Business Studies

Marketing
Louis Bannon! Year 12 Business Studies

Role of Marketing
Role of Marketing
• Strategic role of marketing goods and services

• Production approach, selling approach, marketing approach

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

• Interdependence with other key business function

Strategic Role of Marketing Goods & Services

Marketing is the total process, by which a business or an organisation plans, produces, prices, promotes and distributes a
product to the consumer. Remember: Strategic refers to long term goals for the whole business.

Marketing plays an important role within a business/ firm and also has an impact on society:

Firm Society
Profit Maximization Brand Awareness
Helps set direction for firms Subsidizes some services (Facebook)

Interdependence with Other Key Business Functions

Operations and Marketing

• In every business, operations of a business often translate into the basis for the marketing campaign. A product generally
has one key distinguisher from others. This is important for the business as the marketing must be a true reflection of the
general advantages of the product.

Finance and Marketing

• Any decision in marketing e.g. developing a new product will requires finances from to be dispensed (research, making
prototypes etc.). Failed marketing efforts can lead to loss of money therefore financial implications for other departments.
Some marketing campaigns are far greater than others i.e. Holden’s Billion Dollar Baby campaign. In these cases,
businesses must reserve finances for special instances.

Human Resources and Marketing

• HR + Marketing managers need to work together to ensure effective staffing (e.g. Skills and experience). HR are
responsible for marketing concepts and creating ways to sell the product to consumers.

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Production | Selling | Marketing Approaches

1820-1920 Production Approach (Take Orders & Deliver Goods) - Industrial Revolution (product oriented)

1920-1960 Sales Approach (Advertising & Personal Selling) - High Quantity, Mass produced products

- Advertising first used

1960-1989 (MK) Approach (aimed to satisfy customer) - Market Research was conducted

- Customer oriented, marketing plans established

1980-Present (MK) Approach- Stage 2 Societal Approach - Environmental concern (Resource Depletion),
social responsibility

- External Forces & Customer attitudes

considered

Production

• In the production approach there is a focus on the strengths of the business rather than the customer thus the
business will work at making the products that it makes [Link] suggests that consumers will favour products that are
easily available, improved quality and highly affordable. Henry Ford followed this approach. Because of increased
competition in the market place, the production approach is not viable today.

Selling

It considers the skills of selling to be the most important task of marketing. The business will make a product it is good at
making and then use a promotional campaign to sell the product. In the 50’s RJ Reenroll ds, makers of Winston
cigarettes used this approach to sell it products.

Marketing

• This approach is customer focused. Focus on satisfying consumer needs and wants by offering products that meet
those needs. Changing economic and social conditions over the last three decades have seen a modification to the
marketing approach. Consumers are expecting business to be involved with CSR.

Types of Markets
Resource

• These markets consist of those individuals or groups that are engaged in all forms of primary production, including
mining, agriculture, forestry and fishing. They produce things by growing and extracting them from the earth.

• These businesses buy goods and services that they need to produce these goods, such as tools, equipment,
chemicals etc.

Industrial

• The industrial market includes industries and businesses that purchase products to use in the production of other
products or in their daily operations. E.g. LG buys metals to produce LCD and plasma TV’s.

Intermediate

• These are markets in which products are sold to companies that then sell the products to other customers. It consists
of wholesalers & retailers who buy finished products and resell them to make a profit. E.g. David Jones sells Boss

• Wholesalers resell finished products to other businesses -> Retailers sell the finished product to consumers.

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Consumer

• This involves businesses selling goods and services to individuals and households who buy goods and services for
personal use e.g. Consumer goods are not used to make other products as they are ‘used up’ by the customer.

Mass

• Refers to the market for goods and services that appeal to the vast majority of customers. Here the seller mass-
produces, mass-distributes and mass-promotes one product to all buyers E.g. Gas, Electricity and tap water

Niche

• Are the small markets for more specialised goods and services that only a few people are interested in or can afford.

• It is created when the mass market is finely divided into smaller markets consisting of buyers who have specific needs
or lifestyles For example: in any newsagent you will see rows of magazines, each appealing to a specific niche market
– male, female, young, old, high income, urban, sport etc.

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Influences on Marketing
Influences
• Factors influencing consumer choice - psychological, sociocultural, government, economic

• Consumer laws - deceptive and misleading advertising, warranties, implied conditions, price
discrimination

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

Factors Influencing Customer Choice

Consumers choose to buy a product for many varying reasons (PSEG). Marketers must be aware of these factors to be able
to successful influence customer choices.

Psychological
These are influences within an individual that affect his/her behaviour.

Perception This is the process through which people select, organise and interpret information to create meaning.
Motives/motivation is the force that drives us to satisfy a need.
Attitudes are what we believe about something, what we feel about something and how we respond to something.
Personality and self-image: This is the collection of all the behaviours and characteristics that make up that person

Sociocultural

These influences are external forces that affect customer behaviour.

Family and Roles refer to the societal obligations of consumers.

Reference groups are those groups with which a person closely identifies, adopting their attitudes, values and beliefs.
Social Class refers to a person’s relative rank in society, based on his or her education, income and occupation.
Culture and subculture are the values, beliefs, customs, patterns of behaviour and traditions shared by a society.

Economic

The economic climate will influence the type and amount of consumer spending.
• Level of income (the ability to purchase goods)

• Savings (ability to buy expensive items)

• Ability to borrow (ability to purchase)

Government

Government economic policies sets the economic climate which will directly or indirectly influence business activity and
consumer spending habits.
• Government policies (fiscal and monetary) affect inflation, interest rates, economic activity and borrowing power.

• Govt. regulations (laws) also have an affect e.g. cigarettes, guns and alcohol

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Consumer Laws

Role of Consumer Laws

Consumer laws are used in an effort to discourage unfair practices and to encourage competition in the market place.

Competition and Consumer Act 2010

The act’s 2 major purposes are:
- To protect consumers against undesirable practices, such as misrepresenting the contents of products and misleading and
deceptive advertising.
- To regulate trade practices what restrict competition.

Deceptive and Misleading Laws

• Advertising must be truthful and avoid any false, misleading or potentially misleading claims. Includes practices such
as overstating the products features or performance, misleading labels, rigged or unfair contests.

The ACCC closely monitors techniques such as:

‘Bait Switch’ – this is when low prices are advertised when there are very few products at that price, the intention being
to persuade the consumer to buy the higher priced products when they arrive at the store and find that the advertised
products are sold out.

Even though the Trade Practices Act makes false and misleading advertising illegal, a number of methods are still used
by some retailers e.g. Fine print: important conditions are written in small-sized print

Price Discrimination

This is the setting of different prices for a product in separate markets.

The difference in price is possible because:

• The markets are geographically separated– i.e. city and country

• There is product differentiation within one market – i.e. different electricity prices for domestic and business users.

The Competition and Consumer Act prohibits price discrimination if it could substantially reduce competition.

Implied Conditions

Are unwritten guarantees that the product or service will do the job that it is intended to do. These conditions are as-
sumed to exist regardless of whether they were especially mentioned or written into a contract.

Two most important implied conditions:

Acceptable Quality: means that the product is of a standard a reasonable person would expect for the price
Fit for purpose: means that the product is suitable for the purpose for which it is being sold.

Warranties

A warranty is a promise by the business to repair or replace faulty products. These are written guarantees by the seller
that the product is fit for use and fulfils its purpose. They imply services, repairs and replacement parts for a certain time
period at no cost to the buyer.

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Ethical
Ethical issues are the ‘moral’ factors that affect marketing decisions beyond legal requirements. Some marketers may decide
not to do something that is legal because they think it is morally wrong. If a business thinks that a customer will think that
their actions are unethical this could harm the business’s reputation.

Truth, Accuracy and Good Taste in Advertising

• Truth and accuracy in marketing laws relate to issues such as misleading advertising, but there remain loopholes and
grey areas the business could exploit.

• In these cases, the marketing strategy is influenced by ethical concerns. Ethical considerations are generally related to
concealed facts, exaggerated claims, vague statements and invasion of privacy.

• Good taste in advertising is highly subjective - some might find the advert offensive and others may not.

• The ASB administers a national system of self-regulation i.e making corrections without the need of excessive
intervention.

Products That May Damage Health

• One of the main ethical influences on marketing relates to dangerous or unhealthy products and how they are
marketed.

• There are usually laws that affect the production and promotion of such goods, but there are also many areas that are
unregulated.

Engaging in Fair Competition

• There are laws that aim to ensure fair competition, but there remain grey areas and loopholes which firms can exploit.

• Examples of engaging in unfair competition may include: large chains temporarily setting unrealistically low prices to
drive smaller competitors out of the market e.g. Coles and Woolworths.

• Advertising campaigns that make insults or allegations about competitors or make misrepresentations about a
competitor.

Sugging (Selling Under Guise of a survey)

• This is a marketing ploy whereby a salesperson pretends to be conducting market research, but is in reality trying to
sell a product.

• The ethical issues raised include: invasion of privacy and deception.

• An example would be: a telemarketer phones you to conduct a survey about where and when you take your holidays.
You are told that another person may contact you at a later date with further questions. Later, the other person informs
you that you have been selected for a prize and should attend a special meeting. Confirmation comes in the mail with
your tickets. When you attend the meeting you find a number of other prize-winners there. The organisers launch an
aggressive sales pitch to sell time-share holiday units.

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Marketing Processes
Marketing Processes
• Situational Analysis - SWOT, product life cycle

• Market research

• Establishing market objectives

• Identifying target market

• Developing a marketing strategy

• Implantation, monitoring, controlling - developing a financial forecast, comparing actual vs.

planned results, revising the marketing strategy

Situational Analysis
Situation analysis answers the question “Where are we now”? in terms of marketing.
• It allows the business to see what it is doing right and wrong.

• Analysis of needs and wants of target market.

• Internal/external environment analysis

SWOT

The next stage is to conduct a SWOT analysis which examines the Strengths and Weaknesses (both internal) of the cur-
rent marketing as well as the Opportunities and Threats in the external environment.

Strengths Weaknesses

• Strong brand • Non renewable resource i.e. not recyclable

• Market Leader • Product has lifestyle
• Reputation • Small market share
• Effective/efficient distribution channel (place) • Old/obsolete product
• Technologically advanced
Opportunities Threats

• Social - Trend for healthy lifestyles • Competitors have superior image

• New industry/target market • Competitors move into # location
• New product • $ law and advertising statutes that must be aware of in
• New events (e.g. Catholic Youth Forum 2008) marketing approach (i.e. cigarette companies forced to
$ packaging [pictures] advertising banned, sponsorship
illegal, $’d names)
• Interest rates $ :. May not buy product.

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Product Life Cycle

Another aspect of this situation analysis is to examine the Product Life Cycle (PLC) in order to determine whether the
current line up has growth potential or is moving into the decline stage.

- Revenue low (people not yet accept, high costs, low sales, net loss, limited distribution, low
Introduction price to attract target market)
- Encourage brand name association.
- Product beginning to be accepted
- Sales, profits, market share rise
- Market segments developed
Growth
- Strategic product positioning and differentiation as competition increases
- Prices may drop (e.g. Plasma screens & prestige)
- Brand loyalty encouraged
- Market share decline – outdated product :. Need to redesign packaging
Maturity - Sales level off
- Product may be abandoned
- Sales decline (unpopular, outdate product, packaging etc)
Decline
- Business might withdraw from market
- Product modification, heavy promotion
- Decrease price to lower stockholding
Renewal - Narrow distribution channel
- Increase/ Decrease promotion
- Redesign initial advert

Competitor Analysis

A business needs to analyse the competitor’s strategies, strengths and weaknesses, and predict what they might do.
• Useful to know the competitor’s profitability, sales volume and market share because it gives the business an idea on
the implications of their strategies.

Market Research
This is an organised system of collecting and analysing information to help in determining consumer wants.

• Market research is done to understand consumer’s needs and wants and why they buy.

• Research is vital because up-to-date and reliable information is needed at all time.

Determining Information Needs

Gathering information is costly so managers need to carefully consider what they actually need rather than what they would
like to know.

Data Collection
Primary data: New data and information specifically collected for the particular problem. E.g. Surveys
Secondary data: Where the business using already existing information to help solve the identified problem. Internal (Previous
Sales figures) External (ABS)

Analysis and Interpretation

Once data is collected it needs to be analysed and interpreted to make it useful and draw conclusions that are relevant to
the problem.

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Establishing Market Objectives

CASE STUDY: LOYALTY CARD SYSTEMS

Loyalty card programs collect and store different types of data about their card holders. This can include:

• Information provided by the customer upon applying for the card

• Information about purchases made using the Loyalty card at the point of sale (e.g. Type and location of retail outlet)

• Responses to any surveys or other information-gathering schemes conducted by the Loyalty program.

GOALS MUST BE SMART

S – Specific:
M – Measurable
A – Achievable
R – Realistic
T – Timely

Four common marketing objectives include:

• Increasing market share

• Expanding the product range

• Expanding existing markets

• Maximising customer service

Identifying Target Market

The target market is the group of potential customers with shared characteristics at which a product is aimed. Marketing will
be tailored to take into account the characteristics of the target market.
Market segmentation: This occurs when the total market is subdivided into groups of people who share one or more com-
mon characteristics. Segments are gauged through using research. Additionally, business must decide whether a small, un-
tapped market will be more effective than a market with other competitors.

Developing Market Strategies

Once the target market has been identified the next step is to develop strategies to reach that target market. This will involve
developing a marketing mix of product, price, promotion and place that will satisfy the needs of consumers and achieve the
objectives determined by the business.

• Demographic • Income
Marketing strategies should:
• Satisfy the needs of the target market • Behavioural • Age
• Psychological • Family size
• Meet the objectives of the business and marketing plan
• Geographical • Sex
• Capitalise on corporate strengths and minimise the effects of any weakness

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Implementation | Monitoring | Control

Implementation involves putting into place the strategies that have been determined with resources dedicated to that task.

Three areas of implementation activity

Organising marketing effort – scheduling
Staffing the business – responsibility
Directing the operational efforts of the staff as they carry out the plans - resources

Monitoring involves the process of measuring the business’s actual performance against its planned or forecast perform-
ance. For example – monitoring actual sales against planned sales.

Controlling involves taking action once the monitoring has been completed.
Managers use controls to see if the objectives are being reached by using:
• Sales analysis

• Market share analysis

• Marketing profitability/cost analysis

1. Sales analysis: Breaks down total business sales by different products, market segments, individual sales representatives
and individual sales territories.
2. Market Share Analysis: Compares the business’s sales performance with that of its competitors, by working out whether
of not its share of the total market has increased
3. Marketing profitability/cost analysis: Looks at the cost of marketing and the profitability of different products.
Developing a Financial Forecast; Comparing Actual Vs Planned Results

• A financial forecast is an estimation of the firm’s future financial situation, based on current trends and known future
events.

• It is important because the marketing mix will have to be adapted based on the level of sales, and will be affected by
changes to the firm’s financial position.

• Marketers would forecast expected revenue costs and profit outcomes for the future.

Revising the Marketing Strategy

• Once the result of the sales analysis, market share analysis and marketing profitability analysis are studied and
compared, the business is in a position to see where the plan is working and where it is not.

• As changes in the business environment occurred, so the need to revise the marketing strategy to cope with these
changes.

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Marketing Strategies

Operations Processes
• Market segmentation, product and service differentiation, positioning

• Product - branding

- packaging

- goods and services

• Price - cost-based, competition based, market based

- pricing strategies - price points, price penetration, loss leader, price skimming

- cost & quality interaction

• Place - distribution channels

- channel choice - intensive, selective, exclusive

- physical distribution issues - warehousing, transport, inventory

• Promotion

- elements of the marketing mix - advertising, personal selling and relationship

marketing, sales promotions, publicity and public relations

- the communication process - word of mouth, opinion leaders

Market Segmentation | Product & Service Di!erentiation | Positioning

Market Segmentation involves subdividing markets, channels or customers into groups with different needs, to deliver
tailored strategies which meet these needs as precisely as possible. Fitness First in Summer Holidays

Segmentation is done based on:

20% 15%
Big
• Customer needs Junkies
25% Old Women
• Geographic, demographic, psychographic and behavioural factors 20% Students
Overcompensating Men
20%

Product differentiation, making the product different from its competitors, can be achieved through:

• Distinctive design - e.g. Dyson; Apple iPod

• Branding - e.g. Nike, Reebok

• Performance - e.g. Mercedes, BMW

Positioning is to position a brand within the target market/s/ It is important because it is the means by which goods and
services can be differentiated from from one another and so give consumers a reason to buy.

Two Elements:
1. Physical Attributes: Functionality and capability that a brand offers

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2. Brand Communication: how consumers perceive the brand relative to other competing brands in the marketplace.

Products
Goods and/or Services

A product is a good or service, an idea or any combination of the two that can be offered in an exchange.
Three types of products:
Core Product: The basic product that consumers look to buy. E.g. – an mp3 player
Actual Product: Consists of the core product and the additional physical aspects customers pay for, such as packaging,
brand name, and style.
Augmented Product: This includes additional aspects beyond the physical factors that add value for customers, such as
warranties and customer service.

Branding

A brand is a distinguishing name, term, symbol, design or any combination of these that identifies a specific product and
distinguishes it from its competition. Marketers aim to get customers to instantly recognise their brand name and the
products associated with them. The brand acts as a summary or trigger for a range of attributes that customers associ-
ate with a product.

Symbols and Logos

• A brand symbol or logo is a graphic representation that identifies a business or product.

• A strong brand name adds value to the product and can build customer loyalty.

• A strong brand name gives customers a sense of security or confidence about the product they are buying.

Branding Strategies
When a manufacturer owns a brand it is refereed to as a manufacture's brand or national brand.
Common examples of manufacture's brands include Sunbeam appliances, Kraft foods and Billabong clothing.

Private Brand Generic Brand

This is one that is owned by a retailer or wholesaler. These are products with no brand name.

Examples include: Myer sells its own label products includ- They only carry the name of the product and are in plain
ing Reserve, Basque, Blaq etc. packaging. Examples include: No Frills – Franklins, Farm-
land – Coles, Select- Woolworths etc

Packaging

Packaging refers to the way in which a product is presented. This involves the development of the container and the
graphic design for a product. It is an important marketing strategy because it can serve as a form of advertising at the
point of sale that differentiates the products from similar products, or after the sale to encourage repeat purchases.
Packaging serves a number of important uses in marketing:
• It protects the product during transportation, on the shelves, during use.

• It informs the consumer about the use of the product.

• It promotes the product and distinguishes it from its competitors.

Redesigning packaging is a strategy that can be used to extend a product’s lifecycle.

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Price (Including Pricing Methods)

Price refers to the amount of money a customer is prepared to offer in exchange for a product

Cost | Market | Competition-Based

Cost
A cost-based pricing method simply adds a standard mark up (margin) to the cost of production of the product.
However, it doesn’t take into account the level of demand, the value of the product to the consumer or other com-
petitors

Market based pricing (Demand based):

Instead of using costs to determine price, businesses will set prices according to supply and demand – whatever the
market is prepared to pay!

Competition-Based
This pricing method determines the price based on the prices set by competitors. E.g. Jetstar prices of flights in re-
sponse to Virgin Blue cheap flights.

Pricing Strategies

Pricing strategies are different pricing techniques that marketers can use to achieve business objectives such as higher
profits.

Skimming

• This involves charging the highest price possible for innovative products. This method would be used when there is
no substitute for the product and no or very little competition. As competition enters the market this strategy would
no longer be used. E.g introduction of plasma and LCD TVs

Penetration

• This occurs when a business charges the lower price than the competition for a product or service to gain market
share. Also sometimes known as ‘mass-market pricing’. E.g. – Initial flights between Melbourne and Sydney were
as low as $23 as Virgin sought to gain public and media interest and obtain market share.

Loss Leaders

• Here the seller will deliberately sell a product below its cost price to attract customers to the shop. Although it will
make a loss on this product, it hopes that the extra customers will buy other regularly priced products while in the
store.

Price Points

• This is a pricing strategy used mainly by retailers where a limited number of prices, or price points, are set for
selected lines or groups of stock. Example: a jeweller may offer a line of watches priced at $35, and a more
expensive line of watches at $55.

• Qantas airlines – 1st class, business class, premium economy and economy.

Discounts:
Example - Quantity Discount: Reduces the price per product as more units are purchased.

Psychological/Odd pricing

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• Pricing an item at $9.95 rather than $10.00 as psychologically consumers believe it is ‘much’ cheaper! This
approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.

Price and Quality Interaction

• Also indication for prestige (Customers often use the price as at guide for judging quality).

• The price set for a product must be consistent with its positioning and overall marketing strategy, e.g. value-for-money
products cannot have a high price tag.

• In general, people equate higher prices with higher quality.

Promotion

Promotion: is the part of the marketing mix that a business uses to inform, educate, persuade and remind customer.

Elements of the Promotion Mix

Promotion Mix: is the mix of personal selling and relationship marketing, advertising, below the line promotions (sales
promotions) and public relations and publicity that a business uses.

Advertising

Advertising: this is a paid, non-personal message communicated through a mass medium.

Examples of advertising media include: Television, Radio, Newspapers, Magazines, Catalogues, Billboards etc
• Advertising is designed to inform, persuade and remind

Advertisements are often expensive, particularly TV adverts during prime time. Marketers will need to consider
whether the expected benefits outweigh the costs.

Personal Selling & Relationship Marketing

Personal Selling: The activities that involve direct two-way communication between the seller and the potential buyer
to try and persuade the customer to buy the product. This is usually done face to face, such as by a salesperson in a
shop, or over the phone. Major advantage is that the message can be tailor made to suit the individual customer.

Relationship marketing: This is an element of the promotion mix that involves focusing on developing long-term rela-
tionships with customers so that they are loyal to the business, rather than focusing on short-term sales.
Examples could include – frequent flyer program, fly-buys, Woolworths everyday rewards card, monthly newsletter
with specials etc

Sales Promotions

Here the business may decide to offer a direct inducement to customers in an attempt to sell more of its product.
Commonly known as ‘below the line’ promotions.
These activities could include exhibitions, point-of-sale material, demonstrations, competitions, free samples and
coupons, use of banners, direct email and ring tones. This is used when the target market is specific and easily iden-
tified and as a relatively cost effective form of promotion.

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Publicity and Public Relations

Publicity is any free news story about a business’s products.

Public relations are those activities aimed at creating and maintaining favourable relations between a business and its
customers.
It is the role of the PR department to create and maintain favourable relations between the business and its stake-
holders.

The Communication Process

Opinion Leaders

An opinion leader is a person who influences others. Their opinions are respected, and they are often sought out for
advice.

Word of Mouth

Word of mouth communication occurs when people influence each other during conversations. Consumers will tend
to trust this type of information more than business-sponsored commercials as it is considered to be unbiased e.g.
Oprah.

Place/ Distribution

Distribution Channels

Is a business, or group of businesses, involved in moving goods and services from the manufacturer to the point of final
use. A distribution channel connects a manufacturer to retailer to consumer.

Direct Channel is a distribution channel in which the producer distributes directly to the consumer. E.g. Dell used to sell
all its products directly.
Indirect Channel is a distribution channel in which a producer uses intermediaries to serve the market.
Intermediaries (link between producers and consumers) include agents, brokers and retailers, operate between the
source of the product and the final user. Intermediaries are independently owned business that moves products from the
producer to end-user. N.B Many markets are too small to make it economically viable for businesses to deal directly with
customers.

Channel Choice

How a business chooses the channel of distribution best suited to its product depends largely on the location of the
business’s market or market coverage. Market coverage refers to the number of outlets a firm chooses for its products.
Intensive

Here the business wishes to saturate the market with its product through making the product available for sale in
every possible outlet e.g. milk, lollies and newspapers.

Selective

This involves using only a moderate proportion of all possible outlets e.g. Clothing, furniture and electrical appliances
are often distributed this way. The customer would be prepared to seek out a specific outlet that stocks the goods.

Exclusive

This is the use of only one retail outlet for a product in a large geographical area. This method of distribution is often
used for exclusive, expensive products e.g. Cars.

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Physical Distribution Issues

These are all those activities concerned with the efficient movement of the products from the producer to the consumer.

Transport

This is how the product is moved from one place to another, either by road, air, rail or water. Concerns include:
• type of product

• speed of delivery

• cost and distance to be covered

Warehousing

This is a set of activities involved in receiving, storing and dispatching goods. The storage of products before distribu-
tion.
• It would be important to store these products in locations that are convenient for the firm.

• Storage space and cost and location would all impact the decision as to where the product would be stored.

Inventory

Inventory control is a system that maintains quantities and varieties if products appropriate for the target market.
• This would be how the stock levels are managed.

• Having the most economic quantity of stock would need to be determined.

• There are advantages and disadvantages to having too much or too little stock.

People | Processes | Physical Evidence

People
• As services are performed by people, it is essential that the business use appropriately recruited, qualified and trained
employees. The people element refers to the quality of interaction between the customer and those who will deliver the
service.

• The people involved are important to any product, but they are especially important in the marketing of services.

• Customers make a judgement about the service and business based on their impressions of the people involved.

Processes
• This refers to the systems (processes) or flow of activities used by a business to deliver a service. Customers will judge the
business on how efficient and customer –friendly these processes are.

Physical evidence
• This refers to the environment in which the service will be delivered. It also includes materials needed to carry out the
service such as signage, brochures, calling cards, letterheads, business logos and website.

• Physical evidence is a marketing strategy that involves giving potential customers exposure to the actual product (service)
so that they can judge the product (service) and be persuaded to purchase it.

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E-Marketing

Technology has driven the push to market products to customers worldwide. Businesses have access to a global market via
setting up websites that promote products and then dispatch them to various destinations around the globe.

E-marketing is the practice of using the internet to perform marketing activities. E-Marketing technologies include: Web
pages, Podcasts, SMS, Social Media Advertising, e.g. Facebook and Twitter.

Global Marketing

Global marketing is the process of marketing a product that is sold around the world. Conditions are different in different
markets around the world, so marketers must reassess the marketing strategy that is used and adapt their marketing mix
accordingly.

Global Branding

Global Branding is the worldwide use of a name, term, symbol or logo to identify the seller’s products.
Reasons for using global branding:
• It can be cost effective because one advertisement can be used in a number of locations.

• It saves costs associated with rebranding

• The brand becomes recognisable all around the world.

Many of the most successful businesses in the world own global brands, such as McDonalds, Coca-Cola, Microsoft,
Apple and Nike. A global brand can add prestige to the product and reassure customers about its quality, which can
boost the business’ reputation not just in new markets, but in its original markets too. However, cultural or linguistic dif-
ferences, for example, might make a certain brand name inappropriate in certain countries.

Standardization

A common product to worldwide market. This can only be used if the product is suited to each market.

• Advantage: Economies of scale; savings in R&D costs; savings in marketing costs // Also better quality marketing as
more money can be put into it as it is company-wide

• Disadvantage: Standardising advertising hard – language barriers, lifestyle difference (i.e. USA family diff to Aus/UK
family) // It doesn’t allow for local variation in needs unsuitable product may result

Customisation

This is a strategy of tailoring the marketing mix for a product sold around the world to individual markets.

• Due to different culture, income, government regulations, economic factors, competition, technology, change in
products between nations is done i.e. Google™ had to go against philosophy and censor search results to gain
access to China market

• Strong cultural differences i.e. perfume companies didn’t do well in Japan – not worn. Bath oils impractical in showers
and communal baths. Also different voltage and power-point systems- always required to some extent.

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Louis Bannon! Year 12 Business Studies

Of course, it is possible for a business to adopt a middle path e.g. McDonalds has achieved this by having a standard-
ised name, logo methods and some of its menu options. However there are local variations in menu that are customised.

Global Pricing

This is how businesses coordinate their pricing policy across different countries.

• Using a standard price (uniform pricing strategy) across all markets has the benefit of simplicity and may help develop
a consistent global brand image - Having large discrepancies with prices in different markets may result in customers
becoming confused or annoyed.

• The rise in e-commerce means that consumers can often compare prices across global markets and even buy a
cheaper version overseas.

• Customised pricing occurs whenever consumers in different countries are charged different prices for the same
product.

Competitive Positioning

This relates to how a business will differentiate its products from its competitors and in so doing, develop strategies for
the business to create value from these differences .

• In order to develop and maintain a competitive position in an increasingly challenging environment, businesses must
gain a deep understanding of their dynamic environments in which they operate, and form their strategies according to
evolving conditions.

• Example: Volkswagen Group have done this over the past few years, gaining a world market share of about 12 per
cent.

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