marketing

• Strategic Role of Marketing


  • Creating and keeping customers (attract new and maintain existing customers)
  • Assessing which customers, they are targeting and design products based on this
  • Adapting to the constantly changing external environment 
  • Inform, persuade and remind
  • Increase sales (revenue- generating activity) and overall profit
• Interdependence


  • Operations: plans and produces the products that marketing designs, uses market research to decide how many g/s to create
  • Finance: allocates marketing budget, control costs and minimise expenses
  • Human Resources: staff are trained to assist with new product launches and changes in marketing activites
• Marketing Approaches


  1. Production - increased output, increased demand, marketing was ‘if we make it, they will buy it’
  2. Selling: increase in efficient and productivity, sales-oriented approach, increase in advertising
  3. Marketing (stage 1) - customer at the centre of marketing activities
  4. Marketing (stage 2) - customer orientation, relationship marketing, bigger picture
• Types of Markets

  • Resource - engaged in primary production including mining, agriculture, forestry and fishing
  • Industrial - business that purchase products to use in the production of other products
  • Intermediate - Wholesalers and retailers who purchase finished products and sell them again to make a profit
  • Consumer - individuals who plan to use or consumer the products they buy, not to sell or make other goods
  • Mass - Include standard and undifferentiated products for which there is large demand
  • Niche - Narrower customer base, specific group of people
• Factors Influencing Customer Choice - Psychological


  Internal influencesInternal influencesInternal influencesInternal influences

  • Perception - process through which people select, organise and interpret information to create meaning
  • Motive - The reason that makes an individual do something
  • Attitude - A person’s overall feeling about an object or activity
  • Personality and self-image - Marketers make the most of individuals’ desire to express their identity through what they buy, highlighting the image value of the product
  • Learning - behaviour caused by information and experiences
• Factors Influencing Consumer Choice - Sociocultural


  External forces

  • Social class - Social class (education, occupation, income) influences the type, quality and quantity of products a customer buys
  • Culture and subculture - All learned values, beliefs, behaviours and traditions shared by a society
  • Family and roles - Different roles within family and community determine buying behaviour
  • Peer group - People adopt the attitudes, values and beliefs of those around them and are influenced by what they buy and how they are perceived by them
• Factors Influencing Consumer Choice - Economic


  influence a business’s capacity to compete and a customer’s willingness and ability to spend. Level of economic activity fluctuates from boom to recession. 

  • Boom - high levels of employment, rising incomes, increase in consumer spending
  • Recession - high unemployment, incomes fall, decrease in consumer spending
• Factors Influencing Consumer Choice


  Government implements economic policy to expand or contract the level of economic activity, directly influencing business activity and customers’ spending habits. → The Competition and Consumer Act 2010 (Cth) (CCA) is a single national law that influences marketing decisions.
• Consumer Laws

  The Australian Consumer Law aims to protect Australian consumers from unfair practices of businesses that can harm consumers. 

  The Competition and Consumer Act 2010 (Cth) has two major purposes:

  • To protect consumers against undesirable practices 
  • To regulate certain trade practices that restrict competition
• Consumer Laws - Deceptive and Misleading Advertising


  Examples of deceptive and misleading advertising under CCA:

  • Fine print
  • Before and after
  • Tests and surveys
  • Country of origin
  • Packaging
  • Special offer
  • Bait and switch
  • Dishonest
• Consumer Laws - Price Discrimination

  Price discrimination: the setting of different prices for a product in separate markets

  • Applies to suppliers of products, not retailers selling at their own price 
  • Is legal if selling to global businesses, as the business must factor in costs of transport
  • Also applies to situations where a company gives discounts, credits, rebates, services and better payment arrangements
  • A business cannot give favoured treatment to some customers and not others
• Consumer Laws - Implied Conditions


  Implied conditions: the unspoken and unwritten terms of a contract. They are assumed to exist regardless of whether they were explicitly mentioned. 

  • Most important implied term is that a product has acceptable quality – meaning it is fit for purpose, acceptable appearance, free from defects, safe, and durable
• Consumer Laws - Warranties


  Warranty: a promise by the business to repair or replace faulty products 

  • Government legislation has made it necessary for businesses to state the terms and conditions of the warranty
  • False or misleading statements concerning the existence, exclusion or certain conditions of the warranty are prohibited under ACL 
• Ethical Considerations - Truth and Accuracy


  1. Untruths due to concealed facts -  information purposefully omitted from an advertisement, harms the trust between consumers and businesses
  2. Vague statements - Statements using words so ambiguous that the consumer will assume the advertisers assumed message
  3. Exaggerated claims - an exaggerated praise used for promotional purposes that no reasonable person would take as factual
• Ethical Considerations - Good Taste in Advertising


  • Good taste in advertising is subjective i.e. what consumers may find offensive 
  • The Advertising Standards Bureau (ASB) self-regulates advertising to ensure that acceptable advertising standards are followed
  • Administer a national system of advertising self-regulation
  • Advertising Standards Board and the Advertising Claims Board are part of the dispute resolution mechanism that deals with consumer complaints
  • Critics believe advertising standards should be controlled by the government
• Ethical Considerations - Products that may damage health


  • Examples: cigarettes, junk food (obesity), premixed alcoholic drinks (binge drinking) and gambling 
  • Nutritionists argue that self-regulatory advertising codes, such as the Responsible Children’s Marketing Initiative aimed at reduced junk-food marketing are not working. 
  • The proliferation of social-networking sites provide marketers with new and largely unregulated ways of advertising junk food to children.
• Ethical Considerations - Engaging in Fair Competition


  • Involves being fair when referring to competitors in marketing and advertising
  • The CCA 2010 regulates fair competition and anti-competitive behaviour that limit or prevent competition such as
  • Cartel conduct: when businesses agree to act together instead of competing to control or maintain prices
  • Misuse of market power: prohibits corporations with market power from taking advantage of competitors or preventing new entrants
  • Exclusive dealing: when one business trades with another and then imposes restrictions on them
• Ethical Considerations - Sugging


  Sugging: selling under the guise of a survey - disguised as market research

  • Raises ethical concerns of invasion of privacy and deception
  • Consumers are asked general questions to determine needs then suggested products
• Situational Analysis - SWOT


  SWOT analysis: involves the identification + analysis of the internal strengths and weaknesses of the business, and the opportunities in, and threats from, the external environment – helps develop a clear understanding of environment to market to
• Situational Analysis - Product Life Cycle


  Product life cycle: consists of the stages a product passes through: introduction, growth, maturity, and post-maturity/decline

  An assessment of the product’s position on the product life cycle is necessary because different marketing strategies will need to be used at different stages of a product’s life
• Market Research


  the process of systematically collecting, recording and analysing information concerning a specific marketing problem

  Three step process:

  1. Determining information needs - The information must be relevant to the issue - constantly ask questions concerning its ultimate use
  2. Collating primary and secondary data - Use primary and secondary data to gain greater information about consumers and the market
  3. Analysing and interpreting data - Drawing conclusions from collected information. Often displayed in a table format for comparisons of individual categories.
• Establishing Market Objectives


  Increasing market share:

  • develop an extensive product range with different brand names to gain more market share
  • Even small market gains translate into large profits

  Expanding the product mix

  • Same mix will not remain effective as consumer tastes and preferences change over time
  • Each item should attempt to satisfy different target markets

  Maximising customer service

  • High levels of customer service → improved customer satisfaction, establishes customer base → repeat purchases
  • One dissatisfied customer tells 11 other, who tell another 5
• Identifying Target Markets

  Purpose of target market:

  • Use marketing resources more efficiently (cost and time)
  • Better understand consumer buying behaviour
  • Collect data effectively and make comparisons over time
  • Refine marketing strategies to influence customer choice
  • Primary - most marketing resources focus on
  • Secondary - less important but still targeted
  • Mass - targets everyone
  • Segment - specific group of people
  • Niche - very small, specific
• Developing Marketing Strategies


  Marketing mix: the combination of the four P’s (product, price, promotion, place)

  • Once established, business must determine the emphasis it will place on each of the variables → determined by where it is positions or its stage on the product life cycle
  • Product
  • Price
  • Promotion
  • Place / distribution
• Implementation, Monitoring and Controlling


  Implementation: the process of putting the marketing strategies into operation

  Monitoring: checking and observing the actual progress of the marketing plan by gathering information and reporting on any changes, problems or opportunities

  Controlling: involves the comparison of planned performance against actual performance and taking corrective action to make sure the objectives are attained
• IMC - Developing a Financial Forecast


  Financial forecast: details the costs and revenues for each strategy.

  1. Cost estimate – marketing plan (market research, product development, promotion and distribution
  2. Revenue (sales) estimate – forecasts based on how much they can sell for and in what quantity

  Marketing costs are easier to forecast than revenue as it is controlled by the business. Projected marketing revenue is difficult to calculate because of changes in the external environment. By accurately analysing both projected costs and revenues, it allows the business to forecast profit levels.
• IMC - Comparing Actual and Planned Results


  Key performance indicator (KPI): a forecast level of performance against which actual performance can be compared e.g. increase monthly sales by 5%

  • Sales analysis: Comparing actual sales to forecast sales to determine effectiveness of marketing strategy
  • Market share analysis: Evaluate marketing strategies compared to competitors
  • Marketing profitability analysis: Breaking down the total marketing costs into specific marketing strategies, assess allocation of resources
• IMC - Revising the Marketing Strategy


  • Where the business assesses which objectives are being met and which are not based on the previous analyses 
  • Dynamic business environment → marketing mix is constantly revised through changes
  • Production modification
  • Price modifications
  • Promotion modification
  • Place modification
  • New Product Development
  • Product Deletion
• Market Segmentation


  Market segmentation: involves dividing the total market into segments, then selecting one of these segments to become the target market

  • Aims to increase sales, market share and profits by development a marketing mix to target that market
  • Demographic - age, gender, education, occupation, income, social class
  • Geographic - region, urban, rural, climate, city size
  • Psychographic - lifestyle, personality, motives, socioeconomic group, consumer opinions
  • Behavioural - purchase occasion, benefits sought, lifestyle
• Product/Service Differentiation


  Occurs when products that are the same are made to appear different from and/or better than those of their competitors

  • Customer service (pre, during and post)
  • Environment
  • Convenience
  • Social/ethical
• Product/Service Positioning


  Refers to the technique in which marketers try to create an image or identity for a product/service compared with the image of competing products or services 

  • Gives the product its position within the market to help determine direct competitors and understand how the brand is perceived by customers
• Products - goods and/or services


  Tangible: real, physical objects that can be touched and owned e.g. book

  Intangible: for use or enjoyment, not for ownership e.g. financial advice, TV programs

  Total product concept: combination of tangible and intangible components 

  • A product is a ‘collection of satisfactions which might include packaging, brand name, warranty and after-sales service.
• Products - Branding


  Brand: a name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from its competition

  Benefits for consumers:

  • Identify specific products they like
  • Evaluate the quality of products 
  • Reduce their level of perceived risk of purchase, reassurance

  Benefits for businesses:

  • Gain repeat sales because brand is recognisable
  • Introduce new products due to familiarity 
  • Indirect promotion of other products
  • Encourage customer loyalty
• Products - Branding


  Symbol/logo: a graphic representation that identifies a business of product

  • Brand name becomes associated with symbol, making it more recognisable

  Branding strategies

  • Manufacturer’s brand: when a manufacturer owns a brand name, recognised globally, widely available, consistent quality e.g. Kraft foods
  • House brand: owned by retailer or wholesaler making it cheaper e.g. Myer - Miss Shop
  • Generic brand: products with no brand name at all, carrying only the name of the product and in plain packaging e.g. Woolworths essentials
• Products - Packaging


  Packaging: the development of a container and the graphic design for a product 

  • preserves the product
  • protects the product from damage or tampering
  • attracts consumers’ attention
  • divides the product into convenient units
  • assists with the display of the product
  • makes transportation and storage easier 
  • must also consider environmental sustainability
• Pricing Methods


  Cost Based

  • derived from the cost of producing a product then adding a mark-up for profit.
  • simplest method
  • difficulty in determining appropriate mark-up, doesn’t consider state of the market

  Competition Based

  • price covers costs and is comparable to the competitors prices
  • Below comp (to break into market)
  • Equal to comp (to ensure success)
  • Above comp (impression of high quality)

  Market Based

  • setting prices according to the levels of supply + demand
  • accommodates what the consumer wants and willing to pay
  • but market is constantly fluctuating
• Pricing Strategies


  Skimming

  • charges the highest possible price for the product during the introduction stage
  • recover the cost of R&D quickly
  • competitors quickly create cheaper product

  Penetration

  • charges the lowest possible price for the product
  • quickly achieve significant market share
  • more difficult to raise price than lower it

  Loss leaders

  • a product is sold at or below cost price
  • attracts customers to stores hoping they buy additional g/s
  • if not managed well, will lead to profit loss

  Price points

  • Selling products only at certain predetermined prices
• Price and Quality Interaction


  Helps determined the image customers have of products or brands

  • HIGH PRICE → superior quality, high manufacturing costs, quality and status
  • LOW PRICE → low quality, low manufacturing costs, perceived as cheap

  Does not apply to all products → higher priced and infrequently purchased items (cars, homes) display a stronger price quality relationship than frequently purchased products (groceries). 

  • Sometimes price is set high to imply prestige or high quality when in reality the quality is not that superior to cheaper alternatives
• Promotion


  Promotion: the methods used by business to inform, persuade and remind a target market about its products. It attempts to:

  • Attract new customers by heightening awareness of a product (inform/persuade)
  • Increase brand loyalty by reinforcing the image of the problem (persuade)
  • Encourage existing customers to repurchase the product (remind)
  • Provide information so customers can informed decisions (inform)
• Advertising


   a paid, non-personal message communicated through a mass medium → purpose to inform, persuade, remind

  • Provides businesses with flexibility to reach an extremely large audience or focus on a small, distinct target market
  • high cost and target market (e.g. social media not for 50+)

  Six main advertising media:

  • Mass marketing
  • Direct marketing catalogues
  • Telemarketing
  • E-marketing
  • Social media advertising
  • Billboards