Main sectors and industries

Industry vs sector
Although they may seem the same, the terms industry and sector have slightly different
meanings. Industry refers to a much more specific group of companies or businesses, while
the term sector describes a large segment of the economy.

A sector is one of a few general segments in the economy within which a large group of
companies can be categorized. An economy can be broken down into about a dozen
sectors, which can describe nearly all of the business activity in that
economy. Economists can conduct a deeper analysis of the economy by looking at each
individual sector.

There are four different sectors in an economy:

• Primary Sector: This sector deals with the extraction and harvesting of natural
resources such as agriculture and mining.
• Secondary Sector: This sector comprises construction, manufacturing, and
processing. Basically, this sector comprises industries that relate to the production
of finished goods from raw materials.
• Tertiary Sector: Retailers, entertainment, and financial companies make up this
sector. These companies provide services to consumers.
• Quaternary Sector: The final sector deals with knowledge or intellectual pursuits
including research and development (R&D), business, consulting services, and
education.

Industry groups:

- Energy (oils and gas)

- Materials (chemicals, metals and mining, paper and forest products, construction
materials)
- Industrials (Capital goods: aerospace and defense, building products, construction
and engineering, electric al equipment, machinery; Transportation: air fright and
logistics, airlines, marine)
- Information technology (Semiconductors; software and services: Internet, it services
like consultancy, software systems; technology hardware: Communications
equipment, computer)
- Telecommunication services (fixe Line, fibre-optic, wireless)
- Utilities (electric, gas, water)
- Financial (Real estate, insurance, banks, diversified financial: consumer finance,
capital markets)
- Healthcare (Healthcare equipment, pharmaceutical, biotechnology)
- Consumer staples (food, beverage, tabacco production)
- Consumer discretionary (automobiles, household durables, textiles)
- Commercial services (cleaning, auditing, human resources)
 Sole trader/ partnership/ Ltd/PLC

When starting up your business, deciding on your business’s structure is essential. There are
a range of options to choose from:

- Sole Trader
- Partnership
- Limited Liability Partnership, and
- Limited Company

A Sole Trader is someone who is self-employed and runs their own business as an individual
(but can also employ staff members). Being a Sole Trader means you are solely responsible
for the business and its debts – the business and the owner are effectively one and the
same. This means any losses made by the business must be paid for out of your own pocket
This is called Unlimited Liability.

Advantages
• After you’ve paid tax, you can keep all business profits.
• You have full control of how your business is run and all decisions can be made by you
alone.
• Your business’s data is kept private (compared to other business types where data is
visible at Companies House).

Disadvantages
• You’re liable for any business losses.
• It can be difficult for a Sole Trader to financially fund their business ventures.
• The pressure for a business to succeed is placed on an individual’s shoulders.

A Partnership is where two or more people form a business together and all business
partners share responsibility for the business. The profits made are split between each
partner and they are individually responsible to pay their share of tax.

Advantages
• The more partners the higher profits possibility and the easier to financially fund the
business.
• A partnership allows a business’s tasks/responsibilities to be assigned to each partner
depending on their skills, which takes the stress off just one person.
• Solving business problems and making decisions can be made easier as you get a
selection of opinions/ideas.

Disadvantages
• The possibility of disagreements/not being able to come to an agreement on how the
business is run.
• Taxation laws say that all partners must pay their own tax, just like a Sole Trader would.
Also if a partnership obtains a certain level of profits, the partners may be faced to pay
more than they would in a limited company.
A Limited Liability Partnership is a business run by two or more people. The partners are not
personally liable for debts the business can’t pay – their liability is limited to the amount of
money they invest in the business. The partners profit shares and responsibilities are
determined by a LLP agreement.

Advantages
• The liability of the business isn’t down to one single person, this includes financial issues
and business responsibilities.
• The flexibility of what and how much each partner contributes to the business.
• Unlimited amount of business partners.

Disadvantages
• Some businesses/clients don’t see Limited Liability Partnerships as a credible business,
whereas corporations are generally more respected.
• Partners are not legally obliged to consult with other partners when business decisions
are being made, which can cause conflicts.
• The LLP Agreement can sometimes cause issues, if a partner wants a say in another
business area but is not allowed to.

A Limited Company is an organisation that is set up to run a business. Unlike a Sole

Trader/Partnership all of your businesses finances are kept separate to your personal
finances. After payment of corporation tax, the profits are available to distribute to
shareholders as dividends.

There are two types of Limited Companies:

• Public Limited Company (PLC) – Shares can be bought and sold through a stock
exchange.
• Private Limited Company (Ltd) – Cannot buy and sell shares through a stock exchange.

Advantages
• When registering a Limited Company you must register the company name with
Companies House. This business identity is unique to you and will be protected from
other businesses trying to use the same name.
• You have the option to offer company shares to your employees, which motivates them
more and gives the chance to have a say in how the business is run.

Disadvantages
• Bookkeeping and accounting of a Limited Company is more complex as you are required
to keep accurate records as you go along and to submit a range of data each year.
• Private Limited Companies (Ltd) can’t trade their shares with the public as a way to boost
capital.
• Directors and Shareholders may not agree on how the business is run as well as new
ideas.
• Certain information on the company, its directors and shareholders is avaiable in the
public domain.

5 ways that a company can grow

1. Internal growth – stay private. The company inncreases its sales, number of
employees etc. But stays as a private company, perhaps run by the original founders
of the business.
2. Internal growth – IPO. The company moves from being a small, family owned firm to
being a large Corporation with aa Stock market listing. The process of issuing Soares
for the first time is called IPO (initial public offering).
3. Internal growth – trade sale to a much larger company in the same sector. In this
case the original small company is absorber and its name often disappears. Many
startups in the IT and biotechnology areas sell themselves in this way.
4. Merger – two established companies join to one.
5. Acquisition/Take over – one established company buys another. The first step in an
acquisition is often to Take a controlling stake in the Rother company – buying a large
number of Soares but without complete ownership.

Why mergers often fail

1. Overpaying
2. Overestimating synergies
3. Insufficient due diligence
4. Misunderstanding the target company
5. Lack of strategic plan
6. Lack of cultural fit
7. Overextending resources
8. Wrong time in industry cycle
9. External factors
10. Lack od management involvement
1. Overpaying
This is probably the most common reason for the failure of transactions. Most attractive
target companies operate under the assumption that ‘everything is for sale at the right
price’.

This effectively translates to ‘the business is always for sale when a buyer is willing to
overpay.’

In publicly listed companies, this usually means a premium over the share price. There’s little
reason to doubt it’s any different in small, privately-held companies.

It’s important for buyers to set a limit before negotiations start and stick to it to minimize
the chances of overpaying.
2. Overestimating synergies

Overestimating synergies goes hand-in-hand with overpaying in a transaction.

Overestimating the synergies inherent in a transaction is often the first step in overpaying.

While the idea that many costs will largely stay the same as two companies combined is
alluring, it’s also far more difficult to achieve in practice than most managers are willing to
admit. And revenue synergies are no less complicated to achieve.

For this reason, practitioners of M&A would be well advised to look at potential synergies
from a transaction through a highly conservative lens.

Read also

Why You Should Focus Less on Cost Synergies During PMI

3. Insufficient due diligence

The importance of due diligence can never be emphasized enough, partly because so many
firms are evidently keen to get it over with as soon as possible.

One of the major problems that arises during the process is that the acquirer is depending
on the target company to provide information that isn’t always complimentary to their
management. This creates obvious agency problems.

By extension, the more uncomplimentary the information, the more the target company
team is likely to withhold it and/or explain it away.

In extreme cases, this can lead to the failure of the transaction in the long-run.

4. Misunderstanding the target company

Even due diligence doesn’t guarantee that you’ll fully understand the target company.

It gives you the best opportunity to do so, but there are plenty of cases where even a
lengthy period of due diligence doesn’t let you know what makes a company tick.
The example of British grocery retailer Morrisson’s acquiring rival company Safeway in 2003
is testament to this.

What looked on paper like a great deal for Morrisson’s - expanding their footprint all over
the UK - turned into a nightmare, essentially because the two firms served completely
different types of customers.

5. Lack of a strategic plan

A good ‘why’ is an essential component of all successful M&A transactions. That is, without a
good motive for a transaction, it’s doomed to failure from the outset.

Academic literature on M&A is replete with studies of managers engaging in ‘empire

building’ through M&A, and research into how hubris is a common trend in M&A.

A good rule of thumb here is that the less simply the motive for the transaction can be
explained, the more likely it is to be a failure.

‘Market share’ is a good motive; ‘become a visionary in the industry’ is not.

6. Lack of cultural fit

Perhaps ‘inability to acknowledge cultural differences’ might be a better title.

Why?

Because cultural difference in itself isn’t a problem - rather, it’s the inability (or
unwillingness) to acknowledge them and look to bridge the gap.

It’s vital that any two companies engaging in a transaction use a change manager to oversee
the process.

Underestimating this element of mergers and acquisitions as merely a ‘soft area’ of the
transaction has led to billions of dollars being destroyed over the years.
7. Overextending resources

‘Bolt on’ mergers and acquisitions - that is, target companies which are small in size relative
to the acquiring company - are usually considered to be the best type of transactions.

One of the main strands of thought behind this is that they don’t require as many resources
to be acquired or to be integrated.

At the other side of this equation, are those transactions that require significant resources
on the part of the acquiring firm.

Loading up on debt to acquire any firm creates a pressure from day one to cut costs - never a
good start for a deal, and often the beginning of the end.

8. Wrong time in industry cycle

For the myriad of reasons cited for the failure of the notorious AOL/Time Warner deal, one is
seldom given: The year 2000 was not a good time for media firms to merge.

The media industry was about to undergo the biggest shake-up in its history, from which it is
only now beginning to show signs of recovery.

The inability to see long-term shifts is a human trait (we overestimate change in the short-
term and underestimate it in the long-term) and one that catches out many managers in
M&A, ultimately leading to the downfall of many transactions.

9. External factors

External factors (sometimes called ‘exogenous factors’ or just ‘risk’), refers to everything
that’s out of the manager’s control. 2020 provides us with a readily available example.

Suppose the managers of two hotel chains are considering a merger. It makes sense on
almost every level - financial, cultural and strategic.

There is no overlap in geography, meaning regional hotel chains are joining to create a
national chain.
On paper, it is perfect. As soon as the deal closes, a pandemic sweeps the world, tourism
stops and money dries up.

The deal has been a failure because of external factors that few could have foreseen.

10. Lack of management involvement

The most obvious reason for failure is left till last. Management involvement is something of
a catch-all answer and often incorporates many of the other reasons on this list.

No stage of the M&A process will manage itself, be that the search for a suitable target firm
to the integration of the two firms into the newly formed entity.

When managers deem other tasks in their company to be more important than the
successful implementation of M&A, they shouldn’t be surprised when their deal is eventually
deemed a failure.

IPO

An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance. An IPO allows a company to raise capital
from public investors. The transition from a private to a public company can be an
important time for private investors to fully realize gains from their investment as it
typically includes a share premium for current private investors. Meanwhile, it also allows
public investors to participate in the offering.

Advantages

One of the key advantages is that the company gets access to investment from the entire
investing public to raise capital. This facilitates easier acquisition deals (share conversions)
and increases the company’s exposure, prestige, and public image, which can help the
company’s sales and profits.

Increased transparency that comes with required quarterly reporting can usually help a
company receive more favorable credit borrowing terms than a private company.

Disadvantages

Companies may confront several disadvantages to going public and potentially choose
alternative strategies. Some of the major disadvantages include the fact that IPOs are
expensive, and the costs of maintaining a public company are ongoing and usually
unrelated to the other costs of doing business.
Fluctuations in a company's share price can be a distraction for management which may be
compensated and evaluated based on stock performance rather than real financial results.
As well, the company becomes required to disclose financial, accounting, tax, and other
business information. During these disclosures, it may have to publicly reveal secrets and
business methods that could help competitors.

Company structure by function/product/customer type/ geographical area

Based on an organization’s application of the common elements—common purpose,

coordinated effort, division of labor, hierarchy of authority, as well as
centralization/decentralization and formalization—the resulting structure will typically
exhibit one of four broad departmental structures: functional, product, customer, and
geographic.

Functional Structure

As sales increase, organizations generally adopt a functional structure. This structure groups
employees into functional areas based on their expertise. These functional areas often
correspond to stages in the value chain such as operations, research and development, and
marketing and sales. They also include support areas such as accounting, finance, and
human resources. The graphic that follows shows a functional structure, with the lines
indicating reporting and authority relationships. The department head of each functional
area reports to the CEO; the CEO then coordinates and integrates the work of each function.

A functional structure allows for a higher degree of specialization and deeper domain
expertise than a simple structure. Higher specialization also allows for a greater division of
labor, which is linked to higher productivity.[1] Although work in a functional structure tends
to be specialized, it is centrally coordinated by the CEO, as in the earlier graphic. A functional
structure allows for an efficient top-down and bottom-up communication chain between the
CEO and the functional departments, and thus relies on a relatively tall structure. The
disadvantage inherent to a functional structure is that the emphasis on specialization can
cause high levels of job dissatisfaction and fewer process improvements for the business.

Product Structure

Companies with diversified product lines frequently structure based on the product or
service. GE, for example, has structured six product-specific divisions supported by six
centralized service divisions. (1) Energy, (2) Capital (3) Home & Business Solutions, (4)
Healthcare, (5) Aviation, and (6) Transportation. Product divisions work well where products
are more technical and require more specialized knowledge. These product divisions are
supported by centralized services, which include: public relations, business development,
legal, global research, human resources, and finance.

This type of structure is ideal for organizations with multiple products and can help shorten
product development cycles. One disadvantage is that it can be difficult to scale. Another
disadvantage is that the organization may end up with duplicate resources as different
divisions strive for autonomy.

Customer Structure

Companies that offer services, such as health care, tend to use a customer-based structure.
While similar to the product structure, the different business segments at the bottom are
each split into a specific customer group—for example, outpatient, urgent care, and
emergency care patients. Since the customers differ significantly, it makes sense to
customize the service. Employees can specialize around the type of customer and be more
productive with that type of customer. The directors of each customer center would report
directly to the chief medical officer and/or the hospital CEO. This is also designed to avoid
overlap, confusion, and redundancies. The customer structure is appropriate when the
organization’s product or service needs to be tailored to specific customers.
The customer-based structure is ideal for an organization that has products or services
unique to specific market segments, especially if that organization has advanced knowledge
of those segments. However, there are disadvantages to this structure, too. If there is too
much autonomy across the divisions, incompatible systems may develop. Or divisions may
end up inadvertently duplicating activities that other divisions are already managing.

Geography Structure

If an organization spans multiple geographic regions, and the product or service needs to
be localized, it often requires organization by region. Geographic structuring involves
grouping activities based on geography, such as a Latin American division. Geographic
structuring is especially important if tastes and brand responses differ across regions, as it
allows for flexibility in product offerings and marketing strategies. Also, geographic
structuring may be necessary because of cost and availability of resources, distribution
strategies, and laws in foreign countries. Coca Cola structures geographically because of the
cost of transporting water. NetJets, a private aviation company, had to create a separate
company in Portugal to operate NetJets Europe, because the entity had to be owned by a
European Union carrier.

McDonald’s is well-known for its geographic structure and localization strategy for food
preferences. The McDonald’s in Malaysia is certified halal (no pork products) and you can
order the McD Chicken Porridge: chicken and onions in porridge. Other examples are Brie
Nuggets (fried brie) in Russia; the Ebi Filet-O (shrimp patty) in Japan; and in Canada, you can
get poutine (fries and cheese curds smothered in gravy).

This type of structure is best for organizations that need to be near sources of supply and/or
customers. The main disadvantage of a geographical organizational structure is that it can be
easy for decision making to become decentralized; geographic divisions can sometimes be
hundreds, if not thousands, of miles away from corporate headquarters, allowing them to
have a high degree of autosomy.

Hierarchical/flat companies/ matrix structure

Matrix Organizations

Where two dimensions are critical, companies will use a matrix structure. Employees may be
organized according to product and geography, for example, and have two bosses. The idea
behind this type of matrix structure is to combine the localization benefits of the geography
structure with those of the functional structure (responsiveness and decentralized focus).

Hierarchical

A hierarchical structure is typical for larger businesses and organisations. It relies on having
different levels of authority with a chain of command connecting multiple management
levels within the organisation.
The decision-making process is typically formal and flows from the top down. This creates
a tall organisational structure where each level of management has clear lines of
responsibility and control. As the organisation grows, the number of levels increases and the
structure grows taller.

Often, the number of managers in each level gives the organisation the resemblance of
a pyramid. This structure gets wider as you move down - usually with one chief executive at
the top, followed by senior management, middle managers and finally workers. Employees'
roles are clearly defined within the organisation, as is the nature of their relationship with
other employees.

A hierarchical structure can provide benefits to businesses. For example, it can help
establish:

• clear lines of authority and reporting within the business

• a clearer understanding of employee roles and responsibilities
• accountability for actions or decisions at different management levels
• clear career paths and development prospects which can motivate employees
• opportunities for employees to specialise and develop expertise in their field
• close supervision of employees through a narrow span of managerial control
• a culture of loyalty towards teams, departments and organisation as a whole

Workplace hierarchies are not always effective. Common disadvantages of hierarchical

structures include:

• complicated chains of command which can slow down decision-making

• inconsistencies in management at different levels which can impede work
• delays in communicating vertically through the levels and horizontally between
teams
• less flexibility to adapt and react to environmental and market pressures
• disconnect of employees from top-level management
• a strain on the employee-manager relationship due to lack of autonomy
• difficulties collaborating outside of the team 'silo' or dealing with team rivalry
• considerable amount of corporate overhead to support the many management
layers

Flat

A flat structure is an organisational structure with only a few layers of management. In a flat
structure, managers have a wide span of control with more subordinates, and there is
usually a short chain of command. Flat organisational structures are commonly used by
smaller businesses or those adopting a more modern approach to management.

A flat organizational structure has its advantages as well. With this type of structure in place,
employees often have more responsibility and are more involved in important
conversations. Transparency is also a big advantage when using a flat organizational
structure thanks to the limited bureaucracy. Having fewer levels of management also
simplifies internal communication and enables fast decision-making, and because the layers
of middle management are removed, power and responsibility are divided evenly
throughout the organization.

On the other hand, a flat structure can sometimes make it difficult for employees to
specialize in specific roles. In many cases—especially with startups—each employee is
expected to be a “jack of all trades” and to pitch in on a number of different tasks. Because
there are few (or no) management layers, managers are often stretched thin, which can
sometimes cause confusion among employees and lead to issues such as poor oversight and
a lack of direction.

To co Barbra dała – wideo

Hierarchical structure

Long chain of command as Communications Has to go through many layers

Narrow span of control

+ - motivation by promotion, clear accountability

- Communications to the business – slow; higher cost;

Flat structure

Few layers of management

Wide span of control

Short chain of command

+ faster Communications; engagement; save money on salaries

- Little or no progression; reduced motivation; Power struggles

Matrix structure

Has traditional department

Project teams cross functional areas

Temporary or permanent

+ utilises skills within the organisation; effective Communications; increased morale

- Split cross two managers; takes time to gel as a New team;

 Private sector vs public sector

The private sector is the part of the economy that is run by individuals and companies for
profit and is not state controlled. Therefore, it encompasses all for-profit businesses that
are not owned or operated by the government. Companies and corporations that are
government run are part of what is known as the public sector, while charities and
other nonprofit organizations are part of the voluntary sector.

The private sector is a very diverse sector and makes up a big part of many economies. It is
based on many different individuals, partnerships, and groups. The entities that form the
private sector include:

• Sole proprietorships
• Partnerships
• Small and mid-sized businesses
• Large corporations and multinationals
• Professional and trade associations
• Trade unions

Even though the state may control the private sector, the government does legally regulate
it. Any business or corporate entity operating in that country must operate under the laws.

The public sector references all government organizations, including the federal
government, states, and localities. Public-sector organizations focus on services to the public
as a whole, including education, welfare, the legal system, employment, natural resources,
and health services.

Federal agencies like the IRS, FBI, and the Department of Labor, as well as state services like
unemployment benefits, children and family services, and insurance regulation, are all part
of the public sector. In practice, the Bureau of Economic Analysis and the Federal Reserve
Board use data from the public sector to measure the nation’s financial and economic
performance, while local and state agencies use the data to create budgets and
programming.

Centralization vs decentralization

Centralization and Decentralization are the two types of structures, that can be found in the
organization, government, management and even in purchasing. Centralization of authority
means the power of planning and decision making are exclusively in the hands of top
management. It alludes to the concentration of all the powers at the apex level.

On the other hand, Decentralization refers to the dissemination of powers by the top
management to the middle or low-level management. It is the delegation of authority, at all
the levels of management.
 Strategic planning - examples
Operational planning – examples
Swot analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis
is a technique for assessing these four aspects of your business.

SWOT Analysis is a tool that can help you to analyze what your company does best right
now, and to devise a successful strategy for the future. SWOT can also uncover areas of the
business that are holding you back, or that your competitors could exploit if you don't
protect yourself.

A SWOT analysis examines both internal and external factors – that is, what's going on inside
and outside your organization. So some of these factors will be within your control and some
will not. In either case, the wisest action you can take in response will become clearer once
you've discovered, recorded and analyzed as many factors as you can.

McDonald’s segmentation strategy

McDonald's is an international fast-food chain. In this case, it not only has

restaurants in the U.S, but also in other countries. People living in different countries
have very different eating habits and cultural backgrounds. Therefore, McDonald's
must segment different regions correctly in order to keep its dominance in the globe.
In Table 1, region and density are the two major criteria McDonald's take into
account. Under the region criteria, it indicates whether the region is domestic or
international is the first parameter McDonald's takes into account. McDonald's
developed further strategies to perfect its marketing segmentation plan. In fact,
McDonald's menus differ all over the world. As a result of different preferences on the meat
kind, McDonald's adjusts its menu accordingly in different countries.

McDonald's demographic approach including age, gender, life-cycle stage occupation,

religious belief, and so on. In terms of age, McDonald's segments them into a variety of
different groups. As for the young kid, McDonald's designed a special meal for them which is
called “Happy Meal”. There are three different setups in the U.S market. Meanwhile, they all
consist of little fries and milk which are products that are designed for young kids.
Oftentimes, there will be toys included in these meals. Though people in other age groups
may don't value them enough, its effect on young kids is huge. As for the teenager group
who are mostly students, McDonald has not only priced their products aggressively to retain
these group of people who are sensitive about the price, but also provide amenities such as
Wi-Fi to attract students [5]. As for the grown-up, McDonald's offers them coffee products
which cannot be compared to a conventional coffee shop. These designs clearly target
customers who belong to different age groups. As for other segment criteria, McDonald's
would create a framework that address all these characteristics.

In terms of Behavioral Approach, it plays a significant role within McDonald's segmentation

system. In Table 4, it's clear that McDonald's segmentation builder includes the degree of
loyalty to the restaurant and Benefits sought. The research from McDonald's UK indicates
that 36% of consumers eat McDonald's food because of its value. This 36% of respondents
buy McDonald's food because they believe McDonald's products bring them great cost
benefits [1]. In addition, these consumers feel like McDonald's not only provides cheaper
prices for its hamburgers, fries, and drinks compared to other fast-food chains, the food
portion is also very ideal compared to their competitors. For instance, 20 pieces of chicken
nuggets are only a little bit over six dollars which are a dollar more compared to 10 pieces of
chicken nuggets. However, McDonald's realize there are other customers who value time
efficiency more than the cost benefits. These groups of people may care less about how
much they saved from each McDonald's meal, but care more about having a meal which can
provide enough energy calories in a certain amount of time

CRM Building customer relationship

CRM is a customer-focused business strategy designed to optimise revenue, profit and

customer satisfaction," explains Jason Nash, Microsoft's CRM product marketing manager.
"The more you understand your customers, the easier it is to target new prospects and
boost sales.
"If you have your marketing database, your sales pipeline and delivery going through your
CRM system, you can monitor the relationship and accurately measure your return on
investment," he continues. "By using data effectively, you can also drive sales from an
existing customer base, rather than spend a lot of money on trying to attract new clients."
 Marketing strategy – give examples

Spotify: Offer a Different User Experience

Today, Spotify is one of the best known global companies but how did this Swedish brand
come to conquer the world?

There are many streaming music services but what makes Spotify unique is its focus on
helping users discover new content. Spotify breaks the mold of typical music streaming
platforms and instead offers listeners a totally new user experience.

For example, in addition to the typical filter by genre, Spotify also allows users to choose
music based on their moods. Whether you want to workout, sleep, or even need some
songs to sing in the shower! This helps users discover songs that would never have
occurred to them and in turn reinforces their relationship with the brand. They are also
the leaders in using artificial intelligence to curate playlists specifically based on their
users’ habits, like Release Radar and Discover Weekly.

Email marketing sends a commercial message to a large group through email. Using an email
list of targeted customers, companies distribute advertisements and company updates.
Email lists grow by enticing consumers to sign up in exchange for rewards such as an e-book
or free trial.

Example: A newspaper group sends an mass email to past subscribers advertising a deal to
save $20 if they resubscribe now. The bottom of the email features a big button flashing
"Subscribe now."

Mass marketing aims for global sales by creating messages that are relevant to a wide
audience. To reach the most people, companies use mass media to spread their message.

Example: A company advertises their soap, a daily product everyone uses, that leaves you
cleaner than their competitor's product

Niche marketing involves advertising to the needs of a specific group. By segmenting from a
larger market, businesses can take a more unique approach in advertising and differentiate
from other brands.

Example: A cleaning product company creates products that are eco-friendly to appeal to
those who are environmentally conscious.
 Coca Cola marketing

Two different types of media are used in Coca-Cola Advertising, and they are- published
media and visual/aural media. Let us go through both of them one by one to know different
media types that empowered Coca-Cola brand to reach where it is- Published media types-

• Newspapers
• Magazines
• Internet
Visual and aural media types
• Television
• Cinema
• Radio
• Posters
• Billboards

“Holidays are coming” was an ad campaign that was run in 1995. Since then, it has been
officially heralded as the Christmas song by many consumers. It featured sleigh bells, snow-
covered woods, atmospheric music, excited children, and a brightly lit truck. Coca-Cola had
always celebrated the festivities since the 1930s, but this particular ad marked its direct
connection with Christmas.

In 2016, Coca-Cola decided to wave off its traditional advertising style when it came up
with “Coke Factory”. It was produced by an Amsterdam Creative Networking Agency,
Weiden+Kennedy.

This particular ad featured an animated movie, imagining the inner workings of a vending
machine right after a coin is inserted. It featured whimsical creatures whose combined
efforts contributed to making a perfect bottle of Coke.

At this point, Coca-Cola had kids and young teenagers as its consumers and, hence, the
target audience.

4Ps marketing mix

A marketing strategy is a course of action used to promote and sell a company's products or
services. Businesses create these plans for reaching consumers and showcasing their
product's advantages. Understanding the needs and wants of consumers empowers a
forward-thinking marketing strategy able to achieve sustainable advantage and guide a
business in the direction its marketing efforts should take.

Marketing strategies consist of the business's value proposition, key brand messaging and
data on target customer demographics. Marketing often refers to these strategies
components as the four "Ps":
 • Product: A marketing strategy describes the product or service the business is
offering, along with related information such as the functionality and warranty.
• Price: The business features what price they plan to use for their product and
addresses wholesale and seasonal pricing, bundling and price flexibility.
• Place: Marketing strategies address the place or distribution of the product for
delivery, including transportation and warehousing.
• Promotion: The business plans how to market its product, using tactics like
advertising, public relations and sales promotion.

Market segmentation

At its core, market segmentation is the practice of dividing your target market into
approachable groups. Market segmentation creates subsets of a market based on
demographics, needs, priorities, common interests, and other psychographic or behavioral
criteria used to better understand the target audience.

By understanding your market segments, you can leverage this targeting in product, sales,
and marketing strategies. Market segments can power your product development cycles by
informing how you create product offerings for different segments like men vs. women or
high income vs. low income.

Companies who properly segment their market enjoy significant advantages. According to a
study by Bain & Company, 81% of executives found that segmentation was crucial for
growing profits. Bain also found that organizations with great market segmentation
strategies enjoyed a 10% higher profit than companies whose segmentation wasn’t as
effective over a 5-year period.

Other benefits include:

1. Stronger marketing messages: You no longer have to be generic and vague – you can
speak directly to a specific group of people in ways they can relate to, because you
understand their characteristics, wants, and needs.
2. Targeted digital advertising: Market segmentation helps you understand and define
your audience’s characteristics, so you can direct your marketing efforts to specific
ages, locations, buying habits, interests etc.
3. Developing effective marketing strategies: Knowing your target audience gives you a
head start about what methods, tactics and solutions they will be most responsive to.
4. Better response rates and lower acquisition costs: These will result from creating
your marketing communications both in ad messaging and advanced targeting on
digital platforms like Facebook and Google using your segmentation.
5. Attracting the right customers: Market segmentation helps you create targeted,
clear and direct messaging that attracts the people you want to buy from you.
6. Increasing brand loyalty: when customers feel understood, uniquely well served and
trusting, they are more likely to stick with your brand.
 7. Differentiating your brand from the competition: More specific, personal messaging
makes your brand stand out.
8. Identifying niche markets: segmentation can uncover not only underserved markets,
but also new ways of serving existing markets – opportunities which can be used to
grow your brand.
9. Staying on message: As segmentation is so linear, it’s easy to stay on track with your
marketing strategies, and not get distracted into less effective areas.
10. Driving growth: You can encourage customers to buy from you again, or trade up
from a lower-priced product or service.
11. Enhanced profits: Different customers have different disposable incomes; prices can
be set according to how much they are willing to spend. Knowing this can ensure you
don’t over (or under) sell yourself.
12. Product development: You’ll be able to design with the needs of your customers top
of mind, and develop different products that cater to your different customer base
areas.

Companies like American Express, Mercedes Benz, and Best Buy have all used segmentation
strategies to increase sales, build better products, and engage better with their prospects
and customers.

Promotional mix

A promotion mix is a set of different marketing approaches that marketers develop to

optimize promotional efforts and reach a broader audience. The marketer’s task is to find
the right promotion mix for a particular brand.

Developing a promotion mix requires skills and experience in marketing. Marketers should
complete various studies and gather lots of data about a particular company to come up
with an effective promotion mix.

For instance, it is necessary to identify your target audience, work out a budget that you can
afford for a promotion, and decide the most efficient marketing channels for your audience.

A promotion mix is a more expanded approach towards one of five elements of the
marketing mix — Promotion. Other factors are people, product, place, and price.

Major shifts in advertising fashion recently

Established brands, new enterprises looking to carve out a unique niche, or up-and-coming
designers searching for a USP to make their mark in the custom apparel industry – any
fashion company should keep a keen watch on the emerging trends for 2019. How
consumers view clothing, price points, and changing tastes can influence the success or
failure of couture houses. Experts keeping watch on the industry have identified 6 key
factors that high-profile designers and makers of custom apparel should keep in mind when
working out their production and marketing strategies.
1. Buying Trends are No Longer Dependent on Seasonal Collections

In the past years, designers would focus on putting together collections for a particular
season by predicting what consumers would like to wear. Accordingly, they would organize
fashion shows in which super models would display their latest designs. Later, the clothing
would be offered at retail stores where people could buy them. In the coming years, like
this article on CBInsights reveals, couturiers have noted a major shift towards new fashion
trends where each week new silhouettes and colors make their debut in the stores.

The focus is moving toward the releases by smaller designers who create and market only a
limited number of pieces in each style. Smaller labels in the custom apparel industry prefer
to advertise their wares via platforms like social media and influencer marketing. Customers
are no longer interested in waiting for fashion shows to tell them what to wear. Buyers
wanting to go shopping would rather check Facebook, Twitter, Instagram, and other social
media for styles that their favorite celebrities are wearing and adopt them into their
wardrobes.

2. Customized 3-Dimensional Printing

Custom fashion apparel manufacturers are acknowledging the demand for quick printing on
garments such as t-shirts, hoodies, custom hats, Polo shirts, and sportswear. A good example
is RushOrderTees, a customized printing company that takes orders for specialized designs
and prints them for customers. The company has made its mark thanks to the high-quality
garments it provides and the different printing options offered including 3D printing, Twill
printing, Direct-to-Garment printing, and various others.

The agency has also gained popularity for the fast turn-around-time they provide and the
precision and finish in the products they deliver. 3D printing methods reduce the wastage of
fabrics by 35% through the production processes. This factor brings down the price points of
the clothing making them more affordable and attractive.

3. The Going Green Factor

Statistics reveal that by 2020, potential buyers of fashionwear are likely to rise to 1.2 billion
with the age demographic ranging from 16 to 24 and 25 to 34 years. Given the dedication of
the younger generation to conservation and reducing waste, these customers tend to
support companies that advertise the green initiatives they’ve adopted. Industry experts are
noting how brands that have indicated their adoption of eco-friendly polices clearly have an
edge over the competition.

Grace Farraj is the SVP, Public Development & Sustainability at Nielsen. She says, “Brands
that establish a reputation for environmental stewardship among today’s youngest
consumers have an opportunity to not only grow market share but build loyalty among the
power-spending Millennials of tomorrow, too.”
 4. Preference for Sustainable Fabrics

Yet another trend in the custom apparel industry is the emergence of organic fabrics that
won’t harm the environment. The study by Neilsen reveals that not only do buyers prefer
products that are made with sustainable materials, but they would be open to spending
more on organic and naturally-made products. Given a choice between personal gratification
and convenience, Baby Boomers and Millennials prioritize personal values and ethics.

Research shows that 12% more buyers now opt for eco-friendly products. In an attempt to
capture the market, the big fashion houses are coming out with options. For instance, H&M
has released the Conscious Collection, which has leather jackets and cowboy boots made
with pineapple leaves and Adidas now offers sneakers made with plastic recovered from the
oceans and recycled. Fabrics made with microalgae and macroalgae could also be up for
grabs in coming times.

Products features and benefits

The difference between features and benefits: A feature is a part of your product or service,
while a benefit is the positive impact it has on your customer.

Think about your favorite pair of jeans.

Your favorite pair of jeans has a specific number of threads keeping everything together, a
certain length and size, a particular metal for the buttons.

Those are features.

But when asked why you love your favourite jeans, you’re unlikely to say, “I just love the 30
inch waist, the metal buttons and the cotton thread sewn into the seams.”

You’re more likely to say: “They’re so comfortable, they fit really well and I love that they
look good with heels or boots.”

Benefits are important because they answer your customer’s question: “Why should I care
what you have?”

Rather than simply telling your customer what you have or provide, you’re telling them how
your product or offer is going to have a positive, valuable impact on their life.

How to identify benefits:

If you think about a feature as the facts and figures of what you offer, a benefit is a
combination of:

1. The effect it has on your customer

2. How they feel because of this
 A very simple 3-step approach to identifying the benefits of your product is:

1. What does it have or do?

2. What effect does this have on my customer’s life?
3. Does this cause a positive emotion or eliminate a negative emotion (or both)?

Pricing strategies

Pricing is defined as the amount of money that you charge for your products, but
understanding it requires much more than that simple definition. Baked into your pricing are
indicators to your potential customers about how much you value your brand, product, and
customers. It's one of the first things that can push a customer towards, or away from,
buying your product. As such, it should be calculated with certainty.

Pricing strategies refer to the processes and methodologies businesses use to set prices for
their products and services. If pricing is how much you charge for your products,
then product pricing strategy is how you determine what that amount should be. There are
different pricing strategies to choose from but some of the more common ones include:

− Value-based pricing
− Competitive pricing
− Price skimming
− Cost-plus pricing
− Penetration pricing
− Economy pricing
− Dynamic pricing

The art of persuasion

It would be nice to think that people consider all the available information, but the reality is very
often different.

We all need rules of thumb to guide our decision-making.

As universals that guide human behavior, they are:

- Reciprocity – obligation to give when you receive. In the context of a social obligation people
are more likely to say yes to those that they owe.
E.g., in restaurants, waitress always give us a gift and about the same time she brings our bill.
In the study, giving diners a single mint at the end of their meal, typically increase tips by
around 3%.

- Scarcity - people want more of those things there are less of. We need to say people not
about benefits, but what is unique and what they stand to lose.
 - Authority – people will follow credible knowledge experts. E.g., when we see medical
diplomas on the walls. What is important is to signal to others what makes you a credible
knowledgeable authority before you make your influence attempt.

- Consistency - looking for and asking for commitments that can be made. So, when seeking to
influence usig the consistency principle, the detective of influence looks for voluntary, active
and public commitments and ideally gets those commitments in writing.

- Liking – we like people who are similar to us, people who pay us complements and people
who cooperate with us. E.g., negotiations.

- Consensus – people will look to the actions of others to determine their own. Rather than
relying on our own ability to persuade others we can point to what many others are already
doing especially many similar others.

Understanding these shortcuts and employing them in an ethical manner, can significantly increase
the chances that someone will be persuaded by your request.