BCOR Final Outline Part 2

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Business Core
BCOR 1015
Beth Cross

Midterm #2 Outline Business Forms: 1.) Sole Propriotership- a business owned and operated by one individual Advantages  Easy to start  Single taxation- pay one tax on profit  Total control of business  Total profit  Secrecy  Limited gov regulation Disadvantages  Unlimited liability  Limited skills  Lack of continuity  Limited sources of funds, limited money 2.) Partnership- an association of 2 or more people who carry on as co- owners of a business Advantages  Single taxation  Ease of organization  Make a written agreement  Combined skills and knowledge (specialization of specific jobs)  Decision making  Availability of capital and credit Disadvantages  Unlimited liability  Distribution of profits  limited source of funds  shared decision making 3.) C Corporation- is a legal entity whose assets and liabilities are separate from its owners, corporations treated as individuals, public or private Advantages  limited liability  transfer of ownership  perpetual life  external sources of funds  expansion potential Disadvantages  double taxation  difficult to start  gov regulation  employee-owner separation  disclosure of information Key Issues in choice of form of business ownership include:  Taxation- o Single- pay tax on profit, gross income is pay before tax, net income is pay after tax o Double- pay tax on profit, and tax on dividends (way company shares its profits with shareholders and pays for limited liability -Liability- things that an entity has o Unlimited liability- you get sewed you can loose everything invested and everything you own o Limited liability- you get sewed you loose only what was invested A. Marketing a. Definition and Marketing mix- the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organization goals b. Context of Marketing i. Legal challenges ii. Political iii. Development status iv. Social/cultural v. Technology vi. Economic environment vii. Media fragmentation viii. Competition c. Segmentation and Target Markets i. Market segmentation- divide the total potential market into groups w/similar characteristics or needs 1. Demographics- age 2. Physchographics- personality attitudes 3. Geography- where you live 4. Behavioristic- specific behavior, hunters, outdoors people 5. Purchase history- what have you bought in the past 6. Lifetime value 7. 80/20 rules- 20% of people account for 80% of business -Target Markets- specific groups of consumers w/common characteristics on whom a company focuses its marketing efforts, market can be broad or narrow EX. - Coke- broad market - Staples- narrow market - Mcdonalds- broad market - Elements of marketing mix are interrelated and can be focuses on a target market - Product- customization, pricing- volume/repeat, place- channel selection, promotion- media d. Consumer Buying Cycle i. Problem/need recognition- generation a need, something needs to be fixede ii. Information seeking- data collection iii. Evaluation of alternatives- look at everything iv. Purchase decision v. Post-purchase evaluation vi. Marketing has many factors that influence consumer buying behavior e. Organization Buying (B TO B) i. EX- manufacturers, service providers, institutions, governmental agencies ii. Selling to the business is different than selling to consumer iii. SIGNIFICANCE- 3 times the size, they know what they want, they buy in bulk, looking for volume discounts iv. BUSINESS TO BUSINESS TRANSACTION 1. They want volume 2. Look for discounts 2. The Marketing Mix: Product A. Total Product Offer: try and sell the product through packaging, it is what the business is offering  EX. Apple offers a huge build up period opening up the box, they offer warranty, different products, colors  TOTAL PRODUCT OFFER INCLUDES: o Product/service itself o Value enhancers - Packaging - Services - Warranties - Branding  A way for you to differentiate yourself from competition (value enhancers), need as many value enhancers as you can have B. Brand Equity  A brand is a name, term, design, symbol or other feature that identifies a product  Spend money to protect their brand  Brand awareness- recognize brand such as NIKE  Brand loyalty  Brand quality perceptions  Brand association  Creates an advantage, the brand brings in a lot of business to company  Consumer benefits- convenience, status, quality, safety/risk  Seller benefits- purchase convenience, efficiency- new products, promote on budget- loyalty, not have to spend as much on advertising C. Product Mix and Product Lines a. Product mix- all products companies make, options for supplier b. Product lines- related group  Different types of models (features and prices)  Apple has a lot of different products but has a product line for ipods  Sign- options for suppliers  Each business is different  Differentiation for consumer 3. Price a. pricing objectives - quickest of the 4 p’s to change but the most difficult to cost - heavily influenced by costs and market forces - how much profit do you want to make? -consider wat it costs, image, profit, traffic, market share 2 pricing strategies: 1. skim pricing- go in w/a high price to make most profit w/each profit, make more profit off fewer transactions 2. penetration pricing- start w/a lower price and get more market share. The goal is to try and generate more transactions at a cheaper price to make more profit, enter market at lower price b. pricing factors - competition - demand - costs - fix costs- rent, building, electric, every month expenses - variable costs- all the costs that going into each point - break evenpoint- how many I have to sell to break even EX. What was Sony’s objectives? -get most profit initially, looking for target markets 4. Place A. distribution channels - how are we going to get the product to the customers - includes all the activities necessary to move products from producers to consumers - transportation -warehousing - inventory control - distribution channel- the path that a product or service follows from the producer to end user B. Intermediaries: Wholesalers, Retailers, Agents/Brokers -middlemen - Retailers: anyone who sells to general public - Wholesalers: sell in wholesale for bulk, try and buy discounted prices, provide a holding place for product, take larger shipements and store it until needed -Agents/brokers- facilitate sale EX. Amazon.com, just take order and give product to manufacturers -the key with middlemen, is if they are providing value don’t use them because they take time and costs C. Value of Intermediaries -Time utility- available when you want it, 24/7, how accessible are you, the internet has maximized time utility because it is available all the time - Place Utility- its convenient to you, close to you, where you need it - service utility- EX. Bike stores, provide tune ups, as well as will service you and fixing and repairing bikes -form utility- Harley Davidson custom fit bike for you. They customize product for you - information utility- talk to someone to give you best advice, provide info to best help you make decision on product -ownership utility- lease it, buy houses to rent it out - provide value because if they don’t it is hurting price of time and cost 5. Promotion A. Promotion Strategies  trying to communicate the uses, features, and benefits of a product  position- show the value  differentiates- show differences, make your product stand out  can add value, how can you add value to consumer, how can you show that  identifies/creates need 2 Different Approaches to promotion: 1. Push Strategy- free samples Producer->wholesaler->retailer->consumer EX. Pharmaceuticals pushing free samples to doctors that can then give them to the customers, push product from producer to consumer 2. Pull Strategy Producer
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