Marketing

Strategic role of marketing goods and services

Marketing is a total system of interacting activities designed to plan, price, promote and distribute
products to present and potential customers.
Planning, specifically strategic planning, is essential to long term business success as it encourages
businesses to set goals and devise strategies on how they will achieve those goals. To achieve these
goals, businesses may devise a marketing plan which is a document that lists activities aimed at
achieving marketing outcomes. It provides a template for future action. There are two main strategic
goals related to marketing:
 Profit maximisation: occurs when there is a maximum difference between total revenue
coming into the business and the total costs being paid out.
 Customer orientation: is placing customer satisfaction at the core of the business’ decisions
to ensure the business needs their needs and wants.
To develop customer awareness and demand, and thus form a customer base, an organised
marketing campaign is necessary, starting with the development of a marketing plan. Without a
marketing strategy, financial disaster is inevitable. Many new inventions become commercial failures
because they have not been marketed adequately.
To achieve profit maximisation and customer orientation, the marketing plan should be the focus of
both short- and long-term planning for three reasons:
1) The marketing plan outlines the strategies to be used to bring the buyer and seller together.
2) The core of marketing is satisfying existing customer wants, which should lead to repeat
sales.
3) Marketing is the revenue- generating activity of any business. Nothing is achieved until a sale
is made.

Interdependence with other Key business functions

Interdependence refers to the mutual dependence that the key business functions have on one
another. The marketing concept is a business philosophy that states that all sections of the business
are involved in satisfying a customer’s needs and wants while achieving the business’s goals.
Production approach
The production approach allows for businesses to focus on improving the production methods used
to make goods and services. The Industrial Revolution created huge consumer demand for goods
that production could not keep up with so as long as businesses made the product, the consumer
bought it. There is little regard for consumer needs and selling was now secondary. Under this
approach, marketing consisted of simply taking orders and delivering products.

Selling approach
The selling approach emphasises selling due to increased competition in the marketplace. During the
time of depression, there was overcapacity, supply > demand, lots of competition, this resulted in the
hard sell approach. Focus was on promotion and less emphasis on quality products and efficient
financing. This approach emphasised persuasive sales techniques to convince the consumer to
purchase the business’s products.

Marketing approach
The marketing approach focuses on finding out what consumers want through market research. An
increase in discretionary income has meant businesses can focus not just on customers’ needs BUT
also wants. Businesses must now identify customer wants before production. There are 3 focuses on
the marketing approach:
- Corporate Social Responsibility: growing public concern over the environment has meant
marketing managers must ensure products meet ecological expectations while promoting
this.
- Customer orientation: involves collecting customer information and using this to create
efficient and effective strategies.
- Relationship marketing: Is the development of long-term and cost-effective relationships
with individual customers.

Types of Markets

A market is a group of individuals, organizations or both that need or want products.

Resource market
Consists of individuals or businesses engaged in all forms of primary production e.g. mining,
agriculture, forestry

Industrial market
Includes industries and businesses that purchase capital goods.

Intermediate market
Consists of wholesalers and retailers who purchase finished products and resell them to make a
profit e.g. furniture stores

Consumer market
Consists of individuals who consume or use goods and services.

Mass market
The seller mass produces, distributes, and promotes one product to all buyers.

Niche market
A specialised market segment with specific needs.

Factors influencing customer choice

Marketers need to closely follow consumer behaviour in order to see the decisions of goods and
services they search for to effectively predict customer trends.

Psychological Influences
Psychological factors are personal factors within an individual that affect their decisions and
preferences. There are five main psychological factors influencing customer choice: perception,
motives, personality and self-image, and learning.
Perception is the process through which people select, organise, and interpret information to create
meaning. Marketing managers are extremely aware that they must create a positive or favourable
perception about their product in the mind of the consumer – they will not normally purchase a
product that they perceive as inferior.
A motive is the reason that makes an individual do something – these include: comfort, health,
safety, ambition, taste, pleasure, fear, amusement, cleanliness, and the approval of others.
Advertising attempts to motivate the customer to buy the product.
An individual’s personality is the collection of all the behaviours and characteristics that make up
that person. An individual’s self-image relates to how a person views himself or herself – we all have
an image of who we are, and we reinforce this image through our purchases.
Learning refers to changes in an individual’s behaviour caused by information and experiences.
Successful marketing strategies may assist customer learning that encourages brand loyalty
(favourable attitude towards a single brand resulting in repeat sales).

Sociocultural Influences
Sociocultural influences are forces exerted by other people and groups that affect an individual’s
buying behaviour. There are four main sociocultural factors: social class, culture and subculture,
family and roles, and reference (peer) group.
Social class or socioeconomic status refers to a person’s relative rank in society, based on his or her
education, income, or occupation. Social class influences the type, quality and quantity of products a
customer buys.
Culture is all the learned values, beliefs, behaviours, and traditions shared by a society – these
influences buying behaviour as it determines what people wear, what and how they eat, and where
and how they live.
Different family roles influence buying behaviour – e.g., most women still make buying decisions
related to healthcare products, food, and laundry supplies.
A reference or peer group is a group of people with whom a person closely identifies, adopting their
attitudes, values, and beliefs. The rest of the group may influence an individual’s buying behaviour.
Alternatively, if friend buys expensive clothes, so will you.

Economic Influences
Economic forces influence a business’s capacity to compete and a customer’s willingness and ability
to spend.
A boom is a period of low unemployment and rising incomes and therefore businesses increase their
production lines and attempt to increase their market share. Customers are willing to spend and
therefore marketing potential is large during this time.
A recession sees unemployment reach high levels and incomes fall dramatically. This means that
customers reduce their spending – and therefore marketing plans should stress the value and
usefulness of product.
Government Influences
The government implements a variety of policies at different times to influence the level of economic
activity. These policies directly or indirectly influence business activity and customers spending
habits. Laws such as the Competition and Consumer Act 2010 (Cwlth), Sale of Goods Act 1923 (NSW)
and the Fair-Trading Act 1987 (NSW) – all influence marketing decisions. Governments also play an
important social role in influencing customers’ purchasing behaviour. Age restrictions on the
purchase of alcohol and tobacco and censorship warnings on television programs and films reflect
the government’s role in promoting social responsibility in the community.

Consumer Laws

Consumer Laws are laws that influence the marketing practices of businesses by setting clear
standards for interaction with customers and the promotion of products, such as the Australian
Consumer Law (ACL) which regulates business practices and consumer transaction.

Competition and Consumer Act 2010:

The Competition and Consumer Act 2010 protects consumers against undesirable practices, such as
misrepresenting the contents of products, their place of production, and misleading and deceptive
advertising, and regulates certain trade practices that restricts competition. It is enforced by the
Australian Competition and Consumer Act (ACCC) and the Australian Securities and Investments
Commission (ASIC). Businesses must make sure they are up to date with the current laws and that
they apply them to them to all marketing practices. Any breaches of any consumer protection
provisions can result in the ACCC taking civil or criminal proceedings against the business. The
maximum penalties for companies per breach of the ACL were increased to $10 million or 10% of
annual turnover in the preceding 12 months. Penalties against individuals under the ACL also
increased to $500,000 per breach.

Deceptive and Misleading Advertising

Deceptive and Misleading Advertising is false or misleading claims in advertising. When a business
makes any representation, the business must ensure that the representation is not untrue or false
and is not likely to mislead the type of consumers at which the advertisement is targeted. Even
though illegal, a number of methods are still used by some businesses.
- Bait advertising involves advertising products that are not available, or only available in very
limited quantities at reduced prices to attract customers. When these products run out,
customers are quickly directed to higher priced items.
- Fine print is when important conditions written in small-sized print and difficult to read
- Before and after advertisements are where consumers are forced to fall for distorted
comparisons where the ‘before’ images are worsened and ‘after’ images enhanced
- Tests and surveys: unsubstantiated claims when no survey has been conducted
- Special offer is when ads imply that a special offer is available for only a limited period, when
in fact the offer is continuously available
- Dishonest advertising is when an advertisement uses words that are deceptive or claims that
a product has some specific quality when it does not.

Price Discrimination
Price discrimination is. The difference in price is possible because:
- The markets are geographically separated.
- There is product differentiation within the one market.
This prohibition also applies to discounts given, credits, rebates, services, and payment
arrangements. This means that a business cannot give favoured treatment to some customers. It is
enforced by the ACC.

Implied Conditions
Implied conditions are the unspoken and unwritten terms of a contract. The Australian Consumer
Law established consumer guarantees, providing customers with rights to certain remedies from
retailers and manufacturers where goods purchased fail to comply with the consumer guarantees
provisions in the ACL. The most important implied term is acceptable quality - products that are safe,
lasting and with no faults, look acceptable and do all the things someone would normally expect
them to do.

Warranties
A warranty is a promise made by a business that they will correct any defects in the goods that they
produce. The law requires businesses to clearly state the terms and conditions of the warranty. False
or misleading statements concerning the existence, exclusion or certain conditions of the warranty
are prohibited under the ACC. Also regards refunds and exchanges.

Refunds and Exchanges

A business is required by law to offer a refund if the products provided are faulty, if they do not
match the description or a sample, if they fail to do the job they were supposed to do. There is no
obligation to offer a refund if the customer has simply changed their mind, has found the same
product at a cheaper price in another store, or damage has occurred after the purchase was made.
The ACC gives consumers certain rights and remedies.

Ethical Influences

Ethical Marketing is honest, transparent, and morally responsible marketing practices. Critics of
marketing argue that it lacks a strong code of professional conduct and sometimes blurs the lines
between what is ethically right and wrong.

Truth and Accuracy in Advertising

Advertising is a paid non-personal message communicated through a mass medium. However, some
advertising exaggerate claims by overstating them, as well as telling untruths due to concealed facts
which omit important information, deceiving consumers. Ethical businesses should ensure their
advertising is truthful as they can be held morally responsible for misleading the public.
E.g., a business may use the term ‘special’ – to a customer that means reduced price while the
business may interpret the word to mean that the product is distinct or unique. The unethical
practice of concealed facts can severely harm the trust customers have in a product.

Puffery refers to exaggerated claims used for promotional purposes, that no reasonable person
would take as factual. Vague statements are statements using words so ambiguous that the
consumer will assume the advertiser’s intended message. These words are deliberately misleading.

Good taste in advertising

There is usually common agreement as to what society considers acceptable and marketers must be
aware of community sensitivities. Within society, there is recognition of the growing role that mass
media is playing in children’s lives, and the fact that advertisers and marketers are now targeting
children more than ever. One area of marketing to children that has received widespread publicity in
Australia in recent years is the sexualisation of children in advertising.
Products That May Damage Health
All consumer products supplied must be safe and meet consumer guarantees under the ACL.
Businesses cannot sell banned products and must ensure that their products or product-related
services comply with the relevant mandatory statements before offered for sale. Consumer
guarantees give people the right to a refund if a product is unsafe. Consumers can seek
compensation for damages and loss caused by a safety defect in products.
There are also two mandatory notification requirements under the ACL. If there is a risk that a
product will or may cause injury, it must be recalled. Awareness of a death, serious injury or illness
associated with a product a business supplies, must be reported within two days, which is known as
mandatory reporting.

Engaging in Fair Competition

Businesses compete against each other to attract the greatest number of customers. There may be a
temptation for marketers to engage in unfair strategies, which ultimately result in consumer
exploitation. Marketers can use a corporate ethical marketing policy to help ensure the business is
engaging in fair competition. The Competition and Consumer Act 2010 requires businesses to
compete fairly and contains provisions relating to fair competition. Some examples of anti-
competitive conduct that is prohibited include: Cartel conduct where businesses that would normally
be in competition with each other agree to act together which would enable them to fix prices, rig
bids, share markets or restrict outputs, anti-competitive agreements, misuse of market power, and
mergers and acquisitions where it could substantially reduce competition in a particular market.

Sugging
Selling Under the Guise of a Survey – disguised as market research. Invasion of privacy and
deception. Luring them in by making them think they are assisting an organisation by answering a
few questions when in actual fact they are being led to buy a product.

Qantas must sure they adhere to the Competition and Consumer Act. Qantas was fined
millions by the ACC after colluding with other airlines to fix fuel surcharges on its freight
to the US. Qantas was fined another $2 million in 2019 for misleading customers about
refund rights during delays or cancellations on Jetstar flights. The ACCC has launched legal
action in 2023 alleging Qantas engaged in false, misleading and deceptive conduct by
continuing to sell tickets on flights that had been cancelled during COVID.

Qantas has articulated plans aimed at reducing its environmental impact, involving
measures such as the reduction of 100 million single-use plastics and a commitment to
eliminating waste destined for landfills. The airlines faced accusations of anti-competitive
behaviour, including alleged influence over government decisions to block Qatar’s efforts
to expand flights to Australia.

Situational analysis

The most crucial step of the marketing plan is that management has a precise understanding of the
business’s current position and a clear picture of where it is heading. For this, a situational analysis
must be undertaken.

Situational analysis is the use of SWOT and product life cycle to determine where a business is
positioned compared to its competitors. By identifying its strengths, then acting on opportunities it
sees present in the business is able to determine appropriate marketing strategies and apply the one
which will best achieve the objectives of the company. To achieve this effectively, a business will also
determine where the product sits in the product life cycle as the appropriate strategy needed will
differ on whether a product is in the introduction, growth, maturity or decline phase.

SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis

A SWOT analysis involves the identification and analysis of the internal strengths and weaknesses of
the business, and the opportunities in, and threats from, the external environment. It provides the
information needed to complete the situational analysis and gives a clear indication of the business’s
position compared with its competitors.

Product Life Cycle

The product life cycle consists of the stages a product passes through introduction, growth, maturity,
and decline.
Introduction Stage: The business tries to increase consumer awareness and build a market share for
the new product.
- Product brand and reliability are established.
- Price is often lower than competitors.
- Promotion directed at early buyers – and communication educates potential customers.
- Distribution is selective – consumers form an acceptance of the product.
Growth Stage: The producers of the product actively pursue brand acceptance and market share.
- Product quality is maintained and improved, and support services may be added.
- Price per unit of production is maintained - increased customer demand and market share.
- Promotion now seeks a wider audience.
- Distribution channels are increased as the product becomes more popular.
Maturity Phase: Sales plateau as the market becomes saturated:
- Product features and packaging try to differentiate.
- Price may need to adjust downwards to hold off competitors.
- Promotion continues to suggest the product is tried and true – the best.
- Distribution incentives may need to be offered to encourage preference over rival products.
Decline Stage: Sales begin to decline as the business faces several options:
- Product maintained with some improvements or rejuvenation.
- Price is reduced to sell the remaining stock.
- Promotion discontinues.
- Distribution channels reduced and product offered to a loyal segment of market.

Market Research

Market research is the process of gathering and analysing data about a target market. Minimising
risk is the main purpose of market research. By collecting and assessing information about the needs
and wants of consumers, a more accurate and responsive marketing plan can be designed and,
therefore, reduce the risk of market failure. There are three main steps of the market research
process:

Determining Information Needs

Information is useful if it results in marketing strategies that meet the needs of the business’s target
market, assists the business to achieve its marketing objectives, and may be used to increase sales
and profits. The information collected must be relevant to the issue or problem being investigated.

Data Collection – Primary and Secondary Sources

Marketing data refers to the information relevant to the defined marketing problem. Primary and
secondary data are the two types of data.

Primary data are the facts and figures collected from original sources for the purpose of the specific
research problem. The collection of primary data is directed at solving a specific marketing problem,
although it can be expensive and time consuming. The survey method, the observation method, and
the experiment method are the three main methods used to gather primary data.
Surveys involve the gathering of data by asking or interviewing people. These include personal
interviews, focus groups, electronic methods of collection and questionnaires. The benefit of a
survey is that it gathers customers’ opinions. Observation involves recording the behaviour of
customers – the actions of the customers are systematically observed. Experiments involve gathering
data by altering factors under tightly controlled conditions to evaluate cause and effect.

Secondary data comprises information that has already been collected by some other person or
organisation. Internal Data is information that has been already collected from internal sources.
External Data is published data from sources outside the business.

Data Analysis and Interpretation

Statistical interpretation analysis is the process of focusing on the data that represents average,
typical or deviations from typical patterns. The first step in drawing conclusions is to tabulate the
data and use ‘cross-tabulation’ which will allow comparisons to be made between individual
categories.

Establishing Marketing Objectives

Marketing objectives are the realistic and measurable goals to be achieved through the marketing
plan. These objectives should be closely aligned with the overall business goals, but more-customer
orientated than the goals for the entire business. Three common marketing objectives include:

Increasing Market Share

Market share refers to the business’s share of the total industry sales for a particular product.
Increasing market share is an important marketing objective for businesses that dominate the
market, because small market gains often translate into large profits.

Expanding the Product Mix

The product mix is the total range of products offered by a business. Businesses wish to expand their
product mix as this will increase profits in the long term due to changing customer tastes and
preferences, and demand for a particular product may decrease. Each item in a product line should
attempt to satisfy the needs of different target markets.

Maximising Customer Service

Customer service means responding to the needs and problems of the customer. High levels of
customer service will result in improved customer satisfaction and a positive reaction from
customers. This leads to a solid customer base and possibility of repeat purchases. The strategies a
business could use to maximise customer service include and establishing and maintaining long term
relationships with customers, encourage employees to focus their attention on the customer’s needs
(customer-oriented) and not just on making a sale (sales-oriented).

Identifying Target Markets

A target market is a group of present and potential customers to which a business intends to sell its
product. A primary target market is the market segment at which most of the marketing resources
are directed. A secondary target market is usually a smaller and less important market segment.
This occurs because the business is able to:
- Use its marketing resources more efficiently, resulting in the marketing campaigns being
more cost effective and time efficient
- Promotion material is more relevant to the customers’ needs
- Better understand the consumer buying behaviour of the target market
- Collect data more effectively and make comparisons within the target market over time
- Refine the marketing strategies used to influence customer choice.
Businesses can choose one of three approaches to identifying and selecting a consumer target
market.

Mass Marketing Approach

In a mass market, the seller mass-produces, mass-distributes, and mass-promotes one product to all
buyers. The mass marketing approach assumes that individual customers in the target market have
similar needs. One type of product is produced with little to no variation, with one promotional
program aimed at everyone, one price, and one distribution system used to reach all customers.

Mass Segmentation Approach

Market segmentation occurs when the total market is subdivided into groups of people who share
one or more common characteristics. Segmenting a market enables a business to design a marketing
plan that meets the needs of a relatively uniform group.

Niche Market Approach

In a sense, the niche market is a segment within a segment, or a ‘micro-market’. For example, an
exclusive fashion boutique can carve out a niche market and, therefore, avoid direct competition
with large department stores.

Developing Market Strategies

Marketing strategies are actions undertaken to achieve the business’s marketing objectives through
the marketing mix. A business has control over the four Ps and uses them to reach its target market.
Product: This element involves the business deciding which product to make, and determining
features such as the product’s quality, packaging/labelling, design, brand name and guarantee.
Price: Selecting the ‘correct’ price can be difficult. The major pricing decision is whether to set a price
above, below, or about even with the competitor’s price.
Promotion: A promotion strategy details the methods to be used by a business to inform, persuade,
and remind customers about its products. Main forms of promotion include advertising, personal
selling and relationship marketing, sales promotion, publicity, and public relations. Technology has
had major impacts on how businesses promote their products.
Place/Distribution: The channels of distribution are the ways of getting the product to the customer.
This process usually involves a number of intermediaries such as the wholesale or retailer. The
intermediaries’ chosen will determine how widely the product will be distributed.

Implementation, Monitoring and Controlling

Implementation is the process of putting the marketing strategies into operation. It involves the
daily, weekly, and monthly decisions that have to be made to make sure the plan is effective.

Monitoring means checking and observing the actual progress of the marketing plan. The
information collected during the monitoring stage is now 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 attained.

Developing a financial forecast requires a cost and a revenue estimate. This comparison allows the
marketing manager to evaluate the effectiveness of the marketing plan. A financial forecast is the
business’s predictions about the future and details the costs and revenues for each strategy. By
measuring the sales potential and revenue forecasts (benefits) for each strategy and comparing
these with the anticipated expenditures (costs), a business is in the best position to decide how to
allocate its marketing resources.

Comparing actual and planned results

Performance indicators are the means by which a business can measure its performance and
evaluate the degree to which the business is achieving its objectives. Sales analysis, market share
analysis, and marketing return on investments are the three key performance indicators used to
measure the success of the marketing plan.

Sales analysis refers to comparing of actual sales with forecast sales to determine the effectiveness
of the marketing strategy. Strength - sales figures are relatively inexpensive to collect and process.
Weakness – data for sales revenue do not reveal the exact profit level.

By undertaking a market share analysis, a business is able to evaluate its marketing strategies as
compared with those of its competitors - reveal whether changes in total sales have resulted from
the business’s marketing strategies or have been due to some uncontrollable external factor.

Marketing ROI measures how much revenue a marketing campaign is generating compared to the
cost of running that campaign.

Revising the Marketing Strategy:

Once the results of the sales, market share and profitability analysis have been calculated, the
business is now in a position to assess which objectives are being met and which are not. Based on
this information, the marketing plan can be revised. There are three different ways to revise the
marketing strategy. The marketing mix will constantly need to be revised. Changes that could be
introduced include product modifications, price modifications, promotion modifications, and place
modifications.

New Product Development: If a business wants to achieve long-term growth, it must continually
introduce new products.

Product deletion is the elimination of some lines of products. Outdated products may create an
unfavourable image and this negativity may rub off on other products sold by the business. When a
product is in the decline stage, a decision will eventually have to made to either delete or redevelop
the product.

Marketing Segmentation
Marketing segmentation involves dividing the total markets into segments. Once the market has
been segmented, the marketing manager selects one of these segments to become the target
market. The main aim of market segmentation is to increase sales, market share, and profits by
better understanding and responding to the desires of the different target customers.

Segmenting Consumer Markets:

The consumer market can be segmented according to four main variables.
Demographic segmentation is the process of dividing the total market according to particular
features of a population, including the size, age, sex, income, cultural background, and family size.
E.g., energy drink Monster is targeted at 15–35-year-old males.
Geographic segmentation is the process of dividing the total market according to geographic
locations. Different geographical locations have different needs, tastes, and preferences.
Psychographic segmentation is the process of dividing the total market according to personality
characteristics, motives, opinions, socioeconomic group, and lifestyles. A business would research a
consumer’s brand preferences, favourite music, radio, and television programs, reading habits,
personal interests and hobbies, and values.
Behavioural segmentation is the process of dividing the total market according to the customers’
relationship to the product. A total market, for example, may be divided into users and nonusers.
Users can then be classified as heavy, moderate, or light. To convince light users to purchase the
business may have to redesign the product, set special prices, and implement special promotion
activities.

Points of Differentiation
Product/Service differentiation is the process of developing and promoting differences between the
business’s products and services and those of the competitors. Failing to provide excellent customer
service will result in lost sales and damage the business’s competitive advantage. Four important
points of differentiation are customer service, environmental concerns, convenience, and social and
ethical issues.
Consumers expect a high level of customer service. Customer service also includes the presentation
of the premises, the atmosphere, or the range of products that set a business apart and capture the
consumer’s interest. People are becoming more concerned with ‘quality of life’ issues, especially the
physical environment. Businesses that create pollution may risk losing customers. Because today’s
consumers are busy, they will often select products that are convenient to use. For example,
businesses have introduced frozen meals because many consumers do not have a lot of time for
meal preparation. Ethical consumerism provides businesses with opportunities to satisfy the
demands of this growing number of consumers. Consumers appreciate if products or brands do not
exploit workers, producers, or the environment.

Product/Service Positioning
Product/service positioning refers to the technique in which marketers try to create an image or
identity for a product/service compared with the image of competing products or services. The
business will decide on the image it wishes to create for a product/service and will use other
elements of the marketing mix to shape and maintain this image. This will be achieved through the
product/service’s name, price, packaging, styling, promotion, and channels of distribution. Prada, for
example, portrays an image of sophistication and luxury.

Products – Goods and/or Services

Products are goods or services that can be offered in an exchange for the purpose of satisfying a
need or want. Goods are real objects that can be touched and owned; they are tangible. Services are
for our use or enjoyment; they are intangible. When customers purchase products, they by both the
tangible and intangible benefits – which can include a variety of things such as the package, the
brand name, the warranty, and the after-sales service.

Product Branding:
A brand is a name, term, symbol, design, or any combination of these that identifies a specific
product and distinguishes it from its competition. It is important for success as it allows a business to
gain wider recognition of its products through growing brand awareness to increase sales revenue
and therefore improve profit.

Benefits of Branding
Branding helps consumers identify the specific products they like, evaluate the quality of products,
reduce their level of perceived risk of purchase, and gain a psychological reward that comes from
purchasing a brand that symbolises status and prestige. Branding helps businesses gain repeat sales
because consumers recognise the business’s products, introduce new products onto the market
because consumers are already familiar with the brand, with their promotional activities because the
promotion of one product indirectly promotes other products with the same brand, and encourage
customer loyalty.

Branding – Symbols and Logos

Some businesses encourage the instant recognition of their brand symbol rather than their brand
name. This includes a brandmark logo (a solitary graphic e.g. apple), a wordmark logo (the logo is the
name of the business e.g. Coca Cola), letter mark logo (the company’s initials e.g. Gucci),
combination mark logos, and an emblem.

Branding Strategies
Brands are usually classified according to who owns them. When a manufacturer owns a brand
name, it is referred to as a national brand. These brands have a high appeal with customers as they
are recognised across the country, are widely available and offer reliability with constant quality. A
private or house brand is one that is owned by a retailer or wholesaler – e.g., Myer sells products
from its own label, including Reserve, Blaq, Urbane, etc. Generic brands are products with no brand
name at all – e.g., Home Brand, Select (Woolworths).

Packaging:
Packaging involves the development of a container and the graphic design for a product. Well-
designed packaging will give a positive impression of the product and encourage first-time
customers. Packaging can attract customers, protects the product, assists with the display of the
product, and makes transportation and storage easier. Apart from performing these practical
functions, packaging also acts as a form of communication. For example, consumers see certain
colours and draw conclusions – red soft-drink would mean cola. Furthermore, the shape of the
packaging can become part of the product itself.

Labelling is the presentation of information on a product or its package. Marketers can use labels to
promote products or to encourage proper use of products and therefore greater consumer
satisfaction with products.

Price and Pricing Methods

Price refers to the amount of money a customer is prepared to offer in exchange for a product. A
price set too high could lead to lost sales, and a price set too low gives customers the impression that
the product is ‘cheap and nasty’. Businesses attempt to gain some control over the price by
differentiating their products.

Pricing Methods:
There are three main pricing methods, which factor in both internal and external factors:
competition in the marketplace, government regulations, and the location of the product on its life
cycle and the level of economic activity.

Cost based pricing is a pricing method derived from the cost of producing or purchasing a product
then adding a mark-up. This pricing method is mainly used by wholesalers and retailers. The major
drawbacks are the difficulty in accurately determining an appropriate mark-up percentage, and the
product is priced after production and associated costs are incurred without considering the other
elements of the marketing mix or the state of the market.

Market-Based Pricing is a method of setting prices according to the interaction between the levels of
supply and demand. It is difficult to apply as the levels of supply and demand constantly change.
When demand for a product is greater than its supply, there will be a shortage in the market, forcing
up the price. As the price rises, consumers are less willing to purchase. When the supply of a produce
is greater than its demand, then there is a surplus in the market, and thus the price drops.

Competition-Based Pricing is where the price covers costs and is comparable to the competitor’s
price. This pricing strategy is mainly used when there is a high degree of competition from businesses
producing similar products. Once a business has established a base price, it can then decide to
choose a price either below, equal to, or above its competition. The business will choose to price its
product below competition if it wishes to break into an established market. The business will choose
to price its product equal to that of competitors if it wants to avoid undertaking market research to
find out what customers would actually pay. The business will choose to price its product above
competition if they want to appeal to status-conscious buyers, where their products are seen as
superior.

Price Strategies

Price skimming occurs when a business charges the highest possible price for the product during the
introduction stage of its life cycle. The objective is to recover the costs of research and development
as quickly as possible before competition enters the market. Consumers are willing to pay a high
price for a product’s novelty features because of the prestige and status that ownership gives.

Price penetration involves charging the lowest price possible for a product at either on or below cost
price in an attempt to achieve a large market share for a product. The objective is to sell a large
number of products during the early stages of the life cycle and thus discourage competitors from
entering the market. The main disadvantage of this is that it is more difficult to raise prices
significantly than it is to lower them. Although, as the business gains customer loyalty and
awareness, prices can be revised, increasing the profit margin of the business.

A loss leader is a product sold at or below cost price. By advertising selected products at a loss,
customers will be attracted to the business. Customers will purchase the product due to its low price
and will also be exposed to other products within the business and are highly likely to make
additional purchases. This will increase sales, enabling the business to recover the loss on the low-
price item. This strategy is often used when the business is overstocked or a product is slow to sell,
wants to increase the traffic flow in the expectation of gaining customers, or wants to build a
reputation of having low prices.

Price points is selling products only at certain predetermined prices. This strategy is used by retailers,
especially clothing stores, and boutiques. Using this strategy makes it easier for the customer to find
the type of product they need. It also makes it easier for the business to encourage the customer to
‘trade up’ to a more expensive model. The price will be set regardless of how much they cost at
wholesale.

Price and Quality Interaction:

Normally, products of superior quality are sold at higher prices. If a business charges a low price for a
product, customers may perceive the product as ‘cheap’. A higher price could mean an aura of
quality and status. This is referred to as prestige or premium pricing and is designed to encourage
status-conscious consumers to buy the product. If a business that uses premium pricing lowered
their prices dramatically, it would damage their reputation because it is inconsistent with the
perceived images of such products.

Promotion

Promotion is the methods used by a business to inform, persuade, and remind a target market about
its products. Promotion attempts to attract new customers by heightening awareness of a particular
product, increase brand loyalty by reinforcing the image of the product, encourage existing
customers to purchase more of the product, provide information so customers can make informed
decisions, and encourage new and existing customers to purchase new products.

Promotion Mix:
The Promotion Mix is the various promotion methods a business uses in its promotional campaign.

Advertising is a paid, non-personal message communicated through a mass medium. Essential for
successful marketing, which can result in increased sales and profit. The purpose is to inform,
persuade, and remind. The six main advertising media includes mass marketing (television, radio,
newspapers, and magazines), direct marketing catalogues (mail), telemarketing which is the use of
the telephone to personally contact a customer, e-marketing which is the use of the internet to
deliver advertising messages, social media advertising, and billboards.
The type of advertising media a business selects depends on the type of product and its positioning,
the size of the target market and its characteristics, the business’s marketing budget, the cost of the
advertising medium, and the product’s position on the product life cycle. An extensive advertising
campaign may be undertaken to create a saturated coverage of a wide target market.

Personal selling involves the activities of a sales consultant directed to a customer in an attempt to
make a sale. The main promotional strategy for businesses offering expensive, complex products.
Advantages of personal selling are that the message can be modified to suit the individual customer’s
circumstances, the individualised assistance to a customer can create a long-term relationship
leading to repeat sales, and the sales consultant can provide after-sales customer service. By
listening to the customer’s needs and then offering informed recommendations, customer
satisfaction is increased, resulting in repeat business, and building a good reputation. The
disadvantages of using this strategy include the high costs, and the small target market.
Relationship marketing is the development of long-term and cost-effective relationships with
individual customers. The ultimate aim is to create customer loyalty by meeting the needs of the
customers on an individual bases. For example, a highly successful relationship marketing strategy is
loyalty programs – a rewards-based program offered by a business to customers who frequently
make purchases. This creates a reason for the customer to use the product or service again which
increases sales. It is also a strategy that can create a competitive advantage. giving personalised
services that goes beyond consumer expectation, can involve personalised communication where
relationships are renewed or extended and can be used to gain information about a customer buying
behaviour, including repeat sales, and value of transactions. The disadvantages for the business
include that it is time consuming and may be costly and in some cases may bring up privacy issues for
customers, but most business operations would see the advantages far outweighing the
disadvantages. It also focuses on existing customers, thus restricting the business’ promotion to new
customers, limiting expansion of geographic markets.

Sales promotion is the use of activities or materials as direct inducements to customers. Sales
promotion techniques are used primarily to increase the effectiveness of other promotion activities,
especially advertising. Examples of special promotions include coupons, premiums, refunds, samples,
and point-of-purchase displays.

Publicity is any free news story about a business’s products. Most businesses use publicity and public
relations as a means of increasing sales and, therefore, profits. Though it could possibly lead to
negative publicity. The main aims of publicity are to enhance the image of the product, raise
awareness of a product, highlight the business’s favourable features, and reduce any negative image
that may have been created.

Public relations are those activities aimed at creating and maintaining favourable relations between
a business and its customer. There are four main ways in which public relations activities can assist a
business in achieving its objective of increased sales; promoting a positive image reinforces the
favourable attitudes and perceptions consumers have regarding the business’s reputation, effective
communication of messages using advertising, sales promotion, publicity and personal selling to
convey information about the business and its products, issues monitoring, and crisis management
Although it does not guarantee an increase in sales.

The Communication Process:

Marketing managers must be able to communicate to their target markets. A channel is any method
used for carrying a message. Marketing managers use a variety of channels to communicate a
message. More respected and trusted channels include an opinion leader or by word of mouth.

An opinion leader is a person who influences others. Opinion leaders are used as information outlets
for new products and to endorse an existing one. Customers would want to buy the product as a
celebrity is promoting and/or using the business’ product.

Word of Mouth communication is when people influence each other during conversations.
Consumers tend to trust their friends because recommendations can be a powerful influence,
especially when there are many competing products.

Place/Distribution
Place or distribution are the activities that makes the products available to customers when and
where they want to purchase them. Once a business manufactures a product, it must see that the
product gets into the customers hands – and therefore, an efficient distribution system is required.

Distribution Channels are the routes taken to get the product from the factory to the consumer.
Producer to Customer is the simplest channel involving no intermediaries and is used by most
services. Producer to retailer to customer occurs when the retailer is the intermediary who buys
from producers and resells to customers. This channel is only used for bulky or perishable products.
Producer to wholesaler to retailer to customer is the most common method for distribution of
consumer goods. Producer to agent to wholesale to retailer to customer is the last distribution
channel where the agent is paid commission, and are used for inexpensive, frequently used products.

Channel Choice – Including Intensive, Selective and Exclusive

How a business chooses the channel of distribution best suited to its product depends largely on the
location of the business’s market or market coverage. A business can decide to cover the market in
one of three ways, the difference being the intensity of coverage. Intensive Distribution occurs when
the business wishes to saturate the market with its product. Customers can shop at local outlets and
be able to purchase the product. Selective Distribution involves using only a moderate proportion of
possible outlets. The customer is prepared to travel and seek out a specific retail outlet that stocks a
certain brand. Exclusive Distribution is the use of only one retail outlet for a product in a large
geographic area.

Physical Distribution is all those activities concerned with the efficient movement of the products
from the producer to the customer. Physical distribution is a combination of several interrelated
functions, including transportation, warehousing, and inventory control.

An intricate network of transportation is required to deliver the products to customers. The method
of transportation will depend on the type of product and the degree of service. The transportation
methods chosen must meet customers’ needs. Customers demand products be delivered when they
require them and in good order. Having a transportation program that can do this provides consumer
satisfaction and gives a business a competitive advantage.

Warehousing is a set of activities involved in receiving, storing, and dispatching goods. A warehouse
acts as a central organising point for storing goods that will be efficiently distributed later. As
businesses look to improve efficiency, warehouse automation has been increasing as they attempt to
cut down on manual tasks.

Inventory control is a system that maintains quantities and varieties of products appropriate for the
target market. The goal of inventory is to find the correct balance between ‘too much stock’ and ‘too
little stock’. Too much stock on inventory will result in high storage costs. Holding little stock results in
lost sales.

People, Processes and Physical Evidence

Three more P’s have been added to the original four, which apply especially to intangible products
(services) such as tourism, entertainment, and hospitality.

People:
People refers to the quality of interaction between the customer and those within the business who
will deliver the service. It is essential that the business use appropriately recruited, qualified and
trained employees to deal with customers. Customers base their perceptions and make judgements
about a business based on how the employees treat them, so by developing a reputation for
customer service and ensuring the quality of interaction between customer and staff, the business
will be able to build customer loyalty, positive word of mouth and ultimately will increase the
number of sales.

Processes:
Processes are the systems in place ensuring a service is delivered in a way that meets customers’
needs. By implementing an automated ordering platform, the businesses will be able to ensure the
ordering process is streamlined and as efficient as possible. This can ensure their products are
delivered in a timely manner, ensuring high quality products are produced by the business thus
meeting customers’ expectations. By meeting and exceeding customers’ expectations, the business
will build a positive reputation and develop customer loyalty which can translate into repeat sales.

Physical Evidence:
Physical evidence refers to the environment in which the service will be delivered. It also includes
materials needed to carry out the service such as signage, brochures, calling cards, letterheads,
business logo and website. A business should provide high-quality evidence to create an image of
value and excellence. For example, a restaurant with dirty cutlery and uncomfortable chairs would
not entice customers to go there again. That is an example of bad physical evidence.

E-Marketing

With rapid changes in electronic communication and the development of the ‘information
superhighway’, marketers are beginning to exploit all types of e-marketing.

E-marketing is the practice of using the Internet to perform marketing activities.

Webpages convey information in the form of a combination of text, graphics, animation, and video.
It can contain information about the location of the business’s premises, available products, and
online ordering facilities.
Podcasting involves the distribution of digital audio or video files over the internet. Its main use is for
marketing and advertising.
A commercial electronic message is any electronic message that offers, advertises of promotes a
business, good or service. SMS can alert regular customers of any special deals on offer and notify
suppliers of new arrivals.
A blog is an online diary or journal. Blogs allow for communication between the business and its
existing and potential customers.
The development of social networking sites has also made it easier for individuals and businesses to
create and share many different types of content on the web. Social media advertising (SMA) is a
form of online advertising, using social media platforms such as Facebook to deliver targeted
commercial messages to potential customers.

Global Marketing

A business’s marketing plan must be modified and adapted to suit overseas markets as marketing
environment and target markets differ from the domestic scene.

Global Branding:
Global branding is the worldwide use of a name, term, symbol, or logo to identify the seller’s
product. Businesses us global branding because it can be cost effective – i.e. one ad used in a number
of locations, it provides a uniform worldwide image, and the successful brand name can be linked to
new products introduced on the market.

Standardisation:
A standardised approach is a global marketing strategy that assumes the way the product is used
and the needs it satisfies are the same the world over. It is a case of ‘one marketing fits all’.
- Cost savings
- Production runs are longer therefore achieving economies of scale
- R&D costs reduced
- Spare parts and after-sale service simplified
- Promotion strategies can be standardised
- Evaluation and modification of the plan is a much simpler task

Customisation:
A customised approach is a global marketing strategy that assumes the way the product is used and
the needs it satisfies are different between countries. Adopting this philosophy requires the
marketing plan to be customised according to the economic, political, and sociocultural
characteristics of the target country.

Global Pricing:
Accurate pricing decisions must be made if the business’s overseas expansion is to be successful – it
is one of the most critical but complex issues that global businesses deal with. A business’ global
pricing strategy is a major determinant of profits. Accurate pricing decisions must be made if the
business’s overseas expansion is to be successful.

Customised Pricing occurs whenever consumers in different countries are charged different prices
for the same product. Often businesses use the cost-plus method to cover the added costs of
exportation. Such costs include transportation, taxes, warehousing, and tariffs. A cost- plus method
to pricing products for global markets is usually the most commonly used method because of the
added expense associated with exporting.

Market-Customised Pricing sets prices according to local market conditions. The price is set
depending on the level of demand and competition within the overseas market. the price charged in
other countries is also influenced by foreign currency exchange rates Fluctuations in the exchange
rate can change the prices charged across countries and are a major risk for global businesses.

Standardised pricing is the practice of charging customers the same price for a product anywhere in
the world. It will succeed only if the foreign marketing costs remain low enough not to affect overall
costs. Two major risks are that the domestic business may undercut the standardised price, and
changes in the exchange rate may negatively impact on the exported price.

Competitive positioning
Competitive positioning relates to how a business will differentiate its products. It centres on how a
business will carve out a place in the competitive marketing environment. As in a domestic market, a
global business must clearly show how its products are better than the competitors’ products.
Without differentiation, it takes more time, money, and effort to encourage potential customers to
purchase a business’s products. To differentiate successfully and avoid competing on price only the
business should strive to develop product leadership, positive customer relationships and
operational excellence. To develop and maintain a competitive position businesses must gain a deep
understanding of their dynamic environments in which they operate and form their strategies
according to evolving conditions.