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Business Studies - Marketing notes
HSC topic 3: Marketing Study Notes
20% of indicative time
The focus of this topic is to develop an understanding of the nature and role of
marketing in a business and the main elements involved in the development
and implementation of successful marketing strategies
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2 critically analyses the role of business in Australia
H2
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2 evaluates the effectiveness of management in the organisation and
operations of business and its responsiveness to change
H4
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1 selects, organises and evaluates information and sources for usefulness
and reliability
H5
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3 communicates business information, ideas and issues, using relevant
business terminology and concepts in appropriate forms
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The focus of these case studies will be to:
• analyse and evaluate marketing strategies for a product or service
• analyse the marketing plan of a business
• construct a marketing plan for a single product/service (real or imaginary)
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• the role of marketing in the firm and in society
• types of markets — resource, industrial, intermediate, consumer, mass, niche
• production–selling–marketing orientation
• the marketing concept — customer orientation, relationship marketing
• marketing planning process
elements of a marketing plan
• situational analysis including SWOT and product life cycle
• establishing market objectives
• identifying target market
• developing marketing strategies
• implementation, monitoring and controlling — developing a financial
forecast, comparing actual and planned results, and revising the marketing
strategy
market research process
• determining information needs, data collection (primary and secondary),
data analysis and interpretation
customer and buyer behaviour
• types of customers — people, households, firms, educational
institutions, government, clubs and societies, religious organisations
• the buying process — buyers and users
• factors influencing customer choice — psychological, sociocultural, economic,
government
developing marketing strategies
• market segmentation and product/service differentiation
• product and service
– positioning
– branding
– packaging
• price including pricing methods — cost, market and competition-based
– pricing strategies/tactics — skimming, penetration, loss leaders, price
points
– price and quality interaction
• promotion
– elements of the promotion mix — personal selling, advertising, below-theline promotions,
public relations
– the communication process including opinion leaders and word of mouth
• place/distribution
– distribution channels and reasons for intermediaries
– channel choice including intensive, selective, exclusive
– physical distribution issues including transport, warehousing, inventory
• environmental effects on distribution — technology, local government

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Nature and role of markets and Marketing:
Marketing is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges
that satisfy individual and organisational objectives
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A successful business develops a
marketing plan based in careful research and design
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Any business that does not
develop and maintain a customer base soon goes out of business
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Role of marketing in the business and in Society:
A market focused business will want to create products that customers want to
buy
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To achieve the goal of profit, the marketing plan
should be the focus of all short term planning for three reasons:
1: The marketing plan outlines the strategies to be used to bring the buyer and
seller together
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3: Marketing is the revenue- generating activity of any business
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A business must, therefore, determine what the customers want, then develop
a product and marketing plan to satisfy these wants
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There are many markets in an economy,
based on the characteristics of the individuals and groups that make up a
specific market; it is possible to divide markets into six main types
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Resource Market: Consists of those individuals or groups that are engaged in
all forms of primary production, including mining, agriculture, forestry and
fishing
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Industrial Market: Includes industries and businesses that purchase products
to use in the production of other products or in their daily operations
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Intermediate market or resellers: Consists of wholesalers and retailers who
purchase finished products and sell them again to make a profit
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Subway for example, is a retailer that buys goods to make
into sandwiches and salads for sale to consumers
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e
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Each of us is part
of numerous consumer markets for products such as housing, clothing, food,
entertainment, appliances, music recordings and cars
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Very few products are marketed to the
mass market, due to greater choice, higher personal incomes and customers
seeking more individualised products, the mass market has been replaced with
segmented or niche markets
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Production, selling and market orientation – Approaches to marketing:
The production approach: the industrial revolution began in Britain over 170
years ago
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Up until world war one, businesses
concentrated their efforts on the production of goods and services
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Marketing consisted of simply taking
orders and delivering the products
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No longer could a
business rely on selling all it produced
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Businesses faced the challenge or persuading customers to buy
a specific brand
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This extra income was used to satisfy new needs and wants with different
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For example, consumers started spending on
travel and recreation
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Something else was needed if products were to sell as well as previously
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The business should direct all of its policies,
plans and operations to achieving customer satisfaction
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Customer orientation: occurs when a business bases its marketing decisions
and practices on its customers’ wants
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A market focused business wants to create a product that
customers want to buy
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Relationship marketing: is the development of long term and cost effective
relationships with individual consumers
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Relationship
marketing, therefore, emphasises customer retention (creating reasons to keep
customers coming back)
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These schemes offer rewards to those loyal customers who spend
specified amounts or make repeat purchases
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Step 1: Performing situational Analysis:
A situational analysis investigates the marketing opportunities and the
potential problems
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The data is then
analysed by marketing managers
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Step 2: Establishing Market Objectives:
A marketing objective is a statement of what is to be achieved through
marketing activities
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Determining these objectives is the most important step in the marketing
process
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Step 3: Identifying Target Markets:
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Once the target market is identified, the business concentrates
its marketing activities towards that group
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Data may be collected through
questionaries, informal interviews with customer and written surveys
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The four main strategies a business can
peruse are referred to as the marketing mix
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Price- including list price, discounts, credit terms and payment period
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Step 5: Implementing, Monitoring and controlling the marketing plan:
The marketing plan will not operate effectively unless it is well managed;
marketing management is the process of monitoring and modifying the
marketing plan
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By using performance standards,
such as market share analysis profitability by product or territory, management
can assess the effectiveness of the marketing plan
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A
business must constantly monitor these changes, looking for any opportunities
to exploit and find any threats to avoid
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These internal
forces are unique to each business and, by analysing them; management can
assess the strengths and weaknesses of the business
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Product Life Cycle: An assessment of the product’s position in the product life
cycle should be carried out
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Using this
information a business will be able to launch, modify ad delete products in
response to changes in the product life cycle
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The position in the product life cycle is
very important information for the situational analysis, it will effect marketing
strategies
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Market objectives should be more customers orientated than the objectives
for the entire business
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Four common marketing objectives include: increasing market range,
expanding the product range, expanding existing markets and maximising
customer service
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Expanding the product Range: The product mix is the total range of products
offered by a business
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To develop an ideal product range,
businesses must understand customer’s needs
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Geographical representation refers to the presence of
a business and the range of its products across a suburb, town, city, state or
country
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High levels of customer service will result in
improved customer satisfaction and a positive reaction from customers towards
the products they purchase
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Rather it is
an attitude that should be adopted by all departments within the business
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Marketing managers
use four main variables when segmenting the total market
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Geographic: urban, suburban, rural, region, climate and landform
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Psychographic: personality, motives, lifestyles
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Price- Business’s must be careful when setting price, a price set too low may
give customers the impression of the product being cheap and nasty however
a price too high could mean lost sales unless superior customer service is
offered
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The main forms
of promotion include personal selling, advertising, below the line promotions
and public relations
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Place- This element of marketing deals with the distribution of the good or
service and consists of two parts
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Second, the business owner has to decide how many
intermediaries will be involved in the distribution process
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The number of intermediaries
chosen will determine how widely the good or service will be distributed
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To implement a plan effectively a number of basic questions need
to be answered:
- Is the plan fully integrated with all other sections of the business?
- Who are the best people for the various tasks needed to implement the
plan?
- Are all other employees familiar with the marketing objectives and
marketing strategies?
The implementation of this stage is quite difficult, especially as unforseen
situations may arise thatput in jeopardy the success of the entire marketing
plan
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This requires the marketing department and personal as well as other
employees to gather information and report on any important changes,
problems or opportunities that arise during the life of the marketing plan
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A performance
standard is a forecast evel of performance against which actual performance
can be compared
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The second step in the controlling process is to compare or evaluate actual
performance against the performance standard
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Developing a Financial Forecast:
Requires two steps:
1: Cost estimate- How much is the marketing plan expected to cost? Cost of
the marketing plan can be divided into four major components: market
research; product development; promotion, including advertising and
packaging; and distribution
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As time goes by, actual revenue can be compared with the
forecast revenue data to determine the effectiveness of the marketing strategy
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Sales analysis- uses sales data to evaluate a business’s performance and the
effectiveness of a marketing strategy
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The main strength of sales analysis is that sales
figures are relatively inexpensive to collect and process
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Market share analysis/ ratios:
This evaluation can reveal whether changes in total sales, either increases or
decreases, have resulted in the business’s marketing strategies or have been
due to some other uncontrollable external factor
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By comparing the costs of specific marketing
activities with the results achieved, a marketing manager can assess the
effectiveness of each activity
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Revising the Marketing Strategy:
Once the results of the sales, market share and profitability have been
calculated, the business is then in a position to asses which objectives are
being met and which are not
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Modification of the marketing plan is equally important as all
the other steps involved in creating successful marketing strategies
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- Price modifications: Prices fluctuate due to a variety of reasons
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- Promotion modifications: Promotion costs will decrease as the
product continues through its life cycle therefore a business must
continually update their products
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New overseas markets may be tapped, while old markets may
decrease due to demographic changes
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New Product Development: The product cycle indicates that products have an
average life of 5-10 years, and as technology accelerates this will only become
a shorter time span, therefore if a firm wants to achieve long term growth, it
must continually introduce new products
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Product Deletion: is the elimination of some lines of product, outdated
products may create an unfavourable image and this negativity may rub off
on other products sold by the business
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Attention
must be paid to Apple in this area where they release new product lines every
line and phase out the old products
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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
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More businesses are undertaking marketing research of recent years
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Market researchers may use two
types of data: primary and secondary data
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Primary Data- are the facts and figures collected from original sources for the
purpose of the specific research problem
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The three main methods used to gather
primary data:
- Survey: mean gathering data by asking or interviewing people
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- Experiments: involve gathering data by altering factors under tightly
controlled conditions to evaluate cause and effect
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Secondary Data – is information that has already been collected by some other
person or organisation
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That is from inside the business such as financial statistics,
annual and management reports, research reports and customer feedback
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Examples include magazines, industry association newsletters, government
reports and ABS statistics
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Customer and Buyer Behaviour:
Buyer behaviour may be defined as the decisions and actions of people
involved in buying and using products
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if they are aware of factors that influence the buying behaviour of different
types of customer
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- Household spending refers to the combined purchases of individuals
living together
- Business consumer (firms) consists of those businesses that purchase
goods and services for further processing or for use in their production
process
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Because institutions often have limited budgets and
different objectives, marketing managers need to devise special marketing
strategies to serve these customers
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Governments make a majority of their
purchases through a process called tendering, which is a process where
by firms submit quotes to supply a good or service
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The Buying Process:
All customers tend to follow common steps in the buying process:
1: Recognise problem- need or wanting require satisfaction
2: Search for information: brand names, product characteristics, warranty,
service and price
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A buyer is the individual or group who purchases the product
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A user is the individual or group who actually uses the product
being purchased
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Psychological:
Psychological factors are influences within an individual that affect his or her
buying behaviour
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Usually there are a range of perceptions across
different individuals
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Consequentially, marketing managers are extremely
aware that they must create a positive or favourable perception about their
product in the mind of the consumer
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create a perception that a product is trendy, luxurious or classy however it
may not necessarily have those qualities
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The
main motives that influence individual’s choice are comfort, health, safety,
ambition, taste, pleasure, fear, amusement, cleanliness and the approval of
others
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Customer attitudes to a business and its products generally influence the
success or failure of the business’s marketing strategy
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To some extend personality will
influence the types and brands of product a person buys
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Sociocultural Influences:
Whereas psychological influences are internal influences, sociocultural
influences are forces exerted by other people and groups that affect customer
behaviour
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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
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For example if a close friend tells you of a bad experience
in a particular shop you will probably change your buying behaviour based on
this information
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For example higher income earners will purchase luxury cars to
symbolize their status
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It determines what people wear, what and how
we eat and where and how we live
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They influence a business’s capacity to compete and a customer’s willingness
and ability to spend
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Boom: Is a period of low unemployment and high incomes and inflation
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Customers are willing
to spend because they feel secure about their jobs and source of income
...

The mood changes from optimism to one of caution and if this phase lasts for a
long time, customers and business pessimistic
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Recession: sees unemployment reach high levels and incomes fall dramatically
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During this expansion phase, marketing managers need to modify their
marketing plans to tap into this rising prosperity
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A number of laws have been introduced that will influence marketing decisions
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Developing Marketing Strategies:
Market segmentation and differentiation of products and services:
A business segments its markets so it can direct its marketing strategies to
specific groups of customers rather than the total market
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This
occurs because the business is able to:
• Refine the marketing strategies used to influence consumer choice
Common variables for segmenting customer markets include demographic,
geographic, lifestyle and behavioural
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A
primary target market is the market segment at which the most of the
marketing resources are directed
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Mass marketing approach:
Mass marketing or a total marketing approach seeks a large range of
customers
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Concentrated or Niche Markets:
Niche markets require the business to direct its marketing mix towards one
selected segment of the total market
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Differentiation of products and services:
Product differentiation in its broadest sense is the process of developing and
promoting differences between the business’s products and those of its
competitors
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All products are a combination of tangible and
intangible attributes
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Product positioning refers to the development of a product image as compared
with the image of comparing products
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This will be achieved through the product’s name, price,
packaging, styling and promotion
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A brand
name is the part of the brand that can be spoken
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To guard other
businesses against using its brand name or symbol, a business can apply to
have the name registered
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The symbol TM or R at
the end of a brand name signify that the name or symbol is a registered
trademark
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Well designed packaging will give a positive impression of the
product and encourage first time customers
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In addition, packaging helps preserve, inform, protect
and promote the product
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A price set too high could mean lost sales unless
superior benefits are offered
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Pricing methods:
- Cost plus margin: is the simplest method, the business determines the
total cost of production and then adds an amount for profit
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- Market: Business sometimes sets prices according to the level of supply
and demand-whatever the market is prepared to pay
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When demand is low, prices fall
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A
business can choose a price that is either below, equal to or above that
of the competitors
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- Loss Leader: When businesses deliberately sell a product below its cost
price to attract customers to the shop
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- Price lining: is a price strategy mainly used by retailers
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For example, a jeweller may offer a line of watches
priced at $35 and a more expensive line at $55
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Normally, products of superior
quality are sold at higher prices
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If a business charges a low price for a product,
customers may perceive the product as ‘cheap’, if a high price is charged the
product and the product develops an aura of quality and status
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Promotion:
Promotion describes the methods used by a business to inform, persuade and
remind a target market about its products
...
The major advantage of this
method is that the message can be modified to suit the individual
customer’s circumstances
...
In Australia, businesses spend approximately $9 billion a year

on various forms of advertising
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Advertising media is a term for the many forms communication used
to reach an audience
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The promotional
activities are designed and developed in house
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The main types of below the
line promotions are mail catalogues and telemarketing
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Public relations are those activities aimed at
creating and maintaining favourable relations between a business and
its customers
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The communication Process:
A Channel is any method used for carrying a message; two of the most common
channels used for promotional communication include print and electronic
media advertising
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Often Consumers may be more willing to
purchase a product if the message comes via a respected and trusted channel
such as an opinion leader or by word of mouth
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- Word of mouth communication: occurs when people influence each other
during conversations
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Place:
Distributions and reason for intermediaries:
The final ‘p’ of the marketing mix is place, channels of distribution or
marketing channels are the routes taken to get the product from the factory
to the customer
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2: Producer to retailer to customer: A retailer is an intermediary who buys from
producers and resells to customers
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3: Producer to wholesaler to retailer to customer: This is the most common
method used for the distribution of consumer goods
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Agents are paid a
commission by the producer
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A business that does not have any sales representatives will often
use an agent instead
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Market coverage refers to the number of outlets a firm chooses for its product
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Customers can shop at local outlets and be able to
purchase the product
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2: Selective Distribution: This involves using only a moderate proportion of all
possible outlets
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The customer is prepared to travel and seek out
a specific retail outlet that stocks a certain brand
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This method of distribution is commonly used for exclusive, expensive
products
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- Transport: The method of transportation a business uses will largely
depend on the type of product and the degree of service the business
wishes to provide
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- Warehousing is a set of activities involved in receiving, storing and
dispatching goods
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- Inventory control is a system than maintains quantities and varieties
of product appropriate for the target market
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Non- Store retailing is retailing activity conducted
away from the traditional store, is gaining more popularity
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Two of the most rapidly
developing methods are telemarketing and internet marketing
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- Interactive Technology and Internet Marketing: It is now relatively easy
for any business to obtain a domain name and a website and begin
marketing its products via internet
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Local governments have authority over businesses
using signs, outdoor seating etc and whilst fulfilling these laws can be
frustrating it is important to in order to ensure that public areas are safe and
acceptable for all
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Ethical and Legal Aspects of Marketing:
Marketing managers should never forget that the business exists because of
its customers
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Dishonest or unethical marketing managers may ultimately drive customers
away
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The ethics of product placement:
Product placement is the inclusion of advertising into entertainment
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Environmentally Responsible Products:
Green Marketing: refers to the development, pricing, promotion and
distribution of products that either do not harm or have minimal impact upon
the environment
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*Consumers need
to be aware of ‘green wash’ products that appear t be environmentally friendly
but are not
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Those
who argue marketing does not encourage materialism, point out that
marketing merely satisfies the existing needs of customers
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• Introduction of automatic checkout scanning systems that do not require
an operator
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The pressure to survive in this intensely competitive environment
may result in some retailers using questionable marketing practices
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Sugging:
Is selling under the guise of a survey, is a sales technique disguised as market
research
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Role of Customer Laws:
Trade Practices: The trade practices act 1974 is one of the most important
pieces of legislation in Australia and has two major purposes:
• To protect customers against undesirable practices, such as
misrepresenting the contents of products or their place of protection
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The government also wants to ensure
that a number of businesses are operating at any one time in the same
market to avoid the problem of monopolistic power
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The most common
include:
• Fine print: Important conditions are written in small sized print and are
therefore difficult to read
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• Tests and surveys: Some advertisements make unsubstantiated claims;
for example, stating that 9 out of 10 people prefer a product when no
survey has been conducted
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• Packaging: The size and shape of the package may give a misleading
impression of the contents
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• Bait and switch: When a few products are advertised at extremely
competitive prices to attract customers, when these products quickly run
out, customers are directed to purchase higher prices items
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The
difference in price is possible because:
• The markets are geographically separated; for example, city and
country prices
• There is product differentiation within one market; for example,

different electricity prices for domestic and business users
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Implied conditions:
Are the unspoken and unwritten terms of a contract, these conditions are
assumed to exist regardless of whether they were especially mentioned or
written into a contract
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• Merchantable quality means that the product of a standard a reasonable
person would expect for the price
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• Fitness of purpose means that the product is suitable for the purpose for
which it is being sold
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Warranties:
A warranty is a promise by the business to repair or replace faulty products
...

Resale price maintenance:
Occurs when the manufactured or supplier insists that a retailer sell the
product at a certain price
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