4 04 Understand the Marketplace Experience Risk Key

4. 04 Understand the Marketplace Experience Risk Key to understanding the marketplace experience, is identifying risk and knowing how to manage and minimize your exposure to risk. Bellinger: Reflections: Milemarker 6/Key terms (place in your notebook) Teacher Input: Taking Risk ppt Students Input: Taking Risk notes

Milemarker 6 Bellringer Questions to reflect on: How are you going to test your business idea? What do you have to do to prepare to get the idea out in the marketplace? What problems did you encounter in testing your idea? Are there things you would do differently if you had to do it again?

Key Terms 1. Advertising-A non promotional message paid for by an identified sponsor utilizing media such as television, radio magazines billboards and direct mail. Financial plan-provides projected financial statements Loss-More money going out than coming in Net Profit-amount of money that remains when expenses are paid

continued Personal Selling-a form of promotion that uses planned personalized communication in order to influence customer buying decisions and ensure satisfaction Promotion- Any form of communication a business or organization uses to inform, persuade or remind consumers about its product/service Public Relations-Any activity designed to create a favorable image towards a business its products or its policies o Visual Merchandising/display-cordination of the physical elements of a business or a product to project the desired image to the consumer

continued Vender –supplier of goods or services to a business

*Risk: The possibility of a financial loss.

Risk Management: The process of managing a business’s exposure to risk in order to achieve business objectives.

Business risk: The possibility of business failure or loss.

Think About It The possibility of financial loss is: a. b. c. d. Risk Marketing Entrepreneurship Collateral

Speculative risk: Risking loss to make a profit. • Possibilities of loss, no change, or gain (Examples: buying new machinery, constructing new buildings)

Pure risk: The possibility of loss to a business without any possibility of gain. ØEconomic risks ØNatural risks ØHuman risks

*Economic risks: Risks that result from changes in overall business conditions. • Product • Competition obsolescence • Changing consumer lifestyles • Government regulation • Population changes • Recession • Limited usefulness of products • Inflation

*Natural risks: Risks resulting from natural causes. • Unexpected changes in normal weather • Earthquakes conditions • Tornadoes • Floods • Hurricanes • Fires • Lightening • Droughts

Human risks: Risks caused by human errors as well as the unpredictability of customers, employees, or the work environment. • Shoplifting • Employee theft • Burglary • Robbery • Computer crime • Stolen credit cards and bad checks • Accidents and injury

Think About It? A seafood restaurant on the Outer Banks suffered damage during a hurricane and had to close for 3 months to make repairs. What type of risk does this demonstrate? a. b. c. d. Human Risk Economic Risk Natural Risk Transfer

Methods of Risk Management

Methods of dealing with business risk ØRisk reduction ØRisk transfer ØRisk retention ØEmergency planning

Think Pair Share Reflect back on the progress of your product or service? At this stage in the operation, what needs to be reevaluated or changed? By getting involved in producing products or services cause you to see entrepreneurship differently explain your answer. How successful or regretful are you in choosing the product or service. Throughout this progress what has your personal experience or knowledge have you gained from the “Road of Entrepreneurship? ”

Risk reduction • Design work areas to reduce the chance of accident or fire. • Educate employees on safe use of equipment. • Check and service safety equipment on a regular basis. • Stress the limits of your company’s products. • Implement ways to reduce shoplifting. • Control employee theft. • Implement ways to reduce robbery.

Risk transfer* • Property insurance: Covers the loss of physical property (cash, inventory, vehicles, buildings). • Real property: Buildings, land, and fixtures. • Personal property: Vehicles, clothing, furniture, jewelry. • Business interruption insurance: Makes up for lost income if a business is shut down for repairs or rebuilding. For example: Cape Fear Chicken & Barbeque

4. 04 Understand the Marketplace Experience Risk Key to understanding the marketplace experience, is identifying risk and knowing how to manage and minimize your exposure to risk.

Group Activity Bell ringer What Methods do Entrepreneurs Use to Control Risk Read as a Group & Complete the Case Study at the bottom of handout.

Risk transfer • Casualty insurance: Protects a business from lawsuits. • Errors-and-omissions insurance: Protects businesses from lawsuits resulting from mistakes in advertising. • Product liability insurance: Protects manufacturers from claims for injuries that result from using their products. Ex. Mc. Donald’s Hot Coffee Incident) • Fidelity bonds: Protect companies from employee theft. • Performance bonds: Protect a business if

Risk transfer • Life insurance: Pays a business in the event of the insured person’s death.

Risk transfer • Workers’ Compensation: A government-regulated program that provides medical benefits and income to employees who are injured on the job.

Trey was able to use his property insurance to replace his catering company's delivery truck that was stolen. What does this demonstrate? a. Risk Transfer b. Risk Control c. Risk Retention d. Risk Avoidance

Risk retention • Self-insurance against business loss • The business must set aside money each month to help cover the costs should a loss occur.

Emergency planning • Businesses must have procedures in place before a crisis occurs. • Businesses must create emergency response plans to handle emergency situations.

What is Promotion in marketing mix? Promotion is one of the four main components of this mix, and it is essential to complete the sales process Communication The promotion component of the marketing mix is all about communication with the customer. If a business cannot effectively communicate its message to the public, it will not close sales

Advertising (Sprint) https: //www. youtube. com/watch? v=s 34 u-c 4 ykz. Y Target https: //www. youtube. com/watch? v=VFBsxw. KHT 14&i ndex=14&list=PL 2803 FADDD 7 F 2 FC 2 A

Advertising Kia https: //www. youtube. com/watch? v=ZYWHs. Oe. Df 3 Mo ul https: //www. youtube. com/watch? v=3 Jl. AYOK 9 ks. Q

Advertising One of the most essential components of promotion is advertising. Most businesses use some type of advertising to bring in new customers. This is a direct form of communication in which a business has to pay for the right to gain access to consumers. Advertising can take place in a number of different ways such as radio ads, TV ads, newspaper ads and online advertisement.

Public Relations • Public relations is another essential part of the promotion mix. Public relations deals with the overall general perception of the company. This can come through using news releases, news stories and other strategies to shape the perception of the company. Maintaining a good reputation in the public eye is important for most businesses, and this area of promotion deals with handling publicity. This could be done with the help of a public relations firm or handled internally.