Uploaded by Nathan Hodgson

Marketing notes

Marketing notes - Role of marketing chunk 1
Marketing: Def: marketing is the process of getting potential clients or customers interested in
your products and services
 Main aim of attracting customers and growing the base of satisfied customers
 Satisfy customer needs and wants
 Generates revenue through sales
Strategic role of marketing goods and services
The strategic role of marketing is:
 The long-term process of implementing a marketing mix (which includes product, price,
place and promotional strategies) to satisfy the needs and wants of present and
potential customers which will enable the business to increase sales and market share
and achieve long term profit maximization.
As per other business functions, marketing’s overarching goal is:
Profit maximization- occurs when there is a maximum difference between the total
revenue coming into the business and the total costs being paid out.
The marketing plan is: define: a document that lists activities aimed at achieving particular
marketing outcomes in relation to goods or services.
Marketing plan should outline strategies:
Where to market
Who will buy the product?
Why they will buy the product
Coca Cola has built a very good brand through marketing
Interdependence with other key business functions
Interdependence: Define: refers to the mutual dependence that the key business functions have on
one another
Marketing is crucial to all other functions as it generates future funds through the sale of its
 Finance- depends on marketing to generate funds via the selling of goods and services which
generates sales and income and profits for the business. Marketing relies on finance for the
funds necessary to implement its marketing plan
 Marketing determines the number and type of staff required to market the business. HR
provides marketing with the skilled human resources it requires to market its products.
Production, selling, marketing approaches
Production approach 1850s to 1920s
Selling approach 1920s to 1960s
Marketing approach 1960s to present
 The production approaches
The production approach focuses on the productions
of g+s; if business has a better product then
customers will want it.
 Emphasis on quantity and reducing
 Managers focus on achieving high
production efficiency, low costs and mass
 It focuses on strengths of the business
rather than customer
The selling approach
The sales approach emphasizes selling because of increase competition
 Sales orientated. Considers selling most important skill of marketing
 Focus was on promotion and less emphasis on quality products and efficiency finance
 Sales approach is extensively used in industries such as insurance, electricity
The marketing approach
The marketing approach focuses on finding out what customers need/want through market research
and then satisfying needs/wants
 Customer focused
 An increase in discretionary income has meant businesses can focus not just
on customers' needs but also wants
There are 3 focuses on the marketing approach
1. Corporate social responsibility: growing public concern over the environment has
ensure products meet ecological expectation while promoting this
2. Customer orientation: involves collecting customer information and using this to
create effective strategies
3. Relationship marketing: is the development of long term and cost-effective
relationships with individual customers
 Frequent flyer program at QANTAS
Types of markets
Def: a market is a group of individuals, organizations or both that need or want products
 Markets can be defined on:
o The nature of the product being sold
o The characteristics of customers buying the product
o Size of the market
Resource market
The resource market consists of those individuals or groups that are engaged in all forms of primary
production, including mining, agriculture and forestry.
 They produce things by growing and extracting them from the earth
 These businesses buy goods and services that they need to produce these goods, such as
tools, equipment, chemicals
Industrial market
The industrial market includes industries and businesses that purchase products to use in the
production of other products or in their daily operations.
 E.g. LG buys metals to produce LCD and plasma TV's, all car manufacturing companies are in
the industrial market
Intermediate market
The intermediate market consists of wholesalers and retailers who purchase finished products and
resell them to make a profit.
- Wholesalers sell to retailers and then retailers sell to consumers
Consumer market
The consumer market consists of individuals that is, members of a household who plan to use or
consume the products they buy.
 Consumer goods are used up by the customer
 Examples; housing, clothing, food, entertainment
Mass market
In mass markets the seller mass produces, mass distributes and mass promotes one product to all
Products are relatively undifferentiated
E.g. gas, electricity, tap water, milk
Higher personal incomes and customers seeking more individual products, the mass market
has been replaced by segmented or niche markets
Niche market
A niche market is a narrowly selected target market segment
Market segmentation is the process of dividing a market of potential customers into
groups, or segments, based on different characteristics.
It consists of more specialized goods and services/ also known as a concentrated or
micro market
For example: in any newsagent you will see rows of magazines, each appealing to a
specific niche market
Influences on marketing Chunk 2
Factors influencing customer choice
Customer choice (buying behavior) refers to the decisions and actions of customers when they
search for, evaluate, select and purchase goods and services.
Marketing strategies may aim to influence customer choice by altering motivations
Influences businesses should be aware of:
- Psychological, sociocultural, government and economic
 Customers don’t always know what they want so marketers need to look at underlying
factors that may influence their decision and preferences
Def: Psychological factors are influences within an individual that affect his or her behavior
Personal factors that influence individual behavior
o Perception
o Motivation / motives
o Attitudes
o Personality
o Self-image
Perception: this is the process which people select, organize and interpret information to create
Marketing managers are aware that they must create a positive perception for product
Motives: it is the reason that makes an individual do something
- Advertising aims to influence motives
Main motives: health, safety, comfort, pleasure, cleanliness, taste, fear, amusement and
Attitudes: is a person’s overall feeling about an object or activity
- Consumer’s attitude to a product or company will influence success or failure of business’s
marketing strategy
Personality: is the collection of all the behaviours and characteristics that make up that person
Self-image: relates to how a person views himself or herself
People buy things that reflect how they see themselves
People are influenced depending on activities carried out: aggression, sociable, selfconfident and defensive
QANTAS: Psychological influences: personal characteristics that affect buying behaviour. Perception motives
(comfort, safety, reliability) and attitudes all influence QANTAS customer’s choice
Social cultural influences
Socio-cultural influences are forces exerted by other people and groups that affect an individual’s
buying behaviour.
The four main factors:
Social class: refers to a person’s relative rank in society, based on his or her education, income and
Influences type, quality and quantity of products a customer buys
Culture: the ideas, customs, and social behaviour of a particular people or society
Influences attitudes and perceptions
Family and roles: people we are bought up with
Both women, men and young people in the household will influence household spending
and the goods that are purchased.
Reference (peer) groups: is a group of people with whom a person closely identifies, adopting their
attitudes, values and beliefs.
They influence clothing, cars, music
QANTAS: social class – upper class might purchase more first class and business class tickets, while
lower class would be more likely to buy JetStar flights
Economic influences: such as inflation (cost of living), exchange rates, interest rates, taxation,
employment levels, government expenditure and the business cycle can have many effects on a
consumers purchase decisions
Influence a customer’s willingness to spend
QANTAS: the state of the economy can influence the level of consumer demand for Q’s flights
During a recession, customers will have less disposable income = less likely to fly with QANTAS
More likely to fly in boom
Def: federal government has an influence on consumer spending through taxation policies, subsidies
and laws in relation to what consumers are allowed to purchase.
The government sets the economic climate which will directly or indirectly influence
business activity and consumer spending
Government policies (fiscal and monetary) affect inflation, interest rates, economic activity
Government regulations also have an effect on cigarettes, guns, alcohol and gambling laws
 The government might also offer a rebate to people who buy household rainwater tanks or
solar panels
Consumer laws
The Aust consumer law (ACL)
Introduced 2011, replaced 17 existing state and federal consumer laws
Trade practices ACT 1974 has now been replaced by the Competition and consumer ACT
2010. Enforced by the ACCC
Consumer laws are used in an effort to:
 Discourage unfair practices and
 Encourage competition in the market place
Competition and consumer ACT 2010 (Federal)
To protect consumers from undesirable practices, such as misrepresenting the contents of
products, their place of production and misleading and deceptive advertising
Fines can be up to $10 million for companies found guilty of unconscionable conduct
o This is any practice by a business that is just not reasonable and often illegal
Deceptive and Misleading advertising
Deceptive and misleading advertising results in consumers making choices based on
incorrect or misleading information
Applies to the business’s advertising, their product packaging, and any information
provided to you by their staff
Also applies to any statements made by businesses online, in the media
Examples include:
Jenny Craig, Voltaren Gel, Heinz
o Fined 2.5 million dollars for saying their bread products were "baked today" and
"freshly baked in store".
In fact, partially baked and frozen off site by a supplier, transported and "finished" in
the store when they were just defrozen
Some retailers still try and do the following deceptive techniques
Bait and Switch: involves advertising a few products at reduced and, therefore, enticing prices to
attract customers. When the advertised products quickly run out, customers are directed to higher
priced items.
Dishonest advertising: is when an advertisement uses words that are deceptive or claims that a
product has something specific when it does not
Price discrimination
Def: price discrimination is the setting of different prices for a product in separate markets. It is a
selling strategy that charges customers different prices for the same product or service based on
what the seller thinks they can get the customer to agree to.
These different prices are often based on a bias toward groups of people with certain
o For example Microsoft office schools edition is available for a lower price to educational
institutions than to other users
 In certain circumstances, Price discrimination is no longer separately prohibited in
Australia due to changes in the law based on the Competition Policy Reform Act.
Price discrimination is allowed in Australia if:
 the discrimination makes only reasonable allowance for differences in the cost or likely
cost of manufacture, distribution, sale or delivery resulting from the differing places to
which, methods by which or quantities in which the goods are supplied to the
purchasers, or
the discrimination is constituted by the doing of an act in good faith to meet a price or
benefit offered by a competitor of the supplier.
Implied conditions
Def: the unspoken and unwritten terms of a contract
The most important implied term relating to customer purchases is that goods must be
of acceptable quality.
Acceptable quality: def: means that the product is fit for the purpose for which it is being sold,
acceptable in appearance and finish, free from defects, safe and durable
Products must be acceptable quality, meaning:
 Look acceptable, safe, long lasting, free of defects
Warranty: this is a promise made by a business that they will correct any defects in the goods that
they produce or in the services they deliver
 Offer replacement and repairs if faulty
 A business is required by law to offer a refund:
o If the products provided are faulty
o The products does not match the description or a sample
A business is under no obligation to offer a refund if the customer has:
 Changed mind
 Found product sold at a cheaper price
Signs such as "no refunds" and "no refund on sale items" are meaningless as consumers are
guaranteed legal protection for a refund under the CCA 2010.
Qantas now publishes the true costs of fares including previously hidden extra charges and
levies following legal action launched by the ACCC for misleading and deceptive advertising.
Qantas was fined millions of dollars by the ACCC after colluding with airlines to fix fuel surcharges on its
freight services to the US.
Ethical issues
Def: ethical issues are the 'moral' factors that affect marketing decisions beyond legal requirements
 Marketing ethics often refer to it promoting materialism, stereotype images of males
and females, using sex to sell products and marketing to kids, invasion of privacy,
 Could harm the business's reputation
o Materialism – Refers to an individual’s desire to constantly acquire
o Stereotypical – Refers to relating a widely held and oversimplified image or
idea of a particular person or thing
- In 2012 code of ethics was developed for marketers in relation to advertising - Australian
Association of National (AANA) Code of ethics 2012
•Qantas aims to be ethically responsible to its customers and society in the marketing of its services.
•Qantas aims to produce environmentally responsible products.
Truth and accuracy in advertising
Truth and accuracy in marketing laws relate to issues such as misleading advertising
 Misleading advertising is illegal, there are grey areas and loopholes which business's can
exploit, such as the use of terms like special, low fat
 May influence marketers to be more truthful and accurate
 The main unethical marketing practices include: untruths due to:
o Concealed facts (purposefully omitted)
o Exaggerated claims
o Invasion of privacy (tracking of web users)
Good taste in advertising
Good taste in advertising is highly subjective
Some might find offensive where other may not
Australian Bureau regulates adds to acceptable standards
Products that damage health
Relates to dangerous unhealthy products and how they are marketed
Alcohol, gambling, cigarettes
Cigarettes no longer advertised
Engaging in fair competition
Laws that aim to ensure fair competition however there are still loopholes
Examples of engaging in unfair competition may include
o Price fixing - large companies agreeing to set low prices = drive out competition
o Long term loss leader – large chains set unrealistically low prices = drive out
o Advertising campaigns that misrepresent competitors
Competition and consumer act require businesses to compete fairly
Examples of anti-competitive conduct that is against the law
o Cartel conduct – businesses working together
o Resale price maintenance
o Mergers that result in monopoly
Selling under the guise of a survey
Def: this is a marketing ploy whereby a salesperson pretends to be conducting marketing
research, but in reality trying to sell a product
Marketing processes – Chunk 3
A marketing plan is: a document that lists activities aimed at achieving particular marketing
outcomes in relation to goods and services. The plan provides a template for future action aimed at
reaching business goals, such as profit maximization.
Situational analysis – SWOT, product life cycle
Examine the current marketing policies and also look at competitors
Allows business to see right and wrongs
Internal/ external environment analysis as well as needs and wants analysis.
Part of a situational analysis is to conduct a SWOT analysis:
o Swot Def: involves the identification and analysis of the internal strengths and
weaknesses of the business, and the opportunities and threats from the external
o Internal analysis: Strengths and weaknesses of business – controllable
o External analysis: Opportunities and threats - uncontrollable
Product life cycle
Def: the product life cycle consists of the stages a product passes through:
introduction, growth, maturity and decline
For each stage of the PLC a different marketing strategy is necessary.
 Introduction stage: here the business tries to increase consumer awareness and build
a market share for the new product
 Growth stage: brand acceptance and market share are actively pursued by the
producers of the product
 Maturity stage: sales plateau as the market becomes saturated
 Post maturity phase
 Decline stage: sales begin to decline as the business faces several problems
o Product is maintained with some rejuvenation.
o Price is reduced to sell remaining stock, Promotion is discontinued
o Distribution channels reduced
 Renewal stage: here you may renew the product by changing something (adding or
taking something out) and relaunching the product
Product modification
Increase promotion
New products replace existing
Competitor analysis (Not in the syllabus)
A business needs to analyze the competition strategies, strengths and weaknesses, and
predict what they might do
Market research
Def: is the process of systematically collecting, recording and analyzing information concerning a
specific marketing problem
The market research process involves Must be in order when answering question:
1. Determining information needs
2. Data collection
3. Data analysis and interpretation
Three steps of the marketing research process:1. Determining information needs - What information will be useful
2. Data collection
a. refers to facts and figures
b. Use primary and secondary data
i. Primary data: are the facts and figures collected from original sources for
the purpose of the specific research problem. Examples include surveys,
observations, questionnaires
ii. Secondary data is the information that has already been collected earlier by
some other organization. Examples include business financial reports,
customer feedback data
3. Data analysis interpretation –
a. Process of analyzing and focusing on the data that represents average, typical or
deviations from typical pattens
Establishing market objectives
Marketing objectives are the realistic and measurable goals to be achieved through the marketing
- The goals must complement the overall goals of the business contained in the mission
- Objectives must be SMART (Specific, Measurable, Achievable, Realistic and Timely)
o Three common goals are increasing market share, expanding product range and
maximizing customer service
Identifying target markets
Def: a target market is a group of present and potential customers with shared characteristics to
which a business intends to sell its products.
- A business identifies and selects a target market so it can direct its marketing strategies to
that group of customers
- Business may identify either a:
o Primary target market: is the market segment at which most of the marketing
resources are directed.
o Secondary target market: is usually a smaller and less important market segment
 For example, Kids may push their parents to shop at Woolworths so they can
get Ooshies
- Marketing resources are used more efficiently and effectively
3 approaches to identifying and selecting a consumer target market
Mass marketing approach
Def: seeks a large range of customers
- This approach assumes that individual customers in the target market have similar needs
- Product tends to be standardized
- Promotion is aimed at the entire market
- Only one distribution system – intensive
o Bread, milk, water
Market segmentation approach
Def: occurs when the total market is subdivided into groups of people who share one or more
common characteristics
- This enables a business to design a marketing plan that meets the needs of a relatively
uniform group
o Types of cars – utes, 4 by 4, sports
Niche market
Def: a narrow-selected target market segment or a ‘micro-market’. It is a small market with very
specific needs and wants
- Help to avoid competition with large companies and department stores
- Large businesses tend to neglect niche markets because it is rarely profitable for them to
alter their marketing to cater for very small groups.
Mainly uses behavioural segmentation to select its target market
Buyers are distinguished according to trip purpose - business or leisure/non-business activities
Developing marketing strategies
Marketing strategies: def: this are actions undertaken to achieve the business's marketing
objectives through the marketing mix
This will involve developing a marketing mix of the 4P’s, strategies that will satisfy the
needs and wants of consumers and achieve the objectives determined by the business
Marketing mix
Marketing mix: Def: refers to the combination of the four elements of marketing, the four P's product, price, place and promotion - that make up the marketing strategy
 Marketing managers will decide which of the 4Ps must be emphasised depending on
where the product is positioned or its stage in the product life cycle.
Product includes:
 Range of goods and services, product features, warranty, brand name, product quality, style
Price includes:
 Price method
o Cost, market and competition based
 Price strategies
o Skimming, penetration, loss leaders, price points
 Price and quality interaction
Place includes
 Consider the number of intermediaries
 Distribution ie. Intensive, selective or exclusive
 Transport, Storage
Promotion includes:
 Advertising
 Personal selling and relationship marketing
 Sales promotion
 Publicity and public relations
o All these are in the promotions mix
Implementation, monitoring and controlling
Implementation: Def: putting the marketing strategies into action/ operation.
o Implementation is the how, where and when it is to be done.
Monitoring: Def: means checking and observing the actual progress of the marketing plan
Controlling: Def: involves the comparison of planned performance against actual performance and
taking corrective action to make sure the objectives are attained.
o Establish KPI (key performance indicators) and then measure performance to the KPI
and take corrective action if required
Developing a financial forecast (Monitoring and implementing)
Def: A financial forecast is the business's predictions about the future
o A financial forecast is an estimation of the firm's future financial situation, based on
current trends and known future events
o Will constantly have to be adapted for the business’s changing financial state
o Marketers would forecast expected revenue, costs and profit outcomes for the future
Comparing actual and planned results
Sales analysis - Def: is the comparing of actual sales with forecast sales to determine the
effectiveness of the marketing strategy
o It breaks down total business sales by different products, market segments, individual
sales representatives
See if achieve goals or not. Weaknesses and strengths can be analysed and then
allocate more promotion or attention to the desired area that is weak or not
performing well.
Market share analysis: def: this is the process of comparing actual market share with forecast
market share to determine the effectiveness of the marketing strategy.
Compares the business's sales performance with that of its competitor, by working out
whether or not its share of the total market has increased.
Market profitability / cost analysis
Marketing profitability analysis - def: is a method in which the business breaks down the total
marketing costs into specific marketing activities
It looks at the cost of marketing and the profitability of different products
This enables marketing managers to determine the effectiveness of each marketing
strategy according to how it contributes to profit
Revising the marketing strategy (controlling) - taking corrective action if required)
Once the result of the sales analysis, market share analysis and marketing profitability
analysis are studied and compared, the business is in a position to see where the plan
is working and where it is not.
Revising the marketing strategy
Changes to marketing mix
Product, place, price, promotion modification
New product development, Product deletion
Marketing strategies - chunk 4
Marketing segmentation
Marketing segmentation: def: occurs when the total market is subdivided into groups of people who
share one or more characteristics
 By understanding and responding better to different targeted customers, the ultimate
aim of market segmentation is to:
o Increase sales, increase market share
 Key benefits of market segmentation (advantages)
o Helps to determine market opportunities
o Product development and design
o Determine product pricing
 A business segments its market so it can direct its marketing strategies to specific
customers rather than the total market.
Market segmentation types
o Demographic segmentation
o Is the process of dividing the total market according to particular features of
a population, including the size of the population, age, sex, income, cultural
background and family size
o Geographic segmentation
o is the process of dividing the total market according to geographic locations,
such as urban, suburban, rural and climate.
o Psychographic segmentation
is the process of dividing the total market according to personality
characteristics, such as lifestyles/personality’s/values/motives, opinions
and socioeconomic group
Psychographic variables focus on why people behave the
way they do.
Behavioral segmentation
is the process of dividing the total market into groups based on their
knowledge of attitude towards a product. Buyers can be distinguished
according the occasion, benefits derived, user status, user rate, loyalty
o What is their pattern of behavior
Product/service differentiation
Product/service differentiation: is the process of developing and promoting differences between the
business's products or services and those of its competitors
 Product differentiation involves creating characteristics unique to the product to
persuade consumers to purchase it
Points of differentiation
 Businesses can compete for buyers by marketing its product stand out from its
Potential points of difference include:
 Price, Packaging, Labelling, Quality of service
 Value for money: is the desire to obtain the best quality, features and performance for
a given price of a product
 Convenience, Customer service
 Environmental concerns, Social/ethical issues
QANTAS: safety, environmental concerns, convenience, quality of service,
Product/service positioning
Refers to the technique in which marketers try to create an image or identity for a product
compared with the image of competition products.
 This is how the business wants its customers to perceive and recognize the company
 Some brand names, such as Rolex, Ferrari, Reject shop, can immediately evoke an
image of the products quality
 The business uses elements of the marketing mix to shape and maintain this image
 Once a brand has achieved a strong position, it can become difficult to reposition it.
 In order to position products or brands, companies may emphasize
 Positioning by benefit
o Product benefits can be used as a feature of the product, e,g Volvo
safety, energizer batteries are positioned to 'never say die'
 Positioning by price or quality
o Target and Aldi have been very successful in positioning themselves as
value for money alternatives to competitors
 Positioning by direct comparison
o The creation of a product by comparing it to another product. Ford vs.
Holden and Coke Vs pepsi
 Positioning by usage occasion or users
Products - goods and/or service
Def: a product is a good or service that can be offered in an exchange for the purpose of satisfying a
need or want
 The total product concept refers to the tangible and intangible benefits (attributes e.g.
Maserati car associated with high socio-economic status) a product possess.
Def: a brand is a name, term, symbol, design or any combination of these that identifies a specific
product and distinguishes it from its competition.
 Marketers aim to get customers to instantly recognize their brand name and the
products associated with them
 A brand symbol or logo is a graphic representation that identifies a business or
 a trademark signifies that the brand name or symbol is registered and the business has
exclusive right of use. To protect business
 A strong brand name adds value to the product and can build customer loyalty
Branding uses:
 Brand name: e.g. Coles, Coke or Nike
 Logos - a symbol that identifies a brand
 Slogan - a phrase that identifies a brand
o Nike: Just Do It
 Jingle - a tune that reinforces a brand
Branding strategies
- Brands are usually classified according to who owns them
 When a manufacturer owns a brand it is referred to as a manufactures brand or
national brand.
o Examples: Sunbeam, Kraft, Apple, Ripcurl
 A private or house brand is owned by a retailer or wholesaler
 A generic brand are products with no individual brand name at all
Examples: Coles and wollies home brand
Packaging involves the development of a container and the graphic design for a product
 The branding of the product will be used when designing the packaging
o It is an important marketing strategy because it can serve as a form of
advertising at the point of sale that differentiates the products from
similar products
 Packaging serves as a number of important uses in marketing:
o Protects the products during transportation
o It informs the consumer about the use of the product
o It promotes the product and distinguishes it from its competitors
o It protects against misuse or tampering with the product
o Attracts consumer attention
 Redesigning packaging - extends product lifecycle
o Packaging can be used to:
 Make claims (organic, 99% fat free)
 Functional in consumption (Berocca in bottle)
 Contain information, instructions, ingrdients
Packaging - labelling
Labelling is the presentation of information on a product or its package
 Information contained on a label includes:
o Ingredients, Operating procedures, Shelf life, Package size, Country of
 Laws exist regulating truthful and accurate information on labels
Food labels must identify the:
 Name or description of the food, Name and Australian address of supplier, List of
ingredients, Date mark, Nutrition information panel, Country of origin
Price and pricing methods
Def: refers to the amount of money a customer is prepared to offer in exchange for a product
 A product set too high could mean lost sales unless superior benefits are offered
 A price set to low may give customers the impression that the product is cheap
 Businesses must differentiate themselves in a market to have more control over price
Factors to consider when determining price:
 Competition
 Government regulations
 Stage in the PLC
 State of the economy
Cost based
Def: cost based pricing is a pricing method derived from the cost of producing or purchasing a
product and then adding a mark-up.
 A cost based pricing method simply adds a standard mark up to the cost of production
of the product
 Cost + (Cost x mark-up percentage) = Price
 However, it doesn't take into account the level of demand,
Market based
Def: market based pricing is a method of setting prices according to the interaction between the
levels of supply and demand - whatever the market is prepared to pay
 Supply: the quantity of a product businesses are willing to offer for sale at a particular
Demand: is the quantity of a product consumers are willing to purchase at a particular
Competition based
Def: this pricing method determines the price based on the prices set by competitors
Three options here:
 Below your competitor - undercutting
 Equal to competitor - following the price leader
 Above competitors - perception of superiority
Pricing strategies
Once the basic price has been set using the preferred pricing methods, the business then fine-tunes
this price in line with its pricing strategy or tactics to help increase profits
Bundle pricing: Def: is where customers gain a ‘package’ of goods and
services in addition to the tangible good they purchased.
Price skimming
Def: this occurs when a business charges the highest possible price for innovative products during
the introduction stage of its life cycle
 This method would be used when there is no substitute for the product and no or very
little competition
 As competition enters the market this strategy would no longer be used
 Example: introduction of the Apple watch
Def: this occurs when a business charges the lowest price possible for a product or service so as to
achieve a large market share
 Penetration pricing used by businesses to attract new customers through offering a
lower price. Lower price helps to penetrate the market and attract customers away
from competitors
 The business is wanting to achieve a rapid increase in market share
 This strategy would be best used when their a number of similar products entrenched
in the market and the business's new product needs to be introduced to consumers
 Penetration pricing comes with the risk that new customers may choose the brand
initially, but once prices increase, switch to a competitor.
Example: Disney+ used price penetration to gain market share from competitors such as Netflix and Stan. When
Disney first entered the market they offered a subscription of 6.99 a month in comparison to Netflix's $19 a month
Loss leader
Def: a loss leader is a product or service that is offered at a price that is not profitable, but it is sold
to attract new customers or to sell additional products and services to those customers
 Loss leading is a common practice when a business first enters a market
 It is aiming to gain foot traffic
 For example: Microsoft's Xbox one video game console - the product was sold at a low
margin per unit, but Microsoft knew that there was potential to profit from the sale of
video games with higher margins and subscriptions to the company's Xbox live service.
 RSL clubs and bars. Hope people will buy drinks and that is where money is made
Price points
Def: price points (or price lining) is selling products only at certain predetermined prices. They are
psychological price references for consumers which indicate a relative level of quality.
 The use of price points is a pricing strategy whereby a business sets different prices for
similar products. The products are differentiated by their features.
Qantas airlines - 1st class, business class, premium economy and
Apple offer a range of iPhone 12, Coffee - small, regular or large.
Price & quality interaction
 Customers often use the price as a guide for judging quality.
 The price set for a product must be consistent with its positioning and overall marketing
strategy, e.g. value-for-money products cannot have a high price tag.
 People equate higher prices with higher quality.
 Prestige or premium pricing is a pricing strategy where a high price is charged to give the
product an aura of quality and status
Def: Promotion: describes the methods used by a business to inform, educate, persuade and
remind a target market about its products.
Promotion Mix: is the various promotion methods a business uses in its
promotional campaign.
Def: This is a paid, non-personal message communicated through a mass medium.
Advertising media refers to the many forms of communication used to reach an
Examples of advertising media include:
 Television
 Radio
 To inform, Persuade and Remind
This type of promotion is usually very expensive but can reach a large target market at a
low cost per person reached.
The type of advertising media a business selects depends on a number of variables including
 The business’s marketing budget
 The cost of the advertising media
 The product’s position on the product life cycle
Personal selling
Personal selling: Def: involves the activities of a sales representative directed to a customer in
an attempt to make a sale.
 This is usually done face to face, such as by a salesperson in a shop, or over the phone, or
online via chat bars
 Major advantage is that the message can be tailor made to suit the individual customer
 Disadvantage = expensive as it requires people - wages
Relationship marketing
Def: is the development of long term, cost effective and strong relationships with individual
This is done so that the customers are loyal to the business, rather than
focussing on short term sales
Examples could include - Frequent flyer program, fly-buys, Woolworths everyday
rewards cards
Sales promotion
Def: this is the use of activities or materials as direct inducements to customers to encourage them
to buy.
 This is done in an attempt to sell more of its products
 These promotional activities are mostly designed and developed 'in-house' - by the
business itself.
 These activities could include exhibitions, point of sale material, demonstrations,
competitions, free samples and coupons, discount sales and events
e.g. buy one get one free, loyalty coupons, spend x get so much off, discount
Publicity and public relations
Def: publicity is any free news story about a business's products
Def: public relations are those activities aimed at creating and maintaining favourable relations
between a business and its customers i.e. working with the media, making speeches on special
Their to promote the business or something
It is the role of the PR department to create and maintain favourable relations
between the business and its stakeholders
The communication process
Marketing managers can use a variety of channels to communicate a message
A channel is any method (print, TV, online etc) used for carrying a message
Examples of noise include faulty printing, competing messages, inappropriate
language or images, jargon, misinterpretations or perhaps one of the most common people having conversations and fetching refreshments during commercial breaks
Opinion leaders
Often customers may be willing to purchase a product if the message comes via a respected
and trusted channel, such as an opinion leader
Def: an opinion leader is a person who influences others. They influence the choices and
beliefs of their followers towards or against a specific brand, product or service. They are
knowledgeable in their field. They are respected and trusted by their followers.
Common examples of modern-day opinion leaders include social media
"influencers," like Instagram celebrities and YouTubers.
Examples of opinion leaders include:
Sports celebrities etc.
Word of mouth
Def: word of mouth communication occurs when people influence each other during
Consumers will tend to trust this type of information more than business-sponsored
commercials as it is unbiased.
Businesses are increasingly using social media platforms such as Facebook and
Twitter to engage in a form of word-of-mouth communication
Place distribution
Def: Place is making goods and services available at the right quantities and locations when
consumers want them
Whether to use direct or indirect distribution
Direct - is to sell products direct to the consumer-no intermediaries e.g. door
to door (foxtel) group selling (Tupperware) company owned outlets, telephone
sales, mail order, internet
Indirect - means using intermediaries i.e. agents, brokers, wholesalers and
Assuming you use intermediaries the next decision is the length and intensity of
Def: place or distribution are activities that make the products available to customers when and
where they want to purchase them
Traditional distribution channels:
Direct - producer straight to consumer
Indirect - when it goes to anyone else before the consumer
Distribution channel
Def: distribution channels or marketing channels are the routes taken to get the product from the
factory to the customer
 A distribution channel connects a manufacturer to retailer to consumer
Direct channel: Is a distribution channel in which the producer distributes directly to the consumer.
E.g. Dell started by selling all its products directly but now use indirect channels. Direct distribution
would include: Aussiebum men's underwear.
Indirect: is a distribution channel in which a producer uses intermediaries to serve the market
Intermediaries: (link between producers and consumers)
 Such as agents, brokers and retailers, operate between the source of the product and
the final user
 Intermediaries are independently owned businesses that moves products from the
producer to end user
Reasons for intermediaries
 Many markets are too small to make it economically viable for businesses to deal directly
with customers
 They are often more efficient than producers because their closeness to the consumer
Innovative distribution methods
1. Non store retailing is retailing activity conducted away from the traditional store
2. E-marketing
a. Telemarketing - use of a phone to make a sale
b. Internet marketing - any online medium (websites, social media) and
includes electronic post and parcel delivery
Channel choice - intensity of distribution
Channel of distribution best suited to its product depends on the location of the business's market
and market coverage
Def: market coverage refers to the number of outlets a firm chooses for its products and will
influence the intensity of distribution '
Intensive distribution
Def: intensive distribution is a distribution strategy whereby a producer attempts to sell its products
or services in as many retail outlets as possible within a geographical area without exclusivity.
 Here the business wishes to saturate the market with its products
 Many convenience goods such as milk, lollies, soft drinks and newspapers, are
distributed this way
Selective distribution
Def: selective distribution is a strategy where a producers sells its products or services in a few
exclusively chosen retail outlets in a specific geographical area
 Clothing, furniture and electrical appliances are often distributed this way
 The customer would be prepared to seek out a specific outlet that stocks the goods
 Example: apple, Microsoft, Samsung, Nike
Exclusive distribution
Def: is a kind of distribution a manufacturer or supplier authorizes only one distributor to carry out
within a definite region. Such a distributor becomes the sole authorized seller of the manufacturer's
specific products
 An example of exclusive distribution is Apple solely authorising AT&T
(distribution company) to be the distributor of the iPhone to end users
 This is the use of only one retail outlet for a product in a geographical issue
 This method of distribution is often used for exclusive, expensive products
 Example, Maccas, Ikea
Physical distribution issues
 These are all those activities concerned with the efficient movement of the products from
the producer to the consumer.
 It is a combination of several interrelated functions including:
 Transportation
 Warehousing
 Inventory control
 This is how the product is moved from one place to another, either by road, air, rail or water.
 The following issues would be considered when choosing the appropriate means of
 type of product,
 speed of delivery,
 cost and distance to be covered
 This is a set of activities involved in receiving, storing and dispatching goods.
 The storage of products before distribution.
 It would be important to store these products in locations that are convenient for the firm.
 Storage space and cost and location would all impact the decision as to where the product
would be stored.
Inventory control (Ties in with operations and supply chain management)
 Inventory control is a system that maintains quantities and varieties if products are
appropriate for the target market.
 This would be how the stock levels are managed.
 Having the most economic quantity (not to much, not to little) of stock would need to be
 There are advantages and disadvantages to having too much or too little stock.
People, process & physical evidence
 Inventory control is a system that maintains quantities and varieties if products are
appropriate for the target market.
 This would be how the stock levels are managed.
 Having the most economic quantity of stock would need to be determined.
 There are advantages and disadvantages to having too much or too little stock.
Def: The people element refers to the quality of interaction between the customer and those
within the business who will deliver the service.
Recruiting and training quality staff is critical in service based industries.
Customers perception of product is impacted by how staff treat them.
Def: Processes refer to the flow of activities that a business will follow in its delivery
of a service.
Customers will judge the business on how efficient and customer – friendly these
processes are.
A business that has inefficient processes will lose customers and damage its
Physical evidence
Def: Physical evidence refers to the environment in which the service will be delivered. It also
includes the location of where the service is being provided and the materials needed to
carry out the service such as signage, brochures, business cards, business logo and website.
Customers make judgements on physical evidence.
High quality creates an image of excellence and value.
Physical evidence is a marketing strategy that involves giving potential customers exposure to
the actual product (service) so that they can judge the product (service) and be persuaded to
purchase it.
In a restaurant this would include the menu, lighting, furniture, layout and décor etc.
Def: (electronic marketing) is the
practice of using the internet to
perform marketing activities
Social media
SMA (Social Media advertising)
is a form of online advertising
using social media platforms
such as Facebook, Messenger,
Instagram, YouTube and Twitter
to deliver targeted commercial
messages to potential
Main advantages:
o Inexpensive in comparison to traditional advertising methods.
o Easy to use and monitor.
o An effective method to gain exposure.
Main disadvantages:
o Lack of personal touch,
o security and privacy issues
Other pricing strategies not in the Syllabus
o Extra - Discounts
o Phycological/odd
Global marketing
A business’s marketing plan must be modified and adapted to suit overseas markets.
Global marketing is relevant to TNCs.
A Transnational corporation (TNC) is any business that has production facilities in two or more
countries and that operates on a worldwide scale.
 The marketing mix should be customised to consider differences in culture, religion and
tastes from one country to another. This is despite globalisation.
 Market research specific to each country being entered is crucial to business success.
 Information needed from each country:
o Price to charge
o Types of packaging
o Appropriate distribution channel
o Product modifications
o Economic, social, political & cultural features
Global branding
Def: Global branding is the worldwide use of a name, term, symbol or logo to identify the seller’s
 Used for the following reasons:
o Cost effective as the same ad can be used in multiple locations.
o Provides a uniform brand.
o A successful brand can be linked to new products being introduced.
Global branding is considered successful if the brand is recognised regardless of language, social or
cultural barriers
e.g. McDonalds and Etihad airways
Def: A standardised approach is a global marketing strategy that assumes the way the product is
used and the needs it satisfies are the same all over the world.
 The marketing mix will be the same for all marketplaces (countries)
 Standardisation is cost effective because you can gain economies of scale in marketing.
 It has cost savings for a business in that:
 Production runs be longer (PLC)
 R&D is cheaper
 Promotion is standardised (global branding)
 Evaluation/modification is a simpler task
For example Coke: Similar adds or products all over the world
Def: a customised or local approach is a global marketing strategy that assumes the way the product
is used and the needs it satisfies are different between countries
 Here marketing adapts (tailors) the product to meet local consumers' needs and wants
 The marketing mix will be adapted to suit a locations economic, political and sociocultural
 It is possible to adopt a ‘middle path’ between standardised and customised global
marketing. Macdonalds do this as some of their products are standardise across the globe
(Big Mac) and others are customised (Aussie Burger). Beer in Germany
 Due to different culture, income, government regulations, economic factors, competition,
technology, change in products between nations is done.
 Different safety standards in different countries.
 Different voltage and plug of electrical products.
 Income level differences
Global pricing
Def: global pricing is how businesses coordinate their pricing policy across different countries
 This is a major determinant of profits so accurate pricing decisions are crucial to business
 Two strategies:
o Def: customized pricing occurs whenever consumers in different countries are charged
different prices for the same product. For example, Apple music sell the same songs for
different prices in different countries.
o This is determined using the cost-plus method to cover costs of exporting
including tariffs
o Def: standardized pricing is the practice of charging customers the same price for a
product anywhere in the world
o Only successful if marketing costs remain low across all locations
o Risks of this strategy include:
o A domestic business may undercut the standardized price
o Changes in the exchange rate may negatively impact on the exported price
Competitive positioning
Def: Competitive positioning relates to how a business will differentiate its products.
In so doing, develop strategies for the business to create value from these
differences .
A global business must clearly show how its products are better than the competitors’
Without differentiation, it takes more time, money and effort to encourage potential
This is achieved through product differentiation by showing product leadership, developing
positive customer relationships and operational excellence in foreign markets.