Mr Oates Today

Hi Guys

Anyone looking for me come and find me in room 207 as I have been turfed out by exams.

Cheers

Mr Oates Today

Hi Guys

Anyone looking for me come and find me in room 207 as I have been turfed out by exams.

Cheers

Medis & Mariah Summit 1

Set of questions by the grusome twosome!

Price Taking (Stolen from tutor 2 u as I am lazy)

Competitor-based pricing

If there is strong competition in a market, customers are faced with a wide choice of who to buy from. They may buy from the cheapest provider or perhaps from the one which offers the best customer service.  But customers will certainly be mindful of what is a reasonable or normal price in the market. 

Most firms in a competitive market do not have sufficient power to be able to set prices above their competitors. They tend to use “going-rate” pricing – i.e. setting a price that is in line with the prices charged by direct competitors.  In effect such businesses are “price-takers” – they must accept the going market price as determined by the forces of demand and supply.

An advantage of using competitive pricing is that selling prices should be line with rivals, so price should not be a competitive disadvantage.

The main problem is that the business needs some other way to attract customers.  It has to use non-price methods to compete – e.g. providing distinct customer service or better availability.

Above the line and below the line

Above the line promotion

This is paid for communication in the independent media e.g. advertising on TV or in the newspapers.  Though it can be targeted, it can also be seen by anyone outside the target audience.

The main aims of above-the-line promotion are to inform customers, raise awareness and build brand positioning.  Above-the-line tends to have a higher cost since the promotional methods used are less precise.

Below the line promotion

This concerns promotional activities where the business has direct control over the target or intended audience. There are many methods of below-the-line, including sales promotions, direct marketing, personal selling and sponsorship.

Sponsorship is controlled because you can decide who is being sponsored and what event. 

http://businesscasestudies.co.uk/kia-motors/using-sports-marketing-to-engage-with-consumers/above-the-line-and-below-the-line-promotion.html#axzz2V2T5IKb8

Product Design Mix

The design mix is defined as: Where an organisation considers the three main aspects of a potential product weighing up the different features and how they will best fit the target market.

Working Capital and so forth

Hi Guys

Few questions coming my way on this.

Working Capital = Current Assets - Current liabilities

A current asset is something that can be sold or used up within one year. A current liability is something a business must pay back within one year.

Essentially working capital is looking at the liquidity of an organisation. The more liquid a business the easier it is for them to turn its assets into cash and pay off short term debts. Any business which cannot pay off short term debts is at risk of becoming Insolvent. It does not matter whether a business is due to make a million pounds of profit next month if they cannot pay off short term debts they will cease trading before they get that profit.

Businesses with liquidity issues need to consider financial contingency planning. In other words is customers don't pay debts or supplier miss delivery deadlines leading to losses of revenue what do we do? Negotiating overdraft facilities can be a good technique for some situations where the requirement is relatively small but consider the implications of a 50,000 pound tax bill when you have just lost a major bit of revenue for that month. You will now get that revenue in the following month but that is no help to you.

In this situation it can be prudent to organise a short term loan with a bank in order to cover the current liabilities. Banks will need to see your cash-flow and business plans etc. in order to grant this to you. Remember this is another argument for having a great relationship with your bank and businesses would need to be well established and have a great trading history and credit rating to be able to get this. A business without this may struggle and therefore fall into insolvency.

Cash flow planning and managing supplier and customer credit terms/payments is therefore very important. Can you put off a supplier payment for a month? Are they willing to extend your trade credit? Do this too often and the relationship sours.

Also consider stock control/management and having the required stock which is being turned into cash relatively quickly. If you don't turn stock into cash quickly you will be left with depreciating current assets and potential spoilage costs. All in all not a good situation to be in!