Business Studies - Marketing notes HSC topic 3: Marketing Study Notes 20% of indicative time The focus of this

topic is to develop an understanding of the nature and role of marketing in a business and the main elements involved in the development and implementation of successful marketing strategies. Outcomes The student: H1.2 critically analyses the role of business in Australia H2.1 describes and analyses business functions and operations and their impact on business success H .2 evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change H!.1 critically analyses the social and ethical responsibilities of management H".1 selects# organises and evaluates information and sources for usefulness and reliability H".2 plans and conducts an investigation into business to present the findings in an appropriate business format H". communicates business information# ideas and issues# using relevant business terminology and concepts in appropriate forms. Content $tudents learn to: use existing business case studies to investigate and communicate ideas and issues related to marketing. The focus of these case studies will be to: % analyse and evaluate marketing strategies for a product or service % analyse the marketing plan of a business % construct a marketing plan for a single product&service 'real or imaginary(. $tudents learn about: nature and role of markets and marketing
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% the role of marketing in the firm and in society % types of markets - resource# industrial# intermediate# consumer# mass# niche % production.selling.marketing orientation % the marketing concept - customer orientation# relationship marketing % marketing planning process elements of a marketing plan % situational analysis including $/0T and product life cycle % establishing market ob1ectives % identifying target market % developing marketing strategies % implementation# monitoring and controlling - developing a financial forecast# comparing actual and planned results# and revising the marketing strategy market research process % determining information needs# data collection 'primary and secondary(# data analysis and interpretation customer and buyer behaviour % types of customers - people# households# firms# educational institutions# government# clubs and societies# religious organisations % the buying process - buyers and users % factors influencing customer choice - psychological# sociocultural# economic# government developing marketing strategies % market segmentation and product&service differentiation % product and service . positioning . branding . packaging % price including pricing methods - cost# market and competition2based . pricing strategies&tactics - skimming# penetration# loss leaders# price points . price and 3uality interaction % promotion . elements of the promotion mi4 - personal selling# advertising# belo,2the2 line promotions# public relations the communication process including opinion leaders and word of mouth % place&distribution . distribution channels and reasons for intermediaries . channel choice including intensive# selective# e4clusive . physical distribution issues including transport# ,arehousing# inventory % environmental effects on distribution - technology# local government

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ethical and legal aspects % environmentally responsible products % other issues including creation of needs# impacts of retail developments# sugging 'selling under the guise of research( % role of consumer la,s in dealing ,ith . deceptive and misleading advertising . price discrimination . implied conditions . ,arranties . resale price maintenance. Nature and role of markets and Marketing: 5arketing is the process of planning and e4ecuting the conception# pricing# promotion and distribution of ideas# goods and services to create e4changes that satisfy individual and organisational ob1ectives. 5arketing is a total system of interacting activities# designed to plan# price# promote and distribute products to present and potential customers. A successful business develops a marketing plan based in careful research and design. The customer should al,ays be the central focus of the marketing plan. Any business that does not develop and maintain a customer base soon goes out of business. 6t is a role of the marketing to make sure a customer base is created and maintained. Role of marketing in the usiness and in Society: A market focused business ,ill ,ant to create products that customers ,ant to buy. The business needs to see itself as a customer2satisfying process rather than a production process. To achieve the goal of profit# the marketing plan should be the focus of all short term planning for three reasons: 1: The marketing plan outlines the strategies to be used to bring the buyer and seller together. The business needs to be able to identify: 2 /here the market is 2 /ho ,ill buy the product 2 /hy they ,ill buy the product 2 Ho, often they ,ill buy the product 2: The core of marketing is satisfying e4isting customer ,ants# ,hich should lead to repeat sales. : 5arketing is the revenue2 generating activity of any business. 7othing is achieved until a sale is made. A business must# therefore# determine ,hat the customers ,ant# then develop a product and marketing plan to satisfy these ,ants. !ypes of Markets: A market is group of individuals# organisations or both that: need or ,ant a product# have money 'purchasing po,er( to purchase the product# are ,illing to spend their money to obtain the product and are socially and legally authorised to purchase the product. There are many markets in an economy# based on the characteristics of the individuals and groups that make up a specific market8 it is possible to divide markets into si4 main types.
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*esource 5arket: 9onsists of those individuals or groups that are engaged in all forms of primary production# including mining# agriculture# forestry and fishing. As a group# this market in Australia is made up of appro4imately 11: 000 enterprises or customers and has a large purchasing po,er. 6ndustrial 5arket: 6ncludes industries and businesses that purchase products to use in the production of other products or in their daily operations. +or e4ample tip top bakery that purchases flour to make into bread. 6ntermediate market or resellers: 9onsists of ,holesalers and retailers ,ho purchase finished products and sell them again to make a profit. The vast ma1ority of goods sold to consumer markets are first sold to an intermediate market. $ub,ay for e4ample# is a retailer that buys goods to make into sand,iches and salads for sale to consumers. 9onsumer 5arkets: consist of an individual that is members of a household ,ho plan to use or consume the products they buy i.e. consumers do not intend to use the products to make other goods or services. ;ach of us is part of numerous consumer markets for products such as housing# clothing# food# entertainment# appliances# music recordings and cars. 5ass 5arket: is ,here the seller mass produces# mass distributes and mass promotes one product to all buyers. <ery fe, products are marketed to the mass market# due to greater choice# higher personal incomes and customers seeking more individualised products# the mass market has been replaced ,ith segmented or niche markets. 7iche 5arkets: is a concentrated or micro market# is created ,hen the mass market is finely divided into smaller markets consisting of buyers ,ho have specific needs or lifestyles. "roduction# selling and market orientation $ %pproaches to marketing: The production approach: the industrial revolution began in =ritain over 1>0 years ago. This burst of industrial gro,th sa, demand for products e4ceed the production capabilities of many businesses. ?p until ,orld ,ar one# businesses concentrated their efforts on the production of goods and services. =usinesses ,ere usually able to sell all their output. 5arketing consisted of simply taking orders and delivering the products. The sales approach: /hen higher 3uality# mass produced products came onto the market and competition bet,een businesses increased. 7o longer could a business rely on selling all it produced. =usinesses increased their advertising# making use of ne,ly developed electronic communication systems# such as radio and film. =usinesses faced the challenge or persuading customers to buy a specific brand. The marketing approach: +or the first time after //66 Australian@s had discretionary income# more income than needed to obtain the necessities of life. This e4tra income ,as used to satisfy ne, needs and ,ants ,ith different
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kinds of goods and services. +or e4ample# consumers started spending on travel and recreation. Aroducers no, had to learn ho, to satisfy ,ants as ,ell as needs8 this involves market research to determine ,hat those ,ants are. $omething else ,as needed if products ,ere to sell as ,ell as previously. !he Marketing Concept: The marketing concept is a business philosophy that states that all sections of the business are involved in satisfying a customer@s needs and ,ants ,hile achieving the business goals. The business should direct all of its policies# plans and operations to achieving customer satisfaction. 6n recent decades there has been increasing focus on environmental sustainability leading to marketing focusing on Bgreener@ products. 9ustomer orientation: occurs ,hen a business bases its marketing decisions and practices on its customers@ ,ants. To be effective# the marketing concept must be adopted by all its employees of the business# employees should ,ork to,ards customer satisfaction by establishing positive relationships ,ith customers. A market focused business ,ants to create a product that customers ,ant to buy. The business therefore needs to see itself as a customer satisfying process rather than a production process. *elationship marketing: is the development of long term and cost effective relationships ,ith individual consumers. The ultimate aim is to create customer loyalty by meeting the needs of customers on an individual basis. *elationship marketing# therefore# emphasises customer retention 'creating reasons to keep customers coming back(. A highly successful marketing strategy introduced during the early 1CC0s ,as loyalty re,ard programs such as +ly =uys and A=9 re,ard card. These schemes offer re,ards to those loyal customers ,ho spend specified amounts or make repeat purchases. Marketing "lanning "rocess: $trategic marketing planning is the process of developing and implementing marketing strategies to achieve marketing ob1ectives. $tep 1: Aerforming situational Analysis: A situational analysis investigates the marketing opportunities and the potential problems. To do this market research is used to gather all the available information about the market environment. The data is then analysed by marketing managers. $ituational analysis attempts to ans,er t,o broad 3uestions: ,here is the business no,D and /here ,ill the business be in the futureD. $tep 2: ;stablishing 5arket 0b1ectives: A marketing ob1ective is a statement of ,hat is to be achieved through marketing activities. These e4pectations become the business ob1ectives# clear ob1ectives are essential for any marketing plan to be effective. Eetermining these ob1ectives is the most important step in the marketing process. $ome e4amples of marketing ob1ectives might include: increase market share by " per cent and to improve e4isting product range. $tep : 6dentifying Target 5arkets:
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The target market is the group of customers to ,hich the business intends to sell its product. 0nce the target market is identified# the business concentrates its marketing activities to,ards that group. =usiness o,ners must conduct some basic research to identify their customers@ needs in order to tailor stock and service standards to group@s e4pectations. Eata may be collected through 3uestionaries# informal intervie,s ,ith customer and ,ritten surveys. $tep !: Eeveloping 5arketing $trategies: 5arketing strategies are plans that outline ho, a business ,ill use its resources to achieve its marketing ob1ectives. The four main strategies a business can peruse are referred to as the marketing mi4. The marketing mi4 is the four As of marketing ,hich are Aroduct2 including brand name# packaging# positioning and ,arranties. Arice2 including list price# discounts# credit terms and payment period. Aromotion2 including advertising# sales promotion and publicity Alace2 including location of its markets# ,arehousing# distribution# transport and inventory. $tep ": 6mplementing# 5onitoring and controlling the marketing plan: The marketing plan ,ill not operate effectively unless it is ,ell managed8 marketing management is the process of monitoring and modifying the marketing plan. 5onitoring involves comparing actual performance ,ith predetermined performance standards. =y using performance standards# such as market share analysis profitability by product or territory# management can assess the effectiveness of the marketing plan. &lements of a Marketing "lan: Situational %nalysis $ S'O! %nalysis and "roduct life cycle: $/0T '$trengths# /eaknesses# opportunities and threats(2 9hanges in the e4ternal environment can dramatically alter the course of a business. A business must constantly monitor these changes# looking for any opportunities to e4ploit and find any threats to avoid. 6nternal forces operate from inside the organisation and are largely ,ithin the control of the business. These internal forces are uni3ue to each business and# by analysing them8 management can assess the strengths and ,eaknesses of the business. To develop a clear understanding of both internal and e4ternal environments a $/0T analysis should be conducted and the marketing plan modified to reflect this information. Aroduct Fife 9ycle: An assessment of the product@s position in the product life cycle should be carried out. This is necessary because different marketing strategies ,ill need to be used at different stages of a product@s life. ?sing this information a business ,ill be able to launch# modify ad delete products in response to changes in the product life cycle. +ailure to do so ,ill result in declining sales and reduced profits. The position in the product life cycle is very important information for the situational analysis# it ,ill effect marketing strategies. &sta lishing Marketing O (ecti)es:
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5arket ob1ectives should be more customers orientated than the ob1ectives for the entire business. They are also concerned ,ith products and markets. +our common marketing ob1ectives include: increasing market range# e4panding the product range# e4panding e4isting markets and ma4imising customer service. 6ncreasing market $hare: 5arket share refers to the business@s share of the total industry sales for a particular market. ;4panding the product *ange: The product mi4 is the total range of products offered by a business. =usinesses are usually keen to increase to increase their product mi4# this ,ill in the long term increase profits because the same product mi4 ,ill not remain effective for long because customer@s tastes and preferences ,ill change over time. To develop an ideal product range# businesses must understand customer@s needs. ;4panding e4isting markets: The demand for some products varies greatly due to geographic variables. Heographical representation refers to the presence of a business and the range of its products across a suburb# to,n# city# state or country. 5a4imising customer service: 9ustomer service means responding to the needs and problems of the customer. High levels of customer service ,ill result in improved customer satisfaction and a positive reaction from customers to,ards the products they purchase. 9ustomer service can no longer be regarded as merely e4plaining the refund policy or providing a complaints desk. *ather it is an attitude that should be adopted by all departments ,ithin the business. *dentifying !arget Markets: The market segmentation approach: 5arket segmentation occurs ,hen the total market is subdivided into groups of people ,ho share one or more common characteristics. 5arketing managers use four main variables ,hen segmenting the total market. Eemographic: age# gender# ethnicity# income# occupation# education level# religion# family siIe and social class. Heographic: urban# suburban# rural# region# climate and landform. Aroduct related: regular user# first time user# brand loyalty# price sensitivity and end use. Asychographic: personality# motives# lifestyles. +e)eloping Marketing Strategies: 5arketing 5i4 . the four As: Aroduct2 The business o,ner must determine the product@s 3uality# design# name# ,arranty and guarantee# packaging# labelling and e4clusive feature. Arice2 =usiness@s must be careful ,hen setting price# a price set too lo, may give customers the impression of the product being cheap and nasty ho,ever a price too high could mean lost sales unless superior customer service is offered. Aromotion2 A promotion strategy details the methods to be used by a business to inform# persuade and remind customers about its products. The main forms of promotion include personal selling# advertising# belo, the line promotions and public relations.

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Alace2 This element of marketing deals ,ith the distribution of the good or service and consists of t,o parts. The first is the transportation and storage of finished products. $econd# the business o,ner has to decide ho, many intermediaries ,ill be involved in the distribution process. The most common intermediaries are ,holesalers and retailers. The number of intermediaries chosen ,ill determine ho, ,idely the good or service ,ill be distributed. *mplementing the Marketing "lan: 6mplementation is the process of putting the marketing strategies into operation. To implement a plan effectively a number of basic 3uestions need to be ans,ered: 2 6s the plan fully integrated ,ith all other sections of the businessD 2 /ho are the best people for the various tasks needed to implement the planD 2 Are all other employees familiar ,ith the marketing ob1ectives and marketing strategiesD The implementation of this stage is 3uite difficult# especially as unforseen situations may arise thatput in 1eopardy the success of the entire marketing plan. Monitoring and Controlling: 5onitoring means checking and observing the actual progress of the marketing plan. This re3uires the marketing department and personal as ,ell as other employees to gather information and report on any important changes# problems or opportunities that arise during the life of the marketing plan. The first step to the controlling process re3uires the business to outline ,hat is to be accomplished# that is to establish a performance standard. A performance standard is a forecast evel of performance against ,hich actual performance can be compared. +or e4ample# a performance standard could be: 2 6ncrease monthly sales by " per cent 2 6mprove sales revenue per salesperson by 10 per cent over the ne4t si4 months. The second step in the controlling process is to compare or evaluate actual performance against the performance standard. =udgets# sales# statistics and cost analyses can be used to evaluate results. Eeveloping a +inancial +orecast: *e3uires t,o steps: 1: 9ost estimate2 Ho, much is the marketing plan e4pected to costD 9ost of the marketing plan can be divided into four ma1or components: market research8 product development8 promotion# including advertising and packaging8 and distribution. 2: *evenue estimate2 Ho, much revenue is the marketing plan e4pected to generateD +orecasting revenues ,ill be based on t,o ma1or components: ho, much consumers are e4pected to buy and for ,hat price8 and ,hat sales staff predict they ,ill sell. As time goes by# actual revenue can be compared ,ith the forecast revenue data to determine the effectiveness of the marketing strategy. 9omparing actual and planned results:
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$ales analysis2 uses sales data to evaluate a business@s performance and the effectiveness of a marketing strategy. The more the sales are broken do,n# the clearer the picture becomes. The main strength of sales analysis is that sales figures are relatively ine4pensive to collect and process. Their main ,eakness# ho,ever is that data for sales revenue do not reveal the e4act profit level: such information can only be gleaned from further investigations of total e4penditure. 5arket share analysis& ratios: This evaluation can reveal ,hether changes in total sales# either increases or decreases# have resulted in the business@s marketing strategies or have been due to some other uncontrollable e4ternal factor. 5arketing Arofitably Analysis: 6s a method in ,hich the business breaks do,n the total marketing costs into specific marketing activities. =y comparing the costs of specific marketing activities ,ith the results achieved# a marketing manager can assess the effectiveness of each activity. This evaluation also helps in deciding ho, best to allocate marketing resources in the future. Re)ising the Marketing Strategy: 0nce the results of the sales# market share and profitability have been calculated# the business is then in a position to asses ,hich ob1ectives are being met and ,hich are not. =ased on this information# the marketing plan can be modified. 5odification of the marketing plan is e3ually important as all the other steps involved in creating successful marketing strategies. 9hanges in the marketing mi4: 9hanges to the marketing mi4 that could be introduced include the follo,ing: 2 Aroduction modifications: no product is perfect8 businesses that continually upgrade their products ,ill be able to maintain a competitive advantage. 2 Arice modifications: Arices fluctuate due to a variety of reasons. Therefore# the price component of the marketing mi4 ,ill need to be modified in response to changes in the e4ternal business environment. 2 Aromotion modifications: Aromotion costs ,ill decrease as the product continues through its life cycle therefore a business must continually update their products. 2 Alace modifications: As a product@s success increases the distribution channels ,ill need to be e4panded to cater for the gro,ing market. 7e, overseas markets may be tapped# ,hile old markets may decrease due to demographic changes. /ith the development of electronic communications# ne, distribution channels# such as the internet may be used. 7e, Aroduct Eevelopment: The product cycle indicates that products have an average life of "210 years# and as technology accelerates this ,ill only become a shorter time span# therefore if a firm ,ants to achieve long term gro,th# it must continually introduce ne, products.
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Aroduct Eeletion: is the elimination of some lines of product# outdated products may create an unfavourable image and this negativity may rub off on other products sold by the business. 5ost businesses find it difficult to delete a product# especially is it had been successful for a long time. Attention must be paid to Apple in this area ,here they release ne, product lines every line and phase out the old products. Market Research and Customer and Buyer Beha)iour: !he !hree Steps of the Market research "rocess: 1: Eetermining information needs: The best method to determine the relevance of data is to constantly ask 3uestions concerning its ultimate use. 6nformation is useful if it: 2 *esults in marketing strategies that meet the needs of the business@s target market 2 Assists the business to achieve its marketing ob1ectives. 2 5ay be used to increase sale and profits. 5ore businesses are undertaking marketing research of recent years. 2: Eata 9ollection 'Arimary and $econdary(: 5arketing data refers to the information# usually e4pressed as facts and figures# relevant to the defined marketing problem. 5arket researchers may use t,o types of data: primary and secondary data. 7ormally market researchers use a combination of both types of data. Arimary Eata2 are the facts and figures collected from original sources for the purpose of the specific research problem. 5any businesses outsource the activity of collecting market data. The three main methods used to gather primary data: 2 $urvey: mean gathering data by asking or intervie,ing people. 2 0bservation method: involves recording the behaviour of customers. 2 ;4periments: involve gathering data by altering factors under tightly controlled conditions to evaluate cause and effect. This is often used on beauty products and health products. $econdary Eata . is information that has already been collected by some other person or organisation. There are t,o types of secondary data: 2 6nternal data: This is information that has already been collected from internal sources. That is from inside the business such as financial statistics# annual and management reports# research reports and customer feedback. 2 ;4ternal data: This is published data from sources outside the business. ;4amples include magaIines# industry association ne,sletters# government reports and A=$ statistics. : Eata analysis and interpretation: $tatistical interpretation analysis is the process of focusing on the data that represents average# typical or deviations from typical patterns. Customer and Buyer Beha)iour: =uyer behaviour may be defined as the decisions and actions of people involved in buying and using products. 5arketing managers are better able to predict ho, customers may react to particular marketing strategies
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if they are a,are of factors that influence the buying behaviour of different types of customer. !ypes of Customer: 2 Aersonal spending refers to the consumer purchases made by individuals. 2 Household spending refers to the combined purchases of individuals living together 2 =usiness consumer 'firms( consists of those businesses that purchase goods and services for further processing or for use in their production process. 2 6nstitutional customers consist of schools# clubs# churches and other non profit organisations. =ecause institutions often have limited budgets and different ob1ectives# marketing managers need to devise special marketing strategies to serve these customers. 2 Hovernment customers: governments spend millions of dollars each year on a variety of goods and service. Hovernments make a ma1ority of their purchases through a process called tendering# ,hich is a process ,here by firms submit 3uotes to supply a good or service. The lo,est bid that meets the specifications is accepted. !he Buying "rocess: All customers tend to follo, common steps in the buying process: 1: *ecognise problem2 need or ,anting re3uire satisfaction 2: $earch for information: brand names# product characteristics# ,arranty# service and price. : ;valuate alternatives: cost benefit analysis !: Aurchase2 particular choice made# product brought ": ;valuate after purchase2 ,eighing up the suitability of the product# satisfaction gained# dissatisfaction may occur. A buyer is the individual or group ,ho purchases the product. =uyers are sometimes called purchasing agents# select suppliers and negotiate in terms of purchase. A user is the individual or group ,ho actually uses the product being purchased. ,actors influencing consumer Choice: +our main factors influence both consumer and organisational purchasing decisions. "sychological: Asychological factors are influences ,ithin an individual that affect his or her buying behaviour. Aerception: is the process through ,hich people select# organise and interpret information to create meaning. ?sually there are a range of perceptions across different individuals. As individuals ,e often act on our perceptions of reality rather than reality itself. 9onse3uentially# marketing managers are e4tremely a,are that they must create a positive or favourable perception about their product in the mind of the consumer. +or e4ample advertising may be used to
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create a perception that a product is trendy# lu4urious or classy ho,ever it may not necessarily have those 3ualities. 5otives: A motive is the reason that makes an individual do something. The main motives that influence individual@s choice are comfort# health# safety# ambition# taste# pleasure# fear# amusement# cleanliness and the approval of others. Attitudes: An attitude is a person@s overall feeling about an ob1ect or activity. 9ustomer attitudes to a business and its products generally influence the success or failure of the business@s marketing strategy. Aersonality: An individual@s personality is the collection of all behaviours and characteristics that make up that person. To some e4tend personality ,ill influence the types and brands of product a person buys. +or e4ample the style of a car may reflect their personality. Sociocultural *nfluences: /hereas psychological influences are internal influences# sociocultural influences are forces e4erted by other people and groups that affect customer behaviour. +amily and roles: +amily roles influence buying behaviour# for e4ample although ,omen@s roles are changing# market research sho,s that most ,omen still make buying decisions about health related products# food and laundry supplies. *eference 'peer( groups: A reference or peer group is a group of people ,ith ,hom a person closely identifies# adopting their attitudes# values and beliefs. A customer@s buying behaviour may change to match the rest of the group@s beliefs and attitudes. +or e4ample if a close friend tells you of a bad e4perience in a particular shop you ,ill probably change your buying behaviour based on this information. $ocial 9lass: influences the type# 3uality# 3uantity# 3uality of the product that a customer buys. +or e4ample higher income earners ,ill purchase lu4ury cars to symboliIe their status. 9ulture and subculture: influences buying behaviour because it infiltrates all that ,e do in our everyday life. 6t determines ,hat people ,ear# ,hat and ho, ,e eat and ,here and ho, ,e live. &conomic *nfluences: ;conomic forces have enormous impacts on both business and consumers. They influence a business@s capacity to compete and a customer@s ,illingness and ability to spend. ;conomies do not al,ays e4perience constant gro,th. =oom: 6s a period of lo, unemployment and high incomes and inflation. =usinesses increase their production lines# and attempt to increase their market share by intensifying their promotional efforts. 9ustomers are ,illing to spend because they feel secure about their 1obs and source of income. 9ontraction: 6s a period of slo,ly rising unemployment ,ith incomes stabilising. The mood changes from optimism to one of caution and if this phase lasts for a long time# customers and business pessimistic. This can drastically decrease consumer spending and customers become price conscious. *ecession: sees unemployment reach high levels and incomes fall dramatically. 9ustomers and businesses lack confidence in the economy and a mood of deep pessimism persists.
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;4pansion: ?nemployment rates start to fall slightly and incomes begin to rise. Euring this e4pansion phase# marketing managers need to modify their marketing plans to tap into this rising prosperity. -o)ernment *nfluences: The government has a number of methods of either e4panding or contracting the economy8 these policies can directly or indirectly influence business activity and customers@ spending habits and as such ,ill influence the marketing plan. A number of la,s have been introduced that ,ill influence marketing decisions. 5arketing manager need to be fully informed about these la,s and must ad1ust their marketing strategies accordingly. +e)eloping Marketing Strategies: Market segmentation and differentiation of products and ser)ices: A business segments its markets so it can direct its marketing strategies to specific groups of customers rather than the total market. This allo,s the business to better satisfy the ,ants and needs of the targeted group. This occurs because the business is able to: *efine the marketing strategies used to influence consumer choice 9ommon variables for segmenting customer markets include demographic# geographic# lifestyle and behavioural. $ometimes a business is able to identify a primary and secondary market. A primary target market is the market segment at ,hich the most of the marketing resources are directed. A secondary target market is usually a smaller and less important market segment. 5ass marketing approach: 5ass marketing or a total marketing approach seeks a large range of customers. Aroducts that can be marketed using the mass marketing approach include basic food items# ,ater# gas and electricity. 9oncentrated or 7iche 5arkets: 7iche markets re3uire the business to direct its marketing mi4 to,ards one selected segment of the total market. The needs of customers in these markets are often neglected by large businesses because it is rarely profitable for them to alter their marketing mi4 for very small groups. Eifferentiation of products and services: Aroduct differentiation in its broadest sense is the process of developing and promoting differences bet,een the business@s products and those of its competitors. "roducts and Ser)ices: A product is a good or service# an idea or any combination of the three that can be offered in an e4change. All products are a combination of tangible and intangible attributes. Aositioning:
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Aroduct positioning refers to the development of a product image as compared ,ith the image of comparing products. /henever a ne, product is launched# the marketing manager needs to have clearly determined the desired position of the product. This ,ill be achieved through the product@s name# price# packaging# styling and promotion. =randing2 $ymbols and Fogos: A brand is a name# term8 symbol# design or any combination of these that identifies a specific product and distinguishes is from its competition. A brand name is the part of the brand that can be spoken. A brand symbol or logo is a graphic representation that identifies a business or product. To guard other businesses against using its brand name or symbol# a business can apply to have the name registered. This gives the business e4clusive rights to use the name or symbol and protect itself from infringement. The symbol T5 or * at the end of a brand name signify that the name or symbol is a registered trademark. Aackaging: Aackaging involves the development of a container and the graphic design for a product. /ell designed packaging ,ill give a positive impression of the product and encourage first time customers. +or e4ample# tasteful packaging can create an image of lu4ury# sensuality and e4clusiveness# helping to promote the product. 6n addition# packaging helps preserve# inform# protect and promote the product. "rice and "ricing Methods: Arice refers to the amount of money that a customer is prepared to offer in e4change for a product. A price set too high could mean lost sales unless superior benefits are offered. A price set too lo, could give off the perception of the product being cheap and nasty. Aricing methods: 2 9ost plus margin: is the simplest method# the business determines the total cost of production and then adds an amount for profit. This e4tra margin is referred to as the mark up. 2 5arket: =usiness sometimes sets prices according to the level of supply and demand2,hatever the market is prepared to pay. Then demand is high# prices are high. /hen demand is lo,# prices fall. 2 9ompetition =ased: this method is often used ,hen there is a large degree of competition from businesses producing similar products. A business can choose a price that is either belo,# e3ual to or above that of the competitors. Aricing $trategies: A number of strategies can be used by a business ,hen determining the price of the product# including the follo,ing: 2 Arice skimming: this occurs ,hen a business charges the highest price possible for innovative products . that is# they Bskim the cream@ off the market.
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2 Arice penetration: This occurs ,hen a business charges the lo,est price possible for a good or service# the strategy aims to 3uickly achieve a large market share for a product and is sometimes called mass market pricing. 2 Foss Feader: /hen businesses deliberately sell a product belo, its cost price to attract customers to the shop. This ,as a controv ersial move made by 9oles ,here milk ,as offered for J1 per litre# customers ,ere shopping at 9oles thinking that they ,ere receiving value for money although other products in the shop ,ere increased in price in order to cover the costs of the milk sale. 2 Arice lining: is a price strategy mainly used by retailers. The business chooses a limited number of key prices or price points for selected product lines. +or e4ample# a 1e,eller may offer a line of ,atches priced at J " and a more e4pensive line at J"". Arice and Kuality 6nteraction: Arice is important in positioning a product as it can create customer perceptions# a product image or even persuade the purchase 1ust based on the price and a small other number of factors. 7ormally# products of superior 3uality are sold at higher prices. This is usually due to the higher manufacturing cost involved in producing them. 6f a business charges a lo, price for a product# customers may perceive the product as Bcheap@# if a high price is charged the product and the product develops an aura of 3uality and status. This pricing strategy is kno,n as prestige pricing and is designed to encourage status conscious consumers to buy the product. "romotion: Aromotion describes the methods used by a business to inform# persuade and remind a target market about its products. To achieve these ob1ectives of informing# persuading and reminding# a promotion campaign attempts to: Attract ne, consumers by heightening a,areness of a particular product
6ncrease brand loyalty by reinforcing the image of the product ;ncourage e4isting customers to purchase more of the product Arovide information so customers can make informed decisions ;ncourage ne, and e4isting customers to purchase ne, products 9hange individuals@ behaviour through information or persuasion

;lements of the promotion mi4:

2 Aersonal $elling: involves activities of a sales representative directed to a customer in an attempt to make a sale. The ma1or advantage of this method is that the message can be modified to suit the individual customer@s circumstances.
2 Advertising: is a paid non personal message communicated through a mass medium. 6n Australia# businesses spend appro4imately JC billion a year

on various forms of advertising. Advertising may take many forms# from buying time on national television to ine4pensive leaflets or posters. Advertising media is a term for the many forms communication used to reach an audience. The five main advertising media includes television# radio# ne,spapers# magaIines and internet.
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2 =elo, the line promotions: are promotional activities for ,hich the business does not make use of an advertising agency. The promotional activities are designed and developed in house. The Bline@ is an imaginary boundary bet,een those businesses that pay a commission to e4ternal advertising agencies and those that do not. The main types of belo, the line promotions are mail catalogues and telemarketing. 2 Aublicity and public relations: Aublicity is any free ne,s story about a business@s products. Aublic relations are those activities aimed at creating and maintaining favourable relations bet,een a business and its customers. 6t is the role of public relations personal to design# implement and manage the publicity events of the business. The communication Arocess: A 9hannel is any method used for carrying a message8 t,o of the most common channels used for promotional communication include print and electronic media advertising. 7oise is any interference or distraction that affects any or all stages in the communication process. 0ften 9onsumers may be more ,illing to purchase a product if the message comes via a respected and trusted channel such as an opinion leader or by ,ord of mouth. 2 0pinion Feaders: An opinion leader is a person ,ho influences others# for e4ample actors# sports stars# musicians and models. 2 /ord of mouth communication: occurs ,hen people influence each other during conversations. +riend@s recommendations are very important# especially for the purchase of services8 often ,e use services of a mechanic#dentist or hairdresser because they are recommended by a friend. "lace: Eistributions and reason for intermediaries: The final Bp@ of the marketing mi4 is place# channels of distribution or marketing channels are the routes taken to get the product from the factory to the customer. The four most common channels of distribution are: 1: Aroducer to customer2 This is the simplest channel and involves no intermediaries# virtually all services use this method and as online shopping becomes more popular this is an increasing channel. 2: Aroducer to retailer to customer: A retailer is an intermediary ,ho buys from producers and resells to customers. This channel is often used for bulk or perishable products such as furniture fruit. : Aroducer to ,holesaler to retailer to customer: This is the most common method used for the distribution of consumer goods. A ,holesaler is an intermediary ,ho buys in bulk# from the producer# then resells in smaller 3uantities !: Aroducer to agent to ,holesaler to retailer to customer: An agent distributes products to ,holesalers but never o,ns the product. Agents are paid a commission by the producer. ?sually agents are ine4pensive# fre3uently used products. A business that does not have any sales representatives ,ill often use an agent instead. 9hannel 9hoice .including intensive# selective and e4clusive:
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5arket coverage refers to the number of outlets a firm chooses for its product. A business can decide to cover the market in one of three ,ays as follo,s# the difference being the intensity of coverage: 1: 6ntensive Eistribution: This occurs ,hen the business ,ishes to saturate the market ,ith its product. 9ustomers can shop at local outlets and be able to purchase the product. 5any convenience goods such as milk# lollies and ne,spapers# are distributed this ,ay. 2: $elective Eistribution: This involves using only a moderate proportion of all possible outlets. 9lothing# furniture and electrical appliances are often distributes using this method. The customer is prepared to travel and seek out a specific retail outlet that stocks a certain brand. : This is the use of only one retail outlet for a product in a large geographic area. This method of distribution is commonly used for e4clusive# e4pensive products. Ahysical Eistribution 6ssues: Ahysical Eistribution is all those activities concerned ,ith the efficient movement of the products from the producer to the customer. 2 Transport: The method of transportation a business uses ,ill largely depend on the type of product and the degree of service the business ,ishes to provide. The four most common methods of transportation are rail# road# sea and air. 2 /arehousing is a set of activities involved in receiving# storing and dispatching goods. A ,arehouse acts as a central organising point for the efficient delivery of products. 2 6nventory control is a system than maintains 3uantities and varieties of product appropriate for the target market. &n)ironmental effects on +istri ution: Technology: =usinesses are al,ays looking for different ,ays to distribute their products# the purchasing of products from a store or a supplier is the oldest and most common form of distribution. 7on2 $tore retailing is retailing activity conducted a,ay from the traditional store# is gaining more popularity. /ith rapid changes in electronic communication businesses are beginning to e4ploit types of electronic marketing as alternative methods. T,o of the most rapidly developing methods are telemarketing and internet marketing. 2 Telemarketing: 6s ,here offers are called in to consumers guaranteeing them huge saving. 2 6nteractive Technology and 6nternet 5arketing: 6t is no, relatively easy for any business to obtain a domain name and a ,ebsite and begin marketing its products via internet. Focal Hovernment: 5any businesses overlook the importance of local government regulations# any business using premises or land must first seek local government approval. Focal governments have authority over businesses using signs# outdoor seating etc and ,hilst fulfilling these la,s can be frustrating it is important to in order to ensure that public areas are safe and acceptable for all.
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&thical and .egal %spects of Marketing: 5arketing managers should never forget that the business e4ists because of its customers. =y satisfying customers a business may operate profitably. Eishonest or unethical marketing managers may ultimately drive customers a,ay. The ethics of sponsorship Eeals: $ponsorship agreements open up a variety of problems# such as: 0ver commercialisation of school Eirect marketing to children 'pester Ao,er( Health implications of promoting some food and drink products 6nfluence on the school curriculum. The ethics of product placement: Aroduct placement is the inclusion of advertising into entertainment. +or e4ample in the recent Lames =ond film the E=C became highly demanded due to its large part in the film. &n)ironmentally Responsi le "roducts: Hreen 5arketing: refers to the development# pricing# promotion and distribution of products that either do not harm or have minimal impact upon the environment. Hreen marketing provides businesses ne, opportunities ho,ever research sho,s that consumers may not be prepared to pay a higher cost to protect the environment# still ,ant to use convenience products# are confused about ,hich products are environmentally safe. M9onsumers need to be a,are of Bgreen ,ash@ products that appear t be environmentally friendly but are not. Other marketing ethical and legal issues: 9reation of 7eeds 'materialism(: 5aterialism is an individual@s desire to constantly ac3uire possessions. Those ,ho argue marketing does not encourage materialism# point out that marketing merely satisfies the e4isting needs of customers. 6mpact of *etail Eevelopments: *etailing ,ill further evolve ,ith developments such as: Finking of direct marketing to electronic databases. 6ntroduction of automatic checkout scanning systems that do not re3uire an operator. ?se of in2 store television presentations Arovision of internet ordering services Transformation of shopping malls into entertainment centres Along ,ith these developments ,ill come increased competition bet,een retailers. The pressure to survive in this intensely competitive environment may result in some retailers using 3uestionable marketing practices.
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$ugging: 6s selling under the guise of a survey# is a sales techni3ue disguised as market research. Although this techni3ue is not illegal# it does raise several ethical issues# including invasion of privacy and deception. Role of Customer .a/s: Trade Aractices: The trade practices act 1C>! is one of the most important pieces of legislation in Australia and has t,o ma1or purposes: To protect customers against undesirable practices# such as misrepresenting the contents of products or their place of protection. To regulate certain trade practices that restricts competition# hence the term Brestrictive trade practicesB. The government also ,ants to ensure that a number of businesses are operating at any one time in the same market to avoid the problem of monopolistic po,er. Consumer .a/s and Specific Marketing "ractices: Eeceptive and 5isleading advertising: ;ven though the trade practices act makes false or misleading advertising illegal# a number of methods are still used by some retailers. The most common include: +ine print: 6mportant conditions are ,ritten in small siIed print and are therefore difficult to read. =efore and after advertising: 9onsumers may be mislead by before and after advertisements ,here the comparison is distorted so that Bbefore@ images are ,orsened and after@ are enhanced. Tests and surveys: $ome advertisements make unsubstantiated claims8 for e4ample# stating that C out of 10 people prefer a product ,hen no survey has been conducted. 9ountry of origin: Accuracy in labelling is important8 for e4ample Bmade in Australia@ and product of Australia has t,o distinct meanings. Aackaging: The siIe and shape of the package may give a misleading impression of the contents. $pecial offer: Advertising may be misleading or deceptive to the imply that a special offer is available only for a limited time ,hen the offer is permanently available. =ait and s,itch: /hen a fe, products are advertised at e4tremely competitive prices to attract customers# ,hen these products 3uickly run out# customers are directed to purchase higher prices items. Arice discrimination: 6s the setting of different prices for a product in separate markets. The difference in price is possible because: The markets are geographically separated8 for e4ample# city and country prices
There is product differentiation ,ithin one market8 for e4ample# $eparate discounts and allo,ances being offered

different electricity prices for domestic and business users.

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6mplied conditions: Are the unspoken and un,ritten terms of a contract# these conditions are assumed to e4ist regardless of ,hether they ,ere especially mentioned or ,ritten into a contract. The t,o most important implied terms relating to customer purchases refer to the merchantable 3uality and fitness of the product. 5erchantable 3uality means that the product of a standard a reasonable person ,ould e4pect for the price. 5erchantable 3uality applies to most consumer contracts. +itness of purpose means that the product is suitable for the purpose for ,hich it is being sold. That is# it ,ill perform as the instructions or advertisements imply. /arranties: A ,arranty is a promise by the business to repair or replace faulty products. 6n recent years government legislation has made it necessary for businesses to state# clearly and simply# the terms and conditions of the ,arranty. *esale price maintenance: 0ccurs ,hen the manufactured or supplier insists that a retailer sell the product at a certain price. +or e4ample# if a distributer of television sets forced a retailer to charge a set price for a product8 this ,ould be vie,ed as an incidence of resale price or maintenance and therefore# a breach of the act.

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