marketing strategies

Question 1

‘market segmentation, product/service differentiation and positioning’ - case study

Answer 1

Demographic:
The high price of iphones (relative to competitors) is targeted at higher income customers in developed countries. The low cost models such as the iPhone SE aim to target developing countries.

Geographic segmentation:
The highest demand and growth for smartphones in recent years has been in the Asia Pacific region, especially in China and India. The importance of these developing markets can be seen in changes to the appearance of the iPhone, such as a larger screen size, which is preferred by Asian smartphone users. In 2020, the release of the updated iPhone SE (low cost model) was largely designed to target the high growth markets of China and India.

Psychographic segmentation:
According to a study published in Medical News Today in 2016:
iPhone users are more concerned about viewing their iPhone as a status object than their Android counterparts
iPhone users show lower levels of honesty and humility, and higher levels of emotionality. iPhone users are also more extroverted than Android users

Differentiation:
Apple’s branding and marketing efforts have focused on design, innovation and quality in an attempt to differentiate the iPhone from other smartphones. Differentiation allows Apple to charge a premium price for its products (price skimming) and achieve higher profit margins.

Positioning:
Previously, Apple was seen to offer superior hardware and design features. Chinese brands tended to focus on building durable and highly customised phones targeted at the mass market.
In more recent years, the gap between global brands and Chinese smartphones has become less significant to Chinese consumers so Apple needs to develop strategies to compete with the key Asian smartphone manufacturers in the future.

Question 2

‘products – goods and/or services – branding’ - case study

Answer 2

MACCAS
Branding refers to the name, colour or symbols used to represent a business. According to the book ‘Fast-food Nation’, more people are able to recognise the “golden arches” than the Christian cross. This shows the effectiveness of global campaigns to build brand awareness.

Question 3

‘products – goods and/or services – packaging’ - case study

Answer 3

Another product strategy utilised by McDonald’s is the way it uses packaging. McDonald’s packaging does more than just protect the burgers; the packaging is used to reinforce information that the company wants consumers to know. This promotes consistent brand design.

Question 4

‘price including pricing methods – cost, market, competition-based pricing strategies – skimming’ - case study

Answer 4

• Price skimming is used when a new iPhone is released, positioning it as a leading edge, quality product.
• When a model is upgraded, the older model price is reduced to be more competitive (competition-based pricing) usually aligned with the latest Samsung model
• A competition-based pricing strategy is adopted for low cost and older models
• Bundling plans offered by network providers allow customers to pay for their phone over a two-year period, making the high price of iPhones somewhat less significant.
• Buy-back program and discounted prices on older models in Asia

Question 5

‘price including pricing methods – cost, market, competition-based pricing strategies – loss leaders’ - case study

Answer 5

McDonald’s has developed an approach that positions a range of items in terms of price and quality to appeal to the value conscious customer. McDonald’s in Australia introduced the Loose Change menu. This is consistent with this objective to simplify the menu. These items use a loss leader pricing strategy to undercut competitors and attract customers who may purchase both a cheaper item (for example a 70 Cent ice cream cone) and a more expensive item (like a coffee).

Question 6

‘price including pricing methods – cost, market, competition-based pricing strategies – price points’ - case study

Answer 6

Through this strategy, maccas has been able to offer its customers pricing flexibility by providing a value ladder whereby customers can select and modify menu items to accommodate varying levels of affordability. McDonald’s has a variety of products and offers a few distinct price-points. At the lowest end of the product offerings is the Loose Change menu which offers several products from $1 each. The standard menu has also been expanded to include a few gourmet burgers such as the Angus and Chicken Deluxe. By offering different price points McDonald’s is able to appeal to a wider pool of potential customers.

Question 7

‘promotion – elements of the promotion mix – advertising’ - case study

Answer 7

McDonald’s uses TV, radio, billboards and social media to advertise. It also sponsored sports teams and even whole sport Leagues and competitions (like the FIFA World Cup). In Australia McDonald’s spends approximately 30% of its advertising budget on digital media such as Facebook and Instagram. As it operates in 119 countries McDonald’s adopted a regional approach to advertising. Different countries have different campaigns targeting different target markets. McDonald’s conducts much of its advertising through local “co-ops” where stores that are in the same area contribute to a fund for advertising. This means that even within a single country different regions run individual advertising campaigns that suit the needs of the area.

Question 8

‘promotion – elements of the promotion mix – personal selling and relationship
marketing’ - case study

Answer 8

Historically the most obvious example of this was McDonald’s rewarding frequent coffee purchasers with a free beverage via a cardboard loyalty card. The scheme has since been replaced with an app which gives McDonald’s that data and tools to conduct relationship marketing on a whole new level.

Question 9

‘promotion – elements of the promotion mix – sales promotions’ - case study

Answer 9

McDonald’s makes use of competitions to drive sales. For example the popular annual Monopoly promotion rewards customers when they buy promotional items with two games stamps. These stamps correspond to either an instant prize or relate to a space on the Monopoly board. If stamps for all the properties of a single colour are collected major prizes can be one such as cash, cars. holidays, TVs and more. The limited time creates hype and the nature of the game is designed to get customers back into the store for more pieces.

Question 10

‘place/distribution – distribution channels’ - case study

Answer 10

• Distribution of iPhones by online sales, Apple stores, mobile carriers (e.g. Telstra, Optus, Virgin, Vodafone in Australia) and retail mobile stores
• In 2020 Apple more than 500 retail stores in 24 countries and online stores available in 40 countries (including India in 2020).
• Recent contracts secured with Mobile China Inc. (the country’s largest mobile carrier), as well as leading distributors in India and Japan.
• Approximately 30% of Apple sales are made through direct distribution channels (online and Apple stores) and 70% were through indirect channels such as network carriers and other retailers.
• Sales to educational institutions and government are secured using direct selling.
• Apple and Samsung are collaborating to produce a digital SIM card, aimed at reducing the profit shared with network providers.

Question 11

‘place/distribution – channel choice – selective’ - case study

Answer 11

With over 39000 restaurants worldwide McDonald’s uses a selective distribution channel. One of McDonald’s objectives is to redefine convenience through delivery. In 2019 delivery was offered by nearly 25000 stores across the globe. It accounted for over 4% of total sales. During the covid-19 pandemic McDonald’s reported further increase in delivery transactions.

Question 12

‘place/distribution – physical distribution issues – transport’ - case study

Answer 12

One of Mcdonald’s objectives is to redefine convenience through delivery. In 2019, delivery was offered by nearly 25000 stores across the globe. This accounted for over 4% of total global system-wide sales as the company reached $4 billion solely from deliveries in 2019.

Question 13

‘place/distribution – physical distribution issues – warehousing’ - case study

Answer 13

Mcdonalds has hubs which are redistribution warehouse facilities which are used to manage lower turnover items. This is efficient as it allows Mcdonalds to accurately calculate its stock numbers which helps minimise stock wasted and allows them to buy more inventory accordingly.

Question 14

‘people, processes and physical evidence’ - case study

Answer 14

APPLE:
People:
- Strong focus on sales and customer service in Apple stores
- job titles such as genius and specialists to raise employee status
- install online and phone support for after-sales repairs complaints and warranties

Processes:

• Online ordering system
• free upgrades of iOS existing customers
• pre ordering available prior to new product launches
• roaming payment system in Apple stores so customers don’t need to wait at a checkout

physical evidence:

• Apple stores are designed to reflect the importance of innovation and quality
• encourage hands-on approach allowing customers to test drive Apple products
• Elaborate building entrances for most stores, positioned in prime city locations

Question 15

e-marketing - case study

Answer 15

The ability to have an online presence has greatly influenced Apple’s marketing mix through:

• Product (images of iPhones on their website allows for customer awareness)
• Price (internet has led to greater price transparency, allowing customers to efficiently compare prices. Also, Apple has increased sales through online sales, reducing costs in operating retail stores)
• Place (Apple’s website tailors for different languages and cultural preferences, helping a wider audience. Also, customers prefer online due to flexibility)
• Promotion (products are promoted on their website, special offers sent to existing customers via email, online ads)

Question 16

‘global marketing – global branding’ - case study

Answer 16

The current Apple logo is well-suited to the global market as it is both simple and globally recognisable. When companies such as Apple launch new products in the global market they have a competitive advantage due to Global brand recognition. They’re also able to use the same strategies in the global market reducing costs by creating marketing economies of scale.

Question 17

‘global marketing – customisation’ - case study

Answer 17

In 2015 some media commentators suggested that the iPhone 6 Plus was designed for the high growth Asian market when large screens were proving popular with competitor phone’s. Whilst customisation of marketing a global product is more expensive it may be considered worthwhile if it is effective. The news extract about iPhones in India in 2015:

• Apple is looking to capture the Indian market with the release of its first india-specific television commercial based around the Great Indian wedding.
• Makes the ad specific and relevant to indians

Question 18

‘global marketing – global pricing’ - case study

Answer 18

Global pricing involves adapting the pricing methods and strategies to suit individual markets. Given the different purchasing power of consumers around the world this is necessary to make an expensive product such as an iPhone affordable in less economically developed countries. However there are various influences on pricing in different markets such as currency exchange rates, transportation costs and local taxes.
e.g. In recent years, further appreciations in the value of the US dollar lead to increases in the price of iPhones in countries such as Australia, New Zealand and Canada.

Question 19

‘market segmentation, product/service differentiation and positioning’ - description

Answer 19

Market Segmentation
Definition: It is the process of taking a large consumer market and breaking it down into smaller markets (dividing total market into segments)
- A segmentation variable is the characteristics of individuals or groups that are used by marketing managers to divide the total market into segments

Demographic:

• Process of dividing a total market according to particular features of the population
• Variables: age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, social class

Geographic:

• Divides a target market by location so marketers can better serve customers in a particular area
• Geographic variables: religion, urban/suburban/rural, city size, county size, state size, market density, climate, terrain

Psychographic:

• Divides buyers based on intrinsic characteristics
• Psychographic variables include personality, values, beliefs, lifestyle, attitudes, interests
• Main difference between demographic and psychographic is that the demographic focuses on quantifiable and visible information

Product Service Differentiation

• The process of developing and promoting differences between the business’ products or services and those of its competitors
• Points of differentiation include: customer service, environmental concerns, convenience and ethical and social issues

Positioning

• A technique where marketers try to create an image for a product compared with the image of competing products.
• Image is achieved through product name, price, packaging, styling, promotion and channels of distribution

Question 20

‘products – goods and/or services – branding’ - description

Answer 20

Branding

• Brand: a name, term, symbol or design that identifies a specific product and distinguishes it from its competitor
• Branding helps consumers:
  1. Identify the specific products that they like
  2. Evaluate the quality of products
  3. Reduce their level of perceived risk of purchase
  4. Gain a psychological reward that comes from purchasing a brand that symbolises status and prestige
• Branding helps business:
  1. Gain repeat sales because consumers recognise the business’ products
  2. Introduce new products into the market because consumers are already familiar with the business’ existing brands
  3. With their promotional activities because the promotion of one product indirectly promotes all other similar branded products
  4. Encourage customer loyalty. This has the added benefit to the business of being able to charge a higher price for the product

Question 21

‘products – goods and/or services – PACKAGING’ - description

Answer 21

Packaging
Packaging: the development of the container and the graphic design for a product
Distinguishes a product from competitor products - colour is important (Cadbury)
Packaging also:
- Preserves the product
- Protects the product from damage or tampering
- Attract consumers’ attention
- Divides the product into convenience units
- Assists with the display of the product
- Makes transportation and storage easier

Question 22

‘price including pricing methods – cost, market, competition-based pricing strategies – SKIMMING’ - description

Answer 22

Price skimming: charging highest price possible (often for innovative products) eg. Apple charging maximum money for its products (to recover all the money spent on research)

Question 23

‘price including pricing methods – cost, market, competition-based pricing strategies – LOSS LEADERS’ - description

Answer 23

Loss Leader: setting price below the cost price to attract customers, can only be for a few items (not all) – cannot be sustained for too long eg. 30c Maccas soft serve/frozen coke

Question 24

‘price including pricing methods – cost, market, competition-based pricing strategies – PRICE POINTS’ - description

Answer 24

Price points: Price points (or price lining) is selling products only at certain predetermined prices. This pricing strategy is used mainly by retailers, especially clothing stores and boutiques

Question 25

‘promotion – elements of the promotion mix – advertising’ - description

Answer 25

Advertising in paid communication with the target market and it is usually designed to be persuasive.
Seeks to convey a message to a broad group of customers - via electronic/print communication
Advertising media includes: mass marketing (TV, radio, newspapers, magazines), direct marketing catalogue, telemarketing, e-marketing, social media, billboards
Types of media selected will depend on:
- Type of product and positioning
- Size of target market and characteristics
- Budget
- Cost of advertising medium
Advantages:
- Able to each a wide range of customers
- Appeal to large target market
- Able to adapt for different regions or markets
- Memorable
Disadvantages:
- Can be expensive
- Lengthy process to create and implement
- Not customised/individualised for customer

Question 26

‘promotion – elements of the promotion mix – PERSONAL SELLING AND RELATIONSHIP MARKETING’ - description

Answer 26

Personal Selling: involves the activities of a sales representative directed to a customer in an attempt to make a sale
Relationship Marketing: is the development of long-term, cost effective and strong relationships with individual customers
Focuses on in-person interaction to sell products and takes the product directly to the customer
Main aim to create customer loyalty
Can also involve the use of loyalty programs
Advantages:
- Message can be modified to suit the individual needs/circumstances of customers
- Individualised assistance towards customer can create long-term relationships, resulting in repeart sales
- Sales consultant can also provide after-sales service
- Loyalty program can ensure repeat customers
- Better understanding of customer preferences and needs
Disadvantages:
- Cots involved in higher staff
- May take time to train employees
- Massage inconsistency between sales people
- Dependant on motivation, personality, skills, qualification, experience of sales person

Question 27

‘promotion – elements of the promotion mix – SALES PROMOTION’ - description

Answer 27

Sales Promotion: the use of activities or materials as direct inducement to customers
Intended to create interest in and generate awareness of a particular product
Can include: competitions, samples, coupons, premiums, point-of-purchase displays (end of aisle displays in supermarkets)
Advantages:
- Cost effective method of attracting interest of customers, e.g. through emails
- Can draw the attention of consumers whilst in store
- Effective at achieving quick boost to sales
- Encourages customer to trial a product
Disadvantages:
- Sales effect may only be short term - non sustainable
- Customers may expect promotions
- May damage brand image

Question 28

‘place/distribution - DISTRIBUTION CHANNELS’ - description

Answer 28

Distribution channels - channels by which a profit is moved from the place of manufacture to the consumers
Intermediary - a business that purchases the final product and then takes on the responsibility of selling this product to the consume

Producer → Consumer
Simplest and most direct channel - involves no intermediaries
Producer gains a detailed knowledge of their customer
Producer is able to control the process of selling/promotion
Cheaper (due to no intermediary costs)
Business may require additional storage for stock
Limited ways to reach consumer - difficult to reach all potential consumers

Producer → Retailer → Consumer
Retailer used as an intermediary who access the good from the producer and then sells it to the consumer
Retailer assumes responsibility for stock control, warehousing, promotions
Producer does not need retail space
Retailers are well known and convenient
Product could become more accessible as more retail outlets offer the product

Producer → Wholesaler → Retailer → Consumer
Most common method of distribution for consumer goods
Wholesaler normally purchases in bulk then resells in smaller quantities
Gives access to smaller retail stores that businesses wouldn’t normally be able to reach
Wholesalers are better at maintaining relationships with smaller retailers
Adds to the price - cost of wholesaler

Producer → Agent → Wholesaler → Retailer → Consumer (additional)
Agent distributes products to wholesalers on behalf of producer
Agents are paid a commission by the producer
They never own the product - just have the responsibility of finding a wholesaler
Producers who don’t have sales representatives may decide to hire an agent

Question 29

‘place/distribution – channel choice – SELECTIVE’ - description

Answer 29

Selective distribution - select moderate amount of outlets to sell the product/s e.g. fashion brands only in Myer/David Jones

Question 30

‘place/distribution – physical distribution issues – TRANSPORT’ - description

Answer 30

Physical distribution issues:
Transport: An intricate network of transportation is required to deliver the vast array of products on supermarket shelves. The method of transportation a business uses will largely depend on the type of product and the degree of service the business wishes to provide. The four most common methods of transportation are rail, road, sea and air.

Question 31

‘place/distribution – physical distribution issues – WAREHOUSING’ - description

Answer 31

Warehousing: Warehousing is a set of activities involved in receiving, storing and dispatching goods. A warehouse acts as a central organising point for the efficient delivery of products.

Question 32

‘people, processes and physical evidence’ - description

Answer 32

PEOPLE (link with HR)
People are the most important element in any service or experience. Employees are the human face of the business therefore central to the marketing message
“People” refers to the quality of interaction between the customer and employees
Need appropriately recruited, qualified and trained employees
PROCESSES:
Processes - the flow of activities that a business will follow in its delivery of a service. Businesses need to ensure that their processes and procedures are customer friendly and that they satisfy customer needs
Without a tangible product, the processes must be highly efficient to achieve customer satisfaction. Any business that has inefficient processes will lose customers and damage its reputation
PHYSICAL EVIDENCE
Physical evidence refers to the environment in which the service will be delivered
It also includes the location of where the service is being provided and the materials needed to carry out the service such as a signage, brochure, business cards, business logo and websites as well as ambience and spatial layout. Customers make judgements about the business based on these features
Intangible products are difficult - customers initially buy services on trust and they make judgements about the business based on the physical evidence. Consequently, a business should provide high-quality physical evidence to create an image of value and excellence

Question 33

e-marketing - description

Answer 33

E-MARKETING
Definition: When a business markets its brands, services, or products through the internet (electronic marketing)

E-Marketing Technology: e.g web pages, podcasts, SMS, blogs, web2.0 (facebook, twitter)
Social Media Advertising (SMA)
Many more businesses have been using social media for advertising their products
Advantages:
- It is inexpensive in comparison to traditional advertising methods
- Easy to monitor and easy to use
- An effective method to gain exposure
Disadvantages:
- A marketer doesn’t have any control over what online consumer write about the business and the business’s products
- It is much more difficult to measure how many people are exposed to the message (reach) and how many times someone has seen it (frequency)

Problems With E-Marketing:
The big risk for Australian businesses is that consumers will purchase from overseas retailers and completely bypass local businesses.
Their servers are not able to cope with the workload and the amount of users at the same time and/or there may be an error in the system and so the website will crash.

Question 34

‘global marketing - GLOBAL BRANDING’ - description

Answer 34

Global Branding
why is maccas good at this:
- 88% of people can identify the McDonald’s Golden Arc
- Cultural awareness - local adaptations made to menus to better suit local desires of consumers - Japan Ebi burger, Australia - Angus burger
- Global - Red and Yellow are the colours commonly associated with McDonalds, in Europe - brand colours are dark green and yellow to respect their culture of environmental preservation

Question 35

‘global marketing – customisation’ - description

Answer 35

• A customised or local approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are different between countries
• Despite the advantages of a standardised approach, when entering an overseas market, many businesses find it necessary to either modify the existing marketing mix or develop a new one
• The marketing has to be customised according to the economic, political and socio cultural characteristics of the target country

Question 36

‘global marketing – global pricing’ - description

Answer 36

Global pricing is how businesses coordinate their pricing policy across different countries
Price is the only element of the marketing mix that generates revenue which is why global pricing is the most critical but complex issues that global businesses have to deal with
Accurate pricing decisions must be made if the businesses overseas expansion is to be successful.