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TOPIC 2 – MARKETING

ROLE OF MARKETING
What is 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 (American
Marketing Association).
A more simplified definition is that marketing is a total system of
interacting activities designed to plan, price, promote and distribute
products to present and potential customers.
Marketing is undertaken by businesses with the intention of generating
sales by satisfying customers’ needs and wants.
Marketing today places a strong emphasis on viewing the business
through the customers’ eyes, or customer-oriented marketing.
Four main features to marketing:
 involves a wide range of activities
 is directed at a wide range of goods, services and ideas
 stresses the importance of satisfying exchanges — that is,
something in return
 is not limited to the activities of businesses

Selling involves a set of activities that salespeople undertake to assist the
customer’s buying decisions. In this sense, selling is part of the marketing
process, but marketing takes a much broader view and is more involved
than selling.
Many people also mistakenly believe that marketing is the same as
advertising. This is because advertising is highly visible and everywhere,
which makes it easy to associate the two. Advertising, though highly
influential, is just one part of the promotion strategy, which in itself is one
of a number of marketing strategies.

Strategic role of marketing goods and services


A common financial business goal is profit maximisation. The strategic
role of marketing is to translate this goal into reality. Profit maximisation
occurs when there is maximum difference between the total revenue
coming into the business and total costs being paid out.
To develop customer awareness and demand, and thus form a customer
base, an organised marketing campaign is necessary, starting with the
development of a marketing plan.
The marketing plan is a document that lists activities aimed at
achieving particular marketing outcomes in relation to goods or services.
The plan provides a template for future action aimed at reaching business
goals, such as profit maximisation.


A successful business develops a marketing plan based on careful
research and design.
The customer should always be the central focus of the marketing plan.

Interdependence with other key business functions




The 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’s goals.
The business should direct all its policies, plans and operations towards
achieving customer satisfaction.
The marketing plan, therefore, needs to become integrated into all
aspects of the business with marketing strategies playing a major role
in all business activities.
To be effective, therefore, the marketing concept must be embraced by all
employees of the business, not only by those involved in marketing
activities.
The marketing manager cannot work in isolation and often has to work
with other managers in the business to ensure the success of the
marketing plan.

Production, selling, marketing approaches









The production approach (1820s to 1920s) focused businesses on the
production of goods and services.
The attitude towards marketing is best explained by a catchphrase
common during this time: ‘If we make it, they will buy it’.
Production design was based more on the demands of mass production
techniques than on customer needs and wants and business was
production-oriented.
The sales approach (1920s to 1960s) emphasised selling because of
increased competition.
Because customers’ basic needs were satisfied, businesses had to develop
a new marketing approach — one that was sales-oriented in an attempt to
beat the competition and gain new customers.
To stimulate demand for their goods and services, businesses increased
their spending on advertising, making use of newly developed electronic
communications systems such as radio and film.
Businesses faced the challenge of persuading customers to buy a specific
brand.
The marketing approach (stage one – 1960s to 1980s) focused on
finding out what customers want — through market research — and then
satisfying that need.
The marketing approach began with the economic boom after World War
II, as businesses began to practise marketing in its current form.
Most Australian families had discretionary income, disposable income
that is available for spending and saving after an individual has purchased
the basic necessities of food, clothing and shelter. They used this extra

income to satisfy their needs and wants with different kinds of goods and
services.
The emphasis shifted to the development of a marketing concept. It
must be:







customer-oriented
supported by integrated marketing strategies
aimed at satisfying customers
integrated into the business plan so as to achieve the business’s
goals

The marketing approach (stage two – 1980s to present): Changing
economic and social conditions over the last three decades have seen a
modification to the marketing approach.
With growing public concern over environmental pollution and resource
depletion came a shift in the emphasis of marketing plans. Marketing
managers now realise that businesses have a corporate social
responsibility (CSR).
Customer orientation refers to the process of collecting information
from customers and basing marketing decisions and practices on
customers’ wants and interests.
Customer satisfaction measures how goods and services supplied by a
business meet or exceed customer expectation.
It is no longer sufficient for a business to just market its goods and
services in the hope of attracting new customers. What is also required is
a business to keep its existing customers satisfied. Relationship
marketing is the type of marketing that does this.
Relationship marketing is the development of long-term and costeffective relationships with individual customers.
The core of relationship marketing is customer loyalty — so as to
generate repeat sales — and which can be achieved through reward
programs, customer care or good after-sales service

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

A market is a group of individuals, organisations or both that:




need or want products (goods or services)
have the money (purchasing power) to purchase the product
are willing to spend their money to obtain the product
are socially and legally authorised to purchase the product

Because marketing plans and strategies vary depending on the intended
market, marketing managers need to understand the main characteristics
of these six different types of markets.
The resource market consists of those individuals or groups that are
engaged in all forms of primary production, including mining, agriculture,
forestry and fishing.




The industrial market includes industries and businesses that purchase
products to use in the production of other products or in their daily
operations.
An intermediate market consists of wholesalers and retailers who
purchase finished products and resell them to make a profit.
Consumer markets consist of individuals — that is, members of a
household who plan to use or consume the products they buy. E.g.
housing, clothing, food, entertainment, appliances, music recordings, cars
and personal services.
The consumer market can be divided into the mass market and
niche market.
In mass markets, the seller mass produces, mass-distributes and masspromotes one product to all buyers. Very few products today are marketed
to the mass market. Basic food items, electricity and water are three
current examples.
A niche market, also known as a concentrated or micro market, is a
narrowly selected target market segment. For example, in any newsagent
you will see row upon row of magazines, each appealing to a specific niche
market — male, female, young, old, high income, low income, urban, rural,
outdoor lifestyle, indoor lifestyle and so on.

Brand loyalty occurs when a favourable attitude towards a single brand results in repeat sales over time. organise and interpret information to create meaning. pleasure. Learning refers to changes in an individual’s behaviour caused by information and experiences. economic. a business must assist customers to learn about them. personality and self-image. attitudes. amusement. Customer attitudes to a business and its products generally influence the success or failure of the business’s marketing strategy. sociocultural. Five main psychological factors influence customer choice. Psychological          Psychological factors are influences within an individual that affect his or her buying behaviour. and learning. Self-image is a major determinant of what products we buy. Negative attitudes to a business or its products often force the business to change its strategies. ambition. An individual’s self-image relates to how a person views himself or herself. Perception is the process through which people select. The main motives that influence customer choice include comfort. An individual’s personality is the collection of all the behaviours and characteristics that make up that person. cleanliness and the approval of others. the style of car. evaluate. fear. A motive is the reason that makes an individual do something. safety. personality will influence the types and brands of product a person buys. Sociocultural  Sociocultural influences are forces exerted by other people and groups that affect an individual’s buying behaviour. Therefore. clothing or jewellery that a person buys may reflect their personality. What an individual perceives may be very different from reality. people see and hear the same things differently. For example. taste.INFLUENCES ON MARKETING Factors influencing consumer choice – psychological. These are perception. An attitude is a person’s overall feeling about an object or activity. . health. government  Customer choice (buying behaviour) refers to the decisions and actions of customers when they search for. We all have an image of who we are. and we reinforce this image through our purchases. select and purchase goods and services. successful marketing strategies may assist customer learning that encourages brand loyalty. motives. To market products successfully. To some extent.

occupation and income. A recession sees unemployment reach high levels and incomes fall dramatically. . Social class or socioeconomic status refers to a person’s relative rank in society. and where and how they live. Survival becomes the main business goal. A boom is a period of low unemployment and rising incomes. Culture is all the learned values. Family and roles: All of us occupy different roles within the family and groups within the wider community. therefore. the government will put in place policies that expand or contract the level of economic activity. They influence a business’s capacity to compete and a customer’s willingness and ability to spend. Economic     Economic forces have an enormous impact on both businesses and customers. market research shows that most women still make buying decisions related to healthcare products. They look for value and products that are functional and long-lasting. For example. a mood of deep pessimism persists. These roles influence buying behaviour. family and roles. A customer’s buying behaviour may change to match the rest of the group’s beliefs and attitudes. Businesses increase their production lines. food and laundry supplies. Social class influences the type. and reference/peer groups. The level of economic activity fluctuates from boom to recession. A reference or peer group is a group of people with whom a person closely identifies. They are social class. and attempt to increase their market share by intensifying their promotional efforts. These policies directly or indirectly influence business activity and customers’ spending habits. based on his or her education. although women’s roles are changing. Customers are willing to spend because they feel secure about their jobs and source of income. beliefs. behaviours and traditions shared by a society.      There are four main sociocultural factors. what and how they eat. stress the value and usefulness of a product. values and beliefs. Culture influences buying behaviour because it infiltrates all that we do in our everyday life. Businesses and customers are optimistic about the future. the factors generally used to determine a person’s social class are education. income or occupation. Depending on the prevailing economic conditions. adopting their attitudes. quality and quantity of products a customer buys. and therefore will influence the marketing plan. Customer and business spending reach very low levels. Regulatory forces consist of laws (statutes) and regulatory bodies that can influence business behaviour. Marketing plans should. Customers and businesses lack confidence in the economy and if this phase lasts for a long time. It determines what people wear. Government    Governments use a number of economic policy measures to influence the level of economic activity. In our society. culture and subculture.

‘made in Australia’ and ‘product of Australia’ have two distinct meanings. Even though the Competition and Consumer Act makes deceptive or misleading advertising illegal. and to clarify the rights and responsibilities of businesses. These include:  Fine print: Important conditions are written in a small-sized print and are therefore difficult to read. . Breaches of the Competition and Consumer Act can result in the ACCC taking civil proceedings against the business or individual engaged in unconscionable conduct. where the comparison is distorted so that ‘before’ images are worsened and ‘after’ images enhanced. Deceptive and misleading advertising    False or misleading advertising can be the most serious because of the influential nature of advertising. a single. both federal and state. for example. The Competition and Consumer Act 2010 protects consumers against undesirable business practices and prohibits various unfair (restrictive) business practices.  Before and after advertisements: Consumers may be misled by ‘before’ and ‘after’ advertisements. Sale of Goods Act 1923 (NSW) and the Fair Trading Act 1987 (NSW).  Tests and surveys: Some advertisements make unsubstantiated claims. In 2011. The Competition and Consumer Act is administered and enforced by the Australian Competition and Consumer Commission (ACCC) and relevant state and territory consumer agencies. stating ‘9 out of 10 people’ prefer a product when no survey has been conducted. have been passed that influence marketing decisions. national consumer law — the Australian Consumer Law (ACL) — was introduced. Greenwashing is the practice of making a misleading or deceptive claim about the environmental benefits of a product. have introduced laws to improve the protection and rights of consumers. Consumer laws      Governments.  Such regulatory forces exert a significant influence over the marketing activities of businesses because the breaking of these laws or regulations may result in financial penalties.  Packaging: The size and shape of the package may give a misleading impression of the contents. a number of methods are still used by some businesses. such as the Competition and Consumer Act 2010 (Cwlth) (formerly the Trade Practices Act 1974).  Country of origin: Accuracy in labelling is important. business practice or technology in order to present a positive public image. for example. A number of laws.

Such actions convey a false impression of the exact nature of the product.  Two of the most common deceptive and misleading advertising techniques are:  Bait and switch advertising: This involves advertising a few products at reduced and. enticing prices to attract customers. This prohibition also applies to discounts given. safe. The difference in price is possible because:  the markets are geographically separated. This changed the structure. are also to be avoided. When the advertised products quickly run out. This has been changed by the ACL to acceptable quality. With the introduction of the Australian Consumer Law (ACL). and durable. Previously under the Trade Practices Act. for example different electricity prices for domestic and business users  The Competition and Consumer Act prohibits price discrimination if the discrimination could substantially reduce competition. specials or free-gift offers must all be genuine. of the law that applies to consumer purchases of goods and services. when in fact the offer is continuously available.  Dishonest advertising: Advertisements must not use words that are deceptive or claim that a product has some specific quality when it does not. Implied conditions     Implied conditions are the unspoken and unwritten terms of a contract. This means that a business cannot give favoured treatment to some customers while denying it to others. services and payment arrangements. . Price discrimination   Price discrimination is the setting of different prices for a product in separate markets. but not the aim. free from defects. As well. for example city and country prices  there is product differentiation within the one market. Acceptable quality means that the product is fit for the purpose for which it is being sold. Advertisements that could deceive. therefore. a single set of statutory consumer guarantees was established. rebates. businesses have had to ensure their products are of ‘merchantable’ quality. credits. acceptable in appearance and finish. These conditions are assumed to exist regardless of whether they were especially mentioned or written into a contract. price reduction. even though no one may actually be deceived. customers are directed to higher priced items. Special offer: Advertisements may be misleading or deceptive if they imply that a special offer is available for only a limited period. which replaced the previous system of implied conditions and warranties of the Trade Practices Act.

engaging in fair competition. Critics of product promotion feel that most businesses. has found the same product at a cheaper price in another store.Warranties      All businesses have certain obligations with regard to the products they sell. cleaning the house or caring for the children. A warranty assures the customer that the business has confidence in the quality of its product and will repair or replace any faulty items. sugging  The main ethical criticisms of marketing include:  Creation of needs: materialism.  Stereotypical images of males and females: In most advertisements it tends to be the male who uses the power tools. Ethical – truth. A business is required by law to offer a refund for the following reasons:  if the products provided are faulty  do not match the description or a sample  fail to do the job they were supposed to do   There is no obligation to offer a refund if the customer has simply changed their mind. Materialism is an individual’s desire to constantly acquire possessions. the terms and conditions of the warranty. government legislation has made it necessary for businesses to state. These obligations are designed to offer a degree of protection to the customer if the good is faulty or if the service is not carried out with due care and skill. In recent years. accuracy and good taste in advertising. are portrayed preparing meals. especially large businesses. or who watches sport with his mates. It is also important that accurate signs regarding refunds and exchanges are displayed. on the other hand. clearly and simply. A warranty can be used as an aggressive marketing tool if it includes superior options to those of a competitive product. . products that may damage health. A warranty is a promise by the business to repair or replace faulty products. or damage has occurred after the purchase was made. use sophisticated and powerful promotional strategies (particularly advertisements) to persuade and manipulate customers to buy whatever the firm wants to sell. Females.

consumers. Advertising can represent real ethical dilemmas for marketers. Truth and accuracy in advertising         Advertising is a paid. ‘low fat’. ‘light’ and ‘once in a lifetime offer’ can be interpreted in many different ways. The unethical practice of concealed facts — pieces of information purposefully omitted form an advertisement — can severely harm the trust customers have in a product or a business. Puffery is exaggerated praise or flattery. a claim that a certain shampoo or toilet paper is superior to any other on the market cannot be confirmed by consumers. Exaggerated claims: Exaggerated claims — referred to as puffery — cannot be proved. the insertion of these products is subtle: an Omega watch on the celebrities arm or a can of Coca-Cola seen when a refrigerator door is opened. especially when used for promotional purposes that no reasonable person would take as factual. Generally. Dishonest or unethical marketing strategies eventually drive customers away. this would be classified as unethical behaviour. critics of product placement argue that. If the marketer uses these words.  Product placement: The inclusion of advertising in entertainment. ‘great value’. Use of sex to sell products: There is often an overuse of sexual themes and connotations to sell products. Although many people are sceptical of such claims. However. but advertisement-weary. False or misleading advertising is not only unethical. the use of terms such as ‘special’. this type of advertising blurs the line between what is advertising and what is entertainment. non-personal message communicated through a mass medium. advertisements that use sex appeal can have subtle and persuasive impacts. exaggerated claims. Businesses are keen to use this promotional technique because it allows them to reach savvy. The main unethical marketing practices include untruths due to concealed facts. vague statements and invasion of privacy. while at other times they are prominently displayed. they do not perceive advertisements to be believable or honest. These ‘weasel’ words — deliberately misleading or ambiguous language — are . For example.   Ultimately. However. Vague statements: these are statements using words so ambiguous that the consumer will assume the advertiser’s intended message. because of its ‘concealed’ nature. marketing managers should never forget that the business exists because of its customers. attempting to knowingly mislead customers. Advertisers use sex appeal to suggest to consumers that the product will increase the attractiveness or charm of the user. Untruths due to concealed facts: Many customers are aware that advertising takes liberties with the ‘truth’. it is also illegal. By satisfying customers a business may operate profitably.

Some consumers may regard an advertisement as offensive. Within society. This is commonly achieved through the use of digital word-of-mouth advertising. Nutritionists argue that the self-regulatory advertising codes are not working. Self-regulation is a system by which a business or industry controls its own activities rather than being publicly regulated by an outside organisation such as the government. This form of advertising raises new ethical issues. Twitter and MySpace provide marketers with new and largely unregulated ways of advertising junk food to children. One area of marketing to children that has received widespread publicity in Australia in recent years is the sexualisation of children in advertising. the role of the Advertising Standards Bureau (ASB) is to ensure that acceptable advertising standards are followed. which is often portrayed as an essential part of a balanced diet is an area presently being criticised by nutritionists and health advocates. There is usually common agreement as to what society considers acceptable and marketers must be aware of community sensitivities. no advertising is allowed during programs for pre-school children. Good taste in advertising        What is considered to be in ‘good taste’ is highly subjective. and the fact that advertisers and marketers are now targeting children more than ever. especially as childhood obesity rates approach epidemic proportions. . by their nature vague and allow the marketer to deny any intention to mislead or deceive. while others might view it as inoffensive. the federal government sets restrictions on children’s advertising. Bebo. As well as industry established codes. Invasion of privacy: The recent growth in online advertising is raising a number of ethical issues with the most serious being the tracking of web users and using this information to target them with advertisements. The ASB does this by administering a national system of advertising self-regulation through the Advertising Standards Board and the Advertising Claims Board. In Australia. In Australia. Products that may damage health      The marketing of junk food. Viral marketing is a method of promotion that involves the spreading of messages from person to person without the involvement of the originator. The proliferation of social-networking sites such as Facebook. there is recognition of the growing role that mass media is playing in children’s lives. Collection of data in this way may breach consumer privacy.

a business should develop and adopt an ethical marketing policy. Consumer exploitation occurs when the rights of consumers are ignored. Such strategies are not only unethical. When consumers discover that advertisements are untrue or inaccurate. it does raise several ethical issues. is a sales technique disguised as market research. For example.Engaging in fair competition            Competition in the marketplace is a fact of life. there is a temptation for some businesses to engage in unfair marketing strategies. using questions such as:  Do we conduct our marketing activities in a way that is ethical and fair?  Are we being socially responsible in all that we do?  Do we respect and obey the government’s legislation and regulations?  Are we responsive to the emerging social and ethical issues within our society?  Are all employees aware of. the business’s ethical marketing policy? Sugging    Sugging. selling under the guise of a survey. and following. For example. incomplete product descriptions. In order to engage in fair competition. marketers should take care to provide all the important details and avoid making claims that cannot be verified. Therefore. Because the amount of competition in the marketplace can be intense. high-pressure selling methods. but they are also unlawful. including invasion of privacy and deception. The cooperation of consumers is becoming more difficult with response rates to surveys and questionnaires steadily declining. Businesses need to monitor the actions of their competitors and assess the changes their competitors are making. .   Sugging also has long-term negative consequences for market research. being approached by salespeople in a shopping centre or contacted via telephone and surveyed about a particular product. which ultimately result in consumer exploitation. Marketers can plan for such challenges by designing an ethical marketing policy that acts as a standard against which to assess the business’s ethical performance. they may feel cheated and stop buying the product. Although this technique is not illegal. or manipulative. Businesses compete against each other to attract the greatest number of customers. Those businesses that compete successfully will usually increase their sales revenue and profit. Some common exploitative practices include advertisements that make false promises or are highly exaggerated.

and communications seek to educate potential customers about the merits of the new product. .MARKETING PROCESS   A marketing plan gives a purpose and direction to all the business’s activities.  Price per unit of production is maintained as the firm enjoys increased consumer demand and a growing market share. and the opportunities in.  Price is often noticeably lower than competitors’ prices in order to gain a market foothold. which enables consumers to gradually form an acceptance of the product. opportunities and threats) analysis should be conducted. and threats from.  Promotion directed at early buyers and users occurs. product life cycle      A situational analysis provides a precise understanding of the business’ current position and where it is heading.  Product brand and reliability are established. monitoring and controlling Situational analysis – SWOT. A SWOT analysis involves the identification and analysis of the internal strengths and weaknesses of the business.  The steps involved in developing a marketing plan are:       situational analysis market research establish marketing objectives identify target markets develop marketing strategies implementation. weaknesses. the external environment. maturity and decline. growth.  Promotion now seeks a wider audience. At each stage of the product’s life cycle a different marketing strategy is necessary. a SWOT (strengths.  Product quality is maintained and improved and support services may be added.  Growth stage: Brand acceptance and market share are actively pursued by the producers of the product. It provides the information needed to complete the situational analysis and assesses the business’ position compared with its competitors.  Distribution is selective. The product life cycle consists of the stages a product passes through: introduction. To develop a clear understanding of both the external and internal environments that affect a business.  Distribution channels are increased as the product becomes more popular. Introduction stage: The business tries to increase consumer awareness and build a market share for the new product.

detailed and relevant information. Minimising the risk is the main purpose of market research.  Price may need to be adjusted downwards to hold off competitors and maintain market share. Market research     Market research is the process of systematically collecting. By collecting and assessing information about the needs and wants of consumers. Cut the losses by selling it to another business. reduce the risk of market failure. up-to-date. . To obtain accurate information.  Decline stage: Sales begin to decline as the business faces several options:  Product maintained with some improvements or rejuvenation. Maturity stage: Sales plateau as the market becomes saturated:  Product features and packaging try to differentiate the product from those of competitors. Information is useful if it:  results in marketing strategies that meet the needs of the business’s target market  assists the business to achieve its marketing objectives  may be used to increase sales and profits Collecting data from primary and secondary sources  Marketing data refers to the information — usually facts and figures — relevant to the defined marketing problem. recording and analysing information concerning a specific marketing problem. Marketing strategies perform best when they are based on accurate. analysing and interpreting data.  Price is reduced to sell the remaining stock.  Distribution channels reduced and product offered to a loyal segment of the market only.  Promotion continues to suggest the product is tried and true — it’s still the best. therefore.  Distribution incentives may need to be offered to encourage preference over rival products. Determining information needs   The problem is clearly and accurately stated to determine what needs to be measured and the issues involved. marketing managers usually follow a three-step approach: Determining information needs.  Promotion discontinued. collecting data from primary and secondary sources. a more accurate and responsive marketing plan can be designed and.

typical or deviations from typical patterns. focus groups. a process that may be time consuming and expensive. Conducting a survey means gathering data by asking or interviewing people. conclusions need to be drawn. for example. . Surveys may be carried out by: personal interviews.    Market researchers use a combination of two types of data: primary and secondary data. Statistical interpretation analysis is the process of focusing on the data that represents average. It is referred to as secondary because it is information that has been collected for some other purpose. The first step in drawing conclusions (analysis and interpretation) is to tabulate the data — that is. The main benefit of a survey is that it gathers first-hand information that provides details of customers’ opinions. This information can be collected by the business itself. Cross-tabulation will allow comparisons to be made between individual categories. Interpreting data     Once the data has been gathered. Market researchers do this to determine whether changing one of the factors (a cause) will alter the behaviour of what is being studied (the effect). Information may be gathered through: personal observation (researcher posing as a customer in a store) and electronic observation (using camera or counting machines). Instead. For example. cross-tabulation could show how men and women display different shopping habits. There are three main methods used to gather primary data:  The survey method. Internal data refers to information that has already been collected from inside the business. Observation involves recording the behaviour of customers. External data refers to published data from outside the business. mail.     Secondary data is information that has already been collected by some other person or organisation. These are: internal data and external data.  The observation method. electronic methods of collection (phone. Many businesses outsource this activity. There are two types of secondary data. The main advantage of primary data is that their collection is directed at solving a specific marketing problem. No interviews are involved and direct contact with respondents is avoided. the actions of the customers are systematically observed. Their main function is to find out exactly what the customer is thinking. Experiments involve gathering data by altering factors under tightly controlled conditions to evaluate cause and effect. display the information in table format. internet) and questionnaires.  The experiment method. census data and household expenditure surveys gathered by government and private organisations. Primary data are the facts and figures collected from original sources for the purpose of the specific research problem.

Customer service means responding to the needs and problems of the customer. The same product mix will not remain effective for long because customer’s tastes and preferences change over time. for example. . Expanding the product range     Product mix is the total range of products offered by a business. ‘Increase market share by 5 per cent over 12 months’. using many different brand names to gain an extra few percentage points of market share. Three common marketing objectives include:  increasing market share  expanding the product range  maximising customer service Increasing market share     Market share refers to the business’s share of the total industry sales for a particular product. Each item in a product line should attempt to satisfy the needs of different target markets. The marketing objectives should be more customer oriented than the goals for the entire business. are constantly trying to increase their market share of the viewing public as measured by the ‘rating’ of a program. experience and intuition. Increasing market share is an important marketing objective for businesses that dominate the market. and demand for a particular product may decrease. The metropolitan free-to-air (FTA) commercial television broadcasters Nine Network. This interpretation will largely be based on the marketing manager’s judgement. Seven Network and Network Ten. Maximising customer service   Maximising customer service is perhaps the most important objective. because small market gains often translate into large profits. as this will increase profits in the long term. Businesses often develop an extensive product range. Businesses are usually keen to expand their product mix. and should include specific targets to be met — for example. businesses must understand customers’ needs. To develop the ideal product range. For this reason. it is preferable to involve a number of people in the interpretation of data so as to gain a wider perspective. Establishing market objectives    Marketing objectives are the realistic and measurable goals to be achieved through the marketing plan.

Sometimes a business may be able to identify a primary and a secondary target market. The strategies a business can use to maximise customer service include:  asking customers what they want  training employees and rewarding them for excellent customer service  anticipating market trends by conducting research  finding out what competitors are offering and then reviewing the product mix  establishing and maintaining long-term relationships with customers  encouraging employees to focus their attention on the customer’s needs  (customer-oriented) and not just on making a sale (sales-oriented) Identifying target markets        A target market is a group of present and potential customers to which a business intends to sell its product. which is likely to result in the marketing campaigns being more cost effective and time efficient  promotion material is more relevant to the customers’ needs. income. This establishes a sound customer base with the possibility of repeat purchases. the business is able to:  use its marketing resources more efficiently. A business identifies and selects a target market so it can direct its marketing strategies to that group of customers. After identifying a target market. Consequently. The primary target market is the market segment at which most of the marketing resources are directed. location and spending patterns. A secondary target market is usually a smaller and less important market segment.  High levels of customer service will result in improved customer satisfaction and a positive reaction from customers towards the products they purchase. . and is more likely to be noticed  better understand the consumer buying behaviour of the target market  collect data more effectively and make comparisons within the target market over time  refine the marketing strategies used to influence customer choice  Businesses can choose one of three approaches to identifying and selecting a consumer target market: the mass marketing approach. The customers within the target market share similar characteristics such as age. marketers want to tap into this highly profitable target market. the market segmentation approach or the niche market approach. lifestyle. This allows the business to better satisfy the wants and needs of the targeted group.

and one distribution system used to reach all customers. Once the market has been segmented. For example. avoid direct competition with large department stores. Marketing mix refers to the combination of the four elements of marketing. Market segmentation approach      Few businesses can sell their products to the entire market — the market is just too big. In a sense. or a ‘micro-market’. Some people might want only a sports car. Segmenting a market enables a business to design a marketing plan that meets the needs of a relatively uniform group. One of the most useful ways of understanding how to develop a marketing strategy is to examine each of the elements of the marketing mix. A business that is marketing motor vehicles. Market segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. others might want a four-wheel drive. the business selects one of these segments to become the target market. it is a segment within a segment. one promotional program aimed at everyone. price.Mass marketing approach     A mass marketing approach seeks a large range of customers. the four Ps — product. promotion and place — that make up the marketing strategy. This . one price. a business will divide the market into distinct segments. therefore. the business must then determine the emphasis it will place on each of the variables. Developing marketing strategies     Marketing strategies are actions undertaken to achieve the business’s marketing objectives through the marketing mix. would not direct its marketing efforts towards every person in the total vehicle market. The mass marketing approach assumes that individual customers in the target market have similar needs. This means there is one type of product with little or no variation. The business would thus direct its efforts towards a particular segment of the total market for motor vehicles. Niche market approach    A niche market is a narrowly selected target market segment. Therefore. for example. an exclusive fashion boutique can carve out a niche market and. Once the four Ps have been established. The needs of customers in these markets are often neglected by large businesses because it is rarely profitable for them to alter their marketing mix to cater for very small groups. The business therefore develops a single marketing mix and directs it at the entire market for the product.

packaging/labelling. distribution may be as wide as is practically possible. The business also needs to determine such features as the product’s quality. This process usually involves a number of intermediaries or ‘go betweens’. clubs. below or about even with the competitors’ price. The number of intermediaries chosen will determine how widely the product will be distributed. vending machines. Its distribution channels include retail stores. publicity and public relations. revising the marketing strategy . Changes in technology. Price    Selecting the ‘correct’ price can sometimes be difficult. Implementation. The major pricing decision is whether to set a price above. which is the distribution method usually selected by expensive products. which is the method used by Coca-Cola. Place/distribution     This element of the marketing mix deals with the channels of distribution: the ways of getting the product to the customer. Products (goods and/or services)   This element of the marketing mix involves much more than just deciding which product to make. Promotion    A promotion strategy details the methods to be used by a business to inform. The main forms of promotion include advertising. brand name and guarantee. restaurants.will largely be determined by where the product is positioned or its stage in the product life cycle. Alternatively. cafes and fast-food outlets. Customers will buy products that not only satisfy their needs and wants but also provide intangible benefits such as a feeling of security. satisfaction or influence. personal selling and relationship marketing. comparing actual and planned results. Of course. especially advances in information and communication technology (ICT). such as the costs of production and level of consumer demand. Gucci and Louis Vuitton fashion accessories are available in only a few selected locations. monitoring and controlling – developing a financial forecast. For example. such as the wholesaler or retailer. persuade and remind customers about its products. a business must consider other factors too. hotels. prestige. supermarkets. The business may wish to keep supply of the product restricted to a few specialised outlets. sales promotion. are having a significant impact on how businesses promote their products. design.

To implement the marketing plan effectively. what are the objectives?  Are these objectives being achieved?    The first step in the controlling process requires the business to outline what is to be accomplished. Budgets. as well as other employees. This requires the marketing department personnel. that is. a KPI could be: increase monthly sales by 5 per cent. a number of basic questions need to be answered:  Is the plan fully integrated with all other sections of the business?  How should the business be structured and organised?  Have effective lines of communication been established between the marketing department and all other departments?  Who are the best people for the various tasks needed to implement the plan?  Are the marketing personnel motivated and focused on achieving the marketing objectives?  Are all other employees familiar with the marketing objectives and marketing strategies? Monitoring and controlling the marketing plan      Monitoring means checking and observing the actual progress of the marketing plan. . weekly and monthly decisions that have to be made to make sure the plan is effective. For example. a marketing manager could compare each salesperson’s results with his or her sales quota. Implementation involves the daily. to gather information and report on any important changes. sales statistics and cost analyses can be used to evaluate results. For example. The second step in the controlling process is to compare or evaluate actual performance against the KPI. To achieve this. A KPI is a forecast level of performance against which actual performance can be compared. that is.Implementing the marketing plan    Implementation is the process of putting the marketing strategies into operation. to establish a key performance indicator (KPI). The information collected during the monitoring stage is now used to control the plan. problems or opportunities that arise during the life of the marketing plan. Controlling involves the comparison of planned performance against actual performance and taking corrective action to make sure the objectives are attained. the marketing manager needs to constantly ask two questions regarding the marketing plan:  What does the business want the marketing plan to achieve.

By measuring the sales potential and revenue forecasts (benefits) for each strategy. a business must develop a financial forecast that details the costs and revenues for each strategy. The main strength of sales analysis is that sales figures are relatively cheap to collect and process. Comparing actual and planned results  Three key performance indicators used to measure the success of the marketing plan are:  sales analysis  market share analysis  marketing profitability analysis    Sales analysis: the comparing of actual sales with forecast sales to determine the effectiveness of the marketing strategy. Developing a financial forecast requires two steps:  Cost estimate: How much is the marketing plan expected to cost? Costs of the marketing plan can be divided into four major components: market research. Their main weakness. a business is able to evaluate its marketing strategies as compared with those of its competitors. This evaluation can reveal whether changes in total sales. is that data for sales revenue do not reveal the exact profit level. however. have .   Marketing costs are easier to forecast than revenue. Calculating the projected marketing revenue is much more difficult because of changes in the external environment. actual revenue can be compared with the forecast revenue data to determine the effectiveness of the marketing strategy. because these activities are largely controlled by the business. Developing a financial forecast    When evaluating alternative marketing strategies. and what sales staff predict they will sell. product development. It is only by establishing KPIs and then comparing them with actual performance that a marketing manager can evaluate the effectiveness of the marketing plan. Market share analysis/ratios: By undertaking a market share analysis. As time goes by. over which the business has little or no control. promotion (including advertising and packaging). either increases or decreases.  Revenue estimate: How much revenue (sales) is the marketing plan expected to generate? Forecasting revenues will be based on two major components: how much consumers are expected to buy and for what price. and distribution. a business is in the best position to decide how to allocate its marketing resources. and comparing these with the anticipated expenditures (costs).

Businesses that continually upgrade their products will be able to maintain a competitive advantage. if Sony had stopped product development at the transistor radio. The marketing plan can be revised by either:  changes in the marketing mix  new product development  product deletion   Changes in the marketing mix: Because the marketing plan is operating in a dynamic business environment. Promotion strategies will need to change over time corresponding to the life cycle of the product. like . the price component of the marketing mix will need to be revised in response to changes in the external business environment. administration. Therefore.  Promotion modifications: Promotion costs will be high when a new product is first launched onto the market. it would probably be out of business today. Sony. Changes that could be introduced include the following:  Production modifications: No product is perfect. the distribution channels will need to be expanded to cater for the growing market. Revising the marketing strategy   Revision of the marketing plan is as equally important as all the other steps involved in creating successful marketing strategies. a marketing manager can assess the effectiveness of each activity. it must continually introduce new products.    resulted from the business’s marketing strategies or have been due to some uncontrollable external factor. New overseas markets may be tapped. Marketing profitability analysis: a method in which the business breaks down the total marketing costs into specific marketing activities such as advertising.  Place modifications: As a product’s success increases. transport. while old markets may decrease due to demographic changes. order processing and so on.g. However.  Price modifications: Prices fluctuate due to a variety of reasons. This evaluation also helps in deciding how best to allocate marketing resources in the future.   New product development: The product life cycle tells us that all products have a life span of somewhere between five to 10 years. internet) may be used. If a business’s total sales revenue and market share have declined. By comparing the costs of specific marketing activities with the results achieved. if a business wants to achieve long-term growth. With the development of electronic communications. the marketing mix will constantly need to be revised. new distribution channels (e. For example. then the marketing strategies need to be reviewed. Therefore.

a decision will eventually have to be made to either delete or redevelop the product. a business will have to eliminate some lines of products. However. Outdated products may create an unfavourable image and this negativity may rub off on other products sold by the business. Most businesses find it difficult to delete a product. . spends vast amounts on research and development to stay at the forefront of technology and introduce new products Product deletion: the elimination of some lines of products. especially if it has been successful for a long time.    many other large businesses. when a product is in the decline stage. To maintain an effective product mix.

the marketing mix may differ from one geographic region to another. The ultimate aim of market segmentation is to increase sales. Segmentation variables are the characteristics of individuals or groups that are used by marketing managers to divide a total market into segments. cultural background and family size. their use is widespread amongst marketers. Consequently. sex. product/service differentiation and positioning      Marketing segmentation involves dividing the total market into segments. Once the market has been segmented. psychographic and behavioural. Businesses may divide the consumer market into regions because consumers in different geographical locations have different needs. .MARKETING STRATEGIES   The extended marketing mix refers to the combination of people. Demographic segmentation    Demographic segmentation is the process of dividing the total market according to particular features of a population. Market segmentation. income. processes and physical evidence with the four main elements of the marketing mix. One franchise fast-food business will not locate in cities of less than 25 000 people. Age and gender are two of the most widely used demographic variables for segmentation purposes. including the size of the population. Geographic segmentation     Geographic segmentation is the process of dividing the total market according to geographic locations. Due to the ease with which these demographic variables can be measured. Climate also has an impact on segmenting markets for businesses selling heating and cooling systems as well as clothing. The consumer market can be segmented according to four main variables: demographic. age. geographic. The main goal of a marketing manager is to develop and maintain a marketing mix that precisely matches the needs of the customers in the target market. Sometimes the city size can be an important segmentation variable. tastes and preferences. the marketing manager selects one of these segments to become the target market. market share and profits by better understanding and responding to the desires of the different target customers.

When segmenting a market according to physiographic variables. in its broadest sense. gluten-free. thick for toasting and so on. greater convenience. will respond quite differently about the cost of vehicle maintenance. influencing them to buy it. An average Toyota Corolla owner compared with an average Porsche Cayman S owner. is the process of developing and promoting differences between the business’s products or services and those of its competitors. opinions. Differentiation and positioning of product/service   Product/service differentiation. reading habits. This includes customers’ knowledge of. or products or services that are environmentally friendly. Walk into any supermarket to buy a loaf of bread and you are faced with a wide selection from which to choose: white. set special prices and implement special promotion activities. unsliced. socioeconomic group and lifestyles. a business would research a consumer’s brand preferences. sliced. wholemeal. attitude towards. for example. favourite music. Identifying what the customers’ want from the product — the benefits sought — is an important aspect of behavioural segmentation. motives. Psychographic variables focus on why people behave the way they do. Value for money is the desire to obtain the best quality. These factors all play a part in persuading consumers to perceive the product or service as being superior to all similar products or services and. more features and better value for money. By determining the benefits desired by the market. Behavioural segmentation    Behavioural segmentation is the process of dividing the total market according to the customers’ relationship to the product. vitamin enriched. insurance and accessories. features and performance for a given price of a product. such as offering top-quality service. . washing detergent with brightener additives and an exclusive restaurant that offers full-table service. Examples include jeans with designer labels. or benefits sought from the product. or more complex. A business may have to redesign the product. radio and television programs. use of. marketers can design products that directly satisfy these desires. Providing so many different types of breads is a deliberate marketing strategy and is an example of product/service differentiation. therefore. Points of differentiation    The difference could be as simple as changes to the packaging or labelling. and values.Psychographic segmentation    Psychographic segmentation is the process of dividing the total market according to personality characteristics. personal interests and hobbies.

 Four important points of differentiation are customer service. convenience. packaging. producers or the environment. especially the physical environment. environmental concerns.  Ethical consumerism provides businesses with opportunities to satisfy the demands of this growing number of consumers. For this reason. animals and society. food manufacturers have developed a range of convenience food products. promotion and channels of distribution.  Environmental concerns: People are becoming more concerned with ‘quality of life’ issues. Some brand names.  Ethical consumerism involves buying products that are not harmful to the environment. Businesses that create pollution may risk losing customers.  Convenience: Because today’s consumers are busy. and social and ethical issues. The Fair Trade movement is gaining in influence with consumers increasingly prepared to pay more for guarantees of fair labour practices and sustainable. the marketing manager needs to have clearly determined the desired positioning of the product/service. many consumers do not have a lot of time for meal preparation.  Social and ethical issues: A growing number of consumers are becoming more ethically minded and will actively purchase products or brands that they believe do not exploit workers. investing considerable resources to do so. This will be achieved through the product/service’s name. Product/service positioning is something that is done in the minds of the target market: it is how potential buyers perceive the product. these individual characteristics create the image of the product/service . price. In highly competitive markets. In response. they will often select products that are convenient to use. or the range of products that set a business apart and capture the consumer’s interest. For example. the atmosphere.  For example. sales may be difficult to secure. a business will attempt to create an image that differentiates its product/ service from the others. Customer service may also include the presentation of the premises. such as Rolex and Ferrari can immediately evoke an image of the product’s quality. This image gives the product its position within the market. Product/service positioning      Product/service positioning refers to the technique in which marketers try to create an image or identity for a product compared with the image of competing products. Whenever a new product is launched.  Customer service: Consumers expect a high level of customer service. organic products. Combined. whereas businesses that adopt a ‘green’ philosophy and produce environmentally friendly products may see their sales increase. styling.

for example. Branding helps consumers:  Identify the specific products that they like. symbol. The total product concept refers to the tangible and intangible benefits (attributes) a product possesses. then.  Introduce new products onto the market because consumers are already familiar with the business’s existing brands. Branding   A brand is a name.  Reduce their level of perceived risk of purchase. Dinner at an expensive restaurant. This has the added benefit to the business of being able to charge a higher price for the product. When customers purchase products. with mass-produced products. live music and a pleasant atmosphere).  Gain a psychological reward that comes from purchasing a brand that symbolises status and prestige.  Branding helps businesses:  Gain repeat sales because consumers recognise the business’s products. are a combination of tangible and intangible attributes. a consumer selection would be quite random because buyers could have no guarantee that they were purchasing what they preferred. term. provides tangible elements (food and drinks) and intangible elements (efficient service.  Encourage customer loyalty. especially when a consumer lacks the expertise to judge a product’s features. it is on the differences in the intangible benefits that product competition is based. design or any combination of these that identifies a specific product and distinguishes it from its competition. Benefits of branding   Branding provides benefits for both buyers and sellers. Often.  Helps with their promotional activities because the promotion of one product indirectly promotes all other similarly branded products.Products – goods and/or services       Products are goods or services that can be offered in an exchange for the purpose of satisfying a need or want. Most products are combinations of tangible and intangible components. All products. . they buy both the tangible and intangible benefits (attributes) — a total product concept. Without branding. A respected and trusted brand will provide reassurance that the consumer is making the right choice.  Evaluate the quality of products. A brand name is that part of the brand that can be spoken.

It is also why businesses spend a great deal of time. Generic brands are products with no brand name at all. ©. These products are often cheaper because the retailer or wholesaler can buy at lower costs. Packaging     Packaging involves more than simply putting the product in a container or placing a wrapper around it. A trademark signifies that the brand name or symbol is registered and the business has exclusive right of use. is one business that aggressively protects its brand name — which is a registered trademark — against infringement. packaging:  preserves the product  protects the product from damage or tampering  attracts consumers’ attention . money and effort creating and protecting their brand name. When a manufacturer owns a brand name it is referred to as a manufacturer’s brand or national brand. Packaging involves the development of a container and the graphic design for a product.    For these reasons. McDonald’s. Carrying only the name of the product and in plain packaging. Branding strategies     Brands are usually classified according to who owns them. McDonald’s ‘golden arches’ or Nike’s ‘swoosh tick’. E. To assist sales. Kraft foods and Billabong clothing.g. a brand name can be a powerful marketing tool. Home Brand. for example. are widely available and offer reliability with constant quality. In addition. Common examples of manufacturer’s brands include Sunbeam appliances. Branding – symbols and logos    A brand symbol or logo is a graphic representation that identifies a business or product. A private or house brand is one that is owned by a retailer or wholesaler. A brand symbol does not have to duplicate the words in the brand name. The three-pointed star of the Mercedes-Benz and Coca-Cola’s distinctive narrow-waisted bottle are famous brand symbols. the packaging of a product is sometimes as important as the product itself. Well-designed packaging will give a positive impression of the product and encourage first-time customers. Some businesses encourage the instant recognition of their brand symbol rather than their brand name. TM or R at the end of a brand name signify that the name or symbol is copyright protected or a registered trademark. These brands have high appeal with customers because they are recognised across the country.g. E. The symbols.

packaging also acts as a form of communication. These pricing methods provide a ‘basic’ price for each product. market-based and competition-based. the shape of the packaging can become part of the product itself. package size or country of origin. divides the product into convenient units  assists with the display of the product  makes transportation and storage easier    Apart from performing these practical functions. Usually the label will provide information about ingredients. competition-based       Price refers to the amount of money a customer is prepared to offer in exchange for a product. All labels must be truthful. shelf life. one of the most easily recognised shapes in the soft-drink market is the distinctive ‘pinched in at the waist’ Coke bottle. there are number of statutes (laws) and government regulations specifying information that must be included in the labelling for certain products. market. For example. They also make it easier for consumers to compare products. Cost-based (mark-up) pricing . A price set too low may give customers the impression that the product is ‘cheap and nasty’. There are three main pricing methods: cost-based. consumers readily associate a unique shape with a specific product. Many products packaged in black or gold portray an image of luxury and sophistication. Marketers can use labels to promote other products or to encourage proper use of products and therefore greater consumer satisfaction with products. A price set too high could mean lost sales unless superior benefits are offered. That is. Overall. operating procedures. Consumers see certain colours and draw conclusions about the product even before they read the label. Labelling       Labelling is the presentation of information on a product or its package. For example. These regulations are aimed at protecting the consumer from misleading or deceptive claims and the unsafe use of products. a red soft-drink can means cola. Sometimes. Price including pricing methods – cost. a business’s pricing decisions are influenced by a variety of internal and external factors. In Australia. green means lemon-lime. A label is that part of the package that contains this information.

. The total of the cost plus the mark-up is the selling price of the product. Once a business has established a base price. The price of the product will consequently fall. loss leaders. When making a major purchase. there will be a shortage in the market. the business then fine-tunes this price in line with its pricing strategy. therefore. Competition-based pricing       Most products are available from more than one business. need to consider the competition when making their pricing decisions.   Cost-based (mark-up) pricing is a pricing method derived from the cost of producing or purchasing a product and then adding a mark-up and is the simplest of the three methods. price points   Once the basic price has been set using the preferred pricing method(s). This will force up the price of the good. A Mark-up is a predetermined amount (usually expressed as a percentage) that a business adds to the cost of a product to determine its basic price. instead of using costs to determine price. When the supply of a product is greater than its demand. Pricing strategies – skimming. Businesses. equal to. Demand is the quantity of a product consumers are willing to purchase at a particular price. many consumers compare prices. A price leader is a major business in an industry whose pricing decisions heavily influence the pricing decisions of its competitors. Competition-based pricing is where the price covers costs (cost of raw materials and the cost of operating the business) and is comparable to the competitor’s price. Competition-based pricing is often used when there is a high degree of competition from businesses producing similar products. Following the price established by a price leader (equal to) is an easy option for a business because it avoids having to undertake market research to find out what the consumer would actually pay. a surplus will exist in the market. Supply is the quantity of a product businesses are willing to offer for sale at a particular price. penetration. Various pricing strategies can be used. even for the same product. The formula is: Cost + (Cost x Mark-up percentage) = Price Market-based pricing      Market-based pricing is a method of setting prices according to the interaction between the levels of supply and demand — whatever the market is prepared to pay. and it is common for a business to use several at once. it can then decide to choose a price either: below. When demand for a product is greater than its supply. or above its competitors.

they will usually buy other products and spend more than what attracted them into the store to begin with. Price skimming    Price skimming occurs when a business charges the highest possible price for the product during the introduction stage of its life cycle. The objective is to recover the costs of research and development as quickly as possible. The extent to which a business uses any of the following strategies depends primarily on:       its marketing objectives the life cycle of the product the market for the product the degree of product differentiation the level of economic activity The pricing strategies used by marketers will have to be modified depending upon changes within the external business environment. a business may be locked into low sales revenue until it substantially modifies the product at a later stage. The objective is to sell a large number of products during the early stages of the life cycle and thus discourage competitors from entering the market or from taking market share from existing businesses. before competition enters the market. The psychology behind this strategy is that once the consumers are in the store. Some consumers are willing to pay a high price for a product’s novelty features because of the prestige or status that ownership gives. many businesses. This successful pricing strategy is often used when the business:  is overstocked or a product is slow to sell  wants to increase the traffic flow in the expectation of gaining new customers  wants to build a reputation of having low prices . Consequently. it hopes that the extra customers will buy other products as well. Although the business makes a loss on this product. The main disadvantage of this strategy is that it is more difficult to raise prices significantly than it is to lower them. For a special promotion. especially the influence of technology. deliberately sell a product at a loss to attract customers to the shop. especially retail stores. Loss leaders     A loss leader is a product sold at or below cost price. Price penetration    Price penetration occurs when a business charges the lowest price possible for a product or service so as to achieve a large market share.

This pricing strategy is referred to as prestige or premium pricing and is designed to encourage status-conscious consumers to buy the product. If a business that uses premium pricing lowered their prices dramatically. Promotion   Promotion describes the methods used by a business to inform. This pricing strategy is used mainly by retailers. However. especially clothing stores and boutiques. Charge a high price and the product develops an aura of quality and status. consumers may believe that high prices reflect either expensive packaging or market exploitation. a jeweller may offer a line of watches priced at $55. in reality. a premium price is set artificially high to imply a prestigious or quality image when. This is usually due to the higher manufacturing cost involved in producing them. persuade and remind a target market about its products. $75 and $95 regardless of how much they cost at wholesale. This may lead to a reduction in sales because the consumer perceives there to be little actual difference between the quality of a low and high priced item. Prestige or premium pricing is a pricing strategy where a high price is charged to give the product an aura of quality and status. The business chooses a limited number of key prices or price points for selected product lines. products of superior quality are sold at higher prices. Therefore. For example. Sometimes. the quality may not be much superior to cheaper alternatives. Promotion attempts to:  attract new customers by heightening awareness of a particular product  increase brand loyalty by reinforcing the image of the product . the main danger of this practice is that if it is done incorrectly the business can actually lose money. As well. it would damage their reputation because it is inconsistent with the perceived images of such products. This perceived price–quality relationship helps determine the image customers have of products or brands. if a business charges a low price for a product. Using this pricing strategy makes it easier for the customer to find the type of product they need. Price and quality interaction         Normally. It also makes it easier for the business to encourage the customer to ‘trade up’ to a more expensive model. customers may perceive the product as ‘cheap’. Price points     Price points (or price lining) is selling products only at certain predetermined prices.

Advertising media refers to the many forms of communication used to reach an audience. sales promotions. newspapers and magazines  direct marketing catalogues — catalogues mailed to individual households  telemarketing — the use of the telephone to personally contact a customer  e-marketing — the use of the internet to deliver advertising messages  social media advertising — online advertising using social media platforms such as Facebook and Twitter  billboards — large signs placed at strategic locations  Which type of advertising media a business selects depends on a number of variables including the:  type of product and its positioning  size of the target market and its characteristics  business’s marketing budget . A successful advertising campaign can result in increased sales and profit for a business. Methods include:     advertising personal selling and relationship marketing sales promotions publicity and public relations Advertising      Advertising is a paid. radio. publicity and public relations   Promotion mix is the various promotion methods a business uses in its promotional campaign. non-personal message communicated through a mass medium and is an essential tool for successful marketing. distinct target market segment. The main advantage of advertising is that it provides businesses with the flexibility to reach an extremely large audience or to focus on a small. encourage existing customers to purchase more of the product  provide information so customers can make informed decisions  encourage new and existing customers to purchase new products Elements of the promotion mix – advertising. The form and presentation of advertisements have changed over time but the purpose of advertising — to inform. personal selling and relationship marketing. persuade and remind — has remained constant. The six main advertising media includes:  mass marketing — television.

 The individualised assistance to a customer can create a long-term relationship resulting in repeat sales. installation. businesses are willing to spend the money on it because it offers three unique advantages which are:  The message can be modified to suit the individual customer’s circumstances. The ultimate aim is to create customer loyalty by meeting the needs of customers on an individual basis thereby creating reasons to keep customers coming back. followed in 2007 by the Woolworths Everyday Rewards scheme. warranties and servicing. cost of the advertising medium  product’s position on the product life cycle Personal selling    Personal selling involves the activities of a sales representative directed to a customer in an attempt to make a sale. Relationship marketing    Relationship marketing is the development of long-term. . a food producer may offer customers a cookbook as a premium. the Fly Buys loyalty reward program operated by the Coles Group introduced during the 1990s. cost-effective and strong relationships with individual customers. complex or highly individual products — personal selling is the main promotional strategy.  Refunds: Part of the purchase price is given back to those customers who send in a voucher with a specific proof of purchase. For some businesses — such as those offering expensive.  The sales consultant can provide after-sales customer service in relation to product features.  Samples: A sample is a free item or container of a product. Although personal selling is an expensive promotional method. For example. Coupons work best for new or improved products.  Premiums: A premium is a gift that a business offers the customer in return for using the product. Sales promotion  Sales promotion is the use of activities or materials as direct inducements to customers and aims to:  entice new customers  encourage trial purchase of a new product  increase sales to existing customers and repeat purchases  Examples of sales promotions include:  Coupons: These offer discounts of a stated amount on particular items at the time of purchase. For example.

such as an opinion leader. The four main ways in which PR assists a business achieving its objective of increased sales are:  Promoting a positive image: reinforcing the favourable attitudes and perceptions consumers have regarding the business’s reputation  Effective communication of messages: using advertising. efficiently and succinctly to their target markets. promotion is wasted. This can be done by working with the media. sales promotions. publicity and personal selling to convey information about the business and its products  Issues monitoring: protecting sales by providing an early warning of public trends that could affect the business’s sales. by making speeches on special occasions or by some attention-seeking gesture such as a donation or a give-away sale that is reported by others. Without effective communication. inappropriate language or images. word of mouth     Marketing managers must be able to communicate clearly. This means that PR is often more effective and cheaper than paid advertising. which. jargon and misinterpretations. might result in a loss of sales. or by word of mouth. . Point-of-purchase displays: Special signs. The communication process – opinion leaders. Often customers may be more willing to purchase a product if the message is communicated via a respected and trusted channel. Two of the most common channels used for promotional communication include print and electronic media advertising. A channel is any method used for carrying a message.  Crisis management: protecting a business’s reputation as a result of negative or unfavourable rumours and adverse publicity. displays and racks are supplied and installed by the manufacturer in retail outlets. competing messages. Examples of noise include faulty printing. The main aims of publicity are to:        enhance the image of the product raise awareness of a product highlight the business’s favourable features help reduce any negative image that may have been created Public relations (PR) are those activities aimed at creating and maintaining favourable relations between a business and its customers. It differs from advertising in that it is free and its timing is not controlled by the business. if left unchecked. Publicity and public relations   Publicity is any free news story about a business’s products. Noise is any interference or distraction that affects any or all stages in the communication process.

 Producer to retailer to customer: A retailer is an intermediary who buys from producers and resells to customers. Their opinions are respected. A . The four most commonly used channels of distribution are:  Producer to customer: involves no intermediaries. Agents are paid a commission by the producer. Word-of-mouth communication occurs when people influence each other during conversations. use this method. A wholesaler is an intermediary who buys in bulk. Actors. athletes.  Producer to agent to wholesaler to retailer to customer: An agent distributes products to wholesalers but never owns the product. from tax advice to car repairs. Place/distribution  Place or distribution are activities that make the products available to customers when and where they want to purchase them. agent or retailers.  Producer to wholesaler to retailer to customer: most common method used for the distribution of consumer goods. such as the wholesaler. Businesses are increasingly using social media platforms such as Facebook and Twitter to engage in a form of word-of-mouth communication. then resells in smaller quantities to retailers. Friends’ recommendations can be a powerful influence. broker. musicians and models are regarded by some groups as opinion leaders and many businesses use celebrity endorsement as part of their marketing strategies. Virtually all services. Word of mouth     Consumers tend to trust word-of-mouth communication more than business sponsored commercials. This channel is often used for bulky or perishable products such as furniture or fruit. and they are often sought out for advice. especially when there are many competing products from which to choose. Usually agents are used for inexpensive. especially if the message is being communicated by a friend or opinion leader. This process usually involves a number of intermediaries. frequently used products. Distribution channels    Channels of distribution or marketing channels are the routes taken to get the product from the business to the customer. from the producer.Opinion leaders   An opinion leader is a person who influences others.

which will allow customers to purchase via their television or personal computer. Electronic post and parcel delivery channels will be used more extensively to meet the increasing demand. are distributed this way. the difference being the intensity of coverage:  Intensive distribution: This occurs when the business wishes to saturate the market with its product. Two of the most rapidly developing methods of non-store retailing are telemarketing and internet marketing:  Telemarketing: the use of a telephone to make a sale. expensive products. Channel choice – intensive. The customer is prepared to travel and seek out a specific retail outlet that stocks a certain brand. Methods such as door-to-door selling. warehousing and inventory control: . selective. warehousing. A business can decide to cover the market in one of three ways as follows.  Exclusive distribution: This is the use of only one retail outlet for a product in a large geographic area.business that does not have any sales representatives will often use an agent instead. Many convenience goods. such as milk. This method of distribution is commonly used for exclusive.    Non-store retailing is retailing activity conducted away from the traditional store. lollies and newspapers. Market coverage refers to the number of outlets a firm chooses for its product.  Internet marketing: It is now relatively easy for any business to obtain a domain name and a website and begin marketing its products via the internet. The logical extension of telemarketing is the area of interactive technology. party-plan merchandising and vending machines have been used for a number of years. Physical distribution issues – transport. furniture and electrical appliances are often distributed using this method. mail-order catalogues. Customers can shop at local outlets and be able to purchase the product. It is a combination of several interrelated functions. including transportation. exclusive    How a business chooses the channel of distribution best suited to its product depends largely on the location of the business’s market or market coverage.  Selective distribution: This involves using only a moderate proportion of all possible outlets. inventory   Physical distribution is all those activities concerned with the efficient movement of the products from the producer to the customer. Clothing.

The method of transportation a business uses will largely depend on the type of product and the degree of service the business wishes to provide. Any business that has inefficient processes will lose customers and damage its reputation. storing and dispatching goods. processes and physical evidence   The original four P’s . How the staff speak to customers. all businesses should develop a culture of customer focus and put it into practice. Consequently. Processes    Processes refers to the flow of activities that a business will follow in its delivery of a service. road. electronic appliances.  Inventory control: a system that maintains quantities and varieties of products appropriate for the target market. People     The people element refers to the quality of interaction between the customer and those within the business who will deliver the service. processes and physical — which apply especially to intangible product (services) such as tourism. However. If a business carries too much stock on its inventory. The goal of inventory is to find the correct balance between these two situations. A warehouse acts as a central organising point for the efficient delivery of products. The four most common methods of transportation are rail. Consumers base their perceptions and make judgements about a business based on how the employees treat them. too little stock results in lost sales or ‘stock-out costs’. as the service sector within the economy expanded. this traditional approach to marketing was viewed as somewhat outdated. A pizza delivery business. Physical evidence . Transport: An intricate network of transportation is required to deliver the vast array of products on supermarket shelves. must not deliver cold pizza.price. gas and electricity accounts should be set on time. it will experience high storage costs. However. for example. People. product. deal with enquires and handle complaints are all part of the marketing experience and of critical importance. perfumes and motor vehicles. place.  Warehousing: a set of activities involved in receiving. sea and air.are considered appropriate for tangible products (goods) such as clothing. entertainment and hospitality. a restaurant should not keep customers waiting for hours between courses. Therefore. three more Ps have been added — people. promotion . a bank statement must be accurate.

As a general rule. animation and video. the chairs were uncomfortable and the menu was difficult to read. blogs and Web2. which allow for communication .  SMS: Short message service (SMS) is the means by which text messages can be sent between mobile phones. A business should provide high-quality physical evidence to create an image of value and excellence. A website is a collection of related web pages. SMS. marketers are beginning to exploit all types of e-marketing. calling cards. you would probably not eat there again because of bad physical evidence. E-marketing technologies  The main e-marketing technologies available include web pages. SMS has distinct advantages over email in that messages are delivered automatically to one or more recipients without the need for them to dial in or log on. podcasts.  Podcasts: involves the distribution of digital audio or video files over the internet. Most businesses redirect user searches to their home page. Many businesses set up external blogs. graphics. business logo and website. a podcast is directed to a number of users who subscribe to that particular podcasting service. It is usually possible to add comments. Business’s main use of podcasts is for marketing and advertising purposes. usually associated with a particular business or organisation. ask questions. letterheads. With rapid changes in electronic communication and the development of the ‘information superhighway’. a welldesigned home page is a powerful marketing tool. at a restaurant. E-marketing     E-marketing (electronic marketing) is the practice of using the internet to perform marketing activities. Technology not only provides a faster. Text messages can also be used to alert regular customers of any special deals on offer and notify suppliers of the arrival of a goods shipment.  Blogs: also known as weblogs . brochures. provide feedback or share opinions on a blog.0:  Web pages: a display of information accessible on the web through a web browser in the form of a combination of text. if the cutlery was dirty. The big risk for Australian businesses is that consumers seeking the convenience of online shopping will purchase from overseas retailers and completely bypass local businesses. and who receive regular updates. For example.   Physical evidence refers to the environment in which the service will be delivered.refers to an online diary or journal. It also includes materials needed to carry out the service such as signage. it can also be a very effective way of attracting new customers. more efficient way of doing business.

video sharing sites such as YouTube and information sharing sites such as Wikipedia have made it easier for individuals and businesses to create and share many different types of content on the web with the key benefit being low cost. an external blog can have the following advantages for a business:  It allows the business owner and employees to establish a reputation for expertise.between the business and its existing and potential customers. . it is difficult for a marketer to accurately measure the reach (the number of people exposed to the message) and frequency (the average number of times someone is exposed to the message) of SMA. so it can present a human face to the public and build trust with customers. It is expected that SMA will expand rapidly over the next few years as new. criticise and even ridicule a product or a specific business. Social media advertising    Social media advertising (SMA) is a form of online advertising using social media platforms such as Facebook.  A blog by its nature is informal. rather than just a means of retrieving information. SMA does have two main disadvantages:  A marketer does not have control over what online consumers write about the business’s product. The main advantages of SMA are that it is:  inexpensive in comparison to traditional advertising methods  easy to use and monitor  an effective method to gain exposure  However. Bloggers have the freedom to discuss. honesty and consumer trust.0: refers to the transformation of the world wid web into a more creative and interactive platform for information sharing. accuracy.  Web2. A number of legal issues are presently evolving.   SMA raises concerns including issues of privacy. by providing detailed information on products and services. highly interactive mobile platforms and networks increasingly gain consumer acceptance. such as establishing age limits for users — Facebook and YouTube specifically prohibit use by children under the age of 13. YouTube and Twitter to deliver targeted commercial messages to potential customers.  New ideas for products and services can be put to the public to gain comment and feedback.  Unlike more traditional online advertising. review. SMA enables businesses to constantly build relationships with their customers. The development of social networking sites such as Twitter and Facebook.

A transnational corporation (TNC) is any business that has production facilities in two or more countries and that operates on a worldwide scale. all businesses marketing on a global scale need to rely on market research to understand the complexities of the global marketing environment before they can design the marketing mix. the business will be faced with a marketing environment and target markets that differ from the domestic scene. symbol or logo to identify the seller’s products.  It provides a uniform worldwide image. term. mobile phones. Many transnational corporations (TNCs) adopt a global marketing approach that involves developing marketing strategies as if the entire globe were one large market.  A successful brand is one of the most valuable resources a company has. Examples of standardised products are electrical equipment. thereby achieving economies of scale  research and development costs are reduced  spare parts and after-sales service are simplified  promotion strategies can be standardised  any evaluation and modification of the plan is a much simpler task . music. Alternatively. Many businesses have failed because they entered global markets without first gathering adequate market intelligence. Businesses are increasingly using global branding for a number of reasons:  It can be cost effective because one advertisement can be used in a number of locations. This strategy has obvious cost savings for businesses:  production runs can be longer.  The successful brand name can be linked to new products being introduced into the market. Standardisation    A standardised approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are the same all over the world.Global marketing       Within each foreign market. cosmetics. Global branding   Global branding is the worldwide use of a name. religion and tastes. It is essential to analyse overseas markets to an even greater depth than is necessary for domestic markets. movies and fast foods. soft drinks. Irrespective of which approach is adopted. some businesses believe the marketing mix should be customised to take into account differences among countries’ cultures.

Customisation     A customised or local approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are different between countries. the global business may need to adopt a market-customised pricing strategy that allows marketers to vary the price depending on the level of demand and competition within the overseas market. It will only succeed if the foreign marketing costs remain low enough not to affect overall costs. Such costs include transportation. taxes.  Standard worldwide price: Standardised pricing is the practice of charging customers the same price for a product anywhere in the world. it has become apparent that the standardisation approach is being used more frequently than the customised approach. a combination of the two approaches. Fluctuations in the exchange rate can change the prices charged across countries and is a major risk for global businesses. Global pricing     Global pricing is how businesses coordinate their pricing policy across different countries.  Market-customised pricing: Market-customised pricing sets prices according to local market conditions. the price charged in other countries is also influenced by foreign currency exchange rates. In determining the price for an overseas market. many global businesses practise the cost-plus method to cover the added costs of exportation. Accurate pricing decisions must be made if the business’s overseas expansion is to be successful. It is one of the most critical but complex issues that global businesses have to deal with because price is the only element of the marketing mix that generates revenue. warehousing and tariffs. A tariff is a tax on an imported product. Additionally. it is possible for a business to adopt a middle path — that is. as the scale of globalisation has intensified. political and sociocultural characteristics of the target country. A global business can implement one of three global pricing strategies:  Customised pricing: occurs whenever consumers in different countries are charged different prices for the same product. Of course. There are two major risks associated with this strategy: . Over the last decade. Adopting this philosophy requires the marketing plan to be customised according to the economic. To avoid competition from a domestic business.

As in a domestic market. A domestic business may undercut the standardised price  Changes in the exchange rate may negatively impact on the exported price Competitive positioning      Competitive positioning relates to how a business will differentiate its products. it takes more time. a global business must clearly show how its products are better than the competitors’ products. and form their strategies according to evolving conditions. Businesses must gain a deep understanding of their dynamic environments in which they operate. Without differentiation. The business should strive to develop product leadership. money and effort to encourage potential customers to purchase a business’s products. positive customer relationships and operational excellence. .