HSC Business Studies

Topic One: Marketing

Role of Marketing Strategic role of marketing goods and services

Marketing plays a central strategic role of bringing together the products of a business and the customers for those products Marketing helps a business achieve its goals by satisfying the needs and wants of present and potential customers Strategic marketing process involves: Price, Place, Promotion, Product A business must understand customer wants to ensure development of the right products for the right target market Aim of marketing is to achieve profit maximisation (maximum difference between total revenue coming into business and total cost being paid out) A Business will develop and implement a marketing plan that sets out a series of actions or strategies that can be used to attain greater sales.

Interdependence with other key business functions

Marketing and Operations

Operations is core business function and has close link with marketing. Products have a product life cycle Towards end of product life cycle operations and marketing will work together to design and develop new products which can be marketed successfully.Marketing and HR

Marketing is large contributor to success of any business Marketing function of a business conducts essential market research and analysis and decides on all the issues related to promoting the products. It also covers strategies of the business for pricing and sales. In order to be able to do these things there needs to be close ties between marketing and HR management. Marketing relies on HR to hire train and develop employees who work in the field of selling the products of the business. It is the responsibility of well-trained marketing employees to connect the customers successfully with products.

Marketing and Finance

Finance is responsible for providing bus. With financial information. They will provide information and work with marketing in developing the right products and provide marketing budgets.

Production, selling, marketing approaches

Marketing Approach 1960s PresentCustomer focus Customer orientation Relationship Marketing (brand loyalty) Shape product to suit customers Selling Approach 1930s 1950s Use of persuasive selling techniques Also does not attempt to understand customers needs and wants Production Approach 1850 1920s Mass market and low cost production Shape customers to suit product

Types of markets resource, industrial, intermediate, consumer, mass, niche

Resource Market

NicheMassConsumer MarketIntermediate MarketIndustrial Market

Resource Market

Individuals / groups that engage in forms of primary production E.g. Farming, mining, fishing Businesses can sell equipment / machinery to this market Industrial Market

Businesses that purchase raw material to produce other products E.g. Bakery buys flour to make breadIntermediate Market

Wholesalers and retailers who purchase products to sell them for a profit E.g. Subway buys bread to make and sell sandwiches Consumer Market

Consists of individuals / members of a household who plan to consume products that they buy

Mass Market

Sellers mass produce and mass promote one product to a large number of consumers Niche Market

Narrow and selected target market segment

Influences on Marketing

Factors influencing customer choice Psychological, sociocultural, economic, government

Psychological

Influences within an individual that affect his her buying behaviour Includes perception, motives, attitudes personality + self image/

Perception: The process through which people select, organise + interpret info. to create meaning. Businesses must be aware of varying perceptions to create a postive view of their product Created through advertising Motives: Reasons that encourage consumer decision making Main motives include: Comfort, health, safety, ambition, taste and fear. Advertising attempts to manipulate motives Attitudes: A persons overall feeling about an object or activity Personality + self image Personality is collection of all behaviours + characteristics Self image is how a person views themselves or wants to be viewed.

Sociocultural

Forces exerted by other people that affect individuals buying behaviour Social Class Factors used to determine a persons social class: Education, occupation + income Influences type, quantity and quality of purchases Perception plays a big role High income may purchase luxury cars to symbolise their status Culture Culture is learned behaviours, values, beliefs + traditions. Determines what people eat + do. Family + Roles Roles within families determine buying behaviour e.g. mum buying shopping, dad buying chain saw Peers A person or group whom a person identifies with + adopts attitudes, values + beliefs

Economic Influences Boom and Recession Boom: Period of low unemployment + increased incomes Customers optimistic about buying Therefore businesses will employ more marketing strategies + intensity of promotion Recession: Unemployment high Incomes low Lack of consumer confidence Low spending, value as main motive Businesses will focus on promoting the usefulness + value of product Survival of fittest for businesses.

Government Influences Use policies that directly and indirectly influence business activity + consumer spending habits Laws such as: Competition + Consumer Act 2010 Sales of Goods Act 1923 (NSW) Fair Trading Act 1987 (NSW) Influence marketing decisions

Consumer Laws Deceptive and misleading advertising Price discrimination Implied Conditions Warranties Deceptive + misleading advertising Businesses must be truthful in advertising and special offers. Businesses cannot advertise something they cannot prove Consumers make decisions based off information, if businesses provide false information, consumers are making misinformed decisions.

Examples:

9/10 mums say.... Bait and switch Fine print Before and after photos Competition and Consumer Act makes false advertising illegal.Price Discrimination

Setting of different prices for a product in separate markets. Difference in prices could be a result of: Market geographically separated Product differentiation within market Competition and Consumer Act prohibits price discrimination because it could substantially reduce competition. Implied Conditions

The Trade Practices Act implies the following conditions for any consumer purchase: Merchantable Quality Products must meet a basic level of standard and performance. Takes into account price and description Products must be free from defects Products should be fit for purpose, product should do what is said to do.

Warranties Designed to offer a degree of protection to the consumer. If the good is faulty or service is not carried out with due care or skill. Businesses have an important obligation to warranty Assures customers have confidence

Refunds/ Exchanges

Businesses are required to offer a refund if: Product is faulty Does not match description Fail to do job Business has no obligation for change of mind Signs no refunds are meaningless.

Ethical truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, sugging

Ethical Criticisms of Marketing Main ethical criticisms of marketing include: Creation of need materialism Businesses use sophisticated and powerful promotion strategies to persuade and manipulate customers to buy what they want them to buy Stereotypical images of genders Sex to sell Overuse of sexual themes + connotations to sell products Unrealistic images are unattainable Product placement In movie man eats snickers

Truth Accuracy and good taste in advertising

Advertising is paid non-personal message communicated through a mass-medium False or Misleading Advertising False advertising is not only unethical but also illegal Use of terms such as special, low fat or light can be interpreted in many different ways. Main unethical marketing practices include untruths due to concealed facts, exaggerated claims, vague statements and invasion of privacy

Good taste in advertising Good Taste is subjective Within society, there is recognition of the growing role that media is playing in childrens lives. Therefore marketers are targeting children more then ever.

ASB Role of ASB is to regulate advertising They do this by having the ASB + Advertising Claims Board. Products that may damage your health Junk Food is often advertised as being part of a balanced diet Federal GVT. Sets restrictions on advertising such things during programs for preschool children.qSugging

Selling under the guise of a survey Selling techniques as disguised by market research Unethical Occurs usually one the telephone or online.

Marketing Process

Situational Analysis SWOT, Product lifecycle

Situational Analysis

Crucial step of the marketing plan is that management has a precise understanding of the businesses current position. This is done by a SWOT analysis

SWOT A SWOT analysis involves the identification and analysis of the internal strengths and weaknesses of the business and the opportunities in and threats from, the external environmental Product Lifecycle

The product lifecycle consists of the stages a product passes through: Introduction, growth, maturity and decline.

Introduction: Business attempts to increase awareness and build a market share for their new product. Product brand + reliability established Price is often lowered Promotion directed at early buyers and to educate consumers. Growth Brand acceptance and higher market share Product quality needs to be maintained Price per unit is maintained as the demand from consumers increases Promotion seeks a wider audience Maturity Sales reach a plateau Price quality may need to be adjusted to maintain consumer demand Decline Product sales being decreasing

Market Research

Market research is the process of systemically collecting, recording and analysing information concerning a specific marketing problem. 1. Determine information needs: Problem clearly stated to determine what information is needed 2. Collecting from primary and secondary sources Collecting own data + from other sources 3. Analysing and interpreting data Information is useless without it being analysed and determined.

Data Facts and figures relevant to the marketing problem

Secondary Primary

Identifying Target Markets

The target market is the section or segment of the whole market that the business is targeting its product at Market research is used to help identify the target market Research should identify the potential customers + their needs and wants. Market segmentation is how the business divides the total market into smaller sections with slightly different demands. Example: Different cars made for different people. Families 4wd single Ferrari etc. Different products are targeted at each different market segment Consumers can be grouped together by businesses based on: 1. Demographics: Gender, age2. Sociocutural: Cultural background, religion 3. Geographics: Location, urban + rural4. Psychographics: Lifestyle, personality, non rational decision making

Developing Marketing Strategies The purpose of marketing strategies is to meet the goals set out in the marketing plan. The marketing mix is part of the marketing strategies: Price: The correct price must be set that matches with the target market Product: Quality, Packaging and labelling, design, brand name and guarantee. Promotion: Inform, persuade + remind customers. Advertising and personal selling Place: Getting product to customer. Marketing startegies must have a direct link to the marketing plan and the two should work together to achieve the overall goals of the business

Implementation, monitoring and controlling developing a financial forecast; comparing actual and planned results, revising the marketing strategy Implementation, monitoring and controlling Implementation puts marketing plan into action This requires clear communication of goals + strategies from marketing to all functions / employees of a business Business must monitor the performance of the marketing campaign Managers must analyse + evaluate performance of the marketing campaign and take action if required Financial forecasts can be compared to actual performance as a measure of assessing the success of a marketing strategy Other measures can include changes to: Market share Sales Feedback Business needs to reap reward higher than the cost and time involved with marketing Business needs to control and set standards for measuring and assessing the value added to the business from marketing Marketing must value add to the business more than it costs otherwise it is a profit reductant

marketing strategies market segmentation,1. identifying niche markets within a mass market by grouping people with similar characteristics. Demographic (age, sex, education etc.), Geographic (location), Psychographic(why- lifestyle, social class, personality), Behavioural (consumer loyalty, purchase occasion)1. product/service differentiation how businesses separate themselves from the competition1. Positioning-Process or marketers creating an image/identity for their product/brand/organistation these can based on factors such as price, quality, value, luxury, safety. A positioning matrix may be helpful. Positioning strategies include: positioning by benefit, price or quality, direct comparison (create the image of superior product e.g. coke/pepsi), usage occasion or users (e.g. thredo ski resort winter hiking, other sports/events summer)products goods and/or services should also be seen as felxible & product range/use, what to ephasise, position should all be taken into considerationbranding1. A brand name is a way of distinguishing a product from its competitors, branding strategies include: generic brand (e.g. no frills), individual brand (each major product has its own name e.g. Unilever- dove, lux etc.)Packaging1. Often first image of the product image should be positive and effective while aiming to protect and maintain quality. Should offer a reason to purchase product, this may be: nutritional info, benefits, feature, design & colour. Relevant to sales willingness to assistprice including pricing methods cost (price determined by cost of good plus a set %), market, (figure based on supply/demand e.g. bananas going up when crops are low) competition-based (setting a price to compare directly to competitors e.g. beat competitors by 10%)pricing strategies skimming (initially very high price which is gradually skimmed e.g. ps3), -penetration, (setting prices very low to gain an immediate group of customers) -loss leaders (some great deals to entice you into store in the hope you will buy more e.g. coles weekly specials)- Price points (selling a product for a set amount so customers can choose e.g. phones plans $30, $45 etc.)-prestige pricing, product deletion (clearance), demand based (e.g. iPhone), psychological pricing ($19.99)Price and quality interaction this mix should be correct, you cant successfully sell a low quality product for a high price vice versa. E.g. Lexus prestige car, low price = low sales, high (prestige) price = increased sales.

promotionelements of the promotion mix - Advertising To persuade a target market, TV, radio, online, print etc. Advertising which often aims to build brand image is a more long term process than sale promotions- Personal selling and relationship marketing Sales representative persuades customer through depth of knowledge and personal characteristics, message can be tailored to suit customer- Sales promotions Short term attempts for customers to buy more of a product e.g. price reduction, cash back, gifts. Can be below-the-line (non-media communication) especially for new products e.g. food samples- Publicity and public relations Planned establishment of goodwill, promotion of a business/products in most favorable light. made most credible by an outside source e.g. magazinethe communication process opinion leaders (individuals, typically held in high esteem, often more influential than the media, seen as trustworthy. E.g. sportspeople, experts, celebrity spokesperson) word of mouth (argued that customers put more weight on WOM rather than TV/newspaper)place/distribution -> how it gets to the customerdistribution channels (business/s involved in moving goods from manufacturer to point of sale intermediary allows to reach new/smaller markets, more efficient less of companies resources, help match supply/demand)channel choice (direct/indirect (use of intermediaries) intensive (available everywhere e.g. soft drinks), selective(easily available but manufacturers choose where), exclusive (limited supply for elite image or require specialist installation e.g. Ferrari)physical distribution issues transport, warehousing(storing products), inventory(quantity of products available for sale)people, (having the right staff e.g. customer service, product knowledge) processes (total experience of buying the product meeting expectations) and physical evidence (physical appearance across all aspects of presentation, can mean clothng, office)e-marketing Internet marketing, fastest growing in Aust. e.g. youtube, email, pop ups, adds on sites, competitions benefits: reach, interactivity, immediacyglobal marketingglobal branding brands have the same meaning in another language, easier to promote a brand vs. product. recognizablestandardization a business may not need to alter its product for different countries/culturescustomization in some situations it is more effective to differentiate some aspects of a product to suit different culturesglobal pricing should add to the reputation of the brand with awareness of currency exchange/transport, loss leader strategy can be used an made up in other marketscompetitive positioning-how a business differentiates its products. It centers on how a business will carve out a place in the competitive marketing environment.