Marketing

Role of marketing
 Strategic role of marketing goods and services
 Interdependence with other key business functions
 Production, selling, marketing approaches
 Types of markets – Resource, industrial, intermediate, consumer, mass, niche

 Strategic role of marketing goods and services

Strategic – Long-term, the strategic role of each key business function involves the
managers of each function contributing to the strategic direction/plan of the business.
Profit maximisation – Occurs when there is maximum difference between the total revenue
coming into the business and total costs being paid out.

 Interdependence with other key business functions

Operations – Inputs are of high quality and won’t damage reputation

Finance – Money for advertising and promoting (Websites)
HR – Advertising to find the right staff for the job

 Production, selling, marketing approaches

Production approach – Focused businesses on the production of goods and services.

o Example – T model Ford (only produced in black)
Sales approach – Emphasised selling because of increased competition.
o Example – Door to door salesman
Marketing Approach – Focuses on finding out what customers want through market
research and then satisfying that need. [Developing customer relationships]

 Types of markets

Resource – Consists of those individuals or groups that are engaged in all forms of primary
production. [Mining, agriculture, fishing]

Industrial – Includes industries and businesses that purchase products to use in the
production of other products or in their daily operations. [Sony buys plastic & metal for TVs]

Intermediate – Consists of wholesalers and retailers who purchase finished products and
resell them to make a profit. [Subway buys good to make into a sandwich to sell]

Consumer – Consist of individuals; that is, members of a household who plan to use or
consume the products they buy. [Housing, clothing, food, entertainment]

Mass – The seller mass- produces, mass-distributes and mass-promotes one product to all
buyers. [Water from council]

Niche – Is a narrowly selected target market [High end cars]

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Influences on marketing
 Factors influencing customer choice – Psychological, sociocultural, economic,
government
 Consumer laws
 Deceptive and misleading advertising
 Price discrimination
 Implied conditions
 Warranties
 Ethical – Truth, accuracy and good taste in advertising, products that may damage
health, engaging in fair competition, sugging

 Factors influencing customer choice

Psychological – Are influences within an individual that affect his or her buying behaviour.
Five main psychological factors influence customer choice – Perception, motives, attitudes,
personality and self-image, and learning.

Sociocultural – Are forces exerted by other people and groups that affect an individual’s
buying behaviour.
There are four main sociocultural factors – Social class, culture and subculture, family and
roles, and peer group.

Economic – They influence a business’s capacity to compete and a customer’s willingness

and ability to spend.
Boom – A period of low unemployment and rising incomes.
Recession - Sees unemployment reach high levels and incomes fall dramatically.

Government – Policies that directly or indirectly influence business activity and customers’
spending habits.
Fair Trading Act 1987 (NSW) - An Act to regulate the supply, advertising and description of
goods and services and, in certain respects, the disposal of interests in land

 Customer laws

Deceptive and misleading advertising – Creating a false impression in an attempt to

influence customers.

Price discrimination – The setting of different prices for a product in separate markets.

Implied conditions – Are unspoken and/or unwritten terms of a contract.

Consumer guarantees – Provide consumers with rights to certain remedies from retailers
and manufacturers where goods purchased fail to comply with the consumer guarantee
provisions in the ACL.

Warranties – A warranty is a promise made by a business that they will correct any defects
in the goods they produce or services they deliver.
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 Ethical

Truth and accuracy in advertising – Advertising is a paid, non-personal message

communicated through a mass medium.
The main unethical marketing practices include untruths due to concealed facts,
exaggerated claims, vague statements and invasion of privacy.

Good taste in advertising – What is considered to be in ‘good taste’ is highly subjective.

Some consumers may regard an advertisement as offensive, while others might view it as
inoffensive.

Products that may damage health – The marketing of junk food, which is often portrayed as
an essential part of a balanced diet, is an area presently being criticised by nutritionists and
health advocates, especially as childhood obesity rates approach epidemic proportions.
Ethics also influence how marketers promote the product.
Marketers may avoid designing products with such features on ethical grounds.

Engaging in fair competition – There may be a temptation for marketers to engage in

strategies that can limit or prevent competition.
The Competition and Consumer Act 2010 requires businesses to engage in fair competition.

Sugging – Selling under the guise of a survey, is a sales technique disguised as market
research.
Although this technique is not illegal, it does raise several ethical issues, including invasion
of privacy and deception.
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Marketing process
 Situational analysis – SWOT, product life cycle
 Market research
 Establishing market objectives
 Identifying target markets
 Developing marketing strategies
 Implementation, monitoring and controlling – Developing a financial forecast;
comparing actual and planned results, revising the marketing strategy

 Situational analysis

SWOT – (Strengths, Weaknesses, Opportunities, Threats)

A SWOT analysis involves the identification and analysis of the internal strengths and
weaknesses of the business, and the opportunities in, and threats from, the external
environment.

The product life cycle – Consists of the stages a product passes through – introduction,
growth, maturity and decline.

 Market research

Market research – Is the process of systematically collecting, recording and analysing

information concerning a specific marketing problem.
Primary – Collected by the business about its processes and products. [Surveys]
Secondary – Collected by agencies out of the business. [ABS]

 Establishing market objectives

Marketing objectives – Are the realistic and measurable goals to be achieved through the
marketing plan.
Three common marketing objectives include:
o Increasing market share
o Expanding the product range
o Maximising customer service

 Identifying target markets

A target market – Is a group of present and potential customers to which a business intends
to sell its product.
Mass marketing approach – The seller mass-produces, mass-distributes and mass-promotes
one product to all buyers
Market segmentation approach – The total market is subdivided into groups of people who
share one or more common characteristics
Niche market approach – A narrowly selected target market segment.
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 Developing marketing strategies

Marketing strategies – Are actions undertaken to achieve the business’s marketing

objectives through the marketing mix.
Marketing mix – Refers to the combination of the four elements of marketing, the four Ps —
product, price, promotion and place that make up the marketing strategy.

 Implementation, monitoring and controlling

Implementation – Is the process of putting the marketing strategies into operation.

Monitoring – Is the process of measuring actual performance against planned performance.
Controlling – Involves the comparison of planned performance against actual performance
and taking corrective action to make sure the objectives are attained.

Developing a financial forecast – Financial forecast is the business’s predictions about the
future.
Step 1 – Estimate the cost of the marketing plan.
Step 2 – Estimate the revenue (sales) the marketing plan is expected to generate.

Comparing actual and planned results

Three key performance indicators used to measure the success of the marketing plan are:
1. Sales analysis
2. Market share analysis
3. Marketing profitability analysis

Revising the marketing strategy

The marketing plan can be revised by:
o Changes in the marketing mix
o New product development
o Product deletion
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Marketing strategies
 Market segmentation, product/service differentiation and positioning
 Products – Goods and/or services
 Branding
 Packaging
 Price including pricing methods – Cost, market, competition-based
 Pricing strategies – Skimming, penetration, loss leaders, price points
 Price and quality interaction
 Promoting
 Elements of the promotion mix – Advertising, personal selling and relationship
marketing, sales promotions, publicity and public relations
 The communication process – Opinion leaders, word of mouth
 Place/distribution
 Distribution channels
 Channel choice – Intensive, selective, exclusive
 Physical distribution issues – Transport, warehousing, inventory
 People, processes and physical evidence
 E-Marketing
 Global marketing
 Global branding
 Standardisation
 Customisation
 Global pricing
 Competitive positioning

 Market segmentation

Market segmentation – Occurs when the total market is subdivided into groups of people
who share one or more common characteristics.

 Product/service differentiation and positioning

Product/service differentiation – Is the process of developing and promoting differences

between the business’s products or services and those of its competitors.

Product/service positioning – Refers to the technique in which marketers try to create an

image or identity for a product compared with the image of competing products.
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 Products – Goods and/or services

Products – Goods or services that can be offered in an exchange for the purpose of
satisfying a need or want.

Branding – A brand is a name, term, symbol, design or any combination of these that
identifies a specific product and distinguishes it from its competition.
Branding helps consumers:
o Identify the specific products that they like
Branding helps businesses:
o Gain repeat sales because consumers recognise the business’s products

Packaging – Involves the development of a container and the graphic design for a product.
Well-designed packaging will give a positive impression of the product and encourage first-
time customers.

 Price including pricing methods

Price – Refers to the amount of money a customer is prepared to offer in exchange for a
product.

Cost-based (mark-up) pricing – Is a pricing method derived from the cost of producing or
purchasing a product and then adding a mark-up.

Market-based pricing – Is a method of setting prices according to the interaction between

the levels of supply and demand.

Competition-based pricing – Is where the price covers costs (cost of raw materials and the
cost of operating the business) and is comparable to the competitor’s price. A business can
select a price that is below, equal to or above that of the competitors.

Pricing strategies – Pricing strategies used by marketers will have to be modified depending
upon changes within the external business environment, especially the influence of
technology.

Price skimming – Occurs when a business charges the highest possible price for the product
during the introduction stage of its life cycle.

Price penetration – Occurs when a business charges the lowest price possible for a product
or service so as to achieve a large market share.

A loss leader – Is a product sold at or below cost price.

Price points – Is selling products only at certain predetermined prices.

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Price and quality interaction
Normally, products of superior quality are sold at higher prices. This is usually due to the
higher manufacturing cost involved in producing them.
Prestige or premium pricing – Is a pricing strategy where a high price is charged to give the
product an aura of quality and status.
‘You get what you pay for’, to marketing managers, this saying describes the price quality
relationship.

 Promotion

Promotion – Is the element of marketing which is concerned with communicating with

potential customers.

Elements of the promotion mix

The promotion mix – Refers to the different techniques that marketers can use to promote a
product.

Advertising – Involves paid messages in a variety of media and can be text, images and/or
audio.

Personal selling – Involves direct, two-way communication between the seller and buyer, to
try persuade the customer to but the product.

Relationship marketing - Involves focusing on developing long-term relationships with

customers to form repeat-customers.

Sales promotion – Involves short-term reductions in price, such as discounts, cash-backs or

‘two for one’ deals.

Publicity and public relations – Are often a good alternative to traditional advertising. This
aims to create a positive image for the company and increase exposure without having to
pay for ads.

The communication process – Refers to a series of steps that marketers can use to spread
information about a product or potential customers as part of its promotion.

Opinion leaders – Are certain customers in a target market who have considerable influence
over their peers due to their position or reputation.

Word of mouth – Refers to the impact influential individuals can have over sales by affecting
the perceptions of other potential customers about a product.
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 Place/distribution

Distribution channels – Refer to the routes producers van use to mice products to the final
customer.
Direct channels – Are when the producer sells the product directly to the final customer,
rather than using wholesalers or retailers. (IKEA)
Indirect channels – Are when the producer sells through wholesalers or retailers, rather
than direct. (Woolworths, Coles)

Channel choice – Refers to the decision of how many locations will be used to sell the goods.

Intensive distribution – Is when a producer seeks to have its goods sold in as many locations
as possible. (Milk, lollies, newspaper)

Selective distribution – This involves using only a moderate proportion of all possible
outlets. (Clothing stores)

Exclusive distribution – Is when a producer chooses to have its product sold in only one
location. (Exclusive, expensive products)

Physical distribution issues – Marketers are often involved in these decisions as much as the
operations team, as they will often have to choose which areas to service first or how many
products to be sending.

Transport – Is one issue where the goods simply cannot be moved in time.

Warehousing – Is an issue related to the storage of products that could be raw materials,
works-in-progress, or finished goods.

Inventory – Relates to the expense of holding stock of the product. Although some needs to
be held, holding more than needed can become an unnecessary expense. (One solution
could be adopting a ‘just-in-time’ inventory strategy).

 People, processes and physical evidence

People – Relates to the interdependence of Human Resources and Marketing/Operations

and Marketing (customer service). People, from a marketing perspective, is about selecting
the right people it be the face of the company.

Process – Refers to the implementing effective processes to allow customers to be serviced

in a timely fashion and having consultants available where needed. Process is what
customers want which is efficiency and effective.

Physical evidence – Involves giving customers exposure to the actual product so they can
judge it, hopefully to be persuaded to try it. Customers won’t: cleanliness and for it to look
appealing.
 E-marketing
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E-marketing – Is the strategy of marketing over the internet. Using the internet provides
new opportunities and benefits for businesses but it also provides challenges. [Webpages,
SMS]
Social Media Analysing (SMA) – Is a form of online advertising using social media platforms
such as Facebook, YouTube and Twitter to deliver targeted commercial messages to
potential customers.

 Global marketing

Global marketing – Is the process of marketing a product that is sold around the world.
Different markets may warrant different marketing strategies.

Global branding – Refers to the strategic decisions that must be made about the
management and development of s brand when sold around the world.

Standardisation – Is the strategy of using the same marketing mix for a product in different
markets around the world. It allows for the use of activities around the world. It will succeed
only if the foreign marketing costs remain low enough not to affect overall costs.

Customisation – Is a global marketing strategy that assumes the way the product is used and
the needs it satisfies are different between countries.

Global pricing – Is how businesses coordinate their pricing policy across different countries.

Competitive positioning – Relates to how a business will differentiate its products. It centres
on how a business will carve out a place in the competitive marketing environment.