Marketing

Marketing is about a quarter of the HSC course and can be examined in every section. The syllabus focus is the main elements involved in developing and implementing successful marketing strategies.

• Role of marketing: its strategic role, interdependence with other key business functions, the production, selling and marketing approaches, and types of markets.
• Influences on marketing: factors influencing customer choice, consumer laws, and ethical issues.
• The marketing process: situational analysis, market research, establishing objectives, identifying target markets, developing strategies, and implementation, monitoring and controlling.
• Marketing strategies: segmentation, differentiation and positioning; the marketing mix (product, price, promotion, place, plus people, processes and physical evidence); e-marketing; global marketing.

Marketing is the set of activities that identify customers' needs and satisfy them profitably: research, product development, pricing, promotion and distribution. Its strategic role is to create, keep and grow a customer base, giving the business a competitive advantage.

Interdependence

• Operations makes what marketing promises, in the right quantity, quality and time.
• Finance funds marketing campaigns and uses sales forecasts to plan cash flow.
• Human resources recruits and trains salespeople and customer service staff.

Approaches to marketing

Modern businesses use the marketing approach, often with relationship marketing: building long-term loyalty rather than chasing single sales.

Types of markets

• Resource markets: factors of production (land, labour, raw materials).
• Industrial markets: goods bought to make other goods (steel for a car maker).
• Intermediate markets: wholesalers and retailers buying goods to resell unchanged.
• Consumer markets: goods and services bought by households for their own use.
• Mass markets serve many customers with a standard product; niche markets serve a small, specialised segment.

Factors influencing customer choice

• Psychological: factors inside the person: perception, motivation, personality, attitudes and beliefs, learning.
• Sociocultural: other people: family, reference groups (friends, influencers), culture and subculture, social class.
• Economic: the state of the economy and the buyer's finances: boom or recession, income, interest rates, confidence.
• Government: laws, taxes and regulations, such as product safety rules or a tax on certain products.

Consumer laws

The main law is the Australian Consumer Law (ACL), Schedule 2 of the Competition and Consumer Act 2010, enforced by the ACCC and state agencies such as NSW Fair Trading.

• Misleading or deceptive conduct: a business must not mislead customers, including through false 'was/now' prices, fine print that contradicts the headline, or false claims about origin ('Made in Australia'), quality or environmental benefits. Bait advertising (advertising a bargain the business doesn't have enough stock to supply) is also banned.
• Consumer guarantees: goods must be of acceptable quality, fit for purpose and match their description; services must be provided with due care and skill. These replaced the older 'implied conditions' and apply automatically, so 'no refunds' signs for faulty goods are illegal.
• Warranties: a business may offer an express warranty or sell an extended warranty, but these sit on top of the consumer guarantees and cannot take them away.
• Price discrimination (charging different customers different prices for the same product) is in the syllabus, so know what it is. The specific ban on it (s 49 of the Trade Practices Act) was repealed in 1995; today it is unlawful only where it breaches other provisions, such as misuse of market power or misleading conduct. If you use it in an answer, say this.

Penalties are large: since November 2022 the maximum for a company is the greater of $50 million, three times the benefit obtained, or 30% of adjusted turnover during the breach period. Since November 2023, unfair terms in standard-form consumer and small-business contracts are illegal and can be penalised.

Ethical issues

Ethics means doing what is morally right, which can go beyond the law:

• Truth, accuracy and good taste in advertising: no exaggerated claims or offensive content.
• Products that may damage health: marketing of alcohol, gambling, junk food or vapes, especially to young people.
• Engaging in fair competition: not misusing market power or misleading customers about rivals.
• Sugging: 'selling under the guise of research', where a sales pitch is disguised as a survey.

A newer issue is greenwashing: overstating environmental claims. The ACCC has made it an enforcement priority and has taken companies to court over it.

1. Situational analysis: where are we now? Use a SWOT analysis (internal strengths and weaknesses; external opportunities and threats) and the product life cycle: introduction (low sales, high promotion), growth (rapidly rising sales, competitors arrive), maturity (sales peak and level off, intense competition) and decline (falling sales).
2. Market research: the systematic collection, recording and analysis of information. Steps: determine what information is needed, collect data (primary data is first-hand, such as surveys, focus groups and observation; secondary data already exists, such as ABS statistics and industry reports), then analyse and interpret it.
3. Establishing market objectives: specific and measurable, such as 'increase market share from 8% to 11% in two years'.
4. Identifying target markets: the group of customers the business will aim at.
5. Developing marketing strategies: the marketing mix.
6. Implementation, monitoring and controlling: putting the plan into action, then developing a financial forecast, comparing actual and planned results and revising the marketing strategy when needed.

Segmentation, differentiation and positioning

Market segmentation divides a market into groups with similar needs:

• Demographic: age, gender, income, family size, occupation.
• Geographic: location, climate, urban or rural.
• Psychographic: lifestyle, values, personality, interests.
• Behavioural: usage rate, loyalty, occasion, benefits sought.

Product differentiation makes a product stand out from rivals. Positioning is the place the product occupies in customers' minds relative to competitors, often shown on a positioning map (for example price against quality).

Product

A product is a bundle of benefits (goods and/or services). Key decisions: features and quality, branding (names and symbols that identify the product and build loyalty) and packaging (protection, information, promotion and convenience).

Price

Pricing methods:

• Cost-based: cost plus a percentage markup.
• Market-based: based on what customers are willing to pay.
• Competition-based: set in relation to competitors' prices.

Worked example. A florist buys a bouquet for $24 and uses a 40% markup. Markup $=0.40\times 24=\$9.60$ so the price is $\$24+\$9.60=\$33.60$ A 40% _margin_ on the selling price would instead give $24÷0.60=\$40$ Markup is calculated on cost; margin on price.

Pricing strategies:

• Skimming: a high initial price for an innovative product, lowered over time.
• Penetration: a low initial price to gain market share quickly, raised later.
• Loss leaders: a product sold below cost to attract customers who then buy other items.
• Price points: set prices for different quality levels in a range (good, better, best).

Price and quality interaction: customers often treat a higher price as a sign of higher quality, so a premium brand may hurt its image by cutting prices.

Promotion

The promotion mix:

• Advertising: paid, non-personal communication (TV, radio, print, outdoor, online and social media).
• Personal selling and relationship marketing: one-to-one communication and building long-term loyalty (loyalty programs, personalised service).
• Sales promotions: short-term incentives (discounts, samples, competitions, bonus packs).
• Publicity and public relations: publicity is free media coverage; PR is the planned management of the business's image (sponsorship, community events, media releases).

The communication process: opinion leaders (respected people whose views influence others, including social media influencers) and word of mouth (customers telling each other), which customers often trust more than advertising.

Place (distribution)

• Distribution channels: direct (producer to consumer) or through intermediaries (wholesalers, retailers, agents).
• Channel choice: intensive (as many outlets as possible, such as soft drinks), selective (a limited number of suitable outlets, such as appliances) or exclusive (one outlet per area, such as luxury goods).
• Physical distribution issues: transport, warehousing and inventory.

People, processes and physical evidence

For services the mix extends to seven Ps. People: the staff who deliver the service. Processes: the systems and procedures used (booking, payment, complaint handling). Physical evidence: the tangible cues customers use to judge an intangible service (premises, uniforms, website design).

E-marketing

Marketing through digital channels: websites, search engine marketing, social media, email and apps. It allows precise targeting and measurement and two-way communication, but customers can compare prices instantly and negative reviews spread fast. Businesses must also follow privacy law and spam rules.

Global marketing

• Global branding: one brand name and image used worldwide.
• Standardisation: the same marketing mix in every country. Lower costs and a consistent image, but may not suit local tastes, cultures or laws.
• Customisation: adapting the mix to each market. Better fit, higher costs. Most businesses combine the two.
• Global pricing: prices must account for exchange rates, local incomes, competition and costs of distribution and tariffs.
• Competitive positioning: deciding how to position the product against local and global competitors in each market.

• Confusing intermediate and industrial markets, or psychographic and behavioural segmentation.
• Calling an internal factor an opportunity in a SWOT analysis.
• Mixing up markup and margin.
• Describing price discrimination as if the 1995-repealed ban still applied, or using 'implied conditions' instead of consumer guarantees.
• Listing all the Ps without linking them to a target market and objective.

• Short answers often give a stimulus (a business launching a product). Apply every point to that business.
• For the business report, follow the marketing process as a structure: situational analysis (with numbers from the case), objectives, target market, marketing mix, monitoring and control.
• For an extended response on marketing, use a real business case study and date any legal example (for example a specific ACCC case and year).
• _Evaluate_ questions on ethics or law need a judgement, such as whether the benefits of ethical marketing outweigh its costs.

• Operations: product design and quality, warranties, delivery dependability.
• Finance: marketing budgets, sales forecasts, pricing and profitability, global pricing and exchange rates.
• Human resources: training salespeople and service staff; the people element of the extended mix.