6A. Organisation Culture

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    Organizational culture

    and committees

    FUNCTIONAL DEPARTMENTS

    Research and Development

    Purchasing

    Production

    Marketing

    Direct service provision

    Accounting and Finance

    Human Resources

    Administration

    Purchasing

    Purchasing mix: Quantity, Quality, Price andDelivery

    Purchasing is 'the acquisition of materialresources and business services for use by theorganisation'.

    Cost: Raw materials and subcomponentspurchases are a major cost for many firms.

    Quality: The quality of input resources affectsthe quality of outputs and the efficiency of theproduction function.

    Stock control Chart

    Responsibilities of a purchasing manager

    Inputs for production

    Inputs for administration Cost control

    Liaison with the R&D

    Supplier management

    Maintenance of inventory levels.

    Obtaining information on availability, quality,

    prices, distribution and suppliers for the

    evaluation of purchasing alternatives.

    Production

    Converting inputs to outputs

    The production function plans, organizes, directsand controls the necessary activities to provideproducts and services, creating outputs whichhave added value over the value of inputs.

    Making sure that raw materials are provided andmade into finished goods effectively.

    Production and planning (purchase and storing)

    Stock Control, The design and technical supportand Quality control

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    Service operations

    Services are intangible, cannot be stored, areinherently variable in quality and nature and

    their purchase results in no transfer ofproperty. The people and processes involvedin providing them are therefore of paramountimportance.

    Intangibility, Inseparability (Many services arecreated at the same time as they areconsumed), Variability

    Implications of service provision

    Poor service quality at one occasion may lead

    to prolonged disrepute

    Pricing of services is often complicated,

    especially if large numbers of people are

    involved in providing the service.

    Human resources management is a key

    ingredient in the services marketing mix

    Accounting and Finance

    Bookkeeping procedures

    Preparing final accounts

    Providing management information

    Raising finance

    Managing finance

    Helping with audits

    Research and Development (R&D)

    Improving existing products and Inventing

    new products (product research)

    Bringing ideas to sales and production to

    improve the ways of production (Process

    research)

    Must work closely with marketing and

    production department

    Human resources

    Human resource management (HRM) is the

    process of evaluating an organization's human

    resourceneeds, finding people to fill those

    needs, and getting the best work from each

    employee by providing the right incentives

    and job environment with the overall aim of

    helping achieve organizational goals.

    Objectives of HRM

    To develop an effective human component for

    the organisation which will respond effectively tochange.

    To obtain and develop the human resourcesrequired by the organisation and to use andmotivate them effectively.

    To create and maintain a co-operative climate ofrelationships within the organisation.

    To meet the organisation's social and legalresponsibilities relating to the human resource.

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    Importance

    To increase productivity

    To enhance group learning

    To reduce staff turnover

    To encourage initiative

    Human Resource

    Recruitment and selection, job description

    Human resource audit

    Training

    Performance management

    Dismissal and redundancy

    Remuneration

    Negotiating with trade unions

    Making sure safety needs are met

    Paper work for all the employees records

    Marketing

    These are the main section of the marketdepartments:

    Sales department is responsible for the sales anddistribution of the products to the differentregions.

    Promotion department decides on the type ofpromotion method for the products, arrangesadvertisements and the advertising media used.

    Distribution department transports the productsto the market.

    Public relations : corporate activities like

    community events and sponsorships.

    Conducting market research

    To understand the various needs of the

    customers.

    ACCOUNTING AND

    OTHER

    DEPARTMENTS

    18

    More than Selling and Advertising

    MarketingWhats It All About?

    Provides consumers with need-satisfying goods & services

    CUSTOMER SATISFACTION!!!

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    What Is Marketing?

    All of the above, plus much more!

    Personal Selling?

    Advertising?

    Making products available in stores?

    Maintaining inventories?

    Marketing

    Objectives of Marketing To increase sales revenue To improve and maintain image of the product

    or the business

    To increase market share

    To target a new market

    To target a new market segment

    The marketing process should be continuousand dynamic as peoples taste and preference

    changes over time. E.g. Audio cassettes and typewriters are

    replaced by better products for same use

    Basic functions

    Include: Customer analysis

    Buying

    Selling

    Product and/or service planning

    Social responsibility

    Price planning

    Distribution

    Market research

    Opportunity analysis

    Marketing mix

    The set of controllable variables that the firm

    can use to influence the buyers responses

    Concerned with how to influence consumer

    demand

    A model used when considering the range of

    activities necessary to construct and

    implement a comprehensive marketing

    strategy

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    Price

    Jerome McCarthys 4Ps

    Promotion

    Place

    Product

    Product Strategies

    The starting point of the 4

    Ps

    Includes physical unit,

    package, warranty, service,

    brand, image, and value

    Product

    What Is a Product?

    Promotion

    Place (Distribution)

    Price

    ProductProduct is theheart of

    Marketing Mix

    Products

    Technical features, benefits and limitations of

    the product or products offered by the business

    The technical features of the product are

    important because they will determine whether

    it will meet the needs of the customer

    Core Vs. Augmented Distribution (Place) Strategies

    Place

    Product availability where and

    when customers want them.

    Involves all related to moving

    the product from the producer

    to the consumer

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    The processes of getting goods or services from

    producers to consumers

    The products must be available in the right

    quantity, in the right location at the right time and

    at an acceptable price

    If it is not readily available to customers, they will

    turn to a rival product.

    A marketing channel is a system of relationships

    existing among businesses that participate in the

    process of buying and selling the product or

    service.

    Channel intermediaries are those organizations

    which facilitate the distribution of goods to

    ultimate customer.

    Channels for Consumer Products

    Producer Producer Producer Producer

    Consumers Consumers Consumers Consumers

    Retailers Retailers Retailers

    Wholesalers Wholesalers

    Agents orBrokers

    Wholesaler

    Channel

    Retailer

    Channel

    Direct

    Channel

    Agent/Broker

    Channel

    Promotion Strategies

    Promotion

    Role is to bring about exchanges

    with target markets

    Includes integration of personal

    selling, advertising, sales

    promotion, and public relations Any form of communication abusiness or company uses toinform, persuade, or remindpeople about products and to

    improve its image

    PROMOTION

    Promotion

    Promotion may be highly specific to

    individual products or a range of products,

    or may enhance brand recognition in

    respect of the organization's public image

    In some cases the name of the product

    may become synonymous with the

    organisation itself

    E.g, Xerox, Kellogs, Hoover etc.

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    ADVERTISINGThe non-personal

    Communication ofIdeas, goods or

    services delivered

    through selected

    media channels.

    **PAID FOR**

    Objectives of advertising

    Increasing the usage of a certain product and

    hence acquiring more orders.

    Creating new customers and increasing brand

    recognition.

    To obtain feedback from customers regarding

    a certain product.

    To indicate introduction of new products or

    replacement of old ones.

    Major Types of Advertising Media

    Newspapers

    Magazines

    Radio

    Television

    Outdoor Media

    Internet

    Alternative Media

    Sales Promotion

    A range of tactical marketing techniques

    (other than personal selling, advertising,

    and PR) designed within a strategic

    marketing framework, to add value to

    product or service in order to achieve a

    specific sales and marketing objective

    SALES PROMOTION

    stimulate purchases increase store traffic

    2 for 1 Sale

    Buy One,Get OneFree

    $2 offafter 8PMon Tuesday

    Public Relations

    Any activity designed

    to create a favorable

    image toward a

    business, its products

    or its policies.

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    A specific kind of public

    relations that involves

    placing positive andnewsworthy information

    about a business, its

    products, or its policies in

    the media is called..

    Publicity Publicity

    Advantage

    It is free!

    Disadvantage..

    Its contents

    cannot be

    controlled by the

    business

    What is the largest form of

    promotion?

    Personal Selling!

    This type of

    promotion

    requires contact

    with potential

    buyers

    Personal Selling

    A promotional method in which one party

    (e.g., salesperson) uses skills and

    techniques for building personal

    relationships with another party (e.g., those

    involved in a purchase decision) that

    results in both parties obtaining value

    Pricing Strategies

    The most flexible of the 4

    Ps

    Price X Units Sold = Total

    Revenue

    Price

    Price

    This refers not only to the price of the

    product, but to all costs related to the

    purchase

    The price may be a one-off payment, or a

    series of payments over time

    In the context of professional services, price is

    expressed as fees or charges

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    3 Key Questions before pricing

    How much does it cost us to make the

    product?

    How much are competitors charging for a

    similar product?

    What price are customers prepared to pay?

    Government intervention must be studied

    Cost-Based pricing

    The cost of producing a product sets a

    minimum price

    If cost exceeds the price, then a commercial

    business cannot continue in business

    indefinitely

    It could be little complicated than it sounds as

    calculation of full costs are difficult

    Marginal cost pricing

    Competition-Based Pricing

    Setting a price by examining what competitors

    are charging

    How to define a competitor?

    Competition pricing is common when

    knowledge of the going rate for that particular

    product is high among consumers.

    Demand-Based Pricing

    What customers are prepared to pay

    It depends on effective segmentation of marketsand price discrimination which achievesmaximum price from each segment

    Price skimming, penetration pricing,psychological pricing etc.

    Can discriminate customers on the basis of: Demographic and social characteristics

    The time of the purchase

    The place of purchase

    The extended marketing mix People

    People are the most unpredictable resource

    employed by an organisation

    Contribution of any individual can vary from

    day to day, or even during any single day

    Moment of truth

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    People

    An essential ingredient to any service provision isthe use of appropriate staff and people.

    Recruiting the right staff and training themappropriately in the delivery of their service isessential if the organization wants to obtain aform of competitive advantage. Consumers make

    judgments and deliver perceptions of the servicebased on the employees they interact with.

    Staff should have the appropriate interpersonalskills, aptititude, and service knowledge toprovide the service that consumers are paying for.

    Process

    Refers to the systems used to assist theorganization in delivering the service.

    Imagine you walk into Burger King and you ordera Whopper Meal and you get it delivered within 2minutes. What was the process that allowed youto obtain an efficient service delivery? Banks thatsend out Credit Cards automatically when theircustomers old one has expired again require anefficient process to identify expiry dates andrenewal. An efficient service that replaces oldcredit cards will foster consumer loyalty andconfidence in the company.

    Systems used by airlines for booking, ticketing

    and moving customers through airports and

    on to airplanes, and the systems used by

    financial institutions to provide remote

    banking services

    Physical evidence

    Where is the service being delivered? Physical

    Evidence is the element of the service mix

    which allows the consumer again to make

    judgments on the organization.

    Physical evidence is an essential ingredient of

    the service mix, consumers will make

    perceptions based on their sight of the service

    provision which will have an impact on theorganizations perceptual plan of the service.

    the design of the building in which the service

    is delivered, and sometimes the environment

    in which the building is situated interior layout, decor, as well as use of

    contemporary floor plans

    uniforms

    design of web pages and forms

    business cards

    loyalty cards.

    Marketing strategy

    Must be in consistent with strategic plan

    Goals and objectives, e.g.: What business are we in?

    What broad markets to serve? What market segments?

    Competition within markets?

    Customer needs, expectations and power?

    Strengths and weaknesses?

    Orientation

    Production

    Product

    Sales

    Marketing

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    AnalysisWhere are we now?

    PlanningWhere do we want to be?

    ImplementationHow will we get there?

    ControlDid we manage to get there?Ma

    knaut Analysis

    Where are we now?

    How does the companys market share

    compare to rivals?

    What are our weakness and strengths?

    What is the opportunities and threats we face

    in our marketing environment?

    Planning

    Where do we want to be?

    What's our mission, objectives for next year?

    What should be our strategy?

    Implementation

    How are we going to put into effect the

    strategy which leads us to our objectives?

    Control

    Did we achieve our objectives?

    If not, why?

    How can it could be corrected?

    Start again and conduct further analysis

    Mass Market

    The group of consumers who are the majority buyers

    for common household products, i.e. they could betagged as being average.

    This group consists of such a wide variety of people,their desires towards a certain product may betotally different from each other. Often competitionto supply the mass market is fierce, but relativelyeasy to enter because of the large amount ofconsumer pool available. There is little scope fordifferentiation in a mass market, e.g. petrol, bakedbeans etc.

    Niche Market

    A niche market is a relatively small and identifiable

    segment of a larger market. They are often

    overlooked by large firms.

    They are attractive to small businesses as they face

    less competition and can charge premium prices.

    For example, made-to-measure clothing is a niche

    market and tailors can charge a higher price for their

    clothes than mass-produced items.

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    Segmenting and Targeting Markets Market Segmentation

    Market

    MarketSegment

    MarketSegmentation

    People or organizations withneeds or wants and the ability and

    willingness to buy

    A subgroup of people ororganizations sharing one or morecharacteristics that cause them to

    have similar product needs.

    The identification of sub-set ofbuyers within a market who share

    similar needs and who have similarbuying process.

    The Importance of

    Market Segmentation

    Markets have a variety of product

    needs and preferences

    Marketers can better define

    customer needs

    Decision makers can define objectives

    and allocate resources more accurately

    Segmentation Bases

    Characteristics of

    individuals, groups,

    or organizations used

    to divide a total market

    into segments.

    (variables)

    Bases for Segmentation

    Psychological factors

    Socio-economic groups

    Geography

    Gender

    Age

    Product Life Cycle

    Product Life Cycle

    A concept that provides a way to trace

    the stages of a products acceptance,

    from its introduction (birth) to its decline

    (death).

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    Marketing Strategies for PLC

    INTRODUCTION GROWTH MATURITY DECLINE

    Product

    Strategy

    DistributionStrategy

    PromotionStrategy

    PricingStrategy

    Limited models

    Frequentchanges

    More models

    Frequent

    changes.

    Large number

    of models.

    Eliminate

    unprofitable

    models

    Limited

    Wholesale/

    retail distributors

    Expanded

    dealers. Long-

    term relations

    Extensive.

    Margins drop.

    Shelf space

    Phase out

    unprofitable

    outlets

    Awareness.

    Stimulate

    demand.Sampling

    Aggressive ads.

    Stimulate

    demand

    Advertise.

    Promote

    heavily

    Phase out

    promotion

    High to recoup

    development

    costs

    Fall as result of

    competition &

    efficient produc-

    tion.

    Prices fall

    (usually).

    Prices

    stabilize at

    low level.

    Committees

    Team of employees assembled to arrive at a

    joint solution to problem / situation at hand

    Typically consists of individuals from different

    divisions and departments

    Attempt to resolve the problems throughmeetings and discussions

    Purpose and role

    Examples include: Creating new ideas, R&D, brainstorming

    Communication, disseminating information andobtaining feedback

    Problem solving, task force or working party

    Co-ordination of projects, departments, disciplines

    Representing interests of others, stakeholders,environment

    Overseeing procedures, roles, activities Making formal recommendations (to do somethingor not to do anything)

    Types

    Executive committees have the power to govern

    or administer. The board of directors of a limited

    company is itself a 'committee' appointed by the

    shareholders, to the extent that it governs or

    administers.

    Standing committees are formed for a particular

    purpose on a permanent basis. Their role is to

    deal with routine business delegated to them at

    weekly or monthly meetings.

    Ad hoc committees are formed to complete a

    particular task (e.g. fact-finding and reporting

    on a particular problem before being wound

    up).

    Joint committees may be formed to co-

    ordinate the activities of two or more

    committees, for example, representatives

    from employers and employees may meet in a

    Joint Consultative Committee. This kind of

    committee can either be permanent or

    appointed for a special purpose.

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    Sub-committees may be appointed by

    committees to relieve the parent committee

    of some of its routine work

    Management committees in many businesses

    contain executives at a number of levels not

    all the decisions in a firm need to be taken by

    the Board.

    Advantages

    Include:

    More than one head to reach decision

    Spread of responsibility Multi-perspective, talent, judgment, abilities

    Larger work load

    Maximizing co-ordination

    Focal point for information and action

    Formalises processes, improves communications

    Delaying mechanism (when necessary)

    Disadvantages

    Include: Can slow decision making

    Compromise

    Excessive procedures

    Waste time and resources

    Abdication of responsibility

    Dominating member(s)

    Groupthink

    Slow reaction to events Easy to delay and avoid decision making

    Chair

    Responsibilities (Higgs Report)

    Leadership

    Ensuring effectiveness

    Setting the agenda

    Ensuring all receive accurate, timely, clear information

    Effective communication with primary external parties

    Managing time to allow appropriate discussion

    Encouraging active engagement and participation byall and equal opportunity for all

    Chair

    Skills (Higgs Report):

    Understanding of formal/informal procedures

    Persuasion, firmness and tact

    Communications

    Impartial & objective

    Discrete and tactful

    Punctuality

    Considered to be the right person for the Chair

    Committee Secretary

    Primary responsibilities:

    Schedule committee meetings (with the Chair); Prepare meeting agenda (with the Chair);

    Give notice of meetings

    Take meeting notes, decisions made, responsibilities Daft minutes for approval by the Chair

    Circulate approved minutes to all members Ensure members understand responsibilities for

    action

    Generally assist the Chair in running the meeting

    Provide the Chair with procedural support asnecessary

    Provide general administration between meetings

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    Committee Secretary

    Skills:

    Organisation

    Logical thinking

    Language and grammar

    Note taking

    Communication (writing VIP)

    Understanding of procedures