business aos2 u2

marketing

marketing

a total system of interacting activities designed to plan, price, promote and distribute products to customers.

customer base

the group of customers who repeatedly purchase the products of a business and are its main source of revenue

establishing customer base - pros and cons

• PROS:

→ business can ensure that it is likely to be of value to customers - target customers return for repeated purchases

→sig. no. of customers develop loyalty to business

→higher sales and improved market share

• CONS:

→ can be expensive - EG expenses related to necessary market research, marketing mix etc.

→ time consuming - logistics required EG determining internal + external factors, marketing strategies etc.

evaluating the effectiveness of marketing strategies

• establish marketing plan - what is to be achieved?

• monitor performance - what is happening?

• evaluate performance - good/bad? why?

• take corrective action - what can be done?

market research

the collection and study of statistics and other relevant data

• WHY? helps reduce risk

market research process

1. determine info need - identify what exactly it wants to measure/find out about target market/customer base

2. collecting tools and techniques - primary or secondary data

3. analysis and interpretation - determine what the results mean

primary & secondary data

• primary data: collected by the business to answer their specific questions. 3 methods -

→survey: gathering info by speaking to people through; interviews, focus groups, questionnaires, electronic methods etc

→experimentation: gathering data by altering factors under controlled conditions to evaluate cause & effects. (test marketing)

→observation: the recording of customer’s behaviour; can be mechanical (cameras, video, voice recorders etc or personal (eg researcher poses as customer)

• secondary data: data that someone else has already collected. 2 methods -

→internal data: info that internal sources (inside business) have already collected. (EG customer feedback, financial statistics, research reports etc)

→external data: published data from sources outside of the business.(EG reports by the Aus Bureau Statistics (ABS))

brand identity

the message that customers receive about the business & its products (EG name, symbol, slogan, colour etc)

environments RECAP

• internal: within the business, business has full control over.

→ owners/managers

→employees *need to understand marketing strategy

• operating (external): outside of the business, affect an industry, some-little control over.

→customers *customer focused marketing strategy = success

→competitors *good marketing strategy will help distinguish

• macro (external): outside of the business, affect all businesses, no control over.

→economic *strong economy = high consumer confidence, more likely to take on debt & weak economy = good marketing strategy should focus on quality+value over price

→technology *use of technology crucial nowadays, social media + methods of payment

target market

a specified group of people who a business decides are most likely to buy their product/service and focus their marketing efforts on.

side note - market segmentation: where you divide a total market into particular groups who share common characteristics

market dimensions

• used to identify market segments

1. demographic - general characteristics (age, gender etc)

2. geographic - location or geographic units(rural, global etc)

3. psychographic - psychological characteristics and traits (personality, values, lifestyle etc)

4. behavioural - knowledge, attitude, response towards product

consumer behaviour

• when businesses consider WHY do customers buy. 4 reasons:

1. psychological

→perception *positive perception of product is a must

→motive *why are they buying this?

→attitude *opinions

→personality

2. sociocultural

→family & roles

→peer groups

→social class

→culture and subculture

3. economic

→economic cycle *boom, recession etc

4. government

→regulations

marketing mix - 7PS (PRODUCT)

1. product: a good/service that can be offered in exchange for the purpose of satisfying a need/want (tangible or intangible)

→ total product concept: a collection of satisfactions (eg package, brand name etc) *separate or combined goods/services?

→ product positioning: the way a product image is developed (eg name, price, promotion, style etc)

→ branding and packaging

marketing mix - 7PS (PRICE)

2. price: the amount of money required for something. may be influenced by: quantity, quality, demand, cost of supplies

• pricing strategies -

→ recommended retail price: price recommended by a wholesaler/manufacturer (only recommendation bc illegal to set a price if not directly selling to customer)

→ percentage mark up: the cost price is increased by a fix percentage at the final price.

→ price leadership & competition*:* to follow a price set by another seller (business as a price leader)

→ what the market will bear: setting a price dependent on what consumers will pay (eg auctions)

→ quotes: a price set specific to specialised products

→ price skimming: placing a high price on a new item

→ price penetration: placing a low price on a new product (to attract new customers)

→ premium pricing: setting an artificially high price to increase the prestige of product

→ price bundling: selling of a package of goods/services for lower price than individual product

→ psychological pricing: making the price look less than it is

marketing mix - 7PS (PLACE)

3. place: the physical or online location that enables a customer to purchase from.

• customer access to product is through distribution channels;

→ producer to customer

→ producer to retailer to customer (retailer is intermediary, buys from producer and resells to customer)

→ producer to wholesaler to retailer to customer (wholesaler buys in bulk, then resells in smaller quantities to retailer)

→ producer to agent to wholesaler to retailer to customer (agent distributes to wholesaler but never owns product)

• channel choice & market coverage;

1. intensive distribution: when business wishes to saturate market with its product (customers can shop at local outlets)

2. selective distribution: using a moderate proportion of possible outlets (clothing, furniture etc)

3. exclusive distribution: use of only one retail outlet for a product in a large geographic area

marketing mix - 7PS (PROMOTION)

• aim: encourage, inform, attract, persuade, increase rep.

• promotion mix: methods used in a business’ promotional campaign;

→ personal selling: involves the activities of a sale representative directed to a customer

→ opinion leader: person who influences others

→ publicity: any free news story about a business’ products (different from advertising, free and timing not controlled)

→advertising

marketing mix - 7PS (PEOPLE, PHYSICAL EVIDENCE,PROCESS)

• people: everyone involved in the product of a business

• physical evidence: everything that the customer sees when interacting with business

• process: the flow of activities/mechanisms that take place when there is any interaction between the customer and business (eg delivery)

product life cycle

• product life cycle: the length of time from a product’s introduction to its removal from the market. stages;

1. introduction

2. growth (brand acceptance, more known, increase)

3. maturity (fully accepted, sales peak)

4. decline (no longer appeals)

5. extension - revival of product. can be done through;

→export (sell overseas)

→diversification

-product diversification: increase range of products

-geographic diversification: increase locations

customer relations strategies

• customer relations: involves an enhancement of the customer experience. through;

1. quality customer service

→ customer service: how well a business responds to needs/problems of customers (EG clear signage, staff etc)

2. seeking customer feedback

3. returns, refunds & complaints

→ability to deal with and resolve complaints (clear communication, policies etc)

4. customer loyalty programs

→ customer loyalty program: a reward-based program offered to frequent purchasers.

5. online presence

→ customer friendly, informative, easy to navigate etc

6. catering to a multicultural market

technological developments

• technological developments: the overall process of invention and innovation of technology or processes.

• types:

1. social media

→ con: lack of control over comments

2. email marketing

→con: potential scams/spam emails

3. search engine optimism

→ the process of improving a business’ website to increase visibility when people search for its products/services via various search engines

4. artificial intelligence

→ intelligence demonstrated by machines

5. data analytic

→ the science of analysing raw data & draw conclusions about that info/data - data focuses on sales, what customers want, where, when etc

6. management of data

→ data custodian: person responsible for management of data collected by business

→ data maintenance: process of keeping data current, complete and relevant

→ data access: involves determining who is allowed access and for what purpose

→ data security: involves ensuring data is safe.

→ data privacy: ensuring customers’ data is kept private and not shared with other businesses/orgs without their consent,