Business Studies HSC Course
Name: TEACHER’S COPY
HSC Topic 1: Marketing
Date: ________________________
1. Nature and role of markets and marketing
2. Elements of a marketing plan
3. Market research process
4. Customer and buyer behaviour
5. Developing marketing strategies
6. Ethical and legal aspects
Created by L.LI 2010
Syllabus points
Case Study
5. Developing
marketing
strategies
Content
1. p1 Apple Inc’s company profile
A business needs to have a clear understanding of the target market
because the business can:
 Use its marketing resources more efficiently
 Understand the buying behaviour of the target market better
 Collect data more effectively quickly
 Refine the marketing strategies used to influence customer choice
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Product
 Quality
 Style
 Positioning
 Branding
 Packaging
 Warranty
Price
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Cost price
Market price
Competition-based price
Price skimming
Price penetration
Loss leader
Price lining and price point
Price and quality interaction
Promotion
Place (distribution)
 Personal selling
 Channels
 Advertising
 Intermediaries
 Below-the-line promotions
 Intensive distribution
 Public
relations
and
 Selective distribution
publicity
 Exclusive distribution
 Opinion leaders
 Transport
 Word of mouth
 Warehousing
 inventory
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Market
segmentation
and
product/service
differentiation
A business segments its markets so it can direct its marketing strategies to
specific groups of customers rather than the total market. This allows the
business to better satisfy the needs and wants of the target market.
Figure 12.2 Selecting a market segment to be the target market.
A primary target market is the market segment at which most of the
marketing resources are directed.
A secondary target market is usually a small and less important target
segment.
Mass marketing approach (total marketing approach) – seeks a large
range of customers. E.g. vegetables, water, gas, electricity etc
1. p1 Target market
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consumer
SMB
Education
Enterprise
Government
Creative markets
Niche approach (concentrated marketing approach) – requires the
business to direct its marketing mix towards one selected segment of the
total market.
Differentiation of products and services – is the process of developing
and promoting differences between the business’s products and those of the
competitors.
Article: Case study on Apple’s business strategies
“A company’s differentiated product will appear more
attractive relative to substitutes”.
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Product
service
Positioning
Branding
Packaging
and
A product is a good or service, an idea or any combination of the three that
can be offered in an exchange. When customers purchase products, they
buy both the tangible and intangible benefits; this is called the product
concept.
Product positioning refers to the development of a product image as
compared with the image of competing products.
Whenever a new product is launched, the marketing manager needs to have
clearly determined the desired positioning of the product. This will be
achieved through the product’s name, price, packaging, styling, promotion
and channels of distribution.
A brand is a name, term, symbol, design or any combination of these that
identifies a specific product and distinguishes it from its competition.
A brand symbol or logo is a graphic representation that identifies a business
or product.
Packaging involves the development of a container and the graphic design
for the product. The package not only protects the product inside, but a
well-designed packaging can also give a positive impression of the product
and encourage first-time customers.
Packaging of iPhone 4
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Price
including
pricing methods
Cost, market and
competition
based
Pricing
strategies/
tacticsskimming,
Price refers to the amount of money a customer is prepared to offer in
exchange for a product.
Pricing methods:
 Cost plus margin: price = total cost of production + mark-up
(amount for profit)
 Market: price is determined by the level of demand and supply.
When demand is high, prices are high. When demand is low, prices
are low.
Manufacturing cost of iPhone 4 is US$187
U.S. (no contract; 24 hrs shipping time)
US$499 (8GB); US$599 (16GB); US$699(32GB)
Australia (no contract; 2 weeks shipping time)
A$859 (16GB); A$999 (32GB)
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penetration, loss
leaders,
price
points
Price and quality
interaction
 Competition based: price is either <, +, > than competitors.
Pricing strategies:
 Price skimming- charges the highest price possible for innovative
products.
 Price penetration- charges the lowest price possible. The strategy
aims to quickly achieve a large market share.
 Loss leader – business deliberately sell a product below its cost
price to attract customers to the shop.
 Price lining- retailers chooses a limited number of key prices or
price points for selected product lines.
Price and quality interaction:
Prestige pricing is a pricing strategy where a high price is charged to give
the product a sense of quality and status. This perceived price-quality
relationship helps determine the image customers have of products or
brands. Therefore, if a business charges a low price for a product,
customers may perceive the product as ‘cheap’. Charge a high price and the
product develops a sense of quality and status.
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Promotion
Elements of the
promotion mix –
personal selling,
advertising,
below-the-line
promotions,
public relations
The
communication
process including
opinion leaders
and
word
of
Unique iPhone 4, 5.7 million euro.
Promotion describes the methods used by a business to inform, persuade
and remind a target market about its products.
Elements of the promotion mix:
 Personal selling- involves the activities of a sales person directed
to a customer in an attempt to make a sale. The major advantage of
this method is that the message can be modified to suit the
individual customer’s circumstances. Complex and technical
products require personal selling.
 Advertising- is a paid, non-personal message communicated
through a mass medium. E.g. TV, radio, newspaper, magazines,
online.
 Below-the-line promotions- are promotional strategies fore which
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mouth
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the business does not make use of an advertising agency. The ‘line’
is an imaginary boundary between those businesses that pay a
commission to external advertising agencies and those that do not.
E.g. direct-mail catalogues and telemarketing.
Publicity- any free news story about a business’s products.
Pubic relations- are those activities aims at creating and
maintaining favourable relations between a business and its
customers. The main aim is to enhance the image of the product
and the business.
The communication process
The main role of promotion is to communicate with consumers or
organisations directly or indirectly so as to influence their buying behaviour.
Marketing managers must be able to communicate clearly, efficiently and
concisely to their target market.
An opinion leader is a person who influences others e.g. actors, musicians,
models etc who are respected and followed by others. Therefore, many
well-known individuals endorse products for famous brands.
Word-of-mouth communication occurs when people influence each other
during conversations. Consumers normally trust word-of-mouth
communication because they trust the person who they know.
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Place/
distribution
Distribution
channels
and
reasons
for
intermediaries
Channel choice
Channels of distribution or marketing channels are the routes taken to
get the product from the factory to the customer.
The four most commonly used channels or distribution are:
1. producer customer
2. producer  retailer  customer
3. producer  wholesaler  retailer  customer
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1. p1 Distribution channels
retail stores
online stores
direct sales force
3rd party cellular network carriers (e.g. 3, Telstra,
Vodafone)
Wholesalers
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including
intensive,
selective,
exclusive
Physical
distribution
issues including
transport,
warehousing,
inventory
5. Environmental
effects
on
distribution
- Technology
- Local
government
4. producer  agent  wholesaler  retailer  customer
Channel choice:
 Intensive distribution – customers can shop at local outlets and be
able to purchase the product in many different stores.
 Selective distribution – customers need to seek specific retail
outlets to purchase the product.
 Exclusive distribution – customers has to go to a specific retail
outlet to purchase the product.
Physical distribution issues:
 Transport- businesses may use rail, road, sea and air to transport
their products from the factory to customers.
 Warehousing- is a set of activities involved in receiving, storing and
dispatching goods. A warehouse is a central organising point for the
efficient delivery of products.
 Inventory control system- is a system that monitors and controls
the quantities of stock. Too much stock will lead to expensive
storage costs. Lack of stock (out of stock) will lead to lose of sales
and market share.
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Retailers, value-added resellers
iPhone OS: iPhone, iPod touch, iPad
6.iPhone OS (April 2010)
North America (49%)
Western Europe (28%)
10.7 million iPhones were sold in the U.S.
27.4 million iPhones were sold around the world
China: Android > iPhone
Total iPhone OS (April 2010) 85 million
(50 million iPhones + 35 million iPod touch)
1. p2 25/09/10, 317 retail stores worldwide. 233 (US); 84
(Internationally)
Businesses need to be aware of the changes in the business environment,
such as changes in technology and government regulations.
Technology:
Businesses are always looking for different ways to distribute their products.
2 new ways are:
 Telemarketing- use of telephone to make a sale. Order on phone.
 Internet marketing- use of internet to make a sale. Order online.
Local government:
Any business premises or land must first seek local government approvals.
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