Harrison slattery
Marketing Revision
Marketing is the total system of interacting activities such as planning, promotion, price and distribution all involved in in presenting products and services to customers
What is the strategic role of marketing?
The strategic role of marketing Is to translate the financial goal of profit maximisation into a reality. Marketing strategies (promotion, price, planning, distribution) are activities used to attain greater sales.
Types of markets
Industrial: Individuals/groups engaged in secondary (e.g. Steel factories) and tertiary production (e.g. Retailers like IGA)
Intermediate: Wholesalers/retailers who purchase finished goods and sell them with a mark-up (Coles, IGA)
Resource: groups/individuals engaged in primary production, buying and selling (coal mining for example BHP)
Consumer (niche, mass, micro)
INFLUENCES ON MARKETING
· Factors influencing customer choice
What are some factors (psychological, sociocultural, economic, government) that influence customer choice ?
Customer choice is the buying behaviour of customers. Customer choice can be influenced by a number of factors, such as psychological factors, sociocultural factors, economic factors and government factors.
Psychological factors: Influences within a person to buy a certain product/service
-Attitude: Persons feelings about the product.
-Personality: The characteristics that make up a person. May buy product to reflect their personality.
-Perceptions: How a product is viewed
-Motives: A reason to buy a product, based on its taste, smell, look.
-Learning: A change in the individuals behaviour based on the product.
Sociocultural influences: Forces exerted by people that affect customer behaviour
-Social Class: A persons status in society, based on education, income, occupation. Influences the type, quantity and quality of product someone buys.
-Culture: Determines what people eat, wear, buy.
-Family Roles:
-Peer Group: A group of people a person closely identifies with. Buying behaviour may change to match the rest of the groups beliefs/attitudes.
Economic influences: A businesses capacity to compete and a customers willingness to spend.
-Boom: A period of low unemployment and rising incomes. Business/consumers are optimistic, so they increase product/spend more.
-Recession: A period of high unemployment and incomes fall dramatically. Spending confidence reach low levels
Government factors: Governments can introduce policies to alter or influence business activities and spending habits of customers.
· Consumer Laws
Protect the rights of customers purchasing goods/services
Sets out the business obligations when selling goods/services in Australia
EXAMPLE: Competition & Consumers Act 2010
- This acts protects consumers against undesirable business practices and prohibits various unfair business practices
- Administered/enforced by the ACCC (Australian Competition and Consumer Commission)
Deceptive and misleading advertising
-Products must not be advertised as having a specific trait or quality when it does not -Can include country of manufacture, packaging, special offers.
-These can convey an unrealistic image of the product or service.
Price Discrimination
-Setting different prices based on geopgraphic location
-EXAMPLE: Sony ps4 in USA is $400, in AUS it is $500
Implied Conditions – consumer guarantees
-Unspoken/unwritten terms of a contract that are assumed to exist.
--EXAMPLE: A cheaper products is implied to be worse than a more expensive product.
Warranties
· Ethical
Refers to conduct that goes beyond the legal requirements.
Truth, accuracy and good taste in a dvertising:
May be unethical if a business advertises a product as being “low fat” or “special” without stating why
can include vague statements, concealed facts and exaggerated claims.
EXAMPLE: Coles in 2014, fined $3 million for advertising their bread as “freshly baked in-store”
Exaggerated claims is also known as puffery. This is exaggerated praise for promotional purposes
Engaging in fair competition
Businesses compete against each other to attract the greatest number of customers
Weasel words = vague statements
EXAMPLE:
Hungry jacks app
- Allowed users to score a promotion at any hungry jacks restaurant.
- Aimed at young children
- Dietitians say it promotes child hood obesity
MARKETING PROCESS
Involves six steps
1. Situational awareness
2. Market Research
3. Establishing market objectives
4. Identifying target markets
5. Developing market strategies
6. Implementation, monitoring, controlling.
· Situational Awareness
Determines whether a business has an understanding on its current business position
-Involves the use of a SWOT analysis & a products life cycle
SWOT ANAYLSIS
An analysis of a business internal strengths and weaknesses and external opportunities and threats.
Internal = What a business controls
External = What a business does not control
PRODUCT LIFE CYCLE
Introduction = Product/service is introduced, consumer market is established, promotion directed at specific audiences
Growth = Market share and use of promotion increases and targets more markets, quality is maintained
Maturity = Sales plateau, products try to differentiate from others, price may decline
Decline = sales decrease, promotion discontinued, price lowered to sell remaining stock.
EXAMPLE: VOLKSWAGEN BEETLE IN SNAPSHOT BOOK
· Market Research
Collecting, recording and analysing info concerning a specific marketing problem.
Can minimise the risk of failure for a product/services introduction
Steps
1. Determining info needs: Establish what kind of information is required.
2. Data collection (Primary + secondary) : Can be done through survey (asking members of a group), observation (recording behaviour of customers) or experiment methods (Altering factors under tightly controlled conditions to evaluate cause and effect)
3. Data analysis and interpretation: Draw conclusions from the data, then interpret the data.
· Establishing Market Objectives
Realistic and measurable goals to be achieved through the marketing plan.
Most common goals include
- Increasing market share
- Profit maximisation
- Expanding product range
- Increasing customer service
1. Increasing market share: Market share refers to the business share of the total industry sales for a product. SNAPSHOT IN BOOK
2. Expanding product range: The total range of products a business offers. Expanding this means to introduce more products over a time period. To expand businesses must understand customer needs and wants. SNAPSHOT IN BOOK
3. Increasing customer service: This means responding to the needs and wants of customers. High levels of customers satisfaction increase customer loyalty and the possibility of repeat purchases . EXAMPLE: hotels regularly follow up your stay with a questionnaire regarding your stay
· Identifying Target Markets
Determining who a business is aiming to sell their product/service too. A business picks a target market to direct its marketing strategies at.
Based on
· demographic
· psycho-graphic
· geographic
· product related.
TERMS
Potential Market: Set of consumers who have interest in the product.
Penetrated market: Consumers who have already bought the product.
Primary Target Market: Major market segment that most marketing resources are directed. They will purchase most of the production
Secondary Target Market: Usually a smaller and less important segment. They will purchase the product in small quantities
There are 3 approaches to identifying a businesses target market
1. Mass Marketing
Mass Marketing seeks a large range of customers. Usually only selling one product with little variation (EXAMPLE: Coca-cola)
2. Market Segment Approach
This is when the total market is subdivided into segments. Each segment is targeted individually.
3. Niche Market
A narrowly selected target market (EXAMPLE: local bakery)
· Developing Marketing Strategies
These are actions undertaken to achieve the business marketing objectives through the marketing mix.
The marketing mix is the 4 P's,
· Price
· Production
· Promotional
· Place (also called Distribution)
The extended Marketing mix (the 7 P's) includes People, Processes and Physical Evidence
People:
· The quality of interaction between the business and customers
· Employees determine the quality of service customers with receive.
· Customers judge or develop perceptions based on the service they receive from employees.
· A good quality interaction with customers can give a business a competitive advantage
Processes:
· Refers to the flow of activities that a business will follow in its delivery of a service.
· Well design and organised processes assist employees in delivering an efficient service. Poorly implemented and designed processes will lose customers for the business.
· EXAMPLE: A restaurant that keeps customers waiting has inefficient processes and will lose customers.
Physical Evidence:
· Refers to the environment in which the service is delivered. The type of image your business portrays through its physical appearance such as premises, appearance of staff, vehicles, signage and website.
· EXAMPLE: A workplace with poorly dressed staff and is messy is going to lose customers compared to one that has well groomed staff and is clean.
· Implementation, Monitoring and Controlling
How to implement, monitor and control the marketing plan.
Implementation: The process of putting the marketing strategies into operation.
For effective implementation, a business must..
· Clearly communicate all plans with employees
· Ensure staff are motivated to implement marketing plans
· Outline how the change will be monitored
· Resources for the marketing plan are allocated
· Cost benefit analysis is correct
Monitoring: Checking/observing the actual progress of the marketing plan. Looks at real time info at each stage of the marketing process
Controlling: Involves the comparison of actual performance against planned performance & taking corrective action to ensure that the marketing objectives are being achieved.
A KPI (Key performance indicator) is to be used to establish a forecast level of performance which actual performance can be measured against.
The KPI's that can be used include:
· Sales analysis
· Market share analysis
· Market profitability analysis
Sales analysis:
The comparison of actual sales to forecasted sales
Determines how effective a marketing strategy is
Easy to collect and process, does not reveal the profit level however
Market Share analysis
Comparing a businesses marketing strategy to its competitors (EXAMPLE: IGA to Coles)
A business can evaluate whether an increase/decrease in sales is a result of the marketing strategy or an uncontrollable external factor (EXAMPLE: the economy)
Market Profitability analysis
Using this a business breaks down the total marketing costs into specific marketing activities, such as advertising, transport, admin, ordering process and so on.
By comparing the cost of each activity, a business can determine the effectiveness of each activity.
Once the results for the KPI's have been calculated, a business is in a position to determine which objectives are being met and which are not. Based on this info the marketing plan can be modified or revised.
Can be changed by...
· Changes in the marketing mix (4 P's)
· New product development
· Product deletion
Marketing Strategies
These are plans to meet marketing objectives. A good understanding of the marketing mix and the 7 p’s, market segmentation and product/service differentiation is need to develop appropriate marketing strategies
Main goal of a marketing manager is to develop a maintain a marketing mix that precisely matches the needs of the consumers in the target market.
· Market segmentation, product/service differentiation and positioning.
Marketing Segmentation
Involves dividing the total market into segments, a business then selects one of the segments to be its target market.
Ultimate aim to to increase sales and profits by understanding and responding to different target customers.
A market can be divided according to 4 main variables:
· Demographic: Features of a population
· Geographic: locations, rural or urban
· Psychographic: Personality, traits
· Behavioural: Customers relationship with the product
Product/service Differentiation and Positioning
Differentiation refers to the process of developing and promoting differences between the business products/services.
Can include difference in price, quality, labelling, packaging, amount of features for example
Positioning refers to the technique were marketers try to create an “Image” for a product. Effects how potential buyers perceive the product.
EXAMPLE: Rolex is seen as an expensive product for high class people
· Products – Good and/or Services (brand, packaging)
Product – goods/services
Products are good/services exchanged to the purpose of satisfying a need/want.
Can be tangible (real, physical,) or intangible (not physical, like a DVD)
Total Product concept is the combination of tangible/intangible concepts you get when buying a product
EXAMPLE: A Restaurant dinner could include food (tangible) and live music (intangible).
Product Branding
This is term, name, symbol or design a product/service is identified with, that distinguishes them from its competitors
Helps consumers identify certain and specific products
Reduces perceived risk of the product, you know?
Gains psychological reward that comes from purchasing a brand that has status or prestige
EXAMPLES: Mooloo milk, Mambo, apple, Sony, steam, Big M, Rockstar
For businesses, they are able to gain repeat business, encourages customers loyalty, new products are able to be introduce easily under that same brand name and promotion for one product automatically promotes their other products.
A brand symbol or logo is a graphic representation that identifies a business or product. In most cases, the brand name ad logo work together unanimously. EXAMPLE: The nike “swipe”
Some brands are privately owned by retailers or wholesales, usually for exclusivity, and the business can gain more profits from their sales. EXAMPLE: Myer used Blaq and Miss Shop
Some brands are generic brands, meaning they are 'no name” brands. EXAMPLE: Black & gold
Packaging
Involves the development of a container and the graphic design for the product
Well designed packaging can give a positive impression of the product and encourage first time customers
Packaging:
· Preserves the product
· Protects the product from damage
· Attracts customer attraction
· Assists the display of the the product
· makes transportation and storage easier
· Price including pricing methods – cost, market, competition-based
Price refers to the amount of money a customer is prepared to offer in exchange for a businesses product
Price too high and customers wont buy the product, but a price too low and customers may think the quality is inferior
Of all the elements in the marketing mix, price is the most flexible. It can adjusted quickly in response to competitors actions and changes in the marketplace
Pricing Methods
A businesses pricing methods are influenced by internal and external factors