Business Organization and Marketing Strategies
1. The Enterprise and Its Scope of Activities
An enterprise is an organization that efficiently manages resources (land, labor, and capital) to produce goods and services for the market. The entrepreneur decides how much of each resource to use.
Types of Enterprises
- Industrial: Involved in manufacturing or handling physical goods.
- Commercial: Focused on selling products.
Market and Competition
A market consists of all consumers and producers of a specific product, influencing its price. Competition refers to companies offering similar products or services.
- Perfect Competition: Many sellers offering homogeneous products at a stipulated price.
- Monopoly: A single seller with total market control.
- Oligopoly: Few companies competing with homogeneous products.
- Monopolistic Competition: Multiple sellers offering differentiated products, competing on quality rather than price.
2. Organizational Structure of a Company
Companies organize their activities to achieve goals efficiently. This involves establishing functional areas and a clear organizational structure.
Functional Areas
- Technical and Production: Responsible for producing goods or services.
- Financial: Manages economic and financial resources.
- Marketing: Handles sales and purchases.
- Personnel or Human Resources: Manages the workforce.
- Management: Oversees overall operations.
Business Organization
The organizational structure defines the arrangement of functional units and their tasks. It can be formal (determined by management) or informal (spontaneous relationships).
Corporate culture reflects how a company responds to challenges and adapts to change.
Organizational Chart
A visual representation of the company’s structure, showing functional areas, authority levels, and communication channels.
Departments
Areas within a company where functions and tasks are grouped. Departmentalization refers to organizing departments based on functional areas.
3. Marketing Concepts and Strategies
Concept of Supply and Demand
Supply refers to the quantity of a product available, while demand is the quantity consumers are willing to buy at a given price.
Definition of Marketing
Marketing involves studying the market and developing strategies to effectively meet customer needs.
The Marketing Market
In marketing, the market includes all potential consumers of a product. Marketers aim to understand and influence customer desires to attract them to their products.
The real market consists of current customers, while the potential market includes potential buyers.
Market Segmentation
Dividing the market into groups of customers with similar characteristics allows for more efficient marketing. Common segmentation criteria include:
- Geographical: Dividing the market by location.
- Demographic: Segmenting based on factors like age, income, and education.
- Psychographic: Grouping customers based on lifestyle and personality traits.
- Behavioral: Segmenting based on buying habits and product usage.
Companies can adopt an undifferentiated strategy (treating all segments the same) or a differentiated strategy (tailoring marketing to each segment). A concentration strategy focuses on a single segment.
Marketing Mix (4 Ps)
The combination of product, price, promotion, and place (distribution) that a company uses to market its products.
4. Product
A good or service offered to the market to satisfy needs and desires. Key product attributes include:
- Base product
- Quality
- Packaging
- Brand name and label
- Design
Product Life Cycle
- Introduction: The product is new and sales are low.
- Growth: Sales increase rapidly.
- Maturity: Sales growth slows and the product reaches its market potential.
- Decline: Sales decline and the product may be withdrawn or reinvented.
5. Price
The amount of money charged for a product or service.
Pricing Methods
- Cost-Plus Pricing: Setting prices based on production costs plus a desired profit margin.
- Competitive Pricing: Basing prices on competitor prices.
Price Calculations
Break-even point: The number of units that must be sold to cover total costs.
Technical Price: The price that covers all costs and provides a desired profit.
6. Promotion
Communication activities used to inform and persuade customers about products.
Advertising
Paid communication using mass media to reach a large audience.
Sales Promotion
Activities that encourage customers to buy products, such as discounts and coupons.
7. Place (Distribution)
The process of getting products to customers.
Distribution Channels
The path a product takes from the producer to the consumer. Channels can be direct (producer to consumer) or indirect (involving intermediaries like wholesalers and retailers).
8. Supply Chain Management
Suppliers
Companies that provide the materials and services needed for production.
Supplier Selection
The process of finding and choosing the best suppliers. Criteria for selection include price, quality, delivery time, and payment terms.
Purchase Order
A document used to request goods from a supplier.
Vendor Selection Process
- Identifying potential suppliers.
- Requesting information and quotes.
- Evaluating suppliers based on selection criteria.
- Choosing the best supplier and notifying others of the decision.
9. Sales
The process of selling products to customers.
Sales Staff
Responsible for achieving sales goals set in the annual sales plan.
10. Product Portfolio Analysis
A tool used to evaluate a company’s products based on market share and growth rate. The Boston Consulting Group (BCG) matrix is a common example, categorizing products as:
- Stars: High market share and high growth rate.
- Cash Cows: High market share but low growth rate.
- Question Marks: Low market share but high growth rate.
- Dogs: Low market share and low growth rate.
This analysis helps companies make decisions about resource allocation and product strategy.