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CHAPTER TWO: Creativity,innovation and entrepreneurship 2 USE A SERIES OF CREATIVITY TECHNIQUESCREATIVE THINKING Refers to how people respond to problems and solutions  Their ability to combine existing ideas and knowledge into new formationsKNOWLEDGE Encompasses everything a person knows and ca...

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CHAPTER TWO: Creativity, innovation and entrepreneurship 

2.1 USE A SERIES OF CREATIVITY TECHNIQUES CREATIVE THINKING

KNOWLEDGE

 Refers to how people respond to problems and solutions  Their ability to combine existing ideas and knowledge into new formations

 Encompasses everything a person knows and can do  Acquired through formal education, experience, or interaction with other people

MOTIVATION  Extrinsic vs Intrinsic  E = comes from outside a person (rewards etc)  I = A persons internal desire to do something

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CREATIVE TECHNIQUES The action of viewing a problem from an opposite angle PROBLEM REVERSAL

FORCED ANALOGY

ATTRIBUTE LISTING

The action of making an association between two unlike things to obtain new insights The identification and listing of all major characteristics of a product, object or idea

MIND MAP

A visual method of mapping information to stimulate the generation and analysis of it

BRAINSTORMING

A conference technique by which a group tries to find a specific solution for a specific problem by amassing spontaneous ideas

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2.2 DEFINE AND EXPLAIN THE RESOURCES OF INNOVATION AND DIFFERENT INNOVATION TYPES

 innovation is the successful implementation of creative ideas within an organization  innovation is a multidimensional concept

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TYPES OF INNOVATION INCREMENTAL Is the improvement of existing products that enhance performance in dimensions traditionally valued by mainstream customers Extension: Improvement or new use of an existing product, service or process, such as the development of desktop, notebook and laptop computers based on the mainframe. Duplication Creative replication or adaptation of an existing product, service or concept. Duplication can take place across different markets or industries, e.g. fast-food chicken outlets such as Chicken Treat or Red Rooster in Australia were adapted from the Kentucky Fried Chicken model from the USA; Synthesis Combination: of an existing product, service or process into a new formulation or use, such as the fax (telephone + photocopier) or the multipurpose smartphone (telephone + camera + organiser + internet + music player + GPS).

DISRUPTIVE  Change the value proposition, e.g. personal computers, that underperform existing products but are simpler, less expensive, more convenient, adequate and easier to use The bottleneck buster: democratise a limited market What it is: Expand a market by removing a barrier to consumption When it works best: When some customers are locked out of a market because they lack skills, access or wealth. Competitors ignore initial developments because they take place in seemingly unpromising markets. Historical examples: Personal computers, Sony Walkman, eBay Current examples: Blogs, home diagnostics, social networks such as Facebook or Twitte

COST INNOVATION  Innovation that considers the ‘value for money’ segment  Cost innovation can be delivered in three ways: o Selling high end products at mass-market prices o Offering choice or customisation to value customers o Turning niches into mass markets

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NEW PRODUCT DEVELOPMENT  When the organisation develops the idea, undertakes research, prepares prototypes, pre-test the product, makes modifications before the product launch

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2.3 LINKING CREATIVITY, INNOVATION AND ENTREPRENEURSHIP

CHAPTER 4: Identifying customers    

4.1 EXPLAIN THE BROAD CONCEPT OF MARKET A market is a group of people with a heterogeneous needs and wants (broad ) The market then can be broken down into two segments, business and consumer As it is impossible for organisations to appeal to each segment, they tend to focus, identify and understand the market segment in which they can offer the most value, by tailoring the marketing mix to appeal to these segments

 4.2 UNDERSTANDING THE TARGET MARKETING CONCEPT  Is identifying, understanding and developing an offering for those market segments of the total market that the organisation can best serve it is based on 3 premises: 1. Buyers can be identified 2. Sellers understand the needs of buyers 3. Sellers will design their offering to meets target market needs  The decision to identify them through target marketing reflects the difference between a market orientation and a product orientation  Production orientated: organisations see everyone as basically similar and practise mass marketing  Market orientation: organisations see everyone as different and practise target marketing

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THREE MARKET STRATEGIES MASS  Mass marketer sees consumers as having similar needs and wants  Due to this the marketer can take advantage of economies of scale (producing large volumes so the cost per unit goes down) Undifferentiated

ONE TO ONE MARKETING  Seeks to appeal to each individual customer by providing a unique, customised offering that will meet their individual needs  Seller seeks to develop a relationship which will develop loyalty and repeat sales Differentiated

TARGET MARKET BASED ON SEGMENTS  Most buyers or consumers can be grouped into segments the segment has distinctive needs, but the members of the segment have similar needs  This is the logical and common choice for many organisations that want to meet the needs of large number of customers more closely but lack the resources to each each customer as an individual 

PRODUCT AND MARKET SPECIALISATION PRODUCT MARKET  In which all efforts are focused on a  All efforts are concentrated on meeting single product range offered to a number a wide range of needs within one of market segments segment PRODUCT-MARKET SPECIALISATION  Approaches are combined to offer a single product to a single market segment, micro, business commonly adopt this approach  Organisations that adopt this approach aim to dominate in their chosen market niche (however risk putting all their eggs into one basket)

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4.4 SELECT SPECIFIC TARGET MARKETS BASED ON EVALUATION OF MARKET SEGMENTATION  This stage involves a systematic examination of the possible market segments, their potential sales value and revenues, and the relevant ability of the organisation to satisfy the expectations of members of the market segment  The choice of the appropriate target marketing depends upon: o An understanding of the size and attractiveness of the market segments that have been identified o An assessment of the organisations ability to service and compete for the chosen market segments

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EVALUATE POTENTIAL SEGMENTS

SALES POTENTIAL  Market Potential: is the total volume of sales of product category that all organisations are expected to sell, in a specific period of time, assuming a specific level of marketing activity.  Sales revenue: is equal to its total volume of sales multiplied by the average selling price (the total volume of sales is determined by its market share)  A company’s sales potential is an estimate of the maximum sales revenue and market share that an organisation can expect to chieve for a specific product COST STRUCTURE  Organisation needs to consider the costs involved in creating, communicating , and delivering an offering to meet the needs of each potential market segment  Costs will affect the amount they will charge for their product, its price competitiveness, and its profitably given any particular

COMPETITIVE SITUATION  Any estimate of a sales potential must be conducted in context of a thorough investigation of the organisations competitive situation (activities of competitors already in the market place and their market share)  Without a competitive assessment, sales estimates can be misleadingly optimistic, especially when an organisation is entering an already established segment

 SELECT TARGET MARKETS  With a detailed evaluation of potential market segments based on the above, an organisation can determine which segments to target and which to disregard  It is the heart of the marketing concept     

4.5 UNDERSTAND HOW TO EFFECTIVELY POSITION AN OFFERING TO A TARGET MARKET IN RELATION TO COMPETITORS, AND DEVELOP AN APPROPIATE MARKETING MIX The organisation must decide how its offer is positioned in the minds of its target market segment and how the organisation wants to be perceived by its segment Positioning: the way in which the market perceives, an organisation , its products and its brands in relation to competing offers Positioning is all about perceptions, it describes how consumers make sense of a crowded and complex market place and make their brand choice decisions in an efficient way. Positions should not change continuously, they need to be created, nurtured and consistently reinforced

 DETERMINE THE MARKETING MIX FOR EACH SEGMENT  The marketing mix describes the overall offer the organisation makes to its target market  Marketing mix should: o Be consistent with the desired position o Be internally consistent (each element of the mix should be coordinated and supportive of other elements) o Be sustainable and long term

CHAPTER 5: Elements of the Marketing Mix and Framework  5.1 EXPLAIN THE ELEMENTS OF THE MARKETING MIX  The marketing mix is the term given to a set of variable that a marketer can exercise control over in creating an offering for exchange  Frameworks: o 4 P’s (product, price, promotion, place/distribution) o 5 P’s (adding people) o 6 P’s (adding process) o 7 P’s (adding Physical evidence)  Organisations are governed by the cost of implementing their marketing mix      

5.2 DEFINE PRODUCT AND UNDERSTAD DIFFERENT WAYS TO VIEW AND ANALYSE PRODUCTS AND PRODUCT Product is defined as a good, service or idea offered to the market for exchange Potential customers require products to satisfy functional, social and psychological needs, wants and demands Goods are physical, tangible offerings Services are intangible (experience) Ideas can be offered as a concept, issue or philosophy

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THE TOTAL PRODUCT CONCEPT CORE PRODUCT  Comprises of the fundamental benefit that responds to the customer’s problems of an unsatisfied need or want.

AUGMENTED PRODUCT  At this level the product deliver a bundle of benefits that the buyer may not require as part of the basic fulfilment of their needs  Allows for differentiation

THE EXPECTED PRODUCT  Describes those attributes that actually deliver the benefit that forms the core product  Attributes that fulfil the customers most basic expectations POTENTIAL PRODUCT  Comprises of all possibilities that become part of the expected or augmented product

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PRODUCT RELATIONSHIPS PRODUCT ITEM  Particular version of the product that can be differentiated from the organisations other products

PRODUCT LINE  A set of closely related product items (e.g. bonds mens underwear trunks, y fronts etc )

PRODUCT MIX  The set of all products that an organisation males available to its customers 

PRODUCT CLASSIFICATION CONSUMER PRODUCTS Those products purchased by the households and individuals for their own private use CONVENIENCE PRODUCTS SHOPPING PRODUCTS  Inexpensive frequently bought  Are irregularly purchased items that consumer products consists of: involve moderate to high engagement with the decision making process o Staple products  Longevity, infrequently bought, stocked o Impulse products by a small number of shops, low o Emergency products volumes, large profit margins SPECIALTY PRODUCTS UNSOUGHT PRODUCTS  Have unique characteristics that are  Goods/ services that consumer’s either highly desired by buyers, consists of : o Knows about but doesn’t normally o Preselected consider purchasing o No close substitutes o Doesn’t even know about o Infrequent o Sell in low volumes o High profit margins BUSINESS TO BUSINESS PRODUCTS PARTS AND MARTERIALS EQUIPMENT  Raw materials (unprocessed natural  Capital equipment ( installations such as materials) buildings and machinery)  Components ( processed items that form  Accessory equipment (support the part of the businesses product) production of the product drills etc) SERVICES AND SUPPLIES  Business services (such as financial, legal, market research)  Maintenance, repair and operating supplies ( engine oil, rivets and paper)

 PRODUCT DIFFERENTIATION The creation of products and product attributes that distinguish one product from another  Warranties, installation, in-home training and free help-line services are points of differentiation  After and pre-sale care

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5.5 EXPLAIN PROMOTION AND ITS ROLE IN THE MARKETING MIC PROMOTION MARKETING COMMUNICATION The marketing activities (e.g.  A term for promotion that refers to advertising, PR, sales promotion, communicating a message to the personal selling, digital marketing, marketplace. sponsorship) that make potential customers, partners and society aware of and attracted to the business’s offerings OBJECTIVE Is to support the organisations overall marketing objectives Encourage repeat purchases Create demand Increase general awareness and goodwill Cause related marketing 5.7 UNDERSTAND THE INTEGRATED MARKETING COMMUNICATIONS APPROACH TO MARKETING PROMOTION AND THE MAJOR ELEMENTS OF THE PROMOTION MIX INTEGRATED MARKETING COMMMUNICATIONS

 The coordination of promotional efforts to maximise the communication effect.

ELEMENTS OF THE PROMOTION MIX PERSONAL SELLINGADVERTISING sales consultant direct  A paid non personal at a consumer message communicated through  Advantages: a mass medium 1. Modified to suit the individual  Advantages: reaching extremely large 2. Long term audiences, or they can relationship = focus on a small repeat sales market segment 3. HR provide after sales service  e.g. mass, direct (catalogue), tele, emarketing, social media, bill boards SALES PROMOTIONPUBLICITY Activities or materials  Free news story about that are an incentive a businesses product for customers helps create a positive or negative image  Aims: entice new customers, encourage trial purchase of new product, increase sales, repeat puchases

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RELATIONSHIP MARKETING Development of long term cost effective and strong relationship with individual customers.  Ultimate aim = create customer loyalty

PUBLIC RELATIONS Maintenance of a favourable relation between a business and consumer (e.g. donations and giveaways)  4 ways helps a business increase sales: 1. enhance an image 2. raise awareness 3. highlights favourable features 4. reduce any negative images

5.9 DESCRIBE HOW TO DEVELOP AND MANAGE AN EFFECTIVR MARKETING MIX BSED ON THE UNIQUE CHARACTERISTICS OF SERVICES PROCESSESPEOPLEPHYSICAL EVIDENCE Manner in which a  Are the front line of  Environment in product is efficiently a business which the service provided to a will be delivered  Quality of the interaction with the (appearance or customer  Efficient operations customer maybe vital impression)  The better the to the success of the = loyal customer, business presentation the willing to promote better the image of the business (word the business within a of mouth) consumer

CHAPTER 7 : Competitive strategy and decision making 

7.1 OUTLINE THE DIFFERENT TYPES OF COSTS A FIRM FACES, AND THE RELATIONSHIP BETWEEN THE MARGINAL COSTS profits = revenue – costs COSTS RELATIONSHIP  Inputs are costs  Principle of substitution = when a  The increase in output corresponding to number of different inputs can be varied, a unit increase in any input is the and the price of one input increases, the marginal production of the input change in relative prices of inputs will encourage a firm to substitute relatively less expensive inputs  The marginal revenue it revenue it receives from selling an additional unit of output is the price of that unit 

EXPLAIN HOW COSTS DIFFER IN THE SHORT TERM AND LONG TERM LONG SHORT  As production grows, it will pay to build  Short run costs are usually U shaped or a second factory, then third etc this is upward shaping, the marginal and due to the fact as the levels of average cost curve will intersect at the production increases it becomes more minimum point of the average cost costly to run production out of one curve factory and so forth  Economist say short term organisations are not able to change its capitol stock

CHAPTER 8: Market Structures 

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8.1 DESCRIBE THE CONCEPT OF MARKET STRUCTURE AND THIS ENABLES US TO UNDERSTAND THOSE MARKETS WHCH DIVERGE FROM PERFECT COMPETITION AND WHICH THERE IS LIMITED OR NO COMPETITION BETWEEN FIRMS Market structure refers to the framework within which a firm undertakes the production and supply of the product it produces Three principles: o The number of producers o Extent to which the products of producers are different o The eases with which firms begin production in competition with existing firms Perfectly competitive market: large number of sellers, each producing a standardised product subject of other firms into the market competition with them (all firms have to accept the equilibrium price) Monopoly: single firm supplies the entire market (imperfectly competitive) Imperfect competition: any market structure in which there is some competition but organisations face downward sloping demand curves Oligopoly: imperfect competition in which the market has a number of firms, sufficiently few that each one must take into account the reactions of rivals to what it does

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THE DEGREE OF COMPETITION PRODUCT NUMBER OF FIRMS DIFFERENTIATION  Commonly used measure is the four-firm  Degree to which a product is differentiated concentration measure, to its competitors which measures the percentage of the total  Firms in imperfect competition attempt to production of a product create brand loyalty in a market accounted by  Perfect = no product the four largest firms differentiation consumers can buy same product from any firm

BARRIERS TO ENTRY  Any force that prevents any firms from entering the market  Easier it is for firms to enter the market the harder it is for existing firms to maintain prices  Barriers also include patents

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WHY MONOPOLY AND LIMITED COMPETTION OCCURS ECONOMIES OF SCALE PRODUCT DIFFERENTIATION  Firms take advantage of economies of  When one firm’s product is regarded as scale by merging or taking over other superior compared to the other firms producing the product  By creating a ‘brand’ consumers will prefer to buy more of the firms products BARRIERS TO ENTRY  A firm may limited the completion by being the only one who can create and sell a product (through patents and legislations)  Or by purchasing all of the input needed to create a product

NETWORK EFFECT  Occurs when a product becomes more valuable to a consumer the larger its network of users  E.g. Microsoft

RESTRICTIVE PRACTICES  Exclusive dealing: restrictions imposed on a firm by another firm that restricts its freedom to choose the terms under which they deal  Third line forcing: involves the supply of the product under the terms that the purchaser buy goods from a particular third party IMPERFECT COMPETITION  Firms whose products have an established reputation have an advantage  Information or lack of can create a barrier

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8.4 DETERMINE THE CHARCTERISTICS AND IMPLICATIONS OF MONOPOLY THAT APPLY TO ALL MARKETS THAT DIVERF FROM PERFECT COMPETITION  Imperfect competition consists of monopolistic and oligopoly  Monopoly = a downward facing demand curve for the product itself slopes downwards, the firms demand curve is identical to the market demand  Imperfectly competitive firms, the slope of th...