MARKETING
Chapter 9: HSC course
(25% of course time)
Expected Outcomes
On completion of this topic students should be able to:
understand the role of marketing in business
describe the steps in successfully marketing a product (a good or service)
devise a marketing plan
critically assess the implementation and management of a marketing plan.
Terminology
Product orientations, profitability, situational analysis, technology, gross profit, pre-tax
profit, distribution, customer base, contribution, agencies/dealers, representatives,
samples, product liabilities, market research, niche market.
Possible Approaches
Use case studies of specific marketing plans.
Illustrate the process of marketing through a market research project.
Contact Young Achievement Australia to link with their products/projects.
Invite the marketing manager of a company to discuss their latest strategies.
Devise a specific marketing plan for the school or a product of the school, such as a magazine, a concert, an art/craft show, or a quiz night.
Visit a shopping centre to investigate the range of marketing techniques used for a variety of products.
Undertake a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of your school.
Area of Study
1. The marketing concept
Overview of the business plan.
Role of marketing in achieving business goals.
Approaches to marketing.
Goals of marketing.
2. Managing the marketing process
Organising the planning process.
Analysing market opportunities.
Selecting target markets.
Developing the marketing mix.
Managing the marketing effort.
3. Developing a marketing plan
(a) Organising the planning process
Reviewing the business situation:
- mission, goals and objectives.
Establishing marketing objectives:
- increase market share, product range, geographical representation, expansion through export, maximising customer service.
Developing strategies to achieve objectives:
- increase market share, geographic expansion, market penetration, price advantages.
(b) Analysing market opportunities
External influences:
- general economic conditions, government policy and regulations, overseas influences, demographic patterns, technological change, changing consumer attitudes and values, competitors and alternative marketing methods.
Internal influences:
- use of SWOT analyses, including analysis of business resources, staff, assets, market share, product characteristics, competition, advertising, pricing, financial capacity, innovative potential.
(c) Selecting target market
Market segmentation:
- mass markets
- concentrated markets
- differentiated markets
- niche markets.
Physical basis for segmenting the market:
- size, share, location, industry, demographic features.
Behavioural basis for segmenting the market.
(d) Developing the marketing mix
Elements of the marketing mix:
- product, including brand name, packaging, positioning, warranties
- price, including list price, discounts, credit terms, payment period
- promotion, including advertising, sales promotion, publicity
- place, including location of markets, warehousing, distribution, transport, inventory.
Determining the emphasis within the marketing mix.
Impact of product life cycle on the marketing mix:
- idea generation, screening, financial analysis, product development, test marketing.
(e) Analysing costs and benefits
Developing a financial forecast:
- projected costs and revenues
- expenditure breakdown, including research costs, promotion, advertising and packaging, distribution and warranties.
- revenue breakdown by market territories, company division and representatives.
4. Managing the marketing plan
Monitoring the marketing plan:
- sales and market
- market share analysis, ratios, profitability by product/territory.
Modifications to the marketing plan:
- change in marketing mix, new product development, product deletion, allocation of human resources.
5. Marketing Case Studies
The development of a marketing plan in a business.
The management of the marketing process in a business.
SUMMARY
THE MARKETING CONCEPT
Definition:
Marketing involves any activities relating to the conception, development, pricing, promotion and distribution of a product or service to create exchanges which satisfy both the consumer and business.
Marketing is more than just selling - it identifies customer wants and then produces to satisfy those wants.
Review of the Business Plan
The business plan sets out where the business is going and how it should get there.
A business plan is a written expression of your intentions for the developments of your business in the next 3 - 5 years. It sets a direction for the business to follow by defining business objectives and the strategies to adopt and achieve them.
Business Plan:
The business plan includes:
It is wise to implement the marketing side first as marketing is the basis for all other activities in the business.
The Benefits of Planning
ROLE OF MARKETING
The role of marketing is to bring the buyer and seller together.
This is done through the development of a marketing plan which identifies strategies to allow the sale to take place. This should identify:
Marketing has two main goals:
APPROACHES TO MARKETING
Marketing Concept (Def.) - A market oriented philosophy which states that the whole business is oriented towards satisfying the customer.
For marketing to be successful it must be supported by:
Business orientation
There are two main types of business orientations:
Market orientation: Organisation focuses on CUSTOMER needs and wants.
Product Orientation: Company focuses on developing a PRODUCT and hopes customers will buy it.
MANAGING THE MARKETING PROCESS
ORGANISING THE MARKET PLANNING PROCESS
Analysis
External Business environment
Before the planning process can begin the marketing manager must have a good understanding of the external factors affecting the business, as well as those which could affect the business in the future. There are a number of wide ranging forces which affect the business:
Developing goals
Once the firms position has been reviewed it is now in a position to establish marketing objectives. For example: increase market share by 5%.
Through changes to the marketing mix, the business can devise a strategy that will achieve the marketing objectives of:
Market share is the percentage of total sales held by a particular firm.
Product range is the full list of products sold by a firm.
Product Width is the number of different product lines carried by a business.
Product depth is the variety of models held within each product line.
Geographical representation is the number of outlets that a firms product is sold in.
Marketing Strategies
Developing marketing strategies to meet marketing goals.
The main four marketing strategies to achieve objectives are:
There are a number of ways to increase market share:
Involves gaining a bigger customer base. There are two main strategies to achieve geographic expansion:
Strategies to Sell more products to existing customers. Strategies for market penetration include:
Market penetration strategies are most effective in rapidly growing markets with low levels of competition.
There are a number of pricing strategies available to businesses:
ANALYSING MARKET OPPORTUNITIES
Clear understanding of both:
External Influences
The following external influences should be considered:
Internal Influences
SELECTING TARGET MARKET (SEGMENTING)
SEGMENTATION
Markets are segmented into groups of people with similar needs so the business can develop an appropriate marketing mix for each segment. Markets may be segmented according to:
Mass market: Market with a large volume of sales.
DEVELOPING THE MARKETING MIX
MANAGING THE MARKETING EFFORT
Marketing management is the process of monitoring and modifying the marketing plan.
Remember product/profit life cycle.
DEVELOPING A MARKETING PLAN
Situation
Goal
Strategies
A marketing plan outlines what marketing actions need to be taken.
A successful marketing plan is integrated with all other aspects of the business
Includes:
Through changes to the marketing mix, the business can devise a strategy that will achieve the marketing objectives of:
SUMMARY: Marketing plan so far
So far in developing the marketing plan we have:
The next step is to critically examine the environment in which the business operates. This consists of the internal and external environment.
EXTERNAL INFLUENCES
General Economic conditions
Government policy and regulations
Overseas influences
Demographic patterns
Demographics are population characteristics. When constructing a marketing plan it is important to understand current and future customers. Examination of demographic patterns will provide a clearer picture of a firms future customers.
Trends in demographics
Technological change
Changing customer attitudes and values
Concern for Environment
Health conscious customers
Convenience
Activities of competitors
Alternative marketing methods
INTERNAL INFLUENCES
Business has control over the influences within the business
Analysis of Business resources
Staff
Assets
Analysis of Market share
Analysis of Product characteristics
Analysis of Advertising
Analysis of Price
SELECTING TARGET MARKETS - MARKET SEGMENTATION
Marketing plan
Consists of:
This is used to select a market segment which the business will target.
The total market can be segmented into
Primary Target Market - primary segment at which most marketing resources are directed.
Secondary target market - a small, less important segment to which products are sold.
How markets are segmented:
Seeks a large range of customers. eg. basic food items, gas, electricity.
eg. BMW.
Analyse customer base more closely.
Design strategies to satisfy this groups needs.
Dangers of Niche marketing
Between mass and concentrated markets approach is the multi-segment approach.
Involves directing its marketing efforts at two or more segments
Basis for segmenting the market:
Physical Basis for segmenting the market
Breaking the market down according to physical characteristics.
Behavioral basis for segmenting the market
DEVELOPING THE MARKETING MIX
4 P's
PRODUCT:
A combination of good, service or idea.
Eg. good: CD.
Eg. idea: advertising campaign, logo.
Eg. service: massage, haircut.
Total Product Concept, which includes:
Product refers to both the tangible (physical characteristics) and intangible aspects (perceived value).
It is more often than not the intangible benefits that sell a product.
Consumer goods
There are 3 types of consumer goods:
PRICE:
In marketing terms price = product value
The price of a good or service may depend on:
The goal of the business is to chose a correct price - a balance.
A business must decide what it wants to achieve through pricing - its pricing policy.
Some examples of pricing objectives are:
Discounts
Pricing Methods
Pricing Objectives -> Pricing methods -> Pricing Strategy -> Price
Pricing Strategies
Skimming: high initial price of product.
Penetration: low price to gain market share quickly.
Cost based pricing: firms adds up costs then sets markup.
Demand based or perceived value: what people are willing to pay.
Psychological pricing: focuses on consumers perception of price, eg $2.99 rather than $3.00. Stressing price reduction, eg was $30, now $21.
PROMOTION:
Promotion involves communication about the product or service.
It is the methods used by a business to inform, persuade and remind a target market about its products.
To achieve these objectives a promotion campaign attempts to:
Advertising is just one of 4 elements of the promotion mix:
DISTRIBUTION (PLACE)
How to get it to customers. Routes taken to get the product from factory to customer.
Includes:
Factors of Location
Why a particular business has chosen to locate in this particular place.
DETERMINING THE EMPHASIS WITHIN THE MARKETING MIX
A marketer must decide on the appropriate market mix, that is, the emphasis placed on each of the four marketing elements.
IMPACT OF THE PRODUCT LIFE CYCLE ON THE MARKETING MIX
Diagram
The stage of the product in the product life cycle will affect the marketing mix.
Low sales
Increasing sales
Max sales, beginning to decline
Declining sales
Second chance, sales beginning to increase
Before a product even gets to the introductory stage, it needs to go through a number of preliminary stages. These are idea generation, screening, financial analysis, product development and test marketing.
The length of the product life cycle can range from a few weeks (fads) to many years (cars).
Life cycles are getting shorted due to technological change.
COST BENEFIT ANALYSIS
Weighing up Expected sales vs. Total expenditure
Developing a Financial Forecast
When evaluating alternative marketing strategies, a business will need to develop a financial forecast which details costs and revenues for each marketing strategy.
By measuring sales potential and benefits for each strategy and comparing these with anticipated expenditure a business is in the best position to decide how to allocate its marketing resources.
Projected Cost and Revenues
A marketing plan should contain the following projected revenues and costs so that forecast performance can be compared with actual outcomes:
_
MANAGING THE MARKETING PLAN
Marketing management is the process or Planning, Leading, Organising and Controlling the market strategies.
The management of the marketing plan can be divided up into two main functions:
Monitoring and Controlling the marketing plan
Comparing planned performance standards with actual performance.
Modifications to the marketing plan
Changes to the Marketing mix:
External Influences - Government policy and Regulations.
Exam Practise
Write in Report Style
EXECUTIVE SUMMARY
Internal and external factors:
Market opportunities
Business resources
market share
product characteristics
competition
pricing
innovative potential
relationship marketing - repeat custom.