PESTEL P - political - government policy, the degree of intervention in the economy.

What goods and services does a government want to provide? E - Economic - For example - higher interest rates may deter investment because it costs more to borrow. S - social - In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. T - Technological - MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances E -environmental - the weather and climate change. Changes in temperature can impact onmany industries including farming, tourism and insurance L - legal/legislation - the legal environment in which firms operate, eg. age + disability discrimination, min wage = recent laws affecting business. STRENGTHS - Strengths are INTERNAL FACTORS that a firm may build on to develop a strategy and are internal. For example, they may include: Marketing strengths, Financial strengths, Operations, HRM strengths WEAKNESSES - are INTERNAL FACTORS that a firm may need to protect itself against such as: Marketing weaknesses, Financial weaknesses Operational weaknesses such as old, inefficient equipment and poor quality, HRM weaknesses OPPORTUNITIES - these are AN EXTERNAL INFLUENCE and are thing that a business has an opportunity to do. Ask if strengths up hold oppertunities and if your weaknesses could offer oppertunities by eluminatinng them. THREATS - these are also EXTERNAL INFLUENCES - A threat is a challenge created by an unfavourable trend or development that may lead to deteriorating revenues or profits. Competition, intolerable price increases by suppliers, governmental regulation, economic downturns, devastating media or press coverage or a shift in consumer behavior. Boston matrix Analysing and informing decision making about possible marketing strategies Developed by the Boston Consulting Group in 1968. Links growth rate, market share and cash flow Stars - products in a market with high growth and high market share Cash cow - products in a market with high market share and low growth Dogs - low market growth and low market share Problem child - low market share and high growth Boston Matrix This is a method of analysing the product portfolio of a business (that is, the number and range of different products which a business produces at a particular point in time). This model was developed by a group of management consultants called the Boston Consulting Group, and it divides

the products that are produced by a business into 4 categories, according to their market share and the level of market growth. The 4 categories are : Problem Child Sometimes referred to as Question Marks or Wild Cats). This is a product which has a low market share in a high growth industry. These products have often been launched quite recently and have not had the necessary time to establish themselves in the market. They will require a significant amount of money to be spent on their promotion in order to achieve a healthy market share. They are at the 'Introduction' stage of the product life-cycle. Stars These products have a high market share in a high growth market. They are very successful products which create a large amount of revenue for the business. They still require a large amount of money to be spent on their promotion, in order to keep ahead of the rival products in the marketplace. They are at the 'Growth' stage of the product life-cycle. Cash Cows These products have a very high market share in a stable market (i.e. market growth is low). These products are at the 'Maturity' and 'Saturation' stages of their product life-cycle and produce a very large amount of revenue for the business. This money is often used to promote the 'Problem Child' products and to develop new products. Dogs These products have a very low market share in a low growth market. They produce very little revenue for the business and are at the 'Decline' stage of the product life-cycle. The business has to decide whether to try and extend the life-cycle and boost sales revenue, or whether to delete the product from the portfolio. Pricing Strategies Cost Plus Pricing - Involves business working the cost of producing one unit of a product out and then adding a percentage for profit. Sometimes called mark-up pricing. It's simple to use, and ensures a profit's made. I.E - if a product costs 6 and the mark-up's to be 200% then 12 will be added onto the cost, making the total price 18 Contribution Pricing - Ensures that variable costs of production are met. Any extra will be a contribution to the company's fixed costs or overheads. For example, if the variable cost of producing a doll is 12 and its sale price is 25 then the contribution to overheads from each doll produced is 13. Price Discrimination - This involves charging different prices to different groups of consumers for the same level of service. Used extensively in the transport sector. Promotional Pricing - Used extensively in supermarket sector. May involve introductory offers or a special offer/promotion. Psychological Pricing - Using prices like 9.99 to try & convince consumers they're paying less and getting a bargain.

Price Skimming - Strategy used often by technology businesses (Apple is an example) when they introduce a new product. They begin by charging a high price to recover their research & development costs. Over time price is gradually reduced to appeal to a mass market. Penetration Prices - Involves introducing a new product at a lower price. Collectors' magazines generally use this technique for the first issue of a series to encourage consumers to continue purchasing the whole series when the price rises. Predatory/Destroyer Pricing - This may be used by large firms who are try

Market Research There are two main types of market research. These are Primary research (field research) and secondary research (desk research). Primary research is data or information that does not already exist. Primary Research First hand information Can be highly focussed and relevant Care needs to be taken with the approach and methodology to ensure accuracy Types of question closed limited information gained; open useful information but difficult to analyse Collected by the entrepreneur Examples Customer questionnaires Focus group Direct mail surveys Web-based surveys Customer interviews Disadvantages Expensive to collect, analyse and evaluate Difficult to carry out accurately It can be inaccurate therefore the business might make inappropriate decisions. Entrepreneurs often lack the skills and time to carry out Primary research. Secondary research is data that has already been found by someone and published. That has not been collected specifically for the purposes of the entrepreneur. Internal sources Company Accounts Internal Reports and Analysis Stock Analysis Retail data - loyalty cards, till data, etc. External sources Government Statistics (ONS) EU - Euro Stat Trade publications Commercial Data - Gallup

 Household Expenditure Survey Magazine surveys Other firms research Research documents publications, journals, etc. Internet - many web sites offer information and much government published data can be accessed for free through their web sites. Sampling Methods Random Samples equal chance of anyone being picked May select those not in the target group indiscriminate Sample sizes may need to be large to be representative Can be very expensive One in which each potential member of a group has an equal chance of being in the sample. Stratified or Segment Random Sampling Samples on the basis of a representative strata or segment Still random but more focussed May give more relevant information May be more cost effective Popular as it has the benefits of being random, thus reducing bias and its not as expensive or as difficult as a full random sample. Quota Sampling Again by segment Not randomly selected Specific number on each segment are interviewed, etc. May not be fully representative Cheaper method Not everyone has an equal chance of being in it, and the results cant be used to predict the behaviour of everyone. Cluster Sampling Primarily based on geographical areas or clusters that can be seen as being representative of the whole population Multi-Stage Sampling Sample selected from multi-stage sub-groups Snowball Sampling Samples developed from contacts of existing customers word of mouth type approach! Factors affecting choice of sampling methods Available finance A small business start up is unlikely to have large amounts of capital available, and the entrepreneur may be unwilling to spend money researching the market. So any research is likely to be free. The Nature of the product An existing product or service will already have created secondary data e.g. information about competitors, location, sales. New innovative ideas are less likely to have data in existence. Local products & services are easier to research than those with larger geographical markets. Many entrepreneurs

find is easier to research the customers attitudes to a physical productsomething you can try out. The level of risk The newer the product the greater the risk. The greater the risk the more need for research. The Target market A clearly defined target market is easier to target in terms of sample. Purpose To discover sales trends To find out about competitors activities To measure the effectiveness of promotional activity To classify customers into groups or types Advantages of Market Research Helps focus attention on objectives Aids forecasting, planning and strategic development May help to reduce risk of new product development Communicates image, vision, etc. Globalisation makes market information valuable (HSBC adverts!!) Disadvantages of Market Research Information only as good as the methodology used Can be inaccurate or unreliable Results may not be what the business wants to hear! May stifle initiative and gut feeling Always a problem that we may never know enough to be sure! Quantitative Research/data is in numerical form. It is usually collected from larger scale research in order to generate statically reliable results. Techniques to collect quantitative data are questionnaires, telephone surveys, and online surveys. It is good for establishing key information about a business and its market. It doesnt tell you why, when, how. Qualitative Research/data is about opinions, attitudes and feelings. It is usually expressed in terms of why people fell or behave the way they do. This data is more expensive and difficult to collect. Techniques to collect qualitative data are: in-depth interviews, group discussions. The Product Life Cycle Notes The product life cycle traces the sales of a product over its life. The typical path for a product can be divided into five stages. 1. Research and Development During this stage the basic idea is developed and tested. This can be expensive for a firmand no revenue is being generated. The length of the research and development process will vary depending on the product. Some products never get beyond the development stage.

2. Introduction This is when the product or service is put on sale, but at this stage income from sales is unlikely to cover initial launch costs. In the launch phase distribution and promotion costs will be high. 3. Growth When the product becomes known, and hopefully accepted by customers, sales should grow. At this stage it should be slightly easier to get distributors to stock products, as they will be more confident of sales. The firm should begin to make profits at this stage, as revenues begin to outweigh costs. 4. Maturity and Saturation At this point in a products life, sales begin to slow. The product is likely to have been in the market for some time and competitors may well have launch similar products. 5. Decline Eventually, the sales of any product will begin to fall. The firm may find it more difficult to get the product distributed and may be forced to cut the price to maintain sales. So you have your product, you know who will buy it, you know where to sell it and youve set the price. Now you need to work out how to get the message about the product out to your target market. This is where decisions need to be made on promotion. There are many different types of promotion, and these are sometimes referred to as the "Marketing Toolkit". These include: 1. 2. 3. 4. Advertising Sales Promotions Direct Mail Public Relations

1. Advertising Advertising is an industry that involves using different media to inform consumers about products and persuade them to buy. These can include:

Television and radio Newspapers and magazines Billboards

Internet

Delivery methods used with the different types of media can include:

Unpaid Product placement (e.g. companies can supply their products to be used on screen by characters or in locations). Split Screen advertising on screen at the same time as broadcasts such as F1 Internet Advertising information windows and pop ups

2. Sales Promotions These are techniques used to keep a product name in the mind of the consumer without using the direct advertising mentioned previously. Possible promotions might be:

Discounts a temporary reduction in the price of a product to increase the likelihood of the customer trying it. Free samples giving away examples of the product for consumers to try before they buy. Special stand in a shop a display of goods which is intended to catch the consumers eye.

3. Direct Mail This is the process by which the company contacts the customer directly with information and/or incentives to buy the product from outlets. New laws on sending direct mail and the growth of email marketing have significantly changed how customers are contacted. Plus, advances in technology mean that companies are now better able than ever to effectively target customers through direct mail. 4. Public Relations (PR) Public relations is all about making sure that a company builds and maintains good relations with their target audience. This includes such activities as working to make sure newspaper journalists write positive things about the product or service, or organising events to help raise the profile of the product or service. Can you think of examples of each of these different types of promotion The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy. Ansoffs product/market growth matrix suggests that a business attempts to grow depend on whether it marketsnew or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below: Market penetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives: Maintain or increase the market share of current products this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling Secure dominance of growth markets Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors Increase usage by existing customers for example by introducing loyalty schemes A market penetration marketing strategy is very much about business as usual. The business is focusing on markets and products it knows well. It is

likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: New geographical markets; for example exporting the product to a new country New product dimensions or packaging: for example New distribution channels Different pricing policies to attract different customers or create new market segments Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. Diversification Diversification is the name given to the growth strategy where a business markets new products in new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.