HSC TOPIC 2: MARKETING
Role of Marketing
MARKETING​:​ process of planning/executing conception, pricing, promotion + distribution
of ideas/goods/services to create objective-satisfactory exchanges
STRATEGIC ROLE OF MARKETING GOODS AND SERVICES
● Implementation of marketing plan to achieve profit maximisation
● Develop customer awareness and demand
PROFIT MAXIMISATION​:​ maximum difference between total revenue and total costs
MARKETING PLAN​:​ activities aimed at achieving marketing outcomes
- template for future action for reaching business goals
Marketing plan:
- Outlines strategies needed
- Based on research
- Customer as central focus
- Maintain customer base
INTERDEPENDENCE WITH OTHER KEY BUSINESS FUNCTIONS
INTERDEPENDENCE WITH MARKETING:
Operations​ - relies on production of quality goods/services to fulfill customer promises
Finance​ - provision of sufficient funding for aspects of marketing
Human Resources​ - select staff best equipped to achieve business’ objectives
PRODUCTION, SELLING, MARKETING APPROACHES
PRODUCTION APPROACH
SALES APPROACH
- 1820s - 1920s
- 1920s - 1960s
- Industrial Revolution
- Emphasises selling
- Focused on production
- Increased competition →
- Marketing = taking orders
attempt to stimulate demand
+ delivering products
- Marketing still secondary to
production + finance
MARKETING APPROACH
- 1960s - present
- Customer becomes focus
- Market research
- Stage two: adds CSR +
relationship marketing
- Customer orientation
SELLING​:​ activities undertaken to assist customer’s buying decisions
CUSTOMER ORIENTATION​:​ every aspect of business operations = aimed at
achieving highest standards of customer service
TYPES OF MARKETS
RESOURCE
➢ Primary production (e.g. mining,
agriculture)
INTERMEDIATE
➢ Purchase finished products + resell to
make profit
MASS
➢ Mass-production, mass-distribution,
mass-promotion (one product to all buyers)
INDUSTRIAL
➢ Purchase products to use in further
production
CONSUMER
➢ Individuals who plan to use/consume
products they buy
NICHE
➢ Concentrated/micro market → narrow
target market segment
Influences on Marketing
FACTORS INFLUENCING CUSTOMER CHOICE
CUSTOMER CHOICE​:​ (buying behaviour) decisions/actions of customer regarding
evaluation/selection/purchase of goods/services
PSYCHOLOGICAL
➔ Influences within
affecting choice
- Perception
- Motives
- Attitudes
- Personality
SOCIOCULTURAL
ECONOMIC
➔ External influences
by people/groups
- Social class
- Culture
- Family
- Friends
➔ Capacity to
compete +
customer’s to
spend
- Boom
- Recession
GOVERNMENT
➔ Policy measures
- Economic policy
- Laws/regulations
(CCA 2010)
- Regulatory bodies
(ASIC + ACCC)
CONSUMER LAWS
❖ Competition and Consumer Act 2010 (Cth)
➢ Replaced ​Trade Practices Act 1974 (Cth)
■ Protect consumers
■ Regulate trade practices that restrict competition
Australian Competition and Consumer Commission
UNCONSCIONABLE CONDUCT​:​ practice by business deemed unreasonable (often illegal)
DECEPTIVE AND MISLEADING ADVERTISING
EXAMPLES:
Fine print​ - important conditions written in small print → difficult to read
Before and after advertisements​ - misleading comparison (distorted ‘before’, enhanced ‘after’)
Tests and surveys​ - making unsubstantiated claims e.g. stating ‘9 out of 10 people’ without survey
BAIT AND SWITCH ADVERTISING​: ​advertising few products at reduced prices → ‘run out’
= directed to higher priced products
DISHONEST ADVERTISING​:​ claim product has quality it doesn’t have
GREENWASHING​:​ misleading/deceptive claims about environmental benefits of product
PRICE DISCRIMINATION
PRICE DISCRIMINATION​:​ setting different prices in separate markets
Possible due to:
- Markets geographically separated (e.g. city vs country)
- Product differentiation within one market (e.g. electricity prices for domestic/business users)
● Prohibited if substantially reduces competition
● Business cannot favour some customers over others
IMPLIED CONDITIONS
IMPLIED CONDITIONS​:​ unspoken/unwritten terms of a contract
CONSUMER GUARANTEES​:​ comprehensive rights/remedies for defective goods/services
ACCEPTABLE QUALITY​:​ (‘merchantable quality’) product fit for purpose
- safe, durable, no defects
WARRANTIES
WARRANTY​:​ promise by business to repair/replace faulty products
● Clearly stated terms and conditions of warranty for product
● Business required by law to provide refund
○ If product is faulty
○ If product does not match description
○ If product fails to do job it is designed to do
ETHICAL
MATERIALISM​:​ individual desire to constantly acquire possessions
PRODUCT PLACEMENT​:​ inclusion of advertising in entertainment
1.
2.
3.
4.
Creation of needs → appeal to materialism
Stereotypical images of males/females
Use of sex to sell products → overuse of sexual themes/connotations
Product placement → concealed nature
TRUTH, ACCURACY AND GOOD TASTE IN ADVERTISING
ADVERTISING​:​ paid, non-personal message communicated through mass medium
● Untruths from concealed facts
○ Purposely omitted information → harms customer trust
● Exaggerated claims
○ Puffery → exaggerated praise (especially in promotions) that no one would take as factual
○ E.g. ‘$13 million lawsuit proves Red Bull doesn’t give you wings’
● Vague statements
○ Ambiguous wording so customers assume intended message
○ E.g. ‘helps to …”
● Invasion of privacy
○ Data collection resold for target advertising purposes
-
Ad Standards
- Ensure acceptable advertising standards are followed
Dispute resolution mechanism (lacks authority to enforce guidelines)
PRODUCTS THAT MAY DAMAGE HEALTH
● ‘​Responsible Children’s Marketing Initiative’​
○ Fast food companies can advertise products to children that meet nutritional guidelines
● Digital advertising (e.g. Facebook, Twitter) of junk food to children
ENGAGING IN FAIR COMPETITION
CONSUMER EXPLOITATION​:​ rights of consumers = ignored
● E.g. high pressure sales tactics
● Development + adoption of ethical marketing policy
SUGGING
SUGGING​:​ selling under guise of a survey
Marketing Process
SITUATIONAL ANALYSIS
SWOT
PRODUCT LIFE CYCLE
INTRODUCTION
- Increase consumer
awareness
- Build market share
- Product​: brand
established
- Price​: often lower
than competitors
- Promotion​: directed
at early buyers
- Distribution​:
selective
-
GROWTH
Pursuit of brand
acceptance and
market share
Product​: maintain
quality
Price​: per unit
maintained
Promotion​: seek
wider audience
Distribution​:
channels increased
MATURITY
Sales plateau
Market saturated
Product​: try to
differentiate
- Price​: may go
down
- Promotion​:
continue quality
image
- Distribution​:
offer incentives
-
-
DECLINE
Sales decline
Business faces
options
Product​:
maintained with
improvements
Price​: reduced
Promotion​:
discontinued
Distribution​:
channels reduced
MARKET RESEARCH
MARKET RESEARCH​:​ process of systematically collecting/recording/analysing
information of specific marketing problem
● Information about needs and wants of consumers
Steps of market research process:
1. Determine information needs → relevant to issue/problem
2. Collect data from primary/secondary sources
3. Analyse/interpret data
MARKETING DATA​:​ information relevant to defined marketing problem
PRIMARY DATA​:​ facts/figures collected from original sources for purpose of problem
SECONDARY DATA​:​ already collected by other person/organisation
Gathering primary data:
1. Survey method
2. Observation method
3. Experiment method (test marketing)
Secondary data:
- Types of secondary data
- Internal data: already collected inside of business
- External data: published data outside business
- E.g. census data, household surveys
- Gathered by government + private organisations
STATISTICAL INTERPRETATION ANALYSIS​:​ focusing on data representing average or deviations
from patterns
ESTABLISHING MARKET OBJECTIVES
MARKETING OBJECTIVES​:​ realistic/measurable goals achieved through marketing plan
1. Increasing market share
2. Expanding product mix
3. Maximising customer service
PRODUCT MIX​:​ total range of products offered by business
● E.g. QANTAS/Jetstar combined goal to maintain domestic market share of 63%
IDENTIFYING TARGET MARKETS
TARGET MARKET​:​ present + potential customers business intends to sell to
PRIMARY TARGET MARKET​:​ market segment most of marketing resources are directed
SECONDARY TARGET MARKET​:​ smaller/less important market segment
● Mass marketing approach → large range of customers
● Market segmentation approach → total market divided into groups with common characteristics
● Niche market approach → narrowly selected customer base
DEVELOPING MARKETING STRATEGIES
MARKETING STRATEGY​:​ actions to achieve marketing objectives
- Through marketing mix
EMPHASIS ON MARKETING MIX
|
PRODUCT
PRICE
PROMOTION
DISTRIBUTION
Outcomes:
● Efficiency
○ Cost effective + time efficient
● Effectiveness
○ Tailoring to customer needs more effectively
● Specificity
○ Develop understanding of buying behaviours + needs of target market segment
IMPLEMENTATION, MONITORING AND CONTROLLING
IMPLEMENTATION​:​ putting strategies into operation
- Daily, weekly, monthly decisions
Implementation questions:
- Plan integrated with all other sections of business?
- Effective lines of communication (marketing + other dep.)?
- Best people for tasks needed?
- Employees familiar with objectives + strategies?
MONITORING​:​ checking/observing actual progress of marketing plan
➔ Market share analysis/ratios - strategy effectiveness to competitors + effect of external factors
CONTROLLING​:​ marketing plan revised through corrective action to achieve objectives
DEVELOPING A FINANCIAL FORECAST
- Costs + revenues for each strategy
- Measuring sales potential + revenue forecasts
- Comparing against anticipated expenditure (cost-benefit analysis)
COMPARING ACTUAL AND PLANNED RESULTS
- Key performance indicators
- Sales analysis
- Market share analysis → evaluate strategies compared to competitors
- Marketing profitability analysis
SALES ANALYSIS​:​ comparing actual sales with forecast sales
MARKETING PROFITABILITY ANALYSIS​:​ business breaks down total marketing costs into
specific activities
REVISING THE MARKETING STRATEGY
- Based on findings
- Whether marketing plan needs to be revised/modified
- Changes in marketing mix
- Product → continually upgrade for competitive advantage
- Price → fluctuate according to external business environment
- Promotion → change according to product life cycle
- Place → expand distribution channels for growing market
- New product development (natural life span of product = 5-10 years)
- Product deletion → when outdated, in decline stage
Marketing Strategies
MARKET SEGMENTATION, PRODUCT/SERVICE DIFFERENTIATION AND
POSITIONING
MARKET SEGMENTATION​:​ dividing into specific segments
- aiming to increase sales, market share + profits
DEMOGRAPHIC SEGMENTATION​: ​dividing according to features of population
- occupation, age, sex, income, cultural background
GEOGRAPHIC SEGMENTATION​: ​dividing according to geographic location
- climate, city, rural
PSYCHOGRAPHIC SEGMENTATION​: ​dividing according to personality characteristics
- motives, opinions, socioeconomic aims, lifestyle
BEHAVIOURAL SEGMENTATION​: ​dividing according to customer relationship with product
- purchasing habits, users/non-users, heavy/moderate/light
PRODUCT/SERVICE DIFFERENTIATION​: ​developing/promoting differences between competitors
- e.g. adopting ‘green’ philosophy, customer service
PRODUCT/SERVICE POSITIONING​: ​create image/identity compared to competitors
- e.g. Ferrari = high socioeconomic value
PRODUCTS - GOODS AND/OR SERVICES
PRODUCT​: ​good/service offered in exchange for satisfying need/want
BRANDING
BRANDING​:​ name, term, symbol, design identifying specific product
Allows customers to:
- Identify liked products
- Evaluate quality of product
- Reduce level of perceived risk
Allows businesses to:
- Gain repeat sales
- Introduce new products customers trust
- Create reputation
PRIVATE/HOUSE BRAND​: ​owned by retailer/wholesaler
GENERIC BRAND​: ​no brand name at all
PACKAGING
●
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Preserves product
Protects from damage/tampering
Attracts attention
Divides into units
Assists display
Makes transportation/storage easier
PRICE - INCLUDING PRICING METHODS
PRICE​: ​amount of money customer is prepared to
offer in exchange for product
COST-BASED PRICING​: ​cost of producing/purchasing + markup
MARKET-BASED PRICING​: ​according to interaction between levels of supply/demand
● High supply = drop price
● Low supply = raise price
● High demand = raise price
● Low demand = drop price
COMPETITION-BASED PRICING​: ​cover costs + compare to competitor’s price
-
Below competitor → undercut competition
Equal to competitor → follow established price leader
Above competitor → for consumers to perceive superiority
PRICING STRATEGIES
PRICE SKIMMING​: ​charging highest possible price during introduction
PRICE PENETRATION​:​ lowest price possible to quickly increase market share
LOSS LEADER​: ​sold at/below cost price (hope made up for with other purchases)
PRICE POINTS​: ​selling at predetermined prices
PRICE AND QUALITY INTERACTION
● General assumption
● Better quality products = more expensive/lower quality products = cheaper
PROMOTION
PROMOTION​: ​methods used to inform/persuade/remind target market about products
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Attract new customers
Increase brand loyalty
Reinforce brand image
Encourage existing customers to purchase more
ELEMENTS OF THE PROMOTION MIX
ADVERTISING
ADVERTISING​: ​paid, non personal
message communicated through mass
medium
E.g. TV advert, leaflets, posters
SALES PROMOTIONS
SALES PROMOTION​: ​use of
activities/materials as direct inducement
E.g. coupons, premiums, refunds
PERSONAL SELLING AND RELATIONSHIP MARKETING
PERSONAL SELLING​: ​activities of sales representative directed
to customer
RELATIONSHIP MARKETING​: ​development of long term,
cost-effective relationships with customers
E.g. reward/loyalty programs
PUBLICITY AND PUBLIC RELATIONS
PUBLICITY​: ​free news story about product
PUBLIC RELATIONS​: ​creating/maintaining favourable relations
E.g. speeches, attention-seeking gestures
THE COMMUNICATION PROCESS
OPINION LEADERS
● Person who influences others (actors,
athletes, musicians)
WORD OF MOUTH
● Influence through personal conversations
PLACE/DISTRIBUTION
PLACE​: ​make products available to customers + where they want to purchase from
DISTRIBUTION CHANNELS
DISTRIBUTION CHANNELS​: ​routes taken to get product from business to customer
1.
2.
3.
4.
Producer → customer
Producer → retailer → customer
Producer → wholesaler → retailer → customer
Producer → agent → wholesaler → retailer → customer
NON-STORE RETAILING​: ​conducted away from store
- e.g. e-marketing
CHANNEL CHOICE
INTENSIVE DISTRIBUTION​: ​saturate market with product (sold everywhere)
SELECTIVE DISTRIBUTION​: ​moderate proportion of outlets
EXCLUSIVE DISTRIBUTION​: ​use only one retail outlet in large area
PHYSICAL DISTRIBUTION ISSUES
TRANSPORT​: ​rail, road, sea, air
WAREHOUSING​: ​central organising point for delivery
INVENTORY​: ​high stock = high cost
PEOPLE, PROCESSES AND PHYSICAL EVIDENCE
1. People​ → quality of interaction between customer and business
2. Processes​ → flow of activities that business follows in delivery of service
3. Physical Evidence​ → environment that service will be delivered + materials needed
E-MARKETING
E-MARKETING​:​ using internet for marketing activites
● E.g. web pages, podcasts, SMS, blogs
● Social media advertising
GLOBAL MARKETING
● Marketing plans must adapt to suit overseas markets
GLOBAL BRANDING
GLOBAL BRANDING​: ​worldwide use of name/term/symbol/logo to identify seller
● Cost effective
● Uniform worldwide image
● Successful brand name linked to new products
STANDARDISATION
● Global marketing strategy
● The way product is used + needs it satisfies = same worldwide
● Marketing mix = similar/identical worldwide
CUSTOMISATION
● Global marketing strategy
● Local approach → way product is used + needs it satisfies = different between countries
● Marketing mix varies greatly worldwide
GLOBAL PRICING
GLOBAL PRICING​: ​how businesses coordinate pricing policy across different countries
CUSTOMISED PRICING​: ​consumers in different countries charged different prices for same product
- cost-plus method → cover added costs of exportation (taxes, tariffs)
MARKET CUSTOMISED PRICING​: ​prices according to local market conditions
COMPETITIVE POSITIONING
COMPETITIVE POSITIONING​: ​how business differentiates product
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Avoid competing only on price
Develop product leadership
Create positive customer relationships
Sustain operational excellence