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Appreciation that initial planning to set up a
business will require recognition and
investigation in to other businesses offering
the same product or service (competitors).
Understand that new businesses will need to
find out more information about their
competitors – their strengths and
weaknesses.
Appreciate that entrepreneurs can spot
further opportunities by comparing their
business offerings with that of others.
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Product Range – a group of similar products
made by a business, eg different soap powders
Brand – a named product which customers see as
being different from other products, with which
they associate, eg designer names.
Brand image – the idea that customers have in
their mind about a product/shop/brand.
Added Value – increasing the worth in a product
or service.
USP – Unique Selling Point, a characteristic that
makes a product/service unique
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A competitive market has many businesses
trying to win the same customers.
The chocolate bar
market is competitive!
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A monopoly exists when one firm has 25% or more of the market, so reducing the
competition.
Case Study
Chloe Smith graduated with a degree in fashion
design and went on to work, at management
level, for a large department store with much
of her work focussed on shoes. Having gained
this experience she feels it is time to launch
her own business selling shoes.
To get her business in the best place she has
to analyse the competition….
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Different shoe stores compete with each
other for customers, in different market
segments,
Different stores have slightly different
product offerings and product ranges,
To succeed as a business you need to be
competitive, there are different was to be
competitive.
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Product Range,
Quality,
Design,
Selling experience,
Customer service,
After sales service,
Price,
Brand image,
Suppliers
TASK 1
In a word document
with a clear
explanation, using
these words, say what
these are and how can
they help your business
to be competitive?
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Can you think how each of the ways to be
competitive, listed on the previous slide,
would help to be competitive?
List each one and explain please.
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If you want to set up a business that is in a
strong market place – there are established
businesses in it – you have to find a way of
adding value to the product or service that
your business has to offer.
This can be done by ADDING VALUE
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Quality,
Design and Formula,
Convenience,
Speed and quality of service,
Branding,
USP
Task
How can each of
these add value to a
business? List each
one and explain
how it can add
value to a product
or service please.
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Building a brand – a reputation for quality, value etc that
customers are prepared to pay for. Nike trainers sell for much
more than Hi-tec, even though the production costs per pair are
probably pretty similar!
Delivering excellent service – high quality, attentive personal
service can make the difference between achieving a high price
or a medium one
Product features and benefits – for example, additional
functionality in different versions of software can enable a
software seller to charge higher prices; different models of
motor vehicles are designed to achieve the same effect.
Offering convenience – customers will often pay a little more for
a product that they can have straightaway, or which saves them
time.
A business that successfully adds value should find that it is able
to operate profitably. Why? Remember the definition of adding
value: where the selling price is greater than the costs of making
the product.
www.tutor2u.net
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Every business needs to add value to help to
survive.
The most successful businesses are the ones
that can achieve high levels of value added
for the type of product that is being sold.
Even in Education – schools have value added
measures!!
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Consider the examples of new cars
rolling down the production line
being assembled by robots. The
final, completed and shiny new car
that comes off the production line
has a value (price) that is more than
the cost of the sum of the parts.
Value has been added. Exactly how
much added value is determined by
the price that a customer pays.
Alternatively, imagine a celebrity chef
preparing a meal at his luxury
restaurant. Once the cooking is
complete, the meal is being served and
sold for a high price, substantially
more than the cost of buying the
ingredients. Value has been added.
www.tutor2u.net
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Create a document to explain why brand or
product image is important.