MARKETING – CASE STUDY: APPLE

LINK THE SYLLABUS POINTS BELOW TO EXAMPLES OF BUSINESS CASE STUDIES;

ROLE OF MARKETING

STRATEGIC ROLE OF MARKETING The strategic goals of a business include profit maximisation, growth and market share, and satisfying
GOODS AND SERVICES customer needs and wants. Companies such as apple rely on brand awareness and customer loyalty to
ensure success of the business as marketing plays a key role in generating sales.

 INTERDEPENDENCE WITH OTHER

KEY BUSINESS FUNCTIONS
-When sales for a product begin to decline, finance will look towards marketing to increase sales by
altering marketing mix – e.g. changing promotion strategies, redesigning or eliminating products, altering
prices etc.

-Changes in marketing activities aim to increase demand of good, which will need to be managed by
operations. E.g. When Apple discontinued iPhone 5, and launched 5c and 5s – Foxconn would have begun
planning for changes in process layout, establishing quality contrpl systems, ordering new components

-Market research enables sales forecast for new models, which are used by operations to prepare
production schedules

-Operations and marketing often need to collaborate in design and development of new products,
combining marketing data on customer preferences with operational know-how, along with financial
considerations which will influence design and development of new products

-Changing in marketing activites e.g. launch of new iPhone give rise to need for staff training and
development

-HR – 10,000 Foxconn employees recruited to meet launch date for iPhone 5

HUMAN RESOURCE:

- Foxconn employees need to be trained in assembly requirements of each new model of iPhone, must
 develop quality control methods to ensure standards are met

-Employees of Apple retail stores need to be trained in specifications and promotional offers for current
iPhone range e.g. customer service teams in overseas locations such as Ireland

-Training and perfomance management needs to be conducted to ensure employees at Genius Bar are
capable of repairing/replacing components

-To effectively control costs and minimise expenses budgets will be allocated by finance to all key
business functions

CONFLICTS OF INTEREST:

-Marketing may set deadline for launch of new product to increase revenue, operations may require
moretime to test and develop product for quality management to be achieved

-Pressure on HR to meet deadlines, possibly leading to ineffective practices e.g. inadequate training or
excessive hours of overtime

-If issues are not effectively managed, business may not achieve strategic goals e.g. profit maximisations
and efficiency

 PRODUCTION, SELLING,
MARKETING APPROACHES SELLING APPROACH:

-To some extent, innovative nature of smartphone design creating a selling approach to marketing,
particularly in introductory stage of product lifestyle

-This is because smartphone developers e.g. Apple were creating products with capacities beyond
consumer expectations

-Focused on marketing strategies aimed at educating customers on features of earlier iPhones, and design
and development of new technologies

MARKETING APPROACH:

-As market for smartphones has become established, focus of marketing iPhone has become more
persuasive than informative
 -Customers have developed expectations regarding capactive of current and future designs – led to greater
focus on market research and making products that meet needs and wants of consumers

-Apple conducts regular surveys of existing iPhone customers to assess their response to various
applications and design features – valuable information that becomes input in production of future models

-E.g. customer feedback has led to changes in iPhone design such as larger screen size, lighter and thinner
phone, longer battery life etc.

-If Apple is to maintain a competitive situations, they need to reinforce the need for a marketing approach
– due to highly competitive and rapidly changing smartphone market, and customer expectations

-This was seen in release of larger screen size of iPhones in 2014 due to popularity of this feature in
competitor smartphones, particularly in Asian market

 TYPES OF MARKETS
CONSUMER MARKET:

-Customers purchase Apple products for consumption and are not meant for further sale e.g. iPhones

INTERMEDIATE MARKET:

-Apple sells their products to other retaillers e.g. Harvey Norman

INDUSTRIAL MARKET:

-Apple purchases components e.g. battery and utilises these for production of the iPhone

RESOURCE MARKETS:

-Apple purchases raw materials e.g. glass to produce the iPhone

INFLUENCES ON MARKETING

Apple is required to develop appropriate marketing strategies for its various target markets to identify the influences
 FACTORS INFLUENCING
on consumer choice. They must undertake extensive marketing research
CUSTOMER CHOICE –
PSYCHOLOGICAL,
SOCIOCULTURAL, ECONOMIC, PSYCHOLOGICAL:
GOVERNMENT
-Perception

-Motives

-Attitudes

-Personality

-Learning

-September 2013 – launch of iPhone 5c and 5s – introduction of colors was shift away from Apple’s
tradition of only producing black and white iPhones

-Cheaper model 5c – released in 5 colors (green, blue, yellow, pink, white) with matching colored
protective cases – example of psychological influence on consumer choice

-Apple’s promotion of 5c “color reveals your personality...It’s not just for lovers of color. It’s for the
colourful”

-Surprisingly, iPhone 5c was not popular with consumers as indicated by low sales – perception of quality
was stronger than love of color amongst iPhone consumers

-5s – more expensive model – released in silver, gold, grey – metallic colors, especially gold, associated
with quality and refinement

-Promotional information for 5s was targeted at consumers with psychological preferences for quality,
innovation, leading technology

-Product was associated with ideals of perfection “meticulously considered. Precision crafted” – Apple’s
promotion for 5s

SOCIOCULTURAL:

-Social class

-Culture
-Family and roles

-Friends/peers

-E.g. 2011 iPhone commercial contained the message “If you don’t have any iPhone, then you don’t have
iBooks, you don’t have…and you don’t have…”

-Focus was on viewers who don’t own an iPhone – example of how marketers use sociocultural influences
or social pressures to persuade consumers to purchase their products

-Design of iPhone has adapted to sociocultural influences on consumers

-Apple has responded to social trends in design of iPhones e.g. improved camera quality, larger screen

ECONOMIC:

-Growth

-Boom

-Decline

-Recession/depression

-Economic influences on consumer choice refer to state of economy, such as levels of inflation and
unemployment and how they impact on consumer spending

-Times of economic downturn, consumers tend to reduce spending

-Times of growth, higher levels of spending are seen

-During GFC, and subsequent years of economic recession, Apple experienced negative growth in iPhone
sales in some regions of U.S and Europe

-Company has implements range of strategies e.g. developing the ‘low-cost’ iPhone SE in 2016, as well as
continuing to sell older iPhone models that are more price-competitive, such as iPhone 5 in India

GOVERNMENT INFLUENCES:
 -Laws

-Regulations

-Policies

-Changes in government policy/regulations affect how a business may operate in any given country,
including formation of their marketing strategies

-Channel choice is China is limited

LAWS REGULATE A RANGE OF MARKETING CONCERNS, SUCH AS:

-nature of products e.g. health implications of using Wi-Fi dependent products

-pricing strategies e.g. price discrimination

-availability of certain products (place/distribution) e.g. Chinese government privacy concerns

-ethical considerations in promotion of products e.g. targeting children and product placement

-2014 – launch of iPhone 6 and 6 Plus was delayed for Chinese customers due to government concerns
regarding product

-Issues surrounding privacy and accessibility of third parties to iPhone customer accounts

-Given China is largest, fastest growing market for smartphones in world, influence of Chinese government
policy has far-reaching implications for Apple’s competitive position

 CONSUMER LAWS
-Consumer laws vary from country to country, so Apple requires a large investment in legal services
around the world to ensure they are compliant with all consumer laws

DECEPTIVE AND MISLEADING ADVERTISING:

-Must follow Competition and Consumer Act 2010 which prohibits advertising of a misleading or
deceptive nature e.g. Apply cannot suggest certain qualities that the smartphone does not have

-In 2015, 100 iPhone 4 and 4s users filed action against Apple in U.S, claiming company was intentionally
rendering their phone unusable via IOS upgrades. Complaints extended to Apple’s marketing campaign,
claiming it misled consumers by suggesting the upgrade would increase performance and battery life of
 iPhones

-In 2016, iPhone 6 Plus would freeze, become unresponsive, bent out of shape – Apple repaired affected
devices for a fee of $228.95

PRICE DISCRIMINATION:

-Competition and Consumer Act prohibits Apple from setting different prices for the same products in
different locations

-However, other retaillers can determine their own price for the same product

IMPLIED CONDITIONS:

-Australian Consumer Law requires goods to be of acceptable quality, meaning certain conditons are
implied

-E.g. Implied conditions in the sale and marketing of iPhone include:

- smartphones fit for purpose

- they correpsond with their description

- Apple will make available spare parts, repairs, comply with express warranties

WARRANTIES:

-Apple iPhone warranty must be complient with Competition and Consumer Act and other
laws/regulations

 ETHICAL CONSIDERATIONS
PRODUCT PLACEMENT:

-Reduced value of advertising to due evolution of digital media has led to increased presence of product
placement in movies/TV/music videos

-Ethical concerns: subtle, potentially deceptive nature of product placement, especially when aimed at
children
 -2015 Apple received Product Placement Award-achieved more screen time than any other brand

-Demise of traditional advertising e.g. TV has led Apple to move to product placement

-E.g. Apple devises make around 900 appearances in TV shows each year e.g. Modern Family episode
about iPhad prior to its launch

-Apple products appeared in 25-35% of U.S box office no.1 films on 2014-2015

-Subtle, sneaky method – ethical issue relating to advertising to children

ENCOURAGEMENT OF MATERIALISM:

-Apple aggressively markets new phones-seen as questionable given high levels of consumerism and
environmental issues surrounding e-waste

-Always promoting the need for newest models

HEALTH CONCERNS:

-Exposes users to microwave radiation

-World Health Organisation found phones to indicate potential implications for sleep, reproductive health,
hearing, memory- potentially “carcinogenic to humans”

-Future threat of legal action against smartphone manufactuers and service providers considered major
investmenr risk due to unknown long-term effects of radiaction exposure

-Many European countries have introduced legal regulations on mobile phone use by children

ENVIRONMENTAL:

-Mass wastage

-Carbon emissions from manufacturing plants

-Toxic chemicals released when burning waste

MARKETING PROCESS
 SITUATIONAL ANALYSIS
SWOT ANALYSIS:

STRENGTHS:

-Strong global brand/customer loyalty

-Low production costs due to outsourcing

-Own operating system (IOS)

WEAKNESSES:

-High price relative to competitors especially Asian markets

-Incompatibility with different operating systems (OS)

-High R&D costs associated with technological innovation

OPPORTUNITIES:

-Futher partnerships with mobile network countries in high growth markets e.g. China-create new
distribution channels

-Promoting older models e.g. iPhone 5 in developing countries to compete in mid-price range

-Design and development of new products that differentiate Apple from competitors creating competitive
advantage

THREATS:

-Increased competition, particularly Asian manufacturers e.g. Oppo, Huawei

-Rapid technological change in smartphone market, leads to shorter product life cycle

-Rising pay levels, greater labour regulation in China may lead to higher production costs
 -E.g. In 2019, appreciation of $U.S dollar made iPhone more expensive in China – more susceptible to being
undercut by domestic businesses such as Huawei

PRODUCT LIFE CYCLE:

-Apple has been able to increase sales by introducing larger screen versions of iPhone and by expanding
into new markets like China

-Smartphone market is penetrated, upgrade cycle is every two and a bit years and is getting longer

MARKET SHARE:

-Apple (2018) sits in 3rd position behind Samsung (1) and Huawei (2)

-Combination of market saturation, increased market smartphone penetration rates, climbing average
selling prices continue to dampen growth of overall market

-To contest slowdown, vendors will need to focus on new innovative features and form factors combined
with incentives and promotions to drive growth in highly competitive market – customers now expect
devices to outlast and outperform previous generations of that device which cost considerably less a few
years ago

KEY CHANGES BETWEEN 2017 AND 2018:

-Huawei surpassed Apple, leading business in China’s smartphone market. Strong sales growth in Europe
and Asia, future challenge likely to be US market

-Samsung maintained top sport despite decline in shipments/loss of market share compared with
previous year – due to both intensified competition at high end and overall sluggish smartphone market

-Apple dropped to 3rd sport despite its second quarter growth – still performed well at high end as iPhone
X remains top seller in many markets

 MARKET RESEARCH
-Refers to marketing activities designed to discover opinions, belief and desires of potential and existing
customers - involves collecting data and information to gain greater understanding of specific market

2 TYPES:
 1. Primary – gathering new data firsthand for specific study e.g. surveys
2. Secondary – use of data that has been compiled for some other purpose e.g. ABS

-Every month Apple surveys iPhone buyers – reveals what is driving customers to buy Apple products in
each country vs. Android, what features they use most, level of satisfaction with different aspects of iPhone

-Apple had a 12% increase from 2016 to 2017 in American market – net sales

-Apple had a 9% decrease from 2016 to 2017 in Japanese market – net sales

 ESTABLISHING MARKET
OBJECTIVES SETTING TARGETS FOR MARKETING ACTIVITES TO ACHIEVE

-May relate to various factors such as market share, market leadership, product positioning, product
development, customer service etc.

APPLE EXAMPLES:

-Increase market share in India by 10% in next 12mths by securing agreements with Indian government to
reduce import costs

-Increase online sales by 15% in next quarter by offering price discounts

 IDENTIFYING TARGET MARKETS

CURRENT AND POTENTIAL CUSTOMERS TO WHOM A BUSINESS WANTS TO SELL ITS
PRODUCTS

-Economic data will indicate opportunites for business based on level of economic growth in given
countries

-According to ‘Focus Economics’ China and India continue to experience highest rates of economic growth
in world, important marjet for Apple’s leading product, iPhone

3 MAIN APPROACHES:

1. Mass market
2. Market segmentation
3. Niche market
 -Apple uses multiple strategies to target different segments of global market for smartphones

EXAMPLES:

-Executives – ads in business newspapers and magazines

-Teenagers – product placement and celebrity endorsement in TV, music videos

-Young children – product placement in movies/TVs

-Mass market – billboards, website, social media, TV commercials

-Shot on iPhone campaign 2015 – images taken by iPhone users, marketed on billboards, TV, social media
in 25 countries

-Product Placement Award alongside Mercedes-Benz

 DEVELOPING MARKETING
STRATEGIES MARKETING MIX – PRODUCT, PRICE, PLACE, PROMOTION

-Strategies adapted at various stages of product life cycle in attempt to achieve marketing strategies

2018 APPLE’S PRODUCT MIX:

-Consisted of 5 positions

POSITION 1 : iPhone XS Max largest and most expensive iPhone to date launched in September 2018

POSITION 2 : iPhone XS launched September 2018 smaller version of iPhone XS Max

POSITION 3 : iPhone XR reported to be a repackage version of iPhone X to be launched October 2018

POSITION 4 : iPhone 8 launched September 2017, cheaper than iPhone XR

POSITION 5 : iPhone 7 released September 2016, cheaper thn iPhone 8

-Most recent models – XS Max, XS, XR, 8, 11

 IMPLEMENTATION, MONITORING
AND CONTROLLING –
-Marketing planning involves systematic process of identifying current performance of products in market,
undertaking marketing research, and devising marketing objectives and strategies to achieve goals
 DEVELOPING A FINANCIAL
FORECAST; COMPARING ACTUAL
-Once marketing plan implemented, need for ongoing monitoring and controlling to ensure objectives
AND PLANNED RESULTS, being met
REVISING THE MARKETING
STRATEGY
-MONITORING – measuring extent to which targets are being achieved e.g. Apple would monitor sales data
for iPhone to identify market saturation (sales plateau)

-CONTROLLING – involves corrective action required to improve perfomance and meet objectives e.g.
Apple may require a new model of Iphone to be launched or identifying new distribution channels to
increase sales/market share

REFER TO 2018 IPHONE MARKETING STRATEGY

MARKETING STRATEGIES
 MARKET SEGMENTATION,
PRODUCT/SERVICE MARKET SEGMENTATION:
DIFFERENTIATION AND
POSITIONING -Division of market for product according to certain characteristics of customers e.g. age or gender

DEMOGRAPHIC-

-Age, gender, race, religion, socioeconomic status etc.

-High price of iPhones (relative to competitors) is targeted at higher income customers in developed
countries

-iPhone 5c first ‘low cost’ iPhone to be targeted at customers globally, however had limited success

GEOGRAPHIC-

-Location of customers can have implications for segmentation due to factors e.g. income, race, language,
religion that is specific to that region

-Apple’s geographic segments – Americas (North and South), Greater China (China, Hong Kong, Taiwan),
Japan, Europe (Europe, India, Middle East, Africa), and rest of Asia (Australia, other countries)
-In 2016, highest demand for iPhones were in China and India – due to changes to appearance of iPhone
such as larger screen size which is preferred by Asian smartphone users

PSYCHOGRAPHIC-

-Involves consideration of emotional influences and lifestyle of customers e.g. values, opinions, beliefs,
habits

-‘Medical News Today’ Report 2016 – Compared personality differences between iPhone and Android
users. Found that iPhone users are more concerned about viewing their phone as a status object than their
Android counterparts, iPhone users showing lower levels of humility and honesty, and higher levels of
emotionality, iPhone users more extroverted than Android users

BEHAVIOURAL-

-Involves identification of customer attitudes towards a product, or way they use it

-In smartphone market, network carriers will segment customers according to level of usage e.g. cheaper
plan will offer less phone and data usage than more expensive ones

PRODUCT DIFFERENTIATION:

-Achieved when business is able to make its product distinct from that of its competitors

-Apple focuses on design, innovation, quality in attempt to differentiate iPhone – differentiation allows for
Apple to charge a premium price for its products (price skimming) and achieve higher profit margins

-Differentiation has become a major challenge for Apple – was heralded as a market leader in earlier days
of smartphone development but critics claim Apple has become more of a market follower than leader in
recent years e.g. ‘new features’ of iPhone X have been available in competitor phones for years such as
facial recognition and waterproofing claimed by some analysts

-Differentiation of features may not be significant but quality of features give Apple a leading edge –
maintain high sales and market share

-Apple’s highly effective marketing strategies continue to persuade customers that they produce a
superior smartphone – reinforced by relatively high price of iPhones compared to competitors
 -Apple’s key differentiation is more psychological than physical

POSITIONING:

-Relates to how a product is percieved in relation to others in market

-Previously, Apple and Samsung were seen to offer superior hardware and design features

-Chinese brands tended to focus on building durable and highly customised phones targeted at mass
market

-Recent years, gap between global brands and chinese smartphones has become less significant to Chinese
consumers - Apple will need to develop effective marketing strategies to compete with Asian smartphone
manufacturers in future

-India is another major developing economy that is experiencing strong sales growth for smartphones –
Apple relocated production of iPhone SE to India in 2017 to better position Apple in market

-iPhone can’t compete against ‘lower price’ phones so Apple has to emphasise quality

-Awkward moment for Apple’s software chief at the launch of the iPhone X in 2017 following a failed
attempt to demonstrate the facial recognition feature of the model – eventually this model was
discontinued in 2018 due to the issues

 PRODUCTS – GOODS AND/OR

SERVICES FOCUS ON QUALITY, DESIGN, APPEARANCE
– BRANDING
-Unique operating system (IOS)
– PACKAGING
-High quality camera, plethora of apps available on App Store

-High memory capactiy, voice recognition

BRANDING:

-Strong brand image, high visible logos on products

PACKAGING:
 -Packaging suggests luxury and quality

 PRICE INCLUDING PRICING

METHODS
-Apple utilises price skimming when a new iPhone is released – positions product as leading edge, quality
product, also provides finance for R&D
– PRICING STRATEGIES
– PRICE AND QUALITY -When model is upgraded, older models are reduced to more competitive pricings usually aligned with
INTERACTION latest Samsung model

-Competition-based pricing is adopted for low cost and older models

-Bundling plans offered by network providers – allows customers to pay for their phone over two year
period cutting intial high price

-Buy-back programs, discounted prices on older models in Asia

-Apple’s high quality means customers have to pay a high price

 PROMOTION
ELEMENTS OF THE PROMOTION MIX:
– ELEMENTS OF THE PROMOTION
MIX – ADVERTISING,
PERSONAL SELLING AND ADVERTISING:
RELATIONSHIP MARKETING,
SALES PROMOTIONS, -Use of media to create a highly publicised event of new product launches
PUBLICITY AND PUBLIC
RELATIONS -TV and mass media advertising traditionally focused on innovation, quality, design, features of iPhone
– THE COMMUNICATION
PROCESS – OPINION -Product placement in TV shows and movies e.g The Intern
LEADERS, WORD OF MOUTH
-Extensive use of social media

-Business magazines and journals to target executives

-Use of website for launches and product information

PUBLICITY AND PUBLIC RELATIONS:

-Publicity and a secrecy approach to keep media guessing about upcoming models

COMMUNICATION PROCESS:
 -Celebritiy endorsement in ads and product launches e.g. rock band U2

-Product launches are an important part of Apple’s promotional mix – 2016 launch of iPhone 7 and iPhone
7 Plus included perfromances by Sia, James Corden and Pharrell Williams

 PLACE/DISTRIBUTION
DISTRIBUTION CHANNELS:
– DISTRIBUTION CHANNELS
– CHANNEL CHOICE
-iPhones distributed by online sales, Apple stores, mobile carriers (e.g. Telstra, Optus etc.), and retail
– PHYSICAL DISTRIBUTION
mobile stores (e.g. JB-HI-FI)
ISSUES
-Traditional distribution channels – Producer to consumer, producer to retailler to consumer, producer to
wholesaler to retailler to consumer

-Innovative distribution channels – E-commerce, m-commerce

CHANNEL CHOICE:

-Selective – Uses only a moderate proportion of all possible outlets

-2018 – Apple had 504 retail stores in 24 countries, online stores available in 40 countries

-Recent contracts secured with Mobile China Inc. (country’s largest mobile carrier, as well as leading
distributors in India and Japan

-Approx. 30% of Apple sales made through direct distribution channels (online and Apple stores), 70%
through indirect channels such as network carriers/retaillers

-Apple and Samsung collaborating to produce a digital SIM card, aimed at reducing profit shared with
network providers

-Sales to educational insititutions and government are secured using direct selling

 PEOPLE, PROCESSES AND

PHYSICAL EVIDENCE PEOPLE:

-Strong focus on sales and customer service in Apple stores

-Job titles ‘Genius’ and ‘Specialist’ to raise employee status

 -In-store, online, over-phone support for warranties, complaints, sales, repairs etc.

PROCESSES:

-Online ordering system

-Free upgrades of iOS for existing customers

-Pre-ordering available prior to new product launches – when purchasing directly from Apple

PHYSICAL EVIDENCE:

-Apple stores are designed to reflect importance of innovation and quality

-Elaborate building entrances, positioned in prime city locations

-Encourage hands-on-approach, allowing customers to ‘test-drive’ Apple products

 E-MARKETING
-Online presence has significant impact on business and marketing activites

E-MARKETING HAS INFLUENCED THE MARKETING MIX IN THE FOLLOWING WAYS:

PRODUCT:

-Websites can provide detailed information regarding product without expense of printing brochures or
manuals

-Well-designed website allows products such as iPhone to be displayed as still image or video, increasing
customer awareness of company products

-Frequently asked questions/technical specifications can be provided online, reducing expense of

providing customer service in store

PRICE:

-Internet has led to greater price transpareny- customers can compare prices of products to that of their
competitors

-Apple is able to increase profit margins by selling online, cutting costs associated with operating retail
stores

-Price-comparison websites allow shoppers to identify lowest price offered for given product

PLACE:

-Websites provide a platform for the global market, without establishment costs of owning a retail store in
another country

-Cost of using intermediaries can be reduced by selling directly to online customers

-Apple tailors websites for different languages and cultural preferences

-Some people prefer flexibility of online shopping

-E-marketing limitations – some customers prefer to view a product before purchasing, or may not trust
security of online banking

PROMOTION:

-Apple utilises variety of images, audio, video clips to promote iPhone on website

-New product launches are published on website

-Online ads are used extensively on social media sites, online business journals/newspapers

-Apple use their extensive database of existing and potential customers to promote products via email and
social media – create short and visually effective ads that do not require long attention span of viewers
 GLOBAL MARKETING
GLOBAL BRANDING:
– GLOBAL BRANDING
– STANDARDISATION
-Apple logo has changed three times since its inception in 1976
– CUSTOMISATION
– GLOBAL PRICING -Current Apple logo is well suited to global market as it is both simple and globally recognizable
– COMPETITIVE POSITIONING
-When Apple launches new products in the global market they have a competitive advantage due to global
brand recognition.

-Also able to use the same strategies in the global market, reducing costs by creating marketing economies
of scale

-In 2018, Apple came in second as world’s most valuable brand

-Apple was worth $170 billion in 2017

STANDARDISATION:

-Pricing may differ between markets, however, the same iPhone is found in every country in which it sells

-Some promotional strategies for iPhone are standardized for global market, including simple images of
the iPhone that do not need to be altered for different cultures or target groups e.g. iPhone 5c billboard
advertisement

-TV advertisements for iPhone 5c took a global approach, featuring people from different nationalities,
speaking their own language on the colourful iPhone 5c

-By developing standardized marketing strategies, Apple is able to reduce costs associated with marketing
iPhone

-With some alterations to cater for different languages, the same promotional material can be used in
multiple markets

CUSTOMISATION:

-Some technology commentators suggest that the iPhone 6 Plus was a product designed for the Asian
market, where large screens have shown to be popular with competitor phones

-In 2015, Apple customized its first advertisement in India. This was done through an identifiable ritual of
the great Indian wedding and follows a bride/groom in the few hours leading up to their wedding using an
iPhone 6 to stay in touch.

GLOBAL PRICING:

-It is necessary to adapt pricing methods to make an expensive product such as an iPhone affordable in
less developed countries

-Various influences on pricing in different markets, including currency exchange rates, transportation
costs and local taxes. In 2017, the iPhone X was almost 40% higher in Russia than the United States

-In 2016, depreciation of the Euro compared to the U.S dollar led to a 30% increase in the price of iPhones
in France

-In United Kingdom, government taxes (VAT) made it the third most expensive country in the world to
purchase an iPhone in 2017

-In recent years, further appreciations in value of U.S dollar led to significant increases in the price of
iPhones in countries such as Australia, New Zealand, Canada

COMPETITIVE POSITIONING:

-Apple has historically positioned its products (including iPhone) in the high end of the market in terms of
quality and design, and priced its products accordingly

-As high end market for smartphones in developed countries has become saturated, Apple and its
competitors have turned to emerging economies such as China and India. New marketing strategies are
required due to local competition, income levels, other demographic factors in these markets

-In smartphone market, competitive advantage can be achieved by establishing distribution channels in
new markets. In 2014, Apple secured a contract with China Mobile Inc., China’s largest phone carrier. This
resulted in a significant increase in iPhone sales in 2015, and an increase in Apple’s market share for
smartphones. However, this has not been sustained in recent years.

-According to 2018 International Data Corporation report on smartphone market, market experienced an
overall decline of nearly 2% between second quarters of 2017 and 2018 – due to market saturation in
most developed countries, as well as previously high growth market of China
-Asia/Pacific region continued to experience market growth led by India and Indonesia, which are
expected to increase sales in 2018 by 14.4% and 15.4% respectively

-Samsung and Apple achieved little growth however top 2 Chinese smartphone makers; Huawei and Oppo,
registered strong growth

-Huawei became second largest manufacturer in the world in the second quarter of 2018, overtaking
Apple and continuing to pose a threat to Samsung

-Key challenge for these Chinese manufacturers will be to capture greater market share in U.S and
European markets

-Apple has turned its sights to the high growth smartphone market of India – key challenge of this market
is high price of iPhones compared to competitor products. In 2016, average selling price in India for
iPhone was $U.S 122. Apple initially attempted to sell pre-owned and refurbished iPhones to Indian
consumers at lower prices, but this was promptly banned by Indian government

-Apple has revised its marketing mix for the Indian market with a focus on earlier models such as iPhone
5s and low-cost iPhone SE in 2017

-In 2018, Apple experienced a significant loss of market share in India’s premium smartphone segment
(13.6% in April-June from 29.6% a year earlier). China’s OnePlus became the leader with Samsung second.

-New iPhone XS and iPhone XS Max will be priced at record highs when they go on sale in India on
September 28, after factoring in the rupee’s depreciation against dollar and a 20% import duty, starting
price has gone up by almost 13% for the flagships
MARKETING

ROLE OF MARKETING

MARKETING FUNDAMENTALS:

-More than 70% of new products launched on the market fail in first year of operation, mainly as a result of poor marketing

-Without some form of marketing, customer’s may not even be aware of a product’s existence, regardless of how ‘revolutionary’ it may be

-Insignficant and unimportant products have become best-selling as result of well-managed professional marketing plan e.g. Coca-Cola  brown, sugary,
fizzy water is now a global product

WHAT IS MARKETING?

-Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives

-Essence of marketing  finding out what customers want, then attempting to satisfy their needs

FEATURES OF MARKETING:

-Involves a wide range of activities

-Is directed at a wide range of goods, services, and ideas

-Stresses importance of satisfying exchanges – that is, something in return

-Is not limited to activities of businesses

-Current approach focusses on satisfying consumer’s needs and wants, being socially responsible, and building long-term and cost-effective relationships
with customers

STRATEGIC ROLE OF MARKETING GOODS AND SERVICES:

-Strategic means long-term, broad aim affecting all areas

-Strategic role means it contributes to strategic direction/plan of business

-Strategic goal  long-term, 3-5 years

-Strategic goal of marketing  profit maximization OR market share

-Marketing objectives  Size

 Increase sales

 Market share

 Legal compliance

 Ethical issues

-Ultimately about boosting customer base and increasing triple bottom line, increasing customer loyalty, or expanding product width/depth

-Strategic role of marketing has impact on society and includes choice, standards of living, employment, brand awareness

-Role of marketing is to develop a relationship between business and its customers – customer orientated approach

-E.g. Coca-Cola in 1st year sold about 10 servings per day, today it is sold in over 200 countries with 1.9 billion servings consumed everyday  marketing
is a powerful strategy available to help achieve business goals

-In order to achieve business success, must develop effective marketing plan  Situational analysis

Research

 Objectives

 Target market

 Strategies

 Implementation, monitoring, evaluation

-Marketing plan acts as guide for business, should be designed around goals business wishes to achieve, be in line with values, beliefs, ideals within
business’s mission statement

-Marketing plan should focus on both short-term and long-term planning for 3 reasons 

1. Outlines strategies to be used to bring buyer and seller together. Businesses need to identify  Where market is

 Who will buy product

  Where they will buy product, how often

2. Core of marketing is satisfying existing customer base, which leads to repeat sales
3. Marketing is revenue-generating activity of any business

-Successful businesses develop marketing strategies on careful research and design

CHOICE:

-Businesses must differentiate products from similar products in market place to attract customers to purchase  leads to competition

-E.g. Product features, pricing strategies, promotional strategies  known as competitive advantages – what a business does better than competitor

-Marketing provides consumers with choice

-E.g. Apple Inc.  seen as innovator, highly regarded for quality, ease of products – customers who emphasise innovative consumer technologies

-Huawei gained competitive advantage through price – appeals to more price conscious customers

STANDARD OF LIVING:

-Businesses constantly improving features of products to enhance our lifestyles and develop their income streams

-Research and development plays an important role in improving quality of life

-E.g. Tip Top Bakery develops a range of bread types catering to diverse dietary and nutritional requirements of a varied and changing society

EMPLOYMENT:

-To provide product to customers, businesses must employ labour to assist in transformation process of changing input resources into finished goods

-Marketing provides source of income and employment for millions of Australians  with income, able to purchase goods and services that satisfy needs
and wants

-Must use skills of labour to research innovative methods of improving/enhancing product

BRAND AWARENESS:

-Extent to which consumers are aware of existence of a particular product  features, price, places of purchase
-Fundamental goal of marketing  increase brand visibility within commercial environment

-Often achieved through strong/effective marketing campaigns

-Strong brand awareness allows products to remain in consumer minds, likely to influence buying behaviour

INCREASING MARKET SHARE:

-Market share - % of total sales business has compared to competitors in particular market

-Purpose is to increase market share, to increase business sales and profitability

-E.g. Coles  “Down, down, prices are down” – heavily promotes image of low-cost, attempt to lure customers from Woolworths

INTERDEPENDENCE WITH OTHER KEY BUSINESS FUNCTIONS:

-Four key business functions  Marketing

 Operations

 Finance

 Human resources

-Each has separate role, but closely interdependent – reliance on other functions to achieve common goal, mutually dependent, holistic approach =
success

-Marketing does not occur in isolation

-Business policies/plans – operations should be directed towards achieving customer satisfaction

-Marketing must be allocated appropriate funds of finance to fund marketing campaigns so they can draw customers attention that operations create

-Marketing department surveys customers about ways to improve product and notify operations of potential product changes

-Marketing interrelates with HR as employees within organization must be motivated and skilled to develop appropriate products

-In 50s, shift to customer-orientated approach in marketing concept – each function of business should be driven by needs and wants of customers and
meeting those needs and wants  need to undertake market research and develop marketing concept
-Marketing concept  philosophy that states all sections of business are involved in satisfying customer’s needs and wants while achieving business
goals

-Marketing plan needs to be integrated into all aspects of business

-Marketing manager has to work with HR manager to ensure right staff are employed to create good/service that is desirable

PRODUCTION, SELLING, MARKETING APPROACHES:

PRODUCTION APPROACH:

-1820s – 1920s

-Businesses focused on production of goods and services

-Catchphrase “if we make it, they will buy it”

-Industrial revolution created tremendous burst of industrial output, saw demand of goods and services exceed production capabilities

-Production design based on demands of mass production techniques rather than on customer needs and wants

-E.g. Henry Ford – T. Model Ford

SELLING APPROACH:

-1920s-1960s

-After WWI, production became efficient and productivity increased

-Competition increased

-Consumers’ basic needs were satisfied, businesses had to develop new marketing approach  sales-orientated

-Sales approach  emphasized selling because of increased competitio0n

-Increased spending on advertising to stimulate demand for good/service

-Salespeople hired and trained, were relied on to convince customers to buy  sometimes very aggressive high-pressure tactics

-Businesses still neglected needs of customers

-Instead of researching what consumers wanted, businesses produced goof/service and relied on sales representative to create demand

-Emergence of door-to-door sales

-Women at home, men would sell to them

MARKETING APPROACH: STAGE ONE:

-1960s-1980s

-Shift from focusing on production and placing customer at centre of all marketing activities

-Focused on finding out what customers want – through market research and then satisfying need

-Families had disposable income  money available for spending after buying necessities

-Emphasis shifted to development of marketing concept

-Marketing became central to all aspects of business, satisfying customer needs became responsibility of all employees, regardless of employee job e.g.
operations specialists, HR officers

-More global competition  product differentiation increases

MARKETING APPROACH: STAGE TWO:

CORPORATE SOCIAL RESPONSIBILITY (CSR)-

-Growing public concern over environmental pollution and resource depletion came a shift in emphasis of marketing plan

-External pressure from customers and environmental organizations, also political forces, is presently influencing marketing plan

-Increase in demand for ecologically sustainable products

-Triple bottom line  Profit

 Social

 Environmental

CUSTOMER ORIENTATION-

-1/3 of all TVs are made in South Korea and 25% of those are Samsung
-Strong customer orientation  collecting information from customers and basing marketing decisions and practices on customers’ wants and interests

-Businesses that adopt customer orientation approach  relationship does not end with sale, it begins there

-Companies e.g. Samsung strive to exceed customer expectations

RELATIONSHIP MARKETING-

-Keep existing customers satisfied

-Places a high priority on customer retention and continual satisfaction

-Core of relationship marketing is customer loyalty achieved through rewards program, customer care

TYPES OF MARKETS:

WHY DO MARKETING MANAGERS NEED TO KNOW THEIR MARKET?

-Market  group of individuals, organisations or both that –

-need or want a product (good/service)

-have the money to purchase a product (purchasing power)

-are willing to spend their money to obtain product

-are socially and legally authorized to purchase the product

-Marketing plan and strategies vary depending on intended market so marketing managers need to understand main characteristics of 6 different types
of markets

RESOURCE MARKET:

-Where production and sale of raw materials occurs

-Some businesses require natural materials e.g. gold, aluminum, sugar to produce the good/service that they can sell to other businesses

-E.g. BHP Billiton, Rio Tinto

-Natural resources e.g. mining, forestry, fishing, agriculture

-165,000 Australian businesses

INDUSTRIAL MARKET:

-More than 932,000 Australian businesses

-Either secondary or tertiary

-Includes industries and businesses that purchase products for use in the production of other products or in their daily operations

-Generally associated with manufacturing

-E.g. Sony buys plastics and metals to produce TV, Tip Top Bakery buys flour to make bread

INTERMEDIATE MARKET:

-Consists of wholesalers and retailers which purchase finished products for resale to make a profit

-Vast majority of goods sold to consumer markets are first sold to an intermediate market

-Resellers are an intermediate market

-Over 187,000 retailers, over 61,000 wholesaling intermediaries

-E.g. Subway buys goods to make into sandwiches and salads for sale to consumers

CONSUMER MARKET:

-Consists of individuals  members of a household who plan to use or consume products they buy

-Products are not intended to be used to make other goods and services

-Largest market – products such as clothing, food, appliances

-E.g. JB-HI-FI sells Apple products, Coles sells food

-Marketing managers try to influences buying behaviour through a mix of marketing strategies and by closely examining consumer behaviour

MASS MARKET:

-Mass-produced goods that utilise one marketing mix (standardized product, price, promotion, distribution)
-Aimed at all consumers irrespective of age/demographic

-E.g. electricity, gas, water

-Mass produce, mass distribute, mass promote one product to all

-Assumption that all customers in market have similar needs and wants

-E.g. Model T. Ford – 1908, mass produced

-Very few products are mass marketed today  has been replaced by segmented or niche markets

-Worked during 1900s  consumers’ wants could not be fulfilled, most items produced could easily be sold, increased demand

-Benefits  cost efficient

 Advertising broadcast over mass media gave a business the ability to achieve economies of scale and appeal to a very large audience in a
gggggggggg single showing

-Only effective if product is a commodity/beneficial to people across wide range of demographics

NICHE MARKET:

-Narrowly selected target market segment

-Very small market with unique characteristics and special demographics

-Concentrated or micro market

-Mass market is divided into smaller market segments consisting of buyers who have specific lifestyles and needs

-Smaller group becomes target market, where marketing managers aim their efforts at

-E.g. magazines  targeted at different groups – Women’s Weekly, Better Homes and Gardens, Wheels

-Sales less frequent, goods sold generally dearer

INFLUENCES ON MARKETING
FACTORS INFLUENCING CUSTOMER CHOICE:

1. Psychological
2. Sociocultural
3. Economic
4. Government

WHY DO MARKETS CLOSELY EXAMINE BEHAVIOUR OF CONSUMERS?

-To understand what influences customer choice

-So they can try and influence customer choice by modifying their marketing strategies to appeal to customer’s motives

-To understand why a customer selects one product and rejects another

-So they can predict customer trends and how they may react to particular marketing strategies

CUSTOMER CHOICE/BUYING BEHAVIOUR

-Decisions and actions of customers when they search for, evaluate, select and purchase goods and services

PSYCHOLOGICAL FACTORS

-Personal characteristics of an individual that affect their buying behaviour

1. Perception
2. Motives
3. Attitudes
4. Personality and self-image
5. Learning

1.PERCEPTION-

-People see and hear the same things differently

E.g. One person may think a Ferrari is a sign of achievement, another may think it is ostentatious

-Perception is a process through which people select, organize and interpret information to create meaning

-Marketers aim to create positive perception about their product in the mind of the customer they are targeting
-Customers will not purchase a product they perceive as inferior  perception of a product is often result of advertising that attempted to create an
‘image’ of the product e.g. trendy, luxurious, fun  in reality, product may not have such characteristics – more to do with how consumers perceive
products

2.MOTIVES-

-Individual’s reason for doing something

-Main motives that influence customer choice  comfort, health, safety, ambition, taste, pleasure, fear, amusement, cleanliness, approval of others

-Marketing (advertising) attempts to influence an individual’s motivation to buy the product e.g. health, natural

3.ATTITUDES-

-Person’s overall feeling about an object or activity

-Customer attitudes to a business and its products generally influence success or failure of business’s marketing strategy

-Negative attitudes to a business or its products often force business to change its strategies

-E.g. Cars are for adventure

4.PERSONALITY AND SELF-IMAGE-

-Individual’s personality  collection of all their behaviours and characteristics that make up that person

-To some extent, personality will influence brands of products a person buys e.g. style of clothing

-Coupled with personality is individual’s self-image  how a person views himself or herself

-Self-image is major determinant of what products we buy  we reinforce our image through what we buy ‘you are what buy’ – tendency found
especially in young people

-Marketers will make most of an individual’s desire to express their identity through what they buy by highlighting the image value of their products

-Celebrities and sportspeople are often used to endorse products because people aspire to be like then

-E.g. LeBron James endorses Nike

5.LEARNING-

-Refers to changes in an individual’s behaviour caused by information and experiences

-Much customer behaviour is learned

-Successful marketing strategies that assists customers to learn may encourage brand loyalty

-Customer’s now less brand loyal with increasingly similar products

-E.g. Learning occurred for the first time a customer tasted Coca-Cola

-Learning can also be based on indirect experiences e.g. if a customer see and ad for Coca-Cola that shows other people enjoying a new flavor, the
customer may assume that they would like it also

SOCIOCULTURAL FACTORS:

1. Social class/socioeconomic status

2. Culture and subculture
3. Family roles
4. Peer group

-Forces exerted by other people and groups

1.SOCIAL CLASS/SOCIOECONOMIC STATUS-

-Education, occupation, income

-Influences type, quality, quantity of products a customer buys

-E.g. People from a high socio-economic status are usually willing to buy products that are perceived to be prestigious e.g. designer brands like Gucci

2.CULTURE AND SUBCULTURE-

-Learned values, beliefs, behaviours, traditions shared by a society

-Influences buying behaviour because it infiltrates all that we do in our everyday life

-Determines language, clothing, religion, what we eat, where/how they live

-E.g. Greater desire for healthy food, many low-fat, sugar free food products are now marketed

3.FAMILY ROLES-

-All of us occupy different roles within family

-E.g. Most women still make buying decisions related to healthcare products, food and laundry supplies despite women’s changing roles

-Teens influence parents buying behaviour, especially clothes, shoes, music, books, food

-Roles influence buying behaviour

4. REFERENCE (PEER) GROUPS-

-Group of people with whom a person closely identifies, adopting their attitudes, values, beliefs

-Customer’s buying behaviour may change to match the rest of the group’s belief and attitudes

E.g. If a close friend tells you of a bad experience at a particular shop, you will probably change your buying behaviour based on this information OR if
your peer group wears distinctive clothing, you probably make clothing purchases based on this influence

ECONOMIC INFLUENCES:

-Influence a business’s capacity to compete and a customer’s willingness and ability to spend

-Level of economic activity fluctuates from boom to recession

BOOM-

-Period of low unemployment and rising incomes

-Businesses increase production lines and attempt to increase market share by intensifying promotional efforts

-Marketing potential is large

-Sales respond to all forms of promotion

-Customers willing to spend  more job security

RECESSSION-

-Unemployment high levels, income falls

-Customers reduce spending and are more price conscious  look for products that are functional and long-lasting

-Marketing plans should stress value and usefulness of a product, concentrate on maintaining existing market share

-Customers and businesses lack confidence

GOVERNMENT FACTORS:

-Use of economic policies to influence levels of economic activity  expand or contract level of economic activity

-Policies directly or indirectly influence business activity and customer’s spending habits  influences marketing plan

-Impact of government regulations more direct and immediate on marketing plans

-Regulatory forces  laws

 regulatory bodies

 exert significant influence over marketing activities of business because breaking these laws/ regulations may result in financial penalties

-E.g. Competition and Consumer Act 2010 (Cwth), Fair Trading Act 1987

-Influence marketing of products such as alcohol and tobacco

CONSUMER LAWS:

1. Deceptive and misleading advertising

2. Price discrimination
3. Implied conditions
4. Warranties

WHY IS IT IMPORTANT TO KNOW THE INFLUENCES ON MARKETING?

-To successfully manage the marketing function, a marketing manager must manage these influences which impact on what they are doing

-There has been radical and continuous change by federal and state gov. around business laws and these have affected marketing departments

-Consumer laws were introduced to protect both consumers and businesses from unscrupulous or dishonest practices

-Competition and Consumer Act 2010 (Cwth)  introduced in 2011, replaced Trade Practices Act 1974

2 Main Functions:

 Protect consumers from misrepresenting the contexts if a product, where product is made (place of origin) or misleading and deceptive advertising or
unconscionable conduct (unreasonable and possibly illegal)

 Encourage healthy competition and ensure a level playing field for all businesses to operate
-Australian Competition and Consumer Commission (ACCC) enforces CCA and can enforce fines or criminal charge  expensive, severely damage
business reputation

-ASIC regulates financial services industry part

HOW DOES THIS RELATE TO MARKETING?

-Marketing managers must be familiar with laws that regulate what they can/ can’t do

-Need to know what changes to laws are made and how this affects product (changes to packaging e.g. when food packaging laws changed nutritional
information was required to be on the label)

-Also how it affects promotion (change an advertisement), pricing and distribution (change credit policy)

BREACHING THE ACT-

-Courts can impose penalties up to $1.1 million for companies, $220,000 for individuals for unconscionable conduct (any practice that is not reasonable
and illegal)

-Consumers can sue businesses for compensation

-Affects business reputation

-Can give on the spot fines to manufacturing businesses for false claims about their product ($12,600-$126,000)

-Can issue public warning notices of suspected illegal activity

UNDESIRABLE AND ILLEGAL PRACTICES THAT ARE ENFORCED BY THE COMPETITION AND CONSUMER ACT:

1.DECEPTIVE AND MISLEADING ADVERTISING

-Most serious of breaches in consumer law

-Advertising that has intent to misrepresent/ mislead consumer, creates false impression

-Mislead information about products features, content, place of manufacture (made in Australia vs. product of Australia)

-E.g. ACCC fined Nurofen $6million in Dec. 2016 for using different packaging for their pain relief tablets but the tablets were all the same

-Overstating benefits that a product provides e.g. Before and after advertisements, tests, surveys
DISHONEST ADVERTISING-

-Offering discounts and special offers that don’t actually exist or free gift orders

BAIT AND SWITCH ADVERTISING-

-Advertising a few products at reduced prices and therefore enticing prices to attract customers. When advertised products quickly run out, customers
are directed to higher priced items

-E.g. Electrodry Carpet Cleaning Franchisees posted false testimonials which were fabricated and not real

-In 2010, ACCC found LG cheated during energy testing process for 2 fridges, which allowed them to obtain a higher energy star rating which was used in
marketing campaign of its products

FINE PRINT-

-Important conditions written in small-sizes print, difficult to read

-Coles forced to pay $2.5million for misleading “Baked today” and “Freshly baked in-store” bread promotion  frozen off-site, ‘finished’ at in-store
bakeries within supermarket

2.PRICE DISCRIMINATION:

-Setting of different prices for a product in separate markets

-Process where business gives preference to some retail stores by giving stock at a lower price than is offered to competitors of those retailers

-E.g. Peak and off-peak accommodation or ‘early bird pricing on airline tickets’ – generally business will try to charge higher prices to consumers they
believe have a higher willingness to pay

-CCA prohibits price discrimination if the discrimination could substantially reduce competition

-Price discrimination happens all the time e.g. student discounts on movie tickets or different fuel prices based on where you live

-Price discrimination is not illegal unless a business has monopolistic power and it is anti-competitive behaviour

-Healthy competition in an industry is good

-E.g. McDonalds has been accused of price discrimination in that different products cost different amounts at different stores, however, because it is a
franchise it has avoided legal complications
DIFFERENCE IN PRICE IS POSSIBLE BECAUSE-

-Markets are geographically separated e.g. city and country prices

-There is product differentiation within the one market e.g. different electricity prices for domestic and business users

-Business cannot give favourable treatment to some customers while denying it to others

3.IMPLIED CONDITIONS/CONSUMER GUARANTEES:

-Comprehensive set of rights and remedies for defective goods and services

-What you can assume when you purchase a good or service, they are assumed to exist regardless of whether they were written down

-Under CCA, the consumer guarantees provide consumers with rights to certain remedies from retailers or manufacturers where goods fail to comply
with consumer guarantees provisions in ACL

CONSUMER GUARANTEES ARE-

1. Products must be of ‘acceptable quality’ (known as merchantable quality) that is they are safe, lasting/durable, look acceptable. Acceptable
quality takes into account what would normally be expected for the type of product and cost
2. Products must match description made by salesperson or on packaging and be ‘fit for purpose’ for which it is being sold – must be able to perform
the function for which it was made, be free from defects and have spare parts

-By law businesses must offer refund or exchange should good be faulty at time of leaving store  retailer cannot refuse to help you by telling you to go
to the manufacturer

-E.g. Kmart swimwear  label proclaims that it may become see-through when wet, can’t take ‘excessive contact’ with suntan lotions, oils, rough
surfaces, heated pools and spas wit harsh chemicals. ACCC found Kmart swimwear breached the ‘implied conditions’ of ‘fit for purpose’

-It is retailers’ responsibility to fix any faulty product

-You should not be paying for an extended warranty

SERVICES MUST BE-

-Provided with acceptable care and skills or technical knowledge and taking all necessary steps to avoid loss and damage

-Give results business has agreed to

-Delivered in reasonable time when there is no agreed end date

-Cancelling a service, compensation for damage and loss  remedies consumers can claim

-E.g. LuleLemon fined $32,400  website claimed sale items were ‘yours for keeps’ so ‘no returns and no exchanges’ – under ACL, people are
automatically entitled to a remedy if product fails to meet consumer guarantee or develops fault, even if product is purchased on sale  false and
misleading representation about consumer guarantee rights

4.WARRANTIES:

-Warranty  promise made by business that they will repair or replace faulty products

-Obligation of a business

-Business must honour warranties if: goods are faulty, goods don’t match description, or if goods fail to do job

-Warranties can be aggressive marketing tool if superior options to its competitors

-E.g. Kia was the first to have 7yr warranty on new motor vehicles

-No obligations to provide a refund if customer changes their mind or damage has occurred after sale  no refund on sale is meaningless, CCA gives
consumers certain rights

-Schedule 2 of CCA (2010) lists conditions and warranties that Australian businesses must abide by

-E.g. iPhone support safe informed customers they were no longer entitled to a repair because they had used a third party to fix their devices  court
declared Apple in the wrong and were fined $9million

-False or misleading statements concerning existence, exclusion, certain conditions of the warranty are prohibited under CCA

ETHICAL:

1. Truth, accuracy and good taste in advertising

2. Products that may damage health
3. Engaging in fair competition
4. Sugging

WHAT DOES ETHICAL MARKETING MEAN?

-Marketing ethics are moral principles that govern marketing behaviour (socially responsible, fair, morally right)

-Laws do not cover every aspect of marketing so businesses sometimes need to make a judgement call about whether their strategies are suitable
ETHICAL PRACTICES IN MARKETING-

-Ethical behaviour involves going above and beyond what they law requires with regard to marketing

-Some marketing strategies may be legal but still considered wrong/ unethical

TRUTH, ACCURACY AND GOOD TASTE IN ADVERTISING:

-Some marketers deliberately exaggerate claims and make confusing statements

-Ethical businesses should ensure advertising is truthful as they can be morally responsible for misleading public by using untruth in ads

-Can lead to backlash, loss of brand image and decreased sales

MAIN UNETHICAL MARKETING PRACTICES INCLUDE-

-Untruths due to concealed facts  advertised product may not make a consumer more successful, glamorous, sexy, happy, healthy – concealed facts
are pieces of information purposefully omitted from an ad that can severely harm trust customers have in a product/business

-Exaggerated claims  puffery cannot be proved e.g. customers cannot confirm that a certain shampoo is superior to any other on market – sometimes
not considered misleading e.g. ‘best steaks in the world’  no one could possibly believe that

-Vague Statements  Statements using words so ambiguous that consumers will assume advertisements intended message  ambiguous language are
by their nature vague and allows marketer to deny any intention to mislead/deceive e.g. ‘helps fight against’

-E.g. Domain was claimed to be ‘highest rated property app’  sued by main competition REA group (own Realestate.com) – judged ruled it to be
‘advertising puffery’ and did not breach consumer laws

GOOD TASTE IN ADVERTISING-

-What is considered to be in ‘good taste’ is highly subjective

-Marketers should ensure ads are not offensive and in good taste to avoid negative publicity

-Within society, recognition of growing role that mass media is playing in children’s lives  sexualisation of children can result in increased risk of
depression, self-esteem and identity disorders, premature sexual activity

-E.g. BCFing fun ad had 248 complaints due to use of inappropriate language

PRODUCTS THAT MAY DAMAGE HEALTH:

-Marketers have been heavily criticized by consumer and health groups for promoting products that may damage health  particularly junk food given
high obesity rates

-Social networking sites and smartphone apps are used by marketers to digitally advertise junk food to children  much of this is presently unregulated

-Federal government sets restrictions on children’s advertising and no advertising is allowed during programs for pre-school children

-Code of Nutritional Guidelines  does not cover TV shows popular with older children e.g. Home and Away

-Self-Regulatory Advertising Codes  Responsible Children Marketing Initiative – aimed to reduce junk food marketing, only allows fast-food companies
to advertise certain products in children’s TV programs only if they meet specific nutritional requirements

E.g. Gatorade

ENGAGING IN FAIR COMPETITION:

-Competition between businesses to be market leader can be intense

-This can place pressure on marketers to engage in unethical tactics to gain and unfair advantage  tactics may limit or prevent competition

-E.g. Ads should not insult or make false assertions towards their competitors

-Competition and Consumer Act (2010) requires businesses to engage in fair competition

EXAMPLES OF ANTI-COMPETITIVE CONDUCT THAT IS PROHIBITED INCLUDE THE FOLLOWING-

-Cartel conduct  Cartel exists when businesses agree to act together instead of competing against – designed to increase profits of cartel members
while putting other companies out of business e.g. illegal to agree, fix, control or maintain prices

-Anti-competitive agreements Contracts/ arrangements containing provisions that substantially lessen competition in market

-Misuse of market power  Prohibits corporations who have substantial degree of market power from taking advantage of that market power for
purpose of damaging a competitor/ preventing business from entering market

-Exclusive dealing  Occurs when one person/ business trades with another and then imposes restrictions on them e.g. businesses only supply
products on condition that purchaser agrees to buy goods or services from particular third party

-Resale price maintenance  Illegal for suppliers to pressure other businesses to change their recommended retail price or to stop them from selling
goods or services below a specified price

-Mergers  Prohibited if it can be demonstrated that they have the effect of substantially lessening competition in a market
-E.g. Telstra fined $18.5 million from blocking their competition from installing broadband equipment at their telephone exchanges, which they are
legally required to do under carrier license

SUGGING:

-Selling Under the Guise of a Survey

-Sales technique disguised as market research where potential customer is approached and asked to complete survey. At some point consumer is asked
to buy a product

-Not illegal, but raises ethical issues, including invasions of privacy and deception

-1/3 individuals refuse to take telephone, online, personal surveys because of suspicion that survey is a case of sugging  negative consequences for
market research

-E.g. door-to-door electricity surveys

MARKETING CODE OF ETHICS-

-Code of Ethics 2012

-If consumer feels an add breaches code, they can make a complaint to Advertising Standards Bureau (ASB)  ensure Code of Ethics is followed

-Advertising Standards Board and Advertising Claims Board  dispute resolution mechanisms that deals with consumer complaints – national system of
advertising self-regulation  many argue self-regulatory system is ineffective because ASB lacks authority to enforce Code of Ethics – say it should be
regulated by government

ETHICAL CRITICISMS OF MARKETING:

-Critics of marketing argue that industry does not always adopt ethical practices and that is sometimes blurs the line between what is ethically right and
wrong

1. Creation of needs (Materialism)

2. Stereotypical images of males and women
3. Use of sex to sell products
4. Product placement
5. Invasion of privacy

CREATION OF NEEDS (MATERIALSM)-

-Materialism  individuals desire to constantly acquire possessions

-Critics consider many businesses use sophisticated promotional strategies to persuade and manipulate customers to buy their products

STEREOTYPICAL IMAGES OF MALES AND FEMALES

-Tends to be males who use power tools or watch sport with his mates

-Females often portrayed preparing meals, cleaning house, caring for children

-In 2018, ads that play on gender stereotypes will not be permitted by UK’s Advertising Standards Authority  calls for Australia to follow suit

-E.g. Ultratune ad  portrays women as dumb and stupid, an object for men

USE OF SEX TO SELL PRODUCTS-

-Often overuse of sexual themes and connotations to sell products

-Advertisers use sex appeal/ sexual terms and connotations to suggest product will increase attractiveness or charm of user

-Can have subtle and persuasive impacts

-E.g. Ultratune, Sportsbet

PRODUCT PLACEMENT-

-Marketing strategy of advertising in entertainment

-Critics argue that because of its ‘concealed’ nature this type of advertising blurs the line between advertising and entertainment

-Often subtle, allows them to reach advertisement-weary consumers

-E.g. Chevrolet has highest number of product placements in Stranger Things

INVASION OF PRIVACY-

-Recent growth in online advertising raises ethical issues relating to privacy

-Most serious  tracking web users and using this information to target them with advertisements

-Most websites infer consent (consumer agrees to their web searches being tracked unless person opts out by ticking box)  many consumers unaware
data is being collected
-Behavioural data is collected and resold by data exchange companies and then used by businesses for target advertising purposes

-Marketing managers should never forget that businesses exist because of its customers  dishonest/ unethical marketing will drive customers away

IMPORTANCE OF ETHICAL BEHAVIOUR-

Ethical-

-Positive image of business  leads to significant marketing and business opportunities, ethical businesses often enjoy regular publicity in media

-Attracts new customers, increasing market share

-Increase brand loyalty

-Leads to increased sales and profits

-Positive effect on employment relations  productivity, staff absenteeism rates can improve, can attract most talented employees

-Attract more investors

Unethical Behaviours-

-Go against business image

-May lose market share and reduce profit

-Complaints lead to negative publicity

-Less appealing to stakeholders

Importance of Government Regulation-

-Protect consumers

-Protect businesses

-Increase consumer traits in business  good for economy

-Encourage businesses to do the right thing

-Promote competition  more equal playing field

MARKETING PROCESS
SITUATIONAL ANALYSIS:

SWOT ANALYSIS:

-Involves identification and analysis of internal strengths and weaknesses of business, and opportunities in, and threats from external environment

-Changes in external environment can dramatically alter the course of a business  must constantly monitor these changes, looking for opportunities
and avoiding threats
-By analyzing internal forces, management can assess strengths, weaknesses of business

-Gives clear indication of business’s position compared with its competitors

PRODUCT LIFE CYCLE:

INTRODUCTION-

-New product released

Marketing Aims-

 Establishing brand awareness e.g. logo

 Promoting heavily e.g. social media

 Increase market share

 Price decrease – usually low to increase sales (price penetration) except technology  set price high (price skimming) to recap R&D

 Distribution selective – gradually enables consumers to form acceptance of products

GROWTH-

-Brand awareness and acceptance increase

Marketing Aims-

 Sales increase and market share grows

 Promotion is wider (width and depth) e.g. accessories for product

 Place – broader e.g. from selective distribution to intensive distribution

 Product costs decrease so profits increase due to economies of scale

 Quality is maintained and improved

MATURITY-

-Sales plateau, market becomes saturated

Marketing Aims-

 Competition in market increases

 Price decreases to counteract slowing sales e.g. discounts

 Product features become ‘old and outdated’

 Promotion relies on customer loyalty, suggests product is tried and true

 Incentives may need to be offered to encourage preference over rival products – distribution

DECLINE-

-Product has been around for a long time

Marketing Aims-

 Sales decrease so price lowered to sell remaining stock

 Promotion discontinued

 Place – distribution channels are reduced

 Product is maintained with some improvements

WHY DO SOME PRODUCTS DECLINE?-

-Changing public perception of what is fashionable

-New technology replacing old ones (obsolete)

-Fluctuations in level of economic activity  shifts in customer spending habits

-Customers will no longer buy unsustainable products

-E.g. After nearly 16 years on the market, 400million units sold, Apple pulled iPod Nano and Shuffle off shelves (2001, 2017) 

Why?

 Introduction of iPhones that had similar but more effective features

 Rising popularity of other smartphones that offered similar music features

 Rise of music streaming services

SITUATIONAL ANALYSIS-

-Crucial step of marketing plan

-Management must have understanding of business’s current position and clear picture of where it is heading

-Product Life Cycle  different marketing strategies will need to be used at different stages of product life cycle

-Marketing plan must be integrated and ‘mesh’ with business’s operational plan, financial plan and HR plan  departments working towards common
goal

Marketing Plan should be-

-Realistic in light of situational analysis

-Achievable within business’s resources and budgets

MARKET RESEARCH:

-Process of systematically collecting, recording and analyzing information concerning a specific marketing problem
WHY HAVE MARKET RESEARCH?

-Marketing strategies perform best when they are based on accurate, up-to-date, detailed and relevant information

-Being well-informed about all aspects of market, especially buying behaviour of existing and potential customers, places business in stronger position

-E.g. IKEA have developed numerous research methods, where researchers take firsthand look at customer themselves. This gives deeper and better
understanding of how people behave and what they actually want and need. IKEA frequently do home visits and set up cameras in peoples’ homes,
through their research they want to come closer to peoples’ everyday lives and reality  Studies over 8,000 people across cities to observe morning
routine and found many people stressed picking outfits - developed freestanding mirror called Knapper that has rack on back to hang clothes and
jewellery. This helped customers assemble outfits night before to cut down on morning stress.

-One of the main reasons products fail is inadequate market research

-By collecting and assessing, informing about needs and wants of consumers, a more accurate and responsive marketing plan can be designed

-Reduces 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

3 STEPS OF MARKET RESEARCH PROCESS-

1. Determining information needs – what needs to be measured and the issues involved
2. Collecting data from primary and secondary sources – researchers know at this stage factors needed, must now gather missing data 
information can be collected by telephone, personal surveys, private data sources
3. Analysing and interpreting data – facts do not always provide solution to marketing problem  must be analysed and interpreted to determine
what they need

DATA COLLECTION:

-Facts and figures relevant to marketing problem

PRIMARY DATA Facts/ figures collected from original sources for the purpose of the specific research problem e.g. surveys and focus groups

SECONDARY DATA Facts/ figures already collected by some other person or organization e.g. ABS

Types of Primary Data Collection-

-Process more time consuming and expensive

-Main advantage  collection is directed at solving a specific marketing plan

1.Survey Method-

-Gathering data by asking or interviewing people

-Can be personal interviews (face-to-face in public places), focus groups, electronic methods (phone, email), questionnaires

-Main benefit  gathers first-hand information, however becoming more difficult because respondent rates are declining

2.Observation Method-

-Involves recording behaviour of customers, actions systematically processed

-Can raise ethical issues, especially privacy information gathered through personal observation (research poses as customers in store) or electronic
observation (scanner and cash register at store checkout can record data on sales and customers’ purchase patterns)

-Possible for business to access its loyalty program, customer spending habits and customer database through use of smartcards and bar coding

-Highly accurate, however, only explains what happens, not why it happens

3.Experiment Method-

-Involves gathering data by altering factors under tightly controlled conditions to evaluate cause and effect

-Do this to determine if changing one of the factors will alter behaviour of what is being studies

-Experiments carried out in field called ‘test marketing’

Types of Secondary Data Collection-

-Referred to as secondary because it is information that has been collected for some other purpose e.g. Census data

1.Internal Data-

-Information that has already been collected from internal sources  that is, from inside the business e.g. customer feedback, sales and management
reports, research reports

2.External Data-

-Published data from sources outside business

-E.g. Magazines, industry association newsletters, internet sources, private data collection agencies, Australian Bureau of Statistics (ABS)
DATA ANALYSIS AND INTERPRETATION-

-Raw data has little value until analysed and interpreted

-Statistical Interpretation Data is process of focusing on the data that represents average, typical, or deviations from typical patterns

-First step is to tabulate data – spreadsheets, cross tabulate (will allows comparisons to be made between individual categories)

-Involves number of people in interpretation of data to gain wider perspective and avoid error of personal bias

ESTABLISHING MARKET OBJECTIVES:

-Marketing objectives are the realistic and measurable goals to be achieved through marketing plan

-Most important step in marketing plan process  objectives should be aligned to overall business goals, but more customer-orientated than the goals
for entire business

-Concerned with products and market

3 COMMON MARKETING OBJECTIVES-

1. Increase market share

2. Expand product range
3. Maximise customer service

INCREASE MARKET SHARE:

-Refers to business’s share of total industry sales for particular product

-Businesses often develop extensive product range, using many different brand names to gain extra % of market share

-Important marketing objective for businesses that dominate the market, as small market gains often translate into large profits’

-E.g. Priceline Pharmacy has continued to grow their share of Australian Cosmetics market  almost 1 in 4 of Australian women (23.3%) buy cosmetics
from Priceline, up 12.8% 4 yrs ago

EXPANDING PRODUCT RANGE/ MIX:

-Product mix  total range of products offered by business

-Expansion of product mix will increase profits in long term

-Same product mix will be ineffective as customers’ tastes and preferences change over time e.g. sugarless coke

-Must understand customers’ needs to develop ideas of product ranges

-Each item in product line should attempt to satisfy needs of different target markets

-E.g. Beau’s Floral Studio  while floral arrangements are main product, most florists have expanded product mix to include gifts, vases, aromatherapy
oils

MAXIMISING CUSTOMER SERVICE:

-Perhaps most important

-Customer service means responding to needs and problems of customer

-High levels of customer service will result in improved customer satisfaction and positive reaction from customers towards these products they
purchase  established sound customer base with possibility of repeat purchases

-Customers are lifeblood of any business

-To keep existing customers and attract new ones, business needs to talk and listen to customers

-Research has shown that one dissatisfied customer usually tells 11 others, who in turn will tell another 5

-Customer service can no longer be regarded as merely explaining refund policy or providing a complaints department  rather an attitude that should
be adopted by everyone within business

STRATEGIES 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

-Encouraging employees to be customer-orientated rather than sales-orientated

-E.g. Commonwealth Bank named Best Major Bank of the Year in 2013 for having outstanding levels of customer satisfaction
IDENTIFYING TARGET MARKETS:

-Group of present and potential customers to which a business intends to sell its product

-Customers share similar characteristics e.g. age, income, lifestyle, location, spending patterns

-Teenage/ young adult market  marketers want to tap into this highly profitable target market – make up 5% of Australian population but purchase
approx. 25% of all takeaway on food and spend average $1,100 a year on clothes

PRIMARY TARGET MARKET-

-Most of marketing resources are directed, generates most revenue

-80/20 principle  80% sales comes from 20% of a business’s customer base, only a small % of customers usually responsible for majority of sales

SECONDARY TARGET MARKET-

-Smaller and less important market segment  should not be ignored, while customer number may be small, does provide an alternative in case there is
a loss of customers from primary target market

-E.g. Smiggle  Primary – 4-14 yr. olds

 Secondary – Grandparents of young Smiggle fans

Why identify and select a target market?

-So business can direct its marketing strategies to that group of customers  allows business to better satisfy wants and needs of targeted group because
marketing resources are used more efficiently, promotional material is more relevant to customer’s needs, marketing strategies can be refined to
influence consumer choice

3 APPROACHES:

1. Mass market
2. Market segmentation
3. Niche market

MASS MARKETING APPROACH:

-70 yrs ago  large demand for standard product

-Assumes individual customers in target market have similar needs

-Business develops single marketing mix, directs at entire market

-One type of product with little or no variation, one promotional program aimed at everyone, one price, one distribution system used to reach all
customers

-Mass-produced, mass-distribute, mass-promote one product

-E.g. The Model T. Ford

MARKET SEGMENTATION APPROACH:

-Few businesses can sell their products to entire market  too big – divide into distinct markets

-Occurs when total market is subdivided into groups of people who share one or more common characteristics  one becomes target market

-Enables business to design a marketing plan that meets the needs of a relatively uniform group

NICHE MARKETING APPROACH:

-Extension of market segmentation

-Narrowly-selected target market segment

-Needs of customers in those markets often neglected by large businesses because it is rarely profitable for them to alter their marketing mix to cater for
very small groups

-Can avoid direct competition with large stores

-E.g. In 2011 BMW entered relatively young niche in automotive industry  electric car market with launch of i3 – targets relatively young upscale urban
consumers who strongly support sustainable living
DEVELOPING MARKETING STRATEGIES:

-Once business has undertaken situational analysis, conducted market research, established marketing objectives and identified/ selected target market,
next process is to develop marketing strategies to achieve marketing objectives

-Marketing strategies are actions undertaken to achieve business’s marketing objectives through market mix

MARKETING MIX:

-Refers to product, price, promotion, place

-Business has control over 4p’s and uses them to reach its target market

-Additionally, business has control over other business resources  such as information, finance, employees – that may also be used to achieve
marketing objectives

-Once 4p’s established, business must then determine emphasis it will place on each of the variables  largely determined by where product is
positioned or its stage in product life cycle

-E.g. A product that is being marketed with an image of prestige will require a marketing mix totally different from a no-frill, generic item

PRODUCT-
-Tangible

-Quality, design, name, warranty, packaging, features

-Customers will be buy products that satisfy needs and wants, also provide intangible benefits e.g. feeling of security

PRICE-

-Selecting most appropriate price for the market being targeted

PROMOTION-

-Consumer awareness

-Strategies to inform, persuade, and remind customers about a product

-Advertising, personal selling, relationship marketing

PLACE-

-Distribution of product

-Transportation, number of intermediaries

IMPLEMENTATION, MONITORING AND CONTROLLING:

-Marketing plan useless unless implemented

-Once implemented, must be monitored and controlled

Implementation – Process of putting marketing strategies into operations, daily/ weekly/ monthly decisions that have to be made to make sure plan
is effective, how/ where/ when it has to be done

BASIC QUESTIONS NEED TO BE ANSWERED-

-Is plan fully integrated with all other sections of business?

-Have effective lines of communication been established between marketing department and all other departments

-Difficult stage, unforeseen situations may arise

 Monitoring – Checking and observing actual progress of marketing plan – gather information and report on any important changes, problems,
opportunities, information collected during monitoring stage is now used to control plan

 Controlling – Involves comparison of planned performance against actual performance and taking corrective action to make sure objectives are
attained

TO ACHIEVE THIS, MARKETING MANAGER MUST ASK FOLLOWING-

1. What does the business want the marketing plan to achieve; that is, what are the objectives?
2. Are these objectives being achieved?

Establish marketing objectives  monitor performance  evaluate performance  take corrective action

STEPS IN CONTROL PROCESS-

1. Establish key performance indicators (KPI’s)  forecast level of performance against which actual performance can be compared e.g. increase
monthly sales by 5%
2. Compare or evaluate actual performance against KPI  budgets, sales, statistics, cost analysis can be used to evaluate results e.g. marketing
manager could compare each salesperson’s results with her/ his sales quota

-By establishing KPIs and comparing them with actual performance, marketing manager can evaluate effectiveness of marketing plan

DEVELOPING A FINANCIAL FORECAST:

-Business’s predictions about the future

-Measuring sales potential and revenue forecasts for each puts business in best position to allocate marketing resources

-Determine most appropriate course of action using cost-benefit analysis  results are always open to individual interpretation

DEVELOPING A FINANCIAL FORECAST REQURIES 2 STEPS-

1. Cost-estimate  market research, product development, promotion, distribution

2. Revenue estimate  how much consumers are expected to buy and for what price and what sales staff predict they will sell

-Marketing costs easier to forecast than revenue, because these activities are largely controlled by business

-Calculating projected marketing revenue much more difficult because of changes in external environment  business has no control over

COMPARING ACTUAL AND PLANNED RESULTS:

3 KPI’S USED TO MEASURE SUCCESS OF MARKETING PLAN-

1. Sales analysis
2. Market share analysis
3. Marketing profitability analysis

SALES ANALYSIS-

-Use data to evaluate business’s current performance and effectiveness of marketing strategy

% change = actual – quota x 100

sales quota

-Main strength  sales figures relatively inexpensive to collect and process

-Main weakness  data for sales revenue do not reveal exact profit level; such information can only be gleaned from further investigation of total
expenditure

MARKET SHARE ANALYSIS/ RATIOS-

-Able to evaluate its marketing strategies as compared with those of its competitors

-Analysis of business market share

-Can reveal changes in total sales, and whether that has resulted from business marketing strategy or external factor

-E.g. If business total sales revenue declined, but market share remained stable, marketing manager can assume that overall industry sales have fallen,
perhaps downturn in economy

-If sales and market share decline, marketing strategies should be revised

-1% fall could represent millions lost in sales

MARKETING PROFITABILITY ANALYSIS-

-Business breaks down total marketing costs into specific marketing activities, such as advertising, transport, order processing etc.

-By comparing costs of specific marketing activities with results achieved, marketing manager can assess effectiveness of each activity

-Evaluation helps in deciding how best to allocate marketing resources in future

-Shows full picture unlike sales and market share analysis

REVISING THE MARKETING STRATEGY:

-Once results of sales, market share and profitability analysis have been calculated, business is now in position to assess which objectives are being met
and which are not

-Based on information marketing plan can be revised

-Revision of marketing plan equally important as any other step involved in creating successful marketing strategies

MARKETING STRATEGIES CAN BE REVISED BY-

1. Changes in marketing mix

2. New product development
3. Product deletion

Changes in marketing mix-

-Dynamic business environment means marketing mix must be constantly reviewed

CHANGES THAT COULD BE INTRODUCED INCLUDE-

-Product modifications  continually upgrading product will be able to maintain competitive advantage

-Price modifications  prices fluctuate due to variety of reasons, need to be revised in response to changes in external business environment

-Promotion modifications  need to change over time corresponding to life cycle of product – increased promotion when first launches, lowers in other
stages

-Place modifications  as product success increases, distribution channels will need to expand to cater for growing market. New overseas market may be
tapped; old markets may decrease due to demographic changes. Increase of electronic communications opens new distribution channels e.g. internet

New product development-

-If business wants long-term growth, must continually introduce new products

-E.g. If Sony stopped product development at the transistor radio it would probably be out of business

-Many companies e.g. Apple spend large amounts on R&D to stay at the forefront of technology and introduce new products
-E.g. Samsung invested $13billion in 2016 in R&D  highest

Product deletion-

-Business will have to eliminate some lines of product to maintain and effective product mix

-Outdated products may create unfavourable image and negativity may rub off in other products sold by business

-When product in decline stage, has to be deleted or redeveloped

MARKETING STRATEGIES

MARKET SEGMENTATION:

-Aim is to increase sales, market share and profits by better understanding and responding to desires of different target customers

SEGMENTATING CONSUMER MARKETS:

-Segmentation variable  characteristics of individuals or groups that are used by marketing managers to divide and total market into segments

4 VARIABLES-

1. Demographic
2. Geographic
3. Psychographic
4. Behavioural

1.Demographic-

-Dividing total market according to particular features of population e.g. size, age, sex, income

-E.g. Powerade core market is 18-34 yr. olds who are ‘always on the go’

2.Geographic-

-Process of dividing the total market according to geographic locations

-Businesses may divide consumer market into regions because consumers in different geographical locations have different needs, tastes, preferences

-E.g. Consumers in Jindabyne will need heaters and warm clothing, but consumers in Port Macquarie will need coolers and light clothing
3.Psychographic-

-Process of dividing total market according to personality characteristics, motives, opinions, lifestyles

-When segmenting according to these variables, business must research consumer’s brand preferences, radio and TV programs, hobbies

-Psychographic variables focus on why people behave the way they do

-Can be difficult to measure

-E.g. Toyota Corolla owner compared with Porsche owner will respond quite differently about cost of vehicle maintenance, insurance etc.

4.Behavioural-

-Process of dividing total market according to customer’s relationship to product

-Includes customer’s knowledge of, attitude towards, use of

-Important to identify what customers want from product

-By determining benefits desired, marketers can design products that directly satisfy these desires

-E.g. Total market may be divided into users and non-users. Users can then be classified as heavy, moderate, or light. To encourage light and moderate
users to purchase more of its products, a business may have to redesign the product, set special prices and implement special promotion activities

PRODUCT/ SERVICE DIFFERENTIATION AND POSITIONING:

-Occurs when similar products are made to appear different from and/or than those of their competitors

POINTS OF DIFFERENTIATION:

-Changes to packaging, offering top-quality service, greater convenience, better value of money  all factors play part in persuading consumers to
perceive product as superior

-E.G. Jeans with designer labels

4 POINTS OF DIFFERENTIATION-

1. Customer service
2. Environmental concern
3. Convenience
 4. Social and ethical issues

1.Customer service-

-Powerful marketing tool, consumers expect high levels

-Failing to provide excellent customer service will result in lost sales and damage to business reputation

-Also includes presentation of premises, atmosphere, range of products that set business apart

2.Environmental concern-

-People becoming more concerned with ‘quality of life’ issues, especially physical environment

-Sales may increase when business adopts ‘green’ philosophy and product environmentally friendly products

3.Convenience-

-E.g. Many consumers do not have time for meal preparation  manufacturers developed range of convenient food products

4.Social and ethical issues-

-Number of consumers are becoming more ethically minded, will not purchase from businesses that exploit workers, producers, environment

-Ethical consumerism  buying products that are not harmful to environment, animals, society

-E.g. Dislike to Genetically Modified Foods, various producers are labelling products as GM-Free

-E.g. Cosmetic industry delivering more natural products, not tested on animals

PRODUCT/ SERVICE POSITIONING:

-Refers to technique in which marketers try to create an image or identify for a product/ service compared with the image of competing products or
services

-Something done in minds of target market

-E.g. Rolex immediately evokes image of product’s quality  image gives product its position within the market

-Many businesses invest considerable resources in positioning of product/ service

-New product launch  positioning achieved through name, price, packaging, styling
-Many companies strategically reposition themselves  Why?

 Changing market conditions

 Decline in sales

 Desire to focus on new target market

 New competition

-Businesses will decide on image it wishes to create for product/ service and will use other elements of marketing mix to shape and maintain image

PRODUCTS:

-Products are goods or services that can be offered in an exchange for the purpose of satisfying a need or want

-Goods are tangible

-Services are intangible

TANGIBLE AND INTANGIBLE PRODUCTS- TOTAL PRODUCT CONCEPT-

-Most products are combinations of tangible and intangible components e.g. dinner at an expensive restaurant provides tangible elements (food, drink)
and intangible elements (live music, efficient service)

-Consequently when customers purchase products, they buy both the tangible and intangible benefits  a total product concept

-Product  much broader concept than most people understand. Usually refers to what a company producers, however, intangibles that come with these
products are also important. They can be used to differentiate one business’s products from that of its competitor

PRODUCT DIFFERENTIATION-

-Branding

-Product quality, guarantee

-Labelling, packaging

-Design

-Other tangible benefits e.g. prestige

BRANDING:

-Brand is a name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from competition

-Brand name is part of brand that can be spoken  may include letters, numbers, pronounceable symbols

-Brand symbol/ logo is graphic representation that identifies a business or product

-Can be powerful marketing tool because of reputation they carry with them  often spend great deal of time creating and protecting it (trademark)

-E.g. McDonalds aggressively protects brand name which is registered trademark  brought legal proceedings against number of businesses with ‘Mc’
names

-Brand is a financial asset which can generate revenue and profit for the business

BENEFITS OF BRANDING-

Branding helps consumers-

-Identify products they like; without branding, consumer selection is random

-Evaluate quality of products

-Reduced level of perceived risk; respected and trusted brands reassure consumers

-Psychological rewards; purchasing prestige brand etc.

Branding helps businesses-

-Gain repeat sales; consumers recognise business’s products

-Introduce new products; consumers are already familiar with existing products

-Promote their products; promoting one product indirectly promotes that brand and its other items

-Encourage customer loyalty; by satisfying needs, also allowing for higher prices to be charged

-Brand symbol does not have to duplicate words of brand name  clever and subtle method to reinforce meaning of symbol and associate with brand
name

BRANDING STRATEGIES-
-Manufacturer’s Brand or National Brand  owned by manufacturer e.g. Billabong Clothing

-Private or house brand  owned by retailer or wholesaler – often cheaper products e.g. Myers

-Generic brands  products with no brand at all e.g. Coles Smart Buy

PACKAGING:

-Involves development of a container and the graphic design for a product

-To assist sales, packaging is sometimes as important as product itself

-Well-designed packaging will give positive impression of product and encourage first-time customers

FUNCTIONS OF PACKAGING-

-Preserves product

-Protects product from damage or tampering

-Attracts consumers’ attention

-Divides product into convenient units

-Assists with display of product

-Makes transportation and storage easier

-E.g. Red soft-drink means Coca-Cola

-Shape of packaging can be associated with product e.g. Coca-Cola gained trademark protection in U.S 1977, as shape has become so recognizable 
aggressively protects this

LABELLING-

-Presentation of information on a product or its package

Includes information-

-Ingredients

-Use-by-date
-Country of origin

-Nutritional information

-Marketers can use labels to encourage proper use of product and to promote other products

-Labels must be truthful  In Australia, number of laws/ requirements specifying information that must be included – aimed at protecting consumers
from deceptive/misleading claims and unsafe products

-Makes easier to compare products

WHY GOOES AND/ OR SERVICES ARE CENTRAL TO BOTH MARKETING AND OPERATIONS-

-Operations manager must determine how to make product/ provide service and marketing plays key role in determining appearance/ function of
product

-Operations department relies on marketing department to carry out market research so they can produce a product that will satisfy customers’ needs

-Operations also rely on marketing to inform market, distribute products, determine price, persuade people to buy

-Operations is central to any business activity, however, simply producing product will not result in sales

PRICE AND PRICING METHOD:

-Price refers to amount of dollars a customer is prepared to offer in exchange for a product

-Price set too high could result in loss of sales

-Price set too low could give impression that product is ‘cheap and nasty’

-Most influential strategy on impacting consumer choice is price

-By differentiating product, business can have more control over price e.g. Nike sets higher prices than Kmart

PRICING METHODS:

-How price is determined

-Marketing objectives, production costs are starting point for price

-Consider government regulations, location of product on its life cycle, level of economic activity
1.COST-BASED PRICING-

-Total cost of producing + adequate profit margin  mark up (%)

-Cost + additional costs (e.g. interest, insurance etc.) x mark up % = price

-Easy to determine

-Drawbacks  difficulty in accurately determining appropriate mark up

 product is priced after production; associated costs are incurred without taking into account other elements of marketing mix

2.MARKET-BASED PRICING-

-Set by supply and demand

-When demand is greater than supply, there will be shortage in market, therefore higher prices

-When supply is greater than demand, surplus will exist in market, therefore product price will decrease

-E.g. Bananas are cheaper in summer months

-Prices constantly changing in relation to fluctuations

-Difficult to apply  levels of supply and demand constantly changing

3.COMPETITION-BASED PRICING-

-Price covers cost6s and is comparable to competitor’s price

-Often used when there is high degree of competition from businesses producing similar products

Either

-Below competitors  undercutting competition, used as a way of breaking into established market

-Equal to competitors  following price established by price leader, avoid market research on what price consumers are willing to pay, avoids
competition war

-Above competitors  perceive superior, appeal to high status buyers

PRICING STRATEGIES:
- ‘Fine tune’ price after method has been set

DEPENDS ON-

-Marketing objectives

-Life cycle of product

-Market for product

-Level of economic activity

-Pricing strategies will have to be modified depending on changes in external business environment

-Bundle pricing  customers gain ‘package’ of goods and services in addition to tangible good they purchased – common with telecommunications,
modified traditional strategy

1.PRICE SKIMMING-

-Charge highest possible price during introduction stage  recap R&D before competition enters market

-Consumers willing to pay high price for product’s novelty features because of prestige or status that ownership gives

-E.g. 12 weeks after Apple introduced 8GB iPhone, decreased price by $200  received negative backlash from early adopters

2.PRICE PENETRATION-

-Charge lowest possible price to achieve large market share

-Objective to sell large number of products during early stages, thus discourage competitors from entering market

-Main disadvantage  difficult to raise price than lower – business may be locked in low sales revenue until product is modified

-Once customer loyalty is achieved pricing begin to rise

-E.g. $1 coffee a day at 7/11 stores

3.LOSS LEADER-

-Product sold at or below cost price to attract customers into shop, dump excess stock, give impression all prices are low, increase brand awareness

-Psychology behind strategy  once customers in store, they will usually buy other products and spend more than what attracted them to store
-E.g. Gillette sells razors cheap but refills are higher price

4.PRICE POINTS-

-Selling products only at certain predetermined prices

-Used mainly by retailers

-E.g. All watches $19.95

-Store does not apply fixed mark up to products

-Easier for customers to find type of product they need

-Easier for business to encourage consumer to ‘trade-up’ to more expensive model

-E.g. Jeweller sells line of watches at $55, $75 and $95, regardless of how much they cost at wholesale

5.PRESTIGE PRICING-

-Charging high price to give impression of quality, luxury, status

-E.g. Ferrari

PRICE AND QUALITY INTERACTION:

- ‘You get what you pay for”

-Higher price = higher quality  usually due to higher manufacturing costs

-Perceived price-quality relationship helps determine image customers have of products or brands

-Low price, perceived as ‘cheap’

-High price, perceived with status and quality

-Customers willing to pay more for good or service because of perceived benefit that it will last longer and breakdown less

-Lowering prices can damage perception of quality

-Some products less impacted by price-quality interaction than other e.g. staples – bread, milk
-Sometimes price set high to imply quality when in reality quality may not be superior to cheaper alternatives

-High prices items e.g. cars, homes

-High price may lead to reduction of sales if consumers believe high prices reflect expensive packaging or market exploitation  consumer may perceive
little actual difference between quality of high and low-priced item

PROMOTION:

-Methods used by business to inform, persuade and remind a target market about its product

PURPOSE-

-Attract new customers by heightening awareness of product

-Increase brand loyalty by reinforcing image of product

-Encourage new and existing customers to purchase new products

ELEMENTS OF THE PROMOTION MIX:

1. Advertising
2. Personal selling and relationship marketing
3. Sales promotion
4. Publicity and public relations

Note: Promotion is not just advertising

ADVERTISING:

-Paid, non-personal message communicated through a mass medium

-Successful advertising campaign can result in increased sales and profit for business

-Purpose  inform, persuade, remind – has remained constant

-Main advantage  provides business with flexibility to reach an extremely large audience or to focus on a small, distinct target market segment

ADVERTISING MEDIA-
-Many forms of electronic and print communication used to reach an audience

-Business needs to find most cost-effective method

6 Main forms of advertising media-

1.Mass marketing TV, radio, newspaper

2.Direct marketing catalogues catalogues mailed to individual households

3.Telemarketing use of telephones to personally contact consumer

4.E-Marketing use of internet to deliver advertising messages

5.Social media advertising online advertising using social media platforms e.g. Facebook, Instagram

6.Billboards large signs placed at strategic locations e.g. main roads

Types of media chosen is based on-

-Type of product and positioning

-Size of target market and its characteristics

-Business’s marketing budget

-Cost of advertising medium

-Product’s position on the product life cycle

-Business’s often undertake extensive marketing campaign that involves multiple forms in order to create a saturated coverage of a wide target market
e.g. when a movie is released  e-marketing, celebrity publicity, electronic/print ads

PERSONAL SELLING:

-Involves activities of sales consultants directed to a consumer in an attempt to make a sale; it involves human aspect of promotion

-Expensive, however advantages include  message can be modified to suit individual customer’s circumstances

 individualized assistance to a customer can create a long-term relationship resulting in repeat sales

 sales consultant can provide after sales services in relation to product

-Main promotional strategy for those offering expensive, highly individual products

-Success of marketing plan depends on competency of business’s sale force

RELATIONSHIP MARKETING:

-Development of long-term, cost-effective and strong relationships with individual customers

-Aim to create customer loyalty by meeting needs of customers on an individual basis  creating reasons to keep customers coming back

-Loyalty program is a rewards-based program offered by a business to customers who frequently make purchases  introduced in early 1990s with Fly
Buys Loyalty Rewards Program operated by Coles Group

-Loyalty program  schemes offer rewards to those loyal customers who spend specified amounts or make repeat purchases

-Can be competitive advantage

SALES PROMOTION:

-Use of activites or materials as direct inducements to customers

AIM-

-Entice new customers

-Encourage trial purchases of a new product

-Increase sales to existing customers and repeat purchases

-Used primarily to increase effectiveness of other promotion activities, especially advertising

EXAMPLES OF SALES PROMOTION-

-Coupons discounts of a stated amount on particular items e.g. 2 to 1 – best for new or improved products

-Premium  gift that a business offers to customers in return for them using business’s products e.g. restaurants offer cookbooks with purchases of
selected gourmet foods

-Refunds  customers returned full amount of money for product if they provide proof of purchase

-Sample free item or container of a product e.g. Baker’s Delight bread samples
-Point-of-purchase displays  special signs, displays, racks are supplied and installed by the manufacturer in retail outlets. Usually located at end of
aisles in supermarket to gain consumer attention and make more efficient use of floor space

PUBLICITY AND PUBLIC RELATIONS:

-Means of increasing sales, and therefore profits

PUBLICITY-

-Any free news story about a business’s products  differs from advertising – free and not controlled by business

Aim-

-Enhance image of product

-Raise awareness of product

-Highlight business’s favourable features

-Helps reduce any negative image that may have been created

PUBLIC RELATIONS-

-Those activities aimed at creating and maintaining favourable relations between a business and its customers

-PR exposes a business or idea to an audience by using often unpaid third parties as outlets  done by working with media, marking speeches, donations,
give-away sale

-Often more effective than paid-advertising and cheaper

Ways PR can assist a business in achieving its objective of increased sales

1.Promoting a positive image  reinforce favourable attitudes and perceptions of business

2.Effective communication of messages  using advertising, sales promotion, publicity, and personal selling to convey information about business and
products

3.Issues monitoring  protecting sales by providing an early warning of public trends that could affect business’s sales. Remedial action can be taken
before much harm is done to sales

4.Crisis management  protecting a business’s reputation as a result of negative or unfavourable rumours – if left unchecked, might result in loss of sales
THE COMMUNICATION PROCESS:

-Main role of promotion is to communicate efficiently with target market

-If communication process becomes distorted (‘noisy’) this results in miscommunication and possibly lost sales

-Marketing managers must communicate clearly, efficiently, succinctly to target market

-Marketing managers can use variety of channels to deliver a message e.g. print or electronic media  channel – any method used for carrying a message

-Interference or distraction that affects all stages in promotional communication is referred to as noise e.g. faulty printing, inappropriate language, or
people having conversations and fetching refreshments during commercial breaks

-Often customers may be more willing to purchase a product if message is communicated via respected and trusted channel 

1.OPINION LEADER  person who influences others, their opinions are respected and they are often sought out for advice, often used to endorse
products – actors, athletes, models, musicians

-Celebrity endorsement is powerful marketing tool when target audience align themselves with ambassador chosen  can open up a huge following –
often have large social media following

-Business must remember brand and image will be aligned to ambassador; if person’s reputation becomes tarnished, this will affect business reputation

-E.g. Nicole Kidman is brand ambassador for Channel N0.5

2.WORD-OF-MOUTH  occurs when people influence each other during conversations

-Receiver places more trust in someone they know as opposed to business advertising its products  consumers trust word-of-mouth more than
business-sponsored commercials

-Business has no control over this

-Friend’s reccommendations can be powerful influence, especially when there are many competing products

-Increasingly using social media e.g. Facebook, Instagram to engage in form of word-of-mouth communication

Why a mix of promotional strategies is important in marketing of goods and services-

-Use mix to cater to needs of everyone in target market

-Aim of promotion is to attract as many potential customers as possible

-Different elements of promotion mix will appeal to different types of customers  businesses need to use combination

-Different elements of promotion mix may each play a part in influencing same customer in different ways and assist them with decision to purchase a
product

-Components should be coordinated and complement each other to help achieve marketing objectives

-Some aspects more influential, however all play a role in making your decision

PLACE/ DISTRIBUTION:

DISTRIBUTION CHANNELS/ MARKETING CHANNELS:

-Routes taken to get the product from the business to the customer

-Customers know little about role and operation of intermediaries

TRADITIONAL DISTRIBUTION CHANNELS-

1.Producer  customer e.g. most services

2.Producer  retailer  customer e.g. furniture, fruit

3.Producer  wholesaler  retailer  customer e.g. electrical products

4.Producer  agent  wholesaler  retailer  customer e.g. businesses entering global market (Agent distributes products to wholesalers but never
owns the product, paid commission by producer)

-Each step add a % of profit

NON-TRADITIONAL RETAILING CHANNELS-

-Conducted away from the traditional store

-Increasing popularity due to internet

-Inexpensive as no commercial property is required

-Lower costs allow for cheaper products and ‘convenience’ for consumers

-E.g. E-Commerce, telemarketing, door-to-door sales, catalogues, vending machines, party plans
1.E-Commerce  buying and selling of goods/ services via internet

-Consumers who are ‘time poor’ prefer convenience of shopping online

2.M-Commerce  buying and selling of goods/ services through wireless handheld devices e.g. smartphones, tablets

-Electronic post and parcel delivery channels will be used more extensively to meet increasing demand

-As more people use internet for shopping, traditional distribution channels will be modified

CHANNEL CHOICE:

-Channel distribution depends largely on location of business’s market or market coverage

-Market coverage  refers to number of outlets a firm chooses for its product

INTENSITY OF COVERAGE-

1.Intensive distribution  mass marketed products which are available in most locations e.g. milk, lollies, occurs when business wishes to saturate
market with product, ‘saturated market’

2.Selective distribution  only available in a select number of locations e.g. clothing, electrical appliances, consumer is prepared to travel and seek out
a specific retail outlet that stocks a certain brand

3.Exclusive distribution  use of only one retail outlet for a product in a large geographic area, used for expensive/ exclusive products e.g. Ferrari

PHYSICAL DISTRIBUTION ISSUES-

-All those activities concerned with the efficient movement of the products from the producer to the customer

-Movement of products through channels of distribution

FUNCTIONS AND ISSUES-

1.Transport-

-Intricate network of transportation is required to deliver vast array of products

-Method of transportation will depend on type of product

-Plane, ship, car, train  all add costs to consumers

-Truck companies like Toll, Linfox, StarTrack  all specialize in assisting businesses to overcome physical distribution issues

Lead time- amount of time it takes to get a product to consumer. Businesses and consumers want short lead times

Quality of product- care and attention to items. E.g. Development in packaging and transportation now permits Australian native flowers to be picked
and sold in Tokyo within 24 hours

2.Warehousing-

-Set of activities involved in receiving, storing and dispatching goods

-Acts as central organizing point for efficient delivery of products

3.Inventory-

-Stock and having the right quantities at right time is important

-Too much stock  high storage costs, wastes money

-Too little stock  lost sales

-To avoid this, businesses implement inventory management systems e.g. Just-In-Time

-Goal of inventory is to find correct balance between these two situations

PEOPLE, PROCESSES AND PHYSICAL EVIDENCE:

-As service sector expanded, traditional approach to marketing was viewed as somewhat outdated

-3P’s added  apply to especially intangible products (services) e.g. tourism, entertainment, hospitality

-Extending marketing mix by adding 3P’S to usual 4P’s connects marketing function much closer to both human resource management and operations,
thus illustrating the interdependence between these two functions

PEOPLE:

-Businesses must use appropriately recruited, qualified and trained employees

-People element refers to quality of interaction between customer and those within business who will deliver service

-Consumers make their judgement about a business based on how a business employee treats them
-How staff interact with customers in all business facets is critical in ensuring profit maximization

-Interdependent with HR

-Critical how staff speak to customers, deal with enquiries, handle complaints

-Interaction between employees and customers can determine success of any marketing campaign

-Takes approx. 15 seconds for a customer to make a judgement about a business

-E.g. Amazon customer obsession

PROCESSES:

-Flow of activities that a business will follow in delivery of a service

-Processes/ procedures need to be customer friendly

-Inefficient processes will result in loss of customers and damage its reputation e.g. pizza delivery business must not deliver cold pizza

-Without a tangible product, processes must be highly efficient to achieve customer satisfaction

-E.g. Amazon one day delivery

-Convenient methods of payment e.g. Afterpay provide an efficient process to assist in marketing strategy

-Interdependent with operations

PHYSICAL EVIDENCE:

-Refers to environment and location where the service will be delivered

-Also includes materials to carry out service e.g. signage, brochures, business cards, logos

-Unlike tangible goods, it is difficult to provide customers with a ‘try before you buy’ sample unless a free trial is offered

-Customers initially buy services based on trust and then they make a judgement about business based on physical evidence

-Business should provide high-quality physical evidence to create an image of value and excellence e.g. NGS brochures, Facebook page, gardens,
playgrounds etc.
E-MARKETING:

-The practice of using the internet to perform marketing activities

-Technology has driven the push to market products to customers worldwide

-Businesses have access to global market  opportunity

-E.g. Woolworths app  push notifications reminding to bring bags, SMS to increase brand loyalty and recognition

-Many businesses in Australia have been slow to adopt e-marketing (weakness)  big risk as many Australians seek the convenience of online shopping
and will purchase from overseas e-tailer and completely bypass local businesses

-Technology provides faster, more efficient way of doing business, effective way of attracting new customers

-Australia is now world’s third biggest per capital online consuming nation

-Over half of Australia’s SME’s are not using e-marketing and businesses in general have been slow to adopt platform

-Important businesses tailor their online content for tablets and smartphones  67% of mobile internet users state they are put off if a business doesn’t
have a mobile website, it is crucial that companies ensure their sites and content will load properly or they may exclude a large segment of the market

E-MARKETING TECHNOLOGIES:

WEB PAGES-

-Conveys information in the form of a combination of text, graphics, animation and video

-Well-designed home page is a powerful marketing tool

-E.g. Dominos allows customers to order online and have delivered or picked up

PODCASTS-

-Involves distribution of digital audio or video files over the internet

-Main use is for marketing and advertising purposes

-Many independent podcasters sell advertising time in the same way as commercial radio stations

-If particular podcast is aimed at same audience as target customers of business, podcast advertising can be effective way of reaching those customers e.g.
sporting goods store may advertise through a podcaster aiming at triathletes
SMS-

-Advantage over email in that messages are delivered automatically to one or more recipients without the need for them to dial in or log on

-Can be used to alert regular customers of any special deals on offer

-E.g. Optus sends out messages about new mobile plans

BLOGS-

-Online diary or journal

-Allows for communication between business and its existing and potential customers  used to announce new products or changes in trading hours,
gather feedback

-As a public relations exercise, an external blog can have the following advantages for a business-

 New ideas for products and services can be put to public to gain comment and feedback

 Allows business owner and employees to establish a reputation for expertise, by providing detailed information on products and services

 Blog by its nature is informal so it can present a human face to the public and built trust with customers

-E.g. Life Moments Westpac

-Relationship marketing

WEB 2.0-

-Refers to transformation of world wide web into a more creative and interactive platform for information sharing, rather than just a means of retrieving
information

-Development of social networking sites e.g. Twitter, Facebook, video sharing sites (YouTube)  made it easier for businesses to create and share many
different types of content on the web

-Networking sites can be powerful public relations tool  low cost

LOCATION-BASED MARKETING-

-Ability for mobile devices to track and report a person’s location has enabled businesses to tailor marketing messages based on a person’s location

-Allows for businesses to adapt and deliver targeted marketing messages to customers based on where they are located through mobile devices
-By knowing where consumers are, brands are able to tap into daily habits and encourage consumers with relevant offers and messages based on their
location

-E.g. Woolworths app  when you drive past a shop it reminds you to get bags

APPS-

-Powerful marketing tool

-E.g. Dominos, Woolworths, Subway

SOCIAL MARKETING ADVERTISING (SMA):

-Form of online marketing, using social media platforms e.g. Facebook, YouTube, Twitter to deliver targeted commercial messages to potential customers

-SMA enables businesses to constantly build relationships with their customers

-Businesses becoming increasingly aware that SMA can have positive results, especially when used in combination with tradition advertising methods

-Marketers have realized they must go to where the customers are to be found e.g. Facebook has over 2 billion monthly users

-SMA will expand rapidly over next two years as new, highly interactive mobile platforms and networks increasingly gain consumer acceptance

ADVANTAGES-

-Inexpensive in comparison to tradition advertising methods

-Easy to use and monitor

-Immediate and fast

-Effective method to gain exposure

-Possible for marketers to accurately measure the reach (number of people exposed to message) and frequency (average number of times someone is
exposed) of SMA

DISADVANTAGES-

-Marketers do not have complete control over what consumers write about business

-Users have freedom to discuss, review, criticize and even ridicule a product or specific business
-Rapid advances in technology, SMA more engaging and inclusive  online customers are not simply being targeted for advertising; in many cases they
are contributors in creation and distribution of advertising

-Raises concerns about privacy, accuracy, honesty consumer trust

-Number of legal issues evolving e.g. establishing age limits  Facebooks prohibits use by children under 13

-Google makes $72 billion in digital advertising market

GLOBAL MARKETING:

-Business marketing plan must be modified and adopted to suit overseas’ markets

-Within each overseas market it will face a different marketing environment and target market to the domestic market

HOW GLOBALISATION HAS AFFECTED MARKETING MANAGEMENT-

-TNC’s need to expand to show growth

-Growth is essential to increase profitability, achieving economics of scale increase share price

-Some TNC’s standardize  as if entire globe was one market; others customize  take into account different religions, cultures, tastes

-Degree of uncertainty and increased risk in developing global marketing strategies

-Businesses must rely on market research to understand complexities of global marketing environment before they can design marketing mix

-Essential to analyze overseas market to even greater depth than necessary for domestic market

-Many fail due to inadequate market intelligence data

Before engaging in global market, businesses must know-

1.Price to charge

2.Type of packaging

3.Distribution channel e.g. ship or plane

4.Any products need modifying?

5.Information about countries political, social and cultural features

GLOBAL BRANDING-

-Worldwide use of one name, term, logo and symbol to identify the seller’s products

REASONS FOR-

-Can be cost effective as one advertisement can be used in multiple locations – promotional costs reduced

-Provides a uniform worldwide image/ recognition (easily identifiable) which does not diminish regardless of language barrier

-Economies of scale are achieved by a global business. This means that the larger the scale of production, the lower the average cost per item produced

-It provides a consistent, reliable, and safe product  important when people travel overseas – people like security

-E.g. McDonalds products are available in 119 countries  all countries have golden arches logo, 88% of people could identify the logo in a recent survey
across countries

-Ford changes steering wheel side for different countries but does not alter brand name

STANDARDISED VS. CUSTOMISED MARKETING STRATEGY:

-To ascertain what global consumers desire, market research methods must be undertaken before product launch

STANDARDISATION-

-Strategy that maintains consistency with products across the globe where one marketing mix is utilized

-E.g. Coke, KFC, Channel perfumes

- ‘One marketing plan fits all’ approach

-Allows for one production method and similar promotion which allows for economies of scale

-As global consumers become more westernized and have similar tastes, standardization is becoming more common

-E.g. mobile phones, soft drinks, movies

-E.g. Despite varying menu around world, McDonalds Big Mac is available in every restaurant with an identical recipe worldwide

-R&D costs are reduced

-Evaluation and modification of plan is much simpler task

-Assumes the way the product is used and the need it satisfies is the same all over the world

CUSTOMISATION-

-Certain products require modification to marketing mix

-Assumes the way the product is used and the need it satisfies is different between countries

-Customised approach is strategy to change marketing mix to suit differing needs and wants, incomes (price), tastes (product), religion (promotion)

-Require marketing plan to be modified according to economic, political, and sociocultural (place) characteristics of target country

-Business can adopt combination of both

-E.g. McDonalds has been successful through standardization of its name, logo, menu, production method, however local variation  will adjust menu to
meet religious, cultural, legal or social differences e.g. Sake in Japan, rice in Indonesia, noodles in Philippines

-Standardisation approach used more frequently than customization approach

GLOBAL PRICING:

-One major challenge facing TNC’s is global pricing  how to determine their pricing method in various countries

THINGS THAT NEED TO BE CONSIDERED-

-Competition, cost of living, disposable income, exchange rates, tariffs, quotas, taxes etc.

-Business global pricing strategy is a major determinant of profits

3 STRATEGIES-

1.Customised pricing-

-Different prices are charged in different countries

-Often cost-plus-margin or market pricing is utilised

-Cost-plus method used to cover added costs of exportation  transport, taxes, warehousing, tariffs – most common method due to added expense
associated with exporting

2.Market-customised pricing-
-When local market conditions are used to determine level of pricing in each country

-E.g. Exchange rate fluctuations can change prices across countries and is a major risk for global business

-To avoid competition from a domestic business, the global business may need to adopt market-customised strategy that allows marketers to vary price
depending on level of demand and competition within the overseas market

-E.g. In competitive market, price charged may have to be lower than in market where the business has a monopoly

3.Standardised pricing-

-Charging customers the same price for a product anywhere in the world

-This can be difficult as exchange rates change and cost of living varies in different markets

-Also may make the product susceptible to cheaper competition

2 Major risks  domestic business may undercut standardized price

 exchange rate changes may negatively impact on exported price

-Only succeed if foreign marketing costs remain low enough to not affect overall costs

COMPETITIVE POSITIONING:

-Relates to how a business will differentiate its products

-Focuses on how a product differentiates itself and establishes strong brand loyalty in different global market

-As each market is different and volume of competitors varies, the competitive positioning may have to vary but this can be assisted by global branding
and customization

-Business should strive to develop product leadership, positive customer relationships and operational excellence

-Ultimately, to develop and maintain competitive position in an increasingly challenging environment, business must gain a deep understanding of the
dynamic environment in which they operate, and form their strategies according to evolving conditions

-Without differentiation it takes more time, money and effort to encourage potential customers to purchase business’s products

-Business must show that its products are better than competitors