HSC Business Marketing Notes PDF

HSC BUSINESS Topic two: MARKETING General course overview : - What do customers want to buy now and in the future - involves a wide range of activities, directed at a wide range of goods, services and ideas - stresses the importance of satisfying changes, is not limited to the act...

HSC BUSINESS Topic two: MARKETING General course overview : - What do customers want to buy now and in the future - involves a wide range of activities, directed at a wide range of goods, services and ideas - stresses the importance of satisfying changes, is not limited to the activities of businesses - multifaceted and doesn't just involved selling or advertising role of marketing strategic role of marketing goods and services The main role of marketing is to maximise profit and it is considered a revenue centre, because it generates sales. PROFIT MAXIMISATION (occurs when there is a max difference between the total revenue coming into the business and total costs being paid out) Profit maximisation through the revenue of marketing Whole point is to increase sales through marketing mix Operation - decrease expenses Marketing - increase profit Marketing is a revenue centre, thus its strategic role is to achieve profit maximisation, which it does through the marketing mix. role of marketing interdependence with other key business functions They achieve this through the marketing concept, which puts the customers at the centre of the process Also known as relationship marketing - continual Relationship with the consumer past the point of sale (best business that implements this is Apple) Eg. warranty, genius bar), cars - car service So the people have a connection and affiliation with the brand through their identity, lifestyle and service Thus, all key functions are centred around marketing - as this function researches the needs of the consumer Businesses must integrate their marketing plans with all key functions - Whilst operations decreases expenses, marketing increases profit - Marketing costs money, finance must be available - Marketing manager needs other managers who can successfully carry out operations and HR Operations/marketing → marketing determines the products/services to be produced Marketing increases sale, whilst operations decreases cost - decides what will actually be product Therefore together they increase product Without finance, you can't do the research Although marketing generates income - it is very expensive Marketing determines the products and services that will be produced through market research Research is a vital aspect of marketing role of marketing production, selling, marketing approaches 1. Production approach - 1820s to 1920s Business focus on the production of goods and services Marketing wasn't a priority “if we make it, they will buy it” - no consumer choice Production design was based more on the demands of mass production technoes than customer needs No variation Eg. Ford was the only car manufacturer 2. Selling approach 1920s to 1960s Add in extra layer of advertising Emphasised selling due to increased competition Era of door to door sales Tupperware parties Persuading customers to buy specific brands Sale reps would sometimes use high pressure tactics 3. Marketing approach (stage 1) 1960s to 1980s Find out what the customers want through market research and then satisfy their needs ‘Discretionary income’ - allowed for spending past necessities Development of four principles: - Customer orientated - Aimed at satisfying customers - Integrated into the business plan so as to achieve the business’ goals - Aimed to develop long-term relationships with customers  4. Marketing approach (stage 2) 1980s to present Changing economic and special conditions over the last three decades - including: CSR - people only burning products that are environmentally and socially just - “Customer orientation” - “Customer satisfaction” - “Relationship marketing” role of marketing types of markets – resource, industrial, intermediate, consumer, mass, niche 1. Resource – The resource markets are those which are involved in all forms of primary production e.g. farming, fishing, mining 2. Industrial – industries and businesses that purchase products in the production of other products. E.g. a bakery buying flour or milk which is then transformed into another product. 3. Intermediate – wholesalers and retailers who purchase finished products to resell them at a profit. For example Woolworths buying products to resell. 4. Consumer – selling to the end consumer who will use the finished product. E.g. buying something from Woolworths as an individual. 5. Mass – Mass markets exist where there is a large demand for a standard product. The business does not tend to target specific groups of buyers as it is assumed everyone already wants the product. For example the sale of petrol. 6. Niche – a narrow selected market with specific needs or demands. E.g. a country garden magazine. influences on marketing factors influencing customer choice – psychological, sociocultural, economic, government What determines what a consumer will buy - influences them Businesses needs to know what influences customers to make them buy things 1. Psychological Personal characteristics influencing buying behaviour and attitudes to certain products Come down to perception, motivation and seklf image How you want to be perceived will determine you attitude about products a) Perception - image that a particular product has in the mind of consumers → marketing campaigns should promote positive image of the product to targeted customer group to buy to reflect this perception  Not black and white How does the customer perceive themselves - what products do they need Eg. outgoing, outdoorsy - match with a product suited for that b) Motive - reason for buying the good or service - may be comfort, health, safety, ambition, pleasure or approval of others Eg. Shoes - heels, comfort Need to do market research in why they are actually going to buy this product Eg. Fomo - promoted by social media c) Attitudes and beliefs - shaped by one's environment and life experiences - including ethnic, religious beliefs, political persuasions and attitudes to social issues Eg. Skydiving - product needs to be promoted as being safe Poeple need to be confident If a product has negative attitudes (fear) the positives need to be emphaised d) Personality and self-concept - behaviours, characteristics of the customer and how they view themselves How you see yourself and what your trying to portray Influences - people see themselves similar to that People want to model their life on what that person has - tied to perception e) Learning: changes in an individual's behaviour caused by information and experiences → marketing strategies that assist customers learning about the business encourages brand loyalty Important for the promotion that is teaching you about the product 2. Sociocultural Where do you fit in to class and culture Outside of yourself - external influences a) Social class: influences type, quantity and quality of products bought (eg. higher income earners may purchase luxury cars to symbolise status) Education, job - you want your job to reflect in the items you own b) Culture and subculture: values, beliefs, behaviours and traditions shared by a society determines what people wear, what and how they eat, and whether and how they live Some families are really into birthdays, christmas, others are not Culture HUGELY determines what your going to buy c) Family and household role: research shows most women still make buying decisions related to healthcare products, food and laundry supplies Eg. marketing of cleaning products traditionally goes towards women ect d) Peer groups: buying behaviour may change to match friends (eg. if person has bad experience at a shop or peer groups wears distinctive clothing, the items an individual will purchase may be influenced) e) Economic Whether its going through a boom or a bust Determines what you buy If you dont have enough money coming in, you dont buy luxury goods  - Influence of general economic trends (unemployment levels, interest rates, economic growth/decline), along with socioeconomic status - which is determined by the person's level of income, occupation and education - Government Govevernment policies directily or indirectly impact the business - Depending on prevailing economic conditions, government will put in place policies to expand or contract the level of economic activity → influence businesses activity and customers spending habits and therefore the marketing plan - businesses behaviour controlled by Competition and Consumer Act 2010 (Cth) - Age restrictions placed on alcohol, tobacco influences on marketing Consumer laws – deceptive and misleading advertising – price discrimination – implied conditions – warranties Cant do deceptive or misleading advertising Why do governments like small businesses? Employment, tax, increased consumer choice, research, development and innovation Law Role ACL Australian consumer law (2011) Ensures all customers have the same rights, and Protects consumer rights when dealing with all Australian business are subject to the same businesses regulations CCA 2010 competition and consumer act (2010) The government wants many businesses to operate in a way that encourages competition whilst giving consumer choice Competition and Consumer Act 2010 There are two major purposes of this law: The first major purpose is to protect consumers against undesirable practices. For example, misleading advertising. The second purpose is to regulate trade practices that restrict competition. This means the government wants to ensure there are a number of businesses operating at the same time, in the same market to encourage competition. This Act is enforced by the Australian Competition and Consumer Commission which is the ACCC. For example, if a particular wanted to buy all the businesses in the industry, it would come before the ACCC, and they would have to reject it because it restricts competition. The ACCC can take civil or criminal proceedings against a business or an individual. The court can award penalties of $1.1 million for businesses and $220 000 for businesses (if you are in breach of the Competition and Consumer Act, the ACCC will take you to court). In addition, a consumer can sue the business for compensation. The ACCC can issue on the spot fines to manufacturers without undertaking court action. For example, misleading advertising. ACCC also issues public warning notices. These warn consumers when a business is being investigated for illegal activity. The following are practices which are illegal under the Competition and Consumer Act. Breaches in these laws will result in: Costs, time, and efforts spent fixing breaches Large fines, legal fees, imprisonment and damgate to business reputation Customers can sue businesses Deceptive and misleading advertising: - Fine print - people cant see it - Ptodcut of Ausralia - just assembled here - Packaging - you can make it look healthy - A special offer - always having a sale - Before and after - photoshop - Bait and switch - advertise a product at a reduce price - hardly any of them, get you to buy a more expensive product - Dishonest advertising Coles bread “Freshly based in store and on the day” Not true - baked night before and off site Creates a false and misleading impression of a product and what it can do, so customers are misled - Greenwashing - when a business lies about its environmentally friendly products - Bait and switch - when a business uses advertising of a low priced product to lure in customers where they are sold higher price products - Dishonest advertising - ads could include misleading words or claim a product can do something that it can Price discrimination The setting of different prices for products in different markets Ikea is australia is far more expesonvie then ikea in europe Price discrimination is when different prices are set for the same product in different markets: - It is legal if there's higher costs involved or they are meeting competitors price - It is illegal if it reduces competition or if there is no valid reason Implied conditions Implied conditions are the unwritten terms of a contract that are assumed to be of acceptable quality (do what it says it will) - Fit for purpose - Well made and free of defects  - Safe and durable Cheap product shouldnt be expected to last long Warranties A business’ promise to fix any defects in their goods or services - If goods are defective or services are not carried out with due care or skill, business must compensate the customer - Compensation can be monetary refund or exchange for a different product influences on marketing ethical – truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, sugging Not illegal, can be done - just done ethical Marekting is materialistic - convcing poeple to buy products they dont need Builds up consumerism and materialism leading to increased spending - Eg. Collectable toys - Marketing affects someones self worth and their priorities - Stereotypical images based on gender - outcome is a physcological connection - The use of sex to sell rpfocuts - not moral to use someone for their sexuality to sell a product - Product placement - inclusion of advertising in entertainment - eg. james bond drives an aston martin - Invasion of privacy - use of cookies Accuracy and good taste in advertising Untruths due to concealed facts: taking a liberty with the truth. You aren’t lying. Omitting information in the advertisement (e.g - Coke Commercial. Coke don’t put in health risks, therefore omitting information.) Exaggerated claim: puffery. Making it bigger than it actually is. Claims that can’t be proved, it is around exaggerated flattery (e.g - it is superior. Not based on any facts, overuse of the word best). Vague statement: this is ambiguous, you can take a statement in different ways. The consumer is then meant to assume what is actually being said due to the use of vague words. These words are known as weasel words. A weasel word is ‘help’ - how much does it help?. ‘Lite’ on packaging. ‘Natural’ instead of organic, which you have to prove. Good Taste in Advertising - This is highly subjective. - This deals with what would be offensive in advertising. - Things such as health ads, alcohol ads, gambling ads, ads focused on children. Products that may damage health - Health warnings must be displayed on cigarette packs, they cannot be advertised or dis[layed  in stores - Push to have similar health warnings for products containing alcohol and advertising junk food during children's tv times Engaging in Fair Competition - Australian Competition and Consumer Commission (ACCC) is a federal government independent authority that ensures businesses engage in fair, legally acceptable competition & enforces competition and consumer act 2010 - Unfair competitive behaviour includes: - price-fixing between competitors - long-term loss leader - undercutting smaller competitors and forcing them to engage in price war Sugging - Selling technique disguised as market research (survey) → unethical as it aims to deceive - Somebody tells you that their going to do a survey but they are actually trying to tell you things marketing process situational analysis – SWOT, product life cycle Situational analysis Enables management to gain an understanding of the businesses current position and where it is headed SWOT ANALYSIS - Strengths: What the business does better than competitors - Weaknesses: What its competitors do better - Opportunities: Changes in external environment that can be exploited to achieve objectives - Threats: Changes in external environment that make it difficult to achieve objectives - internal forces (businesses can control) = strengths and weaknesses - external forces (out of businesses control = opportunities and threats Positives Negatives Internal Strengths Weaknesses Resources Management Culture Product Location External: Opportunities threats Competitive situation Economic situation Financial Political  Geographical Technological PRODUCT LIFE CYCLE Consists of the stages a product passes through, with different marketing strategies required at each stage ➔ Introduction: slow sales, low profit, and requires heavy promotion to increase consumer awareness and market share ➔ Growth: sales increase, profits rise, high levels of promotion to increase consumer awareness and market share ➔ Maturity: high competition, sales steady, profits may begin to decline ➔ Post maturity (enters either decline or renewal) ★ Decline - sales fall, negative profits, reduce promotion efforts, narrow distribution and eventual elimination ★ Renewal - product revitalised with increased promotion, new promotional campaigns, brand altered marketing process Market research Process of collecting, recording and analysing data to solve a specific market problem Determining information needs Problem is clearly and accurately stated to determine what needs to be measured and the issues involved Collecting Data from Primary and Secondary Sources Primary - collected first hand by for the marketing problem (eg. surveys, observational research) Secondary - already exists for another purpose - can be internal (eg. research reports, financial statement, customer feedback OR external (eg. ABS, government reports) Analyzing and interpreting data - Data will be tabulated then analysed to identify any trends or patterns present - Appropriate course of action will be taken based on conclusions drawn Analysed and interpreted to create useful info marketing process Establishing marketing objectives Marketing objectives = Measurable goals to be achieved through the business plan Should be closely aligned with the overall business goals whilst staying consumer focused Specific - clear, precise and relate to specific elements of the business Measurable - developing controls to measure extent to which its been archive Achievable - needs to have financial and HR resources Realistic Timed - establish a time frame for it to be achieve Increasing market share Allows business to become more dominant in marketplace Expanding product range May attract new markets, same product mix in long term will be ineffective due to changing tastes Will increase business sales as the products its sells appeals to more customers Maximising customer service Encourage repeat purchases, due to high levels of customer satisfaction - customer service is responsible to the needs and the problems of the customers marketing process Identifying Market Trends Target market = group of present and potential customers a business intends to sell its products to Allow businesses to develop strategies that better satisfy the needs of customers Primary market - market segment that marketers target most of their resources towards Secondary market - a smaller less important market segment that businesses sell to Mass marketing approach - the businesses targets a large range of customers with common needs , wants and demands (can use single marketing mix aimed at the entire market and has little product variation) eg. demographic, geographical Marketing segmentation approach - total market is subdivided into subgroups who share common characteristics - business is able to develop a marketing plan that meets the needs of a relatively uniform group Niche market approach - specific, narrowly selected target market segment marketing process Developing marketing strategies These strategies are undertaken to achieve the business’ marketing objectives through the marketing mix: - Product - determining quality, packaging, labelling - Price - whether to set above, below or around competitor price - Promotion - methods business use to inform, persuade customer to buy products - place - intermediaries and physical distribution marketing process Implementation, monitoring and controlling Implementation is the process of introducing marketing strategies into operation A financial forecast is developed to compare expected costs and revenues for each strategy to actual performance Monitoring: involves observing the actual progress of the marketing plan Controlling:involves comparing actual and planned results to see if objectives were reasonable and if strategies were effective or should be revised Key performance indicators (KPI’S) Sales analysis Market share analysis Market profitability analysis Revising the marketing strategy: After conducting financial analysis, marketing managers must assess which objectives are not being met and take corrective action needed marketing strategies market segmentation, product/service differentiation and positioning Market segmentation By focusing its efforts on one or more segments, a business can better understand the needs of its market → more competitive Markets can be segmented according to: Goods/service differentiation and position - Business distiubioshees features of its products against competitors to persuade customers their brand is more superior - May be focused on price, higher quality, more environmentally friendly or customer service (pre-sale and after-sales) - Positioning refers to the development of a products image in the mind of a consumer relative to others in the market - Often based on price, quality or benefits eg. brad names such as Rolex evoke an image of their products quality  marketing strategies products – goods and/or services Refers to the goods or services offered in exchange for the purpose of satisfying a need or want They offer consumers tangible and intangible benefits - Tangible - physical attributes such as design, colour and features - Intangible - prestige, image associated with product, after sales service such a warranty Branding Reputation that a business or product developed over a period of time - Brand names and logos provide messages of quality/value/prestige → consumer forms judgements - Strong brand name provides reassurance and customer loyalty Types of branding Maniufactorer (owned by manufacturer, wellknown eg. sunbeam) Private (owned by retailer or wholesaler eg. Myer owns miss shop) Generic (no name, aimed at low budget buyers eg. Woolworths select) Packaging Refers to the way a product is physically presented to customers - Often the first image of a product consumers sees → must give positive impression to encourage first-time customers - Must protect and maintain quality of product, atrtract attention of target market, communicate brand identity and communicate to the consumer marketing strategies price including pricing methods – cost, market, competition-based Price charged msut reflect position and branding of the business within the marketplace. The three Key pricing methods are: Cost-based Cost to plus a profit markup Limitation: ignores the state of the market or market demand and difficult to find an appropriate percentage markup (may be too low or overpriced) Market-based Set according to demand and supply fot he market When demand for products is greater than its supply in the market, the price of the good will be forced up Competition based Business observes competitior’s prices and sets their own accordinly May chose to set above (convey more superior image) or below (to break into the market) or equal to Pricing strategies Skimming - Business sets relatively high price then lowers it over time - Occurs in beginning of product lifecycle when quick profits are needed Penetration - Business charges lowest price possible to achieve a large market share, usually in a highly competitive market Loss leaders - Product sold at or below its cost price to attract customers to the shop so they can buy more products - Often used when business wants to gain newcustomers, built a reputation of having low prices, is overstrocked or has a slow selling product Price points - Certain price levels set for products with relatively constant demand - Eg. clothing labl may set shirts at the price points $55, $75 and $95 regardless of their production costs Price and quality interaction - Customers often associate quality of a product within its price (high price = superior quality) - Prestige or premium pricing strategy where high price is charged to give aura of quality and status marketing strategies Promotion Elements of the promotion mix: Advertising - Form of paid, non-personal communication intended to persuade audience to purchase a product - Can be conducted through several mediums such as TV, radio, internet, magazines, billboards - When considering whcih medium to use, businesses must consider type of product and its positioning, where the prodiuct is on the product on the product lifecycle, its target market, the marketing budget and the cost the medium Personal selling and relationship marketing - Involves personal interaction between salesperson and customer where the saleslerpson attempts to persuade customer through their depth of knowledge and personal hcaracteristics - Key to establishing positive, long term relatiionshgip with customer to encourage repeat sales (relationship marketing) Sales promotion - Activities aiming to entice new customers, encourage trial purhcases of new products and incrrease repeat purchashes from existing customers  - Includes competitions, free gifts and loyalty card offers and point of purchase displays Publicity and public relationships - PR refers to planned efforts to present a business and its product in a positive light - Can be done by working w/the media, sponsoring events or attention seeking seeking gestures such as donations - Publicity - any free news story about business and its product - Aims to enhance image of a product, raise awareness of it and highlight a businesses favourable featured The Communications Process Often customers are more willing to purchase a product if the business message is communicated via a respected and trusted channel such as by world of mouth or an opinion leader - Opinion leader: highly respected and influential individuals eg. mucisisnas, actors, athletes - Word of mouth: people influencing each other in conversation, people tend to trust someone they know more than advertisements marketing strategies place/distribution Distribution Channels Links point of manufacturing to the final customer → often involves intermediaries such as wholesalers and retailers