Understanding Company Costs, Commercial Departments, and Market Research
Company Costs
The cost of production is the value of productive factors used in the production of a good or a service.
Fixed Costs
Those costs independent of output level, i.e., they do not change if you change the quantity produced.
Variable Costs
Those costs that vary with the level of production. In the short term, it’s important to differentiate between fixed and variable factors. However, in the long term, all costs are variable.
Direct Costs
Those costs directly associated with production and that can be assigned specifically to each product, making it easy to measure the number of units applied.
Indirect Costs
Those costs that affect the production process in general or are common to different products and, therefore, cannot be assigned directly to a product but are allocated using specific criteria.
The Commercial Department
Includes all activities necessary to reach consumers with goods and services produced by the company.
Functions:
- Planning and Control: Consists of outlining future actions and then comparing actual results with estimates made previously.
- Market Study: Provides information to try to determine the purchasing preferences of consumers.
- Promotion and Advertising of the Product: Publicizing the product to make it known to the customer. Product promotion aims to increase sales for a period of time.
- Sales: Involves direct sales organization and relationships with distribution channels.
The Market
Looking at the commercial aspect, we see that there are three important elements: the product, the company that manufactures the product, and the consumer that meets their needs. These three elements define a market.
Types of Market
Market means all trading activities of a product carried out by supply and demand. We can find different classifications:
Perfect Competition
Managers and applicants determine the price, and no one can influence it. There is homogeneity and a large number of bidders, many demanders, knowledge of the market, and total freedom of input and output in the market.
Imperfect Competition
Companies seek to influence the price of the product and improve their profit. The price is crucial. The main examples of imperfect competition are monopoly, oligopoly, and monopolistic competition.
Study of Market
A market survey is to collect, process, and analyze information on the general environment, competition, and the consumer.
Phases of Market Research
- Defining the objective of the research.
- Research Model Design. The main sources of information include internal company information, published data, and official statistics made towards the outside of the enterprise.
- Collecting Data. Effective contact with respondents. The data used in research can be of two types:
- Primary Data: Unstructured information that has been collected specifically for the study.
- Secondary Data: Structured information and readily available.
- Classification and Structure of Data.
- Data Analysis.
- Presentation and Interpretation of Results. It is a synthesis that should contain the following sections: problem analysis, methodology, technical results, and conclusions.
Techniques for Primary Data Collection
The techniques most commonly used are:
Survey
There are several types of survey: personal interview, telephone interview, mail surveys, group surveys, and surveys by e-mail and web. The main advantages are being faster and cheaper; the main disadvantages are that respondents are not a representative sample.
Observation
Studying consumer behavior and drawing conclusions. Observation can be direct or through video.
Experiments
Based on consumer behavior to study their reactions.