HSC BUSINESS STUDIES TOPIC 3 MARKETINGROLE OF MARKETING

Marketing is defined as the total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers. Marketing is used primarily by a business as a method of enhancing its revenue streams and increasing the markets awareness of its products. STRATEGIC ROLE OF MARKETING GOODS AND SERVICES The Strategic role of marketing is primarily focused on translating the goal (profit maximisation) into a reality through developing and implementing a marketing plan that sets out a series of actions or strategies that can be used to attain greater sales.Marketing today places a strong emphasis on a customer-oriented approach. Thus in order to develop customer awareness and demand, an organised marketing campaign is necessary starting with the development of a marketing plan (lists activities aimed at achieving particular marketing outcomes in relation to a good or service).This plan is developed upon careful research and design that has the potential to increase a business market share. Market share refers to the percentage of total sales a business has compared with its competitors in a particular market. It increases the businesss sales and profitability. INTERDEPENDENCE WITH OTHER KEY BUSINESS FUNCTIONSInterdependence refers to the mutual dependence that each of the key business functions have in terms of relying on each other to perform effectively and at full capacity. Marketing & Operation: As sales of a product decline over time, operations management and marketing management have consultations to design and develop new products that can be successfully marketed. Operations affects marketing decisions by determining the capabilities and constraints in pricing, product design and development Marketing & Human Resources: HRM hires and trains employees, hence the best HR will hire the appropriate staff to successfully allow marketing to bring the product to the customer Marketing & Finance: Allocation of adequate funds to the marketing function in order to advertise, thereby generating sales. Finance function provides information to assist the marketing function with product design and development as well as developing a marketing plan PRODUCTION, SELLING, MARKETING APPROACHESThe marketing concept is a philosophy that states all sections of the business are involved in satisfying a customers needs and wants while achieving the business goals.The idea of the marketing concept evolved in the early 1960s. Prior to this, there were two different approaches to marketing: production and sales.PRODUCTION APPROACH Relies on the view that consumers base their purchasing decisions on the actual product. Mass production of a standardised product was used to increase output and decrease production costs so the products were more affordable to consumers. The wants of the customer were not considered.SELLING APPROACHIs based on the belief that a business will be successful in selling a product if it is able to promote the benefits of the product to its target market. It does not listen to the target market. Persuasive sales techniques (door-to-door salesmen) were the focus in order to convince customers to buy a particular product.MARKETING APPROACH (1960s to present) Customer is at the core of all business activities. It involves adopting a customer orientation with the belief that all actions in the business should be aimed at satisfying the needs of the customer. There was more focus on relationship marketing (the development of long-term and cost-effective relationships with individual customers). TYPES OF MARKETS RESOURCE, INDUSTRIAL, INTERMEDIATE, CONSUMER, MASS, NICHEA market is a group of individuals, organisations or both that: need or want a product have the money to purchase the product are willing to spend their money to obtain the product are socially and legally authorised to purchase the product.There are Six main types of markets:RESOURCE MARKETSThe resource market consists of those individuals or groups that are engaged in all forms of primary production, including mining, agriculture, forestry and fishing. Examples are BHP Billiton & Rio TintoINDUSTRIAL MARKETSAn industrial market includes industries and businesses that purchase products to use in the production of other products or in their daily operations. Tip Top Bakery, for example, buysflour to make bread, and Sony buys plastics and metals to produce televisions.INTERMEDIATE MARKETSThe intermediate market consists of wholesalers and retailers who purchase finished products and sell them again to make a profit. E.g. WoolworthsCONSUMER MARKETSSell directly to the individual customer such as the many shops in a large regional shopping centre.MASS MARKETSApply to goods and services that appeal to all types of consumers such as milk or bread.NICHE MARKETS Also known as a concentrated or micro market, is a narrowly selected target market segment for more specialized goods and services that only a few people are interested in or can afford such as luxury cars.

INFLUENCES ON MARKETING

FACTORS INFLUENCING CUSTOMER CHOICE PSYCHOLOGICAL, SOCIO-CULTURAL, ECONOMIC, GOVERNMENTCustomer choice (buying behaviour) refers to the decisions and actions of customers when they search for, evaluate, select and purchase goods and services.Customer choice is influenced by four main factors: Psychological: are influences within an individual that affect his or her buying behaviour. They include: Perception - Individuals act on perceptions of reality rather than reality itself thus marketing managers must create a positive perception in the mind of the customer through certain images such as being trendy and classy. Motives - A motive is the reason that makes an individual do something. Main motives (comfort, health, safety etc.). Advertising attempts to influence an individuals motives to ensure purchase Attitudes - An attitude is a persons overall feeling about the product. It generally influences the success or failure of a businesss marketing strategy. Lifestyle - Different lifestyles attract different types of products and services. Personality & Self-concept - The way we view ourselves and the way we respond to other peoples perception of us. People that do not care about luxury will not buy Rolex watches.

Socio-cultural: are forces exerted by other people and groups that affect an individuals buying behaviour. - Family and Roles: Everyone occupies different roles in within the family and groups within the wider community. For Example Men are more likely to be seen purchasing tools and cars whereas women purchase health care and laundry products. However, roles are changing and marketers are beginning to understand that as well - Reference (Peer) Groups: A group of people with whom a person closely identifies, adopting their attitudes, values and beliefs. E.g. if a friend tells someone that they had a bad experience at a certain store, then that person will most probably alter their buying behaviour. Social Class: Social class influences the type, quality and quantity of products a customer buys. People from a high socioeconomic status background, for example, are usually willing to buy products that are perceived to be prestigious. Culture & Subculture: Culture is all the learned values, beliefs, behaviours and traditions shared by a society. Culture influences buying behaviour because it infiltrates all that we do in our everyday life. It determines what people wear, eat etc.

Economic Influences: The level of economic activity fluctuates and its four distinct phases influences the marketing environment. - Boom: Period of low unemployment and high economic growth which lead to higher incomes. Customers are willing to spend and businesses attempt to increase their market share by promoting heavily. The potential marketing during this phase is usually large with more sales. - Recession: Unemployment reaches high levels and incomes falls dramatically. There is a lack of confidence in the economy and a very small level of spending. Marketing during this time should concentrate on maintaining existing market share.

Government Influences: Government policies influence business activity and customers spending habits, and will influence the marketing plan. - Interest rates are significant in determining the level of expenditure in the economy and the level of credit that consumers and business will access. - The government uses fiscal and monetary policies, microeconomic reform and age restrictions placed on the purchase of specific products to influence consumer spending. laws such as the Competition and Consumer Act 2010 (Cwlth), Sale of Goods Act 1923 (NSW) and the Fair Trading Act 1987 (NSW) influence marketing decisions.

CONSUMER LAWS DECEPTIVE AND MISLEADING ADVERTISING PRICE DISCRIMINATION IMPLIED CONDITIONS WARRANTIESRole of consumer laws -The Competition and Consumer Act 2010 (Cth) is used by the government to control business behaviour. It attempts to promote fair and competitive behaviour in the marketplace. -The Australian Competition and Consumer Commission (ACCC) has been set up by the federal government to make sure that businesses do not reduce competitiveness. -The Office of Fair Trading in NSW assists consumers and businesses with their problems.The following are some of undesirable & misleading practices that are illegal under the Competition & Consumer ActDECEPTIVE AND MISLEADING ADVERTISINGOccurs when businesses are not truthful with their advertising. This is a major problem when it causes consumers to make choices based on incorrect or misleading information. Examples of deceptive and misleading advertising under the Competition and Consumer Act 2010 (Cth) are overstating the benefits of that a product provides, special offers that do not exist and bait and switch advertising that promotes a product to be heavily discounted even though there is very few supplied (When the consumer comes into the store & expresses an interest in buying the product, the salesperson will attempt to switch the consumers interest to a more profitable item).PRICE DISCRIMINATIONIs the charging of different prices for identical products among different groups of consumers. Groups are being discriminated against by being forced to pay a higher price for a product that is identical. Under the Competition and Consumer Act 2010 (Cth), sellers must offer the same product at the same price for everyone.IMPLIED CONDITIONS Implied conditions are the unspoken and unwritten terms of a contract. These conditions are assumed to exist regardless of whether they were especially mentioned or written into a contract. The most important implied term relating to customer purchases refers to the products acceptable quality.It is a breach of the law to suggest that a product has a particular characteristic that it does not have. It is illegal, for example, to state that a motor vehicle has a certain fuel-consumption performance, when it does not.WARRANTIESA warranty is a guarantee made by a business that they will attempt to correct any defects in the goods they produce or the services with which they deliver.False or misleading statements concerning the existence, exclusion or certain conditions of the warranty are prohibited under the Competition and Consumer Act.They give consumers protection and help to ensure producers maintain quality products

ETHICAL-TRUTH, ACCURACY AND GOOD TASTE IN ADVERTISING, PRODUCTS THAT MAY DAMAGE HEALTH, ENGAGING IN FAIR COMPETITION, SUGGINGCritics of marketing argue that the industry does not always adopt ethical practices in that it lacks a strong code of professional conduct and sometimes blurs the lines between what is ethically right and wrong.The main ethical criticisms of marketing include: Creation of needs materialism (Individuals desire to constantly acquire possessions). Involves using powerful promotional strategies to persuade and manipulate customers Stereotypical images of males and females Use of sex to sell products. - Advertisers use sex appeal to suggest to consumers that the product will increase the attractiveness or charm of the user. Product placementTRUTH, ACCURACY AND GOOD TASTING IN ADVERTISING The truth can be misrepresented via a no. of ways:1. By concealed information: Eg. Coke advertised that Coke doesnt rot your teeth(but only if you brush your teeth after drinking). By concealing this fact consumers are lead into a misinterpretation of the product. 2. Exaggerated claims: Puffery refers to claims about the product that cant be proven Eg. Sparkling weater advertidsing that bubbles wer natural & bottled at the source. This was shown to be misleading for bubbles were added later in the bottling process3. Vague statements - Can misrepresent the true benefits of a productEg: In HK they sell fruit juices that help people in overcoming illness & improving productivity. As the word help is deliberately vague it is difficult to prove that it doesnt actually do what it claims to achieve4. Invasion of privacy: A recent trend on line is the tracking of web users to target advertising to them; Prresently most websites infer consent for this trackingPRODUCTS THAT MAY DAMAGE HEALTH Another Ethical issue relating to advertisingThe federal and state governments have sought to restrict the provision of various goods and services that may act as a health detriment to the consumer, without applying a ban on their saleExamples include: the sale of cigarettes and alcohol, restrictions on tobacco sponsorship and entries into casinosENGAGING IN FAIR COMPETITIONBecause the amount of competition in the marketplace can be intense, there is a temptation for some businesses to engage in unfair marketing strategies, which ultimately result in consumer exploitation (When the rights of consumers are ignored). Some common exploitative practices include advertisements that make false promises or are highly exaggerated. When consumers discover that advertisements are untrue or inaccurate, they may stop buying the product & complain to the relevant government agencies.In order to engage in fair competition, a business should develop and adopt an ethical marketing policy, that acts as a standard against which to assess the businesss ethical performance.The Australian Competition and Consumer Commission (ACCC) is a federal Govt. independent authority that promotes competition and fair trade to benefit consumers, businesses and the community. Its responsibility is to ensure that consumers and businesses comply with competition, fair trading and consumer protection lawsSUGGINGIs a sales technique involving selling under the appearance of a survey disguised as market research. This technique is not illegal, however, it does raise several ethical issues including invasion of privacy and deception.

MARKETING PROCESS

INTRODUCTIONA marketing plan gives a purpose and direction to all the businesss activities (lists activities aimed at achieving particular marketing outcomes in relation to a good or service).The steps involved in developing a marketing plan are shown below;

The Executive SummaryThe executive summary provides a brief description of current issues facing the business. It provides an overview of the goals and strategies that are to be featured in the plan. SITUATIONAL ANALYSIS SWOT, PRODUCT LIFE CYCLE The situational analysis provides the firm with an opportunity to examine its current position within the market. There are two key elements to a situational analysis.SWOTA SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis provides the information needed to complete the situational analysis and assesses the businesss position compared with its competitors. The Strengths (i.e. Do we have a skilled & motivated workforce?) & Weaknesses (i.e. Have we experienced past failures?) of the business are internal forces as they operate inside the business and are controlled by it Opportunities (i.e. What other business can we acquire to expand the organisation?) and Threats (i.e. Are current competitors taking over our market share?) are the external forces as they operate outside the business and cannot be controlled by the business.

PRODUCT LIFECYCLEThe Product life cycle consists of the stages a product passes through. There are four phases, or stages, to the business life cycle:ESTABLISHMENTWhen the new product is first launched. Profits are limited because of the lack of revenue, while costs, which include fixed expenses (Rent & Insurance), are high. The business is developing a loyal customer base. Low pricing policies will be used to establish quick entry into the market ( This Pricing strategy is known as penetration pricing).GROWTHProfitability will grow as sales expand, and costs will increase during this stage. Competitors will compete for market share and marketing strategies will need to change. Businesses may choose to lower their price to deal with the increased threat of competitors in the market. It is also expected that promotional costs will increase during this stage in a products life cycle.MATURITYThe maturity stage is the period of the product life cycle where sales will begin to slow.The business is faced with a steady income stream with limited prospects for growth. Marketing strategies are modified to ensure profit continues. Business attempts to differentiate themselves by price differentiation, after-sales service, or making it easier for consumers to access the product.

POST MATURITY Final phase of the business life cycle; Increased competition and changing consumer preferences may create the need for change. During this phase the long-term future of the business will be dictated by one of 4 paths:\O Decline-competition and changes in the business environment. Business begins to decline and lose market shareO Renewal- products revitalised, new promotional campaigns, brand altered. New strategies may be developed to attract a new audience.O Steady state- no change, profits stay the sameO Cessation- the business is shut down.

MARKET RESEARCHMarket research is the process of systematically collecting, recording and analysing information concerning a specific marketing problem.To obtain reliable and accurate information; marketers follow a three-step approach:Step 1: Determining information needs. The problem is clearly stated to determine what needs to be measured and the issues involved.Step 2: Data Collection (Primary & Secondary Sources)Marketing data refers to the information, usually expressed as facts and figures, relevant to the defined marketing problem.Primary Data are the facts and figures collected from original sources for the purpose of the specific research problem. This data can be collected by the business itself but it is very expensive and time consuming which is why it is usually outsourced. Three types are: Survey: personal interviews, questionnaires and telemarketing, Observation: personal and mechanical look at research and surveillance footage such as asking questions. Experimental: field tests to evaluate cause and effect. E.g. showing a filmSecondary Data is information that has already been collected by some other person or organisation. The two types of secondary data are: Internal data: information that has been collected from internal sources such as statistics, feedback and reports, External data: published data from other sources such as magazines, internet and the ABS.

Step 3: Data analysis and interpretationStatistical interpretation analysis is the process of focusing on the data that represents average, typical or deviations from typical patterns. Businesses will analyse and interpret the collected data so management can gain a better understanding of the impact of the data on the operations of the business, and determine the course of action. ESTABLISHING MARKET OBJECTIVESMarketing objectives are the realistic and measurable goals to be achieved through the marketing plan.Businesses generally adopt a SMART approach to setting objectives; that is an objective needs to be: S = specific the objective needs to be clear M = measurable the business needs to find ways to measure success A = achievable the business needs to have the resources R = realistic the objective should be reasonable T = time there should be a time frameThree common marketing objectives include:INCREASING MARKET SHARE Market share refers to the percentage of total sales a business has compared with its competitors in a particular marketIncreasing market share is an important marketing objective for businesses that dominate the market, because small market gains often translate into large profitsEXPANDING THE PRODUCT RANGEProduct mix is the total range of products offered by a business. Businesses are usually keen to expand their product mix since:1. It will increase profits in the long term2. The same product mix will not be effective in the long term due to the changing tastes & preferences of consumersMAXIMISING CUSTOMER SERVICECustomer service means responding to the needs and problems of the customer & is perhaps the most important objective.High levels of customer service will result in improved customer satisfaction and a positive reaction from customers towards the products they purchase. This establishes a sound customer base with the possibility of repeat purchases. IDENTIFYING TARGET MARKETSThe target market is a group of customers with similar characteristics (age, income, lifestyle etc.) that a business aims its product at. Sometimes a business may be able to identify a primary and a secondary target market.A Primary target market is the market segment at which most of the marketing resources are directed.A Secondary target market is usually a smaller and less important market segment.A business identifies and selects a target market so it can direct its marketing strategies to that group of customers.In identifying and selecting a consumer target market a Business can choose one of three approaches:Mass Marketing ApproachA mass marketing approach seeks a large range of customers such that the seller mass-produces, mass-distributes and mass-promotes one product to all buyers.Market SegmentationMarket segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. Segmenting a market enables a business to design a marketing plan that meets the needs of a relatively uniform group.Niche Market ApproachA Niche Market is a narrowly selected target market segment whereby a good or service is provided in order to satisfy these customers.

DEVELOPING MARKETING STRATEGIESMarketing strategies are actions undertaken to achieve the businesss marketing objectives through the marketing mix.Marketing mix refers to the combination of the four elements of marketing, the four Ps product, price, promotion and place/distribution that make up the marketing strategy.

Product- The product is a combination of: quality, design, name, warranty, packaging and exclusive features. Customers buy products that satisfy their needs as well as provide them with intangible benefits. Price- The right price needs to be chosen to prevent the product from not selling at all if the price is too high or receiving lower turnover as well as a cheap image if the price is too low. Promotion- The promotion strategy is the method that is to be used by the business to inform, persuade and remind customers about its products. Place- Deals with the distribution of the good or service and consists of two parts which are: transportation and the number of intermediaries (i.e. Wholesaler or retailer) involved. Once the four Ps have been established, the business must then determine the emphasis it will place on each of the variables that will largely be dictated by the present stage in the product life cycle.

IMPLEMENTATION, MONITORING & CONTROLLING DEVELOPING A FINANCIAL FORECAST; COMPARING ACTUAL AND PLANNED RESULTS, REVISING THE MARKETING STRATEGYImplementation is the process of putting the marketing strategies into operation. Implementation of the marketing plan involves establishing lines of communication, motivating the employees and making them familiar with the marketing objectives and strategies.Once the marketing plan has been implemented, it must be carefully monitored and controlled. Monitoring means checking and observing the actual progress of the marketing plan. The information collected during the monitoring stage is used to control the plan.Controlling involves the comparison of planned performance against actual performance and taking corrective action to make sure the objectives are achieved. The controlling process requires the business to outline what is to be accomplished by establishing a performance standard (KPIs) which is a forecast level of performance against which actual performance can be compared.Three Key Performance Indicators used to measure the success of the marketing plan are:1. Sales Analysis - is the comparing of actual sales with forecast sales to determine the effectiveness of the marketing strategy. The main strength of sales analysis is that sales figures are relatively inexpensive to collect and process. Their main weakness, however, is that data for sales revenue do not reveal the exact profit level2. Market Share Analysis/ratios By undertaking a market share analysis, a business is able to evaluate its marketing strategies as compared with those of its competitors. This evaluation can reveal whether changes in total sales, either increases or decreases, have resulted from the businesss marketing strategies or have been due to some uncontrollable external factor.3. Marketing Profitability Analysis - is a method in which the business breaks down the total marketing costs into specific marketing activities (i.e. advertising, transport). By comparing the costs of specific marketing activities with the results achieved, a marketing manager can assess the effectiveness of each activity.Revising the Marketing StrategyOnce the results of the sales, market share and profitability analysis have been calculated, the marketing plan can be revised (modified). The marketing plan can be revised by either:Changes in The Marketing MixAs the marketing plan is operating in a dynamic business environment, the marketing mix will constantly need to be revised; Changes could include the following:Product Modifications (Continual Upgrading Competitive advantage)Price Modifications (In response to changes in the external business environment)Promotion Modifications (Corresponding to the life cycle of the product)Place Modifications (As a products success increases, the distribution channels will need to be expanded to cater for the growing market)New Product DevelopmentNew Products must be developed for a business to maintain a competitive advantage although new product design is a lengthy & expensive process in which many businesses dont have the finance, knowledge or time for this.Product DeletionIs the elimination of some lines of products, in order to maintain an effective product mix.Developing a Financial ForecastA business must develop a financial forecast that details the revenues and expenditures for each strategy when evaluating alternatives. Cost benefit analysis is a helpful tool used to itemise fixed and variable costs and draw up a profit forecast showing profit and return. Developing a financial forecast requires: Cost estimates: How much the marketing plan is expected to cost, which can be divided into four major components: market research; product development; promotion, including advertising and packaging; and distribution. Revenue estimates: How much Revenue (sales) is the marketing plan expected to generate?

MARKETING STRATEGIES

MARKET SEGMENTATION, PRODUCT/SERVICE DIFFERENTIATION AND POSITIONINGMarketing segmentation involves dividing the total market into segments based upon one or more common characteristics. A business selects one of these segments to become the target market. The ultimate aim of market segmentation is to increase sales, market share and profits by better understanding & responding to the desires of the different target customers.Methods of Market SegmentationDemographic SegmentationIs the process of dividing the total market according to particular features of a population, including the size of the population, age, sex, income, cultural background and family size.Age and gender are two of the most widely used demographic variables for segmentation purposes. The marketing of sparkling and still beverages is typical of this. Coca-Cola, for example, targets 15- to 35-year-old males with the energy drink MotherGeographic SegmentationIs the process of dividing 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. Climate also has an impact on segmenting markets for businesses selling heating and cooling systems as well as clothing.Psychographic SegmentationIs the process of dividing the total market according to personality characteristics, motives, opinions, socioeconomic group and lifestyles. When segmenting a market according to physiographic variables, a business would research a consumers brand preferences, favourite music, radio and television programs, reading habits, personal interests and hobbies, and values.Behavioural SegmentationIs the process of dividing the total market according to the customers relationship to the product. This includes customers knowledge of, attitude towards, use of, or benefits sought from the product.Identifying what the customers want from the product the benefits sought is an important aspect of behavioural segmentation. By determining the benefits desired, marketers can design products that directly satisfy these desires.PRODUCT/SERVICE DIFFERENTIATION AND POSITIONINGProduct Differentiation is the process whereby a business distinguishes the attributes and features of a product from those of its competitors products. The purpose of this is to create a competitive advantage for the product.Four important points of differentiation are customer service, environmental concerns, convenience, and social and ethical issues.Customer ServiceConsumers expect a high level of customer service. Pre-sales and after-sales service are very important to consumers purchasing expensive items such as cars or electrical appliances.Environmental ConcernsPeople are increasingly concerned with the physical environment, hence a business may seek to adopt a green philosophy and produce environmentally friendly products in order to increase their salesConvenienceBecause todays consumers are busy, they will often select products that are convenient to use, thus a business can attempt to differentiate their product with regards to this aspect.Social and Ethical IssuesEthical consumerism provides businesses with opportunities to satisfy the demands of this growing number of consumers through producing products that are not harmful to the environment, animals and society. In response to the dislike of genetically modified (GM) foods by some consumers, various producers are labelling their products as GM-free. The Fair Trade movement is gaining in influence with consumers increasingly prepared to pay more for guarantees of fair labour practices and sustainable, organic products. The cosmetic industry is delivering more natural products that are not tested on animalsPRODUCT/SERVICE POSITIONINGRefers to the technique in which marketers try to create an image or identity for a product compared with the image of competing products. Price, quality, perceived benefits and competition are key methods of positioning a product in the minds of customers.

PRODUCTS GOODS AND/OR SERVICES BRANDING PACKAGINGProducts are goods or services that can be offered in an exchange for the purpose of satisfying a need or want. A product offers a consumer tangible and intangible benefits. Tangible benefits refer to the physical attributes of the product such as design style and colour. Intangible benefits refer to non-physical benefits a consumer associates with purchasing a product such as customer care help desks, warranties and maintenance checks.Most products are combinations of tangible and intangible benefits the total product concept.PRODUCT BRANDINGInvolves the development of names and symbols in the form of logos and trademarks for a product or service. A brand symbol or logo is a graphic representation that identifies a business or product to thereby help differentiate it from competitors.BRANDING StrategiesBrands are usually classified according to who owns them.Manufacturers brand or national brands are those owned by a manufacturer (i.e. Sunbeam appliances). These brands are recognised across the country, are widely available and offer reliability with constant quality.A private or house brand is one that is owned by a retailer or wholesaler. These products are often cheaper since the retailer or wholesaler can buy at lower costs. E.g. Myer sells products from its own label.Generic brands are products with no brand name at all. Carrying only the name of the product and in plain packaging; these generic brands have been available in supermarkets since the mid-1970s (E.g. No frills, Home Brand)PACKAGINGPackaging involves the development of a container and the graphic design for a product. Packaging protects and secures the product, but it has also become a specialized tactic for attracting the attention of new customers, making the product distinct and encouraging repeat buyers.LABELLINGIs the presentation of information on a product or its package. Marketers can use labels to promote other products or to encourage proper use of products and therefore greater consumer satisfaction with products.

PRICE INCLUDING PRICING METHODS COST, MARKET, COMPETITION-BASED PRICING STRATEGIES SKIMMING, PENETRATION, LOSS LEADERS, PRICE POINTS PRICE AND QUALITY INTERACTIONPrice is the amount of money a business charges for the purchase of its products. A brand that is well-established and highly regarded may sell for a higher price.The price of a product needs to be set so production costs are covered in the long term, but are at a level where the product will continue to be bought. There are three main pricing methods: cost-based, market-based and competition-based. These pricing methods provide a basic price for each product. COST BASED PRICINGIs a pricing method derived from the cost of producing or purchasing a product and then adding a mark-up {is a predetermined amount (usually expressed as a percentage) that a business adds to the cost of a product to determine its basic price}(Selling Price) Very Simple & straightforward pricing policy & is used mainly by wholesalers and retailersTwo major drawbacks: Difficulty in accurately determining an appropriate mark-up percentage. If the mark-up is too low, the business is losing profit they could have easily 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 PRICINGMarket-based pricing is a method of setting prices according to the interaction between the levels of supply and demand. When demand for a product is greater than its supply, there will be a shortage in the market. This will force up the price of the good. The prices of products, therefore, are constantly changing due to fluctuations in the levels of supply and demand, meaning this method can be difficult to apply.COMPETITION-BASED PRICINGCompetition-based pricing is where the price covers costs (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 similar products. A business can select a price that is below, equal to or above that of the competitors.Once the basic price has been set using the preferred pricing method, pricing strategies are then used to adjust the basic price, depending on the marketing objectives and conditions within the marketplace.The four main pricing strategies include: Price Skimming - When a business charges the highest possible price for the product during the introduction stage of its life cycle. This is used, especially for innovative products. The objective is to recover the costs of research and development as quickly as possible, before competition enters the market. Price Penetration - When the business charges the lowest price possible for a product/service to achieve a larger market share. The objective is to sell a large number of products during the early stages of the life cycle and thus discourage competitors from entering the market Loss leader - Product sold at or below cost price. Customers may enter the store to buy these products but leave the store buying other products as well, sold at regular prices so the business covers the loss. This is commonly used by Woolworths. Price Points - Where a business sets different prices for similar products. The products are differentiated by their features. An example is when a retailer has models clustered around particular prices: two around $25 and two around $55. Consumers who want to spend at max $30 can look around the $25 price point.PRICE AND QUALITY INTERACTION The price-quality relationship is such that higher prices indicate high quality & status. This pricing strategy is referred to as Prestige or premium pricing and is designed to encourage status-conscious consumers to buy the product. This is evident in clothes, expensive technology, Gemstones and wine.

PROMOTION ELEMENTS OF THE PROMOTION MIX ADVERTISING, PERSONAL SELLING AND RELATIONSHIP MARKETING, SALES PROMOTIONS, PUBLICITY AND PUBLIC RELATIONS THE COMMUNICATION PROCESS OPINION LEADERS, WORD OF MOUTHPromotion describes the methods used by a business to inform, persuade and remind a target market about its products. Its objective is to create an image of the product that will generate sales.The Promotion mix refers to the various promotion methods a business uses in its promotional campaign. It consists of: Advertising Advertising is a paid, non-personal message communicated through a mass medium. The purpose of advertising is to inform, persuade and remind. It includes radio, television and the internet. Personal Selling - Involves the activities of a sales representative directed to a customer in an attempt to make a sale. Although personal selling is an expensive promotional method, businesses are willing to spend the money on it because it offers three unique advantages.- The message can be modified to suit the individual customers circumstances.-The individualised assistance to a customer can create a long-term relationship resulting in repeat sales.- The sales consultant can provide after-sales customer service in relation to product features, installation, warranties and servicing. Relationship Marketing - Relationship marketing is the development of long-term, cost effective and strong relationships with individual customers. The ultimate aim is to create customer loyalty by meeting the needs of customers on an individual basis thereby creating reasons to keep customers coming back. E.g. In 2007, the Woolworths Everyday Rewards Scheme offers rewards to those loyal customers who spend specified amounts or make repeat purchases. Sales Promotion - is the use of activities or materials as direct inducements to customers. Sales promotion techniques are used primarily to increase the effectiveness of other promotion activities, especially advertising. Examples of special promotions include: Coupons (offer discounts on particular items at the time of purchase) Premium (Gift offered in return for using a product) Refunds Samples Point-of-purchase displays Publicity and Public Relations Publicity is any free news story about a businesss products. It is free and its timing is not controlled by the business. Publicity raises awareness of a product & highlights the businesss favourable features.Public Relations are those activities aimed at creating and maintaining favourable relations between a business and its customers. PR exposes a business or idea to an audience by using often unpaid third parties as outlets (i.e. Working with the media). PR is often more effective than paid advertising. There are 4 main ways Public Relations activities can assist a business in achieving increased sales: Promoting a positive image Effective communication of messages Issues monitoring Crisis managementTHE COMMUNICATION PROCESSMarketing managers can use a variety of channels (methods) to deliver a message including print and electronic media advertising.Often customers may be more willing to purchase a product if the message is communicated via a respected and trusted channel, such as an opinion leader, or by word of mouth.Opinion LeaderBusiness use individuals in the community that are highly respected such as celebrities, sportspeople or experts in their field such as dentists. They have knowledge and expertise and will create a link between the leaders image and reputation.Word of MouthInvolves consumers relating to others during conversation with regards to their reaction to the use of a product, including the degree to which they were satisfied with the product. When they communicate their experiences to others, this can promote the business if they had positive experiences (Friends recommendations - powerful influence). Businesses are increasingly using social media platforms such as Facebook and Twitter to engage in a form of word-of-mouth communication.

PLACE/DISTRIBUTION DISTRIBUTION CHANNELS CHANNEL CHOICE INTENSIVE, SELECTIVE, EXCLUSIVE PHYSICAL DISTRIBUTION ISSUES TRANSPORT, WAREHOUSING, INVENTORYPlace or distribution are activities that make the products available to customers when and where they want to purchase them.Channels of distribution or marketing channels are the routes taken to get the product from the factory to the customer. This process usually involves a number of intermediaries (***business that purchases the final product and then takes on the responsibility of selling this product to the consumer), such as the wholesaler, retailers.The four most commonly used channels of distribution are:1. Product to Customer: The good or service is produced by an individual/organisation and is then passed directly onto the consumer. There are no intermediaries. Virtually all services i.e. tax advice use this method Advantage: Allows the producer to maintain control over all areas of the product and provides the producer with a direct point of contact with consumers.2. Producer to Retailer to Customer: A retailer is an intermediary who buys from producers and resells to customers. This channel is often used for bulky or perishable products such as furniture or fruit. Advantage: Allows the producer to concentrate on manufacturing. There is greater distribution and access to the good.3. Producer to Wholesaler to Retailer to Customer: This is the most common method used for the distribution of consumer goods. A wholesaler is an intermediary who buys in bulk, from the producer, then resells in smaller quantities to retailers who pass it onto consumers. Advantages: Allows the producer to hold lesser amounts of idle stock. Marketing and sales tend to be the responsibility of the retailer so less costs.4. Producer to Agent to Wholesaler to Retailer to Customer: An agent distributes products to wholesalers but never owns the product. Agents are paid a commission by the producer. Used for inexpensive & frequently used products.CHANNEL CHOICEThe choice of distribution channel will influence the type of customers the product attracts, & the ease with which the consumer is able to access the product.There are 3 distribution channel categories:1. Intensive distribution: The product is readily available to a wide selection of stores or locations. Used for convenience items like bread.2. Selective distribution: Involves the use of a limited number of stores to distribute a product. This method allows a business to control where its product is sold thereby ensuring that the product will reach its target market. Clothing, furniture and electrical appliances are often distributed using this method.3. Exclusive distribution: A form of distribution where there is a restriction on the number of products and/ or availability of the product in a large geographic area. (Product is available at a very limited no. of outlets). This method of distribution is commonly used for exclusive, expensive products (i.e. Watches and luxury cars).

PHYSICAL DISTRIBUTION ISSUES TRANSPORT, WAREHOUSING, INVENTORYPhysical distribution is all those activities concerned with the efficient movement of the products from the producer to the customer.TransportRefers to the process of moving goods from one location to another. Transportation can be expensive and the type of good needs to be considered. The four most common methods of transportation are rail, road, sea and air.WarehousingIs a set of activities involved in receiving, storing and dispatching goods. A warehouse acts as a central organising point for the efficient delivery of products. Some goods can only be warehoused for a very limited time before losing use (i.e. foods)InventoryA business must ensure that it has sufficient stock to satisfy demand. They also must not overstock otherwise clearance sales are needed, which reduces profits. To avoid this, businesses may implement an inventory control system (Maintains quantities & varieties of products appropriate for the target market)

PEOPLE, PROCESSES AND PHYSICAL EVIDENCE

Three more Ps have been added (to the original 4 making up the 7Ps of marketing) people, processes and physical evidence, which apply especially to intangible products (services) such as tourism, entertainment and hospitality.PeopleThe people element refers to the quality of interaction between the customer and those within the business who will deliver the service. Consumers base their perceptions and make judgements about a business based on how the employees treat them. Consequently, all businesses should develop a culture of customer focus and put it into practice.ProcessesRefers to the flow of activities that a business will follow in its delivery of a service. Without a tangible product, the processes must be highly efficient to achieve customer satisfaction. Any business that has inefficient processes will lose customers and damage its reputation. E.g. a restaurant should not keep customers waiting for hours between courses.

Physical EvidenceRefers to the physical appearance of the product across every aspect of its presentation to the consumer, with specific regards to the size, shape, colour, material and label of the packaging of the product. Physical evidence can also refer to the people within a business and how they appear to the client. A business should provide high-quality physical evidence to create an image of value and excellence.

E-MARKETINGTechnological mediums such as the internet have provided businesses with an opportunity to interact with customers, thereby serving as an area of personalised marketing, sales growth and brand awareness.E-marketing (electronic marketing) is the practice of using the internet to perform marketing activities. (It allows a business with online operations to reach a global audience)The main technologies presently available for e-marketing include:Web PagesA web page is a display of detailed information regarding the business (location of the business premises, available products & online ordering facilities) that is accessible on the web through a web browser and is therefore considered a powerful marketing tool.Podcasts ***Podcasting involves the distribution of digital audio or video files over the internet. Businesss main use of podcasts is for marketing and advertising purposes. SMSShort message service (SMS) is the means by which text messages can be sent between mobile phones. Text messages can be used to alert regular customers of any special deals on offer and notify suppliers of the arrival of a goods shipment.BlogsA blog is an online journal that can be added to by readers. Many businesses set up external blogs, which allow for communication between the business and its existing and potential customers. An external blog can have the following advantages for a business:1. It allows for the establishment of a reputation for expertise, by providing detailed information on products and services.2. New ideas for products can be put to the public to gain feedback.3. A blog is informal, so it can present a human face to the public that builds trust with its customers.Web 2.0Refers to the transformation of the World Wide Web into an interactive platform for information sharing. The development of social networking sites has made it easier for individuals and businesses to create and share many different types of content on the web.Social Media AdvertisingSocial media advertising (SMA) is a form of online advertising, using social media platforms such as Facebook, YouTube, and Twitter to deliver targeted commercial messages to potential customers. It enables businesses to constantly build relationships with their customers.Although, SMA raises concerns including issues of privacy, accuracy, honesty and consumer trust.

GLOBAL MARKETING GLOBAL BRANDING STANDARDISATION CUSTOMISATION GLOBAL PRICING COMPETITIVE POSITIONINGMany businesses operate in countries beyond their domestic operations. This provides the business with an opportunity to increase sales, further their brand awareness and establish markets in new countries. Therefore a businesss marketing plan must be modified and adapted to suit overseas markets.GLOBAL BRANDINGGlobal branding is the worldwide use of a name, term, symbol or logo to identify the sellers products, thus increasing brand awareness. It can be cost effective because one ad can be used in a no. of locations & the successful brand name can be linked to new products being introduced into the market. Powerful global brands include Google, Microsoft and Coca-Cola.STANDARDISATIONA standardised approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are the same the world over. Examples of standardised products Electrical equipment, mobile phones etc.This strategy has cost savings for businesses in that production runs can be longer, thereby achieving economies of scale.CUSTOMISATIONA customised approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are different between countries. Adopting this philosophy requires the marketing plan to be customised according to the economic, political and sociocultural characteristics of the target country. For example, McDonalds serves beer in France and Germany, sake in Japan and noodles in the Philippines. GLOBAL PRICINGGlobal pricing is how businesses coordinate their pricing policy across different countries. A businesss global pricing strategy is a major determinant of profits. A Global business can implement one of three global pricing strategies.Customised PricingCustomised pricing occurs whenever consumers in different countries are charged different prices for the same product. In determining the price for an overseas market, many global businesses practise the cost-plus method because of the added expense associated with exporting.Market-customised pricingMarket-customised pricing sets prices according to local market conditions. This strategy allows for even more flexibility than the customised pricing strategy. However fluctuations in the exchange rate can change the prices charged across countries and is a major risk for global businesses.Standard worldwide priceStandardised 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.COMPETITIVE POSITIONINGRelates to how a business will differentiate its products. It focuses on how a business will carve out a place in the competitive marketing environment. Differentiation is the key to positioning as once customers know what the business is offering is different to others, it is relatively easy to build market share.