Web viewroduct: refers to the good or service the business intends to provide in the market place. The business must differentiate it’s products from competitors e.g

HSC Grace De Leon Business Studies

HSC 10:2 - MarketingChapter 6: Role of marketingMarketing• Marketing, it is the process of developing a product and implementing a series of strategies

aimed at correctly promoting, pricing and distributing the product to a core group of customers

• The purpose of this is to determine what the business should be producing• Used as a method of enhancing its revenue streams and increasing the market’s awareness

of its productsStrategic role of Marketing• Refers to the long-term role that the key business functions of marketing has within a

business• These include choice, standard of living, employment and brand awareness• Once these are interdependent within each other it leads to increased market shareChoice• Businesses must be able to differentiate their products in the marketplace• This can be done through product features, pricing strategies or promotional activitiesStandard of living• It is the individual’s quality of life, partly based on g + s the individual can afford to buy• Organisations must develop better products that enhance our lifestylesEmployment• To provide products with consumers, they must employ labour to assist the transformation

process of changing input resources into finished goodsBrand Awareness• Refers to the extent to which;/ consumers are existence of particular product, its features,

price and possible places of purchase• This can be done by using strong and effective advertisement campaigns• This is done to increase market share

- Market share is the percentage of total sales a business has compared with its competitors within a particular market. It can increase sales and profitability

Interdependence with other key business functions• Each key business function must work well together in order to achieve business goalsOperations• They are there so they can incorporate what the consumers want as gathered by the

marketing department into their products• It is the responsibility of the operations department to develop strategies that would sell the

productHuman Resources• This is important because staff must be motivated and skilled to develop products within

the business that is clear and that cater to the needs and wants of a future customer• Because of the marketing process it is clear to businesses as to who they should hire to

produce the desired productFinance• The organisation must know that the needs of potential customers is financially viable for

the business to pursue• Budgets and forecasts must be established for promotional campaigns and sales

Production, selling, marketing approaches• Businesses use an array of strategies aimed at increasing product awareness and generating

sales of their products to satisfy the need of consumers• Many businesses focus on the single elements of the marketing mix rather than a

combination


• Marketing mix, the process of developing a product that meets the needs of consumers and implanting a series of promotional, pricing and distribution strategies that will encourage consumers to purchase the product

Production approach• During the 1920s-30s, many businesses assumed that the high quality of their product will

ensure success• Businesses would focus on how well the product is produced and therefore setting a high

price which meant high quality whichSelling approach• This involves businesses placing an emphasis on strategies aimed at convincing consumers

of the need to buy a product• The aim was to take the product and its benefits to the consume through the sales personMarketing approach• The marketing approach is solely based on consumer wants and needs• For a product to be successful, a successful marketing campaign would have needed to been

doneTypes of marketsResource markets• These are the markets where the production and sale materials occur• Some produce materials for other businessesIndustrial markets• Where good that are used as supplies in the production processes are tradedIntermediate markets• Where retail businesses purchase products that have been produced by other organisations• Also known as wholesalersConsumer markets• The market where businesses directly sells its products to consumers• Consumer markets are broken down into two categories; mass and nicheMass market• The market where products are aimed to all consumers• Its products appeal to all consumersNiche market• The market in which products are aimed at a select group of consumers• These markets specialise in products that not everybody wants


Chapter 7: Influences on marketing Factors influencing customer choice• When making a decision to buy g + s, people are influenced by a range of factors• These factors include price, reliability and convenience all of which relate to ‘product advantage’• Although customers do tend to maximise their satisfaction by making use of their limited resources• Key factors include:Psychological factorsThese are the internal influences that affect an individual’s buying behaviour, such as:• Perception: the opinion the customer has of the product• Motive: the reason for buying the good or service• Attitudes + beliefs: a person’s overall feeling about the business or the product may be based in past

experiences or life experiences• Personality + self-image: behaviours, characteristics of the customer and how the customer views

themselves• Learning: change an individual’s behaviour caused by additional information and experiencesSociocultural factors• These are external factors that affect the customer’s buying behaviour• The four main factors include:

- Social class: based on education, income or occupation- Culture + subculture: beliefs, behaviours and traditions- Family roles- Peer/reference group: those with whom a customer closely identifies adopting their attitudes, values

and beliefsEconomic factors• These refer to the influence of the general economic trends (unemployment levels, interest rates,

economic growth and decline) as well as individual/family income levelsGovernment factors• This relates to the influence of government legislation and regulation of consumer markets• Depending on the level of economic activity (economic cycle) the actions of the government attempting to

slow the economy downConsumer laws• The Commonwealth Government controls business behaviour through the Competition and Consumer Act

(2010). This legislation attempts to promote fair and competitive behaviour in the marketplaceDeceptive and misleading advertising• It is the unfair and unethical way of attracting consumers into your business by promoting inaccurate

prices or goods and services• Examples are:

- Giving misleading information about the product such as benefits, content or place of manufacturer- Offering false discounts and special discounts- Using the bait and switch: the reducing of a product’s price, then once that’s sold out the business will

offer a product of the same brand but at a higher pricePrice discrimination• It refers to the setting of different prices for a product in separate markets. When a business favours one

over the other and offering a discount but denying it for the latter• The competitors are then at a disadvantage as they forced to pay a higher price for an identical productImplied conditions and warranties• Implied conditions: they are the unspoken and unwritten terms of a contract. Two important terms are:

- Merchantable quality: means that the product is of a standard a reasonable person would expect for the price

- Fitness for purpose: means that that the product is suitable for the purpose for which it is being sold• Warranty: it is the promise made by the business to repair or replace faulty products within a certain

time period• Whether or not if the product the customer bought has a warranty, businesses by law must refund the


client’s money or exchange the good should the good be recognized to have been faulty at the time of leaving the store. This is why all products are said to have an implied warranty.

Resale price maintenance• Under the Competition and Consumer Act a manufacturer cannot refuse to sell goods to a retailer who

decides to sell the product at a different price suggested by the manufacturer• Manufacturers cannot discriminate against stores for selling at a price that is lower than recommendedEthical aspects of marketing• Ethics is marketing refers to a combination of broad principles that establish standards of behaviour and

guidelines for people working across the marketing industry• They are not enforceable through lawTruth, accuracy and good taste in advertising• Marketers are expected to engage in fair and honest behaviour when developing a marketing campaign• It is expected that when promotional material distributed, this material represents information that is

truthful, accurate and in good taste• The Competition and Consumer Act prohibits a corporation from supplying consumer goods that do not

comply with prescribed product safety standards• The Advertising Federation of Australia is the peak body representing companies in advertising and

marketing communications• While some social issues that are advertised can be controversial, it is still trying to sell its brand nameProducts that may damage health• Products that may damage our health are referred to as ‘sin’ products, so the state and federal

government put restrictions onto the products, such as:- Tabacco: sponsorship in in sporting/community events/casinos, not displayed openly, contains

health warnings, not sold to under 18s- Alcohol: staff serving must complete Responsible Service of Alcohol course, not sold to under 18s- Casino/Gaming: support for those who are addicted, restrictions on opening hours in leagues and RSL

clubsEngaging in fair competition• It is the role of the Australian Competition and Consumer Commission to regulate business behaviour• Unfair competitive behaviour include:

- Price-fixing between competitors- Long-term loss leader – pricing strategy by undercutting smaller businesses and forcing them to

engage in price war- Misleading advertising regarding the products of a competitor

Sugging• A disguised marketing process that uses general questions in a survey to determine the interests and

needs of a consumer then offers them a product that ‘caters’ to the consumer’s needs• It raises several ethical issues by invasion of privacy and being deceptive


Chapter 8: Marketing processIntroduction• Planning is the central activity of any organisation• It allows the business to examine its current position within the market, consider

opportunities to strengthen that position and determine the most effective method of implementing the required changes

• The elements of a market plan:- Executive summary- Situational analysis- Market research- Establishing market objectives- Identifying the target market- Developing marketing strategies- Implementation, monitoring and controlling

Situational analysisSWOT• Strengths: positive elements of the business’ internal environment• Weaknesses: negative elements of the business’ internal environment• Opportunities: positive elements of the business’ external environment• Threats: negative elements of the business’ external environment• Must consider the needs for the consumers to be sucessful• Goals must be developed that can both achieve business and consumers goals• By understanding the SWOT analysis and working to strengthen the position of the

business, both parties againProduct life cycle• The product life cycle identifies the current position of the goods/services in the market

place• The product life cycle reflects the business life cycle: establishment, growth, maturity and

post-maturityEstablishment:• The stage in which the product is new and is launched• Sales may be slow at first because the business still needs to build a customer base• Profits are limited because of lack of revenue but costs like fixed costs (rent + insurance) are

high• Management may decide to launch the product with a high price accompanied with limited

promotional spending• High costs may recover establishment costs and develop an image of high quality to

customersGrowth:• Once loyalty and satisfaction is gained by customer, business is moved onto growth stage• More profit is gained due to increased sales• As well as entering the market, marketing strategies will change (lower prices or expansion)• Promotional costs will changeMaturity• Sales will begin to slow• Business will face steady income streams and limited prospects for growth• Business must modify its marketing strategies to continue success• Find competitive advantages e.g. price differentiation, after sale services, unique promotions

or easier access for customersPost-Maturity• Key decisions will be made that will affect the long term survival of the business• Already an established organisation within the market


• Increased competition/changing customer preference may be the need for change• The business will be divided into four paths:

- Decline – completion and changes in the business environment. Business declines and lose market share

- Renewal – products revitalised, new promotional campaigns, brand altered. New strategies may be developed to attract a new audience

- Steady stage – no changes, profits stay the same- Cessation – the business is shut down

Market Research• Before conducting market research it is important that the business has an idea of what type

of information it is looking for• It could vary from character profiles, to broad awareness or attitudes towards certain new

productsData collection• An organisation seeks two types of data: primary and secondaryPrimary• Refers to the information that is collected for the specific purpose for which it will be used• Primary research can be conducted through:

- Observational: observing a particular group of customers that goes into the shops and their opinion of it

- Surveys: a primary group of people asking the same question (based on knowledge, attitudes, preferences + buying behaviour)

- Experimental research: used to examine reactions to different productsSecondary• Refers to the information that already exists having been collected for another purpose

- Internal sources Data that are within the business itself Businesses can compare external + internal sources

- External sources Data sources that exist outside the business The business must pay other groups/individuals to get this information All though there’s many sources that do not need any payment e.g. ABS, books,

magazines and the internetData analysis + interpretation• Once it gained this information it must make use of it• The business will analyse and interpret the data so management can gain a better

understanding of the impact of data on operations• Then management will be able to make an appropriate course of actionEstablishing market objectives• The objectives of a business provides the framework for the business and to develop a

series of activities and operations that aim to achieve the objectives• Objectives and goals guide the business• It’s important for the goals to be flexible so they can be adapted to changes in the business

environment• Businesses adapt a SMART approach to set objectives• S – specific, the objective needs to be clear and precise and relate to specific elements of the

business• M – measurable, the business needs to develop controls that are effective in measuring the

extent to which the goal has been achieved• A – achievable, the business needs to have the financial and human resources required to

achieve the goal• R – realistic, the objectives should not be based on unreasonable expectations, that is it must

be possible for the business to achieve this objective


• T – time, the time frame within which the business hopes to achieve the goal must be determined

General market objectives• Marketing objectives must measure up to business objectives. Some can be measured and

have specific targets to bet metIncrease market share• Market share refers to the percentage of total sales a business has compared to other

competitors in a particular market• Increasing market share is very important, especially for those businesses who have large

companies in their marketExpanding the product range• The product mix is the total range of the products offered by the business.• Businesses are usually eager to increase their product mix as the same mix will not be

effective in the long term due the changing tastes and preferences of consumers.Expanding existing markets• The demand for some products varies greatly from one geographic location to another.• Geographical representation refers to the presence of a business and the range of its

products across a suburb, state, city, town or countryMaximizing customer service• Customer service means responding to the needs and problems of the customer and is

perhaps the most important objective.• High levels of customer services usually results in improved customer satisfaction.Identifying target markets• A target market is a group of consumers for whom a particular product has been developed• To identify the appropriate target market for a particular product, a business needs to

understand the nature of consumer markets• By identifying target markets so they can direct their product directly to that market• Mass market approach, the seller mass produces, mass distributes and mass promotes one

product to all buyers• Market segmentation approach, total market is subdivided into groups of people who share a

common interest• Niche market approach, a narrowly selected target market segmentDeveloping market strategies• Developing marketing strategies involves using the marketing mix• It is called a mix because it uses four elements to rich these strategies – the four p’s

- Product: refers to the good or service the business intends to provide in the market place. The business must differentiate it’s products from competitors e.g. quality, image, logo, packaging and if it’ll be an up-market or discount product. Businesses must consider conditions and warranties that’ll come with the product.

- Price: the cost to the consumer when buying the good or service- Promotion: the process of creating and maintaining consumer awareness and interest

towards a particular product- Place: refers to the methods of distribution and the availability of a good

Implementation, monitoring and controllingImplementing• Implementation is the process of organising• The business must implement the strategies once the marketing plan has been devised• Successful implementation relies on the ability of management to effectively organise and

lead the business• Management must ensure that the production of goods are in good quality• Management must also have enough funds to cover all costs• Employees must have the skills and necessary training to assist the transformation processMonitoring and controlling


• A business must develop methods that management can use to determine the extent to which the implemented strategies are achieving the desired outcomes

• Businesses monitor the progress of their operations through controlling• Controlling is the process of comparing actual results with the results that the business had

planned to achieve• It allows businesses to find out if they’re achieving objectives or not achieving their

objectives• Three common forms of analysis and control when monitoring performance:

- Sales analysis- Market share analysis- Marketing profitability analysis

Revising the marketing strategy• The business must adopt revised strategies to ensure continued success• Business should revise market strategy to ensure they meet their business goals and also

the needs of the customers• The extent to which the marketing strategies are altered depends on whether or not the

business has achieved its objectives as well as changes in the environment


Chapter 9: Marketing strategiesIntroduction• Business must understands what the consumer wants and who it’ll appeal to i.e. target market• Once established the organisation can establish appropriate promotional and pricing strategies

that caters to the needs of that certain group• The marketing mix is made up of: product, price, promotion and place• Combined with the three p’s of marketing: people, processes and physical evidence• Makes the extended marketing mix, which refers to the combination of the 4 p’s and 3 p’s• A product can different features or qualities, the packaging can be of different colours or

materials, the brand name can be modified• Various promotions methods, different prices/discounts on offer, various distribution channels

- to a single outlet to a coverage of the entire market• The main goal of marketing manager is to develop and maintain a marketing mix that precisely

matches the needs of the customer in the target marketMarket segmentation• Refers to the dividing of the total market into segments• Once segmented, the marketer is able to choose which segment will be the target market• Businesses will implement a specific marketing mix to each target market• Ultimate aim of market segmentation is to increase sales, market share and profits• This is done by understanding the needs and wants of consumers• Segmentation variable refers to the characteristics of individuals or groups that are used by

marketing managers to divide a total market into segments• The consumer market can be segmented according to four main variables: demographic,

geographic, psychographic and behaviouralDemographic:• Divides the total market according the particular features of a population• Includes size, age, sex, income, cultural background and family size• The ease of the demographic variables can be measured and its use is widespread amongst

marketersGeographic:• Divides the total market according to geographic locations• Businesses may divide the consumer market into regions because consumers in different

geographical locations have different needs, tastes and preferencesPsychographic:• Divides the market according to personality characteristics, motives, opinions, socioeconomic

group and lifestyles• When segmenting according to psychographic variables, businesses would research consumer’s

brand preferences, favourite music, radio and television programs, reading habits, personal interests and hobbies and values

• Values on why people behave the way they doBehavioural:• Divides market on the consumers relationship to the product• Includes customer’s knowledge of, attitude towards, use of, or benefits sought from the product• May be divided into users and nonusers• Users can be classified as heavy or light• To encourage light or moderate users to purchase more of their products, businesses may have

to redesign the product, set special prices and implement special promotion activitiesDifferentiation and positioning of product/service• Refers to –in its broadest sense- is the process of developing and promoting differences

between the businesses products or services and those of its competitors i.e. choice and standing out in the biz. environment


Product differentiation• It is the process whereby a business distinguishes the attributes and features of a product from

those of its competitor’s products• Strategies to emphasis differentiation:

- Price: when using price it’ll be considered the cheapest and provides a wide range of g + s e.g. Big W ‘Australia’s lowest prices’ and Kmart ‘Great value and everyday low prices’

- Product quality: the best quality products around will attract customers e.g. Woolworths ‘The fresh food people’ and BMW ‘The ultimate driving machine’

Service differentiation• It involves a direct and immediate form of contact between the business and the consumer• Small businesses are recognised to have more personality in their service as opposed to their

big competitors• After-sales services is a strategy that emphasises on differentiation, they believe this’ll develop

into a strong brand loyaltyPositioning• Refers to the image a customer has in mind of a product• Marketers will use the technique in order to create an image or identify for a product compared

with the image of competing• Customers will often compare other products with each other• There is often a ‘price + quality’ undertone in positioningMarketing mix• When developing marketing strategies businesses must consider the 4 elements of marketing

and also people, processes and physical evidenceProductsGoods and/or services• Product can refer to both goods and services (good = physical, service = done for you)• Tangible benefits, refers to the physical attributes. Can include style, colour and features of

product• Intangible benefits, refers to the benefits a customer associates with purchasing a product. Can

include the prestige and image associated with the product. Includes customer care help desks, warranties and maintenance checks

• When developing its marketing strategies a business must look beyond the physical attributes and features of its products

• Businesses must consider the branding and packaging (product-related marketing)Branding• Refers to the reputation that a business/product has developed over a period of time• The brand name or logo attached to product provides a message to customers the quality, value

or prestige associated with that product• Strong brand name is important in enhancing the relationship between a business and its

customersPackaging• Refers to the physical appearance of the good; that is how a good appears• Packaging doesn’t impact the customer, the image of the product will be the first thing the

customer will see, therefore it must positive and effective• The packaging must aim to protect and maintain of the quality of the product• Packaging is also important because it is the last point of contact before the customer makes a

decision on whether or not to buy the product• It reveals the benefits, nutritional information or colour, design and style of the productPrice• Price refers to the amount of money a customer is prepared to offer in exchange for a product• A price set too high could mean lost sales unless superior benefits are offered. A price set too

low may give customers the impression that the product is ‘cheap and nasty’• To gain control in price businesses will often differentiate their products. Once that is done, the


business will have leverage over the pricePricing Methods• Pricing decisions are influenced by internal and external factors• The business’s marketing objectives and costs of production provide an indication of what it

should charge for its products• Business should consider the amount of competition in the marketplace, government

regulations, the location of the product in its life cycle and the level of economic activity• There are three main pricing methods: cost-based, market-based and competition-based. These

methods provide a ‘basic’ price for each product• Pricing strategies are then used to adjust the basic price, depending on the marketing objectives

and conditions within the marketplaceCost-based (mark-up) pricing• Refers to the pricing method derived from the cost of producing or purchasing a product then

adding a mark-up• The business then adds an amount to cover additional costs (overheads such as interest

payments, insurance, transport) and to also provide an adequate profit margin• The amount is referred to as the mark-up and is usually expresses as a percentage• The total of the cost plus the mark up is the seeling price of the product

Cost + (Cost x Mark-up percentage) = Price• Cost-based is mainly used by wholesalers and retailers• Although it is simple, the drawbacks include:

- Difficulty in accurately determining an appropriate mark-up percentage. If the % is too high, the product will be overpriced and possibly not sell. If it’s too low, the business is losing profit they could have obtained

- The product is priced after production and associated costs are incurred without taking into account the other elements of the marketing mix or the state of the market

Market-based pricing• It is the setting of the price according to the level of supply and demand (whatever the market is

prepared to pay)• When a demand for product is greater than its supply

- Price will go higher• When the supply of a product is bigger than its demand then it’ll be a surplus

- Price will fall• Prices change due to the fluctuations in the levels of supply• This method is a base for other methods• Difficult because levels of supply + demand always changeCompetition-based pricing• It’s when the price covers cost (cost of raw materials and the cost of operating the business) and

is comparable to the competitor’s price• It is often used when there is a high degree of competition from businesses producing a similar

product• Once a business has established a base price, it can either:

- Below that of competitors. This policy of undercutting the competition is often used as a way of breaking into an established market

- Equal to that of competitors. Follow the price by an price leader instead of taking the time of doing some market research and also avoids he risk of price/competition war

o Price leader refers to a major business in an industry whose pricing decisions heavily influence the pricing decisions of its competitors

- Above that of competitors. Done to make businesses be perceived as prestigious and superior, which appeals to the status-conscious buyer

Pricing Strategies• Once the basic price has been set using the pricing methods, the business then fine-tunes this

price in line with pricing strategies


• Businesses often use more than one strategy, even for the same product• Pricing strategy heavily depends on:

- Its marketing objectives- Life cycle of product- Degree of product differentiation- Level of economic activity

• Strategies heavily depend on the changes within the external business environment and the influence of technology

• Introduction of e-marketing has weakened the control over the business and its prices of products

• Marketers have found that they need to modify their traditional pricing strategies• An example is the widespread use of bundle pricing common with telecommunications

businesses, as evidenced by the ads from mobile phone companies, internet providers and cable television operators offering all kinds of packages- Bundle pricing is where customers gain ‘package’ of g+s in addition to the tangible good they

purchasedPrice Skimming• Occurs when the business sets the highest possible price for their product during its

establishment stage of its life cycle• Some consumers are willing to pay for a high price because of its novelty features because of the

prestige/status that the ownership gives• Businesses do this to recover for the price of the operationsPrice penetration• Occurs when the business charges the lowest possible price for a product to gain an immediate

group of customers and/or achieve large market share• Businesses do this often to stop new businesses to get into the market• However, businesses do have trouble raising the price after awhileLoss Leader• When a product is sold at or below cost price• Used for special promotions especially at retail stores, they deliberately sell a product at a loss

to attract customers to the shop• Although businesses make a loss on this product, it hopes that the extra customers buy other

products as well• Businesses can recover when customers buy other products• This pricing strategy is often good for:

- Overstocked or a product is slow to sell- Wants to increase the traffic flow in the expectation of gaining new customers- Wants to build a reputation of having low prices

• The danger is that businesses may lose money if it’s not done correctlyPrice points• When the product is sold at a pre-determined pruce• Used by retailers, especially retailers boutiques• $55…$65 etc.Price and quality interaction• Usually customers perceive the quality of a product with its price• High price = good quality, low price = bad quality• Referred to as prestige or premium pricing

- Prestige pricing is where a high price is charged to give the product an aura of quality and status

• This may not always work as customers understand that high prices reflect on the packaging or the marketing exploitation

Promotions• It is the most public aspect of marketing. It is the way businesses gets it public image and profile


Elements of the promotion mix• The promotion mix seeks to generate interest in and awareness of a particular product/servicePersonal selling• Aims to establish a direct link between the business and the consumer• Involves the process of taking the business and the product directly to the consumer• Forms include door-to-door sales and party plansRelationship marketing• Refers to the process of building and maintaining long-term relationships with consumers• It involves creating a high level of consumer satisfaction, value and service, thus ensuring

consumers will return to the business• It is based on the loyalty of the consumers• Through a regular client base, consumers can receive special packages, discounts and

promotional eventsAdvertising• The most public face of the promotion mix• It seeks to convey a broad message to a broad range of consumers• Advertising includes TV, newspapers there is also the rise of social media to advertiseSales promotions• Aims to create an interest and generate awareness of a particular product• Promotions include competitors, samples, discounts and offers to buy one and get one free• Businesses are also using e-mail to inform customers of sales and suchPublicity and public relations• It is the process of creating an event for a business to generate awareness, in doing so it attracts

interest in the business’ activities and products• Businesses will endorse celebrities to increase business profileThe communication process• Market research will allow the business to develop strategies that will attract the interest of the

product’s intended marketOpinion leaders• Businesses will use individuals in the community that are highly respected• Their knowledge, expertise and their personality and the leader’s image and reputation will

significantly benefit the businessWord of mouth• Refers to the form of publicity where business has little or no direct influence• Customers in relation to potential customers will always have a reaction to a certain product• This includes the degree of which the business was satisfied with the product or service• Positive word is an extremely valuable form of promotionPlace/distribution• Place is the is process of distributing the product from where it is made to the customerDistribution channels and reasons for intermediaries• Distribution channels refer to the channels by which a product is moved from the place of

manufacture (the product’s place of origin) to the consumer (the product’s final user)• Although, the distribution process may have a few steps:Producer to consumer:• Where the good or service is produced by an individual/organisation and is then passed directly

onto the consumer• There is no other business involved in selling the product• Advantages include the producer maintaining control over all areas of the product, including

quality control and the producer is able to have direct contact with the consumer and have a better understanding of their needs

• Goods, farmer produce in markets. Service, hospitality industries such as hotels and dentistsProducer to retailer to consumer:• Where the retailer is used as an intermediary who accesses the good from the producer and


then sells it to the consumer• Intermediary refers to the business purchasing the final product from the producer and takes

on the responsibility of selling it to the consumer• Advantages include allowing the producer to concentrate on the manufacturing component of

the business operations and the use of retailer means a greater access to the good• Although it does slow down the ability to examine the buying patterns and behaviours of the

consumer• Goods, supermarkets selling everyday products or restaurants (unless they grow their own

produce etc.)Producer to wholesaler to retailer to consumer• In this system an additional intermediary, the wholesaler. In this case, the wholesaler takes the

role of distributing the product to producers and retailers• Generally the most expensive distribution channel• Advantages include the producer being able to hold lesser amounts of idle stock and marketing

and sales will tend to be the responsibility of the retailer, not the producer, thereby saving on costs

• Examples include online global fashion storesChannel choice• The choice of distribution channel will influence the type of customers the product attacks, the

perception of the product in the market and, above all, the ease with which the consumer is able to access the product

Intensive:• Product is readily available and accessible to a wide selection of businesses or locations• Found in a large number of stores• E.g. convenience store itemsSelective• Involves using a limited amount of stores/locations to sell/distribute product• Customer is willing to travel and seek a retailer that stocks the particular product• Includes electrical appliancesExclusive• Restriction on the number of products and/or availability of the product. Available at a limited

no. of venues• Maintain control of elements of production, distribution sales and marketing of product• Tiffany & Co JewelleryPhysical distribution issuesTransport• Refers to the process of moving goods from one location to another• Should consider length of time of transporting good from production to retail centre• Business must consider best method of transportation, can be expensive and should factor cost

into final price of goodWarehousing• Refers to process of storing products before they are distributed to the consumer• Used as a facility to store the finished product, allows build-up of holding stock of good• Distribute product to retailer at later rime with no delays• Warehousing is influenced by the type of good being stored and distributed. Some have limits in

how much can be heldInventory• Refers to the stock of product• Sale of stock provides the business with the means to achieve its financial objectives• Business must ensure their stock meets consumer demand• Avoid overstocking and understocking

- Overstocking leads to clearance sales which reduces profits and restricts business to store more attractive forms of stock


People, processes and physical evidencePeople• An important aspect of business is to employ the right people to support their good or service• This is reflected through customer service

- This customer service reflects in customer satisfaction• It involves knowledge and attending to customers in understanding a manner and knowing the

details of a g+sProcess• It is the consumer’s experience of researching information on the product to the final stage of

experiencing the benefits of the product• Aspects of the sale processes are focused on delivering to the expectations of the consumerPhysical evidence/packaging• Refers to the physical appearance of the product across every aspect of its presentation to the

customer- They should consider the size, shape, colour, material and label of the packaging

• The packaging must be able to convince the consumer to buy the product as it is the last point of contact between them

• Visual packaging is a significant influence in consumer behaviour- Small improvements can leave large reactions

• It also refers to the visual presentation of the employees/business- Staff in how they dress, and act- The way the business is set up, must be aesthetically pleasing

E-marketing• E-marketing refers to the use of the internet and digital media capabilities to help sell your

products or services• It has the ability to help businesses send the right message with their products to the right

customers• Businesses are able to have a wide market, as everybody has internet access• The objectives include:

- Sell: using the internet to sell g+s- Serve: using the internet to provide service to customers- Speak: using the internet to communicate with products (existing and potential)- Save: using the internet to save/reduce costs- Sizzle: using the internet to build brand identity

• Examples of e-marketing include, web pages, blogs and social mediaGlobal Marketing• Many transnational corporations (TNCs) adopt a global marketing approach that involves

developing marketing strategies as if the entire globe were one large market• Businesses believe that the marketing approach should be customized and adapted to suit

overseas markets and different countries cultures, religion and tastes• Many global markets cater to their individual domestic markets• All businesses marketing on a global scale must rely on market research to understand the

complexities of the global marketing environment before they can design the marketing mix• It is essential that they have an analysed in depth research of their marketGlobal branding• It is the worldwide use of a name, term symbol or logo to identify the seller’s products• Business use global branding because:

- It can be cost effective because one advertisement can be used in a number of locations- It provides a uniform worldwide range- The successful brand name can be linked to new products being introduced to the market

• Once this is done they’ll attempt to market the brand globallyStandardisation• An approach where the global marketing strategy assumes the way the product is used and the


needs it satisfies are the same world over• This means that the marketing mix will be the same everywhere• This strategy is beneficial to save costs, products are longer therefore achieving economies of

scale: research and development costs are reduced, spare parts and after-sale services are simplified, promotion strategies can be standardised and any evaluation and modification of the plan is a much simpler task

• Examples include electrical equipment, mobile phones etc.Customisation• An approach where the global marketing strategy assumes the way the product is used and the

needs it satisfies are different between countries• Adopting this approach is to be customised according to the economic, political and

sociocultural characteristics of the countryGlobal pricing• It is how the business coordinates their pricing policy across different countries• It is one of the most critical and complex issues that global businesses have to deal with because

price is the only element of the marketing mix that generates revenue• All other elements involve costs, therefore global pricing strategy is a major determinant of

profitsCustomised pricing• Occurs when consumers in different countries are charged with different prices for the same

product• To determine the price for an overseas market, businesses will use the cost-plus method to cover

the added costs of exportation- Costs include transportation, taxes, warehousing and tariffs (tax on an imported product)

Market-customised pricing• Sets prices according to local market conditions• To avoid competition from a domestic business, the global business may need to adopt a

market-customised pricing strategy that allows the marketers to vary the price depending on the level of demand and competition within the overseas market

• In a competitive market the price charged may have to be lower than in market where the business has a monopoly

• It is also influenced by foreign currency exchange rates• Fluctuations in the exchange rate can charge the prices charged across countries and is a major

risk for global businessesStandard worldwide price• Standardised pricing is the practice of charging customers the same price for a product

anywhere in the world• It will only succeed if the foreign marketing costs remain low enough not to affect overall costs• The two risks involved:

- Domestic business may undercut the price- Changes in the exchange rate may negatively impact on the exported price

Competitive positioning• It 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• A global business must show ‘how much better it is’ than other businesses• Without differentiation, more time, money and effort to encourage potential customers to

purchase a business’ 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 and competitive position in an increasingly challenging environment,

businesses must gain a deep understanding of their dynamic environments in which they operate and form their strategies according to evolving conditions

Documents

Web viewroduct: refers to the good or service the business intends to provide in the market place. The business must differentiate it’s products from competitors e.g