Marketing Flashcards
Strategic role of marketing goods and services
Interacting activities designed to plan, promote and distribute products to present and potential customers. A marketing plan is a document devised to achieve marketing outcomes.
- Profit maximization: the maximum difference between the total revenue coming into the business and the total costs being paid out
- Customer orientation: customer satisfaction at the core of the business decisions to ensure the business meets their needs and wants.
∴ The marketing plan should be the focus of both short and long-term planning because:
- Marketing plans outline the strategies that bring the buyer and seller together
- Cost of marketing is satisfying existing customer wants, which leads to repeat sales
- Only revenue-generating of any business
- Determines product, pricing, and promotion as a revenue center as it generates sales ∴ increases profit
Interdependence with other key business functions
Finance
The marketing team needs to ensure there is enough finance available to create what they would like to sell, and not spend too much of the overall budget on marketing.
Generate sales to fund future projects
Operation
The marketing team will be pushing a certain product - if the operations team isn’t able to create that product as desired within budgets, then the product will fail.
- Cost centre(decreased costs) meets the revenue centre(increased sales):
- Lean product
- Cost leader while promoting products/increased sales
- ∴ increasing profit
Human Resources
The HR team will need to provide the required staff (customer service → marketing concept) to produce what the marketing manager is envisioning.
- Skilled employees to conduct marketing functions
Different approaches to marketing
- production
- selling
- marketing
Different approaches to marketing - production
The production of goods and services and was popular from the 1820s-1920s an optional way to sell more of the goods they were already making
“If we make it, they will buy it”
During the industrial revolution with an increase in production, power ∴ costs fell significantly (economies of scale), and demand exceeded production ∴ marketing had no trouble
- Already demand - innovative limited choice
Different approaches to marketing - selling
1920’s technology increased ∴production increased beyond demand - more effort put into advertising
- ∴increased supply
- ∴via mediums of radio, film and print, businesses persuaded to buy their product over a competitors
Needs of consumers were still not researched or taken into consideration when developing the product
Different approaches to marketing - marketing
- 1950’s the customer was placed at the centre of marketing and production by businesses finally researching the needs of the consumer and catering to them
- Household had disposable/discretionary income - money left over spent on optional good
- ‘Teenager’ raised
- 1980s marketing approach evolve into one where different aspects of a business are showcased in order to gain consumer support
- E.g. CSR where consumers may buy more of a product if it is environmentally friendly
- Customer orientation - the after-sales service being offered is part of the product marketing e.g. warranties, APPLE, customer service
- Relationships created - business aims to develop long-term relationships through strategies such as loyalty programs.
Types of markets
Resource
Groups involved in all forms of primary production
- Farming, fishing, mining
Industrial
Industries and businesses that purchase products in the production of other products
- Bakery buying flour or milk to transform it into bread
Intermediate
Wholesalers and retailers who purchase finished products resell them at a profit.
- Woolworths buying products to resell
Consumer
Selling to the end consumer who will use the finished product
- Buying something from Woolworths as an individual
Mass
A large demand for a standard product, businesses do not target a specific group of buyers, but rather assumes that all customers have similar needs
- Petrol
Niche
A narrowly selected market with specific needs or demand
- Wedding or motorbike magazine
Influence - Factors influencing consumer choice
- psychological
- sociocultural
- economic
- government
Influence - Factors influencing consumer choice - psychological
Influences within an individual that affect buying behaviour.
- Perception → everyone sees things from different angles - a perception is a single way of viewing things. Marketing managers attempt to create positive perception in order to repeat sales
- Learning → changes in an individual’s behaviour because of information and experiences. Learning encourages brand loyalty.
- Attitudes → overall feeling about an object or activity. Customer attitudes influence the success of a business’ marketing strategy
- Motives → reasons that make an individual do something. Advertising attempt to influence individuals motives to persuade them to purchase their product
- Personality → collection of behaviours and characteristics that make up a person. Self image relates to how a person view themselves - marketers take advantage of this by highlighting the perceived value of their product
Influence - Factors influencing consumer choice - sociocultural
Forces exerted by other people and groups that affect an individual’s buying behaviour
- Socioeconomic status → relative rank in society based on education, income, or occupation. Influencing the type, quality, and quantity of products a customer buys
- Culture → the learned values, beliefs, behaviours, and traditions shared by a society
- Family and roles → different roles within the family and groups within society influence buying behaviour
- Peer groups → people with whom a person closely identifies, adopting their attitudes, values and beliefs. May change to match the rest of the groups’ beliefs
Influence - Factors influencing consumer choice - economic
Economic forces influence a business’ capacity to compete and a customer’s ability to spend. This can be seen in the form of booms and recessions.
- Boom → period of low unemployment and rising incomes when businesses and customers are optimistic about the future, ∴increase their production and market share ∴ increase in customer spending and discretionary income
- Recession → high unemployment and falling incomes. Customers and businesses lack confidence and become pessimistic. Decrease in consumer spending due to customers becoming price conscious as they turn to look for goods and services that reflect value and function
Influence - Factors influencing consumer choice - government
Laws and policies which may make a product illegal, or affect how customers can use it, hence affecting marketing decisions such as product design, positioning, pricing, and advertising
- For E.g. cigarettes must be sold in plain packaging and cannot be on open display in the store
Influence - Consumer laws
Laws and regulations have been passed by the government to protect consumers when dealing with businesses, particularly in areas of unfair practices and what marketers are allowed to say. For example:
- Activia → advertised nutritional benefits
- Red bull → does not give you wings
Competition and Consumer Act 2010(ACL) and the Fair Trading Act 1987. ACL aims to:
- Protect consumers against undesirable practices, such as misrepresenting the contents of products, their place of origin, or their function
- To regulate certain trade practices that restrict competition
- The government want to ensure a number of businesses are operating to minimise opportunities for monopolies and uncompetitive pricing for consumers
- deceptive and misleading advertising
- price discrimination
- implied conditions
- warranties
Influence - Consumer laws - deceptive and misleading advertising
Creates an inaccurate impression on the customer about some characteristic of the product.
- Fine print - consumers have a responsibility to read it
- Tests and surveys - 9/10 people agreed (targeted sample)
- Packaging - does not represent the product itself
- Country of origin - misrepresentative
- Before and after - potentially only works for an individual
- Special offer - it’s truly an offer not a constant
- Bait and switch - expect one thing and get something else (e.g. cheap price, don’t have in store so offer more expensive)
Dishonest advertising is a product making a claim about a quality it does not possess.
Influence - Consumer laws - price discrimination
The setting of different prices for the same product in different markets. This affords businesses the ability to maximise revenue by charging customers more who can afford to pay more, but it is illegal however will be used through budgets or premiums. Fair price discrimination examples:
- Student discounts
- Sporting events dependent on where you sit
- Different petrol
Influence - Consumer laws - implied conditions
The unspoken and unwritten terms of a contract. Examples:
- The bus route takes an individual to the designated place
- Watch a movie in cinemas → that is advertised
Influence - Consumer laws - warranties
Guarantees by a business to repair or replace a good if it malfunctions, usually valid for a limited period of time.
- If anything goes wrong you can repair, replace and refund your product therefore the business has a legal obligation to fix it
- E.g. KIA, the good guys
- Know your rights surrounding consumer rights
Influence - Ethical
- truth, accuracy and good taste in advertising
- products that may damage health
- engaging in fair competition
- sugging
Benefits:
- Positive image/reputation
- Great publicity
- Attract customers
- Customer loyalty
- Positive employee relations
- Attract best employees
- Attract investors
Drawbacks:
- Costs to business
- Time to plan, implement
- The effort to change focus
- Not guaranteed to be effective
- No guaranteed returns
Influence - Ethical - truth, accuracy and good taste in advertising
Relates to the loopholes and grey areas that businesses could exploit
- Puffery
- Concealed fact - focuses on benefits
- Vague statements
- Perspective of morals
Influence - Ethical - Products that may damage health
Refers to marketing campaigns related to promoting dangerous or unhealthy products. E.g. cigarette promotions, the convenience of fast food
