9 Marketing process

9.1 Overview
LEARNING SEQUENCE
9.1 Overview
9.2 Situational analysis
9.3 Market research
9.4 Establishing market objectives
9.5 Identifying target markets
9.6 Developing marketing strategies
9.7 Implementation, monitoring and controlling
9.8 Review

9.1.1 Introduction
As outlined in chapter 7, a marketing plan gives a purpose and direction to all the business’s activities. Everyone
in the business needs to know the plan, so all departments are working towards achieving the goal. For this
reason, it is referred to as an integrated marketing plan. The marketing plan needs to ‘mesh’ with the business’s
operational plan, financial plan and human resources plan.

BizFACT
The acronym SMEIDI will help you remember the steps involved in developing a marketing plan.

Situational analysis

Market research

Establishing marketing objectives

Identifying target markets

Developing marketing strategies

Implementation, monitoring and controlling

The steps involved in developing a marketing plan are shown in figure 9.1.
There is no set format for developing a marketing plan. Each plan will reflect the individual characteristics of the
business. However, all marketing plans should have two features in common. They should be:
• realistic in the light of the situational analysis
• achievable within the business’s resources and budgets.

242 Jacaranda Business Studies in Action HSC Course Seventh Edition

FIGURE 9.1 Steps involved in developing a strategic marketing plan. Strategic marketing planning provides a
mechanism for businesses to gain a clear picture of where the business is at present, and where it could be in the
future. In this sense, it is the ‘road map’ for marketing.

1. Situational analysis

What is the present state

of the business?
• SWOT
6. Implementation, monitoring • Product life cycle
2. Market research
and controlling

• Developing a financial forecast What products do customers

(How much is the marketing want? Who are the business’s
plan going to cost?) main customers? What are our
• Comparing actual and planned customers like?
results (Is the business achieving
what we thought it would?)
• Revising the marketing strategy
(Is the plan working? Does it need
changing?)

5. Developing marketing 3. Establishing market

strategies objectives

How is the business going What do we want the business

to achieve these objectives? to achieve?

4. Identifying target markets

To whom does the business

presently sell? To whom could
the business sell?

Resources
Resourceseses
Digital document Key terms glossary (doc-35666)
Exam question booklet Chapter 9 Exam question booklet (eqb-0031)

CHAPTER 9 Marketing process 243

9.2 Situational analysis
SYLLABUS LINK In this subtopic you will learn about situational analysis, SWOT and product life cycle.

Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

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. That is, a situational analysis must be undertaken
based on meaningful market research. Two methods of analysis include a SWOT analysis and a product life
cycle.

9.2.1 SWOT
Changes in the external environment can dramatically alter the course of a business. For this reason, a business
must constantly monitor these changes, looking for any opportunities to exploit and any threats to avoid.
Internal forces operate from inside the organisation and are largely within the control of the business. These
internal forces are unique to each business and, by analysing them, management can assess the strengths and
weaknesses of the business.
To develop a clear understanding of both the external and internal environments,
SWOT analysis involves the
a SWOT (strengths, weaknesses, opportunities and threats) analysis should be identification and analysis
conducted. A SWOT analysis involves the identification and analysis of the internal of the internal strengths and
strengths and weaknesses of the business, and the opportunities in, and threats weaknesses of the business, and
the opportunities in, and threats
from, the external environment. It provides the information needed to complete from, the external environment
the situational analysis and gives a clear indication of the business’s position
compared with its competitors. The marketing plan should be modified to reflect this
information.

FIGURE 9.2 A SWOT analysis is a powerful tool that can be used at all stages of the marketing planning process.

Helpful Harmful

What are the strengths of the What are the weaknesses of the
business? business?
• What is the business good at? • Does the business have competent
I
n • Is the business’s product popular? managers and employees?
t • Are customers loyal? • Are the computer systems
e • Does the business have skilled and obsolete?
r
n motivated employees? • Has the business experienced past
a • Does the business operate efficiently? failure?
l • Is the business in a good financial • Has the business upgraded its
position? facilities to keep pace with
• Is equipment state of the art? Strengths Weaknesses competitors?

What opportunities can the What threats does the business

business take advantage of? Opportunities Threats
E face?
x • What will new technology bring to • What trends have been evident in
t the business? markets?
e • Is the economy peforming well?
r • Are there new laws regulating what
n • Are interest rates low? the business can do?
a • Are there any possible new markets? • Are there new competitors?
l • Can the business acquire or • Are current competitors taking over
merge with other businesses to the business’s market share?
expand and grow?

244 Jacaranda Business Studies in Action HSC Course Seventh Edition

Once the SWOT analysis has been conducted, an assessment of the product’s position on the product life cycle
should be carried out. This is necessary because different marketing strategies will need to be used at different
stages of a product’s life.

SNAPSHOT
Case study: SWOT analysis of Kellogg’s
Kellogg’s is an American multinational food manufacturing company that produces cereal and convenience
foods. Below is a SWOT analysis of the company.

Strengths
• Wide range of high-quality products
• Market leader in the industry
• Sells some of the world’s most iconic brands, e.g. Corn
Flakes, Coco Pops, Rice Bubbles
• Has a strong global presence. Kellogg’s manufactures
their foods in 18 countries and offers them in more than
180 countries.
• One of the world’s top 10 snack and bakery companies
with $13 578 billion net sales in 2019
• Growth through strategic acquisitions. As consumers
become more health-conscious, Kellogg’s has made
several acquisitions of more health-focused brands and
expanded on their traditional products.
• Strong brand awareness. Kellogg’s is the world’s largest cereal maker by sales and spends more than $1
billion a year on brand advertising and marketing.
• Demonstrates corporate social responsibility in a number of areas. In 2019 they were recognised by the
Ethisphere Institute as one of the 2019 World’s Most Ethical Companies.

Weaknesses
• Questionable marketing campaigns. Some of Kellogg’s marketing methods have been considered unethical,
especially their marketing targeting children to products that are high in sugar.
• High sugar content and syrups in many products

Opportunities
• Potential new markets overseas.
• Possible expansion of product range
• Social influence of changing lifestyle. Due to modern busy lifestyles, people are looking for convenience
foods and easy meals to save time.
• Opportunities to partner with the segment of restaurants and hotel chains to expand their business

Threats
• Intense competition — there are many substitute products available
• Government regulations and policies relating to products that are high in sugar, as well as policies regulating
marketing
• Some of their products have fallen out of favour with today’s more health-conscious consumers.
• Economic downturn and decrease in customer spending could lead to lower sales.

9.2.2 Product life cycle

The product life cycle consists of the stages a product passes through:
product life cycle the stages
introduction, growth, maturity and decline (see figure 9.3). Many businesses a product passes through:
start because of someone’s great idea to produce a product (a good or service) introduction, growth, maturity
that is new and perhaps superior to what is available. From that tiny seed, a and decline

CHAPTER 9 Marketing process 245

successful business may grow; but like all good things, there is eventually an end to the cycle. Your parents and
grandparents were familiar with many products that you would consider old-fashioned relics from the past, such
as black and white television sets or cut-throat razor blades. Products such as these experienced the same cycle
of introduction, growth, maturity and decline that products continue to experience today.

FIGURE 9.3 A business must be able to launch, modify and delete products in response to changes in the
product life cycle. This diagram shows the PlayStation 5 in the introduction phase of the product life cycle and
growth in Apple AirPods. iPhones are in the maturity phase due to their plateauing sales and mobile phones will
eventually make landline phones extinct, placing landlines in the decline stage of the product life cycle.

Introduction Growth Maturity Decline

stage stage (saturation) stage
stage
Sale ($)

Time

At each stage of the product’s life cycle, a different marketing strategy is necessary.
Table 9.1 outlines the marketing strategies relevant to the different stages of the product life cycle.

TABLE 9.1 Marketing strategies relevant to different stages of the product life cycle
Introduction stage Growth stage Maturity stage Decline stage
Description The business tries to Brand acceptance Sales plateau as the Sales begin to decline
increase consumer and market share market becomes as the business faces
awareness and build a are actively pursued saturated. several options.
market share for the new by the producers of
product. the product.
Product Brand and reliability are Quality is maintained Features and Product is maintained
established. and improved and packaging try to with some
support services differentiate the improvements or
may be added. product from those rejuvenation. Cut the
of competitors. losses by selling it to
another business.
Price Price is often noticeably Price per unit Price may need Price is reduced to sell
lower than competitors’ of production is to be adjusted the remaining stock.
prices in order to gain a maintained as downwards to hold
market foothold. the firm enjoys off competitors and
increased consumer maintain market
demand and a share.
growing market
share.
(continued)

246 Jacaranda Business Studies in Action HSC Course Seventh Edition

 TABLE 9.1 Marketing strategies relevant to different stages of the product life cycle (continued)
Introduction stage Growth stage Maturity stage Decline stage
Promotion Directed at early Promotion now Continues to Promotion is
buyers and users. seeks a wider suggest the product discontinued.
Communications seek audience. is tried and true —
to educate potential it’s still the best.
customers about the
merits of the new product.
Distribution Distribution is selective, Distribution channels Incentives may Distribution channels
which enables consumers are increased as the need to be offered are reduced and
to gradually form an product becomes to encourage product is offered to
acceptance of the more popular. preference over a loyal segment of the
product. rival products. market only.

Why do some products decline?

Products end for various reasons (see the next case study). These include the changing public perception of
what is fashionable at certain times. New technologies are constantly being introduced and with them come new
products replacing old ones. New products also sometimes reduce demand for older ones. Fluctuations in the
level of economic activity constantly result in shifts in customer spending habits.
Consumer behaviour is dramatically changing in light of shock events such as the COVID-19 pandemic and
the ongoing need to reduce carbon emissions in order to prevent more devastating climate change. Consumers
expect products to be more environmentally friendly. Some businesses will grasp this opportunity to create new,
greener and more ecologically sustainable products, while other products will disappear.
Today, for example, car manufacturers are a good example of large-scale manufacturers throughout the world
that are confronted with the unpleasant reality that consumers are more globally aware. They will no longer
continue buying unsustainable products the way they once did.

FIGURE 9.4 Some tech products that seemed innovative when they were
first released and have now experienced a decline in sales due to the
increasing popularity of smartphones and tablets include MP3 players,
e-readers, landline phones, personal computers, digital cameras and
GPS units.

CHAPTER 9 Marketing process 247

 SNAPSHOT
Case study: Product life cycle of Apple iPad
Apple invented the iPad because Steve Jobs, the CEO at the time, wanted to create a new category of device
that would be better than an iPhone or MacBook at certain tasks such as browsing the web, watching videos,
taking photos and listening to music. The iPad was a completely new concept that revolutionised the computer
tablet market. Below is a summary of the iPad’s progression through the four stages of the product life cycle.

Introduction: 2010
• iPad announced and unveiled on 27 January 2010.
• Apple began taking pre-orders of the first-generation iPad in March 2010.
• First-generation iPad released in the USA on 3 April 2010. Apple sold an astonishing 300 000 iPads on the
first day of availability.
• Released in Australia, Canada, France, Japan, Italy, Spain, Switzerland and the UK on May 28 2010.
• By 3 May 2010 Apple had sold 1 million iPads and by June 2010, 80 days after the release of the first iPad,
Apple had sold 3 million units.
• The iPad achieved very high sales at first — 2 million iPads were sold in less than two months from its
launch.
• Profits were low at the start and costs were quite high.
• There was no competition for the first five months.
• Apple priced iPad high — used price skimming.
• No competition — there were no other tablet computers on the market.
• iPads were only available through Apple online and retail stores.

Growth: 2011 to 2012

• A total of 15 million iPads were sold by the end of 2010.
• Prices of iPads began to drop.
• There were new entrants to the market. Apple began facing competition from Samsung, HP, LG and Cisco
who had developed tablets to compete with the iPad.
• The iPad 2 was released on 11 March 2011. The iPad 2 included a dual-facing camera.
• In 2012, just before sales peaked, Apple introduced the smaller and more affordable iPad mini, which was
better priced to take on competition from Google and Amazon.
• The iPad became available from other retailers.

Maturity: 2012 to 2014

• iPad sales peaked in 2014.
• By this stage there were multiple screen sizes, colours, price points and accessories.
• iPads faced increasing competition.
• Due to increasing competition, prices needed to be further lowered.
• Over the years the iPad was rejuvenated numerous times to avoid the product going into the decline stage. In
fact, a total of 21 versions had been released by the end of 2019.

Decline: 2014 to present

• Apple attempted to tackle the decline stage well.
• iPad sales dropped dramatically each year from 2014 despite different iPads being introduced.
• Apple began targeting the enterprise and education markets. For example, Apple grew its IBM partnership
and developed the Classroom application for teachers.
• Larger iPhones have now become a threat to iPad sales. The iPad was initially launched to be better than an
iPhone for certain tasks, however newer iPhones are now able to do similar functions.

248 Jacaranda Business Studies in Action HSC Course Seventh Edition

 10 Years of iPad
iPad revenue as a share of Apple’s total revenue
30

26.2%
25
Percentage of Apple’s total revenue

20

15

10.9%
10

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year

KEY IDEAS
• A marketing plan gives a purpose and direction to all the business’s activities.
• The steps involved in the marketing process are:
• situational analysis
• market research
• establishing marketing objectives
• identifying target markets
• developing marketing strategies
• implementation, monitoring and controlling.
• A situational analysis provides a precise understanding of the business’s current position and where it is
heading.
• A SWOT (strengths, weaknesses, opportunities and threats) analysis provides the information needed to
complete the situational analysis and assesses the business’s position compared with its competitors.
• The product life cycle consists of the stages a product passes through: introduction, growth, maturity and
decline.
• At each stage of the product’s life cycle a different marketing strategy is necessary.

CHAPTER 9 Marketing process 249

9.2 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.2 Quick quiz 9.2 Exercise 9.2 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
1, 2, 4, 5, 6, 7, 8, 11, 13 3, 9, 10, 12, 14, 15, 16, 17 18

9.2 Exercise
Revision
1. Clarify why everyone in the business needs to know the marketing plan.
2. Identify the two features all marketing plans should have.
3. Examine figure 9.1, then copy the table below into your notebook. Complete the table by recalling and then
writing against each step the appropriate statement from those given below. The first step has been
completed for you.

Developing a marketing plan Statement

Step 1: Situational analysis The business currently has a market share of
28 per cent. The market is growing but new
competitors are likely to enter the market.
Step 2: Market research
Step 3: Establish market objectives
Step 4: Identify target markets
Step 5: Develop marketing strategies
Step 6: Implement, monitor and control the plan

Statements
a. The business will design a new promotional campaign featuring younger women. Direct selling methods
will also be introduced.
b. The market share percentage will be examined every three months. If the results are negative, then the
objectives will be reviewed.
c. The business is to increase its market share to 35 per cent within the next 12 months.
d. The business presently sells to 35- to 45-year-old females across all income groups. However, the product
could be made to appeal to the 25 to 35 age group.
e. The business needs to collect information about existing and potential customers.
4. State what the acronym SWOT represents.
5. Outline the value of a SWOT analysis when reviewing the business’s situation.
6. Define the term ‘product life cycle’.
7. Outline the four stages of the product life cycle and provide an example of a product in each stage.
8. Identify at which stage of the product life cycle the following products are located.
a. CD b. Personal computers
c. Electric vehicles d. Plant-based foods
9. Explain why the marketing strategies should change as a product advances through the stages of its life
cycle.
10. Compare the marketing strategies for a product in the growth stage with one in the decline stage.
11. State the main reasons why the sales of many products eventually decline.
12. Construct a SWOT analysis for a business you are familiar with.

Read the case study ‘SWOT analysis of Kellogg’s’ and answer questions 13 to 15.
13. Describe how Kellogg’s could take advantage of some of the opportunities outlined in the SWOT.

250 Jacaranda Business Studies in Action HSC Course Seventh Edition

14. Explain the impact some of the threats mentioned could have on Kellogg’s.
15. Recommend marketing strategies Kellogg’s could implement to overcome their weaknesses or threats.

Read the case study ‘Product life cycle of Apple iPad’ and answer questions 16 and 17.
16. Deduce some factors that have led to the decline in iPad sales.
17. Recommend marketing strategies that Apple could implement to respond to the challenges they face.

Extension
18. ‘Knowledge of the product’s life cycle can provide valuable insights into ways the product can be managed to
enhance sales and profitability.’ Assess the accuracy of this statement.

9.2 Exam questions

Question 1 (1 mark)
Source: HSC 2020 Business Studies Exam, Section I, Q10
A company has reduced the price of their current razor as a new model will be released soon.

Which stage of the product life cycle for the current razor is indicated by this decision?
A. Introduction
B. Growth
C. Maturity
D. Decline

Question 2 (1 mark)
Source: HSC 2017 Business Studies Exam, Section I, Q3
As a result of a SWOT analysis, a gym operator finds that a new larger gym is opening nearby. The operator then
decides to extend its opening hours.

The aim of this strategy is to use

A. a strength to overcome a threat.
B. a strength to overcome a weakness.
C. an opportunity to overcome a threat.
D. an opportunity to overcome a weakness.

Question 3 (1 mark)
Source: HSC 2016 Business Studies Exam, Section I, Q3
While developing a new marketing plan a business discovers that many customers think its website is boring and
confusing.

At what stage in the marketing process should this have been identified?
A. Identifying target markets C. Conducting a situational analysis
B. Developing marketing strategies D. Establishing marketing objectives

Question 4 (1 mark)
Source: HSC 2015 Business Studies Exam, Section I, Q4
At which stage of the marketing process would a business examine its internal and external influences?
A. When identifying target markets C. When establishing its marketing objectives
B. When conducting a situational analysis D. When developing its marketing strategies

Question 5 (4 marks)
Source: HSC 2014 Business Studies Exam, Section II, Q22a & b
Bill and Jane have owned and operated a café in a busy restaurant area for many years. They specialise in
fast healthy food that is popular with 18–30 year-olds. Recently a multinational franchise opened in the area in
response to an expected increase in population.
a. Outline TWO strengths of the café. (2 marks)
b. Outline TWO opportunities for the café. (2 marks)

More exam questions are available in your learnON title.

CHAPTER 9 Marketing process 251

9.3 Market research
SYLLABUS LINK In this subtopic you will learn about the three steps of the market research process.
Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

9.3.1 Importance of market research

Imagine you have just been given an assessable task for your Business Studies class. If you want to achieve
satisfactory results, it is important that you undertake some type of research. The research could consist of
reading books and magazines, conducting surveys, accessing internet sites, carrying out experiments and talking
to people. Marketing managers also have to undertake research of their market.
Market research is the process of systematically collecting, recording and analysing information concerning a
specific marketing problem.
Just as a well-researched assessable task will lead to better results, marketing
market research the process
strategies perform best when they are based on accurate, up-to-date, detailed and
of systematically collecting,
relevant information. Being well-informed about all aspects of the market, especially recording and analysing information
the buying behaviour of existing and potential customers, places the business in concerning a specific marketing
a stronger position. problem

SNAPSHOT
Case study: Market research is at the heart of IKEA’s expansion
Market research is at the heart of IKEA’s expansion. This focus
came about as a result of the problems they encountered when
entering the US market due to their lack of research. Since then,
IKEA has invested a lot of time conducting marketing research and
studying consumers. This is especially the case when they make
the decision to expand to new countries with cultures distinctly
different from their own.

IKEA founder Ingvar Kamprad was a firm believer in conducting his

own market research (i.e. primary research). Before entering a new
market, the company carries out their own market analysis instead
of relying on conventional research involving market studies. IKEA finds this to be more practical and intuitive as
it allows the business to gain access to extensive amounts of cross-cultural data.

IKEA found that surveying people doesn’t always give them the right answers. Many people say things that are
not entirely accurate and what they actually do may be very different to what they say. This could be because
people respond to questions in a way they think they’re supposed to or answer in a way that makes them sound
better; often this is because people are not always fully aware of how they behave.

To overcome this, IKEA have developed a number of research methods that go deeper and give them a better
understanding of how people actually behave and what they actually want and need. Their researchers take a
firsthand look at customers themselves. They frequently do home visits and set up cameras in people’s homes,
filming them for a number of days (with their permission). Through their research they want to come closer to
people’s everyday lives and reality. First their researchers watch the footage and analyse it and then they sit with
their subjects and get them to watch the footage. Their subjects are often surprised as they are often not aware
of how they actually behave.

252 Jacaranda Business Studies in Action HSC Course Seventh Edition

 The following are two examples of how IKEA’s research led to the development of new products to better meet
consumer’s needs:
• IKEA recently studied over 8000 people across eight cities to observe their morning routines. What they
found was that, regardless of the city, many people find the process of picking out their outfit for the
day stressful, with women spending more time on this than men. Based on this data, IKEA invented a
freestanding mirror called the Knapper that has a rack on the back to hang clothes and jewellery. This mirror
is meant to help customers assemble an outfit (including clothes and accessories) the night before to cut
down on morning anxiety.
• Other research revealed that more and more of the world’s population are living in cities with smaller living
spaces. This lead to the creation of more multifunctional products such as their new range of ‘wireless
chargers’ — a range of products that blend in with people’s homes and make it possible to charge mobile
devices where they need them most, without having to chase after outlets or hide messy cables.

Releasing a new product onto the market is risky. Minimising the 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. Market
research attempts to identify and outline both marketing opportunities and problems as well as evaluating the
implementation of the marketing plan. Effective market research can establish whether it is worth launching or
promoting a product at all.
Without adequate, reliable and correct information, businesses expose themselves to market embarrassments,
which could result in the product failing to sell.

BizFACT
In 2018 the Australian Centre for Business Growth revealed new research, which identified the top five reasons
Australian SMEs are failing. Data was collected from CEOs whose small or medium-sized companies had failed.
The top five reasons (in order) were lack of leadership and management skills including poor planning, insufficient
market research and sales skills, mismanagement of financials, underestimating the impact of externalities, and
poor governance structures.

FIGURE 9.5 The founders of Twitter originally designed a podcasting platform

called Odeo. Soon after, Apple launched iTunes podcasting, so the founders
invested significant time researching other opportunities to build on the
platform they’d already created. They eventually decided to create a portal
where people could share what they were up to. With this idea in mind, the
founders researched existing social networking sites and surveyed users to
discover what they didn’t like about those sites. In 2006 Twitter was born.

CHAPTER 9 Marketing process 253

9.3.2 The three steps of the market research process
It is often said that the recipe for effective decisions is 90 per cent information and 10 per cent inspiration.
However, the information must be relevant to the situation or problem.
To obtain accurate information, marketing managers usually follow a three-step approach (see figure 9.6).
You will probably be familiar with this process as it uses similar steps to those needed to complete a research
assignment.

FIGURE 9.6 The three steps of the market research process

Step Explanation

1. Determining The problem is clearly and accurately stated to determine what

information needs to be measured and the issues involved. This is a crucial
needs step.

At this stage, the researchers know the facts that are needed and
those that are already available.
2. Collecting data
from primary Plans must be made to gather missing data.
and secondary
Information may be collected by telephone, personal surveys and
sources
online, as well as by personal observation or from private data
sources.

3. Analysing and Facts by themselves do not always provide a solution to the

interpreting marketing problem. They need to be analysed and interpreted to
data determine what they mean.

Step 1: Determining information needs

The information collected must be relevant to the issue or problem being investigated. The best method to
determine
the relevance of data is to constantly ask questions concerning its ultimate use. 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
• may be used to increase sales and profits.

Ideally, marketing managers should treat information in the same way as other resources within the business,
and weigh up the costs of collecting information against the benefits it provides.

Step 2: Data collection — primary and secondary sources

Marketing data refers to the information — usually facts and figures — relevant to the defined marketing
problem. Normally, market researchers use a combination of two types of data: primary and secondary data
(see figure 9.7.)
Primary data
Primary data are the facts and figures collected from original sources for the
purpose of the specific research problem. This information can be collected by the marketing data the information
business itself, a process that may be time consuming and expensive. Many relevant to the defined marketing
businesses outsource this activity. problem
primary data the facts and figures
The main advantage of primary data is that their collection is directed at solving a collected from original sources for
the purpose of the specific research
specific marketing problem. Their main function is to find out exactly what the
problem
customer is thinking.

254 Jacaranda Business Studies in Action HSC Course Seventh Edition

 FIGURE 9.7 Two types of marketing data: primary and secondary

Data

Facts and figures relevant to

the marketing problem

Primary data Secondary data

Facts and figures collected Facts and figures already

from original sources for the collected by some other
purpose of the specific person or organisation, for
research problem, for example example research reports and
surveys and focus groups Australian Bureau of Statistics

Three main methods are used to gather primary data.

1. The survey method. Conducting a survey means gathering data by asking or interviewing people. Surveys
may be carried out by:
• personal interviews — face-to-face interviews conducted in public places
• focus groups — small groups of people who meet with the researchers
• electronic methods of collection — telephone, mail and internet
• questionnaires — a set of specific questions requiring a response from the person.

The main benefit of a survey is that it gathers first-hand information that provides details of customers’ opinions.
However, gathering information through surveys is becoming more difficult because respondent rates are
declining. To overcome this problem, marketing companies are using electronic
methods of collecting information about consumer behaviour, as outlined in the survey the gathering of data by
asking or interviewing people
previous chapter.

BizFACT
Online surveys are increasingly being used by businesses to conduct market research. This is because they are
faster, cheaper and easier to use for both participants and researchers.

2. The observation method. Observation involves recording the behaviour of customers. No interviews
are involved and direct contact with respondents is avoided. Instead, the actions of the customers are
systematically observed. Such methods can raise serious ethical issues, especially with regard to privacy.
Information may be gathered through:
• personal observation, such as when a researcher poses as a customer in a store
• electronic observation, using camera or counting machines. For example, the scanner and cash register
at a store checkout counter can record data on sales and customers’ purchase patterns (see figure 9.8).
This method of data collection has become very popular over recent years, especially with the development
of computerised technology. It is now possible for a business to access its loyalty program, customer
spending habits and customer database all at once, through the use of smart cards and bar coding (see the
following case study).
Such observation methods can be highly accurate, but their main limitation is that they explain only what
happens, not why it happens.
3. The experiment method. Experiments involve gathering data by altering factors under tightly controlled
conditions to evaluate cause and effect. Market researchers do this to determine whether changing one of
the factors (a cause) will alter the behaviour of what is being studied (the effect). Experiments carried out in
the field are called test marketing.

CHAPTER 9 Marketing process 255

 FIGURE 9.8 Many shopping centres, such as Westfield, offer free wi-fi to
gather data on shoppers. When consumers access the free wi-fi service,
the company tracks their shopping behaviour, internet and social media
use, including the time they spend in stores and the websites they browse
while shopping. It uses this data to send marketing messages on behalf of
stores, and provides feedback to shopping centres and retailers on ways
to attract and retain these customers and encourage them to spend more.

SNAPSHOT
Case study: How Coles and Woolworths gather data
Coles and Woolworths, who have a combined 80 per cent market share of the Australian grocery market, have
invested heavily in data analytics and artificial intelligence capabilities to help them profile and target shoppers
and thus gain a competitive advantage. These technologies will help them analyse the vast amount of data they
collect through their loyalty programs, apps and online shopping sites. This strategy has further cemented their
dominance in the industry and made it harder for smaller competitors who don’t possess this sophisticated
technology to compete.

Woolworths Rewards loyalty program and Coles Fly Buys program provide the
stores with the ability to engage with customers on a personalised level. It enables
the stores to gather a huge amount of data they can leverage through these new
technologies. Loyalty programs provide retailers with an abundance of information
and data. When people initially sign up, the company can find out a great deal
of demographic data about their customers such as age, gender and address.
In addition, each time a customer’s card is scanned, the transaction is recorded
and over time the business can gather data about customer preferences and their
shopping habits, including the location, timing and frequency of their purchases.
Retailers then use that information to build a profile of each customer so they can
promote specific goods or services they are more likely to buy in a way that most
appeals to them.

The data analytic technologies have assisted Woolworth and Coles to make their marketing and promotions
more effective. For example, these stores can use the data gathered to target shoppers with emails notifying
them when products they have previously purchased go on sale. This will enable Woolworths and Coles to assign
their spending on promotion more efficiently, based on how customers are likely to respond. Artificial intelligence
will be able to analyse the success of each promotion and then the business can improve on these promotional
strategies in future.

256 Jacaranda Business Studies in Action HSC Course Seventh Edition

Secondary data
Secondary data comprises information that has already been collected by
secondary data information
some other person or organisation. It is referred to as secondary because it is that has already been collected
information that has been collected for some other purpose; for example, census by some other person or
data and household expenditure surveys gathered by government and private organisation
organisations. With the advent of computer databases, an abundance of secondary
data are available to market researchers.
There are two types of secondary data. These are:
• internal data. This is information that has already been collected from internal sources — that is, from
inside the business. Such data include customer feedback, sales and management reports, and research
reports.
• external data. This is published data from sources outside the business. Examples include magazines,
industry association newsletters, internet sources and private data collection agencies. Probably the best
known are the numerous reports produced by the Australian Bureau of Statistics (ABS).

BizFACT
The Roy Morgan Research Centre monitors what a targeted group of customers read, when and what they watch
on television, what they buy, where they buy, and what they think of different products.

FIGURE 9.9 The Australian Bureau of Statistics (ABS) is Australia’s official statistical
organisation. It provides businesses with a range of resources to assist them with their
planning and research activities. The ABS also provides a range of services to small
businesses. It assists them with market research, profiling customers and planning. It
can provide businesses with a wide range of data on their industry, their community,
and the social and economic climate, as well as hints and tips.

CHAPTER 9 Marketing process 257

Step 3: Data analysis and interpretation
Once the data has been gathered, conclusions
FIGURE 9.10 Around the time the film Avatar was launched,
need to be drawn. Raw data is of little value
LG and Sony invested millions of dollars developing 3D
until it has been analysed and interpreted. TVs. While focus groups showed some enthusiasm, these
Statistical interpretation analysis is the companies assumed demand would be there based on
process of focusing on the data that represents Avatar’s success. The inconvenience of having to wear
average, typical or deviations from typical special glasses and the motion sickness experienced by
patterns. many viewers led to the technology’s demise. Another factor
was the reluctance of producers wanting to invest in creating
The first step in drawing conclusions (analysis 3D material. Sony and LG have now ceased production of
and interpretation) is to tabulate the data — these TVs and could have saved millions of dollars if they
that is, display the information in table format. had invested in extensive market research.
The use of a spreadsheet computer program
greatly simplifies this task. Cross-tabulation
will allow comparisons to be made between
individual categories. For example, cross-
tabulation could show how men and women
display different shopping habits, or the
differences between the purchasing behaviour
of high- and low-income earners.
This interpretation will largely be based on the
marketing manager’s judgement, experience
and intuition. For this reason, it is preferable to
involve a number of people in the interpretation
of data so as to gain a wider perspective and,
therefore, avoid the error of personal bias.
statistical interpretation analysis
the process of focusing on the data
that represents average, typical or
deviations from typical patterns

Resources
Resourceseses
Weblink The Realise Group

KEY IDEAS
• Market research is the process of systematically collecting, recording and analysing information concerning a
specific marketing problem.
• To obtain reliable and accurate information, marketers follow a three-step approach.
• Step 1: Determining information needs. The problem is clearly stated to determine what needs to be
measured and the issues involved.
• Step 2: Collecting data from primary and secondary sources. Data are collected by mail, telephone
and personal surveys, personal observation or from private data sources.
• Primary data: information from original sources. Example: interviews and surveys
• Secondary data: information collected by other organisations. Example: industry reports
and Australian Bureau of Statistics
• Step 3: Data analysis and interpretation. Determine what the data means.
• Statistics are processed to determine if responses show trends or patterns that can be
used in the business.

258 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.3 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.3 Quick quiz 9.3 Exercise 9.3 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
1, 3, 4, 5, 7, 12, 13 2, 6, 8, 9, 10, 11, 15, 14, 18, 19, 21
16, 17, 20

9.3 Exercise
Revision
1. Define the term ‘market research’.
2. Explain why it is important for businesses to undertake market research.
3. Outline the three steps of the market research process.
4. Complete the following sentences by recalling the correct term from the list below.

resources data information investigated relevant questions

a. Information collected must be _______ to the problem being ______.

b. The best method to determine the relevance of the ______ is to constantly ask ________ concerning its
ultimate use.
c. Marketers should treat _______ in the same way as other ______ within the business.
5. Define the term ‘marketing data’.
6. Distinguish between primary and secondary data.
7. Identify the four methods used for gathering survey data. State under what circumstances each should be
used.
8. Account for the increased use of electronic scanners to collect data.
9. Distinguish between the survey, observation and experiment methods of data collection.
10. Compare internal and external secondary data.
11. Explain the purpose of analysis and interpretation of data.
12. Investigate The Realise Group online to identify the services this market research and mystery shopping
company offers its clients. Select and summarise one of the company’s services.

Read the case study ‘Market research is at the heart of IKEA’s expansion’ and answer questions 13 to 15.
13. Outline some of the market research techniques used by IKEA.
14. Assess IKEA’s most successful method of market research (i.e. filming people in their homes).
15. How has market research contributed to IKEA’s success?

Read the case study ‘How Coles and Woolworths gather data’ and answer questions 16 to 18.
16. How have Coles and Woolworths achieved a competitive advantage?
17. Explain the types of primary data Coles and Woolworths gather.
18. Discuss the use of loyalty programs for both businesses and consumers.

Extension
19. Choose a business partner in your class. Assume both of you are managers in an ice-cream manufacturing
business. Analyse how you might use different types of market research (surveys, focus groups,
observations and experiments) to determine customer reaction to a new kind of ice-cream.
20. Think about your school, or a business for which you work part-time.
a. Explain how the organisation collects and processes marketing information.
b. Explain what the information is used for.
c. Propose what secondary sources could be used to supplement this data.

CHAPTER 9 Marketing process 259

 21. As the owner of a supermarket, you believe you could sell more strawberries by displaying them loose on a
tray, rather than packaging them in punnets.
a. Describe an experiment to test this idea.
b. Determine the difficulties in conducting the experiment.
9.3 Exam questions

Question 1 (1 mark)
Source: HSC 2020 Business Studies Exam, Section I, Q5
A business collects its own primary data through market research prior to developing a new product.

Which of the following could this business have used to provide primary data?
A. Customer survey C. Australian Bureau of Statistics catalogue
B. Published journal D. Australian Bureau of Statistics census data

Question 2 (1 mark)
Source: HSC 2015 Business Studies Exam, Section I, Q3
Customers at a furniture store are asked to give their postcodes at the checkout.

What is this an example of?

A. Primary research to determine target market C. Primary research to determine product life cycle
B. Secondary research to determine target market D. Secondary research to determine product life cycle

Question 3 (1 mark)
Source: HSC 2015 Business Studies Exam, Section I, Q20
The table shows, for 2014 and 2015, the number of viewers of four television programs and the total number of
viewers at the times when the programs were shown.

2014 2015
Program Program viewers Total television Program viewers Total television
viewers viewers
A 200 000 1 000 000 250 000 1 250 000
B 200 000 1 200 000 200 000 1 000 000
C 300 000 1 200 000 350 000 1 500 000
D 400 000 1 200 000 400 000 1 400 000

Which television program has increased its market share from 2014 to 2015?
A. Program A C. Program C
B. Program B D. Program D

Question 4 (2 marks)
Source: HSC 2013 Business Studies Exam, Section II, Q25a
Robin and Pat are planning to establish a sporting goods business. They have decided to adopt a niche market
approach to maximise profits.

Outline ONE method that could be used by this business to collect relevant data about its target market.

Question 5 (2 marks)
Source: HSC 2011 Business Studies Exam, Section II, Q24a
Sam and Jody want to start a hairdressing business in their local area. They are very concerned about the
number of other hairdressers already in the area and they want to quickly establish market share. How can market
research help Sam and Jody determine their target market?

More exam questions are available in your learnON title.

260 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.4 Establishing market objectives
SYLLABUS LINK In this subtopic you will learn about the formulation of market objectives such as:
• increasing market share expanding the product range
• maximising customer service.
Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

The next step in the marketing process is the formulation of marketing objectives. Marketing objectives are
the realistic and measurable goals to be achieved through the marketing plan. It is of little value for a business
to plan and implement a marketing strategy without first deciding what it wants to achieve. This decision is
considered the most important step in the marketing planning process. The marketing objectives should be
closely aligned to the overall business goals, but more customer-oriented than the goals for the entire business.
They are also concerned with products and markets.
Three common marketing objectives include:
marketing objectives the
• increasing market share
realistic and measurable goals
• expanding the product range to be achieved through the
• maximising customer service. marketing plan
market share the business’s
Such objectives can be measured, and should include specific targets to be met — share of the total industry sales
for example, ‘increase market share by 10 per cent within the next 12 months’. for a particular product

9.4.1 Increasing market share

All marketing plans aim to achieve a specified market share. Market share refers to the business’s share of
the total industry sales for a particular product. Businesses often develop an extensive product range, using
many different brand names to gain an extra few percentage points of market share. The metropolitan free-to-
air (FTA) commercial television broadcasters Nine Network, Seven Network and Network Ten, for example, are
constantly trying to increase their market share of the viewing public as measured by the ‘rating’ of a program.
The ‘rating’ is an estimate of the number of television sets tuned in to a program. The network with the highest
ratings for any program can charge advertisers more for a commercial spot. Consequently, each network is
constantly battling for the largest share of the total viewing audience. To achieve this, networks offer a range
of products (television programs) to attract the largest number of viewers. With the development of digital
television broadcasting in Australia, the FTA television stations created sub-brands of their primary channels.
Consequently, they have been able to divide (segment) the TV viewing audiences into more narrowly divided
market groups. The motive behind offering these different sub-brands is to broaden the appeal, attract new
customers (viewers) and consequently increase market share.

BizFACT
Google has dominated the search engine market with more than 90 per cent global market share. That’s the
average figure of how many people use Google a day, which translates to at least 5.6 billion searches
per day.

Increasing market share is an important marketing objective for businesses that dominate the market, because
small market gains often translate into large profits.

CHAPTER 9 Marketing process 261

 FIGURE 9.11 According to an IBISWorld Report, the ice-cream manufacturing industry earns $131 million a
year in profits on turnover of $1.1 billion. While the industry was characterised by strong growth, rising health
consciousness among consumers has slowed down industry growth in recent years. Out of the 212 businesses
in the industry, those holding the largest market share are shown in the graph. In order to increase their market
share, many of these companies have introduced low-fat or low-sugar ranges.

Other 19.9%
Regal Cream Products
(Bulla) 24.7%

Norco Co-operative 10.2%

Peters Food Group 24.5%

Unilever Australia 20.7%

9.4.2 Expanding the product mix

The total range of products offered by a business is referred to as the business’s product mix. Businesses are
usually keen to expand their product mix, as this will increase profits in the long term. The same product mix
will not remain effective for long because customers’ tastes and preferences change
product mix the total range of
over time, and demand for a particular product may decrease.
products offered by a business

FIGURE 9.12 Not all businesses have an objective of expanding their product
mix. An important element of Aldi’s strategy is a very limited range of
products, overwhelmingly private brands. The company’s smaller range (some
1500 units as opposed to 20 000 to 30 000 in a large Coles or Woolworths
outlet) has several advantages — a smaller store, lower warehousing costs
and supplier discounts. These savings are passed on to consumers to ensure
Aldi’s appeal to people who are cost-conscious. This strategy has propelled
the company’s growth.

262 Jacaranda Business Studies in Action HSC Course Seventh Edition

To develop the ideal product range, businesses must understand customers’ needs. Each item in a product line
should attempt to satisfy the needs of different target markets.

9.4.3 Maximising customer service

Of all the objectives examined so far, maximising customer service is perhaps the
customer service how well a
most important. Customer service means responding to the needs and problems of business meets and exceeds the
the customer. High levels of customer service will result in improved customer expectations of customers in all
satisfaction and a positive reaction from customers towards the products they aspects of its operations
purchase. This establishes a sound customer base with the possibility of repeat
purchases.

BizFACT
Officeworks reported a 7.6 per cent increase in sales and an 8 per cent increase in revenue for the 2019 financial
year. One reason provided for the improvements in sales and earnings was Officeworks’ new and expanded
product range. Product-range expansion included the educational, commercial furniture and commercial
technology categories.

The old saying ‘the customer is always right’

FIGURE 9.13 The Australian Services Excellence Awards
is still correct today. Customers are the
(ASEAs) are Australia’s premier customer service awards
lifeblood of any business. To keep existing program. In 2019 Melbourne Cricket Club was the overall
customers and attract new ones, the business winner. The judging panel recognised their continued
needs to talk and listen to the customers. investment in their people and partners, as well as the
Research has shown that one dissatisfied sustained growth in customer service satisfaction levels
customer usually tells eleven others, who in year on year. In addition, the introduction of a range of
turn will each tell another five. Such ‘word-of- new services specifically designed to take the customer
mouth’ marketing has the potential to make or experience to the next level was a key point of differentiation
from other entrants.
break a business.
Customer service can no longer be regarded
as merely explaining the refund policy or
providing a complaints department. Rather,
it is an attitude that should be adopted by
everyone within the business.
The strategies a business can use to maximise
customer service include:
• asking customers what they want
• training employees and rewarding them for
excellent customer service
• anticipating market trends by conducting
research
• finding out what competitors are offering
and then reviewing the product mix
• establishing and maintaining long-term
relationships with customers
• encouraging employees to focus their attention on the customer’s needs (customer-oriented) and not just on
making a sale (sales-oriented).

CHAPTER 9 Marketing process 263

 KEY IDEAS
• Marketing objectives are the realistic and measurable goals to be achieved through the marketing plan.
• The marketing objectives should be more customer-oriented than the goals for the entire business, and
should include specific targets to be met — for example, ‘Increase market share by 5 per cent over 12
months’.
• Marketing objectives include:
• Increase market share. Market share refers to the business’s total share of the total industry sales for
a particular market.
• Expand the product range. Product mix is the total range of products offered by a business.
• Maximise customer service. Customer service means responding to the needs and problems of the
customer.

9.4 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.4 Quick quiz 9.4 Exercise 9.4 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
1, 2 3, 4, 5 6, 7, 8

9.4 Exercise
Revision
1. Construct a concept map (started below) summarising the three main marketing objectives.

Increase market share

• Market share refers to the
business’s share of the total Expand the product mix
industry sales for a particular
product.

Marketing objectives

Maximise customer service

2. In the following examples, identify which marketing objective the business is trying to achieve.
a. The business introduces a customer feedback form to measure the level of customer satisfaction.
b. The business undertakes an extensive promotional campaign in an attempt to attract new customers.
c. The business decides to offer a wider variety of products.
3. Explain why businesses wish to increase their market share.
4. a. Define the term ‘product mix’.
b. Explain why businesses are usually keen to increase their product mix.
5. Explain the relationship between customer satisfaction and profits.

264 Jacaranda Business Studies in Action HSC Course Seventh Edition

Extension
6. ‘The most important step in the marketing plan process is the formulation of the marketing objectives.’
Evaluate the accuracy of this statement.
7. Develop a strategic marketing plan for your school’s canteen. How could the canteen maximise its customer
service? Predict what major problems it would face in trying to expand off campus.
8. ‘There are only two ways to create and maintain outstanding business performance. First, take exceptional
care of the customer and, second, develop new products. It is that simple.’ Analyse the relationship between
customer service, product mix and market share.

9.4 Exam questions

Question 1 (1 mark)
Source: HSC 2004 Business Studies Exam, Section II, Q21a
NuCam markets a digital video camera. This product is in the growth phase of its life cycle. Management is
reviewing the performance of the product on the market.

Market share for NuCam digital video camera

15 Forecast
Market share (%)

10

Actual
5

0
2003 2004 2005
Launch Current
year
Referring to the graph, identify a marketing objective that NuCam management has established for the digital
video camera.

Question 2 (1 mark)
Grange Doors has stated that by 2015 they will be the largest provider of doors in NSW. Which of the following
best describes this marketing objective?
A. Market share
B. Sales
C. Expansion into new markets
D. Expand product range

Question 3 (1 mark)
Bobo has set a break-even point for costs and revenue. Which of the following is the most likely market objective
for Bobo?
A. Market share
B. Sales
C. Expansion into new markets
D. Expand product range

Question 4 (3 marks)
Rani has called together the management team to set marketing objectives for her business. Explain the role of
marketing objectives in the marketing process.
More exam questions are available in your learnON title.

CHAPTER 9 Marketing process 265

9.5 Identifying target markets
SYLLABUS LINK In this subtopic you will learn about how a business identifies and selects a target market.

Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

9.5.1 Introduction
A target market is a group of present and potential customers to which a business
target market a group of present
intends to sell its product. The customers within the target market share similar and potential customers to which a
characteristics such as age, income, lifestyle, location and spending patterns. Because business intends to sell its product
you are a senior high school student, you’re part of a major target market — the primary target market the market
teenage/young adult market. The teenage/young adult market: segment at which most of the
marketing resources are directed
• consists of people between 13 and 19 years of age
secondary target market a smaller
• has more disposable income than in the past and less important market segment
• is more willing to spend on themselves, especially designer brands and electronic than the primary target market
devices
• makes up only 8 per cent of the Australian population but influences more than
70 per cent of their parents’ clothes and fast-food purchases
• spend on average $5000 a year of their parents’ money.

Consequently, marketers want to tap into this highly profitable target market.
Sometimes a business may be able to identify a primary and a secondary target market. 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 (see figure 9.14).

FIGURE 9.14 Stationery retailer Smiggle (‘between a smile and a giggle’) has
children and young teens aged from 4 to 14 as its primary target market. Its
brightly coloured products are regarded as an essential fashion accessory by
this age group. It is said that its secondary target market is the grandparents
of young Smiggle fans!

266 Jacaranda Business Studies in Action HSC Course Seventh Edition

A business’s primary target market will generate most of its revenue. These are the customers who are loyal
to a particular business and make repeat purchases. Research has found that a small percentage of customers
are usually responsible for the majority of sales. This is referred to as the 80/20 principle, according to which
80 per cent of sales comes from 20 per cent of a business’s customer base. The secondary target market should
not, however, be ignored, for while the number of customers may be small, it does provide an alternative in case
there is a loss of customers from the primary target market.

BIZFACT
Research from the Financial Planning Association (FPA) of Australia revealed that kids these days are a lot more
well-off than most people think, with some getting up to $40 a week in pocket money. For older teenagers aged
between 14 and 18, the weekly pocket money rate starts at $10 and goes all the way up to $39.

9.5.2 Why identify and select a target market?

A business identifies and selects a target market so it can direct its marketing strategies to that group of
customers. This allows the business to better satisfy the wants and needs of the targeted group. This occurs
because the business is able to:
• use its marketing resources more efficiently, which is likely to result in the marketing campaigns being
more cost effective and time efficient
• make promotion material more relevant to the customers’ needs, and therefore more likely to be noticed
• 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: the mass
marketing approach, the market segmentation approach or the niche market approach (see figure 9.15).

FIGURE 9.15 Identifying and selecting a market to be the target market

Segment 1 Segment 2 Segment 1 Segment 2

Total market

Segment 3 Segment 3

Niche marketing
Mass marketing Market segmentation approach
approach approach

CHAPTER 9 Marketing process 267

 SNAPSHOT
Case study: Fila’s change in target market
Originally started in 1911, Fila’s popularity ended in the 2000s when sales began declining rapidly. A rebranding
campaign was launched to change people’s perception of Fila. The goal was to redesign their brand identity,
rejuvenate their image and focus on creating a brand that is viewed not only as a ‘sports’ brand but a ‘lifestyle’
as well.

Central to Fila’s comeback was the decision made by the

company to change their target market in 2018 and tap into
a new generation of consumers. Fila went from targeting
people in their 30s and 40s to younger customers. The new
brand focuses on young, trendy sports and the lifestyle
the consumer lives outside athletics. They now target
young stylish people who consider sport as an integral
part of their life and sportswear a key asset to improve
performance; young people who want to look good while
doing trendy athletic activities. Fila also caters for the
middle-to high-income groups.

One of their biggest challenges is trying to keep pace with

the younger generation. One way Fila are targeting younger
consumers is through the development of products which
are truly sport-inspired and with superior lifestyle appeal. Another way they have appealed to this demographic is
by teaming up with celebrities to wear their products. For instance, Kendall Jenner and Rihanna have both been
seen in Fila clothing. They have also collaborated with renowned fashion designers including Fendi, Jason Wu
and 3.1 Phillip Lim to emphasis their trendsetter position.

Since the rebranding, Fila has been recognised as a leading brand that combines fashion and sports elements.
This rebranding has paid off. In the first half of 2019, Fila’s revenue increased by 79.9 per cent and gross profit
grew by 79.2 per cent.

9.5.3 Mass marketing approach

As outlined in chapter 7, seventy years ago marketers commonly spoke about ‘mass
mass marketing approach a
market’. In other words, there was a large demand for a standard product. In a mass marketing approach that seeks a
market, the seller mass-produces, mass-distributes and mass-promotes one product to large range of customers
all buyers. The Model T Ford, for example, was the first motor vehicle to be produced
and sold to the mass market. A mass marketing approach seeks a large range of customers.
The mass marketing approach assumes that individual customers in the target market have similar needs. The
business therefore develops a single marketing mix and directs it at the entire market for the product. This means
there is one type of product with little or no variation, one promotional program aimed at everyone, one price,
and one distribution system used to reach all customers.

BizFACT
One of the main objectives of conducting market research is to identify the business’s target market for its
products.

268 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.5.4 Market segmentation approach
Few businesses can sell their products to the entire market — the market is just too
market segmentation occurs
big. Therefore, a business will divide the market into distinct segments. A business when the total market is
that is marketing motor vehicles, for example, would not direct its marketing efforts subdivided into groups of people
towards every person in the total vehicle market. Some people might want only a who share one or more common
characteristics
sports car; others might want a four-wheel drive. The business would thus direct its
efforts towards a particular segment of the total market for motor vehicles.
Market segmentation occurs when the total market
FIGURE 9.16 Lorna Jane Clarkson is the founder of
is subdivided into groups of people who share one or
workout fashion business Lorna Jane. She began
more common characteristics. Once the market has making leotards from a young age and realised
been segmented, the business selects one of these there was a demand for fashionable activewear. She
segments to become the target market. Segmenting a opened her first store in 1993 and now there are
market enables a business to design a marketing plan more than 200 Lorna Jane stores worldwide. Lorna
that meets the needs of a relatively uniform group. Jane Clarkson has never been afraid to take a risk.
Marketing segmentation is explained in more detail in While other businesses believed that the market for
chapter 10. fitness garments was too small to make a profit, she
decided to focus on that niche market anyway.

9.5.5 Niche market approach

An extension of the market segmentation approach is
that of the niche market, which is a narrowly selected
target market segment. In a sense, it 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. In the last few years, some
hotels have developed a niche market for their own
‘boutique’ beers, brewed on the premises. Such
businesses market to a narrow, specific customer base
(see figure 9.16).
The needs of customers in these markets are often neglected by large businesses because it is rarely profitable
for them to alter their marketing mix to cater for very small groups.

KEY IDEAS
• A target market is a group of present and potential customers to which a business intends to sell its product.
• Sometimes a business may be able to identify a primary and a secondary target market.
• A business identifies and selects a target market so it can direct its marketing strategies to that group of
customers.
• Businesses can choose one of three approaches to identifying and selecting a consumer target market:
• mass marketing approach — the seller mass-produces, mass-distributes and mass-promotes one
product to all buyers
• market segmentation approach — the total market is subdivided into groups of people who share
one or more common characteristics
• niche market approach — a narrowly selected target market segment.

CHAPTER 9 Marketing process 269

9.5 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.5 Quick quiz 9.5 Exercise 9.5 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
3, 9, 10, 12, 14 1, 2, 4, 5, 6, 7, 8, 13, 15 11

9.5 Exercise
Revision
1. Why would marketers want to target the teenage/young adult market?
2. Distinguish between primary and secondary target markets and give an example of each.
3. Complete the following sentences by recalling the correct word from the list below.

customers primary segmentation

niche characteristic narrowly
target subdivided present

a. A __________ market is a group of __________ and potential __________ to which a business intends to sell
its product.
b. Sometimes a business may be able to identify a __________ and a secondary target market.
c. Market __________ occurs when the total market is __________ into groups of people who share one or
more common __________.
d. An extension of the market segmentation approach is that of the __________ market, which is a __________
selected target market segment.
4. Why do businesses identify and select a target market?
5. Compare the mass marketing approach with the segmented marketing approach.
6. Why is market segmentation the most common marketing approach used by businesses today?
7. How are market segmentation and target market linked?
8. Explain the relationship between market segmentation and niche market.
Read the case study ‘Fila’s change in target market’ and answer questions 9 and 10.
9. Outline the characteristics of Fila’s target market according to some of the common elements businesses
use to segment customer markets, i.e. demographic, psychographic, geographic and behavioural.
10. Describe the marketing strategies Fila has used to appeal to their new target market.

Extension
11. In pairs, conduct a survey of 30 people to find out what television shows they enjoy watching. Using a
database, classify the respondents by age and gender. Analyse your results and present them to the rest of
the class.

Research a business of your choice and answer questions 12 to 15.

12. Identify the primary and secondary target markets of the business you have chosen.
13. Calculate the importance of these markets to the business.
14. Identify the variables the business owner uses to segment the target market.
15. How does market segmentation help the owner to achieve long-term goals?

270 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.5 Exam questions

Question 1 (1 mark)
Source: HSC 2007 Business Studies Exam, Section II, Q25a
A chain of fitness centres in the city is used by office workers. The owners plan to open a new branch in a
shopping complex in a new suburb.

Identify ONE possible target market for the new branch.

Question 2 (3 marks)
Source: HSC 2002 Business Studies Exam, Section II, Q21

Ron is planning to set up a restaurant. He has undertaken market research which revealed that the proposed
location for the restaurant would suit business people or families with young children.

a. Identify Ron’s TWO possible target markets. (1 mark)

b. Describe TWO factors that Ron may consider in selecting his target market. (2 marks)

Question 3 (1 mark)
Outline the term ‘target market’ as it applies to the marketing process.

Question 4 (2 marks)
‘We now know who our target market is and this is crucial to our success,’ states the CEO of a hotel. Why does
the CEO make this statement?

More exam questions are available in your learnON title.

CHAPTER 9 Marketing process 271

9.6 Developing marketing strategies
SYLLABUS LINK In this subtopic you will learn about the four Ps that make up the marketing mix:
• Product
• Price
• Promotion
• Place.

Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

9.6.1 Marketing mix — the four Ps

Once the business has undertaken a situational analysis, conducted market research,
marketing strategies actions
established the marketing objectives, and identified and selected a target market, the undertaken to achieve the
next process of the marketing plan is to develop marketing strategies to achieve the business’s marketing objectives
marketing objectives. Marketing strategies are actions undertaken to achieve the through the marketing mix
business’s marketing objectives through the marketing mix. marketing mix refers to the
combination of the four elements
One of the most useful ways of understanding how to develop a marketing strategy is of marketing, the four Ps — product,
price, promotion and place — that
to examine each of the elements of the marketing mix. The marketing mix refers to make up the marketing strategy
the combination of the four Ps — product, price, promotion and place/distribution.
A business has control over the four Ps and uses them to reach its target market.
Additionally, the business has control over other business resources — such as information, finances and
employees — that may also be used to achieve marketing objectives.
Once the four Ps have been established, the
FIGURE 9.17 The four Ps, also known as the marketing mix, is
business must then determine the emphasis
probably the most well-known term in marketing and considered
it will place on each of the variables. This to be the essential elements for any marketing campaign.
will largely be determined by where the
product is positioned or its stage in the
product life cycle. For example, a product
that is being marketed with an image of
exclusivity and prestige will require a
marketing mix totally different from a no-
frills, generic item. A different marketing Product Price
mix will also be required for a product in its
introductory stage than when it reaches the
decline stage.
The following section will provide a
brief introduction to the main marketing
strategies based on the ‘four Ps’ of
marketing. This information will be
examined in greater detail in chapter 10.
Promotion Place
Also in chapter 10, you will be introduced
to the extended marketing mix, which
includes people, processes and physical
evidence — the seven Ps of marketing.

272 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.6.2 Product (goods and/or services)
This element of the marketing mix involves much more than just deciding which product to make. The business
also needs to determine such features as the product’s quality, packaging/labelling, design, brand name and
guarantee. The product is a combination of all these variables.
Customers will buy products that not only satisfy their needs and wants but also provide intangible benefits such
as a feeling of security, prestige, satisfaction or influence. Much careful planning needs to be undertaken when
developing the product strategy. The product element of the marketing mix will be examined in more detail in
subtopic 10.4.

9.6.3 Price
Selecting the ‘correct’ price — the amount of money a customer is prepared to offer in exchange for a
product — can sometimes be difficult. The major pricing decision is whether to set a price above, below or about
even with the competitors’ prices. Of course, a business must consider other factors too, such as the costs of
production and level of consumer demand. Price does not just refer to what the price is, but rather, the method
or strategy the business uses to decide its prices. The different pricing strategies and methods will be examined
in more detail in subtopic 10.5.

9.6.4 Promotion
A promotion strategy details the
FIGURE 9.18 Michael from Belle Property relies heavily on social
methods to be used by a business to
media to grow his business and build his reputation as a local
inform, persuade and remind customers market leader. He uses Facebook and Instagram to showcase new
about its products. The main forms of listings and sales, report on industry trends, run competitions and
promotion include advertising, personal post testimonials and live videos. Social media has proven to be
selling and relationship marketing, an effective way for him to connect with his community, clients and
sales promotion, publicity and public potential buyers and sellers.
relations.
Changes in technology, especially
advances in information and
communication technology (ICT), are
having a significant impact on how
businesses promote their products.
The internet, for example, has become
an effective advertising tool used by
businesses to deliver specific messages
to its target market. Marketing mix will
be examined in more detail in
subtopic 10.6.

CHAPTER 9 Marketing process 273

9.6.5 Place/distribution
This element of the marketing mix deals with the channels of distribution: the ways of getting the product to the
customer. This process usually involves a number of intermediaries or ‘go betweens’, such as the wholesaler
or retailer. Apart from the retailer, the other intermediaries are often invisible; that is, the customer knows little
about their role and operation.
The number of intermediaries chosen will determine how widely the product will be distributed. The business
may wish to keep supply of the product restricted to a few specialised outlets, which is the distribution method
usually selected by expensive products. For example, Gucci and Louis Vuitton fashion accessories are available
in only a few selected locations. Alternatively, distribution may be as wide as is practically possible, which is
the method used by Coca-Cola. Its distribution channels include retail stores, supermarkets, vending machines,
restaurants, clubs, hotels, cafes and fast-food outlets. Today, you can buy a Coca-Cola product anywhere from
London to Beijing, Cape Town to Santiago. The place element of the marketing mix will be examined in more
detail in subtopic 10.7.

KEY IDEAS
• Marketing strategies are actions undertaken to achieve the business’s marketing objectives through the
marketing mix.
• The marketing mix refers to the combination of the four Ps — product, price, promotion and
place/distribution.
• Once the four Ps have been established, the business must then determine the emphasis it will place on each
of the variables.
• A business may vary its marketing mix when it wants to reach different target markets.
• A product is a good or service that can be exchanged for money.
• The price is the amount of money a customer is prepared to offer in exchange for a product. It refers to the
method or strategy the business uses to decide their prices.
• Promotion describes the methods used to inform, persuade and remind customers about a business’s
products.
• Place is the element of the marketing mix that deals with the channels of distribution: the ways of getting the
product to the customer.

9.6 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.6 Quick quiz 9.6 Exercise 9.6 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
2, 3, 4, 5 1, 6 7

9.6 Exercise
Revision

1. Explain the link between marketing strategies and marketing mix.

2. Outline the four Ps of the marketing mix.
3. State what determines the emphasis a business places on each of the four Ps of the marketing mix.
4. Identify the factors that need to be considered when determining strategies related to product.

274 Jacaranda Business Studies in Action HSC Course Seventh Edition

5. Summarise briefly the four Ps of the marketing mix by completing the table below.
The first one has been started for you.

Marketing mix element Key features

Product • Goods or services exchanged for money
Price
Promotion
Place

Extension
6. ‘The four Ps are the variables that marketing managers can control, unlike the variables in the marketing
environment.’ Discuss.
7. Referring to a business you are familiar with, examine and evaluate the promotion methods used for one of
their products.

9.6 Exam questions

Question 1 (1 mark)
Source: HSC 2008 Business Studies Exam, Section I, Q8
Which of the following includes ALL four elements of the marketing mix?
A. Credit terms, positioning, segmentation, pricing
B. Advertising, warranties, pricing, public relations
C. Discounting, packaging, advertising, distribution
D. Personal selling, branding, warehousing, publicity

Question 2 (1 mark)
Source: HSC 2005 Business Studies Exam, Section I, Q2
An engineering business that has been producing pollution control components for ten years is now redesigning
components to meet new environmental standards.

What marketing strategy is the business currently concerned with?

A. Place
B. Price
C. Product
D. Promotion

Question 3 (1 mark)
Han has the responsibility of ensuring that products are stored and dispatched as quickly and as cheaply as
possible so that the price and promoted image of service and customer satisfaction are maintained.

For which marketing strategy is Han responsible?

A. Price
B. Product
C. Place
D. Promotion

Question 4 (6 marks)
‘Marketing is a coordinated effort. The effort is only as strong as its weakest point. Each aspect is linked and
interdependent. It is the attention to detail that leads to success.’

Analyse the role of place/distribution as an interdependent part of successful marketing strategies.

More exam questions are available in your learnON title.

CHAPTER 9 Marketing process 275

9.7 Implementation, monitoring and controlling
SYLLABUS LINK In this subtopic you will learn about:
• implementation, monitoring and controlling
• developing a financial forecast
• comparing actual and planned results
• revising the marketing strategy.

Source: Business Studies Stage 6 Syllabus © Copyright 2010 NSW Education Standards Authority (NESA).

9.7.1 Introduction
A marketing plan is a meaningless piece of paper until
FIGURE 9.19 A very simple way businesses can
the plan is implemented. Implementation is the process
monitor which types of marketing strategies are
of putting the marketing strategies into operation. generating the best results for their business is by
Implementation involves the daily, weekly and monthly asking their customers how they found out about
decisions that have to be made to make sure the plan is their business.
effective.
The previous elements of the marketing plan outlined
what had to be done and why it had to be done, whereas
the implementation stage is the how, where and when it is
to be done. This is a crucial part of the process.
To implement the marketing plan effectively, a number of
basic questions need to be answered:
• Is the plan fully integrated with all other sections of
the business?
• How should the business be structured and
organised?
• Have effective lines of communication been
established between the marketing department and
all other departments?
• Who are the best people for the various tasks needed
to implement the plan?
• Are the marketing personnel motivated and focused
on achieving the marketing objectives?
• Are all other employees familiar with the marketing
objectives and marketing strategies?
The implementation stage is quite difficult, especially as
unforeseen situations may arise that put in jeopardy the
success of the entire marketing plan.
Once the marketing plan has been implemented, it
must be carefully monitored and controlled. Monitoring implementation process of putting
marketing strategies into operation
means checking and observing the actual progress of the
monitoring the process of
marketing plan. This requires the marketing department personnel, as well as other measuring actual performance
employees, to gather information and report on any important changes, problems or against planned performance
opportunities that arise during the life of the marketing plan (see figure 9.19).

276 Jacaranda Business Studies in Action HSC Course Seventh Edition

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 (see figure 9.20). To achieve this, the marketing manager needs to constantly ask two
questions regarding the marketing plan:
1. What does the business want the marketing plan to achieve; that is, what are the objectives?
2. Are these objectives being achieved?
The first step in the controlling process requires the business to outline what is to be accomplished; that is, to
establish a key performance indicator (KPI). A KPI is a forecast level of performance against which actual
performance can be compared. For example, a KPI could be:
• increase monthly sales by 5 per cent
• improve sales revenue per salesperson by 10 per cent over the next six months.

FIGURE 9.20 Once marketing objectives have been established, they must be monitored to ensure they are being
met; otherwise corrective action must be taken.

Establish marketing
objectives Monitor performance
• What is actually
• What do we want
happening?
to achieve?

Evaluate performance
Take corrective action
• Is what is happening
• What should be good or bad?
done about it? • Why is it happening?

The second step in the controlling process is to compare or evaluate actual performance against the KPI.
Budgets, sales statistics and cost analyses can be used to evaluate results. For example, a marketing manager
could compare each salesperson’s results with his or her sales quota. It is only by establishing KPIs and then
comparing them with actual performance that a marketing manager can evaluate the effectiveness of the
marketing plan.

9.7.2 Developing a financial forecast

When evaluating alternative marketing strategies, a business must develop a financial forecast that 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. Once this information has been gathered, it is possible to
determine the most appropriate course of action using a cost–benefit analysis.
Although financial forecasting allows the marketing manager to undertake a cost–benefit analysis, the results are
always open to individual interpretation.
Until a detailed analysis of the forecast cost and revenue is undertaken, a business is
controlling involves the
making decisions based merely on ‘gut feelings’, which is an inappropriate approach comparison of planned
in today’s competitive environment. performance against actual
performance and taking
Developing a financial forecast requires two steps: corrective action to make sure
1. Cost estimate. How much is the marketing plan expected to cost? Costs of the the objectives are attained
marketing plan can be divided into four major components: market research; financial forecast the business’s
predictions about the future
product development; promotion, including advertising and packaging; and
distribution.

CHAPTER 9 Marketing process 277

 2. Revenue estimate. How much revenue (sales) is the marketing plan expected to generate? Forecasting
revenues will be based on two major components: how much consumers are expected to buy and for what
price, and what sales staff predict they will sell. As time goes by, actual revenue can be compared with the
forecast revenue data to determine the effectiveness of the marketing strategy.
Marketing costs are easier to forecast than revenue, because these activities are largely controlled by the
business. Calculating the projected marketing revenue is much more difficult because of changes in the external
environment, over which the business has little or no control. However, being able to accurately analyse both
projected costs and revenues allows the business to forecast profit levels.

9.7.3 Comparing actual and planned results

Performance indicators are the means by which a business can measure its performance and evaluate the degree
to which it is achieving its objectives. Three key performance indicators used to measure the success of the
marketing plan are:
1. sales analysis
2. market share analysis sales analysis the comparing of
actual sales with forecast sales to
3. marketing return on investment. determine the effectiveness of the
marketing strategy
Sales analysis
A sales analysis uses sales data to evaluate a business’s current performance and the effectiveness of a
marketing strategy. The more the sales figures are broken down, the clearer the picture becomes, as can be seen
by examining table 9.2.

TABLE 9.2 Sales analysis: sales revenue by territories — 1st quarter

% change ( − decrease +
Sales territory Sales quota ($) Actual sales ($) Difference ($) increase)
1 50 000 58 000 8 000 +16.0
2 80 000 85 000 5 000 +6.3
3 70 000 76 000 6 000 +8.6
4 65 000 72 000 7 000 +10.8
5 90 000 94 000 4 000 +4.4
Total sales revenue 355 000 385 000 30 000 +8.4
To calculate the difference, use the formula Actual sales − Sales quota.

× 100
Difference
To calculate the % change, use the formula
Sales quota

BizFACT
The use of computerised sales has made the collection, storage, retrieval and analysis of sales data much easier.
Computerised sales reports can be prepared, showing:
• daily, weekly, monthly, quarterly and yearly sales reports
• product line sales
• credit as opposed to cash sales analysis
• sales reports for individual sales representatives
• company division sales reports
• any combination of the above.

278 Jacaranda Business Studies in Action HSC Course Seventh Edition

A cursory glance at the bottom line of table 9.2 shows that the total sales revenue has increased by $30 000 or
8.4 per cent above the quota — a pleasing result and confirmation that the marketing plan is a success.
The main strength of sales analysis is that sales figures are relatively inexpensive to collect and process. Their
main weakness, however, is that data for sales revenue do not reveal the exact profit level; such information can
only be gleaned from further investigations of total expenditure.

Market share analysis/ratios

Just as sales can be analysed, so too can a business’s market share. By undertaking a market share analysis, a
business is able to evaluate its marketing strategies as compared with those of its competitors. This evaluation
can reveal whether changes in total sales, either increases or decreases, have resulted from the business’s
marketing strategies or have been due to some uncontrollable external factor. For example, if a business’s
total sales revenue declined but its market share remained stable, then the marketing manager can assume that
overall industry sales have fallen, perhaps due to a downturn in the economy. However, if a business’s total sales
revenue and market share have declined, then the marketing strategies need to be reviewed. Businesses place a
great deal of importance on analysing market share statistics — a 1 per cent fall in market share can represent
millions of dollars in lost sales.

Marketing return on investment (ROI)

Sales and market share analyses, while useful, do not present the full picture. This can only be done by
analysing the marketing costs involved with each marketing strategy. At the most basic level, marketing
ROI measures how much revenue a marketing campaign is generating compared to the cost of running that
campaign. Basically, it’s how a business can measure the impact of their marketing strategies on their revenue
growth. It gives them a holistic view of their efforts and the impact it is having on their business, allowing them
to justify marketing spend and budget for current and future initiatives.
In order to calculate the marketing ROI, you take the sales growth from that business or product line, subtract the
marketing costs, and then divide by the marketing cost.

× = Marketing ROI
(Sales Growth – Marketing Cost) 100
Marketing Cost 1

So, if sales grew by $2000 and the marketing campaign cost $200, then the simple ROI is 900 per cent.

($2000 − $200) 100

× = 900%
$200 1

Let’s say we have a company that averages 4 per cent organic sales growth and they run a $10 000 campaign for
a month. The sales growth for that month is $15 000. The calculation goes:

$15 000 − $10 000 100

Return on Marketing Investment = × = 50%
$10 000 1

By comparing the costs of specific marketing activities with the results achieved,
marketing ROI measures how
a marketing manager can assess the effectiveness of each activity. This evaluation much revenue a marketing
also helps in deciding how best to allocate marketing resources in the future. A campaign is generating compared
good marketing ROI is 5:1. to the cost of running that
campaign

CHAPTER 9 Marketing process 279

9.7.4 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 (modified). Revision of the marketing plan is equally as important as all the other steps
involved in creating successful marketing strategies.

Changes in the marketing mix

Because the marketing plan is operating in a dynamic business environment, the marketing mix will constantly
need to be revised. Changes that could be introduced include:
• production modifications. No product is perfect. Businesses that continually upgrade their products will be
able to maintain a competitive advantage.
• price modifications. Prices fluctuate due to a variety of reasons. Therefore, the price component of the
marketing mix will need to be revised in response to changes in the external business environment.
• promotion modifications. Promotion costs will be high when a new product is first launched onto the
market. During the later stages of the product’s life cycle, promotion costs may stabilise and even fall
during the decline stage. Promotion strategies will, therefore, need to change over time corresponding to
the life cycle of the product.
• place modifications. As a product’s success increases, the distribution channels will need to be expanded to
cater for the growing market. New overseas markets may be tapped, while old markets may decrease due
to demographic changes. With the development of electronic communications, new distribution channels,
such as the internet, may be used.

New product development

The product life cycle tells us that all products have a life span of somewhere between five to 10 years.
Therefore, if a business wants to achieve long-term growth, it must continually introduce new products. For
example, if Sony had stopped product development at the transistor radio, it would probably be out of business
today. However, Sony, like many other large businesses, spends vast amounts on research and development
(R&D) to stay at the forefront of technology and introduce new products.

FIGURE 9.21 R&D helps keep products innovative, which assists companies
to achieve a competitive advantage. Samsung invests in R&D more than
any other technology company, having spent more than $14.9 billion in
2020. This investment allows them to develop and produce some of the
most sought-after electronic parts and is a major contributing factor to their
success.

280 Jacaranda Business Studies in Action HSC Course Seventh Edition

Product deletion
To maintain an effective product mix, a business will have to eliminate some lines of products. This is called
product deletion. Outdated products may create an unfavourable image and this negativity may rub off on other
products sold by the business. Most businesses find it difficult to delete a product,
especially if it has been successful for a long time. However, when a product product deletion the elimination
is in the decline stage, a decision will eventually have to be made to either delete or of some lines of products
redevelop the product.

BizFACT
Car manufacturers continually delete models due to poor performance or the introduction of new models. In 2013
Mazda made the decision to discontinue the CX-7 and Tribute to make way for the CX-5. The CX-5 is more fuel
efficient, has more cargo capacity and overall interior volume than the CX-7 and is better able to compete more
directly with other small SUVs.

Resources
Resourceseses
Weblink iSentia

KEY IDEAS
• Implementing the marketing plan means putting the marketing strategies into operation.
• Once the marketing plan has been implemented, it must be carefully monitored and controlled.
• Monitoring means checking and observing the actual progress of the marketing plan.
• Controlling involves the comparison of planned performance against actual performance and taking
corrective action to make sure the objectives are attained.
• When evaluating alternative marketing strategies, a business must develop a financial forecast that details the
costs and revenues for each strategy.
• Developing a financial forecast requires two steps.
• Step 1: Estimate the cost of the marketing plan.
• Step 2: Estimate the revenue (sales) the marketing plan is expected to generate.
• Three key performance indicators used to measure the success of the marketing plan are:
• sales analysis
• market share analysis
• marketing return on investment (ROI).
• The marketing plan can be revised by:
• changes in the marketing mix
• new product development
• product deletion.

CHAPTER 9 Marketing process 281

9.7 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

9.7 Quick quiz 9.7 Exercise 9.7 Exam questions

Select your pathway

LEVEL 1 LEVEL 2 LEVEL 3
3, 4, 5, 11, 12 1, 2, 6, 7, 8, 9, 10, 13, 16, 18
14, 15, 17

9.7 Exercise
Revision
1. Why is the implementation stage as important as developing marketing objectives?
2. a. Distinguish between ‘monitoring’ and ‘controlling’.
b. How are the two processes linked?
3. Research online to examine the function of the company iSentia.
a. Outline the role of iSentia.
b. State iSentia’s mission.
c. Select a ‘Products and Services’ that interests you and explain how a business would use this product or
service.
4. Recall the two questions a marketing manager needs to ask in the controlling process.
5. Summarise the two steps involved in developing a financial forecast.
6. Why is it easier for a business to forecast marketing costs than revenue?
7. A business has a sales potential of $90 000 but achieves actual sales of only $25 000.
a. Deduce what this signifies.
b. Propose what the business should do next.
8. ‘Any business that fails to conduct a sales analysis will not be able to assess the effectiveness of its
marketing strategies.’ Discuss.
9. Examine the following market share results for Electronic Appliances Ltd.

Year Sales revenue ($ million) Market share (%)

2018 28 18
2019 25 18
2020 33 14

a. Explain how it is possible for sales revenue to decrease between 2018 and 2019 but market share to
remain the same.
b. If you were the marketing manager, calculate with which year’s results you would be most pleased.
Justify your answer.
10. Distinguish between ‘sales analysis’ and ‘market share’ analysis.
11. Clarify the importance of a marketing profitability analysis.
12. Summarise four changes that could be made to revise the marketing mix.
13. Distinguish between ‘new product development’ and ‘product deletion’. Provide examples in your answer.
14. Calculate the marketing return on investment (ROI) for a business that spent $50 000 on a new marketing
campaign and experienced a growth in sales of $10 000.

Extension
15. Account for why a business’s marketing performance should be constantly evaluated. Investigate some
methods that can be used to measure the effectiveness of a marketing plan.

282 Jacaranda Business Studies in Action HSC Course Seventh Edition

 You have just been appointed marketing manager for Apollo Tracksuits Pty Ltd. One of your first tasks
is to analyse total industry sales and product line sales revenue breakdown, as shown in tables 9.3 and
9.4. Then complete questions 16 to 18.

TABLE 9.3 Apollo Tracksuits Pty Ltd — company sales and total industry sales, 2016–2020
Year Apollo sales ($ millions) Industry sales ($ millions) Apollo market share (%)
2016 5 38
2017 7 44
2018 10 81
2019 9 70
2020 12 89

TABLE 9.4 Apollo Tracksuits Pty Ltd — product line sales, 2017
Product Sales quota ($ millions) Actual sales ($ millions) Difference ($) (%)
Techno Tracks 2 1
Weekenders 3 1.5
Sports Plus 2 2
Image Track 2 2.5
No Sweat Tops 3 3

16. Calculate a market share analysis by completing table 9.3. Create a report on your results.
17. The actual sales and sales quota figures for each product are shown in table 9.4. Complete the table.
Deduce what these figures indicate.
18. Determine what suggestions you would make to improve the actual sales performance.
9.7 Exam questions

Question 1 (1 mark)
Source: HSC 2020 Business Studies Exam, Section I, Q16
A bathroom products business cannot sustain the production of their current range. A consultant has advised the
business to reduce the product range.

The actual and planned results for the entire year are shown.

Actual results Planned results Actual results Planned results

Bathroom product
Jan–Jun (units) Jan–Jun (units) Jul–Dec (units) Jul–Dec (units)
Coconut Handwash 7 500 7 500 10 000 9 000
Lavender Bodywash 8 000 8 500 8 500 9 500
Blueberry Handcream 7 000 6 000 7 500 8 000
Peppermint Bath Salts 8 000 7 000 8 500 10 000

By comparing actual and planned results, which product should be deleted?

A. Coconut Handwash
B. Lavender Bodywash
C. Blueberry Handcream
D. Peppermint Bath Salts

CHAPTER 9 Marketing process 283

 Question 2 (5 marks)
Source: HSC 2016 Business Studies Exam, Section II, Q22a & b
A business develops video games. It had three different games for sale last year. The table shows forecast and
actual sales for each game.

Forecast sales ($) Actual sales ($)

Game A 500 000 495 000
Game B 200 000 100 000
Game C 300 000 800 000

A. Why is this information an important part of the marketing process? (2 marks)

B. With reference to the information, recommend a strategy for promoting game B. (3 marks)

Question 3 (1 mark)
Source: HSC 2013 Business Studies Exam, Section I, Q19
The following is an extract from the end of year marketing report for a business.

Planned Actual Variance

sales sales from target
($) ($) %
Region A 1 200 000 1 00 000
Salesperson 1 25
Salesperson 2 -50
Salesperson 3 -25
Region B 1 00 000 1 00 000
Salesperson 4 50
Salesperson 5 50
Salesperson 6 -75
Region C 800 000 1 000 000
Salesperson 7 33
Salesperson 8 50
Salesperson 9 0

Which of the following is suggested by the data?

A. Salesperson 1 is the least successful salesperson in the least successful region.
B. Salesperson 4 is the most successful salesperson in the least successful region.
C. Salesperson 7 is the least successful salesperson in the most successful region.
D. Salesperson 8 is the most successful salesperson in the most successful region.

Question 4 (1 mark)
Source: HSC 2012 Business Studies Exam, Section I, Q18
Use the following information to answer the question.

Extract from marketing report for Star Car Pty Ltd

Star Car Sales Star Car’s % of the car
in each country ($) market in each country
2010 2011 2010 2011
Country A 10 million 12 million 10 12
Country B 10 million 12 million 10 10
Country C 10 million 10 million 10 8
Country D 10 million 8 million 10 6
Note: The price of the cars remained unchanged from 2010 to 2011.

284 Jacaranda Business Studies in Action HSC Course Seventh Edition

In 2011 Star Car Pty Ltd’s main marketing objective was to take sales away from its competitors. In which country
was this objective least effective?
A. Country A
B. Country B
C. Country C
D. Country D

Question 5 (1 mark)
Source: HSC 2002 Business Studies Exam, Section I, Q9
What is the function of management that involves comparing sales figures for a financial period to the forecast of
sales for the same period?
A. Collecting market research data
B. Comparing cash and credit sales
C. Implementing financial plans
D. Monitoring the achievement of marketing plans

More exam questions are available in your learnON title.

CHAPTER 9 Marketing process 285

9.8 Review
9.8.1 Summary
Situational analysis
• A marketing plan gives a purpose and direction to all the business’s activities.
• The steps involved in the marketing process are:
• situational analysis
• market research
• establishing marketing objectives
• identifying target markets
• developing marketing strategies
• implementation, monitoring and controlling.
• A situational analysis provides a precise understanding of the business’s current position and where it is
heading.
• A SWOT (strengths, weaknesses, opportunities and threats) analysis provides the information needed to
complete the situational analysis and assesses the business’s position compared with its competitors.
• The product life cycle consists of the stages a product passes through: introduction, growth, maturity and
decline.
• At each stage of the product’s life cycle a different marketing strategy is necessary.

Market research
• Market research is the process of systematically collecting, recording and analysing information concerning
a specific marketing problem.
• To obtain reliable and accurate information, marketers follow a three-step approach.
• Step 1: Determining information needs. The problem is clearly stated to determine what needs to be
measured and the issues involved.
• Step 2: Collecting data from primary and secondary sources. Data are collected by mail, telephone and
personal surveys, personal observation or from private data sources.
– Primary data: information from original sources. Example: interviews and surveys
– Secondary data: information collected by other organisations. Example: reports and Australian Bureau
of Statistics
• Step 3: Data analysis and interpretation. Determine what the data means.
• Statistics are processed to determine if responses show trends or patterns that can be used in the business.

Establishing market objectives

• Marketing objectives are the realistic and measurable goals to be achieved through the marketing plan.
• The marketing objectives should be more customer-oriented than the goals for the entire business, and
should include specific targets to be met — for example, ‘Increase market share by 5 per cent over 12
months’.
• Marketing objectives include:
• Increase market share. Market share refers to the business’s total share of the total industry sales for a
particular market.
• Expand the product range. Product mix is the total range of products offered by a business.
• Maximise customer service. Customer service means responding to the needs and problems of the
customer.
Identifying target markets
• A target market is a group of present and potential customers to which a business intends to sell its product.
• Sometimes a business may be able to identify a primary and a secondary target market.
• A business identifies and selects a target market so it can direct its marketing strategies to that group of
customers.

286 Jacaranda Business Studies in Action HSC Course Seventh Edition

 • Businesses can choose one of three approaches to identifying and selecting a consumer target market:
• mass marketing approach — the seller mass-produces, mass-distributes and mass-promotes one product
to all buyers
• market segmentation approach — the total market is subdivided into groups of people who share one or
more common characteristics
• niche market approach — a narrowly selected target market segment.
Developing marketing strategies
• Marketing strategies are actions undertaken to achieve the business’s marketing objectives through the
marketing mix.
• The marketing mix refers to the combination of the four Ps — product, price, promotion and
place/distribution.
• Once the four Ps have been established, the business must then determine the emphasis it will place on
each of the variables.
• A business may vary its marketing mix when it wants to reach different target markets.
• A product is a good or service that can be exchanged for money.
• The price is the amount of money a customer is prepared to offer in exchange for a product. It refers to the
method or strategy the business uses to decide their prices.
• Promotion describes the methods used to inform, persuade and remind customers about a business’s
products.
• Place is the element of the marketing mix that deals with the channels of distribution: the ways of getting
the product to the customer.
Implementation, monitoring and controlling
• Implementing the marketing plan means putting the marketing strategies into operation.
• Once the marketing plan has been implemented, it must be carefully monitored and controlled.
• Monitoring means checking and observing the actual progress of the marketing plan.
• Controlling involves the comparison of planned performance against actual performance and taking
corrective action to make sure the objectives are attained.
• When evaluating alternative marketing strategies, a business must develop a financial forecast that details
the costs and revenues for each strategy.
• Developing a financial forecast requires two steps.
• Step 1: Estimate the cost of the marketing plan.
• Step 2: Estimate the revenue (sales) the marketing plan is expected to generate.
• Three key performance indicators used to measure the success of the marketing plan are:
• sales analysis
• market share analysis
• marketing return on investment (ROI).
• The marketing plan can be revised by:
• changes in the marketing mix
• new product development
• product deletion.

CHAPTER 9 Marketing process 287

9.8.2 Key terms
controlling involves the comparison of planned performance against actual performance and taking corrective
action to make sure the objectives are attained
customer service how well a business meets and exceeds the expectations of customers in all aspects of its
operations
financial forecast the business’s predictions about the future
implementation process of putting marketing strategies into operation
market research the process of systematically collecting, recording and analysing information concerning a
specific marketing problem
market segmentation occurs when the total market is subdivided into groups of people who share one or more
common characteristics
market share the business’s share of the total industry sales for a particular product
marketing data the information relevant to the defined marketing problem
marketing mix refers to the combination of the four elements of marketing, the four Ps — product, price,
promotion and place — that make up the marketing strategy
marketing objectives the realistic and measurable goals to be achieved through the marketing plan
marketing ROI measures how much revenue a marketing campaign is generating compared to the cost of
running that campaign
marketing strategies actions undertaken to achieve the business’s marketing objectives through the marketing
mix
mass marketing approach a marketing approach that seeks a large range of customers
monitoring the process of measuring actual performance against planned performance
primary data the facts and figures collected from original sources for the purpose of the specific research
problem
primary target market the market segment at which most of the marketing resources are directed
product deletion the elimination of some lines of products
product life cycle the stages a product passes through: introduction, growth, maturity and decline
product mix the total range of products offered by a business
sales analysis the comparing of actual sales with forecast sales to determine the effectiveness of the marketing
strategy
secondary data information that has already been collected by some other person or organisation
secondary target market a smaller and less important market segment than the primary target market
statistical interpretation analysis the process of focusing on the data that represents average, typical or
deviations from typical patterns
survey the gathering of data by asking or interviewing people
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
target market a group of present and potential customers to which a business intends to sell its product

Resources
Resourceseses
Digital documents Key terms glossary (doc-35666)
Chapter crossword (doc-36216)
Interactivity Chapter crossword (int-7161)
Exam question booklet Chapter 9 Exam question booklet (eqb-0031)

288 Jacaranda Business Studies in Action HSC Course Seventh Edition

9.8 Activities
To answer questions online and to receive immediate feedback and sample responses for every question, go to
your learnON title at [Link]. A downloadable solutions file is also available in the Resources tab.

Exercise 1: Multiple choice questions

1. Which of the following is NOT an example of secondary data?
A. Focus group
B. Government report
C. Financial data and statistics
D. Report from the Australian Bureau of Statistics

2. Which step is the implementation, monitoring and controlling stage of developing a marketing plan?
A. The final step of the process and involves conducting a SWOT analysis
B. The final step of the process and includes revising the marketing strategy to check that it is working
C. The fifth step of the process and involves consideration of who the business is planning to sell to
D. The final step in an ongoing cycle, which focuses on how the business will achieve its business objectives

3. A SWOT analysis is an important tool for a business to use to understand internal and external factors that
affect the business. What does the internal assessment of the SWOT analysis include?
A. Strengths and weaknesses; for example, past failures
B. Opportunities and threats; for example, how new regulations will affect the business
C. Strengths and weaknesses; for example, how new technology affects the business
D. Opportunities and threats; for example, how strong the business’s current financial situation is

4. What stage of the product life cycle is price skimming usually associated with?
A. Decline
B. Introduction
C. Growth
D. Maturity

5. What is the best approach to obtaining reliable information on a specific marketing issue?
A. A SWOT analysis, which includes investigating strengths, weaknesses, opportunities and threats
B. Market research, which includes determining information needs, and collecting and analysing data
C. A product life cycle analysis, which is used to determine the stage of the product and the most appropriate
marketing strategies to match it
D. Development of a marketing plan, which includes situational analysis, establishing market objectives and
developing market strategies

6. Paulo’s Pies is using taste-testing sessions to find out what people think of their pies. What is the information
gained during this process an example of?
A. Secondary data, through internal sources
B. Primary data, through the observation method
C. Secondary data, through external sources
D. Primary data, through the survey method

7. Which of the following would BOTH form part of a situational analysis?

A. SWOT and product life cycle
B. SWOT and business life cycle
C. Business life cycle and SWAT
D. Product life cycle and business life cycle

8. Which of the following are the three steps of the market research process in the correct order?
A. Determine information needs, data collection, data analysis and interpretation
B. Data collection, determine information needs, data analysis and interpretation
C. Data collection, data analysis and interpretation and prepare a report analysing results
D. Determine information needs, data analysis and interpretation, prepare a report analysing results

CHAPTER 9 Marketing process 289

 9. As a result of a SWOT analysis, a café owner discovers that a new restaurant is opening nearby. The owner of
the café then decides to extend their opening hours and alter their menu. The aim of this strategy is to use
A. a strength to overcome a threat.
B. a strength to overcome a weakness.
C. an opportunity to overcome a threat.
D. an opportunity to overcome a weakness.

10. Pampered Pooches makes specialised dog products, mostly for injured or older dogs, such as dog strollers
and portable stairs to help dogs climb into cars. What would be the best marketing strategy to appeal to their
target market?
A. Mass marketing approach
B. Market segmentation approach
C. Niche market approach
D. Secondary target market approach

Exercise 2: Exam practice questions

Question 1 (2 marks)
Identify TWO possible market objectives.

Question 2 (4 marks)
Outline TWO strategies businesses can use to monitor and control their marketing process.

Question 3 (2 marks)
Explain why it’s important for businesses to identify and select a target market.

Question 4 (2 marks)
Identify one stage of the product life cycle and recommend an appropriate marketing strategy for a business in
that stage.

Question 5 (2 marks)
Distinguish between the mass marketing and market segmentation approaches.

Question 6 (4 marks)
Assess why it is crucial for a business to conduct market research.

Resources
Resourceseses
Teacher-led video Chapter 9 Exam practice solutions (tlvd-1872)

Past HSC examinations

Sit past HSC examinations and receive immediate feedback, marking guides and examiner’s report notes.
Access Course Content and select ‘Past HSC examinations’ to sit the examinations online or offline.

Test maker
Create unique tests and exams from our extensive range of questions, including past HSC questions.
Access the Assignments section in learnON to begin creating and assigning assessments to students.

290 Jacaranda Business Studies in Action HSC Course Seventh Edition