Marketing Marketing is the process of developing a product and implementing a series of strategies aimed at correctly promoting, pricing and distributing the product to a core group of customers. The purpose of this is to determine what the business should be producing. Marketing is used primarily by a business as a method of enhancing its revenue streams and increasing the market’s awareness of its products.
The strategic role of marketing The strategic role of marketing extends also to society which includes: Choice- Businesses differentiate themselves from their competitors through price, product laity and features and service. All these provide consumers with greater choice when purchasing a product. Standard of living- Businesses will often develop and market products that improve and enhance standard of living. To provide consumers with better products. Employment- To provide a product to consumers, businesses must employ labor to assist in transforming input resources into finished products.
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Labor is also required to sell these goods and services. Brand awareness- Brand awareness refers to the extent that customers are aware of a product/ brand and its features. It is achieved through strong and effective marketing campaigns. All of this is done to increase the market share. Market share refers to the percentage of total sales a business has compared with its competitors in a particular market. It increases the business’s sales and profitability.
Interdependence with other key functions Each key business function must work effectively with other functions to ensure the goals of the business are achieved. Operation relates with marketing as it needs the data from marketing to know what to produce Human resources relates with racketing as staff must be motivated and skilled to develop products. It is through the marketing process that a business is able to determine the skills needed. Accounting and finance relates with marketing as the business needs to see how much money it can put into marketing.
Approaches to marketing Marketing is aimed at increasing product awareness and sales. There are three core approaches to marketing: Production approach (1920-sass)- Relies on the view that consumers base their purchasing decisions on the quality of the product. Selling approach- Based on the belief that a business will be successful in selling a reduce if it is able to promote the benefits of the product to its target market. It does not listen to the target market. Marketing approach- The basis of which is that the customer is at the core of all business activities.
It involves adopting a customer orientation with the belief that all actions in the business should be aimed at satisfying the needs of the customer Type of markets The production and sale of goods and services is not restricted or targeted solely to customers. Some organizations simply buy a finished good from a manufacturer to sell to consumers. There is a diverse range of markets that demand goods and revives. The type of markets that don’t sell to customer are: Resource markets- those markets where the production and sale of raw materials occurs.
Examples are BP Billion and ROI Tint. Industrial markets- where goods that are used as supplies in the production process are traded. E. G. Construction, agriculture, mining, manufacturing. Intermediate markets- commonly referred to as wholesalers. They sell products to retail businesses that have been produced by other organizations. E. G. Armstrong Electrical Wholesalers. Consumer markets Consumer markets consist of the following markets: Mass markets: apply to goods and services that appeal to all types of consumers.
Electricity, water and postal services are examples. Market segments: where a business chooses to focus on only one area of particular market. E. G. Women aged 20-50 years old. Niche markets: a smaller section of a market segment. E. G. Luxury cars. Chapter 7: influences on marketing Factors influencing consumer choice There are four main factors that influence consumer and organizational purchasing decisions. Psychological Influences- Psychological factors are personal characteristics of an individual that affect his or her buying behavior.
They include: Perception- is the process through which people select, organism and interpret information to create meaning. Individuals act on perceptions of reality rather than reality itself thus marketing managers must create a positive perception in the mind of the customer through certain images such as trendy and classy. Attitudes- An attitude is a person’s overall feeling about an object or activity. It generally influences the success or failure of a business’s marketing strategy. Lifestyle- Different lifestyles attract different types of products and services.
Personality and self-concept- The ay we view ourselves and the way we respond to other people’s perception of us. People that do not care about luxury, will not buy Role watches. Coloratura Influences- are forces exerted by other people and groups that affect an individual’s buying behavior. Family and Roles- Everyone occupies different roles in within the family and groups within the wider community. For example: men are more likely to be seen purchasing tools and cars whereas women purchase health care and laundry products.
However, roles are changing and marketers are beginning to understand that as well. Reference (Peer) Groups- A reference or peer group is a group of people with whom a person closely identifies, adopting their attitudes, values and beliefs. E. G. If a friend tells you that they had a bad experience at a certain store, you will most probably alter your buying behavior. Economic Influences- have an enormous impact on the buying behavior of businesses and customers. The level of economic activity fluctuates and its four distinct phases influences the marketing environment.
Boom- is a period of low unemployment and high economic growth which lead to higher incomes. This is the hash where businesses and consumers are optimistic about the future. Customers are willing to spend and businesses attempt to increase their market share by promoting heavily. The potential marketing during this phase is usually large with more sales. Contraction- is a period of high unemployment, slow economic growth and stabilizing incomes. Customers and businesses become pessimistic and reduce their spending and investment. Marketing plans during this phase stress the value and usability of the product.
Recession- sees unemployment reach high levels and incomes fall dramatically. There is a lack of confidence in the economy and a very small level of spending. Marketing during this time should concentrate on maintaining existing market share. Government Influences- and policies directly/indirectly influence business activity and customers’ spending habits, and as such, will influence the marketing plan. Interest rates are significant in determining the level of expenditure in the economy and the level of credit that consumers and business will access.
It does this through its use of fiscal and monetary policies, microeconomic reform and age restrictions placed on the purchase of specific products. Consumer laws Role of consumer laws The Commonwealth Government controls business behavior through the Competition and Consumer Act 2010 (Act). This legislation attempts to promote fair and competitive behavior in the marketplace. Deceptive and misleading advertising Some business will advertise in ways that are wrong or unethical.
Examples of deceptive and misleading advertising under the Competition and Consumer Act include: overstating the benefits that products provide offering discounts and special offers that don’t exist using bait and switch advertising- promotes a product that is heavily discounted even though the business has very limited supplies Price discrimination Price discrimination refers to the process of a business giving preference to some retail stores by providing them with stock at lower prices than is offered to the competitors of those retailers.
The competitors are being discriminated against by being forced to pay a higher price for a product that is identical. Implied conditions and warranties Implied conditions or terms are unspoken and unwritten terms in a contract. The two most important terms are: Merchantable quality- means that the product is off tankard a reasonable person would expect for the price. Fitness of purpose- means that the product is suitable for the purpose for which it is being sold. A warranty is a promise by the business to repair or replace faulty products.
All businesses have certain obligations with regard to the products they sell. Regardless of whether the product is carrying a warranty, a business must, by law, either refund a client’s money or offer an exchange of the good should the good be recognized to have been faulty at the time of leaving the store. This is why all products are said to have an implied warranty. Resale price maintenance Under the Competition and Consumer Act, a manufacturer cannot refuse to sell goods to a retailer who decides not to sell the good at the price that is suggested by the manufacturer.
A manufacturer cannot discriminate against stores for selling at a price that is lower than it has recommended. Ethical and legal aspects of marketing Ethics in marketing refers to a combination of broad principles that establish standards of behavior and guidelines for people working across the marketing industry. They are not enforceable through law. Truth, accuracy and good taste in advertising It is expected that when promotional material is distributed, this material represents information that is truthful, accurate and in good taste.
The Competition and Consumer Act prohibits a corporation from supplying consumer goods that do not comply with prescribed product safety standards. The Advertising Federation of Australia (FAA) is the peak body representing companies in advertising and marketing communications. It seeks to promote the best practices in advertising. Using somewhat controversial advertisements to promote social issues, while at that the same time selling its brand name. Products that may damage health Products and services that damage people’s health are regarded as “sin” products, so the government puts restrictions.
They include: restrictions on tobacco sponsorship entries into casinos Restricted opening hours for leagues and RSI clubs for gambling Packets contain health warnings for cigarettes Engaging in fair competition The role of the Australian Competition and Consumer Commission is to regulate business behavior. Unfair competitive behavior includes: price-fixing between two or more major competitors long-term loss leader – pricing strategy by undercutting smaller competitors sledding advertising regarding products Australian Competition and Consumer Commission The ACACIA attempts to regulate the level of competition within a range of industries.
It aims to promote fair and ethical behavior by businesses towards their competitors and allows businesses to lodge complaints against competitors regarding behavior that they deem to be unfair and against the Acts. Sunning Selling under the appearance of a survey is a sales technique disguised as market research. This technique is not illegal, however, it does raise several ethical issues including invasion of privacy and deception. Chapter 8: marketing process Introduction Planning is a central activity of any organization.
It allows a business to examine its current position within the market, consider opportunities to strengthen that position and determine the most effective method of implementing the required changes. The elements off marketing plan are: Executive summary Situational analysis Market research Establishing market objectives Identifying the target market Developing marketing strategies Implementing, monitoring and controlling The executive summary The executive summary provides a brief description of current issues facing the equines. It provides an overview of the goals and strategies that are to be featured in the plan.
The situational analysis The situational analysis provides the firm with an opportunity to examine its current position within the market. There are two key elements to a situational analysis. SOOT The use of the SOOT exercise (Strengths, Weaknesses, Opportunities and Threats) provides the information needed to complete the situational analysis and gives a clear indication of the business’s position compared with its competitors. The Strengths and Weaknesses of the business are internal forces as they operate inside he business and a largely controlled by it. Does the business have a good reputation amongst its stakeholders?
Is the business financially stable? Opportunities and Threats are the external forces as they operate outside the business and cannot be controlled by the business. What is the degree of competition? Are competitors reacting to the business’s products? Product lifestyle Product analysis examines the current position of the goods and/or services that a business produces in the marketplace. The business life cycle- different phases over the course of its existence. There are four phases, or stages, to the business life cycle: Establishment – when the new product is first launched. Profits are limited because of the lack of revenue.
The business is developing a loyal customer base. Penetration policies will be used. (using a low price to establish quick entry. Growth- profitability will grow as sales expand, costs will increase during this stage. Competitors will compete for market share and marketing strategies will need to change. Businesses lower their price to deal with competitors. Maturity -steady income stream with limited prospects, marketing strategies edified to ensure profit continues. They try to differentiate themselves by price differentiation, after-sales service, or making it easier for consumers to access the product. Cost-maturity – Increased competition and changing consumer preferences. There are 4 paths: decline- competition and changes in the business environment. Business begins to decline and lose market share renewal- products revivalists, new promotional campaigns, brand altered. New strategies may be developed to attract a new audience. Steady state- no change, profits stay the same cessation- the business is shut down. The business should know the type of information that it requires e. G. Customer profiles, brand awareness etc. Once information needs are established, the business can determine the most appropriate research method.
Data Collection (primary and secondary)- Marketing data refers to the information, usually expressed as facts and figures, relevant to the defined marketing problem. Primary data are the facts and figures collected from original sources for the purpose of the specific research problem. This data can be collected by the business itself but it is very expensive and time consuming which is why it is usually outsourced. Three types are: survey- personal interviews, questionnaires and telemarketing, observation- personal and mechanical look at research and surveillance footage. E. G. Skiing question experimental- field tests to evaluate cause and effect. E. G. Showing a film Secondary data is information that has already been collected by some other person or organization. The two types of secondary data are: internal data- information that has been collected from internal sources such as statistics, feedback and reports, external data- published data from other sources such as magazines, internet and the ABS. Data analysis and interpretation- Statistical interpretation analysis is the process of focusing on the data that represents average, typical or deviations from typical patterns.
Businesses will analyses and interpret the collected data so management can gain a better understanding of the impact of the data on the operations of the business, and then determine the course of action Businesses generally adopt a SMART approach to setting objectives: S = specific – the objective needs to be clear M = measurable – the business needs to find ways to measure success A = achievable the business needs to have the financial and human resources R = realistic – the objective should be reasonable T = time – the time frame must be reasonable Marketing objectives should be closely aligned to the overall business objectives.
Such objectives can be measured and should include specific targets to be met. Increasing market share- Market share refers to the business’s share of the total industry sales for a particular market. Increasing market share is of prime importance for each of the companies involved in any market that is dominated by only a few large businesses. Expanding the product range- The product mix is the total range of the products offered by the business. Businesses are usually eager to increase their product mix as the same mix will not be effective in the long term due the changing tastes and preferences of consumers.
Expanding existing markets- The demand for some products varies greatly from one geographic location to another. Geographical representation refers to the presence of a business and the range of its products across a suburb, state, city, town or country. E. G. Fluoroscope Steel is a transnational corporation that allows it to be near TTS’ customers. Maximizing customer service- Customer service means responding to the needs and problems of the customer and is perhaps the most important objective. High levels of customer services usually results in improved customer satisfaction.
Developing marketing strategies. Marketing involves a number of strategies designed to price, promote and place products in the market place. The marketing mix consists of 4 elements called the Product- The product is a combination of: quality, design, name, warranty, packaging and exclusive features. Customers buy products that satisfy their needs as well as roved them with intangible benefits. Price- The right price needs to be chosen to prevent the product from not selling at all if the price is too high or receiving lower turnover as well as a cheap image if the price is too low.
Promotion- The promotion strategy is the method that is to be used by the business to inform, persuade and remind customers about its products. Place- Deals with the distribution of the good or service and consists of two parts which are: transportation and the number of intermediaries involved. Implementation- is the process of putting the marketing strategies into operation. Implementation of the marketing plan involves integrating it with all the sections of the business, establishing lines of communication, motivating the employees and making them familiar with the marketing objectives and strategies.
Monitoring and controlling- Monitoring means checking and observing the actual progress of the marketing plan. The information collected is used to control the plan. Controlling involves the comparison of planned performance against actual performance and taking corrective action to make sure the objectives are achieved. The controlling process requires the business to outline what is to be accomplished by establishing a performance standard which is a forecast level of performance against which actual performance can be compared.
The common forms of analysis are: Sales Analysis- is the comparing of actual sales with forecast sales to determine the effectiveness of the marketing strategy. Benefit of the sales analysis is that it is inexpensive to produce however the figures may not be 100% accurate. Market Share analysis/ratios- refers to a business evaluating its’ marketing strategies imparted to its competitors through analyzing the business market. Marketing profitability analysis- is a method in which the business breaks down the total marketing costs into specific marketing activities.
By assessing the costs of the specific marketing activities in relation to the profit levels, the manager can assess the effectiveness of each activity. Developing a financial forecast- A business must develop a financial forecast that details the revenues and expenditures for each strategy when evaluating alternatives. Cost benefit analysis is a helpful tool used to itemize fixed and variable sots and draw up a profit forecast showing profit and return.
Developing a financial forecast requires two steps that are: cost estimate- how much the marketing plan is expected to cost and revenue estimate- how much revenue will be generated as a result. Chapter 9- marketing strategies When devising a marketing strategy, it is important to know who to target the marketing act. Promotional and pricing strategies must cater to the target group chosen. Market segmentation Market segmentation is the process of breaking down a total market into small markets based on the similar characteristics off customer group.
By focusing on a reticular target group, a business is able to identify the specific needs of this group. The marketing plan would consider the features that consumer of the target group so that marketing strategies can be determined. Types of segmentation Types of segmentation are: Geographic segmentation: dividing a market or customer groups into smaller markets based on different geographic locations. By focusing on a particular target group, a business is able to identify the specific needs of this group and tailor its marketing plan accordingly..
Demographic segmentation: The process of dividing a market into smaller markets eased on the customers’ age, gender. E. G. Girls at older ages would buy more mature magazines. Girls would not buy car magazines. Behavioral segmentation: dividing a market based on people’s knowledge of, attitudes towards and use of a product. Some factors are: Purchase occasion: when customer is most likely to purchase products Usage rate: how often customers use the business’s good or service. E. G. Internet providers have many packages depending on rate of use . User loyalty: to develop a loyal customer base. E. G.