TOPIC 7: THE SUPRASTRUCTURE IN THE
ENVIRONMENT OF BUSINESS
Business and Environment – Business
forming and transforming the environment and
the environment forming and transforming the
business.
3 Elements of External Environment:
1. Environmental Suprastructures
2. Environmental Infrastructure
3. External Publics
The Suprastructures
1. Political Suprastructures
2. Economic Suprastructures
3. Socio-cultural Suprastructures
4. Technological Suprastructures
The Political Environment
The political environment consists of ideological
forces and factors surrounding and affecting the
business process.
The Political Ideology
Ideology is a body of socio-political concepts
systematically theorized and expressed in a
particular manner of thinking characteristics of a
society.
Any attempts at a political analysis should be
rooted in a deep understanding of the ideology
of the society in which the politics under analysis
exists.
Politics is a direct expression of the ideology.
The Political Process
The process of the formulation and
administration of public policy usually by
interaction between social groups and political
institutions or between political leadership and
public opinion.
The Political Climate
Varies with the personal philosophies and
aspirations of the political leaders, political
pressure groups, international political and
economic pressures and the country’s dominant
opinion-making mechanism. Example: the
media, partisan groups, ideological information
systems, and the business sector.
The Government in Political Environment
Government as a Structure
Government is the totality of the government
set-up composed of all branches, subdivision,
instrumentalities, and agencies of the
government, including government-owned or
controlled corporations with original charters.
The system of authority and domination is a
structure of hierarchical relationships, with a
central power from where authority emanates
and goes down the line through lower power
centers. It is called bureaucracy.
Government as a Process
The stability of the bureaucracy derives from the
rule of law, and its dynamism derives from the
rule of men. It is stable because of the rigidity of
the rules, and dynamic because of the flexibility
of change.
Laws and policies prescribe what should be
done by whom and how, thus setting restrictions
on the operations of the bureaucracy.
3 Basic Elements of Government Dynamism
1. Bureaucracy
2. Politics
3. Administration
POLITICS: A MATERIAL CAUSE OF PUBLIC
ADMINISTRATION
POLITICS
As a function of government, politics is such that
its practice is far from simple, just what politics
is, but creates both concepts and
misconceptions about its notion and its
operations. Examples are the concepts (or
misconception of) “dirty politics“, “too much
politics” referring to government.
2 Aspects of the Concept of Politics
Ideological Politics – (sometimes also referred
to as modal politics), being the direct
expression of the society’s ideology, is the mode
of government, or the operations of the
government as a system. It may be defined as
the science and art of civil government; or, as
the body of ideological principles operating in
the life of civil government.
Partisan Politics – refers to the practices of
politicians and of their political parties. It gives
the human touch to the life of the government,
for better or for worse.
Government and the Business Environment
Government – is the largest single interest
group in the business environment.
Business relates in 3 Principal Ways
1. Mutual Control
The influence of government reaches out to
every aspects of national life, including that
business. A sound business system can never
truly be possible without the government playing
its role as a control agent.
Government control over business is
conditioned by the philosophy underlying the
sovereign rights of the state, specifically its
police power by virtue of which, the government
regulates the practice of trade particularly those
directly related to the common good: public
order, public welfare, consumer protection, fair
trade, and the generations of revenue.
3 Ways by which the Government may
Control Business
1. By legislation – that is, by promulgating laws
and guidelines which business is required to
follow in its organization and its operations.
2. Administrative control – that is, monitoring the
operations; and activities of business and
enforcing the implementation of laws and rules.
3. By ownership – that is, by taking over and
operating certain industries or services which
cannot be effectively left to the private sector.
2. Mutual Support
Government does not and cannot leave
business to its own devices. Not the business
per se or the businessmen themselves, as they
were considered in ancient times, are naturally
irresponsible, but that the search for profit and
the spirit of freedom can, if uncontrolled, lead to
abuses.
Government support business in any
following ways:
1. By creating and maintaining a climate
favorable to business, for example good order in
society, efficient infrastructure, sympathetic
attitude, and others;
2. By providing incentives to pioneering and
distressed industries in order that they may have
better chances of survival and growth; and
3. By protecting business from undue
competition from both local and foreign sources.
The Economic Environment
The economic environment is a natural
consequence of man’s need to complete
himself, as well as the need among men to
complement one another towards the perfection
of their human existence.
For business in particular, the economic
environment is the focus of the environment
concern for the description and analysis of the
production and consumption of goods and
services, as well as the distribution of scarce
resources among unlimited demands.
The impact of these interplaying factors
constitutes the economic environment or
economic suprastructure where business
plays 2 Major Fields:
1. First is the field of microeconomics where the
price theory explains how the interplay of supply
and demand in competitive markets creates a
multitude of individual prices, wage rates, profit
margins and rental changes.
2. The second playing field in the economic
environment is macroeconomics which provides
business with a modern explanation of national
income and employment, and where, among
other things, persistent depression and mass
unemployment are attributed to the concept of
aggregate demand, that is, to the total spending
of consumers, business investors and
government bodies.
The Social Environment
Society is a natural consequence of men’s need
for completion and complementation. This is a
process created out of the differences in men’s
skills, knowledge and attitudes, as well as in the
levels of their physical and mental fitness.
A basic model of social stratification to
which business should be sensitive would
be:
● Upper class
● Middle class
● Lower class
Elements of Social Environment
● The family
● The school
● The church
● Community organization
The Cultural Environment
A cultural environment is a set of beliefs,
practices, customs and behaviors that are found
to be common to everyone that is living within a
certain population. Cultural environments shape
the way that every person develops, influencing
ideologies and
personalities. Cultural environments are
determined by the culmination of many different
aspects of culture that influence personal
choices and behaviors.
Religious beliefs are an important building block
of a specific cultural environment.
Family and the relationship within the family are
additional factors that determine a cultural
environment. Many cultures are structured
around families, while others promote
individuality and self-sustainability. Like religion
and family, language is the third most important
element of a cultural environment.
The Technological Environment
Is part of the company’s external environment
related to developments and changes in
technology. Further, the word ‘technology’ is
usually associated with technique and
equipment. Their change raises threats and
opportunities for the company. The impact of the
technological environment on companies
Technological developments affect all aspects of
business, not only in products and services. In
production, technology can increase total output
through: Increased productivity, the effect of
technological change on the organization as a
whole can affect: Product sales technique. For
example, more retailers are turning online than
physical stores. These changes certainly have a
significant impact on their business strategy.
The Basic of Technology
Information Technology technology is great.
Information technology influence on all aspects
of life. Is the use of computers to store and
process facts and figures into a useful,
organized form. “Data” is the raw Material:
numbers and facts.” Information” is the raw way
material is organized in a useful way.
Introduction of Information Technology
The term information technology or IT refers to
the tyre industry and in actuality, information
technology is the use of computers and
soft-managed information.
History of Technology
The history has been organized using these
widely recognized generations as mileposts.
● The Mechanical Era (1623-19451)
● First Generations Electronic Computers
(1937-1953)
● Second Generation (1954-1962)
● Third Generation (1954-1972)
● Fourth Generation (1972-1984)
● Fifth Generation (1984-1990)
● Sixth Generation (1990- to date)
The Elements of Technology
Modern technologies always make use of a
large variety of ingredients. For Li-ion batteries,
besides lithium, which is extracted from salt
lakes in countries like Bolivia or Chile, cobalt is
an important element. Here, the political stability
of the source of the ore in the Democratic
Republic of the Congo and Zambia is of some
concern.
The Technology of Concept
Technology can be most broadly defined as the
entities, both material and immaterial, created by
the application of mental and physical effort in
order to achieve some value. In this usage,
technology refers to tools and machines that
may be used to solve real-world problems.
Technology is the set of knowledge, skills,
experience and techniques through which
humans change, transform and use our
environment in order to create tools, machines,
products and services that meet our needs and
desires. Etymologically the word comes from the
Greek tekne (technical, art, skill) and logos
(knowledge).
6 Types of Technology
1. Construction technology
2. Manufacturing technology
3. Medical technology
4. Energy power technology
5. Transportation technology
6. Agriculture and biotechnology
The Technology of Process
▪ Process Technology
Precision process technology [3,8,9] is clearly a
vital part of the requirements for controlled
precision products. At our Bradford Centre for
Micro and Nano Moulding, we have an
extensively equipped laboratory with five
micromoulding machines, two mini moulding
machines and one large scale thin-walled
moulding machine, plus the novel in-line
compounding facility. This is part of a
programme associated with miniaturization of
processing, which also includes very small scale
extrusion, and development of sensors and
in-process measurements, and
characterisation techniques for products. A
range of research programmes are in place,
including exploration of bioresorbable materials
for biomedical uses, medical technology
devices, novel materials development, molecular
feature rheology, and precision tooling
developments..
The Technology Tools
Technology tools refers to software, primarily,
that can be used to develop or support online
course content. This could include blogs, wikis,
authoring tools such as Articulate or Captivate,
and Web 2.0 tools available through the internet.
Software that can be used to develop or support
online course content and increase
learning abilities in a virtual manner.
Digital networking facilitates information at high
and reliable speed and capacity. Tools that
students and teachers utilize to facilitate learning
in the virtual, hybrid, or traditional classroom
environment.
Resources to equip people with the ability to
search out ideas for personal and professional
advancement via networked computers.
Chalk, posters, and overhead projectors were
once “technology;” today we think of technology
only as computer related tools, yet technology
includes all teaching tools that enhance the
delivery of instruction and these tools have
changed and will change over time.
TOPIC 9: PRODUCTION (PRINCIPLES AND
PERSPECTIVE)
PRINCIPLES OF BUSINESS
1. Find Problem.
Identify a problem. Problems can be something
encountered organically in a company, but it can
also not be as clear or pressing.
2. Clarify Problem.
The how stage. Clarification will help in breaking
down the problem to the most essential
components. Moreover, it helps in structuring
and framing the solutions at the end.When you
clarify a problem, you will want to know exactly
what the problem is and how it came to be.
3. Break down Problems
The why Stage. Breaking the problem down
allows you to look at the fundamental elements
of the problem. Elements that if taken apart will
give you a better idea of how to work things out.
4. Solve Problems
Now that you know what the problem is, how it
affects the company, why the problem even
exists and what part is exactly responsible for it,
it is time to solve the problem.
5. Question the question.
Playing devil’s advocate. The last part is
reviewing the total process you have gone
through. You can question any of the previous
phases and see if you have covered things that
have not occurred before. During this stage, it is
important to question the process, problem,
clarification, break down and solution. If
improvements need to be made, reiterate. If
everything seems waterproof, you can conclude
and execute.

PRODUCTION OF BUSINESS PHILOSOPHY
1. Identify Value-oriented parts of your
company.
Your business philosophy should overlap with
other value-oriented parts of your business,
positioning its identity in the minds of those
within and outside the organization. Start by
reviewing your company's code of ethics about
the values your employees and executives
maintain when they work.
2. Review Business Philosophy.
It can be helpful to review examples of business
philosophies. This can help you understand the
principles that other companies are using and
explore which are most appropriate for your
own. You can also spend some time
brainstorming words and concepts that you want
people to associate with the organization. You
can even ask for input from your clients to
understand how they see your company.
3. Keep it simple.
For your business philosophy to be actionable
and something you can build into your business,
you need to keep it simple. Consider keeping
the number of tenants within your philosophy to
three. For example, your business philosophy
may include providing exceptional customer
service, changing the industry through
innovation and having fun.
Tips for Creating a Business Philosophy
▪ Ask Philosophical questions. One way you
can identify the tenets on which you want to
base your business philosophy is to ask
philosophical questions.
▪ Ask for unaffiliated feedback. Consider
asking for feedback from professionals who are
unaffiliated with your business. They may be
able to offer critical insight and
recommendations.
▪ Unify your staff. As you create your
philosophy, specifically think of guiding principles
that would unite your staff, strengthening their
teamwork and improving their overall
productivity.
▪ Create Story. Consider creating a narration
that defines your business's philosophy. For
example, ask yourself what caused you to
create your business originally and what ideas
you want to hold true for your brand.
▪ Examine your unique selling point. Your
business philosophy should be consistent,
something that each member of your team can
believe in and stand behind. Think about what
makes your business different from others and
how that fits into your business philosophy.
Principles of Production Management
1. Shorter set-up times.
By their nature, all set-up processes result in
waste; they tie up labor and equipment withouT
adding value. Training, improved efficiency and
giving workers accountability for their own set-
ups allowed them to slash their set-up times.
2. Small-scale production
Cutting the cost and time spent on set-ups
allows a company to produce goods in smaller
batches and according to demand. This results
in lower set-up, capital and energy costs.
3. Empowering employees
Dividing a workforce into small teams and giving
them accountability for housekeeping and
various other tasks has been shown to improve
efficiency. Teams are assigned leaders, and the
workers within those teams are trained on
maintenance issues - allowing them to deal with
delays in the production process immediately.
4. Equipment Maintenance
Workers on the line are best placed to deal with
mechanical breakdowns and subsequent
repairs. They can react to issues quickly and
often without supervision, which allows the
production process to restart far more quickly
after a shut-down.
5. Pull Production
In a bid to minimize inventory holding costs and
production lead times, Toyota pioneered a
system whereby the quantity of materials, labor
and energy expended at every stage of the
process was solely reliant on the demand for
products from the next stage of production.
Often referred to as Just in Time (JIT), this
principle was aimed at producing goods
according solely to the demand for them at any
given time, thus eliminating unnecessary costs.
6. Supplier Involvement
Demonstrated that treating component and raw
material suppliers as integral components of
their own production process led to a number of
benefits. Suppliers were given training in Toyota
processes, machinery, inventory systems and
set-up procedures. As a result, their suppliers
were
able to react positively and swiftly when
problems occurred.
Lean Manufacturing Principle.
A production process based on an ideology of
maximizing productivity while simultaneously
minimizing waste within a manufacturing
operation. The lean principle sees waste as
anything that doesn’t add value that the
customers are willing to pay for.
1. Value: Value is determined from the
perspective of the customer and relates to how
much they are willing to pay for products or
services.
2. Map the Value Stream: This principle
involves analysing the materials and other
resources required to produce a product or
service with the aim of identifying waste and
improvements. The value stream covers the
entire lifecycle of a product, from raw materials
to disposal.
3. Create Flow: Creating flow is about removing
functional barriers to improve lead times. This
ensures that processes flow smoothly and can
be undertaken with minimal delay or other
waste.
4. Establish a Pull System: A pull system
works by only commencing work when there is
demand. This is the opposite of push systems,
which are used in manufacturing resource
planning (MRP) systems. Push systems
determine inventories in advance with
production set to meet these sales or production
forecasts.
5. Perfection: The pursuit of perfection via
continued process improvements is also Lean
manufacturing requires ongoing assessment
and improvement of processes and procedures
to continually eliminate waste in an effort to find
the perfect system for the value stream.
Business Perspective
The Business Perspective defines the business
level view of the system and broadens your
horizon on how you view and tackle important
challenges. This requires a tactically-formulated
approach towards your business model
considering lots of possibilities with
predetermined objectives and how decisions
affect your overall performance and growth.
Key Elements of Perspectives
• Business Entities represent deliverables,
resources, and significant pieces of information
that are used or produced.
• Business Activities show how business
processes, tasks, business entities and business
events and rules work together to perform a
business activity. Events and Rules are captured
in the Business Process Model.
• Business Events represent important
occurrences in the daily operation of the
business that potentially trigger business
processes.
• Business Rules are declarations of policies or
conditions that must be satisfied during the
execution of business activities.
• Business Locations partition the system into
inter-dependent areas of responsibilities based
upon a conceptual view of the system's
conceptual geography. They encapsulate their
resources, and provide services through
well-defined interfaces, to other parts of the
system.
• Business Roles are the active units of a
business, they represent an abstraction of a
human interface (GUI) or software interface.
Logical Perspective
The Logical Perspective is the evolution of the
Business Perspective with choices (and
associated rationale) for the
transformation/realization. Some refactoring of
Business Entities, Activities, Locations and
Processes may be done, adding more detail (as
needed) to describe the system at the logical
level. Computational aspects are also added.
TOPIC 10: MARKETING (IMPERATIVES AND
PRACTICES)
What Is Marketing?
Marketing refers to activities a company
undertakes to promote the buying or selling of a
product or service. Marketing includes
advertising, selling, and delivering products to
consumers or other businesses. Some
marketing is done by affiliates on behalf of a
company.
Understanding Marketing
Marketing as a discipline involves all the actions
a company undertakes to draw in customers and
maintain relationships with them. Networking
with potential or past clients is part of the work
too, and may include writing thank you emails,
playing golf with prospective clients, returning
calls and emails quickly, and meeting with clients
for coffee or a meal. At its most basic level,
marketing seeks to match a company’s products
and services to customers who want access to
those products. Matching products to customers
ultimately ensures profitability.
The 4 P’s of Marketing
PRODUCT, PRICE, PLACE, and PROMOTION
are the Four Ps of marketing. The Four Ps
collectively make up the essential mix a
company needs to market a product or service.
Neil Borden popularized the idea of the
marketing mix and the concept of the Four Ps in
the 1950s.
PRODUCT
Product refers to an item or items the business
plans to offer to customers.
PRICE
Price refers to how much the company will sell
the product for.
PLACE
Place refers to the distribution of the product.
PROMOTION
Promotion, the fourth P, is the integrated
marketing communications campaign.
Promotion includes a variety of activities such as
advertising, selling, sales promotions, public
relations, direct marketing, sponsorship, and
guerrilla marketing.
IMPERATIVES
1. Become a Customer-Led Organization
Experience activation requires an organizational
structure that centers around providing the best
possible customer experience, ensuring critical
journey moments are linked.
2. Employ Data As the Lifeblood for
Customer Insights
Data must be captured, curated, centralized,
enriched, and deployed to truly create,
understand, and respond to a single view of the
customer.
3. Replace Vanity Metrics with Performance
Metrics
Siloed channel metrics and weak proxy or vanity
metrics are increasingly antiquated.
4. Align Marketing Budgets with the
Customer Journey
It’s essential to align marketing budgets around
paid, earned, and owned marketing activity so
all customer touch points are seamless and
coordinated.
5. Use Analytics to Inform Content and
Marketing Strategies
Analytics can do more than drive better cohort
segmentation. Insights should guide both
content creation and the overall distribution
elements of the marketing plan.
6. Develop Customer Listening Capabilities
The most influential companies leverage social
media to listen to their customers.
7. Assess the Customer Experience
Technology Stack
Regularly evaluate the company’s marketing
technology stack to ensure fit- for-purpose and
that it is well connected across all other critical
front office(marketing, sales, and support)
customer-relevant platforms, including CRM,
commerce, and even inventory and order
management systems.
8. Optimize Nonstop Learning Company
Wide
All customer-facing teams should be
continuously testing and learning, creating a
cycle to achieve ongoing improvement and agile
deployment.
PRACTICES
1. FIND OUT WHERE YOUR CUSTOMERS
ARE
Choosing which platforms to focus on is
marketing strategy best practices 101.
Customers prioritize different social media
platforms; factors like age, demographic and
interests play heavily into what will catch your
customers’ eyes – and where.
2. BE AVAILABLE
Any marketing practices you engage in – no
matter how successful – will not produce results
if your team is not available. You need to be
there for your customers when they need you.
3. RESPOND QUICKLY AND WITH MEANING
Everything is immediate now and your marketing
strategy best practices must reflect this.
Customers expect prompt interactions. A quick
reply is valuable only when you fully understand
a customer’s questions, intentions and needs.
4. UNDERSTAND THEIR GOALS AND HELP
THEM MAKE INFORMED
DECISIONS
Social media channels provide the opportunity to
ask your prospects about what they really want
from your product or service.
5. COLLABORATE WITH YOUR CUSTOMERS
TO CREATE VALUE
You’re not just marketing a product – you’re
partnering with your customers. Successful
businesses are more collaborative now than
ever before, adding value that helps clients
realize their goals.
6. ADD A PERSONAL TOUCH
You probably remember every detail from your
company’s earliest days – including the face of
your very first customer. Are your current
customers as memorable? Current marketing
strategy best practices state that individualized
relationships now excel routine transactions.
7. BUILD CREDIBILITY
Social media marketing practices won’t work if
your customer base doesn’t trust you. To build
credibility, you need to share information that
establishes you as a thought leader in your
industry.
8. MEASURE AND REFINE
What’s working and not working with your social
media strategy? Marketing best practices
include tools to measure your efforts and
determine which platform is driving the most
traffic and engagement.
TOPIC 11: THE BUSINESS MOVERS (THE
HUMAN FACTORS OF BUSINESS)
The business movers are the human elements
in the business process who keep business
going and answering the issues of who does
what in the business process.
Management and labor constitute the human
elements of the organization’s internal
environment. At the management level are the
owners, the managers, the governing board and
those involved in the administration of the
company.
Being active elements, they constitute the agent
efficient cause of business either as internal
publics, i.e., the businessmen and their
workers; or as external publics, e.g., the
customers, the competitors, the suppliers, the
community (family, school, church and
organizations), and the government.
The Internal Publics
Management and labor constitute the human
elements of the organization’s internal
environment.
The Owners as Business Movers
The owners are the individuals who provide the
capital of the business organizations who may or
may not be part of management.
The Managers as Business Movers
As an internal public, management is viewed as
a structure composed of people manning the
various positions of the organization.
The Producers as Business Movers
Producers as business movers are all those
people who are engaged in the production of
goods and services.
The Marketers as Business Movers
The marketers as business movers are the
people who sell and distribute the produced
goods to the market.
The External Publics
The community is considered a business mover
because it is where the business firm is and
where it operates.
The Customer as Business Movers
The customer is a business mover for the
reason that a customer is an individual or
business that purchases another company’s
goods or services.
The consumer is viewed with a social
orientation while the customer is viewed with an
economic orientation.
The Customer Market
Collectively the consumer and customers
constitute the customer market, as it is from
them that the businessman sources his clients.
The Competitor as Business Movers
The competitor is a business mover in the sense
of competing among sellers, a specific game of
competition is being played.
The Supplier as Business Movers
The supplier is a business mover in the sense
that suppliers are the external sources of many
things the business firm needs for carrying out
its operations.
T11: THE CONSUMER (A CORPORATE
OBJECTIVE)
Consumers are people or organizations that
purchase products or services. The term also
refers to hiring goods and services. They are
humans or other economic entities that use a
good or service. Furthermore, they do not sell on
that item that they bought.
Who is the consumer?
A consumer might be generally understood as
a purchaser of goods and services for the
personal satisfaction of themselves or other
members of their households, as distinct from
use to generate further income. It follows that
the main characteristics of consumer protection
statutes are that the supplier acts during a trade
or business, the recipient is a private individual
or entity that acts in a private or not-for-profit
capacity. However, it is important not to limit the
term consumer to only contracting parties, as
that might exclude the end user of goods and
services.
Types of Consumers
The extrovert type — the kind of consumer
who falls in this category are the ones who have
a thing for branded items. They will most likely
stick around to them and will strive to become a
loyal one. If met with high quality products and
services, they have a good chance to convert
into brand advocates.
The Inferior goods type — they are the ones
who face a considerable dearth of money and
are a part of the low-income status. Hence, they
are bound to purchase only those products that
are needed for mere survival.
The Commercial type — no matter their actual
requirements of purchasing an item, this
category of consumers will buy goods and
products in bulk. This may or may not be used
for commercial purposes.
The Discrete type — this kind of consumer will
opt for a discrete mode of buying habits. Simply
put, they will consider spending a handsome
amount on some of the specific items only, say ,
cosmetics, jewelry, or apparel. And will mostly
steer
away from thrifting on the other category.
Consumer goods are goods that we buy for our
own consumption. We do not buy them to make
other goods that we sell.
Examples:
1. Young children are the end users of toys, but
their parents buy them. Therefore, in the market
for toys, the buyer and consumer are often
different people.
2. A person who pays a hairdresser to cut and
style their hair.
3. An individual purchasing a new TV for
themselves. The individual is both the customer
and the consumer
Consumer vs. Customer
We often use the terms ‘consumers’ and
‘customers’ interchangeably. However, they do
not always have the same meaning. A customer
is not always the consumer. Customers
purchase things, but consumers use them. The
difference between consumers and customers
impacts how businesses market their products.
Consumer in Biology
In biology, a consumer is an organism that
consumes other organisms or organic matter.
That is how they get their energy. In the animal
kingdom, for example, consumers prey on other
organisms because they cannot produce their
own energy. Neither can they obtain energy from
inorganic sources.
Consumer in Marketplace
In the marketplace, consumers are people or
economic entities that purchase or hire products.
They do this for personal use. In other words,
they do not buy them for manufacture or resale.
When the non-business media talk about
consumers, they usually refer to people.
Specifically, people engaged in evaluating,
acquiring, and using products to satisfy their
needs and wants. Consumers are key figures in
the marketplace. In fact, all the activities of the
makers and sellers of goods are focused on
consumers. According to Adam Smith
(1723-1790), a Scottish pioneer of political
economy, once said: “Consumption is the sole
end and purpose of all production; and the
interest of the producer ought to be attended to,
only so far as it may be necessary for
promoting that of the consumer.”
Consumer Society
A consumer society is one in which people
frequently buy new products, especially goods
we don’t need for survival. Most of the advanced
economies are consumer societies. Consumers
place a high value on owning things. A few
centuries ago, society was very different. Most
people did not spend much time and money
shopping for goods made far away. Before the
Industrial Revolution, most people in Europe and
North America lived in rural areas. Nearly
everybody worked on farms. They had little
clothing and few household possessions. In fact,
virtually everything people owned was made
either at home or in the same village. New
fashions, technological change, and social
pressure did not influence. Our economies have
become completely dependent on consumer
spending. In other words, without high spending
by consumers, GDP does not grow. GDP stands
for gross domestic product’s people buy things.
People’s possessions lasted for decades or
even a lifetime.
Consumer Organization/Association
It is a membership-based non-governmental
non-profit body created to promote the interests
of consumers of goods and services, by
disseminating information and lobbying for laws
to protect consumers against producers or
sellers, who may usually be better organized or
have more resources. Citizens often gather to
form consumer organizations/associations
based on their recognition that:
● There is a need for an independent
party which is non-political and
non-commercial to voice the issues that
impact consumers in a market economy.
● There is a need for the views of the
under-represented, i.e., the inarticulate
and disadvantaged to be heard to
address the disparity in bargaining
power, knowledge and resources
between consumers and business; and
● Consumer organizations/associations
would be an effective avenue to
collectively exercise the civil rights of
disadvantaged/vulnerable
communities/groups or those with
disabilities to be represented and heard
before decisions affecting them are
taken.
Consumer organizations at national and local
levels have undertaken a wide range of actions
that draw on their well-honed skills in
independent research, advocacy, testing and
publishing. Most of these actions involve inter
alia:
● educating consumers with a view to
changing their attitudes and behavior.
 ● providing consumers with timely
information about popular products and
services.
● monitoring and exposing misleading
"claims" by product
manufacturers and advertisers, and
helping governments draw up codes of
practice, laws and regulations that
outlaw them.
The Objectives of Consumer
Consumer research is conducted to improve
sales. Consumer research objectives are to
examine and analyze various territories of
consumer psychology and comprehend their
shopping pattern, what sort of packaging they
prefer, and other similar information that help
businesses to sell their products and services
better.
1. Understanding new inclinations and
behaviors of consumers
Noticed something unusual in the behaviors of
customers regarding your brand? Or have their
needs and inclinations changed? With the
Covid-19 keeping outdoor activities to a
minimum level, consumers have adjusted to new
social norms, prioritized spending on home
accessories and electronics, and are
increasingly looking for home entertainment. It’s
critical to utilize consumers; data while
developing buyer personas to help you toward
developing customer experiences and marketing
strategies that engage and resonate. You can
utilize social data to analyze the following
elements:
● Key subjects of interest
● Opinions and emotions
● Buying intentions and barriers to sell
● Product feedback
● Complaints and suggestions for each
specific product
2. Find out new concerns of customers
While advertisers and consumer insights teams
tend to associate “social media listening” and
checking clients conversations on social media
networks, don’t forget that there are certain tools
that are capable of monitoring mentions on
public forums too! And that’;s a good place to
start analyzing the consumer discussions. When
paying special attention to customers’ new
concerns, behaviors, and preferences that have
emerged, make sure to look for these signals on
your social listening platform:
● What topics did consumers previously
not talk about, and are now trending on
social media?
● What new factors have arisen to change
or impede the customer’s journey?
Focusing on these questions will be critical to
driving customer loyalty and satisfaction. This
brings us to the next point.
3. Identify neglected needs of consumers
that have arisen
Identifying neglected client needs is also among
consumer research objectives that are
important. Meeting these neglected needs will
help you to improve your customers’ journey as
you eliminate blocks and points of friction that
otherwise prevent your clients from making that
purchase.
To be truly effective, consumer insights gathered
should be disseminated to relevant teams, so
they can begin to improve your products and
services. This is much more significant in the
‘Age of the Customer’, when customers are
faced with tons of choices, and can easily take
their dollar to a competitor.
4. Find out where your business stands in
your current market
It’s important to find out your brand positioning
on the market to gauge the effectiveness of your
brand campaigns when coordinated with the
overall market visibility and receptivity. Using a
comparison chart helps you to create social
figures for benchmarking, which lets you put into
perspective the success of your advertising
efforts.
Notice where your brand stands among key
players in the market by utilizing key statistics in
terms of share of voice, sentiment, and reach.
As a market chief in your industry, focusing on a
larger share of voice can get you nearer to
accomplishing adequate brand exposure with
minimal brand-awareness campaigns.

T12: BUSINESS MODEL
What is a business model?
A business model is the plan your business has
for making money. It’s an explanation of how you
deliver value to your customers at an
appropriate cost. This includes descriptions of
the products or services you plan to sell, who
your target market is, and any required
expenses. The business model lets
entrepreneurs experiment, test, and model
different ways to structure costs and revenue
streams. For those just starting out, exploring
potential business models can help you
determine if your business idea is viable, attract
investors and guide your overall management
strategy. For established businesses, it serves
as the basis for developing financial forecasts,
setting milestones, and setting a baseline for
reviewing your business plan.
What are the key components of a business
model?
In its simplest form, a business model can be
broken down into three parts:
1. Everything it takes to make something:
design, raw materials, manufacturing, labor, and
so on.
2. Everything it takes to sell that thing:
marketing, distribution, delivering a service, and
processing the sale.
3. How and what the customer pays: pricing
strategy, payment methods, payment timing, and
so on.
As you can see, a business model is simply an
exploration of what costs and expenses you
have and how much you can charge for your
product or service. It brings together everything
defined in the opportunity and strategy sections
of your business plan. This includes things like
your target market, your value proposition, sales
and marketing activities, etc.
How do you know if your business model will
be successful?
A successful business model just needs to
collect more money from customers than it costs
to make the product. This is your profit—simple
as that. New business models can refine and
improve any of the three components mentioned
above. Maybe you can lower costs during
design and manufacturing. Or, perhaps you can
find more effective methods of marketing and
sales. Or, maybe you can figure out an
innovative way for customers to pay. Keep in
mind, though, that you don’t have to come up
with a new business model to have an effective
strategy. Instead, you could take an existing
business model and offer it to different
customers. For example, restaurants mostly
operate on a standard business model but focus
their strategy by targeting different kinds of
customers.
17 Different Types of Business Models
1. Advertising
The advertising business model has been
around a long time and has become more
sophisticated as the world has transitioned from
print to online. The fundamentals of the model
revolve around creating content that people
want to read or watch and then displaying
advertising to your readers or viewers. In an
advertising business model, you have to satisfy
two customer groups: your readers or viewers,
and your advertisers. Your readers may or may
not be paying you, but your advertisers certainly
are. An advertising business model is
sometimes combined with a crowdsourcing
model where you get your content for free from
users instead of paying content creators to
develop content.
Ex.: CBS, The New York Times, YouTube
2. Affiliate
The affiliate business model is related to the
advertising business model but has some
specific differences. Most frequently found
online, the affiliate model uses links embedded
in content instead of visual advertisements that
are easily identifiable. For example, if you run a
book review website, you could embed affiliate
links to Amazon within your reviews that allow
people to buy the book you are reviewing.
Amazon will pay you a small commission for
every sale that Ex.: TheWireCutter.com,
TopTenReviews.com
3. Brokerage
Brokerage businesses connect buyers and
sellers and help facilitate a transaction. They
charge a fee for each transaction to either the
buyer or the seller and sometimes both. One of
the most common brokerage businesses is a
real estate agency, but there are many other
types of brokerages such as freight brokers and
brokers who help construction companies find
buyers for dirt that they excavate from new
foundations.
Ex.: ReMax, RoadRunner Transportation
Systems
4. Concierge/customization
Some businesses take existing products or
services and add a custom element to the
transaction that makes every sale unique for the
given customer. For example, think of custom
travel agents who book trips and experiences for
wealthy clients. You can also find customization
happening at a larger scale with products like
Nike’s custom sneakers.
Ex.: NIKEiD, Journy
5. Crowdsourcing
If you can bring together a large number of
people to contribute content to your site, then
you’re crowdsourcing. Crowdsourcing business
models are most frequently paired with
advertising models to generate revenue, but
there are many other iterations of the model.
Threadless, for example, lets designers submit
t-shirt designs and gives the designers a
percentage of sales. Companies that are trying
to solve difficult problems often publish their
problems openly for anyone to try and solve.
Successful solutions get rewards and the
company can then grow its business. The key to
a successful crowdsourcing business is
providing the right rewards to entice the “crowd”
while also enabling you to build a viable
business.
Ex.: Kickstarter, Patreon
6. Disintermediation
If you want to make and sell something in
stores, you typically work through a series of
middlemen to get your product from the factory
to the store shelf. Disintermediation is when you
sidestep everyone in the supply chain and sell
directly to consumers, allowing you to potentially
lower costs to your customers and have a direct
relationship with them as well.
Ex.: Casper, Dell, Apple
7. Fractionalization
Instead of selling an entire product, you can sell
just part of that product with a fractionalization
business model. One of the best examples of
this business model is timeshares. Where a
group of people owns only a portion of a
vacation home, enabling them to use it for a
certain number of weeks every year.
Ex.: Disney Vacation Club, NetJets
8. Franchise
Franchising is common in the restaurant
industry, but you’ll also find it in all sorts of
service industries from cleaning businesses to
staffing agencies. In a franchise business model,
you are selling the recipe for starting and
running a successful business to someone else.
You’re often also selling access to a national
brand and support services that help the new
franchise owner get up and running. In effect,
you’re selling access to a successful business
model that you’ve developed.
Ex.: Ace Hardware, McDonald’s, Allstate
9. Freemium
With a freemium business model, you’re giving
away part of your product or service for free and
charging for premium features or services.
Freemium isn’t the same as a free trial where
customers only get access to a product or
service for a limited period of time. Instead,
freemium models allow for unlimited use of basic
features for free and only charge customers who
want access to more advanced functionality. For
more on the freemium model (and other pricing
models popular with SaaS businesses).
Ex.: MailChimp, Evernote, LinkedIn
10. Leasing
Leasing might seem similar to fractionalization,
but they are actually very different. In
fractionalization, you are selling perpetual
access to part of something. Leasing, on the
other hand, is like renting. At the end of a lease
agreement, a customer needs to return the
product that they were renting from you. Leasing
is most commonly used for high-priced products
where customers may not be able to afford a full
purchase but could instead afford to rent the
product for a while.
Ex.: Cars, DirectCapital
11. Low-touch
With a low-touch business model, companies
lower their prices by providing fewer services.
Some of the best examples of this type of
business model are budget airlines and furniture
sellers like IKEA. In both of these cases, the
low-touch business model means that
customers need to either purchase additional
services or do some things themselves in order
to keep costs down.
Ex.: IKEA, Ryan Air
12. Marketplace
Marketplaces allow sellers to list items for sale
and provide customers with easy tools for
connecting to sellers. The marketplace business
model can generate revenue from a variety of
sources including fees to the buyer or the seller
for a successful transaction, additional services
for helping advertise seller’s products, and
insurance so buyers have peace of mind. The
marketplace model has been used for both
products and services.
Ex.: eBay, Airbnb
13. Pay-as-you-go
Instead of pre-purchasing a certain amount of
something, such as electricity or cell phone
minutes, customers get charged for actual
usage at the end of a billing period. The
pay-as-you-go model is most common in home
utilities, but it has been
applied to things like printer ink.
Ex.: Water companies, HP Instant Ink
14. Razor blade
The razor blade business model is named after
the product that essentially invented the model:
sell a durable product below cost to increase
volume sales of a high-margin, disposable
component of that product. This is why razor
blade companies practically give away the razor
handle, assuming
that you’ll continue to buy a large volume of
blades over the long term. The goal is to tie a
customer into a system, ensuring that there are
many additional, ongoing purchases over time.
Ex.: Gillette, Inkjet printers, Xbox, Amazon’s
Kindle
15. Reverse razor blade
Flipping the razor blade model around, you can
offer a high-margin product and promote sales of
a low-margin companion product. Similar to the
razor blade model, customers are often
choosing to join an ecosystem of products. But,
unlike the razor blade model, the initial purchase
is the big sale where a company makes most of
its money. The add-ons are just there to keep
customers using the initially expensive product.
Ex.: iPhone & iTunes, Peloton
16. Reverse auction
A reverse auction business model turns auctions
upside down and has sellers present their lowest
prices to buyers. Buyers then have the option to
choose the lowest price presented to them. You
can see reverse auctions in action when
contractors bid to do work on a construction
project. You also see reverse auctions anytime
you shop for a mortgage or other type of loan.
Ex.: Priceline.com, LendingTree
17. Subscription
Subscription business models are becoming
more and more common. In this business
model, consumers get charged a subscription
fee to get access to a service. While magazine
and newspaper subscriptions have been around
for a long time, the model has now spread to
software and online services and is even
showing up in service industries.
Ex.: Netflix, Salesforce, Comcast