Marketing HSC Study Notes PDF

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Marketing HSC Study Notes...

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● Role of Marketing Marketing is the process that connects customer wants with businesses products. It is the total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.

Strategic Role of Marketing Goods and Services -

The strategic marketing process involves the planning, pricing and promotion of the products of the business, as well as the distribution of the services of the product. Profit maximisation: maximum difference between total revenue coming into business + total costs being paid out Strategic: long term, broad aims affecting all KBA’s o Strategic role: ↑sales to achieve profit maximisation

MARKETING PLAN - These activities are executed through a Marketing plan

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A marketing plan is a document that lists activities aimed achieving particular marketing outcomes in relation to goods and services. The main role of a Marketing plan is too formalise strategies needed to increase sales and guide business decisions A marketing plan should the focus on strategic (long term) and tactical (short term) goals and planning o Plan outlines strategies used bring buyer/seller together o Core of marketing is satisfying customer wants ฀repeat sales o Marketing is revenue-generating business activity

Good and/or services in different Industries GOODS ONLY - Tangible - Can be stored - Output produced before consumption - Low customer contact - Can be transported - Quality easy to examine SERVICES ONLY - Intangible - Cannot be stored - Production and consumption at same time - High customer contact - Cannot be transported - Quality difficult to examine

Interdependence with other key business functions Marketing and Operations: M  arketing must identify a market opportunity and operations must create a good or service that will appeal to that market Marketing and Finance: Finance provides marketing with funds, financial information needed for sound decision making. This includes assisting the marketing function with product design and development as well as providing assistance with the marketing plan. Marketing adopts appropriate promotion strategies in order to further aid the financial objectives of the firm. Marketing and H.R: Marketing is involved with product design and customer satisfaction (through market research). HR acquires and trains staff that will be important to the marketing area.

Production, selling, marketing approaches PRODUCTION APPROACH - Production orientated marketing began with manufacturing in the nineteenth century (1820s-1920s) - The production approach focuses on the production of the goods and service - Mass production techniques eg. Assembly line, division labour SALES APPROACH - In the 1930’s businesses needed to become more competitive in marketing their product distinctively - Sales approach emphasise selling due to increase competition o Increase in quality in order to beat competition and gain customers - Increase in advertising and train sales force (high pressure tactics) o No research = neglect consumer needs eg. iPhone MARKETING APPROACH: Stage 1 (1960’s – 1980’s) - Focus on finding out what customers want through market research then satisfy their needs - Marketing concept based on 4 principles; o Customer-oriented o Aimed at satisfying customers o Supported by integrated marketing strategies o Integrated into business plan to achieve business goals

MARKETING APPROACH: Stage 2 (1980’s – Present) - CSR: open + accountable business actions based on respect for society + environment o Reduce pollution + depletion to environment - Customer orientation: collecting information from customers + basing marketing decisions on customer wants (ensures business success) o After sale = customer satisfaction: how G/S meet + exceed customer expectations - Relationship marketing: development long-term, cost effective relationships with individual customers o Core aspect: establish customer loyalty ฀repeat sales ▪ Achieve: loyalty programs, after-sales service

Types of markets -

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Market: group of individuals, organisations or both that: o Need/want products o Have money to purchase product o Willing to spend money to obtain product o Socially + legally authorised to purchase product Resource: Individuals engaged all forms primary production: mining, agriculture, forestry, fishing o E.g. farmers purchase fertiliser Industrial: business purchase products to use in production other products/daily operations o E.g. Tip Top Bakery buy flour to make bread Intermediate: wholesalers + retailers who purchase finished products + resell them to make profit o E.g. subway is a retailer that buys goods to make sandwiches for sale Consumer: individuals who plan to use/consume the products they buy ▪ E.g. final consumer o Mass: seller mass-produce/promote/distribute one product to all buyers ▪ E.g. bricks, bolts, screws o Niche: narrowly selected target market segment (e.g. magazines, sports cars)

● Influences on marketing

Factors influencing consumer choice (PEGS) PHYSCHOLOGICAL INFLUENCES - Influences within individuals that affects their behaviours -

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Perception: process in which people interpret information to create meaning Images in advertising create positive perception Motives: reason that makes individual do something (eg. Comfort, health, fear) Advertising attempts to motivate customers to spend Beliefs and Attitudes Attitude: persons overall feeling about a product Negative attitudes = unsuccessful business

Personality and self image Personality: collection of all behaviours and characteristics that make up a person -> influences the brands people buy Self-Image: How person views themselves -> further reinforced through purchases eg. C  elebrity endorsed products Learning: ▪ Learning : changes in individual’s behaviour caused by information + experiences ▪ Customer’s experience purchasing product impacts their future purchases ● Good = brand loyalty, bad = deter from business

ECONOMIC INFLUENCES - Socioeconomic status is largely determined by level of income, high income relatively results to increased spending, spending is determined by the economic life cycle and current stability of the economy BOOM - Period growth economy =  employment/income - Business optimistic:  production + promotion to  market share - Customers optimistic: job security + income = spending - Marketing plan: encourage purchase high quality/expensive items = sales respond RECESSION - Period downturn economy:  employment/income - Business pessimistic:  production/sales = shift to lower quality - Customers pessimistic:  job security + income = price conscious - Marketing plan: stress product value, focus on maintaining existing market share GOVERNMENT INFLUENCES - Government factors are indirect influence on goods and services that consumers purchase

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Government regulation takes place through implementation of fiscal and monetary policies and through microeconomic reform Fiscal policy = taxation consumers pay eg. GST  (Goods and services tax) Monetary policy = cash rate/interest rate Microeconomic reform = government policies to promote competition eg. telecommunication

SOCIOCULTURAL INFLUENCES - Forces exerted by other people that affect individuals buying behaviour, these include; ▪ Socioeconomic status (social class) ▪ Culture/subculture ▪ Family roles ▪ Reference (peer) groups

Consumer Laws (WIPD) -

Federal/state legislation = increased protection in consumer rights (outline business responsibility) Given the significance of the marketing function, some businesses may attempt to develop practices that take advantage of consumers’ trust and good faith in the organisation and its products.

DECEPTIVE AND MISLEADING ADVERTISING Examples under Competition and Consumer Act: ● Fine print: important conditions written small print = hard read ● Before & after advertising: comparisons distorted ฀  ‘before’ worsened, ‘after’ enhanced ● Tests/surveys: unsupported claims ● Country of origin: accuracy in labelling – E.g. ‘made Australia’ vs ‘product of Australia’ ● Packaging: size/shape give misleading impressions ● Special offers: “limited time offer” but it’s always available Most common advertising techniques: ● Bait and switch: advertise few products @ reduced + enticing prices = attract customers o Redirect to higher priced item when advertised one runs out ● Dishonest advertising: deceptive words or untrue claims about product = false impression

PRICE DISCRIMINATION

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Price discrimination refers to a business giving preference to some retail stores by providing them with stock at lower prices than is offered to the competitors of those retailers. CCA prohibits if discrimination ↓competition Setting different prices for product in separate markets, possible if: ▪ Market geographically separated (E.g. city vs country prices, transport costs) ▪ Product differentiation within market (E.g. domestic vs business)

IMPLIED CONDITIONS - Consumer guarantees: comprehensive set rights + remedies for defective G/S - Implied conditions: unspoken + unwritten terms contract ฀  assumed to exist regardless o Acceptable quality: product fit for purpose, defect free, safe, durable

WARRANTIES - Warranty: promise made by business to correct any defects in goods they produce or services they deliver o Assures customer of business confidence in product quality - Refund: return of money that occurs if product is faulty,  fails to perform job supposed to or does not match the description o No obligation if customer changes mind

Ethical Influences (TPEGS) -

Ethics: moral principles that govern person’s behaviour

TRUTH, ACCURACY AND GOOD TASTE IN ADVERTISING ● Advertising – paid, non-personal message communicated through mass medium Main unethical practices: - Untruths due concealed facts: info purposely omitted from advertisement to conceal facts ( E.g. side effects) - Exaggerated claims/puffery: exaggerated praise that no reasonable person take as factual (E.g. natural bubbles in sparkling water) o Cannot be proven - Vague statements: use ambiguous words so consumer assumes intended message o E.g. Weasel words – “helps make you feel better”

PRODUCTS THAT MAY DAMAGE HEALTH

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Marketing junk food criticised –  childhood obesity o Phone apps: unregulated way advertise = unethical Federal government restrict advertising during pre-school children programs Advertising smoking banned = plain packaging, not displayed

ENGAGING IN FAIR COMPETITION - Intense competition = some businesses engage unfair marketing o Exploit customers = penalties + poor word mouth Anti-competitive conduct prohibited CCA: - Cartel conduct: businesses act together =  profit members, non-members out of business - Misuse market power: prevents large corporations from damaging competition - Exclusive dealing: One business trade another, impose restrictions on them

GOOD TASTE IN ADVERTISING - Subjective = consumer’s interpretation - Common agreement society considers acceptable o Good taste = non-racist, sexist or violent o Bad taste = racist, sexualisation of children

SUGGING - Selling under the guise of a survey: sales technique disguised as market research - Not illegal, is unethical ฀invasion privacy, deception - Long-term: people disapprove legitimate market research in fear of sugging ● Marketing Processes

Situational Analysis ● Situational Analysis: analysing position business + product relation competitors + assessing how external factors affect business SWOT ANALYSIS - SWOT analysis: identification + analysis of internal strengths weaknesses of business, and the opportunities in, and threats from, the external environment ) o Strengths = understand position to gain competitive advantage (internal  o Weakness = areas improve + learn from failure (internal  ) o Opportunities = new product/market =  profit (external) o Threats = areas to overcome to ensure success (external  )

PRODUCT LIFESTYLE - Product life cycle: stages product passes through: introduction, growth, maturity, decline - Reasons decline: o Changing consumer tastes + spending patterns o New technologies = outdate products

Market Research -

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Market research is the process of systematically collecting, recording and analysing data collected through primary (field) or secondary (desk) research concerning a specific marketing problem Minimise the risk of releasing new products

DATA COLLECTION Primary Data: facts and figures collected from original sources -

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Survey Method – gathering primary information by asking a number of people the same questions ▪ Advantages – first hand info on customer opinions ▪ Disadvantages – respondent rates are traditionally declining Observational Method - record customer behaviour through systematic observation ▪ Advantages – highly accurate ▪ Disadvantages – explain what happens not why, unethical -> invasion of privacy Experimental Method – used  to examine how people react to different products and features, evaluate the cause and effect under controlled conditions ▪ Advantages – Scientific method ▪ Disadvantages – control group does not represent all potential customers

Secondary: information already collected by individual or organisation research reports) ● Internal data: information already collected by business (E.g.  ● External data: published data from outside business (E.g.  ABS stats)

DATA ANALYSIS AND INTERPRETATION

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Process focusing data that represents average or deviations from typical patterns Tabulate =compare categories, graphing  = trends

Establishing Market Objectives -

Marketing objectives: realistic + measurable goals to be achieved through marketing plan

SMART OBJECTIVES S- specific M- measurable A- achievable R- realistic T- time GENERAL MARKET OBJECTIVES Increase Market Share: -

Market share: business’s share total industry sales for particular product MS = extensive product  range + sub-brands = broaden appeal, attract customers Small market share gains = large profits

Expand into new geographic markets: -

Allows business to increase its sales Strengthening of brand awareness Opportunity for the business

Expand the product range: -

Product mix: total range products offered by business Customer taste change = expand mix =  profits long term

Identifying Target Markets -

Target market: group present + potential customers business intends to sell its product Primary target market: market segment most marketing resources directed Secondary target market: smaller, less important market segment ▪ Identifying target market means: ▪ Better satisfy customer needs + wants ▪ Better understand customer buying behaviour ▪ Efficient use resources + promotional material ▪ Collect data effectively

MASS MARKETING APPROACH - Seller mass-produce/promote/distribute standard product all buyers

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Assume customer needs are similar = single marketing mix directed entire market

MASS SEGMENTATION APPROACH - Total market subdivided groups people share one more common characteristic o Demographic, geographic, psychographic, behavioural - Marketing plan meet needs uniform group NICHE MARKET APPROACH - Narrowly selected target market segment - Neglected by large business as not profitable

Developing Marketing Strategies -

Marketing strategies: actions undertaken business achieve marketing objectives through marketing mix Marketing mix: combination four elements marketing that make up marketing strategy, the four P’s – product, price, promotion, place

PRODUCT - Considers: product quality, image, logo, packaging, design and brand - Customers buy products that satisfies needs/wants PRICE -

Amount of money customers are prepared to offer in exchange for the product Set at, above, blow, consider production costs and demand (pricing strategies)

PROMOTION - Methods used by business top inform, persuade and remind target market about products - Advertising, personal selling, relationship marketing, sales promotion, publicity/public relations - Technology = promote through internet and phone PLACE -

Distribution channels = way get product to consumer ( e.g. supermarket, vending machine) May involve intermediaries

Implementation, Monitoring, Controlling -

Implementation: putting marketing plan into action Monitoring: observing actual progress of marketing plan o Employees report problems or opportunities arise

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Controlling: comparing planned performance against actual performance, taking corrective action when required = ensure objectives attained Key Performance Indicator (KPI) – specific criteria used to measure the efficiency and effectiveness of the business’s performance o Actual performance compared to KPI = evaluate effectiveness

DEVELOPING A FINANCIAL FORECAST -

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Financial forecast: business’s predications about future Cost estimate: market research, development of product, promotion, distribution Revenue estimate: based on consumer demand o Revenue , market share same = (price  + sales same) or (total industry sales fell) Using estimates = forecast profits

COMPARING ACTUAL AND PLANNED RESULTS KPI 1: SALES ANALYSIS ● Comparing forecast sales with actual sales ● ADV: inexpensive collect ● DISADV: don’t reveal exact profits KPI 2: MARKET SHARE ANALYSIS ● Comparing change market share over time ● Compare marketing strategies to competitors = reveal if change in sales due marketing strategies or external factors KPI 3: PROFITABILITY ANALYSIS ● Break down total marketing costs into specific marketing activities ● Comparing planned + actual performance of each activity = determine effectiveness of each activity, assist allocation marketing resources

REVISING THE MARKETING STRATAGY CHANGES IN THE MARKETING MIX ● Product modifications: upgrade product to maintain competitive advantage ● Price modifications: revise price in response changes external environment ● Promotion modifications: promotion  late stages product life cycle ● Place modifications: distribution channels as product success NEW PRODUCT DEVELOPMENT ● Continual introduction new products = ensure long term growth PRODUCT DELETION

● Eliminate some product lines ฀outdated products create unfavourable image ฀ may rub off on other products

● Marketing Strategies

Market Segmentation -

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Market Segmentation is the process of breaking down a total market into a market based on similar characteristics of a customer group o Understand customers = increase in Sales, profit and market share Demographic segmentation: population features: age, sex, income, cultural background Geographic segmentation: geographic location Psychographic segmentation: lifestyles, motives + personality Behavioural segmentation: customers’ relationship to product

PRODUCT/SERVICE DIFFERENTIATION AND POSITIONING PRODUCT DIFFERENTIATION ● Product/service differentiation: developing + promoting differences between business’s G/S and those of its competitors ● Value for money: best quality, features + performance for given price CUSTOMER SERVICE ● Customer service: responding to customer needs + problems ● Customers desire personalized + caring service =  loyalty = repeat sales ● High level pre/after sales service for expensive items ENVIRONMENTAL CONCERNS ● ‘Green’ business = environmentally sustainable practices...