HSC Summary Notes- Marketing

10.2    HSC topic: Marketing -> Total system of related activities designed to plan, price, promote and distribute products to potential customers – identifying, satisfying, exchanging & communicating.

                                                                                                                   25% of indicative time

The focus of this topic is the main elements involved in the development and implementation of successful marketing strategies.

Outcomes 

The student:

H1     critically analyses the role of business in Australia and globally

H2     evaluates management strategies in response to changes in internal and external influences

H3     discusses the social and ethical responsibilities of management

H4     analyses business functions and processes in large and global businesses

H5     explains management strategies and their impact on businesses

H6     evaluates the effectiveness of management in the performance of businesses

H7     plans and conducts investigations into contemporary business issues

H8     organises and evaluates information for actual and hypothetical business situations

H9     communicates business information, issues and concepts in appropriate formats

H10   applies mathematical concepts appropriately in business situations

Content

Students learn to:

examine contemporary business issues to:

·         explain why goods and/or services are central to both marketing and operations

·         examine why ethical behaviour and government regulation are important in marketing

·         assess why a mix of promotional strategies is important in the marketing of goods and services

investigate aspects of business using hypothetical situations and actual business case studies to:

·         evaluate the marketing strategies for a good or service

·         analyse a marketing plan for a business

·         explain how globalisation has affected marketing management

Key concepts: satisfying, needs and wants, exchanging, valuing, communicating, corporate social responsibility, choice, ethics, market, ‘bait and switch’, differentiate, niche, sugging SWOT analysis,

Students learn about:

role of marketing

·         strategic role of marketing goods and services

è  central + strategic role – to find the most suitable markets/make sure resources are directed to ensure customers of that market buy product – use of opportunity

·         interdependence with other key business functions

è  marketing does not occur in isolation & impacts finance, operations, employment relations e.g. new marketing campaign = more products/new services =greater production, further staff training + $$

·         production, selling, marketing approaches

è  Product-if business has a better product, customers will naturally want it. Emphasis on quantity & reducing costs. Demand greater than supply

è Sales-Businesses think of customer only after the product is made. Emphasis on selling & advertising. Supply greater than demand

è Marketing-Focus on the customer’s needs/wants. Emphasis on customer satisfaction. Modification-societal approach emphasises quality, safety, the environment.

·         types of markets – resource, industrial, intermediate, consumer, mass, niche

Market	Characteristics	Example
Resource	Where the factors of production (land, labour, capital & enterprise) are sold/exchanged – these resources are then sold to firms producing goods/services for consumers	Mining company discovering iron ore
Industrial	Those who buy goods/services that go into the production of other products	Ford motor company, sourcing parts to complete vehicles
Intermediate	Those who buy goods/services to resell/rent them to others –wholesales –steps to produce the final product	Hertz, antiques
Consumer	A market for goods at their final point of consumption	Department store
Mass	Market for goods appealing to the majority of customers/	Milk, electricity, bread
Niche	Smaller markets for more specialised goods/services, appealing to fewer people	Jeweller specialising in bridal jewellery

influences on marketing

·         factors influencing customer choice – psychological, sociocultural, economic, government

Psychological- Internal personal motivations (aspirations, likes/dislikes, hobbies) –will the product improve my appearance/self-image/status?

Sociocultural-Influence of social/cultural background (friends, family, religion, ethnicity, income, education, reference groups, values etc.) –does this product relate to my religion/background? Will the product harm my relationship with peers/family?

Economic-Influence of greater economic trends (unemployment, interest rates, economic growth/decline) along with individual/family income level – can I afford this? Is it better value?

Government-Influence of government in legislation and regulation of markets – income tax, interest rates impact ability to purchase. Is there a law about purchasing this product? Are there advantages/conditions relating to government policy affecting this product? Will Gov. taxes make this more expensive?

·         consumer laws

–        deceptive and misleading advertising

Overstating benefits, offering discounts that don’t exist, bait & switch advertising. Consumers are responsible for reporting breaches

–        price discrimination

Providing stock at a lower price to that offered to competitors of a preferred retailer. Discounts for bulk buying are however legal.

–        implied conditions & warranties

Reguardless of warranty, a business must either refund or exchange goods recognized as faulty at the time of leaving the store, this is implied warranty

*ALL PART OF THE COMPETITION AND CONSUMER ACT

·         ethical – truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, sugging

Ethical behaviour refers to the generally accepted code of behaviour. When marketing business should act in an ethical way, considering:- health concerns/social obligations, cost of marketing-so we aren’t paid to be marketed to, marketing can be anti-competitive, sugging- customers are approached to complete a survey then sold a product.

marketing process

·         situational analysis (current situation of business)– SWOT, product life cycle (introduction, growth, maturity, post-maturity) –different marketing strategies should be used as products travel through the product life-cycle

·         market research –primary research (focus groups, surveys, interviews)*observational/experimental –secondary research (census data, competitor’s sales data, annual reports)*internal/external

·         establishing market objectives –Specific Measurable Achievable Realistic Time(bound)

·         identifying target markets –to appeal to a target market the business needs an indepth understanding of the nature of consumer markets

·         developing marketing strategies –Product, Price, Promotion, Place, People, Proccessed, Physical evidence

·         implementation,-what, how and why of strategies –organisational structure + skills and expertise monitoring –work in progress checks, -bugets, sales analysis, targets and controlling –cash flow statements, balance sheets, profit and loss developing a financial forecast; comparing actual and planned results, revising the marketing strategy

marketing strategies

·         market segmentation,

è  identifying niche markets within a mass market by grouping people with similar characteristics. Demographic (age, sex, education etc.), Geographic (location), Psychographic(why- lifestyle, social class, personality), Behavioural (consumer loyalty, purchase occasion)

è   product/service differentiation – how businesses separate themselves from the competition

è Positioning-Process or marketers creating an image/identity for their product/brand/organistation these can based on factors such as price, quality, value, luxury, safety. A positioning matrix may be helpful. Positioning strategies include: positioning by benefit, price or quality, direct comparison (create the image of superior product e.g. coke/pepsi), usage occasion or users (e.g. thredo ski resort –winter hiking, other sports/events –summer)

·         products – goods and/or services – should also be seen as felxible & product range/use, what to ephasise, position should all be taken into consideration

–        branding

è  A brand name is a way of distinguishing a product from its competitors, branding strategies include: generic brand (e.g. no frills), individual brand (each major product has its own name e.g. Unilever- dove, lux etc.)

–        Packaging

è  Often first image of the product – image should be positive and effective while aiming to protect and maintain quality. Should offer a reason to purchase product, this may be: nutritional info, benefits, feature, design & colour. Relevant to sales – willingness to assist

·         price including pricing methods – cost (price determined by cost of good plus a set %), market, (figure based on supply/demand e.g. bananas going up when crops are low) competition-based (setting a price to compare directly to competitors e.g. beat competitors by 10%)

–        pricing strategies – skimming (initially very high price which is gradually skimmed e.g. ps3),

-penetration, (setting prices very low to gain an immediate group of customers)

-loss leaders (some great deals to entice you into store in the hope you will buy more e.g. coles weekly specials)

- Price points (selling a product for a set amount so customers can choose e.g. phones plans $30, $45 etc.)

-prestige pricing, product deletion (clearance), demand based (e.g. iPhone), psychological pricing ($19.99)

–        Price and quality interaction –this mix should be correct, you can’t successfully sell a low quality product for a high price vice versa. E.g. Lexus prestige car, low price = low sales, high (prestige) price = increased sales.

·         promotion

–        elements of the promotion mix

- Advertising –To persuade a target market, TV, radio, online, print etc. Advertising which often aims to build brand image is a more long term process than sale promotions

- Personal selling and relationship marketing –Sales representative persuades customer through depth of knowledge and personal characteristics, message can be tailored to suit customer

- Sales promotions –Short term attempts for customers to buy more of a product e.g. price reduction, cash back, gifts. Can be below-the-line (non-media communication) especially for new products e.g. food samples

- Publicity and public relations –Planned establishment of goodwill, promotion of a business/products in most favorable light. –made most credible by an outside source e.g. magazine

–        the communication process – opinion leaders (individuals, typically held in high esteem, often more influential than the media, seen as trustworthy. E.g. sportspeople, experts, celebrity spokesperson) word of mouth (argued that customers put more weight on WOM rather than TV/newspaper)

·         place/distribution -> how it gets to the customer

–        distribution channels (business/s involved in moving goods from manufacturer to point of sale –intermediary –allows to reach new/smaller markets, more efficient –less of companies resources, help match supply/demand)

–        channel choice (direct/indirect (use of intermediaries)– intensive (available everywhere e.g. soft drinks), selective(easily available but manufacturers choose where), exclusive (limited supply for elite image or require specialist installation e.g. Ferrari)

–        physical distribution issues – transport, warehousing(storing products), inventory(quantity of products available for sale)

·         people, (having the right staff e.g. customer service, product knowledge) processes (total experience of buying the product –meeting expectations) and physical evidence (physical appearance across all aspects of presentation, can mean clothng, office)

·         e-marketing –Internet marketing, fastest growing in Aust. e.g. youtube, email, pop ups, adds on sites, competitions –benefits: reach, interactivity, immediacy

·         global marketing

–        global branding –brands have the same meaning in another language, easier to promote a brand vs. product. recognizable

–        standardization –a business may not need to alter its product for different countries/cultures

–        customization –in some situations it is more effective to differentiate some aspects of a product to suit different cultures

–        global pricing –should add to the reputation of the brand with awareness of currency exchange/transport, loss leader strategy can be used an made up in other markets

–        competitive positioning-how a business differentiates its products. It centers on how a business will carve out a place in the competitive marketing environment.