HSC Business Studies - Marketing Notes PDF

HSC Business Studies - Topic 1 - Marketing 1. Role of Marketing 1.1 - Strategic role of marketing goods and services I am confident in my understanding of this syllabus point Marketing - A total system of interacting activities designed to plan, price, promote and...

HSC Business Studies - Topic 1 - Marketing 1. Role of Marketing 1.1 - Strategic role of marketing goods and services I am confident in my understanding of this syllabus point Marketing - A total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers. This is where the business builds and develops a relationship with the customer. Strategic role - decisions made for the long term that will impact all key business functions. The strategic role of marketing (long term decisions that will also impact O, F, HR): Increase market share - ○ OUTLINE: Effective marketing increases a business’s share of the total industry sales for a particular product. ○ EXPLAIN: When market shares increase, the businesses are keeping their competitors from taking customers from them. Improve customer satisfaction and brand loyalty - ○ OUTLINE: A core objective for service-based firms; by providing improved offerings and a high level of service (responsive, attentive, friendly), a business will improve customer satisfaction. ○ EXPLAIN: This will build brand reputation, secure repeat sales and convert potential customers into actual customers. Increase sales revenue - ○ OUTLINE: Effective use of the 4Ps that reach the intended target market → increased sales revenue ○ EXPLAIN: When this is achieved with an efficient use of the marketing budget, then profit maximisation can be achieved. All of the above also should positively impact Profit maximisation in Finance Case study - The strategic role of Barbie was to maximise profits by marketing the movie towards a large target market. 1.2 - Interdependence with other key business functions I am confident in my understanding of this syllabus point  HSC Business Studies - Topic 1 - Marketing Interdependence - each KBF relies on each other to achieve the business’s goals. Importance for marketing? Marketing must be performed in coordination with other business functions. Finance Operations Human Resources Marketing M rely on F to set the M rely on O to produce a M rely on HR to acquire relies on budget allowance for quality product that suitably experienced marketing activities matches the brand mage marketing employees so and for this product to be that they can perform their delivered in time for the tasks to the required promised promotion standard of the brand Marketing F rely on M to generate O rely on M to produce HR rely on M to continue are relied high sales revenue that quality design briefs so generating high sales on by can convert into profit that production reflects revenue so that employees the branding don't need to be laid off due to cost cutting Case study The marketing team at The marketing team at The marketing team at Warner Brothers and Warner Brothers and Warner Brothers and Mattel Films relied on Mattel Films relied on Mattel Films relied on HR finance to provide a $150 Operations to source to recruit a cast that marketing budget for the sufficient pink paint and reflected the Barbie brand, Barbie movie. In turn they to build the Barbie and were able to draw in were able to produce the Dreamhouse sets in line consumers, through hiring most successful marketing with the brand image. In Margot Robbie and Ryan campaign of 2023 and return, Operations relied Gosling as the lead cast. generate $1.36b in global on Marketing to decide In turn, HR relied on sales for finance to use the best shade of pink and marketing to decide the towards growing the other product placements business further. to ensure they could build the quality set required. 1.3 - Production, selling, marketing approaches I understood this syllabus point in class but do need to revise it Production based approach - (1850s-1920s) Beginning of the industrial revolution/mass production Production through improvements in efficiency Little regard for consumer needs Marketing = taking orders and delivering products ‘If we make it, they will buy it’ Selling approach - (1920s-1960s)  HSC Business Studies - Topic 1 - Marketing During the depression, there was an oversupply of goods = lots of competition = hard sell approach Persuasive advertising was paramount and this was done after the goods were made Still used today in certain industries such as insurance and car sales Marketing approach - (1960s-1970s) Driven to meet customer needs and wants prior to product development Spurred new and diverse product development More market segmentation Encourage more market research Wider understanding of the 4Ps (1980s onwards) More recently, the marketing approach has evolved to showcase Corporate Social Responsibility such as environmental promises in order to build a stronger customer base Focus on relationship marketing to develop customer loyalty. 1.4 - Types of markets I understood this syllabus point in class but do need to revise it A market is a group of individuals, organisations or both that: Need or want a product Have the money to buy the product Are willing to spend their money on the product Are socially and legally authorised to purchase the product Type of market Characteristics Examples of businesses Marketing needed Resource Markets in which the BHP Billiton Trade within the production and sale of Rio Tinto resource market sells to raw materials occur. Poultry farmers industrial markets with Product This includes mining, Potato farmer whom they would have agriculture, forestry and Various chemical long standing fishing. compounds relationships. Consumer does not see advertising Industrial Markets in which good Flour mill Buy from resource are traded that go into Tip Top Bakery markets the production of other Wineries Sell to intermediate Place products Inghams Chicken market and would try to McCains fries expand number of wholesalers sold to  HSC Business Studies - Topic 1 - Marketing Intermediate Businesses that buy Amazon Buy from industrial in goods for the purpose of Costco bulk reselling them to others Appliances Sell to consumer (wholesalers and markets retailers retailers) Would try to expand number of retailers that the product ends up in Consumer Businesses who buy McDonalds Products sold direct to goods and services from Toys R US customer the producer or reseller Kmart Effective use of the 7Ps and sell them directly to Woolworths to entice customers. the customer for Coles consumption Ikea Mass Large general market Minimal marketing to where a business consumer needed due to produces and sells a essential products large amount of one particular product Niche Small, segmented Greater marketing markets for more needed to reach specific specialised goods and target market and build services. repeat customers.  HSC Business Studies - Topic 1 - Marketing 2. Influences on marketing Before marketing managers can create effective marketing strategies to achieve their goals, they need to be aware of the external environment in which they operate. There are multiple external factors that will either positively or negatively (or both) influence what decisions the marketing department can make. 2.1 - Factors influencing consumer choice I understood this syllabus point in class but do need to revise it Psychological - are the personal characteristics of an individual that influence their buying behaviour. ○ Perception - People see and hear the same things differently. More detail: some people may perceive products as luxury or classy, others may perceive them as inferior. This is why creating a positive perception of a business’s products is essential for building a strong brand image. ○ Motives - Customers reasons for buying or not buying a product. More detail: this can include their comfort, nostalgia, ambitions, health, safety or personal growth, which can influence the products they purchase. This is significant as consumer motives can cause certain customers to choose specific products over others. ○ Attitudes - A person’s overall feeling about an object or activity. More detail: negative attitudes can often cause a business to change their marketing strategies. ○ Personality - The collection of characteristics that make up a person. More detail: some consumers may strive to boost their self image, or use celebrities to appeal to personality types. It is essential that businesses produce products that allow consumers to express themselves and their personalities through the products they buy. ○ Marketing use these psychological characteristics to their advantage by: - Building a strong brand image by creating a positive perception of their products - Recognising which customers are more likely to purchase certain goods over others; and their motives, and targeting their products towards these people - Focusing on market strategies that build positive attitudes about their brand - Marketing products to consumers that allow them to express themselves, staying on top of trends etc.  HSC Business Studies - Topic 1 - Marketing Case study: consumers are influenced by psychological factors such as perceptions, motives, attitudes and personality. Businesses can harness this influence and target their marketing approach towards it Socio-cultural - are forces exerted by other people and groups that affect an individuals buying behaviour. ○ Family - Different family members are willing to spend their income on different products and marketers will take advantage of these. More detail: women may purchase more home decor and cleaning products than men, and the males may purchase tools and machines/cars. Tweens may purchase or influence their parents to purchase social trends such as skincare and makeup products. How do marketers take advantage of this? Marketers will market these products specifically to certain groups of people, and often mark up these prices which they know will be purchased. ○ Peer group - A customer’s buying behaviour may change to match the rest of the group’s beliefs and attitudes. More detail: For example, if a close friend tells you of a bad experience at a particular shop, you will probably change your buying behaviour based on this information How do marketers take advantage of this? They will place their products or trending products in a prime position in order to attract customers, and will often place some kind of promotion like buy one get one free or % off to attract customers. ○ Social class- A consumer’s position within the class structure determines the quality and quantity of the products purchased. More detail: customers from a higher class may purchase more luxury items and services Consumers from a lower class may purchase essential items, and goods from lower brands/ discount stores. How do marketers take advantage of this? Luxury brands often play security and ensure consumers line up outside of the store to maintain their exclusive and luxury brand image. This is also done by reducing the number of products they have on display, and using luxury colours. In contrast, if a brand is targeting the lower class, often more is more, where as with the higher class, less is more.  HSC Business Studies - Topic 1 - Marketing ○ 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. More detail: culture can include: Cultural background (if this is done bad = cancelled) Gym/diet culture Pop culture (e.g. swifties) How do marketers take advantage of this? Businesses will have to accurately represent these cultures in order to sustain a good brand image, and market appropriately. If businesses market towards a culture appropriately, including pop culture (swifties), they are able to maximise their sales revenue and profits by setting their goods and a high price, knowing their target market will buy them anyway (concert merch). Case study: when making the decision to purchase a barbie, consumers are influenced by the gender roles which are learnt in their families. Mattel has created barbies in many non-traditional female occupations such as CEO and astronaut, in order to inspire young girls and break stereotypical gender roles in society. As a result, this kind of diversity has diversified and expanded their target market, essentially generating higher sales revenue and profits. Economic - forces that influence a business’s capacity to compete and a customer’s willingness and ability to spend. What happens to consumer choice? How does marketing respond? Boom Willing to spend more on items Potential to expand the 4Ps is large because they feel more secure about Attempt to increase market share  HSC Business Studies - Topic 1 - Marketing their income Will do this by expanding product Will spend more on luxury items and range exclusive brands Will increase prices because consumers can afford it Promotion will increase Bust Willing to spend less on items because Potential to expand the 4Ps is small (recessio they feel less secure about their Attempt to maintain market share n) income Will do this by altering product range Will spend more on luxury/essential Will decrease prices because items. consumers can not afford it Will be more price conscious Promotion will decrease Will spend more on functional items and discount brands Case study: when making the decision to purchase a product, consumers are influenced by the economic situation at the time, whether it's a boom or a bust. Due to the delay of the tokyo olympics due to Covid-19 recession, Nike lost their main source of exposure and brand sponsorship. As a result, they had to change their marketing strategy to target consumers during lockdown, and promote ‘at-home’ physical activity to combat a potential loss of revenue. Subsequently, consumers were exposed to advertisements that Government - The government influence consumer purchasing behaviour in two ways: ○ Through implementing economic policies such as JobKeeper and JobSeeker wage subsidy payments as well as Dine and Discover NSW vouchers ○ Through making certain marketing tactics unlawful through legislation and regulations. Case study: when making a decision to purchase a product, consumers are influenced by the government, and the policies and regulations that guild business marketing and activities. Businesses can often be affected negatively, as the government can make certain marketing tactics unlawful. For example, the government regulates the selling and marketing of cigarettes and tobacco, including their product design and promotion, in order to reduce the number of cigarette users in Australia. This includes using graphic images of diseases and health problems on the front of cigarette packages, as well as abolishing promotion of cigarettes online through television advertisements, and in stores, to deter consumers from purchasing these dangerous products. As a result, tobacco sales have decreased due to the government's regulations.  HSC Business Studies - Topic 1 - Marketing 2.2 - Consumer law I understood this syllabus point in class but do need to revise it Intro points - the need for consumer law With the introduction and advancement of technology, online retailers and innovative marketing practices, the need to regulate business behaviour has increased. The relationship between the consumer and the seller is considered to be weighted in favour of the seller (the business). This is due to financial power and clever marketing practices adopted by businesses. At times, this power imbalance can be exploited, whether it be deliberate or unintentional. Therefore, consumer laws have been enacted by the federal government to regulate marketing practices and penalise businesses who do not comply. Marketing managers must ensure they are aware of any changes to consumer laws and make changes to their processes to maintain compliance and to maintain their brand reputation. The name of the law The marketing practices undertaken by Australian businesses are regulated under The Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth). ○ The ACL was introduced in 2011 as a single, national (Federal) consumer law. This means the law applies in the same way to all Australian businesses, whether they are physical stores or online. ○ The ACL aims to to protect consumers against unconscionable conduct such as misrepresenting the contents of products or their place of production, and misleading and deceptive advertising Enforcement of the law The ACL is enforced by the Australian Competition and Consumer Commission (the ACCC) and they will investigate breaches of the ACL. This is important because: it deters similar behaviour from the business or others in the industry, which otherwise may not be enforced. Penalties for breaches may include: ○ A court imposed penalty of up to $50million per breach ○ An infringement notice (On the spot fine) for misleading claims. A private company may be fined approximately $18 780 and a publicly listed company may be fined up to $187, 800 ○ Public warning notices to warn consumers of suspected illegal activity A range of penalties is important because: to deter repetitive breaches of laws from the  HSC Business Studies - Topic 1 - Marketing business, and so they can reflect the degree of the breach. It also demonstrates to consumers that action will be taken. 2.2.1 - Deceptive and misleading advertising Outline: When a business makes any representation of their product (either direct or implied), the business must ensure that the representation is not untrue or false and is not likely to mislead the type of consumers at which the advertisement is targeted. Examples of misleading and deceptive conduct include dishonest advertising, bait and switch and false country of origin claims. Explain and example Type Definition Case study example Impact on the business Dishonest Advertisements must In 2020, Telstra breached As a result, telstra was advertising: not use words that are ACL, through admitting to forced to focus on CSR deceptive or claim that unconscionable conduct in (corporate social a product has some the sale of post-paid phone responsibility), ensuring specific quality when it plans to 108 Indigenous steps were taken to waive does not. Such actions consumers, who could not debts, and refund convey a false afford, and did not consumers wrongfully impression of the exact understand the terms and charged, as well as reduce nature of the product. conditions. By exploiting the risk of this happening cultural barriers and in the future. essentially misrepresenting Consequently, this had a the products as free, a $50 negative impact on profit million penalty was for the business, and had imposed on telstra under the possible long term Australian Consumer Law, negative implications on and enforced by the ACCC. their brand image and relationship with indigenous communities. Bait and This involves Aldi have been accused in Had the impact to damage switch advertising products the past of using ‘bait and Aldi’s brand reputation that are not available, or switch’ techniques, to trick and image, as consumers only available in very consumers into purchasing who fall for this deceptive limited quantities, at from their store. This advertising may not wish reduced prices to attract includes promotion of cheap to chop at Aldi in the customers. When the ‘special buy’ products in future. advertised products store, while only carrying a quickly run out, small stock, to bring dozens  HSC Business Studies - Topic 1 - Marketing customers are directed of consumers into Aldi, (or switched) to higher when the item is out of priced items stock. This in turn entices consumers to purchase other products from Aldi that they didn't intend on buying, as they are already in the store. Fine print When important In 2019, flightcentre was As a result, the company conditions are written issued two infringement had to pay $250 000 in in a small-sized print. notices over advertisements damages, and waive the This information must that ran during christmas original conditions to the not contradict the and easter promoting a $250 thousands who had overall message of the voucher if you spent $1500 purchased the package advertisement. on a holiday package with a and attached voucher. travel agency. What it only This in turn had a said in the small fine print negative impact on their that to use this, the customer brand image, and their use had to purchase another of dishonest advertising. holiday package work $5000. Greenwashi When businesses make H&M has been accused of The brand was ng / environmental claims greenwashing, where consequently sued for environmen about products, they despite their claims of their misleading tal claims must be able to sustainability, it has been sustainability claims, substantiate them. found that 96% of their which in turn cost the claims have not held up, business excess money, making them the worst and damaged their brand fashion brand offenders. reputation of being ‘green’ or ‘sustainable’, possibly deterring consumers from purchasing from the business again. Country of It is illegal to make origin false or misleading claims about the country of origin of goods. Country of origin claims can tell consumers where a product was grown,  HSC Business Studies - Topic 1 - Marketing produced or made, for example  HSC Business Studies - Topic 1 - Marketing 2.2.2 - Price discrimination Outline: price discrimination is when businesses charge customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. Explain: As per the Competition and Consumer Act 2010 (Cth), this practise is: Lawful when differences exist in the cost of getting the product to different markets (city vs rural fuel), or the product is slightly different (e.g. seating tiers at sports or concerts) Unlawful where is could substantially reduce competition or when unjust or prejudicial treatment of different groups of people occur ○ The unlawful use has increased in complexity with the digital age whereby companies use algorithms to determine how much individual consumers are willing to pay. Examples: ○ Ticketek charging $379.90 for A reserve tickets to the Sydney Era’s tour and $79.90 for G reserve is lawful as the experience from the different reserves is different. ○ If a business chargers a woman more than a man (for the exact same product) this is unlawful ○ Shell petrol station charging higher prices for petrol in a rural area rather than an urban area is lawful as the price difference covers the transportation ○ Consumers buying airline tickets several months in advance typically pay less than consumers purchasing at the last minute. This is lawful because of the convenience to the airlines when people book earlier ○ Uber fares charging higher prices in peak/late night hours or when they know a user’s phone battery is draining (Uber knows when its users’ phone batteries are running low because the app switches into power-saving mode). This is unlawful because they are taking advantage of someone's phone dying and them being desperate Case study: Price discrimination is when a business charges customers different prices for the same product or service, based on what the seller believes the consumer will agree to. Tinder has used price discrimination before, when using people's personal data to set personalised prices. This resulted in a consumer advocacy group named Choice making a formal complaint to the ACCC asking the regulator to investigate tinder for potential breaches of the ACL. While in the fine print of the privacy policy tinder does state that they use personal information to deliver offers and discounts, the complaint argued that most people wouldn't interpret this as tinder setting personalised prices. 2.2.3 - Implied conditions Outline: Implied conditions (now called consumer guarantees) 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.  HSC Business Studies - Topic 1 - Marketing Explain: Under the ACL, goods must be: ○ Of acceptable quality ○ Fit for the intended purpose ○ Match the description in the advertising or from the salesperson ○ Not carry any hidden debts or charges In addition, services must be: ○ provided with acceptable care and skill or technical knowledge ○ give the results that you and the business had agreed to delivered within a reasonable time More Explanation: Businesses must comply with consumer guarantees. If they do not provide goods and services of acceptable quality, ○ Consumers can claim a remedy from the retailer if the products do not meet any one or more of the consumer guarantees. ○ The retailer cannot refuse to help you by sending you to the manufacturer or importer. ○ Remedies may include a refund, repair or exchange depending on the reason for returning the product. Case study: 2024, The federal court ordered Mazda to pay an $11.5m fine in penalties for engaging in misleading and deceptive conduct, and making false or misleading representations to nine consumers about their consumer guarantee rights. The nine consumers, who had all experienced recurring and serious faults with their Mazda vehicle within 2 years of purchase, requested refunds or a replacement car, of which the claims were ignored or rejected by the company. Instead, Mazda told the customers that the only remedy would be to repair the cars, despite several failed attempts from other mechanics. Mazda ended up having to pay around $82 000 to some of the consumers, for misrepresenting their implied rights and failing to act on the requests for refunds or replacements. 2.2.4 - Warranties Outline: A warranty is a promise made by a business that they will correct any defects in the goods that they produce or in the services that they deliver; that is, it is a promise to repair or replace faulty products. ○ These are designed to offer a degree of protection to the customer if the goods are faulty or if the service is not carried out with due care and skill. Explain ○ Warranties are often used as an aggressive marketing strategy if it includes superior options to those of a competitive product.  HSC Business Studies - Topic 1 - Marketing ○ However, even if a product is ‘out of warranty’, a consumer can still claim a remedy if their consumer guarantees have been denied. This means that if a product, which is implied to work for a number of years, including a car or phone, has significant faults, they should receive compensation or replacement for the product. ○ Businesses often take advantage of the fact that most consumers are unaware of their ACL rights, which ensure their consumer guarantees rights, and persuade customers with extended warranties, which they technically already have for free. ○ Most extended warranties have what the business work calls a ‘bathtub curve’, meaning that the product sold usually fails within the original warranty period, or outside of the warranty period, covering the product during the period in which it is least likely to fail. The Australian Consumer Law aims to protect consumers from unconscionable conduct from businesses, due to the imbalance of power between the two. This covers warranties, which are promises from businesses that they will repair or replace any broken or faulty products during a specific time period, despite consumer guarantee laws, which already provide this right for free. Sony (Europe) is a prime example of misrepresenting consumer guarantees with warranties, where they denied the replacement or refund of faulty games after they had been installed, or 14 days after purchase. This was in direct violation of consumer guarantees, which imply the game should work for over 2 weeks. Consequently, the ACCC conducted an investigation into the illegal conduct, and fined the company $3.5m for making false and misleading representations on its website and in dealings with Australian consumers about their ACL rights. 2.3 - Ethics I understood this syllabus point in class but do need to revise it Intro points - why are ethics an influence on marketing? Ethics consider what is morally right or wrong. They are personal values and perceptions that vary among consumers. Ethical standards are more difficult to define than legal standards and there is often a fine line between the two. Some ethical criticisms include the use of stereotyping, use of sex to sell products, product placement and the invasion of privacy (increasing due to using technology in marketing).  HSC Business Studies - Topic 1 - Marketing Businesses don’t have to abide by ethical standards (they are not the law), however, if they do not, ○ consumers may: boycott the business, stop purchasing or report it ○ Leading to: may lead to bad press for the business, damaging their brand image, or the ad may be taken down (cases are usually dismissed however). This could also lead to a loss in profit for the company and an inability to gain more market share The name of the ethical guidelines Whilst illegal conduct is prohibited under the ACL, unethical conduct is not. In 2012, the Australian Association of National Advertisers (AANA) developed a national Code of Ethics for marketers in relation to advertising called The Code The Code contains specific sections that relate to advertising to children, food and beverages, environmental claims and wagering (betting) However, The Code is limited in effectiveness as the control of advertising material is largely self-regulated, (businesses control their own activities). So businesses do not legally have to comply. This is because money, or profit, usually corrupts the motives of businesses. Enforcement of the guidelines Whilst illegal conduct is punishable by the ACCC and/or the Federal Court, unethical conduct is not. In order to minimise some harm caused by unethical advertising, Ads Standards is a complaints service where consumers can voice their concerns about the content of ads on Australian media and promote responsible advertising. However, AS has no authority to enforce The Code. If the claim is upheld, the business must remove or amend their ad. Example of a case: ○ Upheld: ○ Dismissed: 2.3.1 - Truth, Accuracy and Good Taste in advertising Outline: The truth and accuracy surrounding a product’s usefulness or benefits can be exaggerated in advertising. Ethical businesses should ensure their advertising is truthful and accurate as they can be held morally (not legally) responsible for misleading the public. The use of terms such as ‘special’, ‘lite’, ‘low fat’, ‘once in a lifetime’ can be interpreted in many different ways. Explain: The main unethical practices relating to truths are:  HSC Business Studies - Topic 1 - Marketing ○ Untruths due to concealed facts – pieces of information purposely omitted from an advertisement ○ Exaggerated claims – praise or flattery that no reasonable person were accept as factual (‘puff piece’) ○ Vague statements – ‘helps fight against’, ‘helps to make you feel’ Outline: ‘Good taste’ in advertising is highly subjective. Therefore, marketers must be aware of many modern sensitivities. Some consumers may regard an advertisement as offensive while others might view it as inoffensive. However, some businesses will try to push the boundaries on what is acceptable, despite the negative consequences to their brand image that may follow. Explain the influence: If consumers deem advertising or packaging to be untruthful, inaccurate or created in poor taste then: ○ Consumers will feel cheated and may stop buying from the brand, or if it is serious enough, may start a boycott ○ Consumers may decide to complain to the Ads Standards where if upheld, the Ad will be removed ○ Negative publicity can cause the business long term damage to their brand image and reputation. Case study: It is essential for businesses to respect boundaries on what is considered acceptable advertising, being constantly aware of modern sensitivities. A key example of where these boundaries have been pushed is the 2022 campaign by Balenciaga, where children were posed in leather outfits and surrounded by BDSM like objects and child abuse papers. This led to the boycott of the brand, where celebrities, including Kim Kardasian, took to social media regarding the sexualisation of children during the Ads. this resulted in a complete boycott of the brand, and significant damage to their brand image and reputation which has lasted ever since. 2.3.2 - Products that damage health Outline: Whilst advertising of cigarettes is illegal under the ACL, that of alcohol and junk food only has minor regulations. E.g. no advertising during pre-school programming. Profit-hungry food advertisers exploit the loopholes that exist in already weak codes and use sneaky tactics so they can bombard children with junk food advertising. Explain: ○ Junk food companies use bright colours and cartoon characters to attract children. Many alcohol companies sponsor large sporting events (can you see an issue?). ○ The marketing of junk food is an area presently being criticised by nutritionists and health advocates, especially as childhood obesity rates approach epidemic proportions ○ The use of self-regulated Codes do little to reduce children’s exposure to persuasive marketing techniques. This has been proliferated with social media marketing as businesses  HSC Business Studies - Topic 1 - Marketing find new ways to advertise to children, raising ethical questions. ○ Advertising of vapes with ‘candy’ like flavours is also increasing. Case study: The sale of Prime (US) has been banned in Australia, due to the caffeine amount being double the maximum of energy drinks in Australia. However, a new adaptation of the drink, now called Prime Hydration, where drinks full of sugar and chemicals are disguised as ‘functional drinks’, and targeted specifically towards teenage boys. Logan Paul and KSI, the owners of Prime, have used their social media platform including youtube to create a one sided relationship, monetising on the peer pressure of these teenagers. They have since been successful in… 2.3.3 - Engaging in fair competition Outline: due to intense competition between businesses, the temptation to engage in unfair and illegal marketing can result in consumer exploitation. As a result, the ACCC has identified a number of areas in which businesses should be aware of so that they avoid anti-competitive behaviour: 1. Anti-competitive price fixing 2. Cartels - where large businesses act together and fix prices 3. Exclusive dealing - where supply is limited to certain customers 4. Predatory pricing - where businesses cut prices and incur losses to undermine a competitor 2.3.4 - SUGGING Outline: Selling Under the Guise of a Survey is a sales technique disguised as market research. Sugging is not illegal but it raises issues due to privacy and deception concerns. ­.g. when you are approached in a shopping centre and asked to complete a survey only to be E offered the actual or similar good or service at a special price. Sugging has long term implications for the legitimate market research companies as there is a declining trend in people wanting to answer phone, online and personal surveys as they are suspicious of sugging. 3. Marketing Process Think of ‘marketing processes’ as the ‘marketing plan’. Or the steps a Marketing team needs to undertake in order to sell their goods and services to the intended audience. Strategic marketing planning provides a mechanism for businesses to gain a clear picture of where  HSC Business Studies - Topic 1 - Marketing the business is at present, and where it could be in the future. Why is it important to gain a clear picture of where the business: is in the present? could be in the future? 3.1 - Situational Analysis I understood this syllabus point in class but do need to revise it Strategic marketing planning allows businesses to get a clear understanding of where they are in the present, and where they could be in the future. 3.1.1 - SWOT analysis Outline: 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 environment. Describe: (add in some prompting questions to each box) Helpful Harmful Internal Strengths Weaknesses Think about staff, What is the business good at? Are managers and employees innovation, Is the business’s product competent? resources, popular? Are computer systems management, Are customers loyal? obsolete?  HSC Business Studies - Topic 1 - Marketing planning, product Are employees skilled and Has the business experienced motivated? any past failures? Is the business in a good Has the business updated its financial position? facilities to keep up with Has the business planned for competitors? the present and future? External Opportunities Threats Think about Is the economy performing What trends have been evident economical, well (boom or bust)? in the market? social, What will new technology Are there any new laws technological, bring to the business? regulating what the business legal, global Are interest rates low? can and can't do? Can the business merge or Are there new competitors? acquire any other businesses Are current competitors taking to expand and grow? over the business’s market Are there any possible new share? markets? Explain: A SWOT Analysis provides the information needed to complete the situational analysis and gives a clear indication of the business’s position compared with its competitors. Benefits of completing a SWOT analysis Consequences of not completing a SWOT analysis Clear understanding of strengths which you Losing market share can capitalise on Inefficient use of resources developing Can highlight areas to improve strategies that may not work Understanding the external market the Not understanding the external market the business operates in business operates in Recognition of the Competition and what Falling behind the competition their strategies are Reduced chance of gaining profit Assists in developing and modifying the maximisation marketing plan Not gaining the best from your strengths and Greatest chance for profit maximisation minimising your weaknesses Competition, understanding, share, reduced, falling, gaining, strategies, market, resources, minimising, developing, inefficient, maximisation, improve, recognition, strengths, modifying, capitalise Case Study - Maccas Helpful Harmful  HSC Business Studies - Topic 1 - Marketing Internal Strengths Weaknesses Think about Maccas is good at fast paced Strengths of employees and staff, production of low cost food, managers tend to vary innovation, including burgers and fries dependent on the location resources, The business’s product and Poor management can lead to management, efficiency is very popular → new less efficiency, and possibly planning, promotions keeping them damage to brand/ store product relevant reputation Customers are loyal Quality of products tend to vary, Employees tend to be well not always as advertised trained and efficient → not Facilities are sometimes old, but always happy changing with competitors in The business is in a good order to keep up. financial position The business plans for the present and future, by planning promotions and predicting sales revenue. Menu diversity caters for a large target audience External Opportunities Threats Think about Due to its low cost and efficient Uber eats and delivery services economical, nature, maccas tends to perform have slowed down production, social, well during both Booms and as they tend to tack priority technological, Busts Shifts towards healthier food legal, global New technology can bring preferences may cause them to efficiency in rostering, training, lose sales and loyal customers production Labour laws and minimum wage Business can continue to expand can influence the business’s by opening new stores, and roster and practices. increasing product range Competitors, such as hungry Investing in sustainable jacks forces Maccas to stay practices could draw in relevant and innovate, otherwise environmentally conscious they could fall behind consumers 3.1.2 - Product lifecycle Outline: The product life cycle consists of the stages a product passes through: introduction, growth, maturity and decline. Individual products have limited life cycles in the market; some longer than others. Products decline due to: ○ Poor product design ○ Poor marketing towards target audience  HSC Business Studies - Topic 1 - Marketing ○ Consumer taste change ○ Advancements in technology ○ The business focuses on new products and eliminates old ones Describe: The life cycle of a product is measured by its level of sales (growing, plateauing, declining). Explain: A business must be able to launch, modify and delete products in response to product lifecycle. If they do not, they may use their marketing budget inefficiently and not make the desired sales. Marketers should apply different marketing strategies (4Ps) depending on the stage of the cycle Definition Challenges for marketing (EXPLAIN) Product example (DESCRIBE) Introduction Product is new so brand and reliability must be The apple view This is the initial stage established Maccas of the product where Price is often lower than competitors – could cheeseburger sales begin cause cash flow problems Promotion is directed at early buyers. Increase customer awareness Distribution is selective (tried in a few stores first) Growth Product quality is maintained and improved The apple TV The product experiences Price per unit of production is maintained as Bigmac, angus rapid sales as it builds demand is strong burger its reputation Promotion now seeks a wider audience Distribution channels are increased (product now sold in more stores) Maturity Product features and packaging may need an Macbook Grimace shake,  HSC Business Studies - Topic 1 - Marketing Sales have reached their update to differentiate from new competitors new pies and peak and begin to Price may need to decrease to maintain market promotions plateau. The rate of share increase is slow Promotion continues to suggest that the product is still the best Distribution channels have settled (no longer added to new stores) Decline Product is maintained (rejuvenated with Ipod Sales decline and adjustments) OR discontinued from sale McFeast marketing may choose Prices are reduced to sell out remaining stock to discontinue the Promotion is discontinued product Distribution is reduced 3.2 - Market Research I understood this syllabus point in class but do need to revise it Outline: Market research is the process of systematically collecting, recording and interpreting information concerning a marketing issue (one of the 4Ps). Market research can include primary research (collected by the business) and secondary research (collected by external sources) Describe: Market research questions may include: ○ Type of good or service desired ○ The amount of goods and services likely to be purchased ○ Spending habits of consumers ○ Where consumers expect to purchase the product ○ The price consumers are willing to spend for the good/service Primary research Secondary research Description The business gathers its own data from The business uses information from customers external sources. Examples surveys, postcodes at point of sale, purchase data from third party market extended interviews with customers, research companies, use ABS data, focus groups, observations, mystery census information, council records shoppers Advantages Specific data can be collected Research is less expensive to Discuss to look at and solve a particular conduct problem Less time consuming for the  HSC Business Studies - Topic 1 - Marketing Provides up-to-date information business relevant to the business Research can offer a broader Data is exclusive to them, and scope can allow the business to gain a Access to historical data can competitive advantage help the business identify patterns Disadvantage Time consuming to conduct this Can be less relevant for the s research, especially during business → data may be old, Discuss introduction may not exactly fit what the Can be very expensive for a business needs/its nature business Quality and reliability of the Potential bias can limit the data can vary validity of the results The research may provide A smaller sample size limited depth compared to (compared to secondary primary research. research) can limit its effectiveness Explain: The purpose of a business conducting market research is to help them: DETERMINE what information needs to be collected in order to avoid inefficiencies COLLECT information from primary and secondary sources to ensure the marketing is based on reality RECORD information to refer to in strategic decision making INTERPRET information to avoid biased assumptions of the target market. If this is done successfully then the market research will improve the efficiency of the marketing budget and lead to marketing strategies that accurately reflect and respond to the target market, thus, reducing the risk of a failed marketing plan. Case study: 3.3 - Establishing market objectives I understood this syllabus point in class but do need to revise it Outline: Marketing objectives are the realistic and measurable goals to be achieved through the marketing plan. These need to be established before the business starts spending its marketing budget on the 4PS.  HSC Business Studies - Topic 1 - Marketing ○ Why? If goals are not realistic then: resources will be wasted and the business will not even try to achieve them If goals are not measurable then: they will be unable to track progress and understand where they can improve or what they can work on to achieve the goal/s. 3.3.1 - Increase market share Outline: Market share refers to the business’s share of the total industry sales for a particular product. It is usually expressed as a percentage of the total market. Describe: Market share can be increased by: ○ Using a number of brand names - Mattel’s brands (Barbie, Hot Wheels, Polly Pocket, Uno, Fisher Price and more) Our Brand Portfolio | Mattel, Inc. resulting in one of the world’s strongest portfolios of children and family entertainment. ○ Improve promotional strategies to increase brand awareness - Immersive experiences such as Barbie themed photo booths, collabs with partner brands on merchandise, Margot Robbie wearing designer versions of famous Barbie outfits, teaser campaigns ○ Expand into a new geographic market - E.g. Zara and H&M opening in Australia Explain: The purpose of attempting to increase the market share of a business is to increase the business’s sales and profitability. Even small market gains often translate into large profits. Achieving this objective allows the business to become stronger and more dominant in the marketplace. Case study: mattel 3.3.2 - Expanding the product mix Outline: Businesses aim to expand the total range of products offered in their brands. Describe: Some products only have a limited lifespan (refer to 3.1 - Product lifecycle) and so the same product mix will not remain effective for long because customers’ tastes and preferences change over time, and demand for a particular product may decrease. Explain: Expanding the product mix correctly, should lead to increased profits in the long term. In addition, providing a wider range of products may allow the business to target new markets in order to attract consumers who have not previously purchased its brands. New promotional strategies may also assist reaching this new market. Case study: 3.3.3 - Maximising customer service  HSC Business Studies - Topic 1 - Marketing Outline: Customer service how well a business meets and exceeds the expectations of customers in all aspects of its operations. It is core objective for service-based businesses. Describe: Customer service can be improved by: ○ Listening to customers and asking their advice ○ Adapting customer service as a culture rather than a task ○ Anticipating market trends and being ready for customer demand ○ Maintaining long term customer relationships Explain: ○ Research has shown that one dissatisfied customer usually tells many others. Such ‘word-of mouth’ marketing, especially with the rise of social media, has the potential to significantly impact a business’s sales and reputation. ○ By providing a high level of service (responsive, attentive, friendly), a business will improve customer satisfaction > improved brand reputation > repeat sales > increased revenue and profit. Case study: 3.4 - Identifying target markets This has not been covered in class yet Outline: A group of present and potential customers to which a business intends to sell its products. The customers within the target market share similar characteristics such as age, income, lifestyle, location and spending patterns ○ Primary target market = Core group to focus the 4Ps on ○ Secondary target market = Smaller groups that may perceive the product as useful but are not directly targeted The target market is often identified through effective market research Describe: Mass marketing Market segmentation Niche marketing approach approach approach Method Range of customers large Medium Smallest (out of 3)  HSC Business Studies - Topic 1 - Marketing Marketing Same product Product differentiation Specialised product assumptions (colours, sizes), same Pricing tiers Customers will pay price, sample place. Promotion must match higher (exploited) Promotion the target market Promotion has to (advertising) match target market (even stronger) Place → exclusive Impact on marketing Once off bulk If one segment fails, Marketing budget strategies advertising cost, more business can delete it, increased time efficient (most and reallocate Time spent marketing likely cheaper in terms resources to another product increased of money and time, segment. Specialised marketing and there is less staff to understand specialised marketing target market staff needed). Might take time to Greater initial capture target market exposure initially If product fails, business has to start from scratch Explain: A business’s primary target market will generate most of its revenue. This is because these customers are loyal and make repeat purchases. When a business successfully identifies and selects its primary target market, they can better understand their customers needs. This allows the business to direct its marketing strategies, such as promotions that will be noticed, to that group of customers. ○ Leading to a more effective use of marketing resources and ○ Increasing the chance of success of the marketing strategy Case study: mattel has selected different target markets for various brands Barbie dolls: 1950s- female children aged 3-12 who wanted to aspire to a role model who had all the trendy clothes and cars Today - as gender norms change, female children are still the primary target market. However, secondary markets such as male children, collectors, and children with diverse needs are now included. Barbie film: (was rated 12+) - was aimed to create a nostalgia for 20-30 year olds and reverse the poor body image Barbie had portrayed in recent decades for that generation as both kids and parents of the current generation. The core cast were in their 30s and 90s pop songs were used such as Matchbox Twenty’s hit ‘push’ (this was a strategy) 3.5 - Developing marketing strategies This has not been covered in class yet Outline: Using various marketing tools (4Ps +3) to achieve marketing objectives. Strategies  HSC Business Studies - Topic 1 - Marketing include: ○ design a Product/service, ○ set an appropriate Price, ○ create Promotional materials, ○ design distribution channels (Place) Describe: ○ Product: Main strategic decisions: The good and/or service that satisfies customers needs Main decisions are determine product features e.g. quality, packaging, design, brand name and guarantee ○ Price: Main strategic decisions: The amount of money a customer will offer in exchange for a product Main pricing decision: to set price below, above or about even with competitors’ price and business ○ Promotion: Main strategic decisions: Methods used to inform, persuade and remind consumers about a product Main decision ios to decide which form to use at which time: including advertising, personal selling, sales promotion, publicity and public relations ○ Place: Main strategic decisions: Deals with channels of distribution → ways of getting product to customer Main decision is whether to use intermediaries or sell direct to customer Explain: A business uses the 4Ps to reach its target market. Once the 4Ps have been established. The business will determine the emphasis it will place on each. This will largely be influenced by where the product is positioned on its stage in the product life cycle. ○ For example: - If a product is in introduction, emphasis is on promotion rather than product development. - Growth, emphasis → placed on price increasing/place. - Maturity → emphasis is product diversification. - Decline, emphasis → start again  HSC Business Studies - Topic 1 - Marketing Therefore, a business can emphasise different elements of the 4Ps for different products. It is important that their marketing strategies are designed effectively otherwise: Case study: tourism australia has used various marketing strategies to capture their target markets, including the US and Asia. This includes using scenery, slogans, and starring well known actors such as Paul Hogan and Chris Hemsworth to entice overseas consumers to holiday in australia. While this has been somewhat successful, they have failed often to capture their entire target market. 3.6 - Implementation, monitoring and controlling This has not been covered in class yet Make your own notes Implementation: the process of putting the marketing plan into operation Monitoring: checking and observing the actual progress of the marketing plan Controlling: comparison of planned performance against actual performance → make sure objectives are attained. EXPLANATION (general) This stage is of vital importance in order to provide feedback to a marketing department regarding their relative success in meeting marketing objectives through their selected strategies. Without this stage, businesses will be unable to correct and improve on marketing strategies that are failing to perform as well as others. They will also fail to understand their best strategies helping them to achieve these objectives. Monitoring and controlling form the basis of future decision making; data is fed into the next situational analysis (3.1) and so the cycle continues again. 3.6.1 IMPLEMENTATION OUTLINE Implementation involves the how, when and where the marketing plan is put into action. Once the marketing plan has been implemented, analysis can occur. EXPLAIN  HSC Business Studies - Topic 1 - Marketing It can often be difficult to implement a marketing plan. Even an effective marketing plan cannot guarantee successful achievement of the objectives. Implementation can be hindered by: ○ A changing economy ○ A rapid change in consumer preferences → a product may become redundant before it is even launched ○ Competitors release products before you ○ Internal functions of the business are unable to cope with the logistics of the new marketing campaign 3.6.2 MONITORING OUTLINE: Monitoring involves checking and observing progress of the marketing plan. This means gathering data and reporting on any opportunities or problems that arise during the life of the marketing plan. DESCRIBE Data on key performance indicators (KPIs) is collected during this stage and wil;l be compared in the next stage: ○ Sales figures (total sales, per geographic region, per industry) ○ Customer surveys (to gauge level of customer satisfaction) ○ Number of new sales (to see potential to expand market share) 3.6.3 CONTROLLING OUTLINE Controlling involves the comparison of planned performance against actual performance and taking corrective action to revise the marketing strategy if required. DESCRIBE AND EXPLAIN 1. Develop a financial forecast This involves outlining what the forecasted performance will be. This forecasted figure will be compared against actual results in the next step E.g. increase monthly sales by 5%, improve sales revenue per salesperson by 10% over the next 6 months, reduce call wait time by 5% in one month 2. Comparing actual and planned results  HSC Business Studies - Topic 1 - Marketing Sales analysis – measure sales estimate time vs actual sales to calculate the effectiveness of a marketing strategy Market share analysis – measures the change in market share, or position among competitors, achieved by the marketing strategy. 3. Revise marketing strategies – after monitoring the data, the business may make nay number of changes to the marketing plan before completing the next situational analysis and going around the circle again ○ Adjust any of the 7Ps – lower prices, introduce new sizes, vary the promotions – to better connect with the target market ○ Delete products that aren't performing – to avoid using the budget inefficiently ○ Train staff more effectively to deal with customer issues – to improve customer service with target market ○ Increase the promotional budget – to improve customer awareness ○ Look at further segmentation of the target market – as actual gains may not be achievable in the current target market ○ New product development – to achieve long term growth  HSC Business Studies - Topic 1 - Marketing 4. Marketing Strategies Define: Marketing strategies are actions undertaken to achieve the business’s marketing objectives Explain: The extended marketing mix (the 7Ps) aid the business in shaping their marketing efforts to best meet their target market. By adapting the 7P to suit their benefits, the business can maximise sales and profits. Each P may not generate the same level of success. Some may achieve or exceed the marketing objectives, others may fall below expectations. ○ This would cause the business to: 4.1 - Market segmentation, product/service differentiation and position This has not been covered in class yet 4.1.1 - Market segmentation Outline: Market segmentation is the division of the total market into groups, or ‘segments.’ Segmentation is usually through common characteristics, such as demographic or psychological attributes, geographical location or behavioural. ○ Demographic: ○ Geographic: ○ Psychographic: ○ Behavioural: Describe and explain: Impact on marketing Example Demographic Stores arrange their products and Businesses, such as kmart, advertising by sections e.g. gender, age, will segment their gendered marketing - pink for girls, blue store/sections into genders. for boys, gender neutral products, age For example, the toy section related discounts such as student, seniors has blue for boys, pink for girls. Other businesses will provide discounts for students or seniors, such as cinemas or swimming pools.  HSC Business Studies - Topic 1 - Marketing Geographic Think of menu items, products available, Maccas → sells different end of season sales, products in different Businesses may customise menu items countries; rice dishes in asian based on its geographical location. countries, poutine in canada. The climate and location, whether cold or Cold climate → will sell ski warm, may influence the products sold. gear, not swimming and End of season sales or post holiday sales beach clothes. will influence the price of goods, which Post easter sales → decreased may decrease, and promotion, which may easter egg prices increase in order to get rid of excess stock. Psychographi Think of how market research may be Apple → their quality and c harder to interpret, how does advertising highly functional products tap into personalities. draw consumers in Promotion may have to be more creative Prada, gucci → use of ‘royal Price will have to be just right → colours’ to make their brand consumer (target market) has to be willing seem more luxurious and to pay for it exclusive, tapping into Product → quality and functionality will personalities of consumers have to be the key features of product, not just colours Behavioural Think of how a business may increase the Airlines → top members get purchasing from light to moderate users, into the lounges, extra what is provided to the most loyal of luggage, customers? Memberships, sales promotions, loyalty E.g. netflix slowly increases cards, steadily increase prices once the its prices because it knows consumer is hooked in. highest members their members are willing to get best perks and benefits stay and that it owns a high market share Segmentation allows the marketing team to better cater for the needs of the target market. This is because they can gear their strategies specifically towards a group of people who will generate a similar response to a marketing action. Why? Because consumers' needs are increasingly more demanding due to changing social attitudes, global consumers, amount of disposable income, and the need for wants to be satisfied faster than ever before. The benefits of market segmentation include:  HSC Business Studies - Topic 1 - Marketing ○ Increased customer satisfaction → because consumers get what they want ○ Greater customer loyalty → consistency ○ Possibility to increase market share 4.1.2 - Product/service differentiation Point of Elaborate Customer What happens if the differentiation expectations business fails to deliver? Product Variations Features, functions, Unique, quality Consumers won't be ­ levels of reflective of price willing to buy, sales customisation paid, useful will decrease, bad publicity Customer service quality service before Personalised, customers ­ and after the sale, to courteous service, make the higher price A high level of worth it after-sales service especially on highly priced items Environment Products (inc. Sustainable Consumers may prefer concerns packaging) and packaging e.g. to purchase from promotions that are cardboard, no paper brands that commit to good for the Commitment to looking after the environment recycling environment, even if higher cost Convenience ­ elivery time, D Quick delivery (same Consumers will accessibility, day), constant restock purchase from brands proximity of items, in a high that deliver quickly, are traffic area (close to more accessible and population), easy to convenient. negative access reviews Social and ethical Marketing that does Businesses pay Bad publicity, damaged issues not exploit people or employees min wage brand image, decrease create consumerism Fair treatment of in sales and customer employees and loyalty customers Rights upheld TA+GT in advertising  HSC Business Studies - Topic 1 - Marketing 4.1.3 - Product/service positioning Outline: refers to the technique in which marketers try to create an image or identity for a product/service compared with the image of competing products or services. Businesses can start in one category and reposition themselves (e.g. zara, glassons) High price low quality High price high quality - Not value for money, rip off, - Exclusive, luxury, superior, ↑ inferior premium Price Low price low quality Low price high quality - Budget, cheap - Value for money, affordable, cost effective, bargain, dupe Quality → Case study (positioning) - Barbie In 2015 mattel saw the ‘death of Barbie’ for poor body image, resulting in sales that declined by $2 billion. Matel has repositioned Barbie from a doll who was about one possibility to a brand that was about potential and multiple possibilities. They did this through different careers and diversity. This shifted the brand from being about trying on different outfits to trying in different dreams, selling over 100 minutes. 4.2 - Product strategies This has not been covered in class yet Product strategies - general intro Outline: Products are goods or services that can be offered to customers to satisfy a need or want. Product strategies refer to those actions used to differentiate the good/service produced and delivered by a business. Explain: The importance of effective product strategies are to” ○ Highlight the value of the product and create points of differentiation. ○ This allows the business to Meet the needs of the target market Attract new customers Increase sales and profit Product strategy 1 - Goods/services concept Outline: Most products are combinations of tangible and intangible components. Therefore, a total product concept is a collection of tangible + intangible aspects of the product/service offering to create maximum value for customers  HSC Business Studies - Topic 1 - Marketing ○ Tangible – size, shape, materials, flavours, function, features, new product design. ○ Intangible – speed, friendliness, after sales service, brand reputation, safety record Explain: Both aspects can be used to differentiate a product from competitors. Understanding what customers want in both categories will increase brand loyalty, but if the business gets one of them wrong, customers will be the first to complain. (e.g. think about when Shapes brought in a new recipe) BRANDING Outline: Branding includes the name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from its competition. Rebranding is the result of ineffective branding, where n Explain: Effective branding can: ○ help customers identify the product they like and can help limit perceived risk in quality expectations. ○ add value to a product, in which in many cases you are paying more for an identical product simply because of its brand. E.g. Mercedes Benz, Billabong, Apple. ○ Be trademarked for exclusive use. Companies like McDonalds have spent considerable resources in court actions protecting their logos from being used by competitors (Big Mac/Big Jack) McDonald’s branding is so successful that more people are able to recognise the ‘golden arches’ than the christian cross. This shows the effectiveness of global campaigns to build brand awareness. Analyse: The long term implications of a positive brand name are that it can help a business: ○ introduce new products when reaching the maturity phase of the PLC due to customer familiarity ○ gain repeat sales because consumers recognise the business’s products. This creates customer loyalty. ○ with their promotional activities because the promotion of one product indirectly promotes all other similarly branded products ○ charge a higher price for the product. Analyse: Sometimes, a business will undergo rebranding. This is when a business changes something in its branding strategies and redirects consumer attitudes to a business. This could be on their own accord or to overcome negativity with the existing branding. ○ When successful, a business can attract new customers and reposition itself in the market. ○ Risks include loss of recognition and cynicism, leading to a reduction in sales. Rebranding case study: - Successful example: due to declining sales throughout the years of 2014-2016, Mattel rebranded Barbie to cater for the modernising world. This included reinventing the doll, moving towards a  HSC Business Studies - Topic 1 - Marketing product image centred around inclusivity by introducing new skin tones, body types and careers, as well as an entire movie tackling stereotypical gender roles and encouraging girls to do whatever they wish in life. By strategically shifting to mirror their diverse audience, Mattel was able to successfully meet the expectations of diversity, hence driving sales revenue and profits for the business. - Unsuccessful example: Twitter's replacement of the iconic blue bird logo to ‘X’ was an unsuccessful attempt by the owner, Elon Musk, to change the platform into more than just a text based platform. The rebranding caused confusion among users and critics. Many felt that the new name and logo did not effectively convey the platform's purpose, making it harder to maintain the sense of familiarity and trust that Twitter had built up. Product strategy 3 - Packaging Outline: Packaging is the development of the container and graphic design of the product. Explain (short term benefits) ○ preserves the product ○ protects the product from damage or tampering ○ attracts consumers’ attention ○ divides the product into convenient units ○ assists with the display of the product ○ makes transportation and storage easier. Analyse (long term benefits / implications) ○ Packaging can be the greatest influence in consumer choice - (think of the psychological benefits of new Apple products) ○ if it is not presented well it will not receive expected sales. ○ Well-designed packaging will give a positive impression of the product and encourage first-time customers. ○ Packaging helps to ensure a business abides by legal and ethical standards ○ Packaging also addresses waste environmental issues (CSR) and can give a business a competitive advantage – eg reducing plastic Case study (total product concept, branding and packaging) Choose either Mattel (Barbie) or Aldi from the Slides (or Maccas from the case study hand out) and make notes. - Total product concept - Branding - Packaging - The benefits and/or limitations of this product strategy - An overall judgement of the success of these strategies  HSC Business Studies - Topic 1 - Marketing 4.3 - Price strategies This has not been covered in class yet Price refers to the amount of money a customer is willing to offer in exchange for a product. This includes: Pricing methods Pricing strategies Consumers are price conscious, this means that if they do not like the price a business is offering, they will seek the same/similar product elsewhere. This is why it is essential for businesses to set the right prices Most appropriate method depends on a variety of factors → nature of product and market, internal and external situation of business What are price strategies? Price is critical to a product/business's success. The way a business chooses their product can have a significant impact on how their product is perceived, what target market they can reach, and what impact they have on an established market may already be flooded with competition. ○ Price too low or too high discourages consumers from buying the product as it affects their attitudes and perceptions Pricing methods are overall approaches to pricing a product full stop they provide a basic price for each product, and include cost based, market based, and competition based pricing On the other hand, pricing strategies, including skimming penetration loss leader end price points, are short term strategies to adjust the basic price to achieve specific outcomes. This can be impacted by the product life cycle, strategies of competitors, and the economic cycle 4.3.1: pricing method 1 - cost-based The cost based pricing method determines the price of the product based on the cost of production and uses a fixed profit mug margin, or markup. For example, if a product costs $50.00 to make and the company operates at a 20% markup, it will add 20% or $10 to the price, making the selling price of the product $60. Cost based pricing is simple and straightforward as a pricing method where costs are covered. However it can be difficult to calculate an appropriate markup and it does not always take into account the market or competition and as such the price may be too high or too low causing consumers not to buy the product 4.3.1 Pricing method 2 - market based Market based pricing sets the price based on supply and demand, regardless of the production cost. If there is strong demand for a product, businesses can charge higher prices. However if you customers are interested in buying the product, they may want to lower the price to encourage more interest. ○ This method prices the item according to the current conditions, where sales can be maximised by adjusting the price at both ends of the market. ○ However, it is difficult to apply as the supply and demand of products is always changing, therefore consumers may not be repeat buyers if the price keeps changing. 4.3.1 pricing method 3 - competition based  HSC Business Studies - Topic 1 - Marketing Competition based pricing determines the price based on the prices set by competitors. The price may be set the same, higher or lower. In some cases the dominant business may be the 'price leader' which all other businesses must respond to. ○ This is a very common method for online sellers, where it is easy to compare pricing between stores and the level of service differentiation is limited. ○ However, this can be time consuming for businesses where they may have to consistently keep up to they changing prices of other competitors. An example of this is Coles and Woolworths, where their sales of chocolate differentiate per week. 4.3.2 pricing strategies For this dot point you must be able to: ○ Identify the four pricing strategies ○ Outline/define the four pricing strategies ○ Provide advantages and disadvantages of both methods ○ Integrate a case study example of this method in use 1. Price skimming Price skimming involves charging high prices to maximise profits. This strategy assumes that some people will buy your product, even if the price is higher than it should be. In this case come out the price is set high to receive maximum profit for these customers. An example of this is when a new piece of technology is introduced, such as the latest iPhone, where the price starts very high as its prestige attracts some people to buy regardless of the price. Higher priced margins also cover high costs of product development. The price will often later be dropped when sales start slow, in order for the next level of consumers to buy them once it's in their price range. This strategy is only useful for high demand products. Apple case study - skimming their way to the top. Apple has always focused on the high end smartphone market, which put them in an ideal position to pursue the skimming price strategy. Before each knew iPhone comes out, apple has already stirred up some customers curiosity and expectations with their marketing strategies. In most cases, when a new product is first launched, are high price would deter many customers from purchasing the product, so why are there always queues outside apple stores when a new iPhone is released? With iPhone sales gradually slowing down, apple needed to look for other ways to increase revenue and the most obvious way to do that is to raise the price of their phones. Therefore over the past few years, apple has successfully made buying their latest and greatest phones more expensive. There are a few reasons why Apple has chosen to adopt price skimming: EXPLAIN 1. High price equals higher revenue - Development of new products at higher prices means the company is able to obtain a larger profit and get a faster return on the initial investment of new products. This extra profit enables the business to further invest in expanding and creating more innovative products.  HSC Business Studies - Topic 1 - Marketing 2. Positioning - since apples target market is the high end consumer. This market position will be supported by the higher prices. Their primary target market is not price sensitive and these higher prices signal the higher quality of their new product. 3. Suppress competition - The new highly priced phones could prevent new competitors from entering the market 4. Branding - apple has developed a very strong brand reputation and has a huge number of customers who perceive the brand as attractive, which enables them to support these higher prices. ASSESS/EVALUATE This price skimming strategy has been so successful that despite a 0% percent change in iPhone sales over the past few years, apple has ended up with a significant interest increase in revenue in its smartphone division. In fact, despite global smartphone sales dropping by 20.4% in the second quarter of 2020, apple was the only company that remained relatively stable this quarter, while other manufacturers saw double digit declines year after year. The higher price tag has been successful enough to significantly increase the iPhones average selling price, and therefore generate the majority of Apple's recent revenue growth. This price skimming strategy is pretty remarkable considering that it will help Apple's revenue growing, even if iPhone sales don't increase in terms of numbers. 1. PRICE PENETRATION ○ Penetration pricing is a method involving charging a lower price than competitors in an effort to enter a market and gain market share, often with the intention of raising prices later. ○ It is easier to keep customers than it is to get new ones, as such, when you first enter a market it can be difficult to convince shop is to abandon their current brand and try your new, often unproven brand. ○ Simply pricing with the competition will often not get the business noticed. Ideally customers will buy a product for the first time because of the low price, and then keep buying it after the prices increase.