Chapter that first step. Jump straight in, experiment and

Chapter Two

Literature Review

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Introduction

A business is an organization where items good and
services are been exchanged for one another or for money. All Businesses
require customers and also some kind of investment to who the products can be
sold to on a agreeable basis in order to make profit for the business. One well-known economic theory teaches that the purpose of
business is maximizing profit for the shareholders. This concept was developed
by economist Milton Friedman, from the Chicago School of Economics, and was published in the New York Times in 1970. The 1976 winner
of the Nobel Prize for Economics became popular perhaps because his ideas had a strong appeal
to the people given the difficulties of the moment. Competition was starting to
become global, and it was becoming more challenging to find ways to increase
profit. “The idea of focusing totally on making money, and forgetting about any
concerns for employees, customers or society seemed worth exploring”.1

There are lots of businesses
that are already in existence, coming up with an idea of your own it is likely
that it will be the first item or product many people will have something like
that already introduced. Many talented entrepreneurs waste time and energy
trying to think of a unique business, when they should be focusing on how to be
better, rather than how to be different. “Don’t believe the myth that an idea
isn’t a good one because there is competition,” says Marianne Cantwell, founder
of Free Range Humans. “2(Guardian)
Often the biggest barrier to success is the fear of
taking that first step. Jump straight in, experiment and see where it leads you
and the business having an idea before getting straight in to have to be the
important part. To understand and hold the increasing influence on how different
factors can make a successful business. ‘In almost all businesses, employees
are needed to really grow, and when managed properly, they can create the
ultimate leverage, job security and wealth for you.’3 (Contributor, 2018)

In the first part, I will
define the main concepts coming from the literature. In the second part I will
set out the diverse business’ an showing models and theories that exist in the
literature; in the third part I will present the different types of Business
ideas available to different entrepreneurs and step by step on how the business
can be successful. “Success is something we should always be striving for. It
comes in different sizes and shapes. It is seen as various things from varying
viewpoints. It can often be hard to achieve, but in some way, it leaves the
world a better place.”4
(Michael Byrnes, national speaker and president of Byrnes Consulting) For most entrepreneurs
achievements comes from the process of starting with just an idea and building
something that lasts. Successful businesses earn a large return on investment
for the shareholders who risked their capital in the venture.5
The people who found the company, are usually the stakeholders, are able to
create wealth for their families, as well as enjoy a wealthier lifestyle. They
measure success by being able to provide a better life for their children than
they had when they were young. Having a business is down to the individual
itself on how they are looking to achieve the goal and at the end of it what
are they achieving, different people all have different mins sets and this is
very important as you need to understand your own goal and also competition
that is going to arise and will be faced in the future of the business.
Companies measure success by all the good they have achieved in society. Some
have different goals for example, improving the environment or providing
educational opportunities for children through the products and services they
offer.6
Others have a very high commitment to charitable giving and being good
corporate citizens.

Film star (Paul Newman’s
company, Newman’s Own Inc)., which manufactures and markets a variety of
consumer products, distributes all of its after tax profits to charitable causes.
The company’s charitable foundation has donated more than $300 million,
according to Newman’s own website.

The term Critical success factor (CSF)
first appeared in the literature in the 1980s when there was interest in why
some organizations seemed to be more successful than others, and research was
carried out to investigate the success components (Ingram, Biermann, Cannon,
Neil, & Waddle, 2000). CSFs are “that thing that must be done if a company
is to be successful” (Freund, 1988). Further studies argued on the area specificity of the critical
success factors as they differ from organization to organization (Anthony et.al
1972).7
Critical success factors for a growing business depend on the environment of
the business and also the industry it is in.

With the number of
businesses that fail or start out strong only to stumble in the competitive
marketplace a few years later, another measure of business success is the
ability to sustain success in the turbulent, ever changing business world. Book
publisher John Wiley ; Sons began in 1807 as a small New York
City-based printing shop. Two hundred years later, in 2007, the company’s
revenues were more than $1 billion, according to the company’s website. The
company has been able to successfully adapt to changes in readers’ taste but
also to the technological changes in the publishing industry for more than two
centuries.8
Defining success is very important but taking a close look at the impact of the
definition is even more important. As your intention is important but all the
results provide the real answer.

To get the best results from
all the critical factors here are some critical factors that can make a
business successful. Increasing the Market share through the customers already
part of the business and involved. To be service oriented when working with all
the customers. Try achieving order fulfillment through all online process
improvement. Arranging rewards with the employees to increase employee
satisfaction. Many
organizations are forming business alliances to quicken the pace of and reduce
risks associated with innovation. Yet by some estimates, 70% of these alliances
fail.

In this Dissertation I have
put together a questionnaire where I will be looking at different people’s
views on how to come a successful business and what kind of things they has
faced while introducing the business and if it has been successful.

3.0
The importance of Business Position

3.1 Product
Planning

It is very important to
understand the positioning of the product before entering the market. Product
positioning is a very important tool for an effective marketing strategic
planning. Product positioning creates an image of the company’s products in the
mind of consumers, highlighting the most important benefits that differentiate
the product from similar products in the market. Product positioning starts
with identifying the specific, niche market segments to target. After
segmenting the target market by demographic and psychographic qualities, all
marketers must understand the needs of the customers, this will help them
define the target segments and also the product positioning this helps the
business meet particular needs in the market segment. In this Dissertation I
have added a questionnaire to see all the different kind of consumers and
business owners there are and to see how they target the needs of the
consumers. Marketers must keep an eye on the competition while considering
positioning elements of their marketing strategy.

The next stage is how to
communicate the differentiated offerings to the identified niche market
segments. This is possible by selecting the appropriate communication channels
that are tailored to connect with the identified target audience when they will
be most open to these messages. So for example having advertisement shown on TV
and also billboard so that the business can communicate with the consumers.

The business should include
the product positioning across all sides of the business, including
manufacturing and customer service in order to ensure reliability of the
positioning from the consumer’s side. Using strong product positioning is a key
component to the success of the Marketing Strategy and to meeting overall
corporate objectives.

3.2 Brand Positioning 

Having your brand relevant to
the target market is very important. Brand positioning is when you are serving
a need or want that your target market is aware of. If the product or service
needs solves a problem that the target market is not aware of the business or
company would need to educate them and show them the problem so that it can get
fixed. Positioning
for your market. Brand positioning is defined as the conceptual place you want to
own in the target consumer’s mind. You can easily draw your own market
positioning chart by identifying two important factors and positioning product
offerings around them. A brand’s position is the set of perceptions,
impressions, ideas and feelings that consumers have for the product compared
with challenging products. Marketers plan positions that give their products
the greatest advantage in selected target markets, and they design marketing
mixes to create these planned positions.( See Appendix 3) This is important
when setting your own business having a perceptional map ready you can see what
type of things you wil be targeting different consumers.

In planning their
positioning, marketers often prepare perceptual maps that show consumer
perceptions of their brand versus competing brands on attributes that are
important to the consumer, whether functional or symbolic.

3.3 Brand Loyalty

Having a brand positioning and also a market
decision it is very important to fix the decision with the overall message.
Having a strong brand positioning are the one with the single focused message,
one that’s easily adjust by the market. If the brand message is not been
promoted properly the message becomes weak, and much less effective. Having a
loyal customer base can help a business push past its competitors and give it
the competitive advantage it needs to succeed in the marketplace.

Companies with strong brand loyalty will see
customers frequently buy the products or services, regardless of changes in
price or convenience.

Having higher sales than those without brand
loyalty, companies that have successfully established a loyal following can
enjoy a growing customer base as well. Loyal customers have the potential to
turn into open advocates and brand ambassadors for a company. Satisfaction with
a business will drive them to spread brand awareness and refer new customers,
effectively providing a company with costless advertising.

4.0 Marketing Mix

The marketing mix is one of
the most famous marketing terms. The marketing mix is the tactical or
operational part of a marketing plan. Marketing Mix are the set of tools that a
company uses to check its marketing objectives in the target market they are
known as the 4ps in marketing they are Product, Price, Promotion and also
Place.

Product is all about the
variety the quality and design of the brand the packaging the design and also
the features all customers look at the product first if the item is likable
they have an interest at looking more in to it. “Product means the goods-and-services combination the company
offers to the target market.” (Kotler and Armstrong (2010).

Price is about is all about
the discounts the allowance the payment period and also the credit terms. Price
is the amount the consumer must exchange to receive the offering. (Solomon et
al (2009).

Promotion is the advertising
the PR the sales force and the product promotion. Place is the location,
transport, assortments. “Promotion includes all of the activities marketers
undertake to inform consumers about their products and to encourage potential
customers to buy these products.” (Solomon et al (2009).9

5.0
Kotler’s Five Product Level model provides businesses with a recognized method for organizing the
product portfolio to target various customer segments. This enables them to
analyses product and customer profitability (sales and costs) in a structured
way.10 “According to Philip Kotler, who is an
economist and a marketing guru, a product is more than a tangible ‘thing’.11(Kotler)
A product meets the needs of a consumer and in count to a real value
this product also has an abstract value.

5.1. Core Product

This is
the basic product and the focus is on the purpose for which the product is
intended. For example, an umbrella will protect you from the rain.

5.2. Generic Product

This
signifies all the qualities of the product. For a umbrella it is about how the
material and shape of the product is.

5.3. Expected Product

This is
about all features the consumer expects to get when they purchase a product. So
the umbrella it should protect them from the rain it should be strong for windy
days not too heavy.

5.4. Augmented Product

This is
all about the additional factors which sets the product apart from the
competition. And this mainly involves brand identity and image. Is umbrella in
style, does the color stand out But also factors like service, warranty and
good value for money play a major role in this.

Moreover,
in the marketing of a product, there are three distinct levels, the third of
which is the augmented aspect. The first two levels include the core benefit
and the actual product. The core customer benefit describes the value a product
offers to consumers.( Appendix 4)

New
Product Development (NPD) will take in to account the consumer’s preference for
benefits over features by considering research into their needs. NPD delivers
products which offer benefits at the core, actual and augmented levels.

5.5. Potential Product

This is
about expansions and transformations that the product may undergo in the
future.

The competition between all businesses mainly focuses on the
individualism of the augmented product. “Competition is determined not so much
by what companies produce, but by what they add to their product in the form of
packaging, services, advertising, advice, delivery (financing) arrangements and
other things that can be of value to consumers”.12
(Kotler) All five levels of the products add value for the customer. The more
production companies make at all levels the more they have a chance to be
unique.

6.0 BCG Model

In 1968 Bruce Henderson
created this BCG Chart to help all organisations with the task on helping them
to analyse their product line or portfolio. This Model helps to assess the
products on two dimensions. The first dimension focuses on the products general
growth within the market. The second dimension measures the entire products market
share to the largest competitor in the industry. Analysing products in this way
provides a useful insight into the likely opportunities and problems with a
particular product. Products are classified into four distinct groups, Stars,
Cash Cows, Problem Child and Dog.

Stars (high share and high growth)

Star products all have rapid
growth and dominant market share. This means that star products can be seen as
market leading products. These products will need a lot of investment to retain
their position, to support further growth as well as to maintain its lead over
competing products.

Cash Cows (high share, low growth)

Cash cows don’t need the
same level of support as before. This is due to less competitive pressures with
a low growth market and they usually enjoy a dominant position that has been
generated from economies of scale.

Dogs (low share, low growth)

Product classified as dogs
always have a weak market share in a low growth market. These products are very
likely making a loss or a very low profit at best. These products can be a big
drain on management time and resources.

Problem Child (low share, high growth)

These products are in a high
growth market but do not seem to have a high share of the market. The could be
reason for this such as a very new product to the market

A completed matrix can be
used to assess the strength of your organization and its product portfolio.
Organizations would ideally like to have a good mix of cash cows and stars.13

7.0 SWOT Analysis

Including a SWOT analysis
within a business is very important as this allows the business to see what the
strong a weak points are. This can make a business strong if it has been added,
and it can help to face all the threats in the market plac.

S.W.O.T. stands for
Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an
organized list of the business greatest strengths, weakness, opportunities and
threats. All strengths and weakness are all internal to the company they can
all change over time. Opportunities and threats are external like supplier’s
competitors and price.

To get the most complete,
objective results, a SWOT analysis is best shown by a group of people with
different viewpoints and rewards in the company. Management, sales, customer
service, and even customers can all contribute effective insight. Moreover, the
SWOT analysis process is an opportunity to bring your team together and
encourage their input in and devotion to company’s resulting strategy.

After SWOT analysis the Tows
analysis has to be done once the SWOT results, have been done then the business
can develop all the short term and also the long term strategies for the
business.

This is called a TOWS
analysis, looking at the strengths identified, and then come up with ways to
use those strengths to maximize the opportunities Then, look at how those same
strengths can be used to minimize the threats identified (these are
strength-threats strategies). Continuing this process, use the opportunities you
identified to develop strategies that will minimize the weaknesses
(weakness-opportunity strategies) or avoid the threats (weakness-threats
strategies). A
SWOT analysis is often created before a business is been introduced .When
creating the analysis, people are asked to pool their individual and shared
knowledge and experience. The more relaxed, friendly and constructive the
setting, the more truthful, comprehensive, insightful, and useful your analysis
will be. So getting all the information for your idea before introducing it to
the public is very important.

8.0 Porters Generic
Strategy

Michael Porter, an economic
researcher, examined competitive behaviors that include a successful business.
In the early 1980s, he set out to uncover the ways companies maintain long-term
advantages over their competitors. Over the work then he created a Porters
Generic Strategy three connected concepts that many organizations use to
develop key operating procedures. Understanding the ins and outs of Porter’s
techniques will offer growing entrepreneurs insight most business models.14

A firm’s position within the
industry decides whether the firm’s profitability is above or even below the
industry average. There are two basic type of competitive advantage a firm can
own they are Low cost or differentiation. The two basic types of competitive
advantage combined with the scope of activities for which a firm seeks to
achieve them, lead to three generic strategies for achieving above average
performance in an industry: cost leadership, differentiation, and focus. The
focus strategy has two variants, cost focus and differentiation focus.15

Cost Leadership is when a
firm sets out to become the low cost producer in its industry. A low cost
producer must find and exploit all sources of cost advantage. if a firm can
achieve and sustain overall cost leadership, then it will be an above average
performer in its industry, provided it can command prices at or near the
industry average.

Differentiation strategy the
business seeks to be unique in its industry along some dimensions that are
widely appreciated by the consumers. It selects one or more qualities that many
buyers in an industry see as important.

Focus The generic strategy of focus rests on the choice of a
narrow competitive scope within an industry. The focuser selects a segment or
group of segments in the industry and tailors its strategy to serving them to
the exclusion of others.

In cost
focus a firm seeks a cost advantage in its target segment, while in (b)
differentiation focus a firm seeks differentiation in its target segment. Both
variants of the focus strategy rest on differences between a focuser’s target
segment and other segments in the industry.

Sometimes some business fall
in the middle of the generic strategy the differentiation and also the cost
leadership, this happens when company don’t offer the high value for money and
individual product or service that you get from a differentiated business. So
focusing on this issue is very important when coming up with a business plan
all these issues have to sorted and looked over with.

1 https://www.huffingtonpost.com/isabel-rimanoczy-edd-/what-is-the-purpose-of-bu_b_7100126.html

 

2
https://www.theguardian.com/small-business-network/2015/jul/31/six-ways-become-entreprenuer-business-idea

3 (Contributor, 2018)

4 http://www.businessnewsdaily.com/4161-definition-business-success.html

 

5 smallbusiness.chron.com. N.p., n.d. Web. 10 Jan. 2018.

.

6 smallbusiness.chron.com.
http://smallbusiness.chron.com/business-success-definition-3254.html (accessed
January 10, 2018).

7 (Anthony et.al 1972).

8 http://smallbusiness.chron.com/business-success-definition-3254.html

Why is Your Brand Positioning Important?

 

9 http://www.marketingteacher.com/marketing-mix/

 

10 https://www.cgma.org/resources/tools/cost-transformation-model/kotlers-five-product-level-model.html

Five Product Levels by Philip Kotler

 

11

12 2.Kotler, P. (1967). Marketing Management: Analysis, Planning and
Control. Prentice Hall.

13 https://www.professionalacademy.com/blogs-and-advice/marketing-theories—boston-consulting-group-matrix

Nigel Piercy,
William Giles, (1989) “Making SWOT Analysis Work”, Marketing
Intelligence & Planning, Vol. 7 Issue: 5/6, pp.5-7,

David, F.
(1993). Strategic Management, 4th Ed. New York, NY: Macmillan Publishing
Company.

 

14 http://www.capsim.com/blog/an-introduction-to-porters-generic-strategies/

 

15 Porter, Michael E., “Competitive Advantage”. 1985, Ch. 1,
pp 11-15. The Free Press. New York.