Business Lecture - Economics

We begun the lecture speaking the simple theory of sales and demand. We talked about the fluctuation of the demand line which can be described as elastic or inelastic. When it comes to supply, the higher the price the less people want to supply it and the cheaper the price the more people want to. This is opposite of the demand line in normal circumstances.

HOWEVER

- Distortion of markets occur
- Taxes/ levies
- Interest rates
- Nature of product
- nature of markets
- Global / International markets

All if these things can effect / distort demand.


Government use taxes / suty to raise money to spend on what is needed;

- Police
- NHS
- Armed forces
- School System etc.


Tax up (Insert diagram from powerpoint)

Interest rates are also important to the management of an economy. The interest rate is the cost of borrowing money. Government also have to borrow money therefore have interest rates.

Interest rate increase - Cost of money up. - return on investment - better savings return.

Corporate - cost of running rises - Productivity increases?

Personal - increase in cost of borrowing reduce expenditure - pay increase demand? Reduced demand - reduction in inflation.

US Issues Economics (Diagram) 

Money - a medium for smoothing trade in all things. A measurement method of value.

Money has several different definitions -
1. Cash you have
2. The cash you have + the cash you can get (e.g. from savings)
3. The cash you have + the cash you can get + loan credit
4. Loan credit (short term) Long term

Some basics -

Cost - what you have to give, to get something you want now normally described in a monetary value.

Price - What an item is actually sold for

If you'e buying, cost = price

Profit - The positive difference between cost and price

Loss -  the negative difference cost and price

Income -  Money coming in, may be cash or credit.

Expenditure - Often refered ro as spending, money going out.

Debt - How much money is owed TO you.
                                       or
           How much money you owe. Often regarded as negative element.

Credit - How much money beyond that which you have. you may use.



Variable costs - A cost that varies with output.

Fixed Costs - a cost that does not vary with output.

Example - The more t-shirts you have to buy - varies directly with production.
Business rates are fairly static - You pay them irrespective of sales.

A: Costs of running the business.
General costs the can not directly appointed to the client. E.g. heating, lighting, building repairs, management costs etc.

B: Costs of undertaking particular projects.
Specific costs that can be allocated directly to a client.
E.g. Product cost, design cost, etc.

Taxation issues -

Income tax bands:
£10,600 - £31,785               20%
£31,786 - £150,00               40%
£150,000 +                          45%


                               

           

Business Lecture - Buyer behaviour and Business issues

We started the lecture by looking at buyer behaviour and the steps that are taken before a purchase. This starts buy the customer recognising they need something and then searching for something that meets the criteria of what they are looking for. They will then carry out a pre-purchase evaluation which is when they compare a product to another product that they already have experience with. The next stage is the purchase. You would think that after the purchase, this would be the end of the process, however the next step is consumption where they will have either a good or bad experience. Finally a post-purchase evaluation can be carried out where they will decide if the product was good, okay, try and justify the purchase and would buy again, or in bad instances, bad or vile.  

Understanding communication and promotion:

If you have a good understanding of who you are talking to, you can design based on what they would like. 

Maslows Hierarchy of Needs:

5. Self-Actualisation - Inflict personal values on others... 
4. Esteem and Status - A form of respect, power and worth
3. Beloningness - Trying to get a relationship, friends, a 'home', sex...
2. Safety - Gain shelter and defence.
1. Physiological - Need food and water.

It is important to think where people are situated on this hierarchy in order to design. You would always need stages 1 and 2 if you wanted to achieve stage 3 and 3 to achieve 4 etc. 

Pareto principle:

This is a principle that olds am 80:20 rule. This means that only 20% of people want the stress of making decisions. This results in 20% of people owning 80% of wealth and 80% of people owning 20% of wealth.

This is shown through the diagram. A small number of businesses all own multiple smaller ones. Even though this is not plain to see usually, it is happening. And the 80:20 principle is evidenced.

Communication Issues.

Sender > Message > Encode > Transmit > Decode > Receive

We spoke about messages being encoded and how this can effect how someone interprets the message we are sending. When sending a message there is often some disruption half way through which is referred to as noise or interference. In order to make sure the message is perceived clearly, a good thing to do is send it in multiple different forms therefore if one encryption does not make it past the interference, then another might and the message will be understood. If the message is received and understood, it will be accepted or rejected. 

Growing up - mental and physical alterations:

We looked at how as we grow up, the way we think changes. And this is down to society and how we get used to the social norms and conventions of the world we live in. As a baby through to 14, we learn through experimentation. However as we get older, 14-30, our social independence increases. This social independence increases the most we we become old as the physical decay that we suffer makes us rely on society in order for us to have the first 2 stages of Maslow's hierarchy of needs and in good cases, stage 3. 

Light and dark colour perception:

Peter went on to talk bout light and dark colour perception. This made me think about the way in which i design, and how i should always think about what environment the design will be situated and when people will see it. For example, if the design is going to be seen at night, it is important to think about the lighting, as the colours can be lost to the naked eye when no light is reflecting off them. The digram is an excellent indicator of this. 

Business Lecture - Market data and market research

We started the lecture talking about quantitive research. There are 3 types which include:
Geographic
Psycographic
Socio-economic

The Pros to this Detail / Clarity - statistical information objective
Cons - Costly - £150000 + complex and difficult to do needs careful control

We then discussed qualitative research. Firstly looking at Primary data. This can be done through a interview focus group where you discuss with people in the know. We then talked about secondary which is data thats already been published.

The Pros - Cheap - cost of train ticket and lunch! Easy to do and offers holistic view.
Cons - no statistical validation, subjective, success depends on control of discussion.

Market segmentation - breaking market into specific blocks.

Can be done by:
Age,
Sex,
Social Class,
Geography,
Hobby/Interest,
etc.

Successful segmentation
Measurable/ identifiable
Accessable
Substantial
Meaningful

Segmentation ensures successful targeting.

Important:
Define the product offering clearly
Don't try and analyse different objects/products
Only compare like with like
Do not re-invent the wheel! Don't mess with the data to make it fit your criteria as this may ruin the authenticity of the data.

Data sources:

Mosaic
ACORN
Mintel
GMDB
Keynote - Reports
FAME - purely financial
Newspaper ProQuest
BRAD Insight

You need to be looking for turnover and not profit, as its misleading. The more profit you make, the more tax you pay. Turnover will tell you a lot more about how the company is preforming. It depends on the nature of the work the business does and what they are doing. They may be making a loss when it comes to profit, however the share price may go up every year as they are actually preforming well.

Magazines - try WH smiths
Newspapers - Ditto!
Company websites - Many give details of products and prices, they also give details of brand ethos and intent
Retailer websites

We looked at various ads that went beyond the norm. Doing something a little bit different and clever is a good way to advertise, as people will remember it.

I like what they have done with the camera add. I actually had to look twice, and i'm sure that other people would too. Its a very clever idea and has been designed well. 

I thought that this was a brilliant ida. A building under construction can be an eyesore. This is a good way to make something ugly into a work of art. 

Business Lecture - Different types of analysis

Placement Recap

We began the lecture going over more details about looking for placements, recapping on the free Index which has every registered graphic design agency in country.

The directory of design consultants only has companies that pay to be on site however this is is better if you are thinking of going abroad for your placement year. We are more of interest to people in the industry at university level than we were at college, so we should not sell ourselves short. Some of the countries that where mentioned were, Canada, Australia and New Zealand. Each of these places massively appeal to me and i will be making the effort to get a placement abroad if possible.

Business structure

Peter talked to us about a business and the different areas that us as designers need to try and keep happy when designing a product. The different areas that were mentioned are; Marketing, Finance, Technical/ R&D and production.

The problem with having so many departments to please is that they all have different goals, and different aspects of the company to worry about. When designing a product for a client, it is important to know what they need/want. This can be tricky however, when marketing is telling you to improve the quality of materials in the design, and finance is trying to have you cut costs. R&D may ask you to incorporate new technology into the design which will also raise the price that finance won't agree with. Production get involve and then ask how it will be made. Under pressure to alter design to please other areas of the internal company. This is only concept stage and will cause a lot of pressure and stress.

When the development stage comes along, the finance department realise that your design will end up costing a lot for production a year down the line, and this can cause problems as it puts finance under stress. After the development stage is over, it is embodiment, detailed design in order to finally have the finished product.

understand what is happening....
the world
the economy
the client
the firm
the market

An example of when a designer not understanding what he was designing is when a Chinese designer didn't understand cultural importance of the arabic words that meant god that he put on slippers. This caused riots in Egypt. The Chinese ambassador had to make a public apology and designer never seen in the industry again. This was a design error and this is something that us as designers should never do. Every time you talk to client, make a note of whats said. Keep record of requirements and conversations you have.

It is important to ask questions before undertaking a design. How do you ask the right questions before you undertake the design? You need to know the direction that you are going in is correct.

Client is the boss.... or at least let them think that! Leave bits out. This makes the client add things and it makes them have ownership of the design. They have contributed to the design, therefore it is less likely for them to say its rubbish. Always try and allow them to have an input that you leave room for without changing the key concept of the design.

The information that you get given from the client is more than likely not the whole amount of information you need. Always ask them questions and access the situation in order to figure out exactly what the client needs.

Product Positioning

This is an axis in relation to the quality of the product and the price of the product. 

The 20-25 age group is very important as this is the age group that people want to be in. Younger people want to be older, older people want to be younger. We place our selves in different social groups and this may effect where, and who we sell products to. 

Dependent on what place in the market you are in (you may be in competition with ford and vauxhall for example) you need to be designing to that standard in order to compete. 

Boston consulting group matrix (BCG)

This is an axis in relation to relative growth rate and relative market share. I have already looked at this matrix in Business A-Level. It is made up of Dogs, Cash Cows, Stars and question marks. You should never want a dog as the market share and growth rate would both be low, therefore it falls out the market. Cash cows are what companies want. This is because the growth rate is low, however the market share is high, therefore you can milk a cash cow for as much money as possible. A star is where it has both high market share as well as high growth rate. Stars are products that will make a profit and are on the up. Eventually stars usually turn into cash cows, which is what the business would want. A question mark is a product that is new, and it is a bit of a risk. You can;t be sure how this product will do, and it could end up turning into any of the other three. 

PEST Analysis

Political

Economic 

Social

Technological

Now.... - 5 Years.... - 10 Years....

SWOT Analysis

Strengths 

                              Internal

Weaknesses 

Opportunities 

                             External

Threats

Product life cycle 

Introduction - Growth - Maturity - Decline. 

Can add an extension strategy in order to extend the product life cycle before the decline. This can be through marketing and advertising again. This may be a change in packaging, or targeting a new target market. 

Adoption Curve 

Innovators - 2.5%  Early Adopters - 13.5%  Early Majority - 34%  Late majority - 34%  Laggards - 16%

After a certain amount of time for different products, products become obsolete. This is something to think about when designing a product. Thinking about the future, and how long it will take for the product to become obsolete. Computers for example usually have an obsolescence of 3 years.

Design Audits 

These are more difficult to assess, often occurring after an event... useless then?! Its best to get it right the first time round! Look at the rate of change, where will the design be shown. Whats the strength of what i'm printing on. As a designer, its important to find out the technical requirements before the final product/ design is printed/ made. 

- Right talents 

- Right team structures  - or recognise where the problem areas are

- Involve all parties 

- Ensure management of information 

- Encourage collaboration 

- Resolve problems quickly 

- Ensure effective communication

Overall I took out a lot from this lecture, as it made me realise how the knowledge i gained at A-Level Business studies can be used in the real world of the creative industry. It was good to recap on the theories such as SWOT analysis, PEST analysis, Boston matrix and the product life cycle, and i think that thinking about these different things when talking to a client, or even completing a brief will be a massive help in the nurturing and improvement of my work. 

Business Lecture - Induction

We started the first Monday back with a Theory as Practice lecture that was conducted by a new lecturer, Peter. He started out by getting us into the right mindset for the year, talking about how we should have confidence in our own ability as designers, and be independent self thinkers.  A nice quote that i took from the lecture was"regret is always more painful than failure".

Placements

He then moved onto talking about placements and what was the best approach for us to find a placement that will be best for us. This involved Peter explaining the different areas that we may want to move into, and what websites to look at in order to find job openings. I am defiantly going to be using the Institute of Practicing Advertisers (IPA) and Free Index in order to see what is available to me.

He then went on to say that it is better to send a written letter to a specific person in a company than just sending an email. This will help you to stick out a little bit more as it is harder to get rid of a letter than an email, and you are more likely to get a reply. We should make the letter person; to that person and company, and make sure not to ask for a placement outright, but ask for a meeting with them in order to chat about the state of the industry.

It is about who you know and not what you know when looking for placements, and making yourself known to influential members in the industry can not hurt at all. If I manage to meet with someone like this, i would intend to try and keep in contact and maybe ask for advice on projects and even competition work.

Different types of placement

The university route - This involves paying the university to see over the placement in case anything goes wrong. You can also opt to have the work you do at the placement marked by the university that will go towards a grade.

Suspended degree - This would involve me leaving university for a year in order to take part in a placement that i find outside of the university guidelines. If the placement of my choice does not meet the guidelines of a university based placement, it is still ok for me to do this for experience alone.

Designing for a client

The things that you should think about when designing for a client are:
- Who does the client actually need you to talk to?
- Understand the client and the end user.

Sometimes the client is not the correct person to be designing the product/ design for, as it could be a company that has customers of their own, therefore the design should be focused on the end user. It is important however to keep both the client happy as well as handing in a design that will be successful with the end user.

When making a design, it is important to think about the product orientation. If you are designing a product, where will this be advertised, and who will it be targeted at?

Being a creative, you do not need to limit yourself to a certain area of the industry. When a client is paying you, they are paying for your knowledge and creative ability. We have assets that the client needs and we can charge for that. Therefore we can move from different areas of the industry as long as we use our assets. It can be hard for clients to wrap their head around this prospect however, especially if they are convergent thinkers.

Markets 

There are different aspects to a market that allow a business to sell products, and it is important for a designer to know what is going on in the market / stocks as it will give them a better depth of knowledge of what is needed in the market at that time. e.g. If there is a disease in all of the coffee beans and Starbucks had asked you to re brand a product in their line, then you may want to check that they still wanted the design before doing it. They may cut back prices in order to survive as a company and a new brand design may be something they cut back on.

We went on to talk about the different types of economies. These included:

- Firms: Manufacturing, Sales, Management, Finance, Marketing, etc.
- Markets: Competitors, Suppliers, Customers, Clients.
- National Economy: Geographic entity - a country. Private sector - Firms, Companies, etc. Public sector - Financed by tax revenue such as schools, Government, Police, Armed service hospitals etc.
- Global economy - World trade, Economic blocks.

These can be put into micro economic and macro economic as shown in the diagram above. However there can be a knock on effect if something happens to one. For example, if we go into a recession on a global scale, then people will be less likely to spend money and you as a designer will find it harder to find clients.

There are a lot of factors that can effect these economies, and some are even out of our control.

Basic Marketing 

The 4 P's:

- Price

- Product

- Promotion

- Place 

These 4 aspects of marketing need to be thought about when designing. They are all as important as each other and different situations have the need to use different ones more. 

When thinking about a product in general, it is set into two categories. A core product which is what the product must do. Which is the reason for the product being made in the first place. And the secondary product, which is why the consumer buys it. This is the aesthetic of the product which actually persuades the customer to make a purchase when the product is compared to others similar. 

Promotion is done through advertising, pricing, offers and packaging. Sometimes loss leaders are used in order to get customers to buy other products or services. 

The place is where the product is being made available. This could be on the high street or on the internet. Different age ranges may prefer to shop in different ways, therefore the place of the product is an important aspect to get correct depending on the demographic. 

What is design?

Design is visual communication through problem solving and creativity. 

We learned about the two different mental processes which include convergent thinkers, and divergent thinkers. 

Convergent thinkers are people who see a problem and work their way through it piece by piece until they come to an solution. These would be people like accountants and engineers. 

However creative people such as graphic designers and animators are divergent thinkers. We do not think as literally as other people, and come up with more radical ideas with out of the box thinking that other people may not be able to figure out how the solution came to be.

An interesting think that i learned was that people who are divergent thinkers are usually better with shape and form, therefore this is why a lot of designers suffer with dyslexia. 

Attitude - Management Vs Designers

Design process

We recapped on the design process that we should go through when starting a brief. It was good to go through this again as I intend to stick to it more in my upcoming project in order to develop a deeper understanding of the subject matter.

I enjoyed the introduction lecture to intermediate theory as practice, as it took a different direction from what we have learned before, and went down the business route, and the things that we should know about the actual clients and how to understand our clients. Some of the things covered, i have actually learned before at A-level business studies, therefore i hope that i will develop a greater understanding, and will be able to excel. 

The most interesting part of the lecture for me had to be the different types of thinkers (convergent/divergent), and how being in a certain category could make a person more adapt to change that others.