Strategies

Question 1

Market segmentation

Answer 1

• when total market is subdivided into groups of people who share one or more common characteristics + targeting a product specific to this market
• aim = increase sales, market share + profits by better understanding + responding to desires of customers
• allows (b) to focus efforts + resources on a section of the market - able to identify specific needs + tailor marketing plan accordingly –> reduce waste + costs
• fill ‘gaps’ or opportunities in market = long-term success
• once segmented, a (b) can select one or more segments to target - allows (b) to tailor its marketing strategies to suit characteristics of that market
• demographic e.g. adult/child, geographic, psychographic, behavioural e.g. experience (beginner)

Question 2

Product/service differentiation

Answer 2

• process of developing + promoting differences b/w (b)’s products or services + those of competitors
  1. Customer service = personalised, tailored to needs + wants, high quality, efficient, courteous, pre + after sale
  2. Environmental concerns = people more concerned with QOL issues + physical env., ‘green’ philosophy = increase sales + reputation e.g. biodegradable packaging, pollution = lose e.g. plastic
  3. Convenience = ‘time poor’ e.g. meal prep (Marley Spoon), sliced apples
  4. Social + ethical issues = more ethically minded = purchase products/brands that don’t exploit staff, env. + animals (ethical consumerism) e.g. cage free eggs

Question 3

Product/service positioning

Answer 3

• buyer perception
• technique: marketers try to create an image or identity for a product compared with image of competitors
• use wants + needs (market research) + tries to place product within buyers perceptions e.g. high quality
• achieved through name, price, packaging, styling, promotion, channels of distribution
• important in highly competitive markets (looks or feels superior to their competitors), augment to add value
  e. g. Tiffany & Co. = trademarked colour, security guard, spacious, pricing

Question 4

Products - goods and/or services

Answer 4

• offer total product concept = both tangible + intangible benefits e.g. restaurant - tangible = food, intangible = CS
• Tangible = physical attribute e.g design, colours, features
• Intangible = prestige, image associated with products, enjoyment/fulfillment, after sales service (warranties)

Question 5

Products - goods and/or services

- Branding

Answer 5

• name, term, symbol or design that identifies a specific product + differentiates it from competitors - trademarking
• refers to reputation (b) or product has developed over time → quality, value, prestige - visual communication
  Benefits:
• helps consumers: identify product liked, reduces level of perceived risk of purchase, psychological reward from purchasing status goods
• helps (b): gain repeat sales = recognised brand, easier to introduce new products with success due to familiarity, encourage customer loyalty
  Branding strategies:
• Manufacturer’s brand or national brands = owned by the manufacturer, recognised globally e.g. Sunbeam
• Private or house brand = owned by a retailer or wholesaler e.g. Myer sells own label including Reserve
• Generic brands = no brand at all e.g. Black and Gold

Question 6

Products - goods and/or services

- Packaging

Answer 6

• involves development of a container + graphic design for a product
• well designed = positive impression of product + encourage first time customers
• form of communication = customers draw conclusions e.g. colour psychology = gain sustained comp adv.
• Benefits: protect + maintain quality of product (from damage), attract customer attention
• service = attitudes + product knowledge of salesperson + willingness to assist with customers concerns + inquiries
  Labelling
• presentation of info on a product or its packaging
• use labels to promote other products or to encourage proper use of products = increase customer satisfaction
• info can include: ingredients, country of origin, shelf life, winner’s awards, safety standard sticker e.g. AMAG = protects consumers from misleading/deceptive claims

Question 7

Price including price methods

Answer 7

• price refers to the amount of money consumer is willing to offer in exchange for a product
• reflect position + branding of (b) within marketplace
• methods provide ‘basic’ price whereas strategies ‘adjust basic price’ depending on objectives + conditions

Question 8

Price including price methods - cost based

Answer 8

• derived from cost of purchasing/producing a product + adding a markup e.g. Messina
• Two DISADV:
  1. Difficulty accurately determining appropriate markup % - too high = no one buys, too low = lose profit
  2. Product priced after production + failed to take into account other costs incurred in marketing mix

Question 9

Price including price methods - market-based

Answer 9

• method of setting prices according to interaction b/w levels of supply + demand - what market is willing to pay
• if demand = greater than supply = shortage in market (limited supply) - increased price (false scarcity e.g. Zara) e.g. housing, art, accomodation
• if supply = greater than demand a surplus will exist in market - decreased price e.g. fruit/veg
• price changes in relation to fluctuations

Question 10

Price including price methods - competition-based

Answer 10

• price covers costs of production + is comparable to its competitor’s price (when product is similar) e.g. coffee
• often used when high degree of comp. in market
• once base price is established, (b)’s can choose price based on:
  1. Below competitors = undercut comp to establish themselves in market
  2. Equal competitors = follows price established by price leader - saves money on market research on how much consumers would pay, avoids risk of price war
  3. Above competitors = increases perception of quality of product, superiority e.g. Red Rock Deli chips

Question 11

• Pricing strategies - skimming

Answer 11

• occurs when (b) charges highest possible price for a product during intro stage of life cycle e.g. Apple
• objective = cover costs of ASAP before competitors enter market/doesn’t go well
• to increase sales = assist in recouping production costs (R+D) + ensuring quick turnover + profit maximisation
• pay for prestige/status it gives = appeals to status conscious + early adopters

Question 12

• Pricing strategies - penetration

Answer 12

• when (b) charges lowest possible price for a product
• aim = achieve large market share in short-term e.g. Rex
• objective = sell large no. duing early stage of life cycle to discourage comps from entering market
• DISADVS = more difficult to raise prices than lower them, may reduce cash flow + profitability e.g. Costco, Amazon

Question 13

• Pricing strategies - loss leaders

Answer 13

• product sold at or below cost price
• aim = attract customers to shop so that once in store they will buy extra products or spend more than what attracted them
• although (b) makes a loss on this product = hopes the extra customers will purchase other products
• can recover loss or low-priced times from sale of other items e.g ALDI, IKEA
• successful when overstocked but done incorrectly = lose money

Question 14

• Pricing strategies - price points

Answer 14

• selling products only at certain predetermined prices
• makes it easier for customer to find type of product they need or fits their budget
• makes it easier for (b) to encourage customers to ‘trade up’ to more expensive models
• most are inclined to avoid lowest price point e.g. Tiffany’s, cars, airlines
• price points for selected product lines e.g. jeweller offers line of watches at $55, $75 + $95 regardless of cost at wholesales

Question 15

• price + quality interaction

Answer 15

• perceive price-quality r/s helps determine image customers have for products (cheap = low, expensive = high quality
• price determines consumers perception of quality of product e.g. more expensive goods perceived higher quality
• prestige/premium pricing = pricing strategy where high price charged to give product an aura of quality + status e.g. jewellery, cars
• higher priced + infrequently bought items imply strong price-quality r/s
• however some believe high prices just reflect expensive packaging = reduced sales e.g. food

Question 16

Promotion

Answer 16

• methods used by a (b) to inform, persuade + remind a target market about its products
• attempts to:
  → Attract new customers by heightening awareness
  → Increase brand loyalty by reinforcing image of product
  → Encourage existing customers to purchase more
  → Provide info so customers can make informed decisions

Question 17

• elements of promotion mix - advertising

Answer 17

• form of paid, non-personal communication intended to persuade a (large) audience to purchase a product
• can reach extremely large audience or focus on a small, distinct target market
• increase sales, profits + market share
• able to reinforce positive attitude about (b)
• Different types include:
  1. Mass - TV, radio, papers
  2. Telemarketing - phone
  3. E-marketing - internet
  4. Social media - FB, Insta
  5. Billboards - large signs placed at strategic locations
  6. Direct marketing catalogues

Question 18

• elements of promotion mix - personal selling

Answer 18

• involves activities of a sales representative directed to a consumer in attempt to make a sale e.g. car salesman
• create loyalty by automatically meeting individual customer needs, establishing customer base to increase sales
• modify market message to meet individual needs = consumer-centric experience = create long-term r/s + repeat sales due to high-quality before + after sales service
• expensive method

Question 19

• elements of promotion mix - r/s marketing

Answer 19

• development of long-term, cost-effective + strong r/s’s with individual customers
• creates high levels of customer satisfaction, value + service = customers return
• more likely to refer (b) to family + friends, due to being offered special packages + discounts
• introduce loyalty program = encourage feedback, experience + innovation to gain sustainable comp. adv.
• loyalty cards = identify consumer patterns = individualised discounts + promo offers
  → emphasises loyalty by offering repeat rewards, identifying trends to maintain customer retention, increase sales + achieve profit maximisation

Question 20

• elements of promotion mix - sales promotion

Answer 20

• use of activities or materials as direct inducements to customers
• provide short-term incentives that motivate customers to purchase products - increase immediate customer purchases
• aims to entice new customers, encourage trial purchases, increase sales by existing customers = profit maximisation
• examples: samples, coupons, premiums, refunds, discounts

Question 21

• elements of promotion mix - publicity + PR

Answer 21

• Publicity
• any free news story about a (b)’s product
• differs to advertising as free + timing not controlled
• enhance image of g/s while raising awareness + broadening customer reach
• able to highlight favourable features = assists in reducing any negative connotations surrounding the (b)
• however can be bad
  Public Relations
• activities aimed at creating + maintaining favourable relations b/w (b) + its customers
• exposes a (b) or idea to an audience by using unpaid third parties as outlets
• enables (b) to work with media = cost-effective strategy that attracts interest e.g. speeches on special occasions, donations
• Benefits of PR:
  → Promote a positive image - reinforces favourable attitude towards (b)
  → Effective communication of messages
  → Issues monitoring - early warning of public trends = protecting sales
  → Crisis management - protect (b)’s reputation due to negative rumours/publicity - left unchecked = loss of sales

Question 22

• the communication process - opinion leaders, word of mouth

Answer 22

• must communicate clearly, efficiently + succinctly - if distorted message = distorted
• noise = any interference that affects promo communication process e.g. faulty printing, jargon
• more willing to purchase products if communication comes via:
  → Opinion leaders = people who influence others e.g. actors, athletes etc; used as info outlets for new products e.g. Chris Brown + dog food
  → Word of mouth = when people influence others during conversation; receiver places trust in someone they know as opposed to (b) advertising; increasingly using social media this e.g. FB

Question 23

Place/distribution

- Distribution channels

Answer 23

• activities that make products available to customers when + where they want to purchase them
  Distribution channels
• routes taken to get product from factory to market
• traditional distribution:
  → Producer to consumer - involves no. intermediaries, g/s produced + passed directly to consumer, used by most services e.g. doctor
  → Producer to retailer to consumer - often used for bulky perishable items e.g. furniture or fruit
  → Producer to wholesaler to retailer to consumer - wholesaler = intermediary who buys bulk from producer + then sells in smaller quantities to retailers = most common
• Innovative distribution
  → Telemarketing (M-commerce) - marketing of g/s by calls, apps, devices
  → Internet marketing (E-commerce) - buying + selling online; now moving away from calls to internet for product communication e.g. Amazon

Question 24

• Channel choice - intensive, selective, exclusive

Answer 24

• refers to no. of outlets firm chooses for its products
• Intensive = wish to saturate market, g/s readily available in various/wide no. of stores + locations e.g. milk, choc
• Selective = using only a moderate proportion of all possible outlets, customer prepared to travel to specific retail outlets e.g. furniture
  → why: doesn’t have resources to produce large quantities more intensively, maintain higher quality + exclusivity than intensive, more customers/sales than exclusive = higher profits
• Exclusive = uses only one retail outlets for a product in a large geographic area, commonly used for exclusive + expensive products

Question 25

• physical distribution issues - transport, warehousing, inventory

Answer 25

• efficient movement of products from producer to consumer
  Transport
• using a network to deliver goods to customers e.g. rail, air, road, sea
• depends on type of product e.g. perishable or frozen, speed required + distance that needs to be covered
• tech + developments in packaging + transport = reduced transit times
• insurance required = extra costs
  Warehousing
• activities involved with receiving, storing + dispatching goods
• acts as a central organising point for efficient delivery
• convenient locations = adequately service pop.
• how many + what size needs to be decided so customers get orders ASAP, - more warehouses = higher cost
  Inventory
• system that maintains quantities + varieties of products
• too much stock = high storage costs + waste, too little stock = loss of sales or ‘stock out costs’
• ensures products available when needed + not lost = minimises lost sales + waste

Question 26

People

Answer 26

• refers to quality of interaction b/w customer + those who will deliver service
• important (b)’s recruit + select right workers + train them appropriately on how to perform service + leave good impression
  → consumers base perception + make judgements about a (b) based on employees + treatment
• requires detailed product knowledge, attending to cost concerns, professionalism in order to deliver high quality CS = customer satisfaction
• (b) should develop + put into practice a consumer-centric organisational culture

Question 27

Processes

Answer 27

• refers to flow of activities that a (b) will follow in the delivery of its service e.g. RTA
• must ensure processes + procedures = customer friendly + satisfy needs
• insufficient/inefficient processes = lose customers + damage reputation
• consumer’s total experience of buying a product (from searching for info experiencing benefits of purchase)
• without tangible product, processes must be highly efficient to achieve customer satisfaction e.g. RTA

Question 28

Physical evidence

Answer 28

• refers to envt in which service will be delivered
• includes location of where service is being provided + materials needed to carry out service such as signage, brochures, (b) cards
• customers make judgements based on PE
• (B)’s who provide high-quality PE create an image of value + excellence

Question 29

E-marketing

Answer 29

• use of internet to perform marketing activities
• internet allows (b) to interact with customers in a more efficient + cost-effective manner while still delivering a personalised service
• assists (b) in gaining brand awareness + sales growth
• fastest growing sales medium in Aus
• enables (b)’s to expand market + reach at a global scale - increasing market share + allowing 24/7 operation
• consumers = time poor therefore likely to research so they don’t waste time + money
  E-marketing Tech:
  → Web pages (location, trading hrs) = accessible, cheap, easy to operate
  → Podcasts = informative
  → SMS (mass communication, instant e.g. Dominos)
  → Blogs - build a r/s with audience, online services
  Social media advertising:
• form of online advertising using social media platforms to deliver target commercial messages to potential customers e.g. FB, YT
  -ADV: cost-effecitve, increase brand exposure, easy to use, attract new customers, encourage existing customer to purchase more = increase sales + market share
• DISADV: don’t have control over what consumers say - potential to criticise or ridicule product freely

Question 30

Global marketing 
(how globalisation has affected marketing management)

Answer 30

• must be modified + adapted to suit overseas markets
• each foreign market = different envt + target market
  Globalisation
• Many TNCs adopt a global marketing approach = involves developing marketing strategies as if entire globe were one large market = standardised approach
• some (b)’s believe marketing mix should be customised to take into account differences in culture, religion + taste
• degree of uncertainty + risk in developing global marketing strategies
• before entering global markets, (b)’s should know:
  → Info to make specific marketing decisions such as price to charge, type of packaging necessary etc.
  → Info about country’s economic, political, social + cultural features

Question 31

• global branding

Answer 31

• worldwide use of a name, term, symbol or logo to identify seller’s products
• equates to global recognition, irrespective of language barrier (symbols)
• (b) must account for brand’s capabilities, strategies of competing brands + oulooks of consumers in the comp global market
• Why use:
  → creates worldwide uniformity
  → allows (b) to take advantage of efficiencies such as EOS = lower cost
  → Cost-effective as ad can be used in a no. of locations
  → Successful brand name = linked to new products being introduced into market

Question 32

• standardisation

Answer 32

• assumes way product is used + needs it satisfies are the same all over the world
• globalisation = standardisation in developments in international trade + removal of trade barriers
• ‘one marketing plan fits all’ approach allowed (b)’s to adopt identical marketing mixes in domestic + global markets
• Benefits include:
  → consistent global image + product features
  → cost savings as worldwide = doesn’t need to be customised for needs of individual markets
  → Decreased R+D costs
  → achieve EOS = reduced costs while delivering high quality products
  E.g. electrical equipment, mobile phones, soft drinks

Question 33

• customisation

Answer 33

• assumes way product is used + needs it satisfies are different b/w countries
• (b)’s customise marketing plan to economic, political + socio-cultural characteristics of target country
• tailor products to needs of individual or a group = increased customer retention while achieving profit maximisation
• modifications made to products so marketing mix suits various global markets
  E.g. McDonald’s India = no beef products due to Hindu pop.

Question 34

• global pricing

Answer 34

• how (b)’s coordinate their pricing policy across different countries
• as price = only area of marketing mix that generates revenue it’s important to select an appropriate strategy
• 3 strategies:
  1. Customised Pricing:
  → consumers in different countries are charged different prices for same product
  → many use cost-based method to price their goods in order to added costs of transportation (exporting, tariff, warehousing)
  2. Standard Worldwide Pricing:
  → charge customers same price for a product anywhere in the world
  → succeed only if foreign marketing costs remain low enough not to affect overall costs
  → 2 major risks: a domestic (b) may undercut standardised price, fluctuations in exchange rate may negatively impact the imported/exported price
  3. Market-Customised Pricing:
  → sets prices according to local market conditions (supply + demand)
  → allows more flexibility as can vary price according to level of demand
  → Fluctuations in exchange rate can change prices charged across countries = major risk for global (b)’s

Question 35

• competitive positioning

Answer 35

• relates to how a (b) will differentiate its product - how it enters a new marketplace
• ensure high quality in comparison to competitors = garner larger market share, broaden customer reach + gain sustainable comp. adv.
• without successful strategy = additional time, money + effort
• to successfully differentiate = conduct R+D + implement leading-edge tech, strive to develop product leadership, positive customer r/s’s + operational excellence
• usually based on price → will determine consumers perception of the product
• (b) must gain deep understanding of dynamic envts in which they operate + form strategies according to evolving conditions