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Krishna Mehta 1 Business Studies- Marketing

Marketing
Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives. 1. Nature and role of markets and marketing. (i) The role of marketing in the firm and in society. Modern businesses are placing a stronger emphasis on customer-orientated marketing and have recognised the importance of being a customer satisfying process rather than a production process. Marketing does increase a businesss revenue; however, it also plays an integral role in society as it provides us with employment, increases the quality of life and provides us with a wider range of choices. A marketing plan should focus on short term planning for three reasons: 1. It should outline the strategies used to bring the buyer and seller together. E.g. identify the type of market, frequency of product sales satisfying needs. 2. Satisfy customers needs = repeat sales. 3. Marketing is a revenue generating activity of a business. (ii) Types of markets. Resource- The resource market consists of those individuals and groups that are engaged in all forms of primary production such as mining, agriculture and forestry. This market has a very large purchasing power in Australia with 118,000 enterprises/customers. Industrial- The industrial market includes industries and businesses that purchase products to use in the production of other products or in their daily operations. There are more than 930,000 businesses in the industrial market in Australia. E.g. Sony. Intermediate- An intermediate market consists of wholesalers and retailers who purchase finished products and resell them to make a profit. E.g. Subway is a retailer. Consumer- Consumer markets consist of individuals- that is, members of the household who plan to use or consume products they buy. Thus, consumers do not intend to resell the products they buy to make other goods or services. E.g. housing and entertainment. Mass- In mass markets the seller mass produces, mass distributes and mass-promotes one product to all buyers. E.g. Electricity and certain products are mass marketed. However, due to greater choice, higher incomes and the need for more individualised products, the mass market has been replaced by segmented or niche markets. Niche- A niche market is created when the mass market is finely divided into smaller markets consisting of buyers who have specific needs or lifestyles. E.g. magazines, lifestyle products and personal hygiene products are targeted towards a specific market.

Krishna Mehta 2 Business Studies- Marketing (iii) Production, selling and market orientation. The Production Approach- (1820s to 1910s) Due to the industrial revolution some 170 years ago, the burst of industrial growth exceeded the production capabilities of many businesses which saw businesses concentrating most of their efforts on the productions of goods and services. Thus, businesses were product- orientated. The Sales Approach- (1920s to 1960s) Production became more efficient and productivity increased after WWI and businesses slowly caught up with the demand. As customers basic needs were satisfied, businesses developed a sales-orientated marketing approach as they faced the challenge of persuading customers to buy a specific brand due to the increasing competition. E.g. Sales Reps were introduced. The Marketing Approach- (1960s to Present) Due to the economic boom after WWII, more families had more disposable income and as a result could satisfy their other wants and needs such as travelling and recreation. Thus, the marketing concept was developed where businesses were involved in satisfying a customers needs and wants whilst achieving their own business goals. (iv) The Marketing Concept- Customer Orientation and Relationship Marketing. The Marketing concept is a business philosophy that states that all sections of the business are involved in satisfying the customers wants and needs while achieving the business goals. More market research had to be undertaken in order to fully understand the customers needs and wants so that a marketing concept can be developed. Customer Orientation- occurs when a business bases its marketing decisions and practices on its customers wants. To be effective, the marketing concept must be adopted by all of the businesss employees and they should be working towards the satisfaction of the customer by establishing positive relationships with them and meeting and exceeding their expectations. Relationship Marketing- is the development of long-term and cost-effective relationships with individual customers. Relationship marketing emphasises customer retention through forging strong relationships with the best customers with loyalty rewards programs and individualised treatment. E.g. GJs loyalty card retains customers. (v) Marketing Planning Process. Strategic market planning is the process of developing and implementing marketing strategies to achieve marketing objectives, which in turn helps to realise the businesss goals. Step 1: Performing situational analysis- A situational analysis investigates the marketing opportunities and potential problems. It attempts to cover the businesss current situation and its future prospects. Step 2: Establishing market objectives- A marketing objective is a statement of what the business expects to achieve through the marketing activities. Clear objectives are essential for a marketing plan as it makes the plan much more effective. Step 3: Identifying target markets- The target market is the group of customers to which the business intends to sell its product. Some market research must be conducted in order to identify their customers needs such as questionnaires and surveys. Once the

Krishna Mehta 3 Business Studies- Marketing target market is identified, the business concentrates its marketing strategies towards that group. Step 4: Developing marketing strategies- Marketing strategies are plans that outline how a business will use its resources to achieve its marketing objectives. These strategies refer to the marketing mix which refers to the combination of the four Ps- product, place, promotion and price. After the marketing mix is established the business needs to determine the emphasis put on each one. Step 5: Implementing, monitoring and controlling the marketing plan- Marketing management is the process of monitoring and modifying the marketing plan. Monitoring involves comparing actual performance to forecasted performance and modifying involves making suitable changes in the marketing plan to improve sales. 2. Elements of a marketing plan. (i) Situational analysis including SWOT and product life cycle. Situational analysis is undertaken to provide a precise understanding of the businesss current situation and allow the marketing plan to be effective. The use of the SWOT exercise (Strengths, Weaknesses, Opportunities and Threats) provides the information needed to complete the situational analysis and gives a clear indication of the businesss position compared with its competitors. The Strengths and Weaknesses of the business are internal forces as they operate inside the business and a largely controlled by it whereas Opportunities and Threats are the external forces as they operate outside the business and cannot be controlled by the business. A business must be able to launch, modify and delete products in response to changes in the product life cycle as each of the different stages of the product life cycle require different marketing strategies. During the introduction stage, the price should be low, the product should be promoted heavily and the brand name should be promoted. During the growth stage, brand loyalty is encouraged, products position is strengthened and product is differentiated due to competition. During the maturity stage, redesign packaging, provide incentives, new promotion strategies and possibly abandon. During the decline stage, lower price to get rid of stock and eradicate the product. Regrowth stage involves increasing promotion, brand recognition and redesigning advertisement. (ii) Establishing market objectives. Marketing objectives should be closely aligned to the overall business objectives. Such objectives can be measured and should include specific targets to be met. Increasing market share- Market share refers to the businesss share of the total industry sales for a particular market. Increasing market share is of prime importance for each of the companies involved in any market that is dominated by only a few large businesses. 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.

Krishna Mehta 4 Business Studies- Marketing 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. E.g. BlueScope Steel is a transnational corporation that allows it to be near its customers. Maximising 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. Customer service, nowadays, extends beyond the sale of the product as good customers need to be retained thus customer service plays an integral role in establishing a customer base. (iii) Identifying Target Market. Market segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. When segmenting the market, the four main variables are: demographic- age, gender, race, income, religion and occupation, geographic- urban, rural, suburban, climate and regional, product-related- regular user, first time user and brand loyalty and psychographic- personality and lifestyle. Developing marketing strategies. Marketing involves a number of strategies designed to price, promote and place products in the market place. The forces that influence the marketing mix are: technical, political, social, economical, legal and competitive. Product- The product is a combination of: quality, design, name, warranty, packaging and exclusive features. Customers buy products that satisfy their needs as well as provide them with intangible benefits. Price- The right price needs to be chosen to prevent the product from not selling at all if the price is too high or receiving lower turnover as well as a cheap image if the price is too low. Promotion- The promotion strategy is the method that is to be used by the business to inform, persuade and remind customers about its products. Place- Deals with the distribution of the good or service and consists of two parts which are: transportation and the number of intermediaries involved. (v) 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 the employees and making them familiar with the marketing objectives and strategies. Monitoring and controlling- Monitoring means checking and observing the actual progress of the marketing plan. The information collected is used to control the plan. Controlling involves the comparison of planned performance against actual performance and taking corrective action to make sure the objectives are achieved. The controlling process requires the business to outline what is to be accomplished by establishing a performance standard which is a forecast level of performance against which actual performance can be compared.

(iv)

Krishna Mehta 5 Business Studies- Marketing Developing a financial forecast- A business must develop a financial forecast that details the revenues and expenditures for each strategy when evaluating alternatives. Cost benefit analysis is a helpful tool used to itemise fixed and variable costs and draw up a profit forecast showing profit and return. Developing a financial forecast requires two steps that are: cost estimate- how much the marketing plan is expected to cost and revenue estimate- how much revenue will be generated as a result. Comparing actual results to planned results- There are three performance indicators used to measure the success of the marketing plan. Sales Analysis- is the comparing of actual sales with forecast sales to determine the effectiveness of the marketing strategy. Benefit of the sales analysis is that it is inexpensive to produce however the figures may not be 100% accurate. Market Share analysis/ratios- refers to a business evaluating its marketing strategies compared to its competitors through analysing the business market. Marketing profitability analysis- is a method in which the business breaks down the total marketing costs into specific marketing activities. By assessing the costs of the specific marketing activities in relation to the profit levels, the manager can assess the effectiveness of each activity. Revising the marketing strategy- The business should revise its marketing strategies once the results of the sales, market share and profitability analysis have been calculated. If the results are unsatisfactory than modifications to the plan need to be made. Changes in the marketing plan- changes that could be introduces are: Product modifications- upgrade products for a competitive advantage, Price modifications- currency fluctuations cause changes in the plan, Promotion modifications- strategies change over the lifecycle of the product as will the cost of promotion and Place modifications- distribution channels will need to be expanded as a products success increases. New Product development- Products have a life span between 5-10 years. Therefore, new products must be introduced continually for long-term growth. Product Deletion- is the elimination of some lines of products. Outdated products may create an unfavourable image thus products that are in the decline stage must be either deleted or redeveloped. 3. Market Research Process. Market research is the process of systematically recording and analysing information concerning a specific marketing problem. (i) Determining marketing needs- The business should know the type of information that it requires e.g. Customer profiles, brand awareness etc. Because market research is extremely costly, once its information needs are established, the business can determine the most appropriate research method. Data Collection (primary and secondary)- Marketing data refers to the information, usually expressed as facts and figures, relevant to the defined marketing problem. Primary data are the facts and figures collected from original sources for the purpose of the specific research problem. This data can be collected by the business itself but it is very expensive and time consuming which is why it is usually outsourced. Three types are: survey- personal interviews, questionnaires and telemarketing, observation- personal and mechanical look at research and surveillance footage and experimental- field tests to evaluate cause and effect.

Krishna Mehta 6 Business Studies- Marketing Secondary data is information that has already been collected by some other person or organisation. The two types of secondary data are: internal datainformation that has been collected from internal sources such as statistics, feedback and reports, and external data- published data from other sources such as magazines, internet and the ABS. Data analysis and interpretation- Statistical interpretation analysis is the process of focusing on the data that represents average, typical or deviations from typical patterns. Businesses will analyse and interpret the collected data so management can gain a better understanding of the impact of the data on the operations of the business, and then determine the course of action. 4. Customer and Buyer Behaviour. Buyer behaviour may be defined as the decisions and actions of people involved in buying and using products. (i) Types of customers- Managers are able to better predict how customers may react to particular marketing strategies if they are aware of the factors that influence them. There are four types of customers. Individual and Household Consumption- Personal spending refers to consumer purchases by individuals whereas household spending refers to the combined purchases of individuals living together. Many of the visible marketing strategies are directed at this group such as print media and electronic advertising. Business Customers- The business market consists of all those businesses that purchase goods and services for further processing or for use in their production process. There are fewer customers than individuals and households but the market has a larger volume. Financial decisions are also more formal. Institutional Customers- consist of schools, hospitals, clubs, churches and other non-profit organisations. While these institutions act as important providers of service to the community, they also act as a significant income stream for many other businesses. Government Customers- Governments spend millions of dollars each year for a wide variety of goods and services and are accountable to the public. They make their purchases through tendering which is a process whereby firms submit quotes to supply a good or service and the lowest bid that meets the specifications is usually accepted. (ii) The Buying Process- is the process consumers use to purchase a product. The common steps involved are: recognising the problem, search for information, evaluate alternatives, purchase and evaluate after purchase. A buyer is the individual or group who purchases the product. A user is the individual or group who actually uses the product being purchased. For consumer purchases, the individual is both the buyer and the user as they buy the product and then use it for their own needs however, for organisational purchases the buyer and user are usually separate as the buyer may be a supplier or purchasing agent. (iii) Factors influencing consumer choice- There are four main factors that influence consumer and organisational purchasing decisions. Psychological Influences- Psychological factors are influences within an individual that affect his or her buying behaviour.

Krishna Mehta 7 Business Studies- Marketing Perception- is the process through which people select, organise and interpret information to create meaning. Individuals act on perceptions of reality rather than reality itself thus marketing managers must create a positive perception in the mind of the customer through certain images such as trendy and classy. Motives- A motive is the reason that makes an individual do something. Motives such as comfort, health, taste and ambition influence consumer choice. Thus, advertising attempts to motivate the consumer to purchase the product. Attitudes- An attitude is a persons overall feeling about an object or activity. It generally influences the success or failure of a businesss marketing strategy. Personality- An individuals personality is the collection of all the behaviours and characteristics that make up that person. Sociocultural Influences- are forces exerted by other people and groups that affect an individuals buying behaviour. Family and Roles- Everyone occupies different roles in within the family and groups within the wider community. For example: men are more likely to be seen purchasing tools and cars whereas women purchase health care and laundry products. However, roles are changing and marketers are beginning to understand that as well. Reference (Peer) Groups- A reference or peer group is a group of people with whom a person closely identifies, adopting their attitudes, values and beliefs. E.g. if a friend tells you that they had a bad experience at a certain store, you will most probably alter your buying behaviour. Social Class- People are generally classified by education, occupation and income. Therefore, social class affects the type of products bought. Culture and Subculture- Culture is all the learned values, beliefs, behaviours and traditions shared by a society. Cultural influences buying behaviour because it infiltrates what we do in our everyday lives. Economic Influences- have an enormous impact on the buying behaviour of businesses and customers. The level of economic activity fluctuates and its four distinct phases influences the marketing environment. Boom- is a period of low unemployment and high economic growth which lead to higher incomes. This is the phase where businesses and consumers are optimistic about the future. Customers are willing to spend and businesses attempt to increase their market share by promoting heavily. The potential marketing during this phase is usually large with more sales. Contraction- is a period of high unemployment, slow economic growth and stabilising incomes. Customers and businesses become pessimistic and reduce their spending and investment. Marketing plans during this phase stress the value and usability of the product. Recession- sees unemployment reach high levels and incomes fall dramatically. There is a lack of confidence in the economy and a very small level of spending. Marketing during this time should concentrate on maintaining existing market share. Expansion- sees unemployment levels fall and rising incomes. During this stage, marketing managers need to modify their plans and market share becomes a major objective again. Government Influences- and policies directly/indirectly influence business activity and customers spending habits, and as such, will influence the marketing plan.

Krishna Mehta 8 Business Studies- Marketing 5. Developing marketing strategies. (i) 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. The ultimate aim of market segmentation is to increase sales and profits by better understanding and responding to the desires of the targeted consumers. The total market can be segmented into one of two very broad types: consumer markets and organisation/business markets. Consumer markets can be segmented into: demographic, geographic, lifestyle and behavioural variables. A primary target market is the market segment at which most of the marketing resources are directed whereas a secondary market is usually a smaller and less important market segment. There are three approaches to choosing a target market. Mass Marketing Approach- seeks a large range of customers. Products that can be marketed using the mass marketing approach include basic food items, gas, electricity and water. One type of product, one promotional strategy and one standard price. Concentrated/Niche Market- requires the business to direct its marketing mix towards one selected segment of the total market. Niche markets exist because some of the needs of customers are often neglected by large businesses because it is unprofitable for them to alter their marketing mix for them. Differentiation of Products and Services- Product differentiation is the process of developing and promoting differences between the businesss products and those of its competitors. Product differentiation persuades customers to perceive that the product is more superior to other similar products through differences in labelling, packaging, values for money and convenience. The marketing mix is greatly influenced by the nature of the selected target market and the specific product characteristics that the business wishes to highlight. (ii) Products and Services. A product is a good or service, an idea or any combination of the three that can be offered in an exchange. Ideas and services are intangible benefits whereas goods are the tangible benefits. The intangible benefits can be used to differentiate a product from its competitors. All products are therefore a combination of tangible and intangible attributes. (a) Positioning- Product positioning refers to the development of a product image as compared with the image of competing products. Businesses aim to create an image for a product that differentiates it from the others by using other elements of the marketing mix to shape and maintain their image. The individual characteristics: name, price, packaging, style, promotion and place, all create the image. (b) Branding- A brand is the name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from its competition. A brand name is the part that can be spoken. A logo is a graphic representation that identifies a business or product. A manufacturers brand is those owned by the manufacturer, a private brand is owned by the retailer and a generic brand are products with no brand name at all. A trademark signifies the brand name with exclusive rights for the registered business.

Krishna Mehta 9 Business Studies- Marketing (c) Packaging- involves the development of the container and the graphic design for a product. Packaging gives the first impression of the product which is why it is considered to be as important as the product itself. Marketing managers need to be more environmentally sensitive when considering and promoting new forms of packaging. (iii) Price and Pricing Methods. Price refers to the amount of money a customer is prepared to offer in exchange for a product. The correct price must be set for the product as it also gives the consumer an impression of the product. For example: if the price is too low the product looks cheap and nasty and if the price is set too high then there will be low levels of sales. Pricing Methods Cost plus margin- is the simplest method where the business determines the total cost of production and then adds an amount for profit (mark-up). Market- Businesses sometimes set prices according to the interaction of supply and demand which implies what the market is prepared to pay. Competition-based- is usually chosen when there is a high degree of competition. Prices can be chosen above, equal or below a competitors. (a) Pricing Strategies- Price skimming involves charging the highest price possible for innovative products. Price penetration occurs when a business charges the lowest price possible for a product or service so as to achieve a large market share. Loss Leader involves deliberately selling a product below its cost price to attract customers. Price Lining is a pricing strategy used mainly by retailers where a limited number of prices, or price points, are set for selected lines or groups or merchandise. (b) Price and Quality Interaction- The consumer perception that a products price refers the quality of the product. Business realise that consumers are willing to pay more for a good or service because of its perceived quality benefits which they associate with its price. This however, is not always an accurate indication. Prestige pricing is a pricing strategy where a high price is charged to give the product an aura of quality and status. (iv) Promotion. Promotion describes the methods used by a business to inform, persuade and remind a target market about its products. (a) Elements of the Promotion Mix- Promotion mix is the various promotion methods used by a business to inform persuade and remind a target market about its products. Personal Selling- involves the activities of a sales representative directed to a customer in an attempt to make a sale. This provides customers with more personalised responses to their questions as well as more familiarity with the product itself. Advertising- is a paid, non-personal message communicated through a mass medium such as magazines, television, internet, newspapers and radio. The purpose of advertising is Inform, Persuade and Remind. Below the line promotion- are promotional activities for which the business does not make use of an advertising agency. These promotional activities

Krishna Mehta 10 Business Studies- Marketing include: in house parties, exhibitions, demonstrations and point-of-sale material. Publicity and Public Relations- Publicity is any free news story about a businesss products. Its main aim is to enhance the products image and can also help reduce any negative image that may have been created. Public relations are those activities aimed at creating and maintaining favourable relations between a business and its customers. Communication Process- The main role of promotion is to communicate with consumers/organisations so as to influence their buying behaviour. Managers use a variety of channels to communicate their message. A channel is any method used for carrying a message. Print media and electronic media are the most common channels used. Noise refers to any interference or distraction that affects any or all stages in the communication process. An opinion leader is a person who influences others such as athletes, celebrities and health specialists. Word of mouth communication occurs when people influence each other during conversations. Customers are often more willing to purchase a product if the message comes from a respected and trusted channel. (v) Place (distribution). (a) Distribution channels and reason for intermediaries- Distribution channels are the routes taken to get the product from the factory to the customer. The process involves a number of intermediaries such as wholesalers and retailers. Producer to consumer- is the simplest channel and involves no intermediaries. Most service industries use this method. Producer to retailer to consumer- the retailer is the intermediary. Often used for bulky or perishable goods. Product to wholesaler to retailer to customer- is the most common method for distribution of consumer goods. Producer to agent to wholesaler to retailer to consumer- Agents are paid a commission to distribute goods and is often used by businesses that dont have a sales representative for inexpensive and frequently used products. Channel Choice- Market coverage refers to the number of outlets a firm chooses for its product. There are three ways to cover the market. Intensive Distribution- occurs when a business saturates the market with its product. Milk, lollies and newspapers are distributed this way. Selective Distribution- this involves only using a moderate proportion of all possible outlets. Clothing, furniture and appliance are examples of this. Exclusive Distribution- this is the use of only one retail outlet for a product in a large geographic area. This method is used for expensive goods. (b) Physical Distribution Issues- is all those activities concerned with the efficient movement of the products from the producer to the customer. Transport- the method of transport used, road, rail, sea or air, will depend on the type of product and the degree of service to be delivered to the customer. Warehousing- is a set of activities involved in receiving, storing and dispatching goods.

Krishna Mehta 11 Business Studies- Marketing Inventory- control is a system that maintains quantities and varieties of products appropriate for the target market. Its goal is to prevent too much stock and too little stock; find the correct balance. (vi) Environmental effects on distribution. Specific distribution methods need to be chosen carefully. Technology- Non-store retailing is retailing activity conducted away from the traditional store such as door-to-door, telemarketing and internet marketing. Telemarketing- Contacting customers through telephone to sell a product. The logical extension of telemarketing is the area of interactive technology, which will allow customers to purchase via their television or pc. Technology has had a positive impact on distribution. Goods can now be accessed with limited delay and are more widely available due to the growth of e- commerce and the internet. Interactive Technology and Internet Marketing- using the internet, is a fast growing channel for sales of goods and services/ ideas. Many new outlets have been presented in this way. The more established distribution outlets use a web presence to supplement their more traditional distribution channels. Local Government- Local government regulates a number of business activities. These include health and building inspection and the use of public space for building purposes. All business owners have a legal obligation to observe the statutory regulations when setting up and operating a business. Local government regulations are quite significant as commencing trade before council approval can result in the closure of the business. 6. Ethical and Legal Aspects. Ethical and legal dilemmas are present in the marketing process as they are in many other aspects of businesses. Ethics are individual moral principles and values relating to business practices. Laws are the societys values and standards enshrined in legislation. The ethics of sponsorship deals- Sponsorship, especially in schools, open up a variety of ethical problems such as over commercialisation of schools, direct marketing to children and health implications of certain foods/drinks. The ethics of product placement- Product placement is the inclusion of advertising into entertainment. E.g. the BMW Z3 was placed in the Bond film GoldenEye. (i) Environmentally responsible products. Societys environmental concerns create both threats and opportunities for marketing managers. E.g. most of the packaging for products is made of plastic which is not bio degradable. In response, the govt. has passed legislation banning the use of certain types of packaging. The Body Shop has seen environmental constraints as an opportunity. They have used recyclable materials, reusable packages and have produced an externally audited environmental report which shows that they are committed to marketing practices responsive to environmental concerns. Green Marketing- refers to the development, pricing, promotion and distribution of products that either do not harm or have minimal impact upon the environment.

Krishna Mehta 12 Business Studies- Marketing Indications are that growing consumer expectation that products should be clean, green and safe will continue to change marketing practices. (ii) Other Marketing Ethical and Legal issues. Creation of needs- Materialism- is an individuals desire to constantly acquire possessions. Critics feel that some big businesses use sophisticated and powerful promotional strategies to persuade and manipulate customers to buy whatever the firm wants to sell. The result of this artificial need results in higher levels not only of materialism but also personal debt within society. Supporters believe that marketing is most effective only when it responds to existing needs, rather than creating new ones. Impact of retail development- Over the last 50 years retailing has undergone many changes such as: marketing through electronic databases, automatic check-outs, Internet shopping and the transformation of shopping malls into entertainment centres. However, consumer organisations are worried about the advertising of special sale items to attract customers to the store in knowledge that stocks are low and will quickly sell out. Sugging- selling under the guise of a survey is a sales technique disguised as market research. This technique is not illegal, however, it does raise several ethical issues including invasion of privacy and deception. (iii) Role of Consumer Laws. Over the past 50 years, business law that relates to dealings with customers and businesses has been subject to radical and fairly continuous change. New statues such as Trade Practices Act, Fair Trading Act, Consumer Credit Act and Door-to Door Sales Act have been introduced to improve the rights and protection of consumers and to clarify the rights and responsibilities of businesses. Trade Practices- Act 1974 (Cwlth) is a very important legislation as it protects consumers from undesirable practices and regulates certain trade practices that restrict competition. The govt. wants to avoid monopolistic power which occurs when only one business operates in a market and therefore, controls prices in that market. (a) Deceptive and misleading advertising- is the most serious because of the influential nature of advertising. A number of methods are still legal and being used. Fine Print- important conditions are written in small print and are often overlooked. Before and after advertisements- where comparisons are made of the before and the result after using the product. Images may be subject to distortion. Tests and surveys- use of incorrect statistics and inaccurate research in order to influence the consumers buying behaviour. Country or origin- Made in Australia and Product of Australia have two quite distinct meanings. Accuracy in labelling is important. Special offer- it is deceptive when the advertisement specifies the offer only being available for a limited time when it is continuously available. Switch and bait advertising- involves attracting customers into a store by advertising cheap products but then telling them that the advertised products have run out and start selling them higher priced models.

Krishna Mehta 13 Business Studies- Marketing Misleading advertising- advertisements that make a false claim or are deceptive. It conveys a false impression of the item and does not specify the exact nature of the item. Price reduction, specials or free-gift orders must also be genuine. (b) Price Discrimination- is the setting of different prices for a product in separate markets. This is possible because of geographical separation, product differentiation and separate discounts being given. The TPA prohibits price discrimination if it is being used to substantially reduce competition. (c) Implied Conditions- or terms are unspoken and unwritten terms in a contract. The two most important terms are: Merchantable quality- means that the product is of a standard a reasonable person would expect for the price. Fitness of purpose- means that the product is suitable for the purpose for which it is being sold. (d) Warranties- A warranty is a promise by the business to repair or replace faulty products. All businesses have certain obligations with regard to the products they sell. These obligations offer a degree of protection to the customer is if the product is faulty or if the service is not carried out with due care or skill. A warranty can also be used as an aggressive marketing tool as if to show superiority of one product compared to another. A warranty must state its terms and conditions clearly and simply as false or misleading statements are prohibited under the TPA. (e) Resale Price Maintenance- occurs when the manufacturer or supplier insists that a retailer sell the product as a certain price. Resale price maintenance ensures a manufacturer cannot refuse to sell goods to a retailer who decides not to sell the good at the price that is suggested by the manufacturer.