HSC Business Studies

Topic One: Marketing

Role of Marketing

Strategic role of marketing goods and services

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Marketing plays a central strategic role of bringing together the products of a

business and the customers for those products
Marketing helps a business achieve its goals by satisfying the needs and wants of
present and potential customers
Strategic marketing process involves: Price, Place, Promotion, Product
A business must understand customer wants to ensure development of the right
products for the right target market
Aim of marketing is to achieve profit maximisation (maximum difference between
total revenue coming into business and total cost being paid out)
A Business will develop and implement a marketing plan that sets out a series of
actions or strategies that can be used to attain greater sales.

Interdependence with other key business functions

Marketing and Operations

Operations is core business function and has close link with marketing.
Products have a product life cycle
Towards end of product life cycle operations and marketing will work together
to design and develop new products which can be marketed successfully.

Marketing and HR

Marketing is large contributor to success of any business

Marketing function of a business conducts essential market research and analysis
and decides on all the issues related to promoting the products. It also covers
strategies of the business for pricing and sales.
In order to be able to do these things there needs to be close ties between
marketing and HR management.

Marketing relies on HR to hire train and develop employees who work in the field
of selling the products of the business. It is the responsibility of well-trained
marketing employees to connect the customers successfully with products.

Marketing and Finance

Finance is responsible for providing bus. With financial information. They will
provide information and work with marketing in developing the right products and
provide marketing budgets.

Production, selling, marketing approaches

Production Approach

1850 1920s
Mass market and low cost
production
Shape customers to suit
product

Selling Approach
1930s 1950s
Use of persuasive selling
techniques
Also does not attempt to
understand customers needs and
wants

Marketing Approach

1960s Present
Customer focus
Customer orientation
Relationship Marketing (brand
loyalty)
Shape product to suit customers

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

Resource Market

Industrial Market

Intermediate Market

Consumer Market

Mass

Niche

Resource Market

Individuals / groups that engage in forms of primary production

E.g. Farming, mining, fishing
Businesses can sell equipment / machinery to this market

Industrial Market

Businesses that purchase raw material to produce other products

E.g. Bakery buys flour to make bread

Intermediate Market

Wholesalers and retailers who purchase products to sell them for a profit
E.g. Subway buys bread to make and sell sandwiches

Consumer Market

Consists of individuals / members of a household who plan to consume products

that they buy

Mass Market

Sellers mass produce and mass promote one product to a large number of
consumers

Niche Market

Narrow and selected target market segment

Influences on Marketing

Factors influencing customer choice Psychological, sociocultural, economic,

government

Psychological

Influences within an individual that affect his her buying behaviour

Includes perception, motives, attitudes personality + self image/

Perception:
The process through which people select, organise + interpret info. to create
meaning.
Businesses must be aware of varying perceptions to create a postive view of their
product
Created through advertising
Motives:
Reasons that encourage consumer decision making
Main motives include: Comfort, health, safety, ambition, taste and fear.
Advertising attempts to manipulate motives
Attitudes:
A persons overall feeling about an object or activity
Personality + self image
Personality is collection of all behaviours + characteristics
Self image is how a person views themselves or wants to be viewed.

Sociocultural

Forces exerted by other people that affect individuals buying behaviour

Social Class
Factors used to determine a persons social class: Education, occupation + income
Influences type, quantity and quality of purchases
Perception plays a big role
High income may purchase luxury cars to symbolise their status
Culture
Culture is learned behaviours, values, beliefs + traditions.
Determines what people eat + do.
Family + Roles

Roles within families determine buying behaviour e.g. mum buying shopping, dad
buying chain saw
Peers
A person or group whom a person identifies with + adopts attitudes, values +
beliefs

Economic Influences
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Boom and Recession

Boom:
Period of low unemployment + increased incomes
Customers optimistic about buying
Therefore businesses will employ more marketing strategies +
intensity of promotion
Recession:
Unemployment high
Incomes low
Lack of consumer confidence
Low spending, value as main motive
Businesses will focus on promoting the usefulness + value of
product
Survival of fittest for businesses.

Government Influences
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Use policies that directly and indirectly influence business activity + consumer
spending habits
Laws such as:
o Competition + Consumer Act 2010
o Sales of Goods Act 1923 (NSW)
o Fair Trading Act 1987
(NSW)
Influence marketing decisions

Consumer Laws
- Deceptive and misleading advertising
- Price discrimination

Implied Conditions
Warranties

Deceptive + misleading advertising

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Businesses must be truthful in advertising and special offers.

Businesses cannot advertise something they cannot prove
Consumers make decisions based off information, if businesses provide false
information, consumers are making misinformed decisions.

Examples:

o 9/10 mums say....

o Bait and switch
o Fine print
o Before and after photos
Competition and Consumer Act makes false advertising illegal.

Price Discrimination

Setting of different prices for a product in separate markets.

Difference in prices could be a result of:
Market geographically separated
Product differentiation within market
Competition and Consumer Act prohibits price discrimination because it could
substantially reduce competition.

Implied Conditions

The Trade Practices Act implies the following conditions for any consumer
purchase:
o Merchantable Quality Products must meet a basic level of standard and
performance.
Takes into account price and description
Products must be free from defects
Products should be fit for purpose, product should do what is said to do.

Warranties
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Designed to offer a degree of protection to the consumer. If the good is faulty or

service is not carried out with due care or skill.
Businesses have an important obligation to warranty

Assures customers have confidence

o Refunds/ Exchanges
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Businesses are required to offer a refund if:

Product is faulty
Does not match description
Fail to do job
Business has no obligation for change of mind
Signs no refunds are meaningless.

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

Ethical Criticisms of Marketing

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Main ethical criticisms of marketing include:

Creation of need materialism
o Businesses use sophisticated and powerful
promotion strategies to persuade and manipulate
customers to buy what they want them to buy
Stereotypical images of genders
Sex to sell
o Overuse of sexual themes + connotations to sell
products
o Unrealistic images are unattainable
Product placement
o In movie man eats snickers

Truth Accuracy and good taste in advertising

Advertising is paid non-personal message communicated through a mass-medium

o False or Misleading Advertising
False advertising is not only unethical but also illegal

Use of terms such as special, low fat or light can be interpreted in many
different ways.
Main unethical marketing practices include untruths due to concealed facts,
exaggerated claims, vague statements and invasion of privacy
o Good taste in advertising
Good Taste is subjective
Within society, there is recognition of the growing role that media is playing in
childrens lives. Therefore marketers are targeting children more then ever.

o ASB
Role of ASB is to regulate advertising
They do this by having the ASB + Advertising Claims Board.

Products that may damage your health

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Junk Food is often advertised as being part of a balanced diet

Federal GVT. Sets restrictions on advertising such things during programs for
preschool children.q

Sugging

Selling under the guise of a survey

Selling techniques as disguised by market research
Unethical
Occurs usually one the telephone or online.

Marketing Process

Situational Analysis SWOT, Product lifecycle

Situational Analysis

Crucial step of the marketing plan is that management has a precise understanding
of the businesses current position.
This is done by a SWOT analysis

SWOT
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A SWOT analysis involves the identification and analysis of the internal strengths
and weaknesses of the business and the opportunities in and threats from, the
external environmental

Product Lifecycle

The product lifecycle consists of the stages a product passes through: Introduction,
growth, maturity and decline.

o Introduction:
Business attempts to increase awareness and build a market share
for their new product.
Product brand + reliability established
Price is often lowered
Promotion directed at early buyers and to educate consumers.
o Growth
Brand acceptance and higher market share
Product quality needs to be maintained
Price per unit is maintained as the demand from consumers
increases
Promotion seeks a wider audience
o Maturity
Sales reach a plateau
Price quality may need to be adjusted to maintain consumer
demand
o Decline
Product sales being decreasing

Market Research

Market research is the process of systemically collecting, recording and analysing

information concerning a specific marketing problem.
1. Determine information needs:
- Problem clearly stated to determine what information is needed
2. Collecting from primary and secondary sources
- Collecting own data + from other sources
3. Analysing and interpreting data
- Information is useless without it being analysed and determined.

Data
Facts and figures relevant to the
marketing problem

Secondary

Primary

Identifying Target Markets

The target market is the section or segment of the whole market that the business
is targeting its product at
Market research is used to help identify the target market
Research should identify the potential customers + their needs and wants.
Market segmentation is how the business divides the total market into smaller
sections with slightly different demands.

Example: Different cars made for different people. Families 4wd single Ferrari
etc.
Different products are targeted at each different market segment
Consumers can be grouped together by businesses based on:
1. Demographics: Gender, age
2. Sociocutural: Cultural background, religion
3. Geographics: Location, urban + rural
4. Psychographics: Lifestyle, personality, non rational decision making

Developing Marketing Strategies

The purpose of marketing strategies is to meet the goals set out in the marketing
plan.
The marketing mix is part of the marketing strategies:
Price: The correct price must be set that matches with the target
market
Product: Quality, Packaging and labelling, design, brand name and
guarantee.
Promotion: Inform, persuade + remind customers. Advertising and
personal selling
Place: Getting product to customer.
Marketing startegies must have a direct link to the marketing plan and the two
should work together to achieve the overall goals of the business

Implementation, monitoring and controlling developing a financial forecast;

comparing actual and planned results, revising the marketing strategy

Implementation, monitoring and controlling

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Implementation puts marketing plan into action

This requires clear communication of goals + strategies from marketing to all
functions / employees of a business
Business must monitor the performance of the marketing campaign
Managers must analyse + evaluate performance of the marketing campaign and
take action if required

Financial forecasts can be compared to actual performance as a measure of

assessing the success of a marketing strategy
Other measures can include changes to:
Market share
Sales
Feedback
Business needs to reap reward higher than the cost and time involved with
marketing
Business needs to control and set standards for measuring and assessing the value
added to the business from marketing
Marketing must value add to the business more than it costs otherwise it is a profit
reductant

marketing strategies
market segmentation,
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)
product/service differentiation how businesses separate themselves from the
competition

 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
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
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 cant 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.