BUSINESS STUDIES: TOPIC 2

THE ROLE OF MARKETING

Definition of Marketing:
Marketing is the process of planning and executing the conception, pricing, promotion and distribution of
ideas, goods and services to create exchanges that satisfy individual and organisational objectives
OR
Marketing is a total system of interacting activities designed to plan, price, promote and distribute
products to present potential customers.
Marketing is not selling
Marketing is not advertising

Why is marketing important?

Marketing helps in fulfilling the main business goal of profit maximisation by translating it into reality

Strategic role of marketing goods and services

Marketing Plan
Outlines the strategies used by the seller to attract customers
 Where the market is
 Who will buy the product?
 Why they will buy the product
 How often they will buy the product
A marketing plan should be based on the customer and extensive R & D

QANTAS Case Study

Qantas’ marketing plan and strategies are effective because:
 Have allowed QANTAS to achieve its business goals
 Marketing plan and strategies are very comprehensive
 QANTAS is customer oriented
 Marketing plan gives the business direction and helps manage a changing environment
 Encourage new product development
 Create more distribution outlets
 Focus on market research

Interdependence of key business functions

 Refers to the mutual interdependence that the 4 key business functions have on one another
 Marketing is a business philosophy that states that all sections are involved in satisfying a
customer’s needs and wants while achieving business goals
QANTAS Case Study
 Due to its central role, marketing at Qantas must be performed in coordination with other business activities
 Finance at Qantas depends on marketing to generate funds
 Marketing strategies such as Qantas’s new lounges, new check in facilities, new carriers flying into Asia are expensive and
need to be funded
 Qantas’ marketing plan includes a major financial dimension
 Budgets for each of its business segments such as Qantas. Jetstar etc. and its related marketing strategies are key
components of its marketing plan
 Staff can determine the fate of Qantas’s marketing efforts, yet they are not under the direct control of marketing, rather it is
within Qantas’s HR department. Therefore, at Qantas, marketing is aligned with HR in developing job descriptions and
designing training programs
  Operations at Qantas may constrain marketing by establishing physical limits such as the scheduling of flights and the rollout
of new initiatives like on line check ins new inflight entertaining etc.
 The use of sales promotions and advertising can help boost sales in non-peak times to help smooth operations in Qantas in
times of fluctuations in demand.

MARKETING APPROACHES

 Production approach (1820s-1920s)

 During IR
 Demand for goods > production capabilities
 Increased in technology -> increase in production of capital goods
 Until WWI businesses concentrated on production of g & s

 Sales approach (1920s- 1960s)

 Higher quality, mass produced goods with increase in competition between markets
 Increase in advertising
 Challenge of persuading customers to buy products

 Marketing approaches (1960s- 1980s)

 After WWII Australians had more disposable income to spend
 Consumers has to satisfy wants + needs

 Marketing approach Stage 2 (1980s- present)

 Philosophy that all stages of a business are involved in satisfying a customer’s needs and
wants while achieving business goals
 Businesses should direct policies, plans and operations to achieving customer satisfaction
 Recent trends of “greener” products
iPhone Case Study
o Market for smartphones has become more established  more customer expectations of future & current designs
o Apple needs a marketing approach for its products to maintain a competitive position
o E.g. release of larger screen size in 2014 due to popularity of feature in competitors products

 Customer Orientation
 When a business bases its marketing on a consumers’ wants
 Has to be adopted by all employees and business in its entirety
 Works towards customer satisfaction

 Relationship Marketing
 Development of a long-term relationship and loyalty from business to customer and
customer to business
 Loyalty cards and rewards systems aims to do this

TYPES OF MARKETS

What is a market?
A market is a group of individuals, organisations or both that
 Need or want the product
 Have money (purchasing power)
 Are willing to spend their money to obtain the product
 Are socially and legally authorised to purchase the product

 Resource market
 consists of individuals or businesses engaged in all forms of primary production e.g. mining,
agriculture, forestry

 Industrial market
 Includes industries and businesses that purchase capital goods

 Intermediate market
 Consists of wholesalers and retailers who purchase finished products and resell them to
make a profit e.g. furniture stores

 Consumer market
 Consists of individuals or consume or use goods and services
 Mass market
 The seller mass produces, distributes and promotes one product to all buyers

 Niche market
 Also known as a concentrated or micro market and narrowly selected market segment

INFLUENCES ON MARKETING

FACTORS INFLUENCING CUSTOMER CHOICE

 Marketers need to closely follow consumer behaviour in order to see the decisions of goods and
services they search for to effectively predict customer trends

 Psychological influences
 Are influences within an individual which affect his/her buying behaviour
 perception -> the way in which people see, select and organise things
 Motive -> reason for an individual to do something
 Attitude -> a person’s feeling about a task or object
 Personality -> behaviours and characteristics that make up a person
 Learning -> changes to an individual’s behaviour caused by info & experiences
 Brand Loyalty -> occurs when a customer becomes favourable to a brand
QANTAS Case Study
o Psychological influences (personal characteristics) affect buying behaviour
o Perception, motives (comfort, safety, reliability) and attitudes all influence Qantas’s customers choice

 Sociocultural influences
 Socioeconomic status: refers to an individual’s class and relative rank in society according to
standards of living, education, wealth and occupation
 Peer group: group of people to which an individual closely identifies adopting similar
behaviours, attitudes and feelings
QANTAS Case Study
o Sociocultural influences (personal characteristics) affect buying behaviour
o These include social class, culture and peer group
 Economic influences
 The place of the overall economy can greatly affect and impact individuals and businesses
alike.
 Can affect willingness to spend
 BOOM
o High levels of employment
o High expenditure
o Rise in Y
 RECESSION
o Unemployment rises
o Y falls
o Customers pessimistic about future
QANTAS Case Study
o Economic influences have a big impact on business and consumers ability to spend
o Because travel is very much as discretionary spend a decrease in economic activity can result in a marked downward shift in
the demand for Qantas’s services

o Decrease in consumer spending

 Government influences
 Governments will use fiscal policy (deficit or surplus budget) to restrict or stimulate the
economy to spend or save
 Such policies can have indirect/ direct influences on businesses and spending habits
 Will have overall more immediate impact on economy
QANTAS Case Study
Government influences also impact purchasing decisions
 Their economic policies have a direct impact on the level of economic activity and therefore the demand for Qantas’s
services

CONSUMER LAWS

Australian Consumer Law

 Replaced 17 existing national, state and territory consumer laws
 Marketers should be aware of laws
 Businesses must ensure they are up to date with current laws that apply to marketing

Competition and Consumer Act 2010

 One of the most important pieces of legislation affecting marketing and businesses
 Affects all businesses in Aus
 Enforced by ASIC & ACCC
1. Protects consumers against undesirable practises, contents of products, false place of production and
deceptive advertising
2. Regulates certain trade practises that restrict competition e.g. collusion
o Breaches of the Act
o Can lead to civil/criminal proceeding
o Unconscionable conduct
QANTAS Case Study
  Qantas must ensure that they adhere to the Competition and Consumer Act. This government law protects consumers from
undesirable business practices like misleading advertising and regulates practices that restrict competition like price fixing.
 Qantas now publishes the true costs of fares including previously hidden extra charges and levies following legal action
launched by the ACCC for misleading and deceptive advertising
 Qantas was fined millions of dollars by the ACCC after colluding (scheming) with airlines to fix fuel surcharges on its freight
services to the US.
 Qantas was accused by the ACCC of anti-competitive behaviour by increasing the number of seats well beyond passenger
demand, thus ensuring no carrier on the route was profitable

 Deceptive & Misleading Advertising

 Places where deception occurs
1. Fine print
2. Before and After Advertisements
3. Testing & surveys (statistical claims)
4. Country of Origin
5. Packaging
6. Special offers
 Bait & Switch advertising: involves advertising a few products at reduced and therefore enticing prices
to attract customers
 Dishonest advertising: when an advertisement uses words that are deceptive or claim a product has a
specific quality

 Price Discrimination
 Is setting different prices for a product in different markets
 Difference is possible because:
 The market is geographically separated e.g. city, country
 Product differentiation within one market e.g. electricity for businesses and individual
 Consumer act prohibits price discrimination if this could reduce competition
iPhone Case Study
o Apple must sell the iPhone at the same price to all customers in Australia
o This does not prevent other retailers of iPhone from determining their own price for the same product

 Implied condition
 Consumer guarantees: are a comprehensive set of rights and remedies for defective goods
& services
 Implied conditions: are unspoken & unwritten terms of a contract
 Acceptable quality: the product is fit to be sold for the intended purpose with acceptable
quality and appearance, free from defects
iPhone Case Study
Australian Consumer Law requires goods to be of acceptable quality, meaning certain conditions are implied
Implied conditions of iPhones include:
o Smartphones are fit for purpose
o Correspond with their description
o Apple will make acceptable spare parts, repairs and comply with warranties

 Warranties
 Businesses have obligations with regard to products they sell
 Warranty: a promise made by a business that they will correct any defects in goods that they produce
 Warranty is a marketing technique to have a competitive advantage over customers
 Governments now have made laws where by businesses have to state t&c’s regarding warranty
 iPhone Case Study
o Apple iPhone warranty must be compliant with the Competition and Consumer Act
o All iPhones should comply to 1 year warranty

ETHICAL

Ethics in business are actions taken by a business to act as responsible corporate citizens within the
community. They are not enforceable by law and rely on the goodwill and virtue of stakeholders to thrive

QANTAS Case Study

 QANTAS was fined over $80 million after colluding with other airlines to fix fuel surcharges on cargo flights in US
 Jetstar was put on notice to treat customers better or face action under Fair Trading Act (customers unhappy with
stipulation to check in at least 30 min before departure or lose seat and money)
 QANTAS now publishes true costs of fares including previously hidden extra charges and levies following warning from
ACCC about misleading consumers

 Truth
 Marketing campaigns must be truthful and not include misleading information
 It is expected to be truthful, fair, honest and provide accurate material which is good in taste

 Accuracy and good taste in advertising

 Most marketers will uphold community values in their advertising
 Some advertisements will become popular due to controversy e.g. sexualisation of women/ children,
degrading ethnic groups

 Products that may damage health

 Advertisements of abusive substances e.g. tobacco and alcohol are banned/ only shown during
sporting games and are minimised and it is unethical advertising
 Advertisement of fast food/ junk food is prohibited during children’s’ prime program time e.g 3-6pm

 Engaging in fair competition

 ACCC (Australian consumer and competition Commission) assembled in 1995 to combat unethical
businesses, acts such as collusion and misleading advertising a dealt with by them
 Penalises businesses that does this type of unethical behaviour
QANTAS Case Study
 QANTAS was accused by ACCC of anti-competitive behaviour under Trade Practices Act by increasing number of seats
well beyond passenger demand, ensuring no carrier on the route was profitable

 Sugging
 Selling goods under the disguise of a survey, questionnaire etc. then offering customers the product
claiming that the customer ‘needs’ it

MARKETING PROCESS

Situational analysis

 The situational analysis provides the firm with an opportunity to examine its current position within the
market. This will examine areas such as:
- What is the present state of the business?
- The market shares of its product
 - Future trends within the market
- Strategies used by competitors
- Changing consumer tastes and preferences

 SWOT (strengths, weaknesses, opportunities, threats)

 Analyses the strengths, weaknesses, opportunities and threats within a business with its external
environment
 Allows a business to best determine how to solve weaknesses and how to manage opportunities and
threats
 This will look at parts of a business such as:
1. Market share of product
2. Future trends within the market
3. strategies used by competitors
4. ∆ing consumer tastes and preferences

 Product life cycle

 Consists of stages in a product’s life: introduction, growth, maturity and decline
 Examines the current position of goods within the market place
 A business will need to identify which stage of the life cycle its products fit into
 The success of a product will be determined by
1. Changing trends
2. Innovation
3. Product prices
4. Sales and profit margins

QANTAS Case Study

Stage in PLC Example Characteristics Marketing Strategic
Employed

Maturity Qantas Domestic Sales have been maintained. Redesigning packaging/modifying

Lots of competition from Virgin marketing strategies, lots of
Australia and Tiger differentiation, upgrading lounges
and rolling out of on-board Wi-Fi

Renewal Qantas International Went from $495m loss in 2014 Ordering new Dreamliner planes,
to strong profits in the last 3 launch new routes and capacity in
years Asia and increase connectivity with
partners

Introduction Growth
 Business tries to increase customer  Brand acceptance and market share are
awareness/build market share for the new actively pursued
product  Product quality maintained/improved –
 Brand/reliability are established support services added
 Price often lower than competitor’s prices =  Price per unit of production maintained
gain a market foothold due to increased demand + market share
 Promotion directed and early buyers – seek to  Promotion seeks a wider audience
educate new customers about the new product  Distribution channels increased as
  Selective distribution product becomes more popular

Maturity Decline
 Sales plateau as the market becomes  Sales begin to decline as the business
saturated faces several options
 Product features + packaging are  Product maintained with some
differentiated from competitors improvements, cut losses by selling to
 Price may need to be adjusted downwards to other businesses
maintain market share  Price reduced to sell remaining stock
 Promotion continues to suggest the product  Promotion discontinued
is still the best  Distribution channels reduced and
 Distribution incentives may be offered to product offered to loyal market segment
encourage preferences over competition only.

Market Research

 The process of systematically collecting, recording and analysing information concerning a specific
marketing problem
 Attempts to identify marketing opportunities + problems
 A business will put together two types of data

1. Primary Data: facts and figured collected from the original sources for the purpose of specific
research
- Observational research: observing a relevant group of people customers and their actions to
certain situation
- Surveys: questionnaires given to people about their attitude, knowledge, preferences & buying
behaviour
- Experimental research: used to examine how people react to different products, allows
businesses to figure out if a changing factor alters consumer behaviour

2. Secondary data: information that has already been collected by other organisations
- Internal: information’s already collected by the business e.g sales reports, research reports
- External: publish data from outside the business: magazines, abs, internet

iPhone Case Study

o Secondary market research such as sales data & market share updates provide valuable insights to marketers of the
iPhone
o Every month Apple surveys iPhone buyers revealing why customers buy Apple products compared to competitors e.g.
Samsung

3. Data analysis and interpretation:

- After data is collected business must analyse the data to gain a better understanding of the
market and determine the most appropriate course of action

Establishing Marketing Objectives

 Marketing Objectives: are the realistic and measurable goals that are established during a
marketing plan
 This includes:
 1. Increasing Market share
 Increasing the amount of customers who buy the businesses’ products
 Increases sales and profitability
 Allows business to become more influential, strong and dominant

2. Expand into new geographic markets

 Allows a business to increase its sales and allows the brand/ products to achieve awareness
amongst an increase number of customers

3. Expand the Product Range

 Providing a wide range of products to allow the business to target more customers
 New may not be substantially different from existing brands but will be distributed &
promoted in a way that reaches new market

QANTAS Case Study

 Qantas main marketing objective is to build 2 leading complementary brands, Qantas (premium airline) and Jetstar (low
fares airline)
 Increase sales (revenue) and decrease costs (expenditure)
 Maintain Qantas/Jetstar’s combined domestic market share of 62%
 Match capacity with demand sustaining loads around 80%
 Increase customer service standards and customer experience
 Enhance complementary portfolio businesses like Freight
 Enhanced partnerships (with Emirates, American Airlines and China Eastern in particular) to expand their international
network
 Align Qantas and Jetstar with Asia’s growth
 Grow their frequent flyer program members and partners

Identifying Target Market

 A target market Is a group of present and potential customers to which a business intends to sell its
products
 Business identifies a target market to easily find out its type of customers and direct its marketing
strategy
 Consumer markets can be broken down into three categories

1. Mass Market
 Consists of all customers- both genders, all ages, geographic locations and income
 Not aimed at specific buyer group and appeals to all customers
 Limited strategies a business can use to make these products different from competing
products
 A business can differentiate its products through packaging, brand loyalty, price or customer
loyalty products

2. Market Segment
 A business may choose to target its product to a specific market segment
 Total market is subdivided into groups of people who share one or more common
characteristics
 A business decides to segment its market to ensure that appropriate promotional and
pricing strategies and developed

3. Niche Markets
 Each market segment consists of a number of smaller markets called niche markets
  A business targeting a niche market has a specific, narrow customer base

QANTAS Case Study

The target market is that group of customers which Qantas aims its marketing strategies at. This allows Qantas to use its marketing
resources more effectively and to better satisfy the needs and wants of its targeted group. Market segmentation is the process used
by Qantas to select its target markets.

Developing Market Strategies

Marketing Strategies: Are actions undertaken by the business’s marketing objectives through the
marketing mix (Product, price, promotion, place of distribution)

 Product
 Refers to the g/s the business will sell on the marketplace
 Must consider the quality, branding, logo, product positioning against competitors e.g.
luxury vs. budget
QANTAS Case Study
 Positioning is the image that Qantas projects in relation to its competitors. Qantas brings attention to its service by using a
variety of positioning strategies:
 By positioning in relation to its competition E.g. By launching its own no-frills carrier, Jetstar, Qantas has arrested the erosion
of its market share to Virgin Blue
 By positioning in relation to a target market e.g. Qantas has concentrated on securing the lucrative corporate/business
market through its City Flyer express service, lounge upgrades, Frequent Flyer Scheme and Qantas Club services

 Price
 When determining appropriate price business must consider, product costs and operation
costs, desired profit margin and price customers are willing to pay
 Low price may encourage sales but may also make the product look poor quality and cheap

 Promotion
 Process of creating and maintaining consumer awareness towards a particular product
 Various forms of promotion are done to persuade consumers to buy the product
 E.g radio, TV, Print, Billboard

 Place of distribution
 Methods of creating and distributing goods to consumers
 E.g wholesaler, manufacturer, directly to customer
 Need to decide place of purchase for customer + storage, transportation etc.
QANTAS Case Study
o Comfort based features such as lounges, in-flight meals and drinks, in-flight entertainment and seat width
o Qantas Frequent Flyer Scheme used to retain customers and increase market share
o Scheduling features such as route frequency, time of departure or arrival, number of stops of direct flights and the aircraft type

Implementation, monitoring and controlling

 Implementation:
 o This is the process of putting a marketing plan into action
o Involves daily, weekly and monthly and monthly decisions made by business in relation to
marketing
o Plan should:
- Integrate well with other parts of the business
- Find best people to implement marketing plan
- Structure well and organise the business
 Monitoring and controlling
o Once marketing plan has been implemented, it must be closely monitored and controlled
o Monitoring means checking and observing actual process of the marketing plan
 New product development: assists in achieving long-term growth by introducing new products into the
business
 Product deletion: elimination of product, outdated products may create an unfavourable image of the
image, so it is imperative to remove them from the product line to maintain their reputation

 Developing a financial forecast

 Financial forecast: businesses’ financial forecast about the future
 Two things are needed to create a financial forecast

1. Cost estimate:
- How much the marketing plan is expected to cost
- Marketing plan can be divided into market research, product development and promotion

2. Revenue Estimate
- How much sales a marketing plan is expected to generate
- Found by looking at how much consumers are expected to buy and at what price, how much staff
predict to sell

 Comparing actual and planned results

 Comparing actual and planned results can be determined by three key factors
1. Sales analysis
- Compares actual sales to forecast sales to determine the effectiveness of the marketing strategy
- Downfall: data for sales doesn’t reveal exact profit level

2. Market share analysis/ ratios

- Business is able to evaluate marketing strategies compared to its competitors
- Can compare increase/ decrease in sales to how the market share of the business is doing

3. Market profitability analysis

- method where by the business breaks down the total marketing costs into specific marketing
activities

 Revising Market Strategy

 Once results of sales market share & profitability have been analysed business can conclude which
needs are being met or not
 Changes in the marketing mix, product depletion and new product development can all cause revising
to marketing plan
iPhone Case Study
o Monitoring: apple would need to monitor sales data for the iPhone to identify market saturation (when sales are no
longer increasing)
o Control: Apple may require a new model of iPhone to be launched or identifying new distribution channels (place) to
increase sales and market share
 QANTAS Case Study
o Due to many unforeseen circumstances that occur during the implementation of marketing plan, Qantas uses a systematic base
for continually monitoring, controlling & adjusting its marketing activities
o Qantas has a strong focus on taking corrective action demonstrated through:
- Introducing its own budget domestic carrier Jetstar in 2004 to counter Virgin’s increase market share of aviation industry
- Lowering flight prices to stimulate demand, reducing flight frequency on some routes & cancelling % delaying orders for
new flights
- Expanding into Asian markets to take advantage of aviation growth in the region

MARKETING STRATEGIES

Market segmentation, product/service differentiation and positioning

 Market segmentation
 When total marketing is divided into different groups of people who share common characteristics
 Majority of g & s sold are a reflection of different tastes and preferences, therefore segmentation
must occur to narrow down the target market of a business
 Methods of market segmentation include:
1. Geographic segmentation: dividing by region e.g. city, suburb, state, country
iPhone Case Study
o Apple’s geographic segments consist of the Americas (north and south), Greater China, Japan, Europe and the rest of
Asia

2. Demographic segmentation: dividing based on age, gender, religion, income, family size etc.
iPhone Case Study
o High price of iPhones (relative to competitors) is targeted at higher income customers in developed countries
o The iPhone 5c was the first ‘low cost’ iPhone to be targeted at customers globally, however had limited success

3. Psychographic segmentation: dividing according to a person’s values, interests and attitudes

iPhone Case Study
o iPhone users are more concerned about the status of owning an iPhone compared to Android
o iPhone users are shown to have higher levels of emotionality, more extroverted and have lower levels of honesty &
humility

4. Behavioural segmentation: dividing according to the behaviour of consumers

 Product/service differentiation
 Is developing and promoting products which differ from its competitors in appearance/ how it is
done
 Points of differentiation include
1. Customer service: how employees and staff treat customers
2. Environmental concerns: how much pollution a business is making, push for ‘eco-
friendly’ business
3. Convenience: ease of obtaining and using product/ service
4. Social & ethical issues: whether a business is involved in exploiting or misleading
behaviours especially in relation to its workers
iPhone Case Study
o Differentiation allows Apple to charge a premium price for its products (price skimming) & higher profit margins
 o Issue for Apple to maintain differentiation despite being a market leader
o E.g. Apple’s iPhone X had features which were criticised for being already available
o Apple’s main differentiation in its persuasive marketing strategies
o Differentiation is more psychological than physical

 Product/ service positioning

 Technique of a business creating an image, brand, identity for its business and products to set it
apart from competitors
iPhone Case Study
o Leading global brands e.g. Apple & Samsung were previously seen to be superior compared to other Chinese brands
however this gap has become less significant

Products- goods, and/or services

 Branding
- The reputation that a business has developed over a period of time
- Brand symbol/ logo: graphic representation that identifies a business or product
- Trademark: signifies a business has registered its name and is exclusive under its use

 Packaging
- Container and developing outside of the product
- Should preserve the product, protect it from damage or tampering, attract the customer’s
attention
- Label: shows ingredients, content of product, information about product
iPhone Case Study
o Focus on quality, design & appearance
o Strong brand image, highly visible logos on Apple products
o Packaging suggestive of quality
o Slow opening box, creates anticipation, peeling back plastic

Price including pricing methods- cost, market, competition-based

Cost Based Pricing

 Pricing method derived from the cost of producing or purchasing a product then adding a mark-up
 Mark-up: a predetermined amount (usually a %) added to the cost of every good as profit
 Cost + (Cost x Mark-up % = Price)
 Issues:
- Difficulty in determining a proper mark-up percentage as if it is too over-priced the good will not
sell
- As mark-up is added after production of the good other costs that may be incurred e.g.
marketing/ operations costs

Market- based pricing

 Setting a price for a good/ service based on the level of demand/ supply within an economy-
whatever the market is prepared to pay

Competition-based pricing
 Price covers costs of raw materials and operating business
 Is comparable to competitors’ price
  Price skimming
 When business charges highest possible price for g/s at the introduction of the products’ life e.g.
iPhones
iPhone Case Study
o Price skimming used for new iPhone releases due to its prestige as a leading edge quality product
o When model is upgraded, older model price is reduced to competition based pricing, usually aligned with the latest
Samsung model
o Competition based pricing is used for low-cost (iPhone SE)
o Bundling plans with network provider+ phone makes higher price more diluted

 Price penetration
 Occurs when a business charges the lowest possible price at the introduction of the product’s life
cycle to achieve largest market share
 May not be viable option forever
QANTAS Case Study
o Qantas uses Penetration pricing (lowest possible price) for Jetstar

 Loss leader
 Pricing strategy whereby business provides a limited number of goods that generates minimal profit
to encourage customers to purchase goods
 It is hoped that once in store consumer will purchase other goods which will be slightly more
expensive than those of competing businesses
 The aim of this pricing structure is to entice consumers into a store with the availability of some
stock that is relatively inexpensive.
 It is hoped that, once in the store, consumers will purchase other goods that will be slightly more
expensive than those of competing businesses.
QANTAS Case Study
o Qantas uses this pricing strategy loss leader when it first launched Jetstar in 2004 and Jetstar international in November 2006 be
introducing ridiculously low fares to gain initial market share

 Price points
 Selling products only at certain predetermined prices
 Business may sell similar products at different prices

Price and quality interaction

 Consumers believe that as price increase so does the quality of the product
 Has to with the prestige/ premium pricing: business will charge high price due to quality and status
of product

Promotion
 Describes the methods used to inform, persuade, and remind a target market about its products

QANTAS Case Study

o Advertising: Qantas advertises on television, radio, magazines, newspapers, brochures, posters in travel agents and billboards
o Sales promotions: E.g. when Qantas first launched Jetstar it released 100,000 tickets for $49
o Qantas also launched a two-for-one ticket sale, which allowed a second passenger to fly for the costs of taxes and charges
Elements of the promotion mix

 Advertising
 Advertising is a paid promotional tool used to persuade and inform consumers about a businesses’
products
 Usually generalised, non-specific
 Most common form of promotion in Australia
 Examples: TV ads, billboards, magazines, radio, newspapers
 Depends on size of business, budget of marketing, cost of advertising medium, product’s position in
product life cycle
iPhone Case Study
o ‘shot on iPhone’ campaign
o product placement on TV shows, mass media advertising focusing on innovation, quality & design
o business magazines & journals

 Personal & relationship marketing

 When a salesperson interacts directly with customers
 More personalised form of promotion
 Message can be informed to suit customer’s needs
 Can be used in smaller shops or door- to door sales reps.
 Relationship marketing: the development of long-term, cost- effective strong relationships with
customers
 E.g. loyalty program: usually a card based point system whereby customers gain points and prizes
from purchasing from a store, therefore building customer loyalty

 Sales promotions
 The use of activities or materials as direct inducements to customers
 E.g. competitions, discounts, sales
 Signing up for email notifications allows for higher exposure to sales promotion

 Publicity and public relations

 Process of creating an event for business to raise awareness about its products
 E.g. product launches done at Nike etc.
 McHappy day, charities events etc.
 Publicity is free advertising done by news outlets on events run by businesses

iPhone Case Study

o Use of mass media at highly publicised launches
o Social media
o Publicity & secrecy approach to keep media guessing

The communication process

 Opinion Leaders
 Are influential leaders usually celebrities with high power among society to influences people,
opinions are highly valued
 Celebrity endorsement etc.
iPhone Case Study
 o Celebrity endorsements e.g. Taylor swift, Drake

 Word of Mouth
 When peers bring up brands to their peers to enhance and give more exposure to business
 Local business will rely on this mainly

Place of Distribution
 It is primarily concerned with the process of distributing the product from where it is made to the
consumer.

Distribution Channels
 Distribution channels are the channels by which a product is moved from the place of manufacture
(the product’s place of origin) to the consumer (the product’s final user).
 The distribution process may involve a number of steps. There are three common channels of
distribution that various businesses may use.

 Producer to consumer
 The good or service is produced by an individual/organisation and is then passed directly on to the
consumer.
 Examples of products with a producer-to-consumer channel of distribution are those provided by
the services and hospitality industries, such as taxation accountants, hotels and dentists.

 Producer to retailer to consumer

 A producer may need to include a retailer in the distribution channel
 The retailer is used as an intermediary who accesses the good from the producer and then sells it to
the consumer.
 This is a popular method of distribution and the retailer and producer will often share marketing
responsibilities
 restrict the ability of the producer to directly examine the buying patterns and behaviour of
consumers

 Producer to wholesaler to retailer to consumer

 The producer-to-wholesaler-to-retailer-to-consumer distribution channel includes an additional
intermediary: the wholesaler
 In this system the wholesaler takes responsibility for distributing the product from the producer to
the retailers

Channel Choice
 The choice of distribution channel will influence the types of customers the product attracts, the
perception of the product in the market and, above all, the ease with which the consumer is able to
access the product.
 The distribution channels can be categorised as intensive, selective and exclusive.
 Intensive
 product is readily available to a wide selection of stores or locations.
 The product is easily accessible by consumers, can be found at a number of different types of
stores and is often included in everyday purchases.
 Convenience items (such as milk, soft drink, confectionery and newspapers) are examples of
products that lend themselves to intensive distribution.

 Selective
 involves the use of a limited number of stores/locations to sell or distribute a product.
  This method allows a business to control where its product is sold and to ensure that the places
chosen are consistent with the image that the business is attempting to project and that the
product will reach its target market.
 Cue is a ladies’ fashion brand available at a limited number of Cue stores and also across all Myer
stores.
 The stores where this fashion brand is sold all appeal to the same demographic.

 Exclusive
 is a form of distribution in which there is a restriction on the number of products and/or
availability of the product?
 The product is available at a very limited number of venues.
 allows the business to maintain control of all elements of the production, distribution, sales and
marketing of the product.
 Tiffany & Co. is one of the world’s most exclusive lines of jewellery. The jewellery it designs and
manufactures is only available in Australia from six stores. Each of those stores is located in close
proximity to customers with a high income.

Physical Distribution Issues

 When a business is establishing the way it will physically distribute its product it needs to consider
several issues, including transport, warehousing and inventory.

 Transport
 Transport is the process of moving goods from one location to another.
 Need to be considered: length of time needed to transport goods, type of good, best method of
transportation
 Many fresh foods must be refrigerated while being transported and there is a limit on how long they
may be stored.
 Transportation can be expensive and it is important that the business factors this cost into the final
price of the good

 Warehousing
 Warehousing is the process of storing products before they are distributed to the consumer.
 The warehouse will distribute the stock to the retailer at a later time and with minimal delay
 As with transportation, warehousing is influenced by the type of good being stored and distributed.
 Examples of these goods, which are known as perishables, are fresh fruit, vegetables and flowers.

 Inventory
 the sale of stock that provides the business with the means to achieve its financial objectives. Stock
is also referred to as inventory.
 A business must ensure that it has sufficient stock to satisfy consumer demand.
 ISSUE: Overstocking may force the business to hold clearance sales in which profits are reduced and
may restrict the ability of the business to store new, possibly more attractive, forms of stock

People, Processes and Physical Evidence

 Traditional way of 4Ps has become outdated
 4 main Ps are used mainly for goods
 Extra Ps are added mainly for services
 Include People, Processes and Physical Evidence
 Each of the Ps must be examined withina manner that would effectively target the business’s customer
base.
  People
 Refers to quality of interaction between the customer and those within the business who deliver
service
 can be reflected through high standards of customer service in all aspects of the business
 Excellent customer service is important to maintain high levels of customer satisfaction
 Includes detailed product knowledge and attending to customer needs in an understanding manner
 Customers make judgement based on how the employees and staff treat them
 Businesses should develop a culture of customer focus
QANTAS Case Study
o The quality of Qantas’ services depends on the ability of its human resources
o Most customers have direct contact with Qantas employees, especially on the ground (through ticketing, check-in and baggage
handling), the impression they give has a big impact on how Qantas is perceived
o Qantas staff must have appropriate personal attributes and training for their jobs
o Qantas spends more than $275 million a year on staff training to ensure a very positive interaction between its customers

 Processes
 Refers to the flow of activities that a business will follow in its delivery of time
 Businesses need to ensure processes are suited to customer need and overall give customer
satisfaction
 All aspects of the sale are involved with delivering the expectations to the customer

QANTAS Case Study

o Qantas implements effective processes to ensure its service is provided in a timely fashion
o Customers judge an airline by how efficient and customer friendly its processes are
o E.g. Qantas’ new Q Bag Tag allows passengers to check in their baggage without attaching temporary baggage tags, you are able
to drop your bags and go, making it much faster
o E.g. Booking flights online
o E.g. Online check in
o E.g. Mobile check in

 Physical Evidence
 Refers to environment which the product is being delivered
 Also include location where service is being provided and materials needed in order to complete the
service e.g. signage, business cards, business logo and website
 Difficult for a business’s marketing to provide ‘try before you buy’, unless free trial is offered
 It is then assumed that a business must provide high-quality physical evidence to create and image/
brand of quality and excellence

QANTAS Case Study

o Qantas’ customer decisions are influenced by a whole range of physical aspects (the environment in which its services are
delivered). These include Qantas’ signage, its web site, its terminals, lounges and uniforms
o Qantas provides a uniform for all staff improve their professional appearance.
o

E-Marketing
 Internet marketing is also known as e-marketing
 The use of emails to directly liaise & communicate with customers
 Allows a business with online operations to directly communicate and reach a global audience
 Use of website and webpage which must entice and interest the customer
 E-marketing can be done on a series of forms
- Podcasts: distribution of digital audio and video over the internet
- SMS: text messages sent between phones
- Blog: online service whereby people post their own thoughts, opinions and ideas
 - Social media advertising: advertising and selling products to a wide range of audience over
social media platforms e.g. Facebook, twitter Instagram etc.
A: cost effective, easy to use and monitor, effective measure to gain exposure
D: business does not have control of what online users may say, difficult to measure the reach &
frequency of audience

QANTAS Case Study

o Qantas uses the internet for e-Marketing in two main ways:
- Emails (Frequent Flyer email list targeted with specials)
- Website (including online purchasing avenues)

Global marketing
 A transnational corporation: TNC is a business that operates on a worldwide scale. Each foreign market
presents new conditions, tastes and cultures, requiring constant alteration of the marketing mix
assisted by effective market research
 Global branding: is the worldwide use of a name, term, symbol, or logo to indetify the seller’s
products. This form of branding is cost effective and encourages brand recognition
QANTAS Case Study
o Uses same brand and logo globally (flying kangaroo)
o Strong global brand allows QANTAS to increase international revenues and growth
o Helps protect them from international competition
o Gives airline instant recognition around world representing safety, reliability, engineering excellence and customer
services
o Drives down packaging, design and advertising production costs

 Standardisation: assume the way the product is used and the needs it satisfies are the same all over
the world (mobiles, electronics, music & soft drinks)
- A: cost & time saving
- Reduced research & development costs
- Easy modification of marketing mix
- Promotional strategy can be standardised
QANTAS Case Study
o Standardises most elements of marketing mix such as product design, brand name, packaging and product positioning
o Allows economies of scale
o Most of these marketing strategies are alliance based
o Alliances create larger range of global products for existing customers e.g. OneWorld alliance (logo appears on all
member planes and ticketing)
o Allows QANTAS to capture greater share of market and of premium customer segments

 Customisation: is a local approach that assumes the way the product is used differs by market, and the
marketing mix is adjusted accordingly.
QANTAS Case Study
o Planned to use customised approach with new premium airline in Japan
o Would have adjust marketing mix elements to suit this particular global target market
o Airline was likely to adopt more culturally sensitive style
o In-flight menu was to focus on Asian dishes

 Standardisation is more common strategy employed by TNC’s, as the challenge and costs of local-
customisation often prove too great
 Global pricing: is the coordination of pricing policy across countries
 o Customised pricing: different prices for same product according to the local costs (taxes,
currency, conversions etc.)
o Marketing customised pricing: even more flexible than customised pricing, used when there is
an excessive competition
o Standard worldwide pricing: same price for same product everywhere in the world
iPhone Case Study
o Price determined by exchange rates, taxes, transportation costs & local taxes

 Competitive positioning: is a formal business process to determine how to differentiate the business
from competitors in the market
iPhone Case Study
o Apple typically positioned products at higher end against competitors due to quality & design
o High-end market has become saturated in developed countries
o Apple and competitors have turned to emerging economies