Professional Documents
Culture Documents
BSBMKG501
IDENTIFY AND
EVALUATE
MARKETING
OPPORTUNITIES
Contents
Introduction ...................................................................................................... 4
1 Identify marketing opportunities ............................................................... 6
1.1 Analyse information on market and business needs to identify marketing
opportunities .................................................................................................. 7
1.1.1 SWOT Analysis .................................................................................. 8
1.1.2 The marketing mix .......................................................................... 11
1.1.3 Ethics and regulation in marketing .................................................... 13
1.1.4 Law and regulation .......................................................................... 15
1.1.5 Is marketing the same as selling? ..................................................... 17
1.2 Research potential new markets and assess opportunities to enter, shape or
influence each market, and the likely contribution to the business ....................... 18
1.3 Explore entrepreneurial, innovative approaches and creative ideas for their
potential business application, and develop into potential marketing opportunities 22
1.3.1 Tools and techniques for generating ideas .......................................... 25
2 Investigating marketing opportunities ..................................................... 30
2.1 Identify and analyse opportunities in terms of their likely fit with
organisational goals and capabilities ................................................................ 30
2.2 Evaluate each opportunity to determine its impact on current business and
customer base .............................................................................................. 31
2.2.1 Knock out factors ............................................................................ 32
2.2.2 Present value analysis ..................................................................... 33
2.2.3 Forecasting..................................................................................... 34
2.3 Use an assessment of external factors, costs, benefits, risks and opportunities
to determine the financial viability of each marketing opportunity ....................... 38
2.4 Determine probable return on investment and potential competitors ........... 40
2.4.1 The risk versus benefit ..................................................................... 44
Media differences ....................................................................................... 46
2.5 Describe and rank marketing opportunities on their viability, and likely
contribution to the business ........................................................................... 47
3 Evaluate required changes to current operations ....................................... 49
3.1 Identify and document changes needed to current operations to take
advantage of viable marketing opportunities .................................................... 49
Introduction
This unit describes the performance outcomes, skills and knowledge required to
identify, evaluate and take advantage of marketing opportunities by analysing market
data, distinguishing the characteristics of possible markets and assessing the viability
of changes to operations.
It applies to individuals working in senior marketing management roles that, together
with a marketing team, identify, investigate and evaluate marketing opportunities to
determine whether they meet organisational and marketing objectives. Based on this
evaluation, changes to current business operations can be determined to take
advantage of marketing opportunities.
Let’s consider a few important facts about marketing before we continue.
Principles of marketing
Marketing is an organisational function, and a set of processes for creating,
communicating, and delivering value to customers, and for managing customer
relationships in ways that benefit the organisation and its stakeholders.
Kotler et al (2007).
Answering these questions about what we need and want can be complex. Marketing
has historically been considered a creative discipline. In reality, marketing is scientific
and follows a common scientific method:
Test your
Do background Construct a hypothesis by
Ask a question
research hypothesis doing an
experiment
Analyse your
Communicate
data and draw a
your results
conclusion
Marketing is a social science related to why humans behave the way they do, and
how we can work with or modify that behaviour to make a profit for our business.
What makes people purchase goods? To answer this question you need to undertake
the above steps.
Customer satisfaction
This depends on a product’s perceived performance in delivering value relative to a
buyer’s expectations. In other words:
What do buyers expect?
What was the perceived performance of the product?
How did these two compare?
If the (perceived) performance is higher than the expectation, the customer is
satisfied. If not, the customer is dissatisfied. The key is to match customer
expectations with product performance, because satisfied customers make repeat
purchases and tell others about their good experiences with the product and the
company providing the product.
Example We don’t expect much from a wooden train set. It costs $10, and we
may be very satisfied with it. Electric sets cost more but it also does
more. Because our expectations are higher we may not be satisfied.
Exchange is the act of obtaining a desired object or service from someone by
offering something of value in return. Exchange is not the only way we can get things
that we need/want.
If we are hungry we can hunt, fish, plant, harvest, beg or steal. By exchanging,
people can concentrate on making things they are good at, and trade them for
needed items made by others thus creating a wider variety of products.
Exchange is central to marketing, and requires a few important conditions:
Two parties must be involved
Each must have something of value to the other
Each must want to deal with the other
Each must be able to accept or reject the other’s offer
They must be able to communicate with each other
If all conditions exist, both parties can exchange, and hopefully be satisfied.
Transaction is the unit of measurement used in marketing. A transaction is a trade
of units of value between two parties.
In a transaction, we must be able to say that one party gives X to another party and
gets Y in return. Not all transactions involve money. Sometimes we exchange goods
or services (barter).
Beyond just transactions, marketers today need to build and maintain relationships
between themselves and other important parties. This is what is known as
relationship marketing.
Relationship marketing is the process of creating, maintaining and enhancing strong,
value-laden relationships with customers and other stakeholders.
Understand the
What does the situation, our
How will we do
organisation want to customers and
that?
achieve? environment we
operate in
Information comes
Research and from customers and
How will we know
gathering of from industry.
that?
information Examin behaviour
from many sources
Stake Share
Customers Suppliers Distributors Partners Dealers
holders holders
Penetrated market
current customers
Current opportunities and threats help us to understand the external influences that
can help us or stop us from achieving our goals. What are our competitors doing?
What changes can impact on our success? In this table there are several generic
SWOT examples that can be applied to a wide range of business applications:
SWOT analysis
Strengths Weaknesses
Opportunities Threats
You can audit your strengths and weaknesses against quality, time, cost, competitor
or industry benchmarks or performance indicators.
SWOT analysis can be used in many situations such as:
Commercial viability
Product positioning
Branding
Sales forecasting
Acquisition strategies
Risk management
Organisational design
Marketing planning requires us to know the answers to many questions regarding the
direction to be taken as a business and the attitudes of our target audience.
We need to consider the impact of attitudes to a wide range of attitudes and beliefs.
These can include but are not limited to:
Environmental considerations what attitudes will our customers adopt in relation
to manufacturing of certain products
What do we do better than our competition?
Where might new customers come from?
How will technology help us, or not? With our products with our business in
general or with the way we operate?
How will the political landscape affect us and our customers?
What legal factors will impact on our production or operation?
What are the needs of specific groups of customers?
There is not one size fits all in marketing consider the needs and attitudes of a range
of customers.
Strategy in marketing refers to the long term direction the organisation chooses to take
so they can meet their objectives and plans. The plan to ensure the success of the
business. Forming a strategy that works for your organisation will take into account:
How people in the organisation think, are they willing to think creatively to
make sure the objectives are met?
Actively search out new opportunities and ways of performing in the business
and the market place
Understanding what your customers want and how to deliver, which of the
opportunities to fill those needs work and which may not?
Areas that provide high yield improvement deserve the most resources
Maintain competitive advantage
What kind of media campaign is being used? Can it be expanded to include
cross media (includes more than one media eg: television, print, web, direct
mail and in house promotions)
Are your plans inclusive of social media? This is an important area to market
how will you address your strategy to capture this opportunity?
Promotional strategies allow for sampling of products, if this works for your
product how will this roll out across the organisation? Who needs to be
involved?
How are you going to manage Loyalty of your customers? Is there a loyalty
program? Does it work well? How do you know?
Alliance marketing is a strategy where more than one entity joins together to
promote and sell products, services, ideas. All parties in the alliance stand to
gain as much as the other
10 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Whether your business decides to pursue heavy web based marketing or print media
or social media, it is important to decide on a strategy or strategies which meets the
objectives and goals already determined by the organisation. Your marketing needs to
drive business to your organisation. How will your customer reach you? Consider all
the elements of the marketing mix in your strategy.
11 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Process
Product Place
Physical
People
evidence
Target
market
Price Promotion
intended
position
12 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
13 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
•May relate to falsely over or •Relates to the overstatement •Can include exaggerating the
under stating factory or of a products features or contents of the product using
wholesale prices, or a large performance, attracting unrelated or unrealistic
reduction in a fake customers to the store for a images or design, not filling
Recommended Retail Price ‘bargain’ that is out of stock, the package to the required
(RRP) or even running rigged level, misleading terms or
competitions language
Consumerism
The increased involvement of government agencies and consumer interest groups
pushing and monitoring regulations designed to protect consumer rights.
Environmentalism
We must become increasingly aware of the impact on the environment of marketing
decisions ranging from product design and development through to promotional
strategies. As more and more people are demanding sustainable options we need to
be ahead in all aspects of business, not just marketing.
Globalisation
The increase of globalisation explains why competition is stronger, communication is
better, we have an increased access to cheaper labour and materials, and transport is
14 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
more efficient. In short the world is becoming smaller and we need to consider this
with our marketing approaches.
Increasing global connectivity and integration in economic, social, technological,
cultural, political and ecological spheres causes issues in marketing.
There are two schools of thought, globalisation may result in:
A convergence of patterns of production and consumption and a
homogenisation of culture
The potential to take many diverse forms
Often considered in this context is the concept of exploitation of third world and
emerging economies to benefit the wealthiest 10% of the world’s population in first
world economies. These third world countries provide lower costs in terms of
resources and labour but also open up broader markets of people with disposable
income to become consumers of all manner of goods and services.
Corporate social responsibility
Organisations are obligated to take responsibility for the impact of all aspects of their
operations. Customers, employees, shareholders, communities and the environment
can all be impacted positively and or negatively. This obligation is seen to extend
beyond the statutory obligation to comply with legislation and sees organisations
voluntarily taking further steps to improve the quality of life for employees and their
families as well as for the local community and society at large.
The term ‘triple bottom line’ has traditionally referred to people, planet and profit.
How we look after the people in our organisation and our customers, how we impact
on our community and planet from a social and environmental perspective and our
financial responsibility of course needs to be observed in balance with the other
issues. Experts now refer to the quadruple bottom line and includes governance and
how we behave as an organisation. It does seem to be difficult to describe the actual
four, with words like cultural, social, sustainable, economic, spirituality and purpose.
Whichever ‘headings’ you subscribe to this refers to an expanded spectrum of values
and criteria for measuring organisational (and societal) success: economic, ecological
social and responsible wellbeing for all.
15 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Internal regulators
Commercial Television
Regulates the content of free-to-air commercial television.
Industry Code of Practice
Codes of practice are important guidelines which dictate how industry should behave
towards its customers.
Example ‘The objectives of the code of practice of the Australian Direct
Marketing Association (ADMA) are to:
• Ensure business and consumers have access to the product and service
information they need to make informed choices
16 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
• Minimise the risk of members breaching the Trade Practices Act 1974, Privacy
Act 1988 including the National Privacy Principles (NPPs), Spam Act 2003 or
State fair trading legislation
• Promote a culture among members of conducting their businesses fairly,
honestly, ethically and in accordance with best practices; and increase business
and consumer confidence in doing business with ADMA members' (ADMA 2012)’
The Free TV Australia Commercial Television Industry has a code of practice which
regulates marketing on commercial television. It ‘... covers matters prescribed in
Section 123 of the Broadcasting Services Act and other matters relating to program
content that are of concern to the community ...’ (Free TV Australia 2010).
The Australian Guidelines for Electronic Commerce (Attorney General's Department
2012), which replaced the Australian E-commerce Best Practice Model, offer guidelines
for fair trading and protection of both consumers and traders who are engaged in e-
commerce or online trading.
External regulators
The ACCC promotes competition and fair trade in the
Aust. Competition and market place to benefit consumers, business and the
Consumer Commission - community. Its primary responsibility is to ensure that
ACCC individuals and businesses comply with the Commonwealth
competition, fair trading and consumer protection laws.
Promotes competition and fair trading to protect
consumers. The Act deals with almost all aspects of the
marketplace: relationships between suppliers, wholesalers,
Competition and Consumer
retailers, competitors and customers. It covers unfair
Act 2010 - replaces Trade
market practices, industry codes, mergers and acquisitions
Practices Act 1974
of companies, product safety, product labeling, price
monitoring, and the regulation of industries such as
telecommunications, gas, electricity and airports.
Australia’s privacy regimes involve a range of
Commonwealth and state/territory enactments, judicial
Privacy legislation
decisions, industry codes of practice and action by
individual players (consumers, businesses, other entities).
ACMA is responsible for regulating online content, including
Aust. Communication and
internet and mobile phone content, and enforcing
Media Authority ACMA
Australia's anti-spam law.
17 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
18 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
If an organisation traditionally markets only within its own country, export markets
can be a source of new markets. Exporting is another tool rather than a
homogeneous market. Japan and the United Kingdom could both be export markets
for Australian canned tuna, but they are clearly not one market because of their
geographic separation and cultural differences. Exporting can be a rewarding tool for
opening up new markets.
Regardless of which tools they use, organisations can develop new markets by
targeting market segments they have not yet penetrated. Marketers subdivide the
whole market into groups or segments, whose members have something in common
that marketers can use.
‘The members of a group or segment will be similar to each other, with respect to
what influences their demand for the particular good or service.’ Rix 2011, p. 116
There are many ways to segment the market; the final choice for any organisation
will depend on products and culture. Most marketers make a fundamental division
between business markets, which buy goods and services to use in a business or to
re-sell, and consumers, who buy goods and services for their own personal use.
When organisations target demographically based segments they must ensure that
they do not breach anti-discrimination legislation.
Example A halal restaurant is likely to target Muslim people, while a female friendly
mechanic would target women. Both can say positive things about their
target markets and indicate that the target groups can trust them to
provide good, friendly service and not take advantage of them in any
way. They must not denigrate or exclude other groups.
Organisations seeking to penetrate new markets must first define the market and
research its characteristics. They must then find new or existing products which
match the requirements of this market.
Example A hardware store currently supplies mainly to the local consumer market
and decides to market to tradespeople. Tradespeople is too broad a
segment (it can include all building trades as well as trades like
hairdressers, mechanics and bakers etc.). The target needs to be limited
to building trades. Even building trades is very broad. Carpenters,
plumbers and electricians all have some common requirements, but each
trade also has unique requirements.
After defining the market it is time to research requirements:
Acquire a database of potential customers from your target market. Business
can do this in a number of ways, including finding details from the Yellow Pages,
using competitions and questionnaires in the store, sending a representative to
visit specific areas or employing a market research organisation
Promote suitable products from its current range to the market and also obtain
new products if research shows that lines which are not currently stocked were
important to the market
19 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
We need to understand
What does the the situation, our
How will we do that?
organisation want to customers and
achieve? environment we operate
in
20 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Example In 2011 (the last census) Brisbane had grown by 11.5% since the 2006
census information. The next census will be held in August 2016.
Case study
In the case of the café this may be providing a different slant on the café experience in the
area. It may have been established that no competitors are offering the same service and
that this is considered to be valuable by our target audience.
At this stage we would conduct a SWOT analysis to determine the strengths, weaknesses,
opportunities and threats of our plan.
Through your research (which may mean looking at census results for your intended location
and area, focus groups and brainstorming) you may discover that the target market cares
about the environment and about growing and eating healthy food with no preservatives.
This will inform your menu choices, organised activities and approach you offer to child care.
If you weren’t aware of these opportunities you may provide options for your customers that
are at odds with their values. Plastic disposable cups may aggravate your target market
instead of providing a choice to reuse all cups for coffee which may be a basic expectation
for them.
Be prepared and understand what is happening for the community, your competitors and
your target audience.
Your primary research may lead to an opportunity to work with an organic fruit and
vegetable supplier to hold a market onsite each Saturday, a chance to develop a new
business opportunity to support your business and fill a need for your clientele.
A hardware store could obtain the agency for a line of trade quality battery operated
power saws. The combination of portability, power and battery life make it ideal for
use on building sites.
Analysis of the market might show that carpenters use portable power saws more
than all the other trades combined on a building site, and therefore have most to gain
from a safer, more efficient product. The store could embark on a marketing
campaign promoting the benefits of no power leads or air lines, time saving,
increasing safety and improving profitability. Research has already identified
carpenters have the most to gain from these benefits so the initial campaign could be
directed at them. Expansion to other trades may be an offshoot from this.
A large retail business could consider advances in technology to improve their
outcomes. They would need to take into account weaker consumer demand (by
analysis of financial results). Understand the actions of the competition and why they
are doing what they are, is it working, can you incorporate changes to your
opportunities? If you have a large checkout element to your organisation consider
how improvements to access, technology and process can improve the outputs. For
example do self-service checkouts help your business? Using the marketing mix in
the appendix how do these important marketing considerations help you with your
planning and when identifying new opportunities?
21 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
22 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Value
Segments
How severe is the need or problem
Are there important differences
identified? Do your customers
among potential customers
recognize that they have this
(relative to the need/problem you
need? How can you measure the
have identified)?
value of a solution?
Consideration of these factors will assist your business in making the right decisions
for their innovative thinking and approaches. Can any of these areas be useful to work
on to fit with the overall strategic direction?
Consumer demand (change in consumer needs)
Changes in technology
Impact of international players competition in local area
Diversifying to increase/protect market share
Reducing cost of labour
If any areas increase the potential for profit, it is worth exploring further.
Case study
Our café is getting organised, they believe they have a good idea of who the target market
is and what they want. Now it is time to challenge the ideas they already have.
23 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Case study
Employ a child care expert to manage the crèche and a café manager to run the café. They won’t
need an overall manager because the other two can report to the owner easily enough
The crèche is to be open from 9 – 3 pm. The rationale is that most people have after
school sport and other children to look after
The café will close at 3.30 pm. The menu will be quite complex to cater for breakfast
and lunch as well as snacks
At the moment the café has to decide if they have a solution to a problem for their customer
or a change in need and use of a product. Does the potential customer for the café
understand that they have this need for an uninterrupted conversation and cup of coffee
with other adults? All while their children are being actively amused by a qualified carer?
The owners and managers hold a brainstorming session with the team and other select
people from the community they ask the following questions (italics) and receive the
following information:
How do your customers buy from you? Is there only one way? Parents need a place to
get good healthy options for afternoon tea and coffee to take to the sporting field,
closing at 3.30 causes a problem for those customers
What behaviour or processes exist? They don’t want too much choice and love to eat
breakfast all day, with a few healthy and gluten free cakes for a treat
Is the solution completely independent or are other, complementary
products/services required? If the latter, who supplies these products and services?
Can you integrate this with your proposed solution? The crèche could do more
business with after school care assuming they are licensed to do this, closing early
however will put a stop to this activity. After school activities are highly sought after,
there is an opportunity for older children to take part in art classes in the crèche, it
may require another provider but this is an additional service which could be very
lucrative, especially in the holidays
What does our customer want but cannot buy? Customers indicated that they wanted
to be able to take home roast dinners especially after late school based sporting
events
As you can see there are many other options than the traditional café approach. Think
innovatively to solve the new marketing opportunities creatively.
Ask and watch. Observe research and brainstorm alternative approaches to solutions
to best suit your target audience and what is important to them. The stage of market
research are predominately these. Understand your customer by watching and
listening. Talk to them and others to determine what is important to them. Pay
attention to the overall environment, the closeness of another business may prompt
an opportunity to work with them to build both businesses. Only an aware business
person is willing to think creatively to provide solutions to the needs of their
customers.
Consider how many people are available to take up your idea? Are their enough
customers to make it viable and successful? How can you be sure of your figures?
What will make them take up your opportunity? What will stop them?
What if your opportunity is a great idea but not one people are willing to pay for? Are
their cultural issues to be overcome before this can be used fully by your audience?
24 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Are their barriers to the technology? Perhaps there are too many alternatives available
for your options to be attractive.
The first step is to develop a conscious mind set of looking for ideas and
opportunities because without this there will be fewer ideas and many
opportunities will pass unnoticed.
Entrepreneurs do not have a magic gift. They train their minds and practice focussing
their awareness. They are observant and prepared to take calculated risks, knowing
that some of their ideas could fail. Entrepreneurs have ideas and see new options and
opportunities to be developed into businesses. Anyone can adopt an entrepreneurial
approach to their marketing by developing their ideas and being prepared to take on
new opportunities.
Example In 1938 Heublein purchased the United States rights to Smirnoff vodka.
Sales were very slow until they changed the product to use whiskey
corks.... In Kentucky sales rocketed as the distributor started marketing
Smirnoff as ‘white whiskey, no taste, no smell’ (Wikipedia 2012).
25 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
The whole list is examined. Silly, irrelevant or unworkable ideas are removed
(and set aside in case they are valid at another time) so the final list contains
only ideas which have potential to be developed
Building on and improving ideas is encouraged
Brainstorming is a popular tool that helps you generate creative solutions to a
problem by gathering a list of ideas spontaneously contributed by a group or an
individual.
It is particularly useful when you want to break out of stale, established patterns of
thinking, to develop new ways of looking at things. This also helps overcome many of
the issues that can make group problem-solving a sterile and unsatisfactory process.
It asks that people come up with ideas and thoughts that can at first seem to be a bit
crazy. Some of the ideas can be crafted into original, creative solutions to a problem
you're trying to solve, others can spark still more ideas. This approach aims to get
people unstuck, by ‘jolting’ them out of normal ways of thinking.
While group brainstorming is often more effective at generating ideas than normal
group problem-solving, there have been many studies showing that when individuals
brainstorm on their own, they come up with more ideas (and often better quality
ideas) than groups of people who brainstorm together.
Partly this occurs because, in groups, people aren’t always strict in following the rules
of brainstorming, and bad group behaviours creep in. Mostly, though, this occurs
because people are paying so much attention to other people’s ideas that they're not
generating ideas of their own – or they're forgetting these ideas while they wait for
their turn to speak. This is called ‘blocking’.
Brainstorming does have limitations however. A number of studies have found that a
large quantity of ideas/solutions does not necessarily lead to quality ideas or
solutions. Groups have been found to perform better than individuals when the
emphasis is placed on finding a quality idea rather than a large number of ideas.
There is also evidence that brainstorming actually performs poorly in terms of idea
generation compared with other techniques or variations due to:
People interrupting each other
The effect of the group on the individual (like attention seeking behaviour and
shyness)
Self-interested laziness (like social loafing and free-riding)
To avoid productivity losses associated with brainstorming it is suggested that:
Brainstorming groups are kept small in size
Authoritative observers should not be present
Group members write down ideas rather than vocalising them
Group members should still generate ideas together rather than alone
Evaluating is an important part of the generation of quality ideas/solutions
26 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
27 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
•Once scenarios are developed, decision makers within the organisation should
review implications that outcomes uncovered by the scenario would have on
the organisation.
Disseminate scenarios
•Once scenarios have been built and refined, they should be written in easy-
to-read language. Contingency plans for scenario outcomes should be
integrated into organisational procedures. Use or modify existing systems to
monitor progress toward operational goals as well as changes in the external
environment.
Scenario planning is a useful way of challenging the assumptions you naturally tend to
make about the situation in which your plans will come to fruition.
By building a few scenarios, you can foresee more unknowns that may come to pass,
and be able to plan measures to counteract or mitigate their impact.
An organisation's competitors can provide ideas for marketing. The entrepreneurial
approach is not to just copy them, but to ask and answer the question, 'What are
they trying to achieve, and how can we do it better?' It is often easier to look
objectively at another organisation than at one's own, especially in very small
organisations with only a few people.
Customers, sales representatives, other personnel and suppliers can also be sources
of entrepreneurial ideas which have potential to turn into marketing opportunities.
Adopting an entrepreneurial approach to marketing is a very creative activity and it is
impossible to give a set of step-by-step instructions for creativity. Organisations and
their personnel who wish to adopt an entrepreneurial approach must first analyse
current circumstances to use as the starting point for future plans.
28 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Analyse the
Sort through
Gather all the Concept and test business and
ideas. Screen the
ideas together your ideas strategy for
ideas for suitability
marketing
29 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
30 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Case study
especially after late school based sporting events
Solution: Consider this option in the second part of the first year of trading work on the
other ideas first.
Other businesses may look to expand their market share by becoming more visible,
more stores, and greater opportunities for online sales for example. They could
develop new products in response to consumer demand or changes in trends.
Example Grocery stores could consider the changes in working hours and the
fact that many families have both parents working. Healthy, pre-
prepared meals could be an important area of growth – a new
opportunity. Also home delivery could be another area of growth. If
the grocery chains weren’t paying attention to trends and
developments they may miss the potential of this opportunity. Many of
the larger grocery chains have expanded into alcohol sales and
discount stores to broaden their exposure and to provide more
products for their customers, more opportunities!
Do your markets value ethics and environmental values in their products? Are organic
products important to your markets? How do you know if they do or don’t? Pay
attention once again, ask them and listen to them when they talk. We have already
discussed the importance of ethical and fair behaviour in marketing it is just as
important to appeal to your customers and help them make fair purchasing decisions.
31 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
A music store could Teenagers would be This might knock out the over
have the opportunity attracted to the store in 60's market, because many of
to enter the teenage large groups to listen to these people are annoyed by the
market as a new music, dance and generally normal behaviour of groups of
market. make a lot of noise, as large teenagers, so would go and buy
groups of teenagers do. their music elsewhere.
32 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Analysis of information
Information Analysis Value to the organisation
Comparative Compare performances in Can compare performance and
market different market segments, profitability in different market
information e.g. a fashion retailer could segments and plan accordingly.
compare performances in the
teenage market and the 30–
40 year old market.
Competitor An organisation analyses what The organisation can compare with its
performance its competitors are doing. competitors and plan ways to compete
against them.
This can also be a source of ideas for
future marketing.
Customer Collecting and analysing Knowing what customers want is
requirements feedback from customers. crucial to planning new marketing.
Customer feedback can also be a
source of ideas for new products.
Legal Analysing legislative changes Reveals threats and opportunities
requirements to determine their effects on enabling plans to be made for both.
the organisation’s marketing
strategies.
Ethical Analysing marketing activity Provides opportunities to promote
requirements in terms of the organisation’s ethics and integrity of the organisation
ethics. into markets with similar values and
ethics.
Market trends Making sure that the Enables the organisation to take
and organisation understands advantage of positive trends and
developments positive and negative trends in minimise impact of negative trends.
its markets.
Example: weaker consumer
demand, increased
competition, rising costs.
New and Identifying new and emerging Allows the organisation to position
emerging markets. Consider itself, ready to serve these markets.
markets technological improvements.
Profitability Analysing the profitability of Reveals opportunities to expand
each market segment. profitable markets and withdraw from
unprofitable ones.
Sales figures Analysing sales figures from Used in conjunction with profitability,
each market segment. sales figures aid planning for future
marketing.
33 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Marketing activities are monitored in terms of their return on investment (ROI) see
the next section. Assessing new market opportunities and planning campaigns in
current markets should be evaluated in terms of their expected costs and expected
revenue. The ROI is the difference between these and can be expressed in dollar
terms or as a percentage.
New opportunities must be evaluated against the same criteria as were used for the
present value analysis. The exact criteria used will depend on the organisation, its
markets and its products. They can be evaluated according to their impact and their
importance. Impact could be measured by a score where -10 is an extremely
negative impact, zero is no impact and +10 is an extremely positive impact.
Example Part of a music store's evaluation of its opportunity to enter the teenage
market could include the following information.
2.2.3 Forecasting
The process of looking to the future and determining what your business will need to
support your plans. Consider the impact of:
Numbers of employees and their skill levels
Investments required in production, capacity and distribution
How to promote your activities
Resources required
Estimate sales levels required to achieve your goals
Forecasting is a process of prediction, as such you need to be able to respond to
changes quickly to remain ahead of your plans. There are two main kinds of
forecasting:
• Macro – Forecasts markets in total, in particular total market demand
34 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
• Micro – detailed sales forecasts, considers market share and what will happen
to their share of the market in the future
Business needs to consider what will happen in their markets in the short term and in
the long term, how else will they be able to predict or forecast what their future
impact will be?
Firstly it is important to fully understand or be able to predict total market demand.
For example how many people will go to a café at all, not just our café in our case
study? Then we need to forecast how many of those people will go to our café. How is
our café, service and product positioned in relation to the other cafés our customers
could go to?
Next we predict the forecast sales based on the information we have and the strategy
we believe will be the most successful for our business based on our goals.
It is a far cry from using your intuition only. This is an educated process where you
use the research and information carefully to shape a view of the world you believe
exists in relation to your product.
Quantitative or qualitative
Interpreting data requires one of two approaches. Quantitative or qualitative:
Quantitative Qualitative
Quantitative research is conclusive, Qualitative research is exploratory. It
and takes a more logical, data-led is used when we do not know what
approach. expect, and need to define or develop
Due to the specific nature of an approach to the problem.
quantitative data it is particularly It focuses primarily on the issues of
useful for assessing performance of interest, looking at how people feel,
the individual, the team and the what they think and why they make
organisation. certain choices.
Generates numerical data or Generates non numerical data.
information which can be converted Rates the likelihood using words and
into numbers. alphabetical ratings e.g. Extremely
Rates the likelihood as a probability Likely = A.
or frequency of the risk using Examination of non-measurable data
numerical weighting e.g. 1 in 200 such as reputation, brand image, or
cases will exhibit this behaviour. feelings people may have. E.g. Rate
Quantitative data can be verified and risk in terms of low, medium or high,
manipulated statistically. or not important, important or very
important.
Goals Counting and classifying. Describing and explaining.
Constructing statistical models and Complete and detailed descriptions
figures to explain outcomes. Whole picture with exploratory
Narrow hypothesis and conclusive research.
research.
Instruments Questionnaires, surveys, Interviews, focus groups, observation,
for data measurements, Audits, Points of In-depth interviews, Participation/observation
gathering purchase, Click-streams
Trend analysis can only be Tools that are useful include mind
35 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
The decision which type of research to use is, of course, dependant on what you are
aiming to achieve with your research. If you want to use numerical information to
support your theory then use quantitative, if you need to explain why something is
the case then use qualitative. In order to analyse market trends, you need to ensure
the correct research is used.
Another consideration with gathering information especially qualitative which of
course is based on feelings and impressions rather than numbers and facts, is how
you ask questions to gain appropriate responses that are useful not just answers that
make you ‘feel’ better about your business.
Open and closed are two types of questions you can use that are very different in
character and usage.
Open questions
Definition Is likely to receive an answer that is long and detailed
Examples Although any question can receive a long answer, open questions
deliberately seek longer answers, and are the opposite of closed
questions.
What did you do on you holidays?
How do you keep on track at work?
What's keeping you awake these days?
Why is that so important to you?
Characteristics They ask the respondent to think and reflect.
They will give you opinions and feelings.
They hand control of the conversation to the respondent.
This makes open questions useful in the following situations:
Pointers and To develop a conversation and open people up
why to use To find out more about a person, their wants, needs, problems.
them To get people to realise the extent of their problems (to which, of course,
you have the solution).
To get them to feel good about you by asking after their health or
otherwise demonstrating human concern about them.
You're looking down. What's up?
Using open questions can be scary, as they seem to hand control over to
the other person.
Well-placed questions do leave you in control as you steer their interest
and engage them where you want them.
Words Open questions begin with such as: what, why, how, describe.
When opening conversations, a good balance is around three closed
36 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Open questions
questions to one open question. The closed questions start the
conversation and summarize progress, whilst the open question gets the
other person thinking and continuing to give you useful information
about them.
A neat trick is to get them to ask you open questions. This then gives
you the floor to talk about what you want. The way to achieve this is to
intrigue them with an incomplete story or benefit.
Closed questions
Definition …can be answered with either a single word or a short phrase.
Also referred to as yes /no questions.
Examples How old are you?
Where do you live?
Are you happy?
Characteristics They give you facts
They are easy to answer
They are quick to answer
They keep control of the conversation with the questioner
For setting up a desired positive or negative frame of mind in them -ask
questions with obvious answers yes / no
For achieving closure
Pointers and As opening questions in a conversation, it makes it easy for the other
why to use person to answer, and doesn't force them to reveal too much about
them themselves.
Its great weather, isn't it?
Where do you live?
For testing their understanding
So, you are looking to buy a blue suit?
For setting up a positive or negative frame of mind
Are you happy with your current supplier?
Do they give you all that you need?
Would you like to find a better supplier?
Seeking yes answers to important questions
If I can deliver this tomorrow, will you sign for it now?
Words Turn any opinion in to a closed question which forces a yes/no answer.
Add ‘isn't it?’, ‘don't you?’ or ‘can't they?’ to any statement.
The first word of a question sets up the closed question and signals the
easy answer ahead. Note how these are words like: do, would, are, will, if.
Do you like this suit?
Gaining information and making a reliable statistical analysis of this information is
critical. Among the other sources of information marketers look at the following:
37 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
•Where is your product in the •Current sales -what are your •There will always be some
cycle of popularity? customers buying? unexpected event that
•Is it waning or growing? •Past sales behaviour may impacts on your business
•It your market dependant on provide information to help •How prepared are you to
the seasonas? you take advantage of an
opportunity or able to
•Is the market optimistic?
respond to a problem?
Remember to start at the beginning. What were your original goals when you began
to gather information to evaluate each of your opportunities for marketing your
business? Once you have gathered it all you need to put all the information into
perspective. Ask yourself?
What did I expect? What can I use from the information to support the new
opportunity?
Does any information exist to help with forecasting?
What are the strengths in terms of what exists, weaknesses?
How will all of this impact on existing customers and levels of service we are
able to provide?
Understanding the financial results will help you to evaluate the results. We will
discuss costs and benefits in the next section. Some of the indicators of success are
earnings per share, income growth as well as profit levels. Comparing from one
quarter to the one in the previous year provides the change which will allow you to
understand what has happened to effect the changes.
38 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
39 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
TWO: Growth
Organisations often reach a limit in their growth within one market and so enter new
markets to allow continued growth of the business. A real estate organisation might
reach a level in the domestic housing market and believe that it would be
uneconomical to try to expand their market share any more, they could continue
overall business growth by entering the commercial property market. The risk of
rapid growth might be a lack in infrastructure and expertise to properly manage the
listings in the new market. Growth of an organisation needs to be carefully planned
and monitored.
THREE: Market share
Increasing market share is not technically entering a new market, but the benefits
and risks are similar. An increased market share:
Can result in increased sales and growth
In one market could require a decrease in another market. If the expanding
market is profitable and the diminishing market less profitable, the change
would be beneficial to the organisation
Example A business could find it beneficial to reduce their share of the consumer
market to concentrate on increasing their share of the business market.
This may allow them to cater to a segment of the market with more
specific needs than the broad ranging consumer market. The business
may be able to:
Limit stock to lines which are required by their businesses customers
This could reduce capital tied up in inventory and increase operational
efficiency because most businesses have a standard stationery requirement
purchased regularly
It could also increase turnover - businesses tend to make larger one off
purchases than consumers
FOUR: Profitability
The ultimate purpose of all marketing activity is to improve profitability of an
organisation. The financial impact of any marketing proposal must be analysed in
detail and an assessment made of how long it would take for the activity to return a
profit. This and the level of profit expected must be considered against start-up costs
and the risk of the activity failing. The organisation has to make a decision that the
cost of start-up and risk of failure are outweighed by potential profits and the
likelihood that they will be achieved within an acceptable time.
40 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
these could be required to enter the new market. In addition, all marketing
campaigns have ongoing costs such as advertising and campaign design.
Organisations must analyse costs of marketing and balance these costs against the
revenues which it expects to generate. This analysis should be repeated at set
intervals throughout the campaign. At the end of the campaign there should be a
final analysis based on actual costs and revenues. If an organisation monitors its
marketing costs it can tell which opportunities were successful and which should be
abandoned.
Return on investment (ROI) is a profitability ratio. It is used to evaluate the efficiency
of an investment. In business it usually refers to the ratio of net profit by the amount
invested in assets. In marketing (or any other aspect of the business) we use it to
demonstrate the value of the investment to the business. How much profit has been
generated by the investment?
When calculating the ROI for a marketing campaign for example consider the amount
of income generated from that campaign. Calculate the costs associated with the
process and the profit that results. Take care to include the appropriate costs into
your calculations marketing can include a range of costs:
Creative, including printing
Technology – websites etc.
Wages and salaries of staff and managers
The actual cost of sales (costs to actually produce the product or service)
The formula for ROI equals the return minus the investment. Then divide this figure
by the investment. The ROI is usually expressed as a percentage so multiple the
result by 100.
Marketers need to know the ROI from all of their campaigns. It is the best measure of
the success or failure available.
Example If a hardware store was considering marketing a heavy duty circular saw,
as a new product to carpenters in the local area, it could use a
spreadsheet to calculate the predicted ROI.
41 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
This is a simplified version. If this organisation decided they needed to run a more
extended campaign at an increased cost the ROI would be different.
Different organisations need to consider other factors. Consideration must be given to
the minimum purchase numbers in order to achieve the ideal buying price. There
may also only be a fraction of units sold at full retail price before being discounted to
clear stock. Spreadsheets will need to show sales at a range of prices.
Other factors which might need to be shown by some organisations include:
Increased staff
Staff training
Overheads associated directly with the marketing campaign
Capital equipment
Regulatory and legal costs
Environmental levies
Organisations also need to analyse the effects of direct competition. If another
hardware store sold the same heavy duty circular saw at increasingly discounted
prices, assessment would be required to analyse the reduction in sales that could be
expected.
An accurately calculated ROI is one of the most important indicators of the potential
viability of a marketing campaign. If the ROI is not acceptable the campaign should
either be revised or abandoned, because it will adversely affect the profitability of the
organisation.
42 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Measuring your returns is critical. How else do you know how this is performing and
what else needs to be done or changed to maximise the potential for success.
Benefits
Improved profitability is usually the main benefit of any marketing opportunity. If an
opportunity does not offer the prospect of improved profitability, it may not be worth
pursuing. If the opportunity threatens to significantly reduce profitability it should not
be pursued.
There are circumstances where other benefits might outweigh the lack of profit.
Recognition in the marketplace may be more important than profitability. This could
be increased recognition of the product, organisation or brand. Some experts caution
against placing too much emphasis on the brand.
‘Branding occurs as a side effect of consistent … marketing. But sales rarely happen
as a side effect of brand advertising.’
Vee, Millerand Bauer 2008, p.100.
They contend that recognition comes from effectively marketing quality products or
services in a way that attracts customers. They suggest that brand advertising is
suited only to very large organisations that have enormous advertising budgets and
can afford to wait up to 10 years for advertising to have a significant effect.
Cash flow can also benefit from a marketing opportunity. Organisations need to do
cash flow predictions whenever they are assessing a new opportunity and then to
monitor cash flows as the campaign unfolds.
Risks
The major risk of any new market opportunity is that of an illusion rather than a real
opportunity. Thorough research, careful planning and test marketing should expose
this risk, so that whenever an organisation does target a new market it know that it
is able to supply a real market with something it needs. There is also the risk that the
market is already saturated, but proper research should reveal this too.
Entry into new markets imposes a risk to resources because there is a lag between
commencing activity and getting a financial return. Organisations must assess the
risks to their finances, customer service, infrastructure and personnel to ensure they
have the resources to operate during the period when there is no return.
Cash flow is always affected by entry into a new market, and must be predicted
before a campaign starts and then monitored carefully throughout the campaign to
ensure that the organisation has the financial resources to absorb the inevitable
period of negative cash flow.
These factors are assessed to determine the viability of a marketing opportunity.
Decisions on whether or not to take the opportunity are based on the data collected
and the predictions based on them. If the opportunity is taken then these factors are
monitored closely to ensure that the predictions were accurate, and to alter the
campaign or even abandon the opportunity if necessary.
43 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
44 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
products. It should analyse the options - a grid will allow them to compare
the alternatives.
Sales revenue $2,200 per year $630 per year $1,000 per year
Market share 1–2% increase Negligible New market. Expect 20% in
increase first year.
Brand No effect No effect Extends beyond primary
awareness market to all parents.
Staff and No change No change Allocate time for rep to visit
infrastructure schools one day per month.
New market None None Primary market is the
opportunities schools. Opportunities to
market to all parents.
Rank 2 3 1
On these comparisons the schools market would appear to be the most viable and
have potential to contribute most to the business with the tennis racquets next and
the golf shoes last. Other factors, not considered here, could change this. For
example, if advertising opportunities were included it is likely that the store would be
able to promote itself through tennis and golf clubs, while most schools do not allow
commercial organisations to advertise to their communities.
If the sports store did not go through this process they may make a costly mistake.
45 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Media differences
Different media have different advantages and disadvantages. Consider them all when
selecting which media to use as part of your promotion strategy. Remember that each of
these advantages and disadvantages are general, individual deals can be struck and it is
up to you to calculate the costs and the return on your investment.
Advantages Disadvantages
Multi-sensory, potentially high High absolute cost, short exposure,
Television
impact, reach and acceptance transient
Flexible, targetable, broad Potentially short exposure, waste
Print
acceptance and reach circulation
High acceptance, targetable, Often not managed well, risk of not
Press release
increased credibility being taken up by media outlets
46 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
47 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Attend to all breakdowns of New units are not as well made as premium units and
existing customer units within 2 are likely to require more breakdown service, which
hours of their call might cause longer waiting times
Based on the impact the new model would have on its goals, the organisation
might decide not to try to enter the market for it. If, however, they could
source another entry level unit with a profit margin which would allow them
to achieve their goal of a 10% increase in profitability, they might decide to
enter the market and hire new installers.
Assessing viability
Organisations are continually faced with three kinds of marketing opportunities. They
are the opportunity to:
Increase market share or establish market leadership within their current markets
Enter new markets either with new products or with their current products
Introduce new products, either to their current markets or to new markets
Some external factors apply generally to all organisations, and others apply only to
groups of similar organisations. An organisation's marketing is influenced by these
factors.
In his section on the market environment, Rix (2011, pp 46-70) subdivides the
external marketing environment into two parts, macro and micro. Marketing
organisations have little or no control over macro factors which include demography,
economic conditions, social and cultural forces, political and legal forces and
technology. Organisations have some small influence over micro factors which include
customer suppliers, marketing middlemen, specific competitors and other public
entities (e.g. the media and citizen action groups).
Some specific external factors should be assessed, because of their potential to
influence opportunities.
48 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
49 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
to the consumer market, after having sold exclusively to the business market would
find itself subject to consumer protection laws. It would need to document its
responsibilities in detail and ensure all relevant personnel understood the new
responsibilities. It could also need to redesign its invoices, warranties and general
stationery to comply with the new regulations.
New markets could be subject to new regulations or licence requirements. A furniture
shop entering the electrical goods market would be subject to regulations covering
these products, while it might need a second hand dealer’s licence if it changed from
selling only new goods to also selling second hand goods.
Financial
The expected financial impact of the new market opportunity is critical in the planning
process. Relevant information would include cash flow forecasts, profit estimates,
cost analyses and predictions of return on investments. Most organisations require
professional advice on these predictions.
If finances need to be raised to enter the new market, business plans, feasibility
studies and cash flow predictions will be required for financial institutions and general
planning.
Businesses could also need to change the way they manage their finances if different
financial arrangements are needed in the new market. A stationery store which had
previously only sold in the consumer market would need to develop a system of
monthly accounts if it was to enter a business market.
50 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
The organisation must determine the needs of their staff to service the new
market while maintaining the level and quality of service to existing markets
Staff members may require additional training to provide the required
standard of customer service in new and existing markets
Customer service depends on staff having the equipment they need. As
discussed, new markets can require new types of equipment and changes or
increases to existing equipment
The physical layout of a workplace can affect customer service and a new
market can require changes to the layout
A hairdresser who enters the beauty therapy market may need to
expand or rearrange the salon to accommodate the new procedures. At
the same time existing clients need to be looked after as well as usual.
New markets can require the adoption of new operational procedures, or
adaptation of existing procedures
A chiropractor, who had previously treated only private patients, could
enter the workers' compensation market. They would retain most of
their current procedures for the treatment of patients, but would need
to adopt new reporting and billing procedures to comply with the
requirements of the workers' compensation authorities.
Financial issues, especially cash flow can impact on customer service.
Organisations entering new markets need to ensure that a lack of cash will
force them to reduce their service to their current customers
If an equipment hire organisation servicing the consumer market,
entered the business market, they would need to carefully monitor and
manage cash flow. Lease payments on new equipment and business
customers paying on monthly accounts means those payments may not
be made on accounts for several weeks. The organisation still has to
make lease payments. This imbalance of cash out (lease payments) and
cash in (income from account payments) could reduce cash flow to the
point where there were delays on essential repairs and maintenance on
equipment, meaning less equipment being available for customers to
hire. Cash flow must be monitored very carefully to ensure maintaining
current levels of service to existing customers
Some new markets are opened by making an agreement with a supplier. If
this agreement requires that this market should have priority over others, it
could affect the service the organisation can deliver to its current customers
If a freelance repairer of all brands and types of whitegoods signed an
agreement to become the sole repairer for LG, this could reduce or even
take away its ability to give good service to owners of other brands. The
organisation would need to plan how to deal with this
51 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
52 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Promotion
Promotion into new markets can include advertising in various media, product
giveaways, seminars, expos, static displays, direct mail campaigns, leaflet drops,
spruikers and competitions. Organisations must plan their promotional campaigns to
suit their own needs, culture and budget to ensure they have the resources they
need.
Research and development
Marketing opportunities need to be thoroughly researched to establish their potential.
Organisations need to know what research resources they need and whether they can
conduct their own market research or have to use market research organisations.
After a new market has been identified it needs to be developed, especially for a new
product.
Example An example of developing a new market is Apple's marketing of its iPad.
Before the product was developed there was no market specifically for it.
Apple developed its market from the existing market for personal
computers.
If the new market requires the development of a new product then alternative
specifications also need to be researched. A kitchen manufacturer entering the do it
yourself, flat pack market would have several alternative plans to consider. Each
would need to be researched and assessed for its potential contribution to the
organisation, before a final choice was made. When a basic plan had been adopted,
the product would need to be developed from a prototype to a commercial product.
This could take from a few weeks to several months.
Example A pharmaceutical organisation introducing a new cancer drug would need a
much longer time for research and development. Unlike the kitchen
manufacturer, this research often begins with no tangible starting point. It
can begin with someone's hunch or an accidental discovery which was
made while researching something else.
The kitchen manufacturer’s research would consist of a finite number of
predictable steps; the pharmaceutical company's research would often
proceed by trial and error in a laboratory and on a computer. Often these
steps lead nowhere and have to be abandoned. While there is an overall
goal, the actual end point of the research is often unknown until it is
reached. Sometimes it comes as a surprise to the researchers when they
do reach the end point.
Developing a drug from research findings takes much longer and involves
many more processes than developing a flat pack kitchen from a set of
plans. The pharmaceutical organisation must manufacture a prototype of
the drug and test it, usually on laboratory animals. Several prototypes
might be needed before the final specifications are determined. After
animal testing is complete, human trials must be done and once they are
completed satisfactorily the organisation must complete a series of steps to
53 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
have the drug approved by the authorities in the countries where they wish
to market it.
Each market and product have their own unique research and development
requirements and a significant amount of research and development must be put
towards identifying resource needs of the new markets and developing these
resources.
Re-tooling
Manufacturers who develop new products need to re-tool their factories and need to
budget for this when the organisation develops the new market. This can be a simple
adjustment of current resources as in the case of a kitchen manufacturer who may
only need to re-set the guides on their machines, or it can require a major refit as
would be the case if the Australian Submarine Corporation began manufacturing
destroyers instead of submarines.
Entering a new market will alter an organisation’s requirement for resources and
these changes need to be estimated and budgeted for whenever a new opportunity is
being assessed. On the whole it is good practice to be conservative in your planning.
Cash flow is not the same as profit, it is important to have a good grasp of the
financial aspects of the new plans as well as the existing business and how it is
operating and continues to operate.
54 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
it's hardly surprising they don't welcome it and implement it enthusiastically.’ (Cote
2010, p. 713)
A landscape supplier who had decided to add garden furniture to its product range
would need to explain the proposal, its benefits and its risks. This could be done in a
meeting, an email or both.
Many stakeholders do not want to know all the details of the proposal and its
viability. They simply want to be sure that the appropriate personnel have assessed it
thoroughly. The offer of a full analysis is reassurance to these people that the
evidence is available, and enables the message to be kept short and simple,
increasing the chances of its being understood. Those who want all the details also
have the option of seeing them.
A key stakeholder is anyone who plays a part in implementing the change or anyone
whose function is affected by the change, and while it is different for every
organisation in terms of size and complexity, stakeholders can include:
Board of The board is ultimately responsible for the organisation’s performance and
Directors must approve any changes to operations. They must also be kept
informed as the changes are introduced.
Finance staff Finance staff can be involved in planning the changes and preparing
budgets for their introduction and ongoing implementation. They also
need to be fully informed as changes are implemented so that they can
monitor the financial aspects and ensure that the budget is adhered to.
Human Responsible to ensure there are adequate personnel who are properly trained
resources to implement the change. HR staff has three main functions when developing
staff a new market: recruit staff required to implement the changes, identify
current staff that needs to be trained or retrained for new or extended roles,
and arrange and oversee all necessary training and retraining.
Managers If a department is affected in any way by proposed changes its manager
needs to be informed. The sales department would be critical when
introducing a new product or opening a new market; the sales manager
needs to be fully briefed. If the organisation were entering a new market
for an existing product then this might not cause any changes to
operations of the stores department, but the store manager would need to
be advised to plan for increased turnover of that product.
Marketing Marketing personnel are responsible for identifying and developing new
personnel marketing opportunities and when an opportunity is taken they must
develop a campaign to allow the organisation to successfully enter the
new market. Marketing personnel are involved in almost all marketing
activities and need to be kept informed of them.
The owners Like the board of directors, are concerned with the viability of the organisation
as a whole and should be advised of all major changes to operations.
Production Some changes involve producing new products while others require
staff increased production of established products. Organisations which
manufacture their own products must advise and train production staff to
ensure new products and extra volumes of existing products can be made
in the quantities required and that quality is maintained.
55 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Supervisors Are directly responsible for the quantity and quality of work produced by their
sections and so must be fully briefed on any changes which are planned.
56 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Product definition
Core
Actual
Augmented
Market definition
Market Characteristics
Potential market
Available market
Qualified market
Target market
Penetrated market
Market Segmentation
Segment Characteristics
Region (location)
Size of population
Geographic
Population density
Climate
Age
Demographic Gender
Family size
57 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Family structure
Generation
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social Class
Segment Characteristics
Activities
Interests
Psychographic Opinions
Attitudes
Values
Benefits sought
Usage rate / frequency
Brand loyalty
Behaviouristic User status (potential,
first-time, regular)
Readiness to buy
Occasion (holiday, event)
Market Activity
Target market
58 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Penetrated market
Implementation strategy
Resources required
Resource Source
People
Physical / Material
Budget
Skills
Role allocation
59 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Conclusion
Now that you have completed this unit you should be able to answer….
How do you identify and marketing opportunities?
How do you evaluate them?
How can you tell if they meet organisational objectives?
And …
How have you documented the changes that need to be made in order to take
advantage of the new opportunities?
60 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
61 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Close range marketing: Also known as Proximity Marketing, this strategy uses
Bluetooth technology or Wi-Fi to promote products and services to customers at close
proximity.
Business-to-business marketing: B2B marketing allows businesses to sell products
and services to other companies and organisations that resell the same products and
services, us them to augment their own products or services, or use them to support
their internal operations.
Promotional marketing: Designed to stimulate the customer to take action towards
a buying decision, promotional marketing is a technique that includes various
incentives to buy, including contests, coupons, and sampling.
Cloud marketing: An internet-based marketing approach where all marketing
resources and assets are transferred online so that the respective parties can develop,
modify, utilise and share them.
Alliance marketing: Two or more business entities come together to pool their
resources to promote and sell a product or service, which will not only benefit their
stakeholders, but also have a greater impact on the market.
62 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Reverse marketing: Getting your customers to seek out your business rather than
you seeking them. Focuses on the customer approaching the potential seller who may
be able to offer the desired product.
Telemarketing: A method of direct marketing where a salesperson solicits
prospective customers to buy products/services via the phone or face to face.
Database marketing: Using database of customers or potential customers to
generate personalised communications in order to promote a product or service.
Permission marketing: Delivering personal and relevant messages to people who
have given you permission to do so.
Loyalty marketing: Growing and retaining existing customers through incentives. It
includes tracking purchase history and getting to know the customers preferences.
63 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Process
Product Place
Physical
People
evidence
Target
market
Price Promotion
intended
position
Product
A product is anything that can be offered to a market for attention, acquisition, use
or consumption that might satisfy a want or need. There are many types of products
- goods, services, events, ideas/causes, people, political candidates and parties,
locations and so on.
Goods: many products are physical goods e.g. cars, toasters, shoes, books, and
televisions. Goods may be used over an extended period of time (durable products
e.g. refrigerators) or may be consumed in a single usage or short period (non-
durable goods e.g. grocery items).
64 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
65 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Product quality is the ability of a product to perform its functions. It includes the
product’s overall durability, reliability, precision, ease of operation and repair, and
other valued attributes.
How should a product’s level of quality be determined?
Marketers should match quality levels with expectations of the target market or
quality levels of competing products. Quality also relates to the consistency of
delivery of quality. Do you think consumers these days expect quality from every
brand? I.e. is quality now a necessity?
Product features are used by marketers as a competitive tool to differentiate your
product from those of a competitor. Often companies begin by offering products
without any extra features - a ‘stripped down’ model and progressively create higher-
level models by adding more features.
What sort of questions might companies ask their customers to determine
what new features they should add to their products?
Which specific features do you like most?
What features could we add to improve the product?
Good design is not just about making a product look good (style), it is also about
creating products that are easy, safe, inexpensive to use and service, and simple and
economical to produce and distribute. For example, Black and Decker’s cordless
power tools feature outstanding design, which contributes to their great success.
Good design can attract attention, improve product performance, cut production
costs and give a product a strong competitive advantage.
Products are further categorised by the level of attributes they contain.
Core product: The problem-solving services or core benefits that consumers are
really buying when they obtain a product. This addresses the question:
What is the buyer really buying?
When designing products, it is critical to identify the core benefits offered by the
product to its consumers.
‘In the factory, we make cosmetics; in the store, we sell hope.’ Charles Revlon of
Revlon Cosmetics.
Actual product: A product’s parts, styling, features, brand name, packaging and
other attributes that combine to deliver core product benefits.
66 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Example: A Qantas air ticket from Brisbane to London is an actual product. So are
the Qantas name (brand name), air terminal layout and services, plane
seating configurations, crew uniform styling, booking system (a
component of packaging), features such as in-flight movies, food and
beverage service/quality are carefully combined to deliver the core benefit
or service.
Augmented product: Additional consumer services and benefits built around core
and actual products. For example, some consumers might require greater service
levels than others - Business or First Class, or vegetarian meals. Some expect extra
services before the flight, and so might join the Qantas Club. Some expect extra
augmentation through packaged tours, a Frequent Flyer point’s scheme. These all
become important parts of the total product.
The product life cycle
The product life cycle is the course of a product’s sales and profits during its lifetime.
It involves five distinct stages:
Product development
Introduction
Growth
Maturity
Decline
The exact shape and length of each stage varies from product to product, and market
to market.
Product development
67 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
68 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Price
Price refers to the value of the exchange charged for a product or service. You pay
rent for accommodation, tuition for education, a toll on the motorway, interest for the
money you borrow from the bank, and so on.
Price is the only element in the marketing mix that generates revenue; all of the
others (product, promotion and distribution) are costs. Common mistakes made by
companies in setting prices include:
Pricing is cost-oriented
Prices are not revised to reflect market changes
Pricing does not take the rest of the marketing mix into account
Prices are not varied enough for different product items and market segments.
Pricing decisions are affected by a number of factors, Internal (company) and
external (environmental).
Internal factors
Marketing objectives
Price is often largely determined by the target market and positioning for the
product. The clearer a firm is about its objectives, the easier it is to set price.
Objectives affecting price
Survival: if a company is facing financial troubles due to over-capacity, heavy
competition or changing consumer wants, they may reduce prices to stay in
business.
Current profit maximisation: a company estimates demand and costs at
different price levels and chooses the most profitable price.
Market-share leadership: by setting prices as low as possible, a company
hopes to out-sell the competition.
Product-quality leadership: the objective of highest quality means setting
higher prices.
69 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
70 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
When setting prices, the company must consider consumer perceptions of price and
how these perceptions affect buying decisions and demand. Pricing, like other
marketing-mix decisions, must be buyer-oriented. Effective pricing involves
understanding how much value consumers place on the benefits they receive from
the product and then setting a price that fits this perceived value. A demand curve
shows the number of units the market will buy in a given time period, at different
price levels that might be set.
In most cases, the higher the price charged for a product, the lower the demand.
However, in the case of luxury goods, sometimes higher prices lead to higher
demand amongst the target market, as they perceive a higher quality product. Most
companies try to measure their demand curves, estimating demand at different price
levels.
Marketers also need to understand price elasticity i.e. how responsive demand will be
to a change in price. If demand hardly changes with a change in price, demand is
inelastic. If demand changes greatly, we say the demand is elastic.
What determines the price elasticity of demand?
Buyers are less price-sensitive when the product they are buying is
Unique or when it is high in quality, prestige or exclusiveness
When substitute products are hard to find
When the cost of a product is low relative to their income
If demand is elastic rather than inelastic, sellers will consider lowering prices.
Competitor’s prices and offers
Companies can use competitors’ prices as a starting point for its own pricing strategy.
The company’s pricing strategy may also affect the nature of the competition that it
faces.
Example: A purchaser considering buying an Omega watch will evaluate Omega’s
price and value against the prices/values of comparable products made by
Seiko, Tag Heuer etc. If Omega follows a high-price, high margin strategy,
it may attract competition. If it follows a low-price, low-margin strategy,
however, it may stop competitors or drive them out of the market.
Basically, Omega will use price to position its offer relative to competitors.
Other external factors
Economic conditions: inflation, booms, recessions and interest rates all affect both
the costs of producing a product and consumer perceptions of the product’s price and
value, and their ability to purchase.
Other parties: the company should give resellers a fair profit.
Government regulations: the Trade Practices Act prohibits unfair pricing practices
e.g. predatory pricing. Predatory pricing is where prices are set unreasonably low to
force competitors out of the market.
71 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Pricing approaches
Companies set prices by selecting a general pricing approach that includes one or
more of the following four sets of factors:
Cost-based pricing
Value-based pricing
Competition-based pricing
Relationship pricing.
Cost-based pricing
This is the simplest pricing approach; it involves adding a standard mark-up to the
cost of producing the product.
Disadvantages -It ignores current market demand and the competition. Mark-up
pricing only works if that price actually brings in the expected level of sales.
Advantages- Sellers can be more certain about costs than about demand.
Sellers earn a fair return on their investment but do not take advantage of buyers
when buyers’ demand becomes great.
Example: Suppose a radio manufacturer had these costs and expected sales:
Variable cost per unit = $10
Fixed costs = $300 000
Expected unit sales = 50 000
The manufacturer’s cost per radio =
Cost per unit = unit variable cost + (fixed cost/unit sales)
= $10 + ($300 000/$50 000) = $16.
There also needs to be a mark-up, in this example use a 20% mark-up
= unit cost/ (1 – desired return on sales)
= $16 / (1 – 0.2) = $20.
Break even pricing (target profit pricing)
This involves setting the price to break even on the costs of making and marketing a
product, or to make the desired profit. Manufacturers should consider different prices
and estimate breakeven volumes, probable demand and profits for each. Much
depends on price elasticity and competitors’ prices.
Breakeven volume = fixed cost divided by (unit sell price – unit variable cost)
= $300 000 divided by ($20 minus $10)
= 30 000 units
Value-based pricing
This approach sets price based on buyers’ perceptions of value rather than on the
seller’s costs. The company uses the non-price variables in the marketing mix to build
up perceived value in buyers’ minds. Price is then set to match the perceived value.
72 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
73 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Psychological pricing
Promotional pricing
Geographic pricing
Discount pricing: a company lowers the regular price of its products:
Cash discounts
Quantity discounts: selling products at a lower cost per unit if the buyer
purchases a given quantity e.g. 6 bottles of wine
Functional discounts: decreasing the price for a reseller who performs certain
marketing activities for other members of the distribution chain
Seasonal discounts and allowances: a special discount offered in the off-season
e.g. Air tickets
Segmented pricing: the company sets different prices for different customers,
product forms, places or times. Nokia will price different mobile phones at different
price points depending on their different functionality.
Psychological pricing: the company adjusts the price to communicate more
effectively a product’s intended position. Expensive (highly priced) suits and other
apparel are then perceived to be of a higher quality. Similar to value-based pricing.
Promotional pricing: the company decides on loss leader pricing (charging less,
when launching a product, in the hope it will lead to a greater quantity of sales and
repeat purchase), special-event pricing and psychological discounting.
Geographic pricing: the company decides how to price to distant customers,
choosing from alternatives like uniform delivered pricing, and zone pricing.
Supermarkets and petrol stations often use this pricing model.
Place
Marketing logistics networks (place) is the system of efficiently and effectively
making and getting products and services to end-users.
It consists of Marketing Channels. Members of the marketing channel move goods
from producers and suppliers to consumers. Members may include retailers,
manufacturers, warehouses, transport companies, docks and wharves.
Distribution and logistics can add up to 30-40% to a product’s cost. A well planned
marketing logistics program can be a very important tool in competitive marketing.
Through marketing logistics network management practices, companies attempt to
source the right inputs (raw materials, components, capital equipment), convert
them efficiently into finished products and dispatch them to their final destinations.
Companies can attract additional customers through offering better service, faster
delivery times or lower prices through logistics improvements.
Marketing logistics network decisions typically involve:
Cycle-time reductions e.g. changing the manufacturing process to make it faster
from time of order to time of receiving the product
74 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Members of the marketing channel move goods from producers and suppliers to
consumers.
Marketing channel members perform many key functions, including:
Information: gathering and distributing marketing research and intelligence
information about people and forces in the marketing environment, this aids
marketing planning
Promotion: developing and spreading persuasive communications about an offer
Contact- finding and communicating with prospective buyers
Matching: shaping and fitting the offer to the buyer’s needs, including grading,
assembling and packaging
Negotiation: reaching an agreement on price and other terms of the offer so that
ownership or possession can be transferred
Physical distribution: transporting and storing goods
Financing: acquiring and using funds to cover the costs of the channel work
Risk taking: assuming the risks of carrying out the channel work.
Channel structures
75 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Each layer of intermediaries that performs some work in bringing the product and its
ownership closer to the final buyer is a channel level. The number of intermediary or
channel levels used indicates the length of a channel. A direct marketing channel has
no intermediary levels. It consists of a manufacturer selling directly to consumers.
For the producer, greater numbers of levels generally means less control, greater
complexity and more costs. Channels may contain one middleman level. In consumer
markets, this is typically a retailer e.g. Kmart sells televisions, cameras, tyres,
furniture, appliances that they buy directly from manufacturers.
Channels may contain two intermediary levels- typically a wholesaler and a retailer
e.g. this is often used by small manufacturers of food, pharmaceuticals, hardware
and other products.
Other channels contain three middleman levels. For example, in the giftware
industry, a jobber buys from wholesalers and sells to smaller retailers who are not
generally served by larger wholesalers.
Are marketing channels also used in marketing services?
Yes! Producers of services and experiences also must decide how they will make their
output available to their target markets. For example, when governments sell
services like health systems, they must determine agencies and locations for reaching
widely spread populations.
Vertical Marketing Networks (VMN)
This is a distribution channel structure in which producers, wholesalers and retailers
act as a unified network. One channel member owns the others, has contracts with
them or wields so much power that they all cooperate. The VMN can be dominated by
the producers, wholesaler or retailer.
Manufacturer
Wholesaler
Consumer
Woolworths in Australia is a good example of a Vertical Marketing Network. They
76 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
77 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
78 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
79 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Promotion
This is the most commonly recognised aspect of the marketing function. It is the
process of integrating and coordinating available communication channels to deliver a
clear, consistent and compelling message about the organisation and its products or
services. The objectives of the communication may vary: inform, persuade, remind,
or reinforce attitudes or perceptions.
In order to develop a compelling message, the sensible marketer:
Identifies the target audience
Determines the response they seek
Selects a message
Selects the appropriate media
Collects meaningful feedback.
Identifying the target audience
The target audience affects all decisions when developing your promotion strategy.
The audience might be current users, potential buyers, decision makers, decision
influencers, groups, individuals, special interest groups, general public etc.
What will be said?
How will it be said?
When will it be said?
Where will it be said?
Who will say it?
Determining the response sought
The marketer uses communications to influence consumer state of mind:
Knowledge The goal is to provide the target market with information about the
product or organisation
80 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
Conviction Convince the target market that buying the product is the right
thing to do, that it fills a need (previously identified need or not).
Purchase Lead consumers to take the final step, often called the ‘Call to
Action’. This may include a sales promotion such as offering the
product at a reduced price, letting the consumer ‘try before they
buy’, or a ‘limited time offer’.
Obviously, the eventual goal is for the consumer to purchase the product; however,
there are other stages the come before the ultimate purchase in the decision making
process that the marketer will attempt to influence.
Selecting a message
The marketer must determine:
What to say – message content
How to say it logically – message structure
How to say it symbolically – message format
For example, in a print ad, the marketer must consider:
Headline
Colour
Illustrations
Placement
Copy
Selecting media
There are 5 common communication channels used in modern consumer marketing:
Advertising
Public Relations
Personal Selling
Sales Promotions
Direct Marketing.
Reviewing media performance
Once the message has been sent, the marketer must obtain meaningful feedback to
determine the success of the communication. Research may include:
Whether the consumers remember the message
How many times they saw it
What points they recall
How they felt about/responded to it
81 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
82 | P a g e May 2015v1.1
eBook
BSBMKG501 Identify and evaluate marketing opportunities
References
Real Marketing, The people the choices. Michael Solomon et al 2012: Pearson
Education
2013. She Runs The Night – strategy, execution, results of Nike's ground-
breaking campaign. Marketing Magazine, [Online]. Available at:
www.marketingmag.com.au/case-studies [Accessed 06 May 2013].
Amazon
Attorney General's Department, The Australian Guidelines for Electronic
Commerce
Australian Direct Marketing Association, Code of Practice
Bangs, DH 1989,Practical Marketing, Kogan Page, London
Business.gov.au, Codes of Practice, viewed 19 January 2012, link Carsguide
BNet (now CBS Money Watch http://www.moneywatch.com)
Cole, K, 2012. Management: Theory and Practice. 5th ed. Frenchs Forest:
Pearson Australia.
Free TV Australia 2010, Commercial Television Industry Code of Practice
Kotler, P, Brown, L, Adam, S, Burton, S, and Armstrong, G (2007). Marketing
7th Edition, Pearson Education Australia, Frenchs Forest.
Nielsen Australia
Oztam
Rix, P 2011, Marketing a Practical Approach, McGraw-Hill Australia, Sydney.
Roy Morgan Research
The People's Supermarket, Mission Statement
Vee, J, Miller, T and Bauer, J 2008, Gravitational Marketing, John Wiley and
Sons, Hoboken, New Jersey. Wikipedia, Smirnoff History
When Art Meets Science: The Challenge of ROI Marketing (Dec 2003)
www.strategy-business.com, retrieved 09 Dec 2009
83 | P a g e May 2015v1.1