N4 Entrepreneurship & Business Management
2. Manufacturing concern
An entrepreneur manufactures tables. The rent for the factory amounts to R4 000 per month. The workers wages amount to R32 000 a month. The materials used to manufacture an average of 1 600 tables per month is R800 and sold. Other administrative costs such as telephone and the salaries of clerks amount to R20 000 a month. The entrepreneur intends making a 20% net profit. • What should the ideal selling price be?
3. Service undertaking Generally there are two types of service businesses, namely those that engage in repair work and those that render a general service.
4. Repair service
Allan, an entrepreneur motor mechanic repairs cars in his backyard. His assistant receives R120 an hour. Other vehicle costs amounts to R1 200 a month. The fix and repair work on a customers car takes 2 hours. His fixed costs per month are R6 000. Spare parts to the value of R1200 (cost price) were fitted. Allan calculated that he spends 300 hours every month repairing motorcars. He intends making a net profit of 10%. Only the assistant work on this specific car. • What must the customer pay for the work?
5. Service rendering business Kaylon who has a hairdressing salon employs two hairstylists. The rent amounts to R1 560 a month. Other fixed costs are R600 a month. Kaylon, pays the hairstylist R20 an hour. Other variable costs amounts on average to R11 520 a month (wages of the stylist excluded). Kaylon does no hairstyling, but receives and sees to the needs of the customers, answers the telephone and does administrative tasks. She has calculated that a hairstylist works on average 180 hours per month. She requires a 10% profit. • If a wash, cut and perm takes three hours, what should the customer pay? •
Given your knowledge of the prices of salons is this a realistic price? Also refer to the pricing criteria.
3. Promotion
Promotion is the 3rd “P” of the marketing mix that we discussed earlier. It is often seen as the creative, visual and fun part of marketing. Promoting your product is essential to securing the sale. It is all about informing your customers about the existence of your product, and convincing them to buy it. Clearly, if you choose the position of your business well then your promotional task will be a lot easier.
3.1 What are the goals of promotion?
When promoting a business, try to achieve the following four goals: 1 Tell them about the existence of your business Advertising the business (name) itself is done to create a general awareness of your business. It implies that the name and logo of your business are displayed prominently on your business premises, vehicles, letterheads, etc.
DEFINITION
Promotion is the process of informing your potential customers about your products and why they should buy them (benefits).
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