how can organisations use market research?
ask customers questions, and use this to increase market share/ products
allow customers to test the product.
use feedback to ensure advertising and marketing is effective
Product portfolio
advantage
increase sales from the variety of products
increase brand awareness
speed risk
Product portfolio
Disadvantages
advertising costs can be high to ensure customers know about their products
research and development costs can be high
ict in marketing
internet- compare prices with competition/ place orders with suppliers
computerised stock control systems
reduces risk of mistakes.
methods of ensuring quality
Quality circles- suggestions for improvements can be made
benchmarking- be more competitive
Benefits to stock control systems
saves time/ money
reduces the risk of double entry (mistakes)
ICT in operations
CAM – computer aided manufacture uses computers to support manufacturing processes
reduces wastage
The use of email, intranet and faxes can ensure that information can get round a firm more easily saving time/ miscommunication
The role of the marketing department is to ..
- help achieve organisational objectives
- anticipate customers needs and wants
- raise awareness and sales of products
Market share
- market share is the term given to the % of sales that an organisation have
- the business with the largest market share is known as the market leader
Market growth
-market growth is the term given to the % increase in sales with a market
Market segmentation
-organisations may choose to focus marketing activities towards a particular group of customers (e.g age, gender)
Impulse purchases
- buying something in the spur of the moment
- usually influenced by promotions
Routine purchases
- buying something out of habit
- common products (e.g bread)
Limited decision making purchases
Buying something that requires some thought before making a decision (e.g suitable clothing for an occasion)
Extensive decision making purchases
Buying something that requires a lot of thought before making a decision (e.g buying a house or car
Market led approach
- customer wants and needs identified through market research
- product produced based upon customer wants
- market may have significant competition
Product led approach
- little or no market research needed
- product produced according to organisations strengths
- little or no competition in the market
Consumer behaviour
-consumer behaviour is important to organisations as it helps them make decisions on their products and how to market it
EPOS systems
- electronic point of sales systems gather info on customer behaviour
- data is collected on purchases and buying habits. This is then used to adapt market strategies
- customers will often receive promotions and offers in the mail designated specifically to them
Market research
Organisations carry out market research in order to find out what existing and potential customer wants, and what trends
Field research
- field research involves an organisation finding out first hand inform for a specific purpose
- this is primary info - questionnaires, interviews,observations, hall tests
Desk research
- desk research involves an organisation looking at existing info
- this is secondary info
- existing info may be available internally or externally - websites, newspapers, textbooks
Sources of info- PRIMARY (adv+disadv)
Adv-
More reliable as the source is known
More relevant as gathered specifically for research
Disadv-
Time consuming to gather
Expensive to collect
Sources of info - SECONDARY (adv+disadv)
Adv-
Easier to obtain as it is already collected
Cheaper
Disadv-
Not as relevant as is already collected
Info may be bias
Sources of info - INTERNAL (adv+disadv)
Adv-
More relevant as specific to the organisation
More reliable as the source is known
Disadv-
Info may not be up to date
ICT software may be expensive
Sources of info - EXTERNAL (adv+disadv)
Adv-
Vast amount of info can be obtained, especially with the internet
Disadv-
Info may not be up to date
May not be reliable if source is unknown
Field research methods - PERSONAL INTERVIEW
Face to face interview with an interviewer asking questions
Adv-
Clarifications can be gained on misunderstood questions
Info obtained instantly
Body language gauged
Disadv-
Time consuming+expensive
Researched may require training
Not always a viable option as people have commitments
Field research methods - TELEPHONE SURVEY
People are contacted by phone and asked to answer questions
Adv-
Large areas can be covered
More cost efficient than personal interviews
Info is obtained instantly
Disadv-
People may not be happy to take part
Time consuming
Large survey likely to be unsuitable
Field research methods -
ONLINE SURVEY
A website is used to ask people questions
ADVANTAGES
- online software is often free of charge
- large geographical areas can be covered
- software often collects and analyses data
DISADVANTAGES
- free online software can limit the number of question asked
- people require internet access
- no means of clarification-must be carefully designed
Field research methods -
OBSERVATIONS
Involves watching a situation and recording what happens I.e reactions
ADVANTAGES
- numerical information gathered is easier to analyse than views or opinions
- often, people being observed are unaware= no bias reviews
DISADVANTAGES
- those being observed cannot be asked for reasons or opinions
- observers may require training= costly
Field research methods -
HALL TESTS
Involves a product being given to people to try for free. Their opinion is then taken on the product.
ADVANTAGES
-It is relatively easy
-cost effective
DISADVANTAGES
-as the product is free, people may not be honest= unreliable results
Test marketing
Involves selling the product in one small market sector before launching it on the wider market
Focus groups
A discussion between a selected number of people and a researcher on specific topics.
ADVANTAGES
-The organisation gains an insight into people’s opinions
DISADVANTAGES
-this information can be difficult to analyse
Sampling
When carrying out MARKET RESEARCH it would be impossible for an organisation to obtain opinions and information from everyone.
Organisations must choose people to take part in their research. There are different sampling methods to choose these groups:
RANDOM SAMPLING
- randomly selected people from a list
- limits the chance of people being bias as there is no structure to selection
QUOTA SAMPLING
- selection according to different groups e.g. Age/gender
- can lead to bias but more cost effective than random
Desk research
Desk research involves organisations looking at different information which has already been collected i.e. Secondary information.
Organisations will aim to use different types of information.
- written
- oral
- pictorial
- graphical
- numerical
Marketing mix
PRODUCT
- product refers to the good or service being sold
- the product must meet the wants and needs of customers. Organisations muse MARKET RESEARCH to identify these.
- there may be several competing organisations selling the same or similar products, so must find ways to differentiate their product from a competitors.
- they aim to keep their product as relevant to customers needs and wants as possible.
Marketing mix
PRODUCT
-Branding
- a product or range of products which have a unique and widely known persona
- a word, symbol or phrase that is registered to an organisation
- brand can only be used by that organisation and appear on their products
- marketed to be instantly recognisable, as higher quality products can be sold at a higher price.
Marketing mix
PRODUCT
-Branding
(adv/disadv)
ADVANTAGES
- costs less to market brand as it is already known
- higher pries can be charged for branded products
- customers can become loyal to a brand
DISADVANTAGES
- products can be copied which can be difficult to prevent
- brands require high levels of market research and development to keep their superior image
- poor products can affect a manufacturers whole range
Marketing mix
DEVELOPMENT
- the first stage is research development
- An organisation will carry out several activities to develop their product
PROFITABILITY - no sales and high costs
- no PROFIT
Marketing mix
INTRODUCTION
- the newly developed product is launched
- the organisation will heavily advertise to make customers aware that the product exists
- sales level begin to increase
- innovative products will have little competition so charge a high price
PROFITABILITY - low sales and high costs
- little to no profit
Marketing mix
GROWTH
- sales are increasing substantially as product becomes popular
- costs are beginning to level out after advertising campaigns
- competitors begin to launch their own version or similar products
PROFITABILITY- increasing sales and average costs
- rising profit
Marketing mix
MATURITY
- this is the peak level of sales
- product is extremely well known within the market
- organisation may look into possible extension strategies to maintain this
PROFITABILITY- high sales and average costs
- highest profit
Marketing mix
SATURATION
- by this stage the product is no longer in demand
- it may be that everyone has the product or it is becoming out of date
- high levels of competition within the market
PROFITABILITY- decreasing sales and average costs
-decreasing profit
Marketing mix
DECLINE
at this stage the sales are paling substantially
-costs are becoming too high and it is no longer worthwhile for the organisation to continue producing the product
PROFITABILITY- low sales and average costs
- little or no profit
Extension strategies
- change the appearance of the packaging to give the the product a new image
- change the size, variety or shape of the product, as this makes it different from the original
- improve the quality of the products(use higher quality materials)
- change the method of promotion (offer a discount)
- change the methods of advertising to reach a larger number of people
- change the price of the product to attract different market segment
- change the place the product is sold(offer it online as well as in shops)
- change the name of the product
- change the use of the product or promote a secondary use
Product portfolio
REDUCE THE RISK OF FAILURE
-balances out less popular products
ATTRACT A VARIETY OF MARKET SEGMENTS
-different people want different products
INCEASE SALES AND PROFITS
-customers can buy a variety of products(increases profits)
EASIER TO INTRODUCE NEW PRODUCTS
customers already know the organisation
INCREASE AWARENESS OF THE ORGANISATION
-build a brand and reputation
COPE WITH SEASONAL PRODUCTS
-balances out products sold at certain times of the year
Boston matrix
PROBLEM CHILD
(high marks growth and low market share)
these products might have future potential as they are in the growth markets, but ales are not good
-if market share doesn’t improve, they will become dogs
sometimes sold to another organisation a better position to exploit the market
Boston matrix
DOG
(low market growth and low market share)
these products have a low market share in a low market, and are typically not very profitable
- to increase market share would cost too much, particularly since the market it is in has a low rate of growth. The products are often discontinued or disposed.
Boston matrix
CASH COW
(low market growth and high market share)
these are products with a high market share in a low growth market
- they are normally profitable and a generator of cash which can support products that are in their development stage
Boston matrix
STAR
(high market growth and high market share)
high share of rapidly growing market, therefore rapidly growing sales
-often necessary to spend heavily on advertising and product improvements, so that when the market slows, these products can become cash cows
organisations will aim to have as many “STAR” products as possible
Product portfolio
Disadvantages
there are also possible disadvantages to offering a wide range of products:
- there could be high promotional and advertising costs due to different methods being used for each product
- one product receiving a bad reputation may impact all the organisations products
- staying varied and innovative may involve high R&D costs
- investment and maintenance costs of the different equipment equipment needed might increase costs
Marketing mic
PRICE
price refers to how much the product costs to buy
it is important that the price:
- reflects the quality of the product
- is competitive in relation to similar products
- considers disposable income of target market
- covers all the costs of production and makes a profit
Pricing strategies
LOW PRICE
- the organisation charges a lower price than competitors
- this is used as it will attract more customers than the competition
Pricing strategies
HIGH PRICE
- the organisation charges a higher price than competitors
- this attracts customers as they think the product is higher quality than usual
Pricing strategies
PROMOTIONAL PRICING
- the organisation charges a lower price for a short period of time
- the product will be bought by customers because it is on special offer and they are getting a “deal”
Pricing strategies
COST PLUS
- a % of the cost of making the product is added to give a profit. This is called mark-up
- this ensures all costs are covered and a profit is made
Pricing strategies
PSYCHOLOGICAL PRICING
- the price charged makes the customer think they are getting a bargain
- it attracts people who buys on impulse as they think the product is cheaper than it actually is
Pricing strategies
MARKET SKIMMING
- the organisation charges a high price during the introduction and growth stages
- there is also little or no competition-price falls after competitors launch similar products
- large products can be made as little to no competition exists
Pricing strategies
PREMIUM PRICING
- high prices are charged for the product
- this gives the product a unique and exclusive image which attracts customers therefore high profits can be made
Pricing strategies
DESTROYER PRICING
- the organisation sets their price deliberately low
- competition cannot match the prices and is proceed out of the market. the organisation can then charge a higher price later
Pricing strategies
LOSS LEADER
- the price charged is actually lower than the cost of production
- this attracts customers to buy the product, but also buy other normally priced products whilst they are shopping
- a profit can therefore be made on total purchases
Pricing strategies
PENETRATION PRICING
-the organisation sets a low price for a new product to attract customers
“special introductory price”
-one awareness and popularity have increased, the price can then be increased
Pricing strategies
COMPETITIVE PRICING
- the price charged is similar or the same as the competition
- this attracts customers and allows for high competition between organisations
Pricing strategies
DISCRIMINATION PRICING
- the organisation charges different prices in different locations (airports/train stations) or at different times of the year with higher demand
- there is little or nor competition nearby, so customers have no option
- this increases profit
Pricing strategies
GOLDICOCKS
- this is where the most popular product is priced between a very low one and a very high one
- the product is seen as reasonable quality for the price
Marketing mix
PLACE
place refers to how the organisation gets its products to the customer, and where the product is sold.
- PHYSICAL DISTRIBUTION
- CHANNELS OF DISTRIBUTION
Channels of distribution
=MANUFACTURER—- CUSTOMER
=MANUFACTURER–RETAILER-CUSTOMER
=MANUFACTURER-WHOLESALER–CUSTOMER
=MANUFACTURER-WHOLESALER-RETAILER-CUSTOMER
Choosing a channel of distribution
What one they will choose depends on:
- how kind is the product life cycle- short product cycles need direct routes
- how unique/exclusive is the product- high exclusivity is more direct
- what logistic facilities are available to the manufacturer
- what finance is available to the manufacturer
- is there legal restrictions on the product
- are retailers/wholesalers reliable?
Wholesaler
A wholesaler buys large quantities of different products from manufacturers.
These are then sold on to the customer in smaller quantities or on to retailers for resale.
Wholesaler
Adv/disadv
ADVANTAGES
- distribution and storage costs are lower as products are bought in bulk
- the risk of having unsold products is reduced as once sold, the risk moves on to the wholesaler
- packaging,labelling and marketing may be carried out by the wholesaler
- retailers may have reduced storage costs, as they can buy smaller quantities from wholesalers as compared to manufacturers.
DISADVANTAGES
- the manufacturer may not like the way a product is portrayed by the wholesaler
- the manufacturer makes less profit selling to a wholesaler than selling to the public
Retailers
Retailers distribute products to the customers on behalf of the manufacturers.
Retailers often stock a range of products from a number of manufacturers and wholesalers.
Retailers
Adv/disadv
ADVANTAGES
- order quantities suitable to themselves
- negotiate deals and prices
- take advantage of economies to scale
DISADVANTAGES
-some manufacturers will not use retailers as they do not want their products to compete with the vast range of products Available there.
Types of retailers:
- supermarkets
- discount retailers
- e-tailer
- convenience retailers
Retailers
SUPERMARKETS
Large organisations that buy large quantities for resale
Supply food, drink, home ware, and electrical supermarkets are a growing trend in towns and cities
Retailers
DISCOUNT RETAILERS
Supply products at a very low price
Thriving due to the current economic climate
Forcing other retailers to lower their prices to remain competitive
Retailers
E-TAILER
Customers shop online then have the products delivered
Having no stores means lower overheads
Work closely with logistics organisations to distribute their products
Retailers
CONVENIENCE RETAILER
A small shop with a limited range of products
Located in small residential areas
Normally charge higher prices due to their “convenient location” for customers
Direct selling
INTERNET SELLING
Internet selling(e-tailing) involves selling products directly to the customer using the internet. This could be through a company website Or social media
ADVANTAGES
- gives access to customers worldwide
- has the convenience of buying at any time from anywhere
- product information is easily accessed and updated
DISADVANTAGES
- the customer cannot see or handle the product beforehand
- customers may encounter internet or computer issues
- customer has to wait for delivery
Direct selling
PERSONAL SELLING
Involves a trained member of sales staff selling the product directly to the customer
This is common in shopping centres or large outlet stores
ADVANTAGES
-It allows the customer to see the product working first hand and to ask questions
DISADVANTAGES
-some customers may feel pressured into purchasing the product
Direct selling
DIRECT MAIL
Involves an organisation posting leaflets to potential customers
ADVANTAGES
-This allows them to target specific segments of customers and tailors the products and deals
DISADVANTAGES
-many potential customers will see the leaflets as junk mail
Direct selling
MAIL ORDER
Involves customer buying through a catalogue
ADVANTAGES
- allows customers to look at their own convenience
- reduces expenses as they don’t need a shop
DISADVANTAGES
-catalogues can be expensive to produce and are often not used
Marketing mix
PROMOTION
Organisations use promotion to:
- inform people that the product exists
- give people information about the product
- persuade people to buy the product
Marketing mix
PROMOTION
(ABOVE THE LINE)
Mass media promotions produced to reach a large range of people
Ex - to adverts, cinema adverts, newspapers, magazines, bill boards
Marketing mix
PROMOTION
( BELOW THE LINE)
Promotions aimed at small, focussed groups of people
Ex- direct selling, public relations
Above the line
TV ADVERTISING
ADVANTAGES
- reaches a larger group of people
- adverts can be broadcast at times more relevant to the target market
DISADVANTAGES
- can cost a lot to advertise during certain times or programmes
- people may not watch or skip adverts, especially with new technology available
Above the line
NEWSPAPER ADVERTISING
ADVANTAGES
- can reach a specific target market/location
- people can keep or refer back to the advert
DISADVANTAGES
- adverts cannot give a demonstration
- advertising in popular newspapers can be expensive
Above the line
RADIO ADVERTISING
ADVANTAGES
-can reach a large number of people
DISADVANTAGES
-people often do not listen fully to radio adverts
Above the line
CELEBRITY ENDORSEMENTS
ADVANTAGES
- successful celebrities promote a positive image for the product
- people may buy products to be associated with celebrities
DISADVANTAGES
- any negative publicity surrounding the celebrity can be associated with the product
- celebrities will often need to be paid a lot
Above the line
INTERNET SELLING
ADVANTAGES
- allows access to customers worldwide
- adverts can have lots of information,pictures etc
DISADVANTAGES
-people often block pop up adverts
Above the line
SOCIAL MEDIA
ADVANTAGES
-adverts can often be linked to users preferences or tastes
DISADVANTAGES
- organisations may need a team to manage their social media profiles=expensive
Below the line
SALES PROMOTIONS
Organisations will use various sales promotions to encourage people to buy their products
This could include:
- discounts
- loyalty cards
- vouchers
- Free samples
- Free gifts
Below the line
PUBLIC RELATIONS
Organisations use public relations as a means of building relationships between themselves and the public
It aims to promote a good image for the organisation and increase sales
They often have a PR team to organise and manage events
Below the line
PUBLIC RELATIONS
(Sponsorships/charity donations)
SPONSORSHIPS
-sponsoring events with a keen public interest helps promote a positive image
The organisations name will be displayed in even materials/adverts etc
CHARITY DONATIONS
- organisations may make donations to help good causes. This encourages the public to view them as socially responsible
Into and out of the pipeline
INTO THE PIPELINE
-promotions from the manufacturer to the retailers used to encourage retailers to stock their products
OUT OF THE PIPELINE
-promotions from the retailers to the customer which encourage customers to buy the products
Into the pipeline
POINT OF SALE MATERIALS
Materials manufacturers give to the retailer to display their products
Into the pipeline
SALE OR RETURN PROMISE
Manufacturers may give retailers the option of returning products that they feel they may not get sold
Into the pipeline
DEALER LOADER
Manufacturers may offer deals to encourage the retailer to stock their products
Into the pipeline
STAFF TRAINING
The manufacturer may provide training for retail staff to ensure they have good knowledge of the products
Out of the pipeline
FREE SAMPLES
Retailers may offer free samples to encourage customers to buy the products
Out of the pipeline
LOYALTY SCHEMES
Large retailers often offer loyalty schemes in which customers can collect points for making purchases in-store.
Points can then be redeemed later against other purchases or offers
Out of the pipeline
VOUCHERS
Retailers may offer vouchers in newspapers/magazines which entitle the customers to a discount on future purchases
Out of the pipeline
SPECIAL OFFERS
A variety of discounts or reductions can be offered to customers, often from large retailers.
Such offers are usually short term
Marketing and ethics
Examples of legal, but unethical activities are:
- price fixing
- Negative advertising
- Cold calling
- Tax avoidance
Extended marketing mix
PEOPLE
People refers to anyone involved in providing the product/service to the customer
Good customer service is very important in achieving high sales and a positive reputation
Organisations must ensure:
- they recruit the best people for the job
- that their staff are well trained
- that they offer rewards and incentives
Extended marketing mix
PROCESS
Process refers to the various processes and systems used to deliver the product/service
Customers expect to receive an effective and reliable service.
Organisations must ensure their systems reflect this and continuously monitor and update where possible
Technology is an important factor in the process
Extended marketing mix
PHYSICAL EVIDENCE
Physical evidence refers to where the product/service is being offered; its design,facilities and the atmosphere/image it creates.
Customers will have expectations of different service- how well an organisation meet these expectations will affect their level of sales. They are less likely to purchase something of physical evidence is poor.
Operations department
- the operations department are responsible for manufacturing goods
- they take the inputs required for the product and process these which results in the output
- they liaise with supplier to make sure that the materials they need arrive on time and are of sufficient quality
- they manage level of stock to ensure that nothing runs out
Choosing a supplier
COST
This is the price charged by your supplier to purchase raw materials.
-costs need to be kept as low as possible to ensure optimum profit
Low costs= healthier cash flow
Choosing a supplier
QUALITY
How good the raw materials are
-low quality raw materials =low quality products being produced
Also increase the possibility of a higher level of wastage
Choosing a supplier
LEAD TIME
this is how long it takes for the raw materials to be delivered after being ordered
- perishable raw materials such as food may need to be delivered quickly or they will go off
- production may be halted if raw materials are not delivered in time
Choosing a supplier
QUANTITY
this is how much raw materials are required
- we need enough raw materials to ensure that production can continue
- if we have too much stock, storage costs will increase as will the risk of theft
- correct quantities of raw material are required to satisfy customer demand
Stock management
MAXIMUM STOCK EVEL
at this level, the highest amount of stock that can be stored is stored
Stock management
MINIMUM STOCK LEVEL
at this level, the lowest amount of stock that should be stored is stored.
if stock falls below this line, there is a danger that production will stop as we do not have enough raw materials to continue
Stock management
RE-ORDER LEVEL
more stock needs to be ordered once we reach this level
Stock management
RE-ORDER QUANTITY
the quantity that needs to be ordered to bring the organisation to maximum stock level
Stock management
LEAD TIME
the time that passes between ordering stock and it arriving
Stock management
TOO LITTLE
- employees and machinery sit idle if production has to stop
- customers may not receive their goods on time. this will lead to increased complaints
- poor image and reputation for the business
Stock management
TOO MUCH
- expenses increase through costs tied to security, storage and insurance
- tock can go to waste if tastes and trends change
- increased risk of theft
An effective stock management system will
- ensure stock is readily available when required
- ensure that there is enough raw materials for production to continue
- avoid delays to customers orders
- avoid increased costs incurred by overstocking
- avoid stock deteriorating or becoming out of date
Stock control
JUST IN TIME
ADVANTAGES
- less cash tied up in stock
- less storage and warehouse space is required. this means lower expenses
- wastage should be kept to a minimum as only stock required is ordered
- PESTEC factors have minimal impact(change in peoples tastes)
DISADVANTAGES
- reliable suppliers are required
- production can be effected if stock is not delivered when required
- more journeys made between supplier& organisations. this impacts the environment and leads to higher delivery costs
Types of production
JOB PRODUCTION
one product is made start to finish before another is made
- made to customers requirements
- usually made by skilled persons and by hand
ADVANTAGES
- customer its exactly what they want. this leads to high customer satisfaction
- as it is a unique, higher prices can be charged
- designs can be changed to meet each customers own requirements
- high employee motivation as they see the product being made from start to finish
DISADVANTAGES
- highly skilled employees required to make the product. this can lead to high expenses
- expensive to buy specialist tools and equipment
- saving from bulk buying can be lost
Types of production
BATCH PRODUCTION
identical products made at the same time
-all products movie a batch onto the next stage of the production line
ADVANTAGES
- batches can be changed to suit the requirement of the customer
- economies of scale- bulk buying of raw materials
- machines being used results in lower expenses
- the use of highly skilled workers is reduced
DISADVANTAGES
- an error in one of the batches can result in the whole lot being scrapped or reworked
- employee motivation is lower as the tasks carried out are often repetitive
- possibility of equipment and staff sitting idle between batches
Types of production
FLOW PRODUCTION
parts are added to the product as it makes it moves along the production line
-machinery and workers have specific tasks to do at each stage
ADVANTAGES
- large amounts of identical products are made
- economies of scale- bulk buying of raw materials
- production uses a lot of machinery that can work longer without breaks
- quality is easily checked at each stage which allows problems to be pinpointed
DISADVANTAGES
- individual requirements cannot be met
- if a fault occurs during production, the whole line may have to stop
- large demand for products are needed to ensure that initial and running cost are made
- expensive start up costs
Centralisation
ADVANTAGES
- it is easier to maintain security of the stock if its held in one location
- easier to implement procedures for receiving, issuing and distributing stock consistently
DISADVANTAGES
- it is potentially expensive to set up and maintain a central stock storage area
- potential for staff to waste time going to collect stock if the centralised area is different from their working location
Decentralisation
ADVANTAGES
- easier for staff to access the stock rather than having to travel to one centralised area
- less chance of stock going to waste or deteriorating as its easier to keep track of what is coming in and going out. People at the decentralised areas will be aware of what stock is required in each of their own areas
DISADVANTAGES
- storage space is required in different locations. This can result in increased expenses
- it is more difficult to maintain security across a number of locations compared to just the one. This may also be ore expensive
Labour intensive
ADVANTAGES
- allows employees to use their own initiative while working
- there is a steady supply of workers available(highly skilled workers may be harder to obtain)
DISADVANTAGES
- recruiting employees is a costly business
- quality of work can vary with every employee
Capital intensive
ADVANTAGES
- machines are able to work 24/7
- quality of work is consistent
- cheaper in the long run
DISADVANTAGES
- breakdown of machinery can result in costly repairs
- employees can become bored with the repetitive tasks that capital intensive production brings
Quality standards and symbols
when an organisation meets certain criteria they can be awarded a quality standard
- this improves the image of an organisation
- allows for higher prices to be charged
- can be used for competitive advantage over similar products
Quality circles
- employees from different departments throughout the organisation meet to discuss quality issues
- members of staff involved are from all levels of the hierarchy
- motivates staff involved
Benchmarking
- involves measuring yourself against other products or services similar to your own
- usually matched with the industry or market leader
- allows for an organisation to see where they need to be
Quality circles
QUALITY MANAGEMENT
-producing the perfect product every time. All employees are responsible for ensuring that this happens
Quality circles
QUALITY ASSURANCE
-the quality of the product is checked at each stage of production
ADVANTAGES
-minimises wastage as errors are stopped and rectified
DISADVANTAGES
-time consuming
Quality circles
QUALITY CONTROL
-quality is checked only after production is completed
ADVANTAGES
-less time consuming as quality is only tested once
DISADVANTAGES
-wastage will be high, as errors are only discovered at the end of the production process
How to ensure quality
- ensure that quality raw materials are used
- employee highly trained/skilled staff are employed
- machinery/technology is up to date/maintained
Mystery shopping
- used in retail and service industries
- mystery shoppers visit shops and make a purchase
- feedback is provided on the service that they received
- staff are not aware of who the mystery shoppers are. This allows for an accurate representation of the service received
Environmental/Ethical issues
MINIMISES WASTAGE
the less wastage an organisation has, the less impact it has on profit. Any wastage that occurs need to be disposed of in a proper manner
Environmental/Ethical issues
RECYCLING
organisations try to reuse as much material as possible. Special coloured bins can be used to encourage employees to recycle products that cannot be reused
Environmental/Ethical issues
MINIMISE PACKAGING
the less packaging a product uses, the less costs involved. this also helps the environment. Lots of organisations used recycled packaging now.
Environmental/Ethical issues
REDUCE EMISSIONS AND POLLUTION
there are policies and laws in place that dictate how organisations deal with emissions, and how they dispose of nay waste that they might have
Environmental/Ethical issues
BE SUSTAINABLE
organisations try to replace some of the materials they use
e.g planting trees instead of cutting them down
Environmental/Ethical issues
FAIR TRADE
an organisation may only use suppliers who are seen as ethical. Fair trade suppliers pay this who produce resources a fair price
Environmental/Ethical issues
RENEWABLE ENERGY SOURCES
the use of renewable sources has increased in recent years. More and more organisations are using sources such as solar and wind power
Operations and ICT
-software
-computer facilities
-CAD
E-MAIl
Online tracking
-websites
-CAM
EPOS
The equality act 2010
Protect characteristics :
- age
- disability
- Sex
- Gender reassignment
- Race
- Religion or belief
- Sexual orientation
- Marriage/civil partnerships
- Pregnancy and maternity
Types of discrimination
DIRECT DISCRIMINATION
An individual is treated less fairly because of a protected characteristic
-job adverts asking specifically for a young woman
Types of discrimination
INDIRECT DISCRIMINATION
When a particular rule or policy occurs that everyone must follow but disadvantages a particular protected characteristic
-work patterns changing so that everybody needs to work every second weekend. New mothers/fathers will be disadvantaged
Types of discrimination
DISCRIMINATION BY PERCEPTION
When a Pearson is discriminated against because an individual thinks that they possess a protected characteristic
-people not being employed because of the perception that they are of a certain religion due to their dress
Types of discrimination
DISCRIMINATION BY ASSOCIATION
People are discriminated against because they associate with a person who posses a protected characteristic
Somebody not being employed because they are a cater for a disabled person
The equality act 2010
What is affects
ADVERTISING A JOB
-organisations need to be careful with the wording of job adverts. They need to steer clear of using language
That is seen to be breaking the law such as “young person required”. This would be age discrimination
The equality act 2010
What is affects
WORKPLACE ACCESSIBILITY
- action maybe taken such as installing lifts or ramps to allow those with disabilities to access the premises
The equality act 2010
What is affects
COMPLAINT INVESTIGATION
If a complaint is made, an organisation is obliged to investigate this and take action if necessary
The equality act 2010
What is affects
TRAINING AND POLICIES
Organisations need to ensure that all employees are aware of the legislation and their obligation in sticking to it
Internal/ external recruitment
INTERNAL
Organisations advertise the vacancy within the business. This means that only existing members of staff can apply. This could’ve done through posting information on notice boards or via staff email.
EXTERNAL
This is when an organisation offers the vacancy to those working within and out with the business. These jobs may be advertised in the newspaper or in websites.
Internal recruitment
ADVANTAGES
- vacancy can be filled quickly
- successful candidate knows how the organisation works
- organisation knows the strengths of the person the appoint to do the job
- money can be saved on the costly recruitment process
- motivation and productivity can increase due to the possibility of promotion
DISADVANTAGES
- field of candidates are restricted. The best candidate for the job may not already work for the organisation
- no existing employees may have the skills required for the job
- a further vacancy will be created if an organisation promotes within
- conflicts may occur within existing employees competing for a job
External recruitment
ADVANTAGES
- new ideas can be brought into the organisation
- large poor of people to choose from
- recruitment agencies can assist with filling vacancy
- specialist publications and agencies can be used to find suitably qualified applicants
DISADVANTAGES
- existing employees who do not get the job may feel demotivated
- it is costly to recruit through a newspaper or website
- the successful applicant is unknown to the business and therefore may ultimately be the wrong person for the job
Training
INDUCTION
New employees are given induction training when they start a new job
Training
ON THE JOB
Training takes place within the business. A more experienced worker may assist with this
Training
OF THE JOB
Employees leave the place of work for this. The training might be provided at a local college or a special training centre.
Continual professional development (CPD)
Staff development is important to an organisation being able to provide a high quality product or service
- allows for employees to gain new skills whilst they progress through their career
- trading can be aimed at meeting objectives set by the business
- CPD this is required can be identified during appraisals alongside of evaluation of any that has taken place already
Virtual learning environment (VLE)
Technology has allowed organisations the opportunity to participate in CPD through virtual learning facilities. These are specific password protected websites that people log into
ADVANTAGES
- can be accessed at anytime and from any location
- learns number can access
- easy to update
- environmentally friendly
- forums and live chats allows for interaction
DISADVANTAGES
- needs trainees to be self disciplined
- people can prefer face to face interaction
- can be expensive to set up and maintain
Training schemes and work based qualifications
There are a wide range of worked based qualifications that an employee can work towards. These may be accessed in house or a training provider.
ADVANTAGES
- recognised qualifications can be gained
- training takes place on the job mostly
- qualified assessors verify qualifications
- skilled staff benefit the organisation
DISADVANTAGES
- can be time consuming to complete
- employees may not be motivated to work towards qualifications
- costs money to enter people for qualification
Employments rights act 1996
EMPLOYMENT CONTRACT
Workers are entitled to have a written copy of the terms and conditions of their employment. Is is the responsibility of the employer to provide this. It needs to be provided within 2 months of employment starting.
Employments rights act 1996
ITEMISED WAGW SLIP
employees are entitled to receive a wage slip detailing money received and deductions made from their wages. This will allow them to keep a record of income and provide information to lenders etc
Employments rights act 1996
REDUNDANCY
when workers are deemed surplus to requirements, they are entitled to fair compensation. these include payments dependent on their length of service
Employments rights act 1996
UNFAIR DISMISSAL
employers need to have a process in place detailing the steps in dismissing employees or if disciplinary action needs to be taken. these may include verbal or written warnings
Health and safety at work act 1974
this piece of legislations aim is to raise the standard of health and safety in the workplace for all workers and members of the public who’s safety may be at risk buy the actions of the people at work
EMPLOYERS DUTIES
all reasonable steps must be taken to ensure that:
-machinery is properly maintained
-hazardous substances are dealt with properly
-staff are trained properly
EMPLOYEES DUTIES
-employees are expected to behave in a reasonable manner and co-operate with employers to ensure that all requirements are met
Minimum wage act
aims to ensure everyone working as paid fairly for the work they do
Data protection Act 1998
a safeguard that is in place to ensure that online information is kept safe
these must be followed
- all information is fairly and lawfully processed
- info collected is adequate, relevant and not excessive
- kept accurate and up to date
- not kept longer than necessary
- processed in line with the date subject rights
- kept secure
- not transferred outside the European economic area without safeguards
Employee relations
MOTIVATED EMPLOYEES = PRODUCTIVITY
relationships between employer and employee are vital in the success of any business. if relationships are good, employees are likely to be more productive and loyal to an organisation
Employee relations
STAFF TURNOVER
staff turnover will decrease which means that less staff leave the organisation. there are many cost associated with recruitment and these are reduced if continuity of staff can be maintained.
Employee relations
ABSENCE
absence will reduce in the workplace if there are good relationships between employer and employee in place
Employee relations
CHANGE
staff are more likely to accept change and adapt to managerial decisions if the relationships are good
Motivation strategies
INCENTIVES
bonuses can be used to make people work harder. payment methods such as commission and piece rate can be used to increase productivity.
Motivation strategies
OPEN DOOR POLICY
managers who encourage employees to discuss problems have the opportunity to resolve any issues before they escalate
Motivation strategies
PROVIDING A FAIR WAGE
if employee feel they are being paid a fair wage, they are more likely to be more productive in their job. workers who feel undervalued will be less productive
Motivation strategies
EMPOWERMENT
certain people excel when given the opportunity to take on extra responsibilities. this allows them to demonstrate what they are capable of doing
Motivation strategies
TEMPORY CONTRACTS
people on these contracts have no job security. organisations should avoid using these. employees with the knowledge that their job is secure are happier in their work
Motivation strategies
CPD
this allows employees to feel valued. this allows them to carry out their job at a higher standard, work towards promotion and gain work based qualification
Assessment centres
effective?
-can be expensive
Working practices
ADVANTAGES
- increase in jobs within the service sector(call centres)
- part time and temporary contracts utilised more often(0 hour contracts)
- more woman in the workplace. more in management
- home and teleworking
- self employed business people encouraged by government
- increase in small businesses
DISADVANTAGES
- primary and secondary sector jobs have decreased
- full time permeant jobs on decrease
Redundancy
- occurs when an organisation can no longer afford to pay employees that they have
- must follow legal requirements
Grievances
when an employee makes a work related complaints organisations will have policies in place to deal with these
if no agreement can be made , an ACAS tribunal may take place
Appraisals
- formal meting between employer and employee
- given feedback
ADVANTAGES
- allows for high quality employees to be identified
- allows for employees to be praised on their performance
- positive appraisals can be motivating for the employee
- targets are identified
- opportunities and CPD can be identified
DISADVANTAGES
- some employees do not see worth in this
- negative appraisals can be a demotivating experience for staff
- takes time to complete, during which management are not competing other tasks
- can result in increased workload if lots of development areas are identified
Maslows hierarchy of needs
belief that each need needs to be satisfied before moving onto the next stage
Maslows hierarchy of needs
PHYSOCLOGICAL NEEDS
The basic needs that humans have in order to survive. These include air to breathe, water to drink, food to eat and shelter.
HR-The payment of wages and bonuses
Maslows hierarchy of needs
SAFETY AND SECURITY
After survival has been met, the continuing safety of the person is important. These needs are met through good health, having a job, a family around you and property to live in.
HR-Job security and employment laws
Maslows hierarchy of needs
LOVE AND BELONGING
People feel the need to belong in social circles. This can be either through friendship or with intimacy with a partner.
HR-Teamwork and social events
Maslows hierarchy of needs
SELF ESTEEM
People feel the need to be recognised through what they do. This inspires confidence and the respect of others.
HR-Promotion and awards
Maslows hierarchy of needs
SELF ACTUALISATION
This when humans strive to meet their full potential. Individuals who have the desire to accomplish everything that they can do.
HR-Promotion
Adam’s equity theory
The equity theory proposes that the effort, time and loyalty that an individual puts into their work should be matched with what they receive in return. These rewards include praise, pay and recognition
Frederick Herzberg
Herzberg’s theory stated that people are influenced by two sets of factors. These are motivational and hygiene factors.
Hygiene factors will not motivate, but if not there, can lead to lower motivation.
Motivational factors can increase motivation within workers.
HYGENE
- Fair Pay
- Company policies
- Working conditions
- Working machinery
- Organisational Structure
- Interpersonal relationships
MOTIVATION
- Achievement
- Advancement
- Challenging Work
- Empowerment
- Profit Sharing
- Responsibility
McGregor X and Y
McGregor proposed that there were two types of manager. These people either fell into the category of being an X or a Y.
X
- Negative viewpoint on employees
- Workers try and avoid doing what is asked
- Employees have no drive and no interest in responsibility
- Tight control exercised
Y
- Looks positively on employees
- Work provides people with a purpose
- Employees work towards shared goals
- Opportunities for development can arise
Iowa leadership
The University of Iowa carried out a study that showed leaders fall into three types:
Autocratic
Democratic / Participative
Laissez-faire
Autocratic
This is linked to McGregor’s X and Y theory where there is tight control and the leader has absolute authority. Subordinates are not consulted in decisions and upward communication in the hierarchy is discouraged
ADVANTAGES
- Quick decision making is made
- Employees get direct assistance from the leader
- Inexperienced employees can be motivated through the experience of the leader
DISADVANTAGES
- Lack of input from employees
- Encourages a blame culture
- Employees do not get an opportunity to develop
- Total dependency on one leader
- Poor motivation of staff
Democratic
In this style there is good communication between the leader and the employee, any decision the leader makes involves consultation and justification. Achievement is encouraged and recognised.
ADVANTAGES
- Increased employee engagement and motivation
- Greater job satisfaction occurs through empowerment
- Employees better prepared for promotion
- Change is easier to implement as employees are involved in decision making
DISADVANTAGES
- This style may not be suitable for employees that require supervision
- Demotivation may result, if employees are only involved in small decisions
- Decision-making process takes time
Laissez-faire
Employees have free reign in this style. Minimal interference from management in the work of the employees. For this to be a success, a very competent leader is required to set the wheels in motion.
ADVANTAGES
- Large amount of trust amongst staff
- Increased motivation
- Less need for management leads to lower managerial wages
- Increased employees skill set.
DISADVANTAGES
- This can lead to high pressure and stress amongst employees
- Little control can lead to poor quality output
- Employees may look for higher wages due to their added responsibility
ACAS
Advisory, Conciliation and Arbitration Service
- Used to ensure that disputes between employees and employers are kept to a minimum through different parties working together.
- Provides impartial advice to people with work problems.
- Resolves problems between employers and employees.
- Facilitating employment tribunals where issues are settled.
Employment Bodies
Confederation of British Industry
Represent employers from all the country’s industries. They own a much stronger voice working collectively and can give their opinion on political matters that have an effect on business.
Employment Bodies
Trade Union Congress
Works in a similar way to the CBI, but for trade unions. Has a wide range of functions such as drawing up common policies, lobbying the government and helps unions falling out amongst each other.
Role of Trade Unions
Collective Bargaining
-Trade unions represent large numbers of employees. Their belief is “strength in numbers”. If more people are unhappy then they have a stronger bargaining position than one or two individuals.
Benefits of a TU
- Obtain good rates of pay
- Protect workers’ jobs
- Secure safe working conditions
- Negotiate employment conditions
Industrial Action
Striking
The trade union holds a ballot amongst its members and if in agreement the members will go on strike. This means that nobody enters the place of work and nothing productive is done. This can result in a poor reputation for the business.
Industrial Action
Go Slow
Employees enter the work place but carry out their tasks slowly. This is going to have an adverse effect on production and can result in customer orders not being met.
Industrial Action
Work to rule
Not as drastic as taking strike action. This is when employees follow their employment contract exactly. They do not do any extra tasks than those specified.
