Market Share and sales - Welwyn Hatfield Consortium · A Level Business •Likely that you •will...
Transcript of Market Share and sales - Welwyn Hatfield Consortium · A Level Business •Likely that you •will...
Business Studies
Mr Moore
What is a business?
Look at the following list of businesses
Match the products with each business
With a partner consider 3 other things that one of
these businesses does ………
A Level Business Studies
• Course consists of 4 sections 1& 2 in year 12; 3&4 in
year 13.
1) Marketing and People in Business
2) Business Finance
3) Business Decisions and Strategy
4) Global Business
A Level Business
• Likely that you
• will have a member of your family who work is in a business
• will work in a business in a part time role in the next 2 years
• will get involved in an enrichment activity which requires you
to work with or for a business organisation
• will ultimately work for a business or have your own business.
A Business Assessment
• How you will be assessed.
• At the end of year 13 – 3 examinations
• Exam 1 Markets People and Global Business 2 hours 35%
• Exam 2 Business Decisions and Strategies 2 hours 35%
• Exam 3 Local National and Global Business 2 hours 30%
What other things do businesses do?
With a partner consider 3 other things that one of
these businesses does ………
What is a business?
• Provides products
• Makes money
• Creates jobs
• Creates new opportunities/ideas
• Creates wealth
• Creates skills
• Creates a community
Types of business ownership
• In order to fully understand and write about business at A level
there is a need to understand the structure of business
• This focuses on how the business is owned.
• Look at 2 main types of ownership
- Sole traders
- Partnerships
Sole trader
• Someone who owns their own business
• Most businesses in the UK – 80%
• Therefore very important to the success of the UK
economy
• Have a closer look.
Business objectives
• Main objective of a business is making a profit
• Profit is one of several objectives of a business
• Working out profit exercise
• Uses of profit
Business ownership – Partnerships
• Partnerships - more than one owner and often seen as a form of
progression for business ownership.
• Closer look…….
Markets
Markets: what is a market and how do
they operate.
What is a market?
• A market is a place where buyers and sellers are brought together
• Don’t have to be physically together – may never see each other.
A sale of a good or a service – is ‘offered at a price’ and is
‘accepted if bought by a buyer.
Markets can be described as ‘planned’ or ‘free’- planned means they
are controlled by the government and free means they are
What is a market?
Markets can be described as ‘planned’ or ‘free’- planned means they
are controlled by the government and free means they are not.
The government plan what markets we need to live day to day eg
how many schools do we need – Education Market
Free Markets are controlled by businesses and customers in terms
of forces of ‘supply and demand’
What is a market?
Markets can have only one supplier of a product – Monopoly
BUT most markets have lots of suppliers who sell similar types of
products
In markets with lots of businesses selling similar types of products
there is ‘competition.
Market Differentiation
• Businesses that sell the same types of products have to
differentiate themselves from their rivals
• Differentiation can be done in range of ways – easy to identify
but difficult to do.
• Price – obvious but can have a harmful effect on profits if they
are lower
• Products – style of product can be adjusted to appeal to a
particular target group.
Task Market differentiation
• Look at the sheet of well known brands
• Match them in terms of which ones compete against each other – ‘Brand
Match’
• Using bullet points explain how these brands differentiate themselves from
each other.
• Obvious points Corporate colours slogans etc
• And less obvious points Finer details Product design etc.
Without Market Differentiation
• Customer can find it difficult to identify the business – lack of brand identity
can be a major problem for the short term survival of a new brand.
• The least dominant business amongst similar business may fail – customers
don’t see the point as it offers nothing new.
• Indeed some customers dislike copycats!
• Lack of clear choice for customers
• So it is important..particularly for business offering a tangible product..
Niche market
• Niche Market or Niche products are specialist products
• Characterised by :
• Products are relatively scarce or unique due to the materials used
• Products or service is relatively unique due to the skills or knowledge of the
workforce
• Market is difficult to penetrate by new companies – without appropriate
knowledge skills or finance.
Market Share and sales
To understand Market Share – how to
calculate and interpret Market share
What is Market share
• Market share is the number of customers that visit and purchase
from a particular business, in relation to the total number of
customers who visit that particular type of business.
• e.g. Tesco have a share of all the customers who visit food
retailers
• Next have a market share of all customers who visit clothes shops
• Debenhams have a market share for all customers to department
stores.
Calculating Market Share
In order to calculate Market share of a business you need to know
- The total value of the market
- The value of sales of a business
- Market share is a percentage
- = Value of sales/ Total sales value of market x100 = %
Market share in Food retailers
Relationship between share and sales
• Having a high market share is good but not a guarantee of success.
• It is possible to have:
• A high market share with declining sales eg Tesco
• High sales but unable to gain a greater share of the market – Fast food outlets trying new products
• Therefore Market share and sales must be looked at carefully.
What happens with Market share data
• Market share is more important than sales as it will indicate the growth
or decline in popularity of the business
• Decreasing Market Share should make a business look at its strategy - Tesco
• Rapid decline is an obvious problem
• But so can rapid growth. Why? Think of a small business trying to grow
rapidly.
• Who watches for rapid growth of market share – how can a business suffer?
Growth of Market Share
• Rapid growth can be a problem for a number of reasons
• Need for more staff
• Need for more shops and space
• Need for more equipment
• Need for loyal customers
• Too successful and can make the business appear too dominant
Markets in UK
To understand how markets are changing in the UK
Changing nature of Markets in UK
• Markets in the UK are dynamic and are constantly changing.
• Markets are influenced by a range of factors – eg society technology and
laws.
• Brainstorm: Can you think of products that have been significantly change
by each of these factors
• 1 A change in the law
• 2 A change in technology and 3 A change in society.
Internet Marketing
• Defn: Marketing activities that businesses perform on line.
• Marketing online has increased significantly over the last 5 years.
• Internet marketing has changed how companies access customers and sell
their products –
• The Internet has changed how consumers shop for their products
• Traditional markets have become more ‘open’ and competition has changed
Advantages of Internet Companies
• Lower start up costs and running costs
• Can be run from a central location – Amazon UK in Northampton
• Lower running costs in terms of floor space means it is cheaper to store products. It is therefore economically cheaper for a business like Amazon to store and supply more products (the long tail effect) than a shop in town selling similar products.
• Make it easy to enter a market – no need for a shop but you need to reach the customer.
Internet Marketing
• On line retailing or e-tailing has seen many shops recognise the importance of having an on line presence.
• It was questioned at one point whether shops would survive – they have, but their role is very different.
• Today Shops act as ‘showrooms’ for many businesses.
• Many large busiensses that have a strong position in a market have been forced to rethink their strategy as the internet has lowered the entry barriers to new entrants and increased competition.
Task How the internet has changed Markets?
• Create a 1 page presentation – giving specific examples of companies (other than Supermarkets) to illustrate each of the 4 points listed below. Include
• A business which has changed its product range
• A business which frequently changes their prices in response to the level of demand
• A business that uses personalised promotion to connect with customers
• A business that has both a presence on the Internet and on the high street. (not a supermarket)
Other impacts of Internet Marketing
• Effectiveness of TV advertising has been questioned for some time.
• New ways needed to reach new audiences have therefore been required
• Small companies can often struggle on the internet.
• Big companies recognise the power of the internet in terms of is directness
and opportunity to reach individual customers
• Use of Social Media is considered to be core element of many companies
marketing strategies – helping to connect with individuals (valued and loyal)
Market Research
• The collection and analysis of Market Information
• Can be carried out in 2 main ways
1) Primary market research – Field research
2) Secondary Market Research – Desk Research
Market Research
• Primary Market research – research that is conducted first
hand and is new.
• Secondary Market Research – research that has already
been collected and is available through a range of sources
Market Research - Primary v Secondary
There are cases to be put for Primary and Secondary – with
a colleague can you bullet point 3 points in favour of
Primary research and 3 points against Primary research
Then do the same thing for Secondary Market research …..
Market research data
• Market research Data can be presented in a number of
different
• Quantitative or Qualitative
• Quantitative – usually consists of measureable figures –
maybe a physical measurement or a ranking e.g. out of 10
how do you rate it?
Market research data
• Qualitative - this type of data is more subjective and
focusses on peoples opinions – I think that is really
good…..
• Look at the list to identify which is Qualitative and which
is Quantitative
Market research Activity – Code of conduct
• Brief or outline of the purpose of the market research
• Design questions – your own
• Create a pilot questionnaire – trial the questions with another member of
the class.
• Assess the questions that you have asked – did they work – Use the attached
list to create a code of conduct – explain your selections for the ‘Market
research Code of Conduct’
Market Mapping
• Market Mapping - a method used to assess the position of similar
businesses using the factors of price and quality
• It also helps businesses to understand what parts of a market are not being
occupied.
• This in turn can make companies change their strategies eg high quality
expensive brands may decide to switch and become a cheaper more
affordable brands cheaper phones and tablets.