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HSC 10:2 Marketing

Role of marketing
Marketing

Marketing, it is the process of developing a product and implementing a

series of strategies aimed at correctly promoting, pricing and distributing the
product to a core group of (potential)customers
The purpose of this is to determine what the business should be producing
Used as a method of enhancing its revenue streams and increasing the
markets awareness of its products
The product can be a good or service

Strategic role of Marketing

Refers to the long-term role that the key business functions of marketing has
within a business
These include choice, standard of living, employment and brand awareness
Once these are interdependent within each other it leads to increased market
share
Choice
Businesses must be able to differentiate their products in the marketplace
Achieved from product features and quality, pricing strategies or promotional
activities
Standard of living
It is the individuals quality of life, partly based on g + s the individual can
afford to buy
Organisations must develop better products that enhance our lifestyles
Employment
To provide products with consumers, they must employ labour to assist the
transformation process of changing input resources into finished goods
To also sell the product to customers
Brand Awareness
Refers to the extent to which;/ consumers are existence of particular product,
its features, price and possible places of purchase
This can be done by using strong and effective advertisement campaigns
This is done to increase market share
Market share is the percentage of total sales a business has compared
with its competitors within a particular market. It can increase sales and
profitability

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Interdependence with other key business functions

Each key business function must work well together in order to achieve
business goals
Operations

They are there so they can incorporate what the consumers want as gathered
by the marketing department into their products
It is the responsibility of the operations department to develop strategies that
would sell the product
Human Resources
This is important because staff must be motivated and skilled to develop
products within the business that is clear and that cater to the needs and
wants of a future customer
Because of the marketing process it is clear to businesses as to who they
should hire to produce the desired product
Finance
The organisation must know that the needs of potential customers is
financially viable for the business to pursue
Budgets and forecasts must be established for promotional campaigns and
sales

Production, selling, marketing approaches

Businesses use an array of strategies aimed at increasing product awareness
and generating sales of their products to satisfy the need of consumers
Many businesses focus on the single elements of the marketing mix rather
than a combination
Marketing mix, the process of developing a product that meets the needs of
consumers and implanting a series of promotional, pricing and distribution
strategies that will encourage consumers to purchase the product
Production approach
Focuses on the production of goods and services
During the 1920s-30s, many businesses assumed that the high quality of their
product will ensure success
Businesses would focus on how well the product is produced and therefore
setting a high price which meant high quality which
Selling approach
This involves businesses placing an emphasis on strategies aimed at
convincing consumers of the need to buy a product due to increased
competition
The aim was to take the product and its benefits to the consume through the
sales person
Marketing approach
The marketing approach is solely based on consumer wants and needs
For a product to be successful, a successful marketing campaign would have
needed to been done

Types of markets
Resource markets
Markets where the primary production and sale materials occur i.e. raw
materials
Some produce materials for other businesses

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Examples mining, agriculture, forestry and fishing

Industrial markets
Where good that are used as supplies in the production processes are traded
Purchasing products to use in production or in daily operations i.e. goods are
supplies
Example bakery buying flour for bread, Sony buying plastics and metals for TV
production
Intermediate markets
Where retail businesses purchase products that have been produced by other
organisations
Consists of wholesalers and retailers who purchase finished products and
resell for profit
Vast majority of goods sold to consumer markets are first sold to an
intermediate market
Example Subway, buys goods to make sandwiches/salads to sell to consumers
Consumer markets
The market where businesses directly sells its products to consumers
Purchases product from other businesses that produce it
Consumer markets are broken down into two categories; mass and niche
Mass market
The market where products are aimed and appeal to all consumers
Seller mass-produces, mass-distributes and mass-produces product to all
buyers
Example water, electricity, toilet paper
Niche market
The market in which products are aimed at a select group of consumers, very
concentrated
These markets specialise in products that not everybody wants, it is narrowly
selected
Example different magazines at newsagents or toiletries at personal care aisle

Influences on marketing
Factors influencing customer choice
When making a decision to buy g + s, people are influenced by a range of
factors
These factors include price, reliability and convenience all of which relate to
product advantage
Although customers do tend to maximise their satisfaction by making use of
their limited resources
Key factors include:
Psychological factors
These are the internal influences that affect an individuals buying behaviour,
such as:

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Perception: the opinion the customer has of the product, the process of
selecting, organising and interpret info to create meaning
Motive: the reason for buying the good or service
Attitudes + beliefs: a persons overall feeling about the business or the
product may be based in past experiences or life experiences
Personality + self-image: behaviours, characteristics of the customer and how
the customer views themselves
Learning: change an individuals behaviour caused by additional information
and experiences, could lead to brand loyalty creating a favourable attitude
towards product
Sociocultural factors
These are external factors that affect the customers buying behaviour
The four main factors include:
- Sociocultural: persons relative rank in society, based on education,
income or occupation, social class
- Culture + subculture: beliefs, behaviours and traditions shared by society
- Family roles
- Peer/reference group: those with whom a customer closely identifies
adopting their attitudes, values and beliefs
Economic factors
These refer to the influence of the general economic trends (unemployment
levels, interest rates, economic growth and decline) as well as
individual/family income levels
Boom, period of low employment and rising incomes. Businesses would
increase production lines and attempt to increase market share by
intensifying promotions. Customers spend more because of confidence in
income
Recession, period of high unemployment and decreased incomes.
Customers and businesses lack confidence in spending and production.
Customers are more price conscious, so marketers must stress value and
usefulness as well as maintaining market share and survival in the market.
Government factors
This relates to the influence of government legislation and regulation of
consumer markets
Depending on the level of economic activity (economic cycle) the actions of
the government attempting to slow the economy down
These policies influence business and consumer activity thus the marketing
plan
Government regulations however influence the marketing plans

Consumer laws
The Commonwealth Government controls business behaviour through the
Competition and Consumer Act (2010). This legislation attempts to promote
fair and competitive behaviour in the marketplace
Deceptive and misleading advertising
It is the unfair and unethical way of attracting consumers into your business
by promoting inaccurate prices or goods and services
- Includes, fine print, before and after ads, tests and surveys, country of
origin, packaging and special offers
Examples are

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-

Giving misleading information about the product such as benefits, quality

content or place of manufacturer
- Offering false discounts, price reductions, specials and free gifts, MUST be
genuine
- Bait and switch, the reducing of a products price, then once thats sold
out the business will offer a product of the same brand but at a higher
price
Price discrimination
It refers to the setting of different prices for a product in separate markets.
The competitors are then at a disadvantage as they forced to pay a higher
price for an identical product
Differences because of geographical location or production differentiation
between each market e.g. between a domestic and business user
Implied conditions
Implied conditions: they are the unspoken and unwritten terms of a contract.
Two important terms are:
- Merchantable quality means that the product is of a standard a reasonable
person would expect for the price
- Acceptable quality means that that the product is suitable for the purpose
for which it is being sold, acceptable in appearance and finish, free from
defects, safe and durable
Australian Consumer Law (ACL) introduced consumer guarantees which are
the comprehensive rights and remedies for defective goods and services
Warranties
Warranty: it is the promise made by the business to repair or replace faulty
products within a certain time period
Whether or not if the product the customer bought has a warranty,
businesses by law must refund the clients money or exchange the good
should the good be recognized to have been faulty at the time of leaving the
store. This is why all products are said to have an implied warranty.
Resale price maintenance
Under the Competition and Consumer Act a manufacturer cannot refuse to
sell goods to a retailer who decides to sell the product at a different price
suggested by the manufacturer
Manufacturers cannot discriminate against stores for selling at a price that is
lower than recommended

Ethical aspects of marketing

Ethics is marketing refers to a combination of broad principles that establish
standards of behaviour and guidelines for people working across the
marketing industry
They are not enforceable through law
Truth, accuracy and good taste in advertising
Marketers are expected to engage in fair and honest behaviour when
developing a marketing campaign
It is expected that when promotional material distributed, this material
represents information that is truthful, accurate and in good taste
The Competition and Consumer Act prohibits a corporation from supplying
consumer goods that do not comply with prescribed product safety standards
The Advertising Federation of Australia is the peak body representing

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companies in advertising and marketing communications

While some social issues that are advertised can be controversial, it is still
trying to sell its brand name
Products that may damage health
Products that may damage our health are referred to as sin products, so the
state and federal government put restrictions onto the products, such as:
- Tobacco: sponsorship in in sporting/community events/casinos, not
displayed openly, contains health warnings, not sold to under 18s
- Alcohol: staff serving must complete Responsible Service of Alcohol
course, not sold to under 18s
- Casino/Gaming: support for those who are addicted, restrictions on
opening hours in leagues and RSL clubs
Engaging in fair competition
It is the role of the Australian Competition and Consumer Commission to
regulate business behaviour
Unfair competitive behaviour include:
- Price-fixing between competitors
- Long-term loss leader pricing strategy by undercutting smaller
businesses and forcing them to engage in price war
- Misleading advertising regarding the products of a competitor
Sugging
A disguised marketing process that uses general questions in a survey to
determine the interests and needs of a consumer then offers them a product
that caters to the consumers needs
It raises several ethical issues by invasion of privacy and being deceptive

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Marketing process
Introduction

Planning is the central activity of any organisation

It allows the business to examine its current position within the market,
consider opportunities to strengthen that position and determine the most
effective method of implementing the required changes
The elements of a market plan:
- Executive summary
- Situational analysis
- Market research
- Establishing market objectives
- Identifying the target market
- Developing marketing strategies
- Implementation, monitoring and controlling

Situational analysis
SWOT
Strengths: positive elements of the business internal environment e.g.
popular product
Weaknesses: negative elements of the business internal environment e.g.
competent staff
Opportunities: positive elements of the business external environment e.g.
rise of new tech
Threats: negative elements of the business external environment e.g.
economic trends
Must consider the needs for the consumers to be successful
Goals must be developed that can both achieve business and consumers
goals
By understanding the SWOT analysis and working to strengthen the position
of the business, both parties again
Product life cycle
The product life cycle identifies the current position of the goods/services in
the market place
The product life cycle reflects the business life cycle: establishment, growth,
maturity and post-maturity
Establishment:
The stage in which the product is new and is launched
Consumer awareness as well as market share is built as well as a customer
base
Profits are limited due to lack of sales and costs like fixed costs (rent +
insurance) are high
Good/service brands reliability are established

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May be pricey and have limited to promotions to make up production costs or

lower to attract consumer attention
Promotions is aimed at early buyers and communication is used to create
awareness + merit
Distribution is selective so consumers can form acceptance of product
Growth:
Brand awareness and market share are actively pursued by producers of
product
Once loyalty and satisfaction is gained by customer, business is moved onto
growth stage
More profit is gained due to increased sales
As well as entering the market, marketing strategies will change (lower prices
or expansion)
Product quality will be maintained/improved and support services may be
added
Price of production is same as firm will enjoy increase consumer demand and
market share
Promotions will seek a wider audience thus increasing costs
Distribution channels widened as product becomes more popular
Maturity
Sales will begin to slow and products become saturated
Business will face steady income streams and limited prospects for growth
Business must modify its marketing strategies to continue success
Find competitive advantages e.g. price differentiation, after sale services,
unique promotions or easier access for customers
Product features and packaging try to differentiate from competitors
Price need to be decreased to hold off competitors and maintain market share
Promotion suggests the product is still favoured
Distribution incentives need to be offered to encourage preference over
competitors
Post-Maturity
Key decisions will be made that will affect the long term survival of the
business
Already an established organisation within the market
Increased competition/changing customer preference may be the need for
change
Product could have improvements or be sold off to another business
Price is reduced to sell remaining stock
Promotions is ceased
Distribution is reduced and offered to loyal customers
The business will be divided into four paths:
- Decline completion and changes in the business environment. Business
declines and lose market share
- Renewal products revitalised, new promotional campaigns, brand
altered. New strategies may be developed to attract a new audience
- Steady stage no changes, profits stay the same
- Cessation the business is shut down

Market Research

Before conducting market research it is important that the business has an

idea of what type of information it is looking for

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It could vary from character profiles, to broad awareness or attitudes towards

certain new products
Data collection
An organisation seeks two types of data: primary and secondary
Primary
Refers to the information that is collected for the specific purpose for which it
will be used
Primary research can be conducted through:
- Observational: observing a particular group of customers that goes into
the shops and their opinion of it
- Surveys: a primary group of people asking the same question (based on
knowledge, attitudes, preferences + buying behaviour)
- Experimental research: used to examine reactions to different products
Secondary
Refers to the information that already exists having been collected for
another purpose
- Internal sources
Data that are within the business itself
Businesses can compare external + internal sources
- External sources
Data sources that exist outside the business
The business must pay other groups/individuals to get this information
All though theres many sources that do not need any payment e.g.
ABS, books, magazines and the internet
Data analysis + interpretation
Once it gained this information it must make use of it
The business will analyse and interpret the data so management can gain a
better understanding of the impact of data on operations
Then management will be able to make an appropriate course of action

Establishing market objectives

The objectives of a business provides the framework for the business and to
develop a series of activities and operations that aim to achieve the
objectives
Objectives and goals guide the business
Its important for the goals to be flexible so they can be adapted to changes
in the business environment
Businesses adapt a SMART approach to set objectives
S specific, the objective needs to be clear and precise and relate to specific
elements of the business
M measurable, the business needs to develop controls that are effective in
measuring the extent to which the goal has been achieved
A achievable, the business needs to have the financial and human
resources required to achieve the goal
R realistic, the objectives should not be based on unreasonable
expectations, that is it must be possible for the business to achieve this
objective
T time, the time frame within which the business hopes to achieve the goal
must be determined
General market objectives

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Marketing objectives must measure up to business objectives. Some can be

measured and have specific targets to bet met
Increase market share
Market share refers to the percentage of total sales a business has compared
to other competitors in a particular market
Increasing market share is very important, especially for those businesses
who have large companies in their market
Expanding the product range
The product mix is the total range of the products offered by the business.
Businesses are usually eager to increase their product mix as the same mix
will not be effective in the long term due the changing tastes and preferences
of consumers.
Expanding existing markets
The demand for some products varies greatly from one geographic location to
another.
Geographical representation refers to the presence of a business and the
range of its products across a suburb, state, city, town or country
Maximizing customer service
Customer service means responding to the needs and problems of the
customer and is perhaps the most important objective.
High levels of customer services usually results in improved customer
satisfaction.

Identifying target markets

A target market is a group of consumers for whom a particular product has

been developed
To identify the appropriate target market for a particular product, a business
needs to understand the nature of consumer markets
By identifying target markets so they can direct their product directly to that
market
Mass market approach, the seller mass produces, mass distributes and mass
promotes one product to all buyers
Market segmentation approach, total market is subdivided into groups of
people who share a common interest
Niche market approach, a narrowly selected target market segment

Developing market strategies

Developing marketing strategies involves using the marketing mix

It is called a mix because it uses four elements to rich these strategies the
four ps
- Product: refers to the good or service the business intends to provide in
the market place. The business must differentiate its products from
competitors e.g. quality, image, logo, packaging and if itll be an upmarket or discount product. Businesses must consider conditions and
warranties thatll come with the product.
- Price: the cost to the consumer when buying the good or service
- Promotion: the process of creating and maintaining consumer awareness
and interest towards a particular product
- Place: refers to the methods of distribution and the availability of a good

Implementation, monitoring and controlling

Implementing

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Implementation is the process of organising

The business must implement the strategies once the marketing plan has
been devised
Successful implementation relies on the ability of management to effectively
organise and lead the business
Management must ensure that the production of goods are in good quality
Management must also have enough funds to cover all costs
Employees must have the skills and necessary training to assist the
transformation process
Monitoring and controlling
A business must develop methods that management can use to determine
the extent to which the implemented strategies are achieving the desired
outcomes
Businesses monitor the progress of their operations through controlling
Controlling is the process of comparing actual results with the results that the
business had planned to achieve
It allows businesses to find out if theyre achieving objectives or not achieving
their objectives
Three common forms of analysis and control when monitoring performance:
- Sales analysis
- Market share analysis
- Marketing profitability analysis
Revising the marketing strategy
The business must adopt revised strategies to ensure continued success
Business should revise market strategy to ensure they meet their business
goals and also the needs of the customers
The extent to which the marketing strategies are altered depends on whether
or not the business has achieved its objectives as well as changes in the
environment

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Chapter 9: Marketing strategies

Introduction

Business must understands what the consumer wants and who itll appeal to i.e.
target market
Once established the organisation can establish appropriate promotional and
pricing strategies that caters to the needs of that certain group
The marketing mix is made up of: product, price, promotion and place
Combined with the three ps of marketing: people, processes and physical
evidence
Makes the extended marketing mix, which refers to the combination of the 4 ps
and 3 ps
A product can different features or qualities, the packaging can be of different
colours or materials, the brand name can be modified
Various promotions methods, different prices/discounts on offer, various
distribution channels - to a single outlet to a coverage of the entire market
The main goal of marketing manager is to develop and maintain a marketing mix
that precisely matches the needs of the customer in the target market

Market segmentation
Refers to the dividing of the total market into segments
Once segmented, the marketer is able to choose which segment will be the
target market
Businesses will implement a specific marketing mix to each target market
Ultimate aim of market segmentation is to increase sales, market share and
profits
This is done by understanding the needs and wants of consumers
Segmentation variable refers to the characteristics of individuals or groups that
are used by marketing managers to divide a total market into segments
The consumer market can be segmented according to four main variables:
demographic, geographic, psychographic and behavioural
Demographic:
Divides the total market according the particular features of a population
Includes size, age, sex, income, cultural background and family size
The ease of the demographic variables can be measured and its use is
widespread amongst marketers
Geographic:
Divides the total market according to geographic locations
Businesses may divide the consumer market into regions because consumers in
different geographical locations have different needs, tastes and preferences
Psychographic:
Divides the market according to personality characteristics, motives, opinions,
socioeconomic group and lifestyles
When segmenting according to psychographic variables, businesses would
research consumers brand preferences, favourite music, radio and television
programs, reading habits, personal interests and hobbies and values
Values on why people behave the way they do
Behavioural:
Divides market on the consumers relationship to the product

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Includes customers knowledge of, attitude towards, use of, or benefits sought
from the product
May be divided into users and nonusers
Users can be classified as heavy or light
To encourage light or moderate users to purchase more of their products,
businesses may have to redesign the product, set special prices and implement
special promotion activities

Differentiation and positioning of product/service

Refers to in its broadest sense- is the process of developing and promoting
differences between the businesses products or services and those of its
competitors i.e. choice and standing out in the biz. environment
Product differentiation
It is the process whereby a business distinguishes the attributes and features of
a product from those of its competitors products
Strategies to emphasis differentiation:
- Price: when using price itll be considered the cheapest and provides a wide
range of g + s e.g. Big W Australias lowest prices and Kmart Great value
and everyday low prices
- Product quality: the best quality products around will attract customers e.g.
Woolworths The fresh food people and BMW The ultimate driving machine
Service differentiation
It involves a direct and immediate form of contact between the business and the
consumer
Small businesses are recognised to have more personality in their service as
opposed to their big competitors
After-sales services is a strategy that emphasises on differentiation, they believe
thisll develop into a strong brand loyalty
Positioning
The image a customer has in mind of a product
Marketers technique in order to create an image or identify for a product
compared with the image of competing
Customers will often compare other products with each other
There is often a price + quality undertone in positioning
Marketing mix
When developing marketing strategies businesses must consider the 4 elements
of marketing and also people, processes and physical evidence

Products
Goods and/or services
Product can refer to both goods and services (good = physical, service = done
for you)
Tangible benefits, refers to the physical attributes. Can include style, colour and
features of product
Intangible benefits, refers to the benefits a customer associates with purchasing
a product. Can include the prestige and image associated with the product.
Includes customer care help desks, warranties and maintenance checks
When developing its marketing strategies a business must look beyond the
physical attributes and features of its products
Businesses must consider the branding and packaging (product-related
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Branding
Refers to the reputation that a business/product has developed over a period of
time
Brand is name, term, symbol, logo, design or any combination that identifies a
specific product and distinguishes it from competitors
Brand name attached to also provides messages of quality, value or prestige
associated
Strong brand name is important in enhancing the relationship between a
business and its customers
Packaging
Refers to the physical appearance of the good, the development/graphic design
of container
Packaging doesnt impact the customer, the image of the product will be the first
thing the customer will see, therefore it must positive and effective
The packaging must aim to protect and maintain of the quality of the product
Packaging is also important because it is the last point of contact before the
customer makes a decision on whether or not to buy the product
It reveals the benefits, nutritional information or colour, design and style of the
product

Price
Price refers to the amount of money a customer is prepared to offer in exchange
for a product
A price set too high could mean lost sales unless superior benefits are offered. A
price set too low may give customers the impression that the product is cheap
and nasty
To gain control in price businesses will often differentiate their products. Once
that is done, the business will have leverage over the price
Pricing Methods
Pricing decisions are influenced by internal and external factors
The businesss marketing objectives and costs of production provide an
indication of what it should charge for its products
Business should consider the amount of competition in the marketplace,
government regulations, the location of the product in its life cycle and the level
of economic activity
There are three main pricing methods: cost-based, market-based and
competition-based. These methods provide a basic price for each product
Pricing strategies are then used to adjust the basic price, depending on the
marketing objectives and conditions within the marketplace
Cost-based (mark-up) pricing
Refers to the pricing method derived from the cost of producing or purchasing a
product then adding a mark-up
The business then adds an amount to cover additional costs (overheads such as
interest payments, insurance, transport) and to also provide an adequate profit
margin
The amount is referred to as the mark-up and is usually expresses as a
percentage
The total of the cost plus the mark up is the seeling price of the product
Cost + (Cost x Mark-up percentage) = Price
Cost-based is mainly used by wholesalers and retailers

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Although it is simple, the drawbacks include:

- Difficulty in accurately determining an appropriate mark-up percentage. If the
% is too high, the product will be overpriced and possibly not sell. If its too
low, the business is losing profit they could have obtained
- The product is priced after production and associated costs are incurred
without taking into account the other elements of the marketing mix or the
state of the market
Market-based pricing
It is the setting of the price according to the level of supply and demand
(whatever the market is prepared to pay)
When a demand for product is greater than its supply
- Price will go higher
When the supply of a product is bigger than its demand then itll be a surplus
- Price will fall
Prices change due to the fluctuations in the levels of supply
This method is a base for other methods
Difficult because levels of supply + demand always change
Competition-based pricing
Its when the price covers cost (cost of raw materials and the cost of operating
the business) and is comparable to the competitors price
It is often used when there is a high degree of competition from businesses
producing a similar product
Once a business has established a base price, it can either:
- Below that of competitors. This policy of undercutting the competition is often
used as a way of breaking into an established market
- Equal to that of competitors. Follow the price by an price leader instead of
taking the time of doing some market research and also avoids he risk of
price/competition war
o Price leader refers to a major business in an industry whose pricing
decisions heavily influence the pricing decisions of its competitors
- Above that of competitors. Done to make businesses be perceived as
prestigious and superior, which appeals to the status-conscious buyer
Pricing Strategies
Once the basic price has been set using the pricing methods, the business then
fine-tunes this price in line with pricing strategies
Businesses often use more than one strategy, even for the same product
Pricing strategy heavily depends on:
- Its marketing objectives
- Life cycle of product
- Degree of product differentiation
- Level of economic activity
Strategies heavily depend on the changes within the external business
environment and the influence of technology
Introduction of e-marketing has weakened the control over the business and its
prices of products
Marketers have found that they need to modify their traditional pricing strategies
An example is the widespread use of bundle pricing common with
telecommunications businesses, as evidenced by the ads from mobile phone
companies, internet providers and cable television operators offering all kinds of
packages

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Bundle pricing is where customers gain package of g+s in addition to the

tangible good they purchased
Price Skimming
Occurs when the business sets the highest possible price for their product during
its establishment stage of its life cycle
Some consumers are willing to pay for a high price because of its novelty
features because of the prestige/status that the ownership gives
Businesses do this to recover for the price of the operations
Price penetration
Occurs when the business charges the lowest possible price for a product to gain
an immediate group of customers and/or achieve large market share
Businesses do this often to stop new businesses to get into the market
However, businesses do have trouble raising the price after awhile
Loss Leader
When a product is sold at or below cost price
Used for special promotions especially at retail stores, they deliberately sell a
product at a loss to attract customers to the shop
Although businesses make a loss on this product, it hopes that the extra
customers buy other products as well
Businesses can recover when customers buy other products
This pricing strategy is often good for:
- Overstocked or a product is slow to sell
- Wants to increase the traffic flow in the expectation of gaining new customers
- Wants to build a reputation of having low prices
The danger is that businesses may lose money if its not done correctly
Price points
When the product is sold at a pre-determined pruce
Used by retailers, especially retailers boutiques
$55$65 etc.
Price and quality interaction
Usually customers perceive the quality of a product with its price
High price = good quality, low price = bad quality
Referred to as prestige or premium pricing
- Prestige pricing is where a high price is charged to give the product an aura of
quality and status
This may not always work as customers understand that high prices reflect on
the packaging or the marketing exploitation

Promotions
Methods used to inform and persuade and remind (potential) customers about its
products
Seeks to generate interest and awareness of the products or brand
It is the most public aspect of marketing. It is the way businesses gets it public
image and profile
Attempts to attract new customers via awareness, increase brand loyalty through
reinforced image, encourage existing customers to purchase and provide
information to make decisions
Elements of the promotion mix
The promotion mix seeks to generate interest in and awareness of a particular
product/service
Personal selling

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Aims to establish a direct link between the business and the consumer
Involves the process of taking the business and the product directly to the
consumer
Message can be modified to suit individual customers needs, assistance creates
relationship thus repeated sales and assistant provides after sales service i.e.
features, installation, warranties and servicing
Forms include door-to-door sales and party plans
Relationship marketing
Refers to the process of building and maintaining long-term relationships with
consumers
Development of a long-term, cost-effective and strong relationships with
customers
It involves creating a high level of consumer satisfaction, value and service, thus
ensuring consumers will return to the business through loyalty
It is based on the loyalty of the consumers
Through a regular client base, consumers can receive special packages,
discounts and promotional events
Advertising
A paid, non-personal message communicated through a mass medium. Informs,
persuade and remind
It seeks to convey a broad message to a broad range of consumers
The most public face of the promotion mix
- Mass marketing: TV, radio, newspapers and magazines. Catalogues and
telemarketing. E-marketing and social media. Billboards placed at strategic
locations
Must consider type of product and positioning, size of target market and
characteristics, budget, cost of advertising medium and position of life cycle
Sales promotions
Use of activities or materials as direct inducements to customers
Aims to create an interest and generate awareness of a particular product
Entices new customers, encourage trial purchases and increase and repeat
purchases from existing customers
Includes coupons, premiums, refunds competitors, samples, discounts and offers
to buy one and get one free
Businesses are also using e-mail to inform customers of sales and such
Publicity and public relations
It is the process of creating an event for a business to generate awareness, in
doing so it attracts interest in the business activities and products
Publicity, any free news story about a business product
- Aims: enhance image, raise awareness, highlight favourable features and
reduce bad images
PR, activities aimed to create and maintain a favourable relation between biz and
customer
- Work with the media, speeches, celebrities or huge gestures e.g. donations
Businesses will endorse celebrities to increase business profile
The communication process
Market research will allow the business to develop strategies that will attract the
interest of the products intended market
Theyll use a channel to convey a promotional message like print or media
However customers are more willing via a respected and trusted channel:

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Opinion leaders
Businesses will use individuals in the community that are highly respected or
highly influential
Their knowledge, expertise and their personality and the leaders image and
reputation will significantly benefit the business
Their opinion is respected and highly sought for
Used as outlets for new products or to endorse an existing one
Includes actors, musicians and models
Word of mouth
Refers to the form of publicity where business has little or no direct influence
This is usually someone close such as a family member or friend
Customers in relation to potential customers will always have a reaction to a
certain product
This includes the degree of which the business was satisfied with the good or
service
Positive word is an extremely valuable form of promotion

Place/distribution
Place is the is process of distributing the product from where it is made to the
customer
Activities to make g+s available for consumers when and where they want to
purchase them
Distribution channels and reasons for intermediaries
Distribution channels refer to the channels by which a product is moved from the
place of manufacture (the products place of origin) to the consumer (the
products final user)
The route from the warehouse to the consumer
Intermediary refers to the business purchasing the final product from the
producer and takes on the responsibility of selling it to the consumer
Although, the distribution process may have a few steps:
Producer to consumer:
Where the good or service is produced by an individual/organisation and is then
passed directly onto the consumer
There is no other business/intermediary involved in selling the product
Advantages include the producer maintaining control over all areas of the
product, including quality control and the producer is able to have direct contact
with the consumer and have a better understanding of their needs
Goods, farmer produce in markets. Service, hospitality industries such as hotels
and dentists
Producer to retailer to consumer:
Where the retailer is used as an intermediary who accesses the good from the
producer and then sells it to the consumer, usually in bulk
Advantages include allowing the producer to concentrate on the manufacturing
component of the business operations and the use of retailer means a greater
access to the good
Although it does slow down the ability to examine the buying patterns and
behaviours of the consumer
Goods, supermarkets selling everyday products. Service restaurants (unless
grow own produce.)
Producer to wholesaler to retailer to consumer

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In this system an additional intermediary, the wholesaler. In this case, the

wholesaler takes the role of distributing the product to producers and retailers
but doesnt own product
Generally the most expensive distribution channel
Advantages include the producer being able to hold lesser amounts of idle stock
and marketing and sales will tend to be the responsibility of the retailer, not the
producer, thereby saving on costs. Marketing and sales tend to be more
important
Online global fashion stores
Channel choice
The choice of distribution channel will influence the type of customers the
product attacks, the perception of the product in the market and, above all, the
ease with which the consumer is able to access the product
Intensive:
Product is readily available and accessible to a wide selection of businesses or
locations
Wishes to saturate market with product
Easily accessible as it is found in a large number of stores
e.g. convenience store items, milk lollies etc.
Selective
Involves using a limited amount of stores/locations to sell/distribute product,
moderate proportion of outlets are selected
Customer is willing to travel and seek a retailer that stocks the particular product
Place chosen are consistent with image business is trying to project and reach
target market
Method allows business to control where the product is sold
Includes electrical appliances, certain brands in Myer e.g. Lipsy London
Exclusive
Restriction on the number of products and/or availability of the product. Available
at a limited no. of venues, or use of one retail outlet for a product in large
geographic area
Used for mainly exclusive, expensive products
Maintain control of elements of production, distribution sales and marketing of
product
Tiffany & Co Jewellery
Physical distribution issues
The activities concerned w/efficient movement of the products from the producer
to consumer
Transport
Refers to the process of moving goods from one location to another
Should consider length of time of transporting good from production to retail
centre
Business must consider best method of transportation for the good, can be
expensive and should factor cost into final price of good
Method of transportation will depend on type of good rail, road, sea and air
Fresh foods must be refrigerated as well as how long good may be stored
Warehousing
Refers to process of storing products before they are distributed to the consumer
A set of activities involved in receiving, storing and dispatching goods

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Acts as central organisation point for the efficient delivery of products

Used as a facility to store the finished product, allows build-up of holding stock of
good
Distribute product to retailer at later rime with minimum delays
Some goods can only be stored in warehouse for a limited time e.g. fresh fruit
Warehousing is influenced by the type of good being stored and distributed.
Some have limits in how much can be held
Inventory
Refers to the stock of product, a system that maintains quantities and varieties
of products appropriate for the target market
Sale of stock provides the business with the means to achieve its financial
objectives
Business must ensure their stock meets consumer demand
Avoid overstocking and understocking especially on certain time periods of the
year
Overstocking leads to clearance sales which reduces profits and restricts
business to store more attractive forms of stock
Understocking leads to lost sales and stock out costs

People, processes and physical evidence

Emerged with the rise of service based businesses
People
The quality interaction between the customer and employee who delivers the
service
An important aspect of business is to employ the right people to support their
good or service, they must be appropriately recruited, qualified and trained
This is reflected through customer service, customer service allows customer
satisfaction
It involves knowledge and attending to customers in understanding a manner
and knowing the details of a g+s
Perceptions on business are based on how consumers are treated. From spoken
to, dealing with enquires and handling complaints
Customer focus is crucial in success
Process
Refers to flow of activities that a business will follow in its delivery of a service
It is the consumers experience of researching information on the product to the
final stage of experiencing the benefits of the product
Without no good, the process must be highly efficient to achieve customer
satisfaction
Aspects of the sale processes are focused on delivering to the expectations of
the consumer
Physical evidence/packaging
Refers to the environment in which the service will be delivered or the physical
appearance of the product across every aspect of its presentation to the
customer
- Service, consider, signage, brochures, calling cards, letterheads, business
logo and website
- Good, consider the size, shape, colour, material and label of the packaging
The packaging must be able to convince the consumer to buy the product as it is
the last point of contact between them
Visual packaging is a significant influence in consumer behaviour

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Small improvements can leave large reactions
also refers to the visual presentation of the employees/business
Staff in how they dress, and act
The way the business is set up, must be aesthetically pleasing

E-marketing

E-marketing refers to the use of the internet and digital media capabilities to
help sell your products or services
It has the ability to help businesses send the right message with their products to
the right customers
Businesses are able to have a wide market, as everybody has internet access
The objectives include:
- Sell: using the internet to sell g+s
- Serve: using the internet to provide service to customers
- Speak: using the internet to communicate with products (existing and
potential)
- Save: using the internet to save/reduce costs
- Sizzle: using the internet to build brand identity
Examples of e-marketing include, web pages, blogs and social media

Global Marketing

Many transnational corporations (TNCs) adopt a global marketing approach that

involves developing marketing strategies as if the entire globe were one large
market
Businesses believe that the marketing approach should be customized and
adapted to suit overseas markets and different countries cultures, religion and
tastes
Many global markets cater to their individual domestic markets
All businesses marketing on a global scale must rely on market research to
understand the complexities of the global marketing environment before they
can design the marketing mix
It is essential that they have an analysed in depth research of their market

Global branding
It is the worldwide use of a name, term symbol or logo to identify the sellers
products
Business use global branding because:
- It can be cost effective because one advertisement can be used in a number
of locations
- It provides a uniform worldwide range
- The successful brand name can be linked to new products being introduced to
the market
Once this is done theyll attempt to market the brand globally
Standardisation
An approach where the global marketing strategy assumes the way the product
is used and the needs it satisfies are the same world over
This means that the marketing mix will be the same everywhere
This strategy is beneficial to save costs, products are longer therefore achieving
economies of scale: research and development costs are reduced, spare parts
and after-sale services are simplified, promotion strategies can be standardised
and any evaluation and modification of the plan is a much simpler task
Examples include electrical equipment, mobile phones etc.
Customisation

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An approach where the global marketing strategy assumes the way the product
is used and the needs it satisfies are different between countries
Adopting this approach is to be customised according to the economic, political
and sociocultural characteristics of the country

Global pricing
It is how the business coordinates their pricing policy across different countries
It is one of the most critical and complex issues that global businesses have to
deal with because price is the only element of the marketing mix that generates
revenue
All other elements involve costs, therefore global pricing strategy is a major
determinant of profits
Customised pricing
Occurs when consumers in different countries are charged with different prices
for the same product
To determine the price for an overseas market, businesses will use the cost-plus
method to cover the added costs of exportation
- Costs include transportation, taxes, warehousing and tariffs (tax on an
imported product)
Market-customised pricing
Sets prices according to local market conditions
To avoid competition from a domestic business, the global business may need to
adopt a market-customised pricing strategy that allows the marketers to vary the
price depending on the level of demand and competition within the overseas
market
In a competitive market the price charged may have to be lower than in market
where the business has a monopoly
It is also influenced by foreign currency exchange rates
Fluctuations in the exchange rate can charge the prices charged across countries
and is a major risk for global businesses
Standard worldwide price
Standardised pricing is the practice of charging customers the same price for a
product anywhere in the world
It will only succeed if the foreign marketing costs remain low enough not to affect
overall costs
The two risks involved:
- Domestic business may undercut the price
- Changes in the exchange rate may negatively impact on the exported price

Competitive positioning

It 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
A global business must show how much better it is than other businesses
Without differentiation, more time, money and effort to encourage potential
customers to purchase a business products
To differentiate successfully, and avoid competing on price only, the business
should strive to develop product leadership, positive customer relationships and
operational excellence
To develop and maintain and competitive position in an increasingly challenging
environment, businesses must gain a deep understanding of their dynamic

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environments in which they operate and form their strategies according to

evolving conditions