COURSE WORKBOOK FOR

Principles of Business
LEVEL3 DIPLOMA IN BUSINESS ADMINISTRATION

LEARNING OUTCOMES
1. Understand business markets
2. Understand business innovationvand growth
3. Understand financial management
4. Understand business budgeting
5. Understand sales and marketing

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HOW TO USE THIS WORKBOOK?

• Read each question carefully and highlight key words such as analyse, describe, discuss, explain, identify,
justify, and recommend with reasons and state. Please refer to the ‘Glossary of Key Words’ below
• There is not always a single correct answer for a question and marks will be awarded for all valid responses
• Penalties for contravention of the rules relating to plagiarism and collaboration - Please refer to college’s
plagiarism policy provided in the student handbook

CONTENTS
Charecteristics of market-------------------------------------------------------- Page 4

Business innovation--------------------------------------------------------------- Page 7 - 8

Financial Management----------------------------------------------------------- Page 11

Managing budget----------------------------------------------------------------- Page 12

Sales & Marketing------------------------------------------------------------------Page 15 - 17

LEARNER DECLARATION
FULL NAME
STUDENT ID BATCH

I declare that this assignment is my own work and that I have correctly acknowledged the work of others

SIGNATURE DATE
Page 3

GLOSSARY OF TERMS
Meaning Example

Analyse
Separate information into
components and identify their
characteristics.
Discuss the pros and cons
(advantages and
disadvantages) of a topic or
argument and make reasoned
comment.
A chair is used for sitting on. It can be used for standing on to reach
something but its most common purpose is to be sat on. It normally
comprises a seat; a backrest and is supported by legs.
Most chairs have four legs spaced to give stability to the chair. Chairs can
have three legs, again it is the positioning of the legs under the seat which
provides the stability and makes a chair fit for purpose.
Chairs can be made in many different styles and use a variety of materials.
The design and material choice are reflected in the cost of the chair.
Traditionally chairs were made of wood however there is now a vast array
of materials used in chair production such as metal, plastic, rubber and
fabric. The material used will affect the weight of the chair. Chairs are often
used alongside a table, for example whilst eating or working. They are
used to support body
weight in a sitting position. The height of a chair is very important as if it
was too high or too low it would not function at a table and may be
uncomfortable.

The chair I am considering has several strengths. It is made from a material

Evaluate
Make a qualitative judgement
considering different factors
and using available
knowledge / experience /
evidence
which is hardwearing and with maintenance and care this chair could last
me a lifetime. If the chair got marked, chipped or damaged it could be
remedied by me, at home. This would avoid having to find a specialist and
having to travel to or haul the chair a great distance, at great cost. Another
strength the chair has is its design. Because the back rest is moulded to an
adult spine, it is possible to remain sitting on it for hours without feeling any
discomfort.

The main weakness of the chair is its colour. It is made from a light wood
and as a long-term investment this may not compliment the shades and
style of the room, as it develops. Also, there is some intricate design on the
back rest which could make cleaning difficult. This could result in a build-up
of dust which would look unsightly.

A chair is used for sitting on. It normally comprises a seat; a backrest and is
Explain supported by legs. The legs are positioned in such a way to balance the
chair, so that when it is sat upon it does not collapse or become unstable.
To give account of the Chairs can be made in many different styles and use a variety of materials.
purposes or reasons The design and material choice are reflected in the cost of the chair. Chairs
are often used alongside a table, to support body weight at a convenient
height whilst doing something at the table. Chairs can be produced in
different sizes to make them suitable for individuals e.g. a child.
Page 4
CHARECTERESTICS OF MARKETS
What are markets?

A market is a place where people go to buy and sell goods and services. At the most basic level of
an economy, we have markets. A market is simply a situation where people are engaged in buying
and selling goods and services, also called outputs. It does not need to be a physical place and
money does not need to be exchanged. As long as something is given in exchange for something
else, a market exists.

Perfect Competition Imperfect Competition

This type of market is characterised by a large
number of small businesses that sell the
same types of products with the same
characteristics. It's easy for businesses to
enter the market and leave it. Everyone has
all the information and technology needed
to make smart and informed decisions in the
marketplace.
In a perfectly competitive market, businesses
have to compete on price because all the
products are basically the same.
A competitive market means that there are a
large number of buyers and sellers of the
same output. Competitive markets involve
either perfect or imperfect competition.
Imperfect competition is the most common
type of market structure. All real markets are
based on imperfect competition, where one
or more of the conditions for perfect
competition is lacking.
Oligopoly

Oligopoly is a market structure with a few

Monopolistic Competition
Monopolistic competition is a market
structure with many competitors who each
own a small market share and sell a slightly
different good or service. There are no
barriers to entry and exit. In monopolistic
competition, companies set their own prices
and find a way to uniquely distinguish their
product. This product could be of different
quality, from a unique location, marketed
and packaged for a niche, or distributed
differently.
sellers who dominate a single market. The
companies compete by differentiating their
message, product, or service. Barriers to entry
are very high, and each firm can influence the
market by changing price or supply.
A classic example of an oligopoly is Coco Cola
and Pepsi corporation which hold major
market share for the fizzy drinks . These
companies dominate the market with a
standard product, control pricing, and
attempt to market something unique about
the drinks the company provides.

A classic example of monopolistic Monopoly

competition is the fast-food hamburger
industry. Several companies sell burgers,
including McDonald's, Burger King etc. Each
company makes a hamburger differently,
sets a unique price, and markets a slightly
different message.
A monopoly is a market structure with one
seller and multiple buyers. The seller is a price
maker that has created large barriers to enter
the market. (E.g. Luxottica is directly involved
in the production of world’s 80% of eyewear -
http://www.luxottica.com/en/eyewear-brand
s)
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ANSWER SHEET

1.1 Explain the characteristics of different markets?

(Perfect competition - large number of buyers and sellers, no barriers to entry or exit, perfect
information, zero transaction costs; Imperfect competition - incorporates monopolies,
monopolistic competition, oligopoly)
The market is based on the relationship between demand and supply, selling and buying. It
is basically the exchange between the two parts involved in the trade.
Depending on the number of competitors and the degree of product differentiation, we have
the following types of competitors:
Perfect Competition
Imperfect Competition

Perfect competition is that Perfect competition is that no one can influence the market prices.
Anyone can open or close a business, there are zero transaction costs.

The imperfect competition shows the difference in price and variety of products and
services. Imperfect competition developed a few different types - monopoly, oligopoly ad
monopolistic competition.

1.2 Explain the nature of interactions between businesses within a market?

(Monopolies: all consumers will purchase a specific product from one business, the
business will set the price for that product; Monopolistic competition: consumers will
purchase differentiated products that are similar but not identical from different
businesses, businesses will compete to sell their product, demand for the product will
affect the price)

The marketing environment has different types of competition and these are reflected in the
every day aspects of business. The monopoly market is a non-competitive market type
where a company has a monopoly position and all consumers will purchase from them. The
price will be set by the business and everyone will buy from them. In comparison with the
perfect competition, in monopoly there are barriers to entry as no competitor is allowed to
enter. An example is BT- British Telecom, that has no real competition on the
telecommunication market in the UK.

Monopolistic competition, however, appears when the market offer comes from numerous of
companies with similar products, but differentiated, in price and presentation. For example in
car industry, smart phones, clothing, footwear, cosmetics, restaurants. It is not only the price
but the quality of products and services that compete.

Oligopoly represents the market where there are a few big competitors and there is both
competition and collaboration between them. Coca Cola an Pepsi dictate the prices and
have products that represent majority on the market. They follow each other's examples and
changes come from this competition.
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ANSWER SHEET

1.3 Explain how organisation’s goals may be shaped by the market in which it
operates?
(Based on the above market condition, the aim of the organisations vary. In a monopoly,
the organisations’ aim may be to make a profit or maximise the profit. Whereas, in a
monopolistic condition, as the products are highly differentiated and the aim of the
company may be to make their product unique and achieve a competitive advantage.)
The aim of the organisations vary as there are different interaction between them on the
market.
For example, in a monopoly the main goal is the profit, because there is no other competitor
to determine changes. Also, the quality of the products won't change because there is no
need as there is no competition.

On an oligopolistic market, companies that offer a particular product are limited competition
is through price and competition outside the price such as advertisements, services,
products. They also make agreements between them to stay on top.

In monopolistic competition we can see the aim of the company is to make their products
different, unique and have an advantage on the market, in front of the competitors.

1.2 Describe legal obligations of a business?

(Based on the legal identity, the businesses in the UK are divided into corporate and
non-corporate businesses. The non-corporate businesses are sole traders and
partnerships where the owner of the business have unlimited liability. i.e. they are
responsible for any loss made by their business. The corporate businesses are limited
companies (public and private) and have limited liability. i.e. the company is a separate
legal entity from its owners and directors. The difference between a private and public
limited company is; public limited companies can offer shares to public whereas a private
limited company cannot)

Based on the legal identity, the businesses in the UK are divided into corporate and
non-corporate businesses.
The corporate businesses are limited companies - LTD (public and private).
Responsibilities of companies with limited liability are related to company law.
The tax status of limited liability companies is that directors are classified as employees for
corporation tax. They have limited liability and this will be only for the company not as an
individual.
There are private and public limited company which means that public limited companies can
offer shares to public whereas a private limited company cannot. For example Lloyds PLC
can offer shares while a private company cannot.

Non-corporate businesses are the sole trader and partnerships and the owner of the
business has unlimited liability which means they are responsible for any loss of their
business. They will be responsible for annual tax return.
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BUSINESS INNOVATION
Definition

Business innovation is the art of creating, a process of inventing or introducing something new in
the business environment. This may include the development of a new product or service, an
innovative way of delivering a service which improves the efficiency as well as profitability for
business or a unique product or service that makes the company stand out from its competitors.

We often think of innovation today in terms of technology. While it's true that technological
innovations in the recent past have been groundbreaking, innovation can come in many forms. It
can be a creative new teaching method to enhance student engagement. It can be a unique
incentive program to reward high-performing employees, or it can be a process such as lean
methodology, a model which streamlines workflows and eliminates waste to keep costs low while
maintaining quality.

Industry Model of Innovation

Apple transformed the smartphone industry

through a breakthrough technology called
multi touch. This has revolutionised the
whole industry and since then there are
many companies followed the multi touch
technology to innovate their product line
and a new era has begun in
telecommunication arena. Apple still holds a
competitive advantage through the vision of
Steve Jobs and ensuring their software and
hardware is seamlessly integrated to provide
better user experience. This model is called
as industry transformation

Revenue Model of Innovation

Netflix started in 1997 to venture into Video

on Demand (VOD) market and from the
initial ‘rental’ revenue model in 2012 - 2013
Netflix started with the video streaming and
subscription model which provided a new
direction to the business and its profitability.
This is an example of Revenue Model of
innovation.
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BUSINESS INNOVATION
Sources of support and guidance for business innovation

Internally the company may have a marketing department that would complete research in the
market and analyse the sales trends and availbility. Other support and guidance within the
business would come from Directors, Management, Stakeholders, Workshops, Customer Service,
Training and Development and Research and Development departments. Externally the company
could bring in experts in their field, advertising companies, partnerships, networking, trade events,
trade bodies, various industry groups and government.

Benefits of Innovation Risks of Innovation Implications of Innovation

• Improved customer experience
• Improving brend reputation
• Improved products / service
• Business growth / expansion
• Ability to offer unique service
• Develop new markets
• Open niche markets
• Failing to meet quality
• Production costs
• Scheduling
• Resources
• Demand
• Predicted sales
• Return on investment
• Employee training & skills
• Attitude to change
• Perception
• Stakeholders collaboration
• Corporate strategy
• Corporate social responsibility

Process of Product or Service Development

Idea generation
1
Involves brainstorming new ideas

Idea Screening
2 Close evaluation of the idea, Market research and Concept studies to check the feasibility

Concept Development
3
Create a prototypes or models, Test on few customers and get feedback

Market Strategy
4
Derive the 4Ps – Product, Price, Place and Promotion

Feasibility Analysis
Organise private groups to test the product (beta version, model, prototype etc.) and evaluate the user
5 experience. The collected feedback is analysed and then determine if the product in development has
potential to make profit.

Product design and development

6 All the feedback collected from testing stages is integrated into the product development stage and
the prototype is turned into a workable market offering.

Test Marketing
7 Evaluate the whole marketing plan and company validate the whole concept. This helps the
company to understand how well the product may be received by the market before the launch.

Market Entry
8 Product is introduced to the target market. All data previously obtained are used to produce, market
and distribute the product through appropriate channels.
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ANSWER SHEET

2.1 Define business innovation?

(Business innovation: creative process, product or service development, new ways of
increasing business efficiency or improving profitability, successfully exploiting a new idea,
adding value to products, services)
Business innovation is the process of inventing or introducing something new on the market,
like services or products, and this can bring profit to the business and increase the number of
customers, the name of the business will be known and the product will be unique.

2.2 Explain the use of models of business innovation?

(Uses of models of business innovations: Industry model innovation - moving into new
industries or creating new industries, Revenue model innovation - generating revenue
through offering reconfiguration (product/service/value mix) and pricing models),
Enterprise model innovation - changing extended enterprise and networks with
employees, suppliers, customers and others)

Business Innovation is based on three Models:

Industry Model of Innovation, represented by the businesses that brought a revolution into
their industry. For example, Apple brought the touch screen technology and revolutionized
the way the phones are seen and used these days for more than voice call and text
messages. Also, IBM introduced the new era of printing and copy machines, Dell has
introduced the direct customer service in relation to their products.

Revenue model is the innovation type that generates revenue through a reconfiguration of
the business. Netflix is an example because they witched their business from renting movies
to streaming. The revenue comes from the membership fees generated by any account
open.

Horizontal moves are those innovative aspects that make a brand bring new challenges in
different areas. Virgin, for example or Tesco are examples for this. Virgin moved from media
to airlines industry while esco moved from supermarket to bank, insurance or petrol station.

Enterprise model innovation includes:

continuum integration and a good example is Zara where Zara's Fast Fashion model is
supported by a highly integrated business model along
its value chain.

Specialization case: Bharti - created a highly specialized Telco business model by focusing
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ANSWER SHEET

2.3 Identify sources of support and guidance for business innovation?

(Internal sources: market research (primary, secondary), customer focus groups,
workshops, senior management teams, boards of directors, internal stakeholders,
External sources - local enterprise partnerships, Business Networking groups (BNI,
Chambers of Commerce), websites, industry, government (policy, guidance, funding),
trade bodies, Intellectual Property Office, trade events, external stakeholders)
Sources of support and guidance for business innovation can be internal and external.

Internally, any company can have a marketing department reviewing the market and
analyzing the trend. Also,directors, can support and stakeholders. An important role in
support and guidance for innovation is also employees training and skills, their attitude to
change,perception, corporate strategy and corporate
social responsibility.

Externally, the organisation: could bring experts in the field, could involve advertising
companies, think of partnerships. It could also appeal to the government for funding.

2.4 Explain the process of product or service development?

(Idea generation: SWOT analysis, market research); Idea screening: eliminating unsound
concepts, target market; Concept development and testing: intellectual property issues,
product/service features, product/service benefits, consumer reaction to product/service
concept; Business analysis: estimating likely selling price, estimating sales volume,
estimating profitability and break-even point; Beta testing and market testing: production
of physical prototype or mock-up, testing the product; Technical implementation:
estimation of resources required, finalise quality management system, resource
estimation; Review of market performance and product pricing: customer reaction,
impact of the product on existing portfolio)

Developing new products is a process of making a product or service from conception to

market.
The process sets out a series of stages: 1. Brain storming sessions, SWOT, Market
research, customer feedback, competitor analisys.
2. Identify the target market, is idea conceptual? Analys market trends, find out
competitive pressures, projected profit on products.
3. Identify the intellectual property issues, features and benefits, production costs,
condumer reaction.
4. Positional selling prices, estimated sales volume, analyse break even points, market
trends, and market entry strategies.
5. Prototypes, testing and feedback, packaging designs, introduce at trade shows, pilot
studies and distribution channels.
6. Estimate resources requires and cost involved, vreate operations plans, publish
technical data, supplier agreements, logistics plan and have contingency plans.
7. Product launch activities, advertising and promotion, critical path analysis and
distribution pipelines finalised.
8. Analyse customer reaction and customer value, price and demand, production cost
analysis, review forecasted sales volume.
Page 11
FINANCIAL MANAGEMENT
“Importance of financial viability and consequences of poor financial management”

Efficient financial management is key to the business success. Therefore, the finance department in
a company play and important role is the day to day running of the business aa well as in the
overall success of the business. Every business must ensure that projects undertaken are viable and
organisation has the capacity and resources to deliver the project. Financial viability is the ability
of the organisation to continue to achieve its operating objectives and fulfil its long term
goals.Organisations must consider if they have adequate resources and if resources are cost
effective and fit for purpose. They must also analyse the adequacy of staff levels, plant, machinery
and logistics.
Poor financial management can cost money to the company and it can even lead to insolvency or
business being dissolved. In case of sole traders and other non-corporate business, poor financial
management can lead to the debt being carried to owner’s personal assets and the owner of the
business can become bankrupt affecting his or her family.

Various financial terminologies

Accounts: It is a record of all financial transactions of the company and the purpose is to provide
details of organisation’s financial position to potential investors and other stakeholders.

Accruals: Accounts on balance sheet that are liabilities and non-cash-based assets. This account may
include accounts payable, accounts receivable, future tax liabilities, future interest expense etc.

Assets: This may include fixed assets such as machinery, building, land, inventory etc. and intangible
assets may include patents, trademarks, copyright, brand recognition etc.

Balance sheet: Financial statement summarise company’s assets, liabilities, shareholders equity etc.
This portray what company owns and owes.

Break–Even Point: Point at which gains equal losses

Capital: Refers to financial resources available to use

Cash flow: Revenue or expense stream that changes a cash account over a given period

Creditors: A person or a company that give permission to borrow money to pay it back at later stage

Debtors: A person or a company who owes money

Depreciation: a method of allocating the cost of a tangible asset over its useful life

Expenditure: Funds used by a company to buy or upgrade physical assets

Fixed costs: A cost that does not change with an increase or decrease in the amount of goods

Gross profit: money left over from revenues after accounting for the cost of the goods sold

Net profit/Income: Companies total income calculated by taking revenues and adjusting for the cost
of doing business, depreciation, interest, taxes and other expenses
Page 12
MANAGING BUDGET
Managing budget

Budget is used to plan the finances and helps to adapt to the changing business needs. A budget
helps to evaluate an investor’s current and future financial state using the known information and
to predict cash flow, asset values etc.

This process may include;

• Reviewing income and expenditure
• Targets and objectives of the business growth
• Directions and responsibilities (KPIs)
• Support innovation
• Training for staff

Example for managing a departmental budget

Managing budget

To manage budget, you must understand what money is available and how much money has to
be spent in order to maintain the department/business. In order to manage the budget you must
identify your priorities and timescales. You must understand resources you need (extra resources
that may be required in case of unforeseen circumstances) and cccurately record all incomings and
outgoings which will help you analyse and monitor these against the plans.
Page 13
ANSWER SHEET

3.1 Explain the importance of financial viability for an organisation?

(Importance of financial viability: maintain operations, provide adequate resources (staffing,
equipment, plant and machinery, working capital, facilities, administration), determine
solvency, determine profitability, investment and corrective action, cashflow)
Financial viability is extremely important in any business.
Smart decisions can determine the success of a business. to be sure that something is
financially viable simply means to ensure it’s profitable and the business can afford it.
For example, it is not profitable for a company to hire too many employees on the same role
and it is better to use less human resources but to work efficiently. Same thing happens
when we have to use between different devices to purchase. Is it viable move to buy one or
another?
Investment should be analysed very carefully and all the plans must include an amount as a
contingency plan.

3.2 Explain the consequences of poor financial management?

(Consequences of poor financial management: variance against the budget and business
plan, wastage, cashflow problems, insolvency, legal implications, reputation and sales
affected, theft, insolvency, cessation of business operations)

The consequences of poor financial management could have both legal and social
consequences. Wrong decisions will lead to debts.

If the department decides to buy an expensive device without analysing the effeciency and
profitability for the business, this will cost the company more and can be consider an
example of poor financial management. hat’s why it’s vital to carefully think about every
decision you make in business. Legal implication, insolvency and other consequences will
weaken the business and eventually will close it down.
Page 14
ANSWER SHEET

3.3 Explain different financial terminology?

(Financial terminology: income, expenditure, transaction, cashflow, accounts, gross profit,
net profit, capital, debtors, creditors, turnover, profit and loss account, balance sheet, fixed
costs, variable costs, break-even point, tax, VAT, assets, depreciation, investments, accruals,
stock, liabilities, shares)
Accounts: It is a record of all financial transactions of the company and the purpose is to
provide details of organization's - financial position to potential investors and other
stakeholders.
Accruals: Accounts on balance sheet that are liabilities and non-cash-based assets. This
account may include accounts payable, accounts receivable, future tax liabilities, future
interest
expense etc.

Assets: This may include fixed assets such as machinery, building, land, inventory etc. and
intangible assets may include patents, trademarks, copyright, brand recognition etc.
Balance sheet: Financial statement summarise company's assets, liabilities, what company
owns and owes.

Break -Even Point: Point at which gains equal losses

Capital: Refers to financial resources available to use

4.1 Explain the uses of a budget?
Cash flow:(Uses: to control
Revenue income and
or expense expenditure;
stream to establish
that changes a cashnumerical
account overpriorities andperiod
a given targets; to
provide direction and co-ordination; to assign responsibilities; to improve efficiency; to
Creditors:monitor
A personperformance; to inform
or a company management
that give decisions;
permission to money
to borrow plan future activities;
to pay it back at
laterstagesupporting innovation; funding training)

Debtors:
A budgetAhelps
person
theor a company
business who owes
to assess money and future investor's financial position
the current
using known information and making predictions.
Budget controls incomes and expenditure.
Also, budget sets priorities and goals in numerical terms. (total amount).
Budget allocates resources which will be communicated to managers.

4.1 Explain the uses of a budget?

(How to manage a budget: identifying priorities and timescales; negotiating and agreeing
financial resources; accurate recording of income and expenditure; monitoring income
and expenditure against planned activity; taking corrective actions if budgets are not met;
investigate unaccounted variances; updating budgets)
To manage a budget, priorities and timescales need to be identified and and checked if
viable. Also, we need to identify priorities and deadlines, to understand what resources we
need and to keep records of all inputs and outputs.
Having a strategic budgeting plan, an organisation can be sure of the success. Then,
negotiating and accepting financial resources everyone involved in any step of the process
will know how to work towards the achievement keeping within the budget. Corrective actions
will be necessary from time to time and these will be done immediately. Similarly, the budget
will be updated.
 Page 15
SALES & MARKETING

Sources of support and guidance for business innovation

Marketing is the a process that identifies and anticipates customer needs and satisfies those needs
profitably. In the end, marketing's central focus is the end user of a business' product or service.
The Marketing Mix consists of elements that can influence perceptions of customers constructively
towards organisations product and services. Marketing mix in marketing literatures defined as selling
right product, with right price, using right promotion at the right place. Traditionally marketing mix
contains four elements such as; Product, Price, Place and Promotion.

Product Price

The actual offering of the company to its How much customer should pay for the
customers. It can be tangible (goods) or product (Pricing strategy, payment period,
intangible (services) (Brand Name, Quality, discounts, financing, credit terms etc.)
Warranty, Appearance, After Sales Service etc.)

Place Promotion

All the activities performed by the company to All communication and selling activities to
ensure the availability of the products to its persuade people to buy the product
targeted customers (Distribution channels, (Advertising, Sales Promotion, Personal Selling,
Logistics, Inventory, Order processing) Public Relations)
 Page 16
SALES & MARKETING
A Sales Process

Prospecting
1 Sales process include identifying the target market and generating leads through networking,
referrals, social media, direct approach etc

The Approach
2 Next step is to contact those leads through calls, mailing, face to face and create the rapport and
trust

Establish Customer Needs

3 At the next stage a customer need analysis must be conducted to understand and establish the
customer needs

The Presentation
4 Once the needs are clearly understood, the next step is to meet those needs though explanation
and demonstration of the product and its features and benefits

Overcome Objections
5 Overcome any doubts or objections from prospective customers and be open for negotiation if
required

The Close
6 Once the customer is convinced and clear all the questions, close the deal, sign contracts if required
organise the delivery

Follow-up
7 Follow up the customer with a call after the sales and see how they are using the new product,
collect feedbacks and ensure the relationship is maintained

Marketing Sales

• Involves systematic planning which brings
buyer and seller togather
• Focusses on market research, advertising,
sales, public relations and customer service
• Is a long-term process
• It is a transaction between two parties where
exchange of product or service takes place
• Once product is designed based on customer
need, persuades customer to purchase the
product
• Is a short-term process

Relationship between marketing and sales

Both sales and marketing are aimed at increasing the revenue. Although they are two different
functions, both work together to increase the revenue for the company. For example, Marketers
generate the leads and Sales professionals close the deal. Both functions share mutual objective and
therefore, how the objective is achieved must complement each other. Both Marketing and Sales aim
is to increase the sales and gain feedback so that they can use those information to attract more
leads and sales through creative advertising and campaigns.
Page 17
SALES & MARKETING

Features and use of market research

Market research gives business organisations with insight in to information about target market,
products and services, competitors and customers in the target market. Features of market research
include;
• Customer feedback, word of mouth, surveys, questionnaires, recommendations etc.
• the collection data from customers and general public their opinion, views and factual data
• it helps organisations to understand what customers think about the organisation and their
products/service
• It helps organisations to understand the needs and wants of the market

Primary Research Secondary Research

Primary market research is carried out by
organisation itself to collect information or
feedback about the products or services.
This type of research is also called field
research since all the information is collected
from primary sources or in other words it refers
to the collection of first hand data.
Secondary market research makes use of
existing data from secondary sources such as
government statistical reports, newspapers,
magazines, data bases, and internet. The
advantage of doing secondary research is its
low cost and time. However, data from
secondary sources may not conform to the
objectives of current research and may affect
the reliability of analysis.

Value of brand to an organisation

The brand provide an organisation with uniqueness and may lead to competitive advantage. The
name, logo, design, trade mark will reflect the image and culture to the audience market. Therefore
the customer will associate a brand with the company and recognise it for value, quality, service and
benefits.
Page 18
ANSWER SHEET

5.1 Explain the principles of marketing?

(Marketing: a process that identifies and anticipates customer needs and satisfies those needs
profitably. Principles of marketing (marketing mix: the 4 Ps such as Product, Price, Place and
Promotion))
If we think of market as the place where the right product is placed in the right place at the
right price at the right time, we have the definition of the principles of market.
Marketing is a process that identifies and anticipates the needs of customers and works to
meet these needs (ex. selling a product or service at a fair price, using the right promotion in
the right place).

The marketing mix:

Product - current company offer to customers.

Price - how much should the customer pay for the product
Place - where to sell
Promotion - make the product known

These are the 4 main principals of marketing - the 4 Ps.

5.2 Explain a sales process?

(Sales process: Prospecting for sales, the approach, establish customer needs, the
presentation, overcoming objections, the close, follow-up )

Sale is a process involving the interaction between a seller and a buyer.

Professional sales involve a series of seven distinct stages:
1. Prospecting - identifying and qualifying potential clients.
2. The Approach - calling, sending by mail, face to face, and creating the report and trust.
3. Determining Customer Needs - an analysis of customer needs needs to be done to
understand and establish customer needs.
4. Presentation - meeting customer needs by explaining and demonstrating the product and
its features and benefits
5. Overcoming objections - any doubts or objections on the part of potential clients are
overcome and opening negotiations if necessary.
6. Closing - if the customer is convinced and all the questions are clear, the agreement is
concluded, the contracts are signed, the delivery is prepared.
7. Follow-up - follows the customer with a call after sales and checking the use of the new
product, collecting feedback and maintaining the relationship.
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5.3 Explain the features and uses of market research?

(Features: primary and secondary research; customer surveys, questionnaires, comment cards,
word of mouth recommendations; Uses: to measure customer behaviour, buying patterns,
preferences and sales trends, success of product development, brand awareness/reputation)
Market research is important when setting up a business or preparing to sell a product.
If you don’t know the market you’re entering into it’s very likely you won’t find it easy to
compete.
The way to conduct market research. Primary research represents the first hand research
and it covers: customer surveys, questionnaires, recommendations.
This is done to measure customers' needs and behaviours, typology and trends, preferences
and brand awareness in a certain place or age range.

Secondary research is the research done through documentation via written materials,
reports, newspapers, magazines, that are already available to public.

5.4 Explain the value of a brand to an organisation?

(Value of a brand: brand equity, consumer perception, consumer recognition of brand,
consumer relationships, consumer loyalty, differentiation from competitors, trust; market
share, profit margins, prestige, competitive advantage)

The brand makes a business known and it leads to the fame of the business. The value
given by a brand brings recognition from the consumers and also loyalty. It makes the
difference between competitors on a similar market and obviously increases the profit.
For example, Samsung sells its products at a higher price than Huawei but they both have
similar products. Same if you buy from Zara instead of Primark. Sometimes you say that you
pay more because you pay for the brand. This is definitely a competitive advantage.
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5.5 Explain the relationship between sales and marketing?

(Positive relationships between sales and marketing: information sharing, joint planning,
alignment, common goals, trust and respect between functions and activities, open
communication to achieve common agendas, consultation on important topics, teamwork,
shared Client Relationship Management functions.

Potential areas of conflict between sales and marketing: cultural (differing mind-sets leading
to misunderstanding), economic (profit margin vs. ease of sale), informational
(communication, physical separation), organisational (responsibility, decision making))

Marketing and sales communicate to each other and most of the times they both have the
same aim, to increase revenue.

For example, marketing department generates potential customers while and sales
professionals complete the transaction.
Both aim to increase sales and get feedback from potential clients, so that they can use this
information to attract more potential customers and sales through
advertising and creative campaigns.

Coca Cola and Pepsi have always launched campaigns that involve more just a simple
informational ad but real artistic pieces.

In a successful company the two departments work together and while marketing helps
generate sales leads then sales team comes to execute the deal.

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