References 4.3.1 Product leadership Its practitioners concentrate on offering products that push performance boundaries. Their proposition to customers is an offer of the best product, period. Moreover, product leaders don't build their positions with just one innovation; they continue to innovate year after year, product cycle after product cycle. (Treacy and Wiersema, 1996) For product leaders, competition is not about pric 4 How do organisations become market leaders? Drucker (1992) wrote: The five most important questions you will ever ask about your organization [are]: What is our business? Who is our customer? What does our customer consider value? What have been our results? What is our plan? Can you answer these questions for your own organisation? I don't expect you to know all the answers now. Try to think about them 3.2 Who is the customer?
Customers are people who buy our products and services, and may or may not use them. The key to defining these people as ‘customers’ is that each engages in an exchange relationship that adds value to the organisation providing the product or service. Consumers do not give any value to organisations – there is no exchange relationship. They use products and services, but do not buy them. 3 Do all organisations need to be market oriented? As you have seen, many marketing writers maintain that to be successful all organisations (commercial and non-profit) must be market oriented and must focus their attention on adding value to their products and services to satisfy their customers’ needs. Leaving aside the word profit from the CIM's definition of marketing, at a conceptual level the process of becoming market orientated is concerned with identifying, anticipating and satisfying customers’ needs. Kotler (Drucker, 1992 2.3 Marketing department marketing It is common practice for an entire organisation's marketing activities, such as advertising, sales and market research, to be grouped together in a marketing department. The department's function is to create marketing plan activities that are designed to increase the customer's understanding of existing products and services. The marketing director manages all specialisms. Marketing is seen as ‘what the marketing department does’. 1 What does 'marketing' mean? Before you start working through this course, take a moment to write down what you understand by the term ‘marketing’, either on the basis of your previous studies or the everyday use of the term. 6.2 Conflicting objectives You have just seen how an objective to maximise market share may not be compatible with an objective to maximise profits. Businesses may have multiple objectives, many of which conflict. Think, for example, how difficult it would be for an oil refinery to both maximise profits and minimise the effect upon the environment of its production activities. Similarly, maintaining high product quality while minimising costs would be extremely difficult. Imagine if a business was struggling. Its 4 Conclusion Culture is just one perspective that can help us to understand more about a business. In this course we saw how the concept of culture developed from research into differences between cultures at a national level. Many cultural elements of a business are not obvious, but there have been some attempts in the academic literature to develop definitions and identify influencing factors. It is possible to see, or ‘feel’, that one business is different from another, and that this involves more Keep on learning   There are more than 800 courses on OpenLearn for you to Learning outcomes After studying this course, you should be able to: make an informed judgement about whether or to what extent a financial market satisfies the conditions of an efficient market identify the main factors that could detract from that efficiency. 4.2 Discounted cash flow Any investment gives rise to a stream of future expected cash flows. DCF converts all of these to an equivalent amount of present-day money (or present value) by discounting each future cash flow for the appropriate number of periods (for example, years) by the periodic discount rate. The periodic discount rate is the investor's required rate of return including the time preference rate, a premium for risk and an adjustment for inflation. Having established the present values< 3.7 Interest rate risk This has to be seen in conjunction with the previous comments about the secondary market in shares and debt instruments. An efficient secondary market can ensure that there is always a ready buyer for an investment, but the price at which the investment can actually be sold will depend entirely on market conditions at the time of sale. The secondary market price will not necessarily bear any relation to the price originally paid by the investor. The following example illustrates the general p Acknowledgements Except for third party materials and otherwise stated (see terms and conditions), this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence Course image: Author(s): 7.3 What is an effective decision? To improve decision making it is first important to have a clear idea of how we should judge an effective decision. While in this course we have suggested that decisions often stray from formal rationality, this does not always mean those decisions are less effective. Sometimes it is smart to take mental shortcuts: drawing on hunches and intuition can allow us to tap our tacit knowledge and experience and can reduce the costs of decision making. It can be smart to ask what is ‘legitimate’ 6.6 The social construction of unknown risk While some risks can be quantified, many are unknown. In the face of such uncertainty our approach to risk depends on fundamental assumptions about the way the world works which cannot be readily subject to empirical test. Different social groups have different approaches to uncertainty. Schwarz and Thompson (1990) characterise these in terms of what they describe as four myths of nature. Adams (1995) has conceptualised these in terms of a ball on a surface ( 6.4.1 Implications What does this all imply for decision making? First, the importance of control perceptions to decision makers' perceptions of risk suggests an important source of bias. In a study of managers' risk taking, Zur Shapira (1995) found that managers would often discount risks on the basis that they felt they could control them. In my own research on traders' decision making, I found traders to suffer from control illusions and their risk judgement and performance to suffer in consequence: illusory 6.2 A rational-economic perspective on risk A rational-economic perspective generally represents risk as a combination of the expected magnitude of a gain or loss, combined with some probability distribution of anticipated outcomes. Economic ideas of risk behaviour are founded largely on expected utility theory. Expected utility theory predicts that investors will always be risk averse. The shape of the utility curve (utility plotted against increasing wealth) is such that utility increases with wealth, but at a declining rate. This is 6.1 Introduction An important aspect of decision making which crosses all three perspectives is making decisions about risks. Risk is all-pervasive in organisational life and many decisions require us to weigh up and choose between different kinds of risk. Thus any account of decision making would be incomplete without examining how our perceptions of risk affect our decisions. In this section we will examine risk from the three different perspectives we have identified: rational-economic, psychological and s 5.5.3 Normative pressures
Normative pressures concern what we think we ‘should’ do. They concern our values and the broader social values to which we subscribe. Some organisations make explicit attempts to foster particular kinds of value (for example, in relation to customer service), but normative pressures also come from outside the organisation, such as from a particular professional or religious affiliation. Institutional pressures are important for both private and public-sector organisations.
Activity 1
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Brassington, F. and Pettitt, S. (2000) Principles of Marketing, 2nd edn, England, Pearson Education Limited.
Christopher, M., Payne, A. F. T. and Ballantyne, D. (1991) Relationship Marketing: Bringing quality, customer service and marketing together, Oxford, Butterworth Heinemann.
Curtis, J. (2000) ‘A clear view of CRM’, Marketing Direct, No. 50, pp. 4
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