HSCGrace De LeonBusiness Studies
HSC 10:2 - Marketing
Chapter 6: Role of marketing
Marketing•Marketing, it is the process of developing a product and implementing a series of strategies aimed at correctly promoting, pricing and distributing the product to a core group of customers
•The purpose of this is to determine what the business should be producing
•Used as a method of enhancing its revenue streams and increasing the market’s awareness of its products
Strategic role of Marketing
•Refers to the long-term role that the key business functions of marketing has within a business
•These include choice, standard of living, employment and brand awareness
•Once these are interdependent within each other it leads to increased market share
Choice
•Businesses must be able to differentiate their products in the marketplace
•This can be done through product features, pricing strategies or promotional activities
Standard of living
•It is the individual’s quality of life, partly based on g + s the individual can afford to buy
•Organisations must develop better products that enhance our lifestyles
Employment
•To provide products with consumers, they must employ labour to assist the transformation process of changing input resources into finished goods
Brand Awareness
•Refers to the extent to which;/ consumers are existence of particular product, its features, price and possible places of purchase
•This can be done by using strong and effective advertisement campaigns
•This is done to increase market share
- Market share is the percentage of total sales a business has compared with its competitors within a particular market. It can increase sales and profitability
Interdependence with other key business functions
•Each key business function must work well together in order to achieve business goals
Operations
• They are there so they can incorporate what the consumers want as gathered by the marketing department into their products
•It is the responsibility of the operations department to develop strategies that would sell the product
Human Resources
•This is important because staff must be motivated and skilled to develop products within the business that is clear and that cater to the needs and wants of a future customer
•Because of the marketing process it is clear to businesses as to who they should hire to produce the desired product
Finance
•The organisation must know that the needs of potential customers is financially viable for the business to pursue
•Budgets and forecasts must be established for promotional campaigns and sales
Production, selling, marketing approaches
•Businesses use an array of strategies aimed at increasing product awareness and generating sales of their products to satisfy the need of consumers
•Many businesses focus on the single elements of the marketing mix rather than a combination
•Marketing mix, the process of developing a product that meets the needs of consumers and implanting a series of promotional, pricing and distribution strategies that will encourage consumers to purchase the product
Production approach
•During the 1920s-30s, many businesses assumed that the high quality of their product will ensure success
•Businesses would focus on how well the product is produced and therefore setting a high price which meant high quality which
Selling approach
•This involves businesses placing an emphasis on strategies aimed at convincing consumers of the need to buy a product
•The aim was to take the product and its benefits to the consume through the sales person
Marketing approach
•The marketing approach is solely based on consumer wants and needs
•For a product to be successful, a successful marketing campaign would have needed to been done
Types of markets
Resource markets
•These are the markets where the production and sale materials occur
•Some produce materials for other businesses
Industrial markets
•Where good that are used as supplies in the production processes are traded
Intermediate markets
•Where retail businesses purchase products that have been produced by other organisations
•Also known as wholesalers
Consumer markets
•The market where businesses directly sells its products to consumers
•Consumer markets are broken down into two categories; mass and niche
Mass market
•The market where products are aimed to all consumers
•Its products appeal to all consumers
Niche market
•The market in which products are aimed at a select group of consumers
•These markets specialise in products that not everybody wants
Chapter 7: Influences on marketing
Factors influencing customer choice•When making a decision to buy g + s, people are influenced by a range of factors
•These factors include price, reliability and convenience all of which relate to ‘product advantage’
•Although customers do tend to maximise their satisfaction by making use of their limited resources
•Key factors include:
Psychological factors
These are the internal influences that affect an individual’s buying behaviour, such as:
•Perception: the opinion the customer has of the product
•Motive: the reason for buying the good or service
•Attitudes + beliefs: a person’s overall feeling about the business or the product may be based in past experiences or life experiences
•Personality + self-image: behaviours, characteristics of the customer and how the customer views themselves
•Learning: change an individual’s behaviour caused by additional information and experiences
Sociocultural factors
•These are external factors that affect the customer’s buying behaviour
•The four main factors include:
-Social class: based on education, income or occupation
-Culture + subculture: beliefs, behaviours and traditions
-Family roles
-Peer/reference group: those with whom a customer closely identifies adopting their attitudes, values and beliefs
Economic factors
•These refer to the influence of the general economic trends (unemployment levels, interest rates, economic growth and decline) as well as individual/family income levels
Government factors
•This relates to the influence of government legislation and regulation of consumer markets
•Depending on the level of economic activity (economic cycle) the actions of the government attempting to slow the economy down
Consumer laws
•The Commonwealth Government controls business behaviour through the Competition and Consumer Act (2010). This legislation attempts to promote fair and competitive behaviour in the marketplace
Deceptive and misleading advertising
•It is the unfair and unethical way of attracting consumers into your business by promoting inaccurate prices or goods and services
•Examples are:
-Giving misleading information about the product such as benefits, content or place of manufacturer
-Offering false discounts and special discounts
-Using the bait and switch: the reducing of a product’s price, then once that’s sold out the business will offer a product of the same brand but at a higher price
Price discrimination
•It refers to the setting of different prices for a product in separate markets. When a business favours one over the other and offering a discount but denying it for the latter
•The competitors are then at a disadvantage as they forced to pay a higher price for an identical product
Implied conditions and warranties
•Implied conditions: they are the unspoken and unwritten terms of a contract. Two important terms are:
-Merchantable quality: means that the product is of a standard a reasonable person would expect for the price
-Fitness for purpose: means that that the product is suitable for the purpose for which it is being sold
•Warranty: it is the promise made by the business to repair or replace faulty products within a certain time period
•Whether or not if the product the customer bought has a warranty, businesses by law must refund the client’s money or exchange the good should the good be recognized to have been faulty at the time of leaving the store. This is why all products are said to have an implied warranty.
Resale price maintenance
•Under the Competition and Consumer Act a manufacturer cannot refuse to sell goods to a retailer who decides to sell the product at a different price suggested by the manufacturer
•Manufacturers cannot discriminate against stores for selling at a price that is lower than recommended
Ethical aspects of marketing
•Ethics is marketing refers to a combination of broad principles that establish standards of behaviour and guidelines for people working across the marketing industry
•They are not enforceable through law
Truth, accuracy and good taste in advertising
•Marketers are expected to engage in fair and honest behaviour when developing a marketing campaign
•It is expected that when promotional material distributed, this material represents information that is truthful, accurate and in good taste
•The Competition and Consumer Act prohibits a corporation from supplying consumer goods that do not comply with prescribed product safety standards
•The Advertising Federation of Australia is the peak body representing companies in advertising and marketing communications
•While some social issues that are advertised can be controversial, it is still trying to sell its brand name
Products that may damage health
•Products that may damage our health are referred to as ‘sin’ products, so the state and federal government put restrictions onto the products, such as:
-Tabacco: sponsorship in in sporting/community events/casinos, not displayed openly, contains health warnings, not sold to under 18s
-Alcohol: staff serving must complete Responsible Service of Alcohol course, not sold to under 18s
-Casino/Gaming: support for those who are addicted, restrictions on opening hours in leagues and RSL clubs
Engaging in fair competition
•It is the role of the Australian Competition and Consumer Commission to regulate business behaviour
•Unfair competitive behaviour include:
-Price-fixing between competitors
-Long-term loss leader – pricing strategy by undercutting smaller businesses and forcing them to engage in price war
-Misleading advertising regarding the products of a competitor
Sugging
•A disguised marketing process that uses general questions in a survey to determine the interests and needs of a consumer then offers them a product that ‘caters’ to the consumer’s needs
•It raises several ethical issues by invasion of privacy and being deceptive
Chapter 8: Marketing process
Introduction•Planning is the central activity of any organisation
•It allows the business to examine its current position within the market, consider opportunities to strengthen that position and determine the most effective method of implementing the required changes
•The elements of a market plan:
-Executive summary
-Situational analysis
-Market research
-Establishing market objectives
-Identifying the target market
-Developing marketing strategies
-Implementation, monitoring and controlling
Situational analysis
SWOT
•Strengths: positive elements of the business’ internal environment
•Weaknesses: negative elements of the business’ internal environment
•Opportunities: positive elements of the business’ external environment
•Threats: negative elements of the business’ external environment
•Must consider the needs for the consumers to be sucessful
•Goals must be developed that can both achieve business and consumers goals
•By understanding the SWOT analysis and working to strengthen the position of the business, both parties again
Product life cycle
•The product life cycle identifies the current position of the goods/services in the market place
•The product life cycle reflects the business life cycle: establishment, growth, maturity and post-maturity
Establishment:
•The stage in which the product is new and is launched
•Sales may be slow at first because the business still needs to build a customer base
•Profits are limited because of lack of revenue but costs like fixed costs (rent + insurance) are high
•Management may decide to launch the product with a high price accompanied with limited promotional spending
•High costs may recover establishment costs and develop an image of high quality to customers
Growth:
•Once loyalty and satisfaction is gained by customer, business is moved onto growth stage
•More profit is gained due to increased sales
•As well as entering the market, marketing strategies will change (lower prices or expansion)
•Promotional costs will change
Maturity
•Sales will begin to slow
•Business will face steady income streams and limited prospects for growth
•Business must modify its marketing strategies to continue success
•Find competitive advantages e.g. price differentiation, after sale services, unique promotions or easier access for customers
Post-Maturity
•Key decisions will be made that will affect the long term survival of the business
•Already an established organisation within the market
•Increased competition/changing customer preference may be the need for change
•The business will be divided into four paths:
-Decline – completion and changes in the business environment. Business declines and lose market share
-Renewal – products revitalised, new promotional campaigns, brand altered. New strategies may be developed to attract a new audience
-Steady stage –no changes, profits stay the same
-Cessation–the business is shut down
Market Research
•Before conducting market research it is important that the business has an idea of what type of information it is looking for
•It could vary from character profiles, to broad awareness or attitudes towards certain new products
Data collection
•An organisation seeks two types of data: primary and secondary
Primary
•Refers to the information that is collected for the specific purpose for which it will be used
•Primary research can be conducted through:
-Observational: observing a particular group of customers that goes into the shops and their opinion of it
-Surveys: a primary group of people asking the same question (based on knowledge, attitudes, preferences + buying behaviour)
-Experimental research: used to examine reactions to different products
Secondary
•Refers to the information that already exists having been collected for another purpose
-Internal sources
Data that are within the business itself
Businesses can compare external + internal sources
-External sources
Data sources that exist outside the business
The business must pay other groups/individuals to get this information
All though there’s many sources that do not need any payment e.g. ABS, books, magazines and the internet
Data analysis + interpretation
•Once it gained this information it must make use of it
•The business will analyse and interpret the data so management can gain a better understanding of the impact of data on operations
•Then management will be able to make an appropriate course of action
Establishing market objectives
•The objectives of a business provides the framework for the business and to develop a series of activities and operations that aim to achieve the objectives
•Objectives and goals guide the business
•It’s important for the goals to be flexible so they can be adapted to changes in the business environment
•Businesses adapt a SMART approach to set objectives
•S – specific, the objective needs to be clear and precise and relate to specific elements of the business
•M – measurable, the business needs to develop controls that are effective in measuring the extent to which the goal has been achieved
•A – achievable, the business needs to have the financial and human resources required to achieve the goal
•R – realistic, the objectives should not be based on unreasonable expectations, that is it must be possible for the business to achieve this objective
•T – time, the time frame within which the business hopes to achieve the goal must be determined
General market objectives
•Marketing objectives must measure up to business objectives. Some can be measured and have specific targets to bet met
Increase market share
•Market share refers to the percentage of total sales a business has compared to other competitors in a particular market
•Increasing market share is very important, especially for those businesses who have large companies in their market
Expanding the product range
•The product mix is the total range of the products offered by the business.
•Businesses are usually eager to increase their product mix as the same mix will not be effective in the long term due the changing tastes and preferences of consumers.
Expanding existing markets
•The demand for some products varies greatly from one geographic location to another.
•Geographical representation refers to the presence of a business and the range of its products across a suburb, state, city, town or country
Maximizing customer service
•Customer service means responding to the needs and problems of the customer and is perhaps the most important objective.
•High levels of customer services usually results in improved customer satisfaction.
Identifying target markets
•A target market is a group of consumers for whom a particular product has been developed
•To identify the appropriate target market for a particular product, a business needs to understand the nature of consumer markets
•By identifying target markets so they can direct their product directly to that market
•Mass market approach, the seller mass produces, mass distributes and mass promotes one product to all buyers
•Market segmentation approach, total market is subdivided into groups of people who share a common interest
•Niche market approach, a narrowly selected target market segment
Developing market strategies
•Developing marketing strategies involves using the marketing mix
•It is called a mix because it uses four elements to rich these strategies – the four p’s
-Product: refers to the good or service the business intends to provide in the market place. The business must differentiate it’s products from competitors e.g. quality, image, logo, packaging and if it’ll be an up-market or discount product. Businesses must consider conditions and warranties that’ll come with the product.
-Price: the cost to the consumer when buying the good or service
-Promotion: the process of creating and maintaining consumer awareness and interest towards a particular product
-Place: refers to the methods of distribution and the availability of a good
Implementation, monitoring and controlling
Implementing
•Implementation is the process of organising
•The business must implement the strategies once the marketing plan has been devised
•Successful implementation relies on the ability of management to effectively organise and lead the business
•Management must ensure that the production of goods are in good quality
•Management must also have enough funds to cover all costs
•Employees must have the skills and necessary training to assist the transformation process
Monitoring and controlling
•A business must develop methods that management can use to determine the extent to which the implemented strategies are achieving the desired outcomes
•Businesses monitor the progress of their operations through controlling
•Controlling is the process of comparing actual results with the results that the business had planned to achieve
•It allows businesses to find out if they’re achieving objectives or not achieving their objectives
•Three common forms of analysis and control when monitoring performance:
-Sales analysis
-Market share analysis
-Marketing profitability analysis
Revising the marketing strategy
•The business must adopt revised strategies to ensure continued success
•Business should revise market strategy to ensure they meet their business goals and also the needs of the customers
•The extent to which the marketing strategies are altered depends on whether or not the business has achieved its objectives as well as changes in the environment
Chapter 9: Marketing strategies