Modern Marketing Places Much More Emphasis on Customer-Oriented Marketing

Role of Marketing

Marketing can be designed as the system of business activities designed to plan, price, promote and distribute a product that satisfies the specific needs of an identifiable group of customers for a profit
A common business goal is profit maximisation, and it is the role of marketing to translate this into reality
Modern marketing places much more emphasis on customer-oriented marketing
An organised marketing campaign is necessary to develop customer awareness and demand as well as a solid customer base – all of which begin with the marketing plan
Marketing plan is a document listing activities aimed at achieving particular marketing outcomes
A successful business develops a marketing plan based on careful research and design
Customer MUST be central focus of marketing plan

Interdependence with other KBFs

Marketing concept is the primary link between marketing and other KBFs
Marketing concept is a business philosophy that states that all sections of the business are involved in satisfying a customer’s needs and wants while achieving the business’ goals

Marketing Approaches

Production approach:
If we make it they will buy it
Focuses largely on operations
Eg T-Model Ford
Sales approach:
Design and make product then convince consumers they want
Characterised by high levels of advertising
Eg 1950s/60s home appliances
Marketing approach:
Focus on customer needs, then design and produce a product that they will actually want/need
Customer orientation with the aim of customer satisfaction

Types of Markets

The production and sale of goods and services is not restricted or targeted solely at customers
Some organisations simply buy a finished good from a manufacturer to sell to customers eg Rebel Sport
There is a diverse range of markets that demand goods and services, many of which don’t sell to customers
Markets that do not involve customers include:
Resource markets – those markets where the production and sale of raw materials occurs eg agriculture
Industrial markets – where goods that are used as supplies in the production process are traded ie secondary and some tertiary businesses
Intermediate markets – commonly referred to as wholesalers; they sell products that have been produced by other organisations to retail businesses
Consumer markets consist of:
Mass markets – apply to goods and services that appeal to all types of consumers eg water, electricity, Australia Post
Market segments – where a business chooses to focus its marketing processes on a particular area of the market eg New Idea magazine  middle aged women
Niche markets – can be considered as a ‘segment of a segment’ or a very specific market segment eg wealthy women over the age of 40 without children

Influences on Marketing

Factors Influencing Consumer Choice

There are four main factors that influence consumer and organisational purchasing decisions:
Psychological influences – personal characteristics affecting an individual’s buying behaviour, including:

Perception
Attitudes
Lifestyle
Personality

Sociocultural influences – forces exerted by other people and groups that affect an individual’s buying behaviour, including:

Social class
Family and roles
Reference/peer groups

Economic influences have an enormous impact on the buying behaviour of businesses and customers. As the level of economic activity fluctuates , this influences the marketing environment:

Boom
Contraction

Government influences – policies directly or indirectly influence business activity & consumer spending habits and as such will influence marketing plan

MP
Purchase restrictions

Consumer Laws and Ethical Marketing

While marketers need not be legal experts, they must be aware of any and all laws affecting their business
In 2011 the Australian Consumer Law (part of the Competition and Consumer Act) was introduced, replacing 17 existing national and state consumer laws
It is enforced by each of the states as if it was state law, but is also enforced by the ACCC as a Cth law
The Competition and Consumer Act 2010 (Cth) is the most important piece of legislation affecting marketing in Australia and has two major purposes:
Protect consumers against undesirable practices
Regulate certain trade practices that restrict competition
The CCA is enforced and administered by both the ACCC and each state/territory’s consumer agency
The CCA allows the courts to impose penalties of up to $1.1 million for companies and $220 000 for individuals for any breaches of the Act
When considering these fines in addition to consumer law suits, legal fees and reputation damage, the cost of breaching the CCA can be seen as quite high
The ACCC also has the power to issue public warning notices of suspected illegal activity, whereas in previous years it had to gather evidence and obtain a court injunction while the illegal activity continued
Of all the unfair trading practices, false or misleading advertising can be the most serious because of the influential nature of advertising
Examples of deceptive and misleading advertising under the CCA include:
Fine print
Before and after advertisements
Tests and surveys
Country of origin
Packaging
Special offer
The two most common deceptive and misleading advertising techniques are:
Bait and switch
Dishonest
Price discrimination refers to the illegal process of a business giving preference to some retail stores by providing them with stock at a lower price than other retail businesses, giving them an advantage over their competitors
Implied conditions or terms are unspoken and unwritten terms in a contract, and in relation to marketing the two most important ones are:
Merchantable quality
Fitness for purpose
A warranty is a promise by the business to repair or replace faulty products, and all businesses have certain obligations regarding the products they sell
Regardless of whether the product is carrying a warranty, a business must, by law, either refund a customer’s money or offer an exchange of the product or repair the product, should the good be recognised to have been faulty at the time of leaving the store – ie an implied warranty
Ethics in marketing refers to a combination of broad principles that establish standards of behaviour and guidelines for people working across the marketing plan
They are NOT legally enforceable
Some major ethical criticisms of marketing include:
Creation of needs – materialism
Stereotypical gender images
Use of sex to sell products
Product placement
Ways in which marketers may engage in unethical advertising may include:
Untruths due to concealed facts
Exaggerated claims
Vague statements
Invasion of privacy
In Australia, the self-regulating Advertising Standards Bureau is responsible for ensuring that acceptable standards of good taste are followed
There is a growing perception of products and services that damage people’s health as being ‘sin’ products, and as such the government has imposed restrictions on these products in response to changing ethical standards within the community:
Restrictions on tobacco sponsorship
Plain packaging cigarettes
Alcopops tax
In recent years there has been a push to ban the marketing of junk food towards children, in response to the child obesity epidemic
The role of the ACCC is to ensure businesses are not engaging in anti-competitive behaviour, including:
Price fixing
Long-term loss leader
False and/or misleading advertising
The ACCC attempts to regulate the level of competition within a range of industries by aiming to promote fair and ethical behaviour by businesses towards their competitors and allowing businesses and individuals to lodge complaints against other businesses regarding behaviour that they think is unfair and against the CCA
Selling under the guise of a survey (called sugging) is a sales technique disguised as market research
While sugging is not illegal, it does raise several ethical marketing issues, including the invasion of privacy and customer deception
This also has the unfortunate side effect of making legitimate market research more difficult as many individuals reject it as they think they are trying to be convinced into buying the product

Marketing Process

Planning is a central activity of any business or organisation
The marketing plan allows businesses to examine their 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 marketing plan are:
Situational analysis
Market research
Establishing marketing objectives
Identifying target market
Developing marketing strategies
Implementing, monitoring and controlling

Situational Analysis

A situational analysis provides the firm with an opportunity to examine its current position within the markets
There are two key elements to a situational analysis:
SWOT analysis – the use of a SWOT analysis provides clear information regarding the business’ competitiveness compared with its competitors
Strengths/weaknesses  large degree of control
Opportunities/threats  little control
Product lifecycle analysis – examines the current position of the product/s that a business produces in the marketplace (one of four distinct stages):
Establishment
Growth
Maturity
Post-maturity
Renewal
Decline
Steady

Market Research

The business should know the type of information that it requires eg customer profiles, brand awareness etc as a result of the situational analysis
One info needs are established, the business can determine the most appropriate market research method
Marketing data refers to the information, usually quantitative, relevant to a defined marketing problem
Primary research is the data collected from original sources for the purpose of the specific research problem. This data can be collected by the business itself but is very expensive and time-consuming, which is why it is usually outsourced
Types of primary market research include:
Surveys - interviews, questionnaires, telemarketing
Observation – personal and mechanical look at research and surveillance footage
Experimental – field tests to evaluate cause and effect (eg Burger King removing Whopper from menu)
Secondary data is information that has already been collected by some other person or organisation
The two types of secondary data are:
Internal
External
Statistical interpretation and analysis is the process of focusing on the data that represents averages, typical patterns or deviations from typical patterns
Businesses will analyse and interpret the collected data so that management can gain a better understanding of the impact of the data on the operations of the business, and then determine the appropriate marketing objectives to rectify any problems

Establishing Marketing Objectives

Businesses generally should adopt a SMART approach to setting goals and objectives:
Specific
Measureable
Achievable
Realistic
Time-Specific
Marketing objectives should be closely aligned with the overall business objectives
Some common marketing objectives include:
Increasing market share
Expanding product range
Expanding existing markets
Maximising customer service

Identifying Target Markets

A primary target market is a market segment at which most of the marketing resources are directed
A secondary target market is usually smaller and less significant in terms of the business’ overall sales
A business identifies and selects a target market so it can direct its marketing strategies to that group of customers, allowing them to better satisfy their wants and needs
The three approaches to identification of target market are:
Mass marketing
Market segmentation
Niche market

Developing Marketing Strategies

Marketing involves a number of strategies designed to plan, price, promote and place products in the market place
The marketing mix consists of:
Product
Quality
Design
Brand/name
Warranty
Packaging
Price
Promotion
Place

Implementing, Monitoring and Controlling

Implementation is the process of putting the marketing strategies into operation
Implementation of the marketing plan involves integrating it with all the sections of the business, establishing lines of communication, motivating employees and making employees familiar with the marketing objectives and strategies
Monitoring means checking and observing the actual progress of the marketing plan
The info collected during the monitoring process is used to control the plan
Controlling involves the comparison of planned performance with actual performance and taking corrective action to make sure the objectives are achieved
When evaluating alternative marketing strategies, a business must develop a financial forecast that details the expected costs and revenues for each strategy, as this puts the business in the best position to decide how to allocate its marketing resources
Three KPIs used to measure the success of the marketing plan are:
Sales analysis
Market share analysis
Marketing profitability analysis
Revisions to the marketing plan could include:
Product modifications
Price modifications
Promotion modifications
Place modifications
New product development
Product deletion

Marketing Strategies

When devising a marketing strategy, it is important to know who to target the strategy at
In particular, promotional and pricing strategies MUST cater to the chosen target market

Market Segmentation

The process of breaking down a total market into small markets based on the similar characteristics of a customer group is known as market segmentation
The consumer market can be segmented according to four main segmentation variables:
Demographic – according to particular features of a population eg age, sex, income
Geographic
Psychographic – according to personality, motives, opinions
Behavioural –according to customers’ relationship with product

Differentiation and Positioning

In relation to marketing, the four most important points of differentiation are:
Customer service
Environmental concerns eg McDonald’s rainforest alliance certified coffee beans
Convenience
Ethical issues eg McDonald’s rainforest alliance certified coffee beans
Product positioning refers to the technique used by marketers to try to create an image or identity for a product compared to competitors products
Eg Ferrari v Toyota

Product Strategies

The term product can refer to either a good or a service
All products offer both tangible and intangible benefits eg expensive restaurant:
Tangible  food and drinks
Intangible  prestige and pleasant atmosphere
The total product concept refers to the combination of tangible and intangible benefits associated with a product
The three most common product strategies are:
Positioning – the image that a particular product has in the mind of a consumer eg Rolex watches
Branding – any name, term, symbol, phrase, logo or design that identifies a specific product from its competition eg McDonald’s:
Logo  golden arches
Brand name is globally recognised
Phrase  I’m lovin’ it
‘Mc’ prefix  association
Packaging – the physical appearance of the good and is thus the first image of the good that the consumer will receive (apart from any advertising)

Pricing Strategies

Price refers to the amount of money a business charges for the purchase of its products
A brand that is well established and highly regarded may sell for a higher price, given the quality expectations
General pricing strategies include:
Cost plus markup – total cost + profit margin
Price points – only selling products at a predetermined price
Psychological pricing – eg $99.98 instead of $100
Price & quality interaction – increase price to give image on better quality (may or may not actually be the case)
Pricing strategies that can be used to generate fast sales include:
Penetration pricing – introduce new products at low price to capture share of the market
Loss-leader – sell products at a loss with the hope of customers purchasing other products in the store
Product deletion – sell prices extremely low to clear excess/useless stock
Pricing strategies aimed at generating the highest returns include:
Price skimming –high price to capture top end of market
Demand pricing – also known as market pricing; price corresponds with level of demand for product
Prestige pricing – similar to price & quality interaction

Promotion Strategies

Promotion allows a business to give its products public image and profile
Usually the first point of contact between a customer and the business
The promotional mix consists of:
Personal selling – aims to establish a direct link between the business and customer eg door-to-door salesmen
Relationship marketing – involves creating high levels of customer service and satisfaction with the aim of securing future sales eg Fly Buys
Advertising – seeks to convey a specific message through an array of mediums
Sales promotion – creates awareness of and interest in a particular product eg coupons, samples
Market research allows the business to develop strategies that will attract the interest of the product’s intended market via:
Opinion leaders
Word of mouth

Place/Distribution Strategies

The process of distributing the product from where it is made to the consumer
Distribution channels – the channels by which the product is moved from the place of manufacture to the customer
An intermediary is a business that purchases the final product and then takes on the responsibility of selling this product to the consumer (eg retailers)
There are three main channels of distribution:
Producer to consumer eg farmers’ markets
Adv = producer maintains total product control
Producer to retailer to consumer eg Woolworths produce
Adv = producer can concentrate on manufacturing
Producer to wholesaler to retailer to consumers eg most clothing
Adv = producer holds less idle stock and very little responsibility for marketing/sales
The choice of distribution channel will influence the type of customers that the product attracts and this the business must carefully select a channel that attracts the target market they have identified
There are three main categories of distribution channels:
Intensive – readily available to a wide range of stores eg milk, bread
Selective – limited number of stores/locations allowing producer to control market eg electronics, fashion
Exclusive – a restriction on the number of products and/or availability of the product (eg jewellery, watches etc.)
Some physical issues with distribution include:
Transport
Warehousing
Inventory

People, Processes and Physical Evidence