MotivationHaving a motivated workforce is vital for most businesses, since it can lead to higher rates

of productivity, better quality output, and low rates of absenteeism and labour turnover.

The main factors which affect the motivation of workers are pay levels, job security,

promotional prospects, being given responsibilities, working conditions, fringe benefits,

participation in decision-making and working in a team.

Motivational Theories

There are two basic theories of motivation; content theories and process theories.

Content theories focus on what actually motivates people, they study the needs that must

be satisfied in order for the employee to be motivated.

The need is either satisfied by an extrinsic reward (e.g. pay) or an intrinsic reward (e.g.

recognition and praise). The Classical (Fayol), the Scientific (Taylor), the Human Relations

(Mayo), and the Neo-Human Relations (Maslow, Herzberg, McGregor) schools of

management thought are all content theories.

Financial Methods

There are many different methods of payment that a business can choose from, each of

which can have different effects on the level of motivation of the workforce. The main

methods are:

1. Time-rate ('flat rate') schemes.

This payment method involves the employee receiving a basic rate of pay per time period

that he works (e.g. £5 per hour, £50 per day, £400 per week). The pay is not related to

output or productivity.

Any time that the employee works above the agreed number of hours per week may make

him eligible for overtime payments, often at 'time and a half' (e.g. £7.50 per hour instead

of £5 per hour).

2. Piece-rate schemes.

This payment method involves the employee receiving an amount of money per unit (or

per 'piece') that he produces. Therefore his pay is directly linked to his productivity level.

However, it is possible that in order to boost his earnings, an employee may reduce the

quality and craftsmanship per unit, so that he can produce more output in a given period of

time.

3. Commission.

This is a common method of payment for salesmen (e.g. insurance, double-glazing,

telesales). The employee receives a very small percentage (say 0.5%) of the value of the

goods that he manages to sell in a period of time.

4. Performance-related pay (PRP).

This is a method of giving pay rises on an individual basis, related to the employee

achieving a number of targets over the past year. This is common with managerial and

professional workers.

5. Profit sharing.

This involves each employee receiving a share of the profit of the business each year,

effectively representing an annual pay rise. It aims to increase the levels of effort,

motivation and productivity of each employee, since their annual pay-award will be related

to the profitability of the business.

However, if the business makes low profits (or even a loss) then this is likely to have a

detrimental effect on the level of motivation of the employees.

6. Share ownership.

A common form of payment in many PLCs is what is termed 'share options'. This basically

involves each employee receiving a part of each month's salary in the form of shares

(usually at a discounted price).

This forms a profitable savings-plan for the employee, and he can sell them after a given

period of time. This should motivate the employees to work harder and increase their

efforts, since the share price will rise as the company becomes more profitable, therefore

increasing the capital gain on their shares.

Many of these different methods of pay are likely to be supplemented by fringe benefits (or

'perks') such as private health schemes, pension schemes, subsidised meals, discounts on

holidays and travel, cheap mortgages and loans, company cars and discounts when buying

the company's products. The total package of pay plus fringe benefits is known as

the remuneration package.

Non-Financial Methods

There is no universal rule for motivating employees, and there are many methods which

are used by different managers to achieve the goal of a motivated and satisfied workforce.

These include:

Delegation. This occurs when managers pass a degree of authority down the

hierarchy to their subordinates.

Empowerment. This involves a manager giving his subordinates a degree of power

over their work (i.e. it enables the subordinates to be fairly autonomous and to decide for

themselves the best way to approach a problem).

Job enlargement. This involves increasing the number of tasks which are involved in

performing a particular job, in order to motivate and multi-skill the employees.

Job enrichment. This is a method of motivating employees by giving them more

responsibilities and the opportunity to use their initiative.

Job rotation. This involves the employees performing a number of different tasks in turn,

in order to increase the variety of their job and, therefore, lead to higher levels of

motivation.

Quality circles. This is a group of workers that meets at regular intervals in order to

identify any problems with quality within production, consider alternative solutions to these

problems, and then recommend to management the solution that they believe will be the

most successful.

Teamworking. This is the opposite production technique to an assembly-line which uses

an extreme division of labour. Teamworking involves a number of employees combining to

produce a product, with each employee specialising in a few tasks. Cell production is an

example of teamworking.

Worker participation. This refers to the participation of workers in the decision-making

process, asking them for their ideas and suggestions.

Symptoms of poor motivation amongst the workforce include high rates of absenteeism

and labour turnover, poor timekeeping, high rates of waste, low quality output and an

increasing number of disciplinary problems.

When a poor level of motivation exists in a workforce, then the management

should:

1. Develop a strong corporate culture and team-spirit.

2. Ensure that pay levels are fair.

3. Design more challenging jobs.

4. Introduce decision-making at lower levels in the organisation.

5. Give praise and recognition to employees for their efforts and achievements.

6. Ensure that communication flows are effective and that the relevant messages

get to the relevant personnel.

Theories!!!

Taylor & Scientific Management

Introduction

Taylor developed his theory of "scientific management" as he worked his way up from a labourer to a works manager in a US steelworks.

From his observations, Taylor made three key assumptions about human behaviour at work:

(1) Man is a rational economic animal concerned with maximising his economic gain;

(2) People respond as individuals, not as groups

(3) People can be treated in a standardised fashion, like machines

Taylor had a simple view about what motivated people at work - money. He felt that workers should get a fair day's pay for a fair day's work, and that pay should be linked to the amount produced (e.g. piece-rates). Workers who did not deliver a fair day's work would be paid less (or nothing). Workers who did more than a fair day's work (e.g. exceeded the target) would be paid more.

The implications of Taylor's theory for managing behaviour at work were:

- The main form of motivation is high wages, linked to output

- A manager's job is to tell employees what to do

- A worker's job is to do what they are told and get paid accordingly

Weaknesses in Taylor's Approach

The most obvious weakness in Taylor's approach is that it ignores the many differences between people. There is no guarantee that a "best way" will suit everyone.

Secondly, whilst money is an important motivation at work for many people, it isn't for everyone. Taylor overlooked the fact that people work for reasons other than financial reward.

Maslow's hierarchy of needs

Maslow's Hierarchy of Needs is a "content theory" of motivation" (the other main one is Herzberg's Two Factor Theory).

Maslow's theory consisted of two parts:

(1) The classification of human needs, and

(2) Consideration of how the classes are related to each other

The classes of needs were summarised by Maslow as follows:

How does the Hierarchy Work?

- A person starts at the bottom of the hierarchy (pyramid) and will initially seek to satisfy basic needs (e.g. food, shelter)

- Once these physiological needs have been satisfied, they are no longer a motivator. the individual moves up to the next level

- Safety needs at work could include physical safety (e.g. protective clothing) as well as protection against unemployment, loss of income through sickness etc)

- Social needs recognise that most people want to belong to a group. These would include the need for love and belonging (e.g. working with colleague who support you at work, teamwork, communication)

- Esteem needs are about being given recognition for a job well done. They reflect the fact that many people seek the esteem and respect of others. A promotion at work might achieve this

- Self-actualisation is about how people think about themselves - this is often measured by the extent of success and/or challenge at work

Maslow's model has great potential appeal in the business world. The message is clear - if management can find out which level each employee has reached, then they can decide on suitable rewards.

Problems with the Maslow Model

There are several problems with the Maslow model when real-life working practice is considered:

- Individual behaviour seems to respond to several needs - not just one

- The same need (e.g. the need to interact socially at work) may cause quite different behaviour in different individuals

- There is a problem in deciding when a level has actually been "satisfied"

- The model ignores the often-observed behaviour of individuals who tolerate low-pay for the promise of future benefits

- There is little empirical evidence to support the model. Some critics suggest that Maslow's model is only really relevant to understanding the behaviour of middle-class workers in the UK and the USA (where Maslow undertook his research).

Herzberg two factor theory

Herzberg's Two Factor Theory is a "content theory" of motivation" (the other main one is Maslow's Hierarchy of Needs).

Herzberg analysed the job attitudes of 200 accountants and engineers who were asked to recall when they had felt positive or negative at work and the reasons why.

From this research, Herzberg suggested a two-step approach to understanding employee motivation and satisfaction:

Hygiene Factors

Hygiene factors are based on the need to for a business to avoid unpleasantness at work. If these factors are considered inadequate by employees, then they can cause dissatisfaction with work. Hygiene factors include:

- Company policy and administration

- Wages, salaries and other financial remuneration

- Quality of supervision

- Quality of inter-personal relations

- Working conditions

- Feelings of job security

Motivator Factors

Motivator factors are based on an individual's need for personal growth. When they exist, motivator factors actively create job satisfaction. If they are effective, then they can motivate an individual to achieve above-average performance and effort. Motivator factors include:

- Status

- Opportunity for advancement

- Gaining recognition

- Responsibility

- Challenging / stimulating work

- Sense of personal achievement & personal growth in a job

There is some similarity between Herzberg's and Maslow's models. They both suggest that needs have to be satisfied for the employee to be motivated. However, Herzberg argues that only the higher levels of the Maslow Hierarchy (e.g. self-actualisation, esteem needs) act as a motivator. The remaining needs can only cause dissatisfaction if not addressed.

Applying Hertzberg's model to de-motivated workers

What might the evidence of de-motivated employees be in a business?

- Low productivity

- Poor production or service quality

- Strikes / industrial disputes / breakdowns in employee communication and relationships

- Complaints about pay and working conditions

According to Herzberg, management should focus on rearranging work so that motivator factors can take effect. He suggested three ways in which this could be done:

- Job enlargement

- Job rotation

- Job enrichment

Leadership Styles

There are three main categories of leadership styles: autocratic, paternalistic and democratic.

Autocratic (or authoritarian) managers like to make all the important decisions and closely supervise and control workers. Managers do not trust workers and simply give orders (one-way communication) that they expect to be obeyed. This approach derives from the views of Taylor as to how to motivate workers and relates to McGregor’s theory X view of workers. This approach has limitations (as highlighted by other motivational theorists such

as Mayo and Herzberg) but it can be effective in certain situations. For example:

When quick decisions are needed in a company (e.g. in a time of crises)

When controlling large numbers of low skilled workers.

Paternalistic managers give more attention to the social needs and views of their workers. Managers are interested in how happy workers feel and in many ways they act as a father figure (pater means father in Latin). They consult employees over issues and listen to their feedback or opinions. The manager will however make the actual decisions (in the best interests of the workers) as they believe the staff still need direction and in this way it is still somewhat of an autocratic approach. The style is closely linked with Mayo’s Human Relation view of motivation and also the social needs of Maslow.

A democratic   style of management will put trust in employees and encourage them to make decisions. They will delegate to them the authority to do this (empowerment) and listen to their advice. This requires good two-way communication and often involves democratic discussion groups, which can offer useful suggestions and ideas. Managers must be willing to encourage leadership skills in subordinates.

The ultimate democratic system occurs when decisions are made based on the majority view of all workers. However, this is not feasible for the majority of decisions taken by a business- indeed one of the criticisms of this style is that it can take longer to reach a decision. This style has close links with Herzberg’s motivators and Maslow’s higher order skills and also applies to McGregor’s theory Y view of workers.

Summary of management styles

Description Advantages Disadvantages

Autocratic Senior managers take all the important decisions with no involvement from workers

Quick decision making

Effective when employing many low skilled workers

No two-way communication so can be de-motivating

Creates “them and us” attitude between managers and workers

Paternalistic Managers make decisions in best interests of workers after consultation

More two-way communication so motivating

Workers feel their social needs are being met

Slows down decision making

Still quite a dictatorial or autocratic style of management

Democratic Workers allowed to make own decisions.

Authority is delegated to workers which is

Mistakes or errors can be made if workers are not skilled or

Some businesses run on the basis of majority decisions

motivating

Useful when complex decisions are required that need specialist skills

experienced enough

MARKETING

A company needs to consider the marketing mix in order to meet their consumers' needs effectively.

Elements of the marketing mix

The   marketing mix   is the combination of   product ,   price ,   place   and   promotion for any business venture .

Marketing MixNo one element of the marketing mix is more important than another – each element ideally supports the others. Firms modify each element in the marketing mix to establish an overall brand image and unique selling point that makes their products stand out from the competition.

What makes for an effective marketing mix?

An effective marketing mix is one which:

Meets customer needs Achieves marketing objectives Is balanced and consistent Creates a competitive advantage for the business

A company can be:

-market oriented (makes decisions regarding its products according to the market demand- established by market research)

-product oriented (focuses on making products and then trying to sell them)

The first one – I will make what the people want

The second one – I will make a product and (hopefully) people will want it or I will make them want it

MARKET SHARE = the percentage of sales in the total market sold by one business

(how much I sold compared to how much was sold in the entire market in a period of time - %)

Q&A - What is the difference between niche and mass marketing?

In most markets there is one dominant (mass) segment and several smaller (niche) segments…

For example, in the confectionery market, a dominant segment would be the plain chocolate bar. Over 90% of the sales in this segment are made by three dominant producers – Cadbury’s, Nestle and Mars.  However, there are many small, specialist niche segments (e.g. luxury, organic or fair-trade chocolate).

Niche marketing can be defined as:

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

Targeting a product or service at a niche segment has several advantages for a business (particularly a small business):

• Less competition – the firm is a “big fish in a small pond”• Clear focus - target particular customers (often easier to find and reach too)• Builds up specialist skill and knowledge = market expertise• Can often charge a higher price – customers are prepared to pay for expertise• Profit margins often higher• Customers tend to be more loyal

The main disadvantages of marketing to a niche include:

• Lack of “economies of scale” (these are lower unit costs that arise from operating at high production volumes)• Risk of over dependence on a single product or market• Likely to attract competition if successful• Vulnerable to market changes – all “eggs in one basket”

By contrast, mass marketing can be defined as:

Where a business sells into the largest part of the market, where there are many similar products on offer

The key features of a mass market are as follows:

• Customers form the majority in the market• Customer needs and wants are more “general” & less “specific”• Associated with higher production output and capacity (economies of scale)• Success usually associated with low-cost operation, heavy promotion, widespread distribution or market leading brands

MARKET RESEARCH!!!!!!!!=Process of collecting recording and analyzing data about customers, competition and the market

Why?

Reduce risks associated with new product launches Predict future demand changes Explain patterns in sales of existing products and market trends

SOURCES OF DATAPrimary=data collected FOR THE FIRST TIME which is directly related to the firms needs

Observation involves watching people and monitoring and recording their behaviour (e.g.

television viewing patterns, cameras which monitor traffic flows, retail audits which

measure which brands of product consumers are purchasing).

Questionnaires are a means of direct contact with consumers and can take a variety of

forms. Personal questionnaires (such as door-to-door interviewing), postal questionnaires,

telephone questionnaires and group questionnaires (such as asking for the attitudes of a

group of consumers towards a new product). Questionnaires can be a very expensive and

time-consuming process and it can be very difficult to eliminate the element of bias in the

way that they are carried out. It is important that every respondent must be asked the

same questions in the same order, with no help or emphasis being placed on certain

questions / responses.

Experimentation involves the introduction of a variety of marketing activities into the

marketplace and then measuring the effect of each of these on consumers. For example,

test marketing, where a new product is launched in a small, geographical area and then

the response of consumers towards it will dictate whether or not the product is launched

nationally.

Secondary research

This is the collection of secondary data, which has previously been collected by others and is not designed specifically for the study in question, but is nevertheless relevant. Secondary data is far cheaper and

quicker to gather than primary data, but it can be out-of-date by the time that it is

researched. The main sources of secondary data are reference books, government

publications and company reports.

The primary and the secondary research will provide the business with much data relating

to its markets and its consumers. This data can then be used to describe the current

situation in the marketplace, to try to predict what will happen in the future in the

marketplace, and to explain the trends that have occurred.

The business may also use the market research data to segment the market. This involves

breaking the market down into distinct groups of consumers who have similar

characteristics, so as to offer each group a product which best meets their needs. The

main ways of segmenting a market are:

By consumer characteristics: this involves investigating their attitudes, hobbies,

interests, and lifestyles.

By demographics: their age, sex, income, type of house, and socio-economic group.

By location: the region of the country, urban -v- rural, etc.

Effective segmentation of the market can lead to new opportunities being identified (i.e.

gaps in the market for a product), sales potential for products being realised and increased

market share, revenue and profitability.

Quantitative vs Qualitative research

Quantitative research

Quantitative research involves carrying out market research by taking a sample of the population and asking them pre-set questions via a questionnaire

(normally 200+ respondents) in order to discover the likely levels of demand at different

price levels, estimated sales of a new product, and the 'typical' purchaser of the company's

products. The data is numerical and can be analysed graphically and statistically. There

are several types of sample that can be used to gather quantitative data:

Random sampling - this gives each member of the public an equal chance of being used

in the sample. The respondents are often chosen by computer from a telephone directory

of from the Electoral Register.

Quota sampling - this method involves the consumers being grouped into segments

which share certain characteristics (e.g. age or gender). The interviewers are then told to

choose a certain number of respondents from each segment. However, the numbers of

people interviewed in each segment are not usually representative of the population as a

whole.

Cluster sampling - this normally involves the consumers being grouped into geographical

groups (or 'clusters') and then a random sample being carried out within each location.

Stratified sampling - the consumers are grouped into segments again (or 'strata') based

upon some previous knowledge of how the population is divided up. The number of people

chosen to be interviewed from each 'strata' is proportional to the population as a whole.

Qualitative research

Qualitative research attempts to gain an insight into the motivations that drive a consumer

to behave in a particular way. It is usually conducted through group discussions (often

called focus groups) in order to discover the rationale behind consumers' purchases. The

group discussion is often chaired by a psychologist in a relaxed manner, which should

encourage the consumers to discuss their shopping habits and pre-conceptions concerning

certain products and brands.

Product Life-Cycle

This shows the various stages that a product is expected to pass through and it also

indicates the likely level of sales that can be expected at each stage.

The length of the lifecycle will vary from product to product and from industry to industry

(e.g. Oxo Cubes, Levi Jeans and Kellogg's Cornflakes have lifecycles that have lasted for

over 50 years, but various pop groups and childrens' toys have a lifecycle that can last less

than 12 months). Generally, there are six stages to the lifecycle - development,

introduction, growth, maturity, saturation and decline, as illustrated on the

diagram below :

During the development stage, much time will be spent designing and testing the product

concept. A prototype will often be test-marketed, in order to assess the potential sales and

profitability of the new product. A decision will then be made whether or not to launch the

product. The business will, therefore, incur many expenses during the development stage

of the product lifecycle and the product will produce a large, negative cashflow.

It is estimated that only 1 in every 5 new products actually pass the development stage

and reach the introductory stage of the lifecycle.

The introduction stage commences with the launch of the product onto the market. Sales

are low and costs are still very high (especially advertising and distribution). The product is,

therefore, unprofitable at this stage. The length of this stage will vary considerably

according to the product. Some products will take a long time to reach the growth stage of

the lifecycle (e.g. new novels) whereas others will head straight from introduction into

growth in a matter of days (eg new pop-music album releases).

Once the business has made customers aware of the new product and it has managed to

achieve a high level of repeat-purchasers, then the product will head into

the growth stage of the lifecycle. This is where the product starts to become profitable.

Advertising is still extensive. Competitors may launch similar products to cash-in on the

successful new product.

The business will try to prolong the growth stage for as long as possible, but sooner or later

it will reach the maturity stage of the lifecycle. The growth in sales will start to slow down

and the product will nearly reach its maximum market share. There will be several

competing products on the market.

The saturation stage of the lifecycle will occur where the sales of the product have

reached their peak and the number of competing products will have grown significantly. It

is during this stage of the lifecycle that the business may decide to use an extension

strategy to prolong the lifecycle and boost sales, sales revenue and profits.

The final stage of the lifecycle is where the sales of the product go into decline. This is

usually an inevitable result of changing customer tastes and fashions, new technology and

the loss of market share to new products introduced by competitors.

Extension strategies

If a business believes that a product which has reached the saturation stage of the lifecycle

can still produce a higher level of sales, then it may choose to implement one or

more extension strategies to improve the product's ailing level of sales, such as :

changing the appearance and the packaging of the product;

trying to find new uses for the product;

trying to find new markets for the product;

trying to entice customers to use the product more frequently;

ltering the ingredients of the product.

Advertising is defined as any “paid-for method of promotion” and is the main form of “above the line promotion”.

Advertising presents or promotes the product to the target audience through a variety of media such as TV, radio, cinema, online and magazines to encourage them to buy.

The problem with advertising is that consumers are bombarded with advertising messages every day.  How can a business cut through the advertising noise and get a message across effectively?  And how can a business measure the effectiveness of an advertising campaign. It is often said that businesses waste half their advertising spend – the problem is that they don’t know which half!

When deciding which type of advertising to use a business needs to consider factors like:

Reach of the media – national or local; number of potential customers it could reach; how long before the message is seen

Nature of the product – the media needs to reflect the image of the product; a recruitment ad would be placed in a trade magazine or newspaper but a lipstick ad would be shown on TV or women’s magazines

Position in product life cycle – launch stage will need different advertising from products undergoing extension strategies

Cost of medium & size of advertising budget – e.g. local newspaper advertising is cheaper than radio, which in turn is cheaper than TV. But the business will also want to consider cost per head if reaching a larger audience

Online or offline – there has been substantial growth in businesses that advertise online as they swap some (sometimes all) of their advertising budgets to reach Internet users. 

Advertising can also be split into two main types:

Persuasive advertising - this tries to entice the customer to buy the product by informing them of the product benefit

Informative advertising - this gives the customer information.  Mostly done by the government (e.g. health campaigns, new welfare benefits)

Sometimes a business will employ an advertising agency to deal with its needs.  An agency plans, organises and produces advertising campaigns for other businesses.  The advantage of an agency managing the campaign is that it has the expertise a business may not have, e.g. copywriters, designers and media buyers.

The main advantages and disadvantages of advertising as method of promotion are:

Advantages Disadvantages

Wide coverage

Control of message being promoted

Repetition means that the message can be communicated effectively

Can be used to build brand loyalty

Often expensive

Impersonal

One way communication

Lacks flexibility

Limited ability to close a sale

I don’t know how to fix this stupid table…

The main methods of promotion are:

Advertising Public relations & sponsorship Personal selling Direct marketing Sales promotion

A business will use a range of promotional activities for its product, depending on the marketing strategy and the budget available.

The way in which promotion is targeted is split into two types:

Above the line promotion – paid for communication in the independent media e.g. advertising on TV or in the newspapers.  Though it can be targeted, it could be seen by anyone outside the target audience.

Below the line promotion – promotional activities where the business has direct control e.g. direct mailing and money off coupons.  It is aimed directly at the target audience.