Topic 3: Marketing

​ Students learn about:

​
role of marketing (TASI)
​ Types of markets,
​ Approaches,
​ Strategic role of marketing,
​ Interdependence with other key business functions)
​
● Strategic role of marketing goods and services
● Interdependence with other key business functions
● Production, selling, marketing approaches
● Types of markets – resource, industrial, intermediate, consumer, mass, niche

influences on marketing (FEC)

● Factors influencing customer choice – psychological, sociocultural, economic, government (PEGS)

Psychological

Economic

Government

Sociocultural
● Consumer laws
​ – deceptive and misleading advertising
​ – price discrimination
​ – implied conditions
​ – warranties
​
● Ethical – truth, accuracy and good taste in advertising, products that may damage health, engaging in fair competition, sugging

​
​ Marketing process (S. M. E. I. D. I)
​
​ situational analysis – SWOT, product life cycle

​ market research

​ establishing market objectives

​ identifying target markets

​ developing marketing strategies

​ implementation, monitoring and controlling – developing a financial forecast; comparing

actual and planned results, revising the marketing strategy

​
​
​
​
​ marketing strategies
​
● market segmentation, product/service differentiation and positioning

● products – goods and/or services

​ – branding
​ – packaging
​
● price including pricing methods – cost, market, competition-based
​ – pricing strategies – skimming, penetration, loss leaders, price points
​ – price and quality interaction

● promotion
​ – elements of the promotion mix – advertising, personal selling and relationship marketing, sales promotions, publicity and public relations
​ – the communication process – opinion leaders, word of mouth
​
​
● place/distribution
​ – distribution channels
​ – channel choice – intensive, selective, exclusive
​ – physical distribution issues – transport, warehousing, inventory
● people, processes and physical evidence
● e-marketing
● global marketing, global branding, standardisation, customisation, global pricing, competitive positioning

Definition: assume the marker is a layperson (has limited knowledge of the course) and ensure you are defining the business term or concept to reflect
your understanding. Can be integrated into the response and does not need its own sentence.
 Point: Attack the question and pinpoint what your overall answer will be, akin to a mini thesis.

Explain: Provide further details that elaborate on your point. Depending on which directive verb you are asked, this is also where you can start to show
relationships (analyse), provide additional economic theories that demonstrate a cause and effect (explain) or make a judgement (assess/evaluate).

Evidence: Use your case study to illustrate how real life businesses apply the business studies content to achieve their goals rather than simply telling
the reader that the business uses a specific strategy and not elaborating on how. Also be careful of simply ‘retelling the story’ of what the business
does but not connecting it to your thesis!

Link: Conclude your paragraph by linking your points back to your original thesis.

Role of marketing KEY TERMS/CONCEPTS

● Strategic role of marketing goods and services

Marketing: Is a total system of interacting activities designed to p;an, promote, and distribute products to present
and potential customers

The strategic role of marketing is to implement strategies to maximise sales, increase brand awareness and improve
customer satisfaction so that the business can translate this goal into reality.

● Planning, specifically strategic planning, is essential to long term business success as it encourages businesses
 to set goals and devise strategies on how they will achieve those goals. To achieve these goals, businesses may
devise a marketing plan which is a document that lists activities aimed at achieving marketing outcomes . It
provides a template for future action. There are two main strategic goals related to marketing:

- Profit maximisation: occurs when there is a maximum difference between the total revenue coming into the
business and the total costs being paid out.
- Customer orientation: Is placing customer satisfaction at the core of the business’ decisions to ensure the
business meets their needs and wants.

To achieve profit maximisation and customer orientation, the marketing plan should be the focus of both short and
long-term planning for three reasons:

1. Marketing plans outline the strategies that bring the buyer and seller together

The business needs to be able to identify:

● where the market is

● who will buy the product
● why they will buy the product
● how often they will buy the product

2. The Core of marketing is satisfying existing customer wants, which leads to repeat sales

3. Marketing is the only revenue generating activity of any business.

● Interdependence with other key business functions KEY TERMS/CONCEPTS

● The following table demonstrates the relationship between marketing and how it relies on the other key business
functions to operate to maximise the business’ productivity.
Finance ● Adequate funds are required to promote the product, conduct market
research, and design the goods and services.

● Finance depends on marketing to generate funds for the business. One of

the key goals of marketing is to sell the goods and services. This in turn
benefits the profitability of the business.

Finance then distributes these funds to other business functions in the form of
budgets and for financial purposes like paying shareholders and paying interest.

At the same time the marketing function relies on finance to fund marketing
activities, particularly promotional campaigns that cost money.

Operations ● The operations function is concerned with the process of manufacturing a

particular good. They work closely with the marketing department to
incorporate product features that consumers will respond positively to.

Production needs to fulfil the designs created by the marketing function. Product
designs must be aligned with the needs of the customer as outlined in market
research.

It is the responsibility of the marketing function to develop strategies that would

sell the product.
Marketing also determines issues such as pricing of products. Operations must
find ways to reduce costs of production in order to make this possible.
 Marketing ensures that the price adheres to the business’ operations costs.

Human resources Marketing requires skilled employees to conduct marketing functions. Human
resources is concerned with recruitment, training and development of employees.
Staff with motivation and skills are required to cater for the needs and wants of
customers as identified by market research.

The human resource function is focused on the role of employees within an

organisation. It is a function that aims to find, attract, develop and motivate the
people who can provide the services that the business requires.

The quality and attributes of staff are particularly important for the marketing of
services, as potential customers judge the product and the business on the basis
of the people who provide the service.

Staff are the public face of the business. Their actions towards consumers will
influence the decision of a consumer to purchase a product

Once a business has conducted market research as part of marketing, they would work with operations
 ● Production, selling, marketing approaches

KEY TERMS/CONCEPTS

Production approach

The production approach allows businesses to focus on the production of goods and services. The Industrial
Revolution saw the demand for goods and services exceed the production capabilities of businesses as they
concentrated purely on producing goods and services.

Businesses were continuously focused on improving quality and the quantity of manufactured products meaning
they were product orientated. A business’ demand for goods and services were based on their mass production
capabilities and their marketing concept consisted of simply taking orders and delivering the products.

Selling approach
The selling approach emphasises selling due to increased competition in the marketplace. Following WWI, production
became more efficient and productivity increased, so market competition increased and businesses started delivering
more high quality and mass- produced products.

To stimulate demand, businesses were increasing spending on advertising and using high pressure tactics to convince
consumers to buy. Businesses produced what the company was able to make and then got their sales representatives
to create demand, rather than research what the customer wanted.

Marketing approach

The marketing approach focuses on finding out what customers want through market research. This began post-
WWII as the economic boom meant most Australian families had sufficient discretionary income. Therefore, the
emphasis of the marketing approach shifted to the development of a marketing concept based on four principles:
Customer orientation, integrated marketing strategies, satisfying customers, and integrated business plans that
achieve the business’ goals. Businesses have also shifted towards integrating customer orientation, relationship
marketing and corporate social responsibility into their business model to satisfy the needs and wants of customers.

Societal marketing approach

The societal marketing approach emphasises social responsibilities and suggests that to sustain long-term success, a
business should develop a marketing strategy to maintain and improve the wellbeing of both customers and society.
The societal marketing approach holds that a business should make good marketing decisions by balancing three
considerations: consumers’ wants, business profits and society's long-term interests.
 ● Types of markets – resource, industrial, intermediate, consumer, mass, niche KEY TERMS/CONCEPTS

Resource market: groups involved in primary production (e.g. mining, agriculture, forestry, and fishing).

Industrial market: businesses that purchase products to use in the production of other products or in their daily operations. For
example, a bakery uses flour to product bread

Intermediate market: consists of wholesalers and retailers who purchase finished products and resell them to make a profit. This
can be referred to as business to business engagement (B2B). For example, Food Retailers, any food business that buys food
products for resale to the end consumer. Food retailers include restaurants, grocery stores, specialty stores and institutional
food services.

Consumer market: Consists of individuals; that is members of a household who plan to use or consume the products they buy.
This can be referred to as business to consumer engagement (B2C)

Mass market: Is when the seller mass produces, mass distributes and mass promotes one product. In mass markets, businesses
do not target a specific group of buyers, but rather assumes that all cus-tomers have homogeneous or similar needs

Niche Market: Is a narrowly selected target market (also known as a concentrated or micro market). The mass market is divided
into smaller market segments of buyers who have specific lifestyles. It assumes that all consumers have heterogeneous or
different needs.

Influences on marketing KEY

TERMS/CONCEPT
S
● Factors influencing customer choice
Customer choice (buying behaviour): refers to the decisions and actions of customers when they search for, evaluate, select, and
purchase goods and services.

As businesses become aware of the different factors influencing customer choice, marketing management can predict future
customer trends and how they may react to different marketing strategies

Psychological factors: are influences within an individual that affect buying behaviour.

● Perception: is the process through which people select, organise, and interpret information to create meaning. Marketing
managers attempt to create positive perceptions about their product in the mind of customers in order to gain repeat sales
and achieve profit maximisation.
● Learning: refers to changes in an individual's behaviour caused by information and experiences. Learning may be based on
indirect experiences in which businesses try to devise successful marketing strategies that encourage customer learning and
increase brand loyalty.

• Attitudes: are a person's overall feeling about an object or activity. Customer attitudes influence the success or failure of a
business' marketing strategy.

• Motives are the reasons that make an individual do something. Advertising attempts to influence an individual's motives in order
to persuade them to purchase their goods and services

• Personality is the collection of the behaviours and characteristics that make up a person. Self-image is related to how a person
views themselves. Marketers attempt to take advantage of an individual's desire to express their identity through what they buy by
highlighting the perceived value of their products.
Sociocultural influences

Sociocultural influences: are forces exerted by other people and groups that affect an individual's buying
Behaviour.

● Social class: refers to a person's relative rank in society based on their education, income, or occupation. Social class
influences the type, quality, and quantity of products a customer buys

● Culture: refers to all 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

● Reference or peer groups: are groups of people with whom a person closely identifies, adopting Their attitudes. values and
beliefs. Customers buying behaviour may change to match the rest of the group’s belief

Economic influences

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. It is an external factor

● Boom: is a period of low unemployment and rising incomes when businesses and customers are optimistic about the future,
and increase their production and attempt to increase their market share.

This means there is an increase in customer spending and discretionary income.

● Recession: is a period of high unemployment and falling incomes. Customers and businesses lack confidence and become
pessimistic. There is a decrease in consumer spending as a result of customers becoming price conscious as they turn to look
for goods and services that reflect value and function.
 Government influences (external)

Government regulations have a more direct and immediate impact on a business; marketing plans. Depending on the current state of
the economy, the government will implement policies to expand or contract the economy which will influence business activity and
the marketing plan. Additionally, laws such as the competition and consumer Act 2010 (Commonwealth) influence marketing
conditions.

● Consumer Laws KEY TERMS/CONCEPTS

Syllabus:

Students learn to: Examine why ethical behaviour and government regulation are important.

Australian Consumer Law (ACL)

In 2011, a nation-wide consumer law known as the Australian Consumer Law (ACL) was introduced.
This law setted out consumer rights and business obligations when selling goods and services.

The Competition and Consumer Act 2010 (CCA)

Within the Australian Consumer Law is the Competition and Consumer Act 2010 (Cth) which
monitors and regulates marketing practices. This Act is enforced by the industry regulator known as
the Australian Competition and Consumer Commission (ACCC), and has two major purposes:

1. To protect consumers against undesirable practices

2. To regulate certain trade practices that restrict competition

Powers of the CCA

● Any breach of the act can result in the ACCC taking civil or criminal proceedings against the
business. The Act allows courts to impose penalties of up to $1.1 million for companies and
$220,000 for individuals for unconscionable conduct.

● The ACCC also has the power to issue on the spot infringement notices (fines) to
manufacturers alleging false claims about their products. Public warning notices and trade
restrictions can be issued by the ACCC to warn customers of suspected illegal activity.

- Deceptive and misleading advertising KEY TERMS/CONCEPTS

● Businesses must ensure that their advertisements do not use deceptive words or make false claims about the
quality or characteristics of their product. Examples of deceptive and misleading advertising under the
Competition and Consumer Act 2010 (Cth) include fine print, country of origin, before-and-after
 advertise-ments, and special offers.

However, the two main misleading and deceptive advertising techniques are:

● Bait-and-switch advertising- This involves advertising products that are not available, or only available in very
limited quantities, at reduced prices to attract customers. When the advertised products quickly run out,
customers are directed (or switched) to higher priced items.

● Dishonest advertising is when businesses use words that are deceptive and claim that their product has some
specific qualities or features when it does not.

● Fine print and qualifications. When important conditions are written in a small-sized print. This information
must not contradict the overall message of the advertisement.

Case study:

The makers of Voltaren admitted they breached the Australian Consumer Law and were owed $4.5 million in 2020 for
making false and misleading representations in their marketing. The company admitted they marketed Osteo Gel as
being more effective than Emulgen (which is 33 per cent cheaper) in treating osteoarthritis despite the two products
being essentially the same
Case study:

In 2019 Volkswagen AG was ordered to pay a $125 million penalty for misleading consumers about its diesel
emissions.The Federal Court declared by consent that the company breached the Australian Consumer Law by making
false representations about compliance with Australian diesel emissions standards.The $125 million that Volkswagen
was ordered to pay is the highest total penalty order ever made by the Federal Court for contravening consumer
law.The car manufacturer admitted that, when it requested approval to supply and import more than 57 000 vehicles
intoAustralia between 2011 and 2015, it did not disclose to theAustralian government that its cars had
two-modesoftware that hid the true nature of nitrogen oxide (NOx) emissions.
– Price discrimination KEY TERMS/CONCEPTS

Price discrimination: is the setting of different prices for the same product in different markets.

Differences in prices may occur because the markets are geographically separated, or there is a product
differentiation within the market. Under the Competition and Consumer Act 2010, Commonwealth (Cth) price
discrimination is prohibited if it reduces competition.

- An example of this is Uber in peak hour where prices start to increase due to higher demand.
 - Implied conditions KEY TERMS/CONCEPTS

Statutory-
Implied conditions: are the unspoken and unwritten terms of a contract. It’s the basic consumer rights to every product

Following the Australian Consumer Law, a single set of statutory customer guarantees were established. Customer guarantees
are a comprehensive set of rights and remedies for defective goods and services. However, the most important condition of
customer purchases is that the goods must be of acceptable quality. This means that the product must be fit for the purpose for
which it is being sold as well as being acceptable in finish, safe, durable, and free from defects.

The following consumer guarantees on products and services apply.

1. Products must be of acceptable quality, that is:

2. Safe, lasting, with no faults

3. Look acceptable

4. do all the things someone would normally expect them to do. Acceptable quality takes into account what would normally
be expected for the type of product and cost.
Products must also:

5. match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising

6. match any demonstration model or sample you asked for

7. best for the purpose the business told you they would be for and for any purpose that you made known to the business
before purchasing

- Warranties KEY
TERMS/CONCEP
TS

Warranties: are promises made by businesses that they will correct any defects in the goods that they produce or the services that
they deliver.

A warranty ensures the customer that the business has confidence in the quality of their goods and service and will repair or replace
any faulty items. The Competition and Consumer Act 2010 (Cth) outlines the rig of consumers regarding refunds and exchanges.

A business is required by law to offer a refund if:

• The products provided are faulty

• The products do not match the description or sample

• The products are not fit for purpose

● Ethical KEY TERMS/CONCEPTS

Syllabus:

Students learn to: Examine why ethical behaviour and government regulation are important.

Ethics are the established standard of behaviour or guidelines for a business. However, businesses are often subject
to ethical criticisms such as:

1. The creation of needs through materialism

- Is an individual’s desire to constantly acquire possessions.

- Large businesses use sophisticated and powerful promotional strategies (advertisement being the main
source) to persuade and manipulate customers to buy whatever the firm sells.

2. Stereotypical images of men and women

- For example, men using power tools, or who watch sports whereas women are portrayed preparing meals,
cleaning or taking care of children.
3. Product placement

- Includes advertising in entertainment as a promotional strategy. These insertion of products are subtle e.g.
an actor in a tv show or movie driving a Mercedes-Benz or using an iPhone or Samsung.

- Businesses use this promotional technique as it allows them to reach consumers in various ways which can
have a subtle and persuasive effect.

4. Invasion of privacy

- Online advertising is raising concerns over ethical issues where the internet is tracking web users and
gathering information to target them with advertisements.

- Collection of data is one prime example where you agree to certain terms and conditions as well as accepting
cookies on websites before entering. This allows the browser and website to target consumers by providing
first search options.

5. Use of sex to sell products: often an overuse of sexual themes and connotations (indication) to sell products.
- Advertisers use sex appeal to suggest to consumers that the product will increase the attractiveness or
charm of the user.
- Examples of this include: beauty products, clothing brands and luxury brands (Politix, GymShark, Mecca
Cosmetics)
Truth and accuracy in advertising

Advertising: is a paid, non-personal message that is communicated through a mass medium.

Ethical businesses should ensure their advertising is truthful as they can be held morally responsible for misleading
the public.

When businesses engage in unethical marketing practices it drives customers away, forcing them to shop at
alternative businesses which may cause a reduction in sales, profits, and market share. False and misleading
advertising is not only unethical but also illegal.

The three main unethical marketing practices are:

• Untruths due to concealed facts: when information is purposely omitted from an advertisement, causing a breach
of consumer trust. For example,

• Exaggerated claims (puffery): Is exaggerated praise, specifically used for promotional purposes, that no
reasonable person would believe as factual.

• Vague statements: are ambiguous words that the consumer could misinterpret as the intended message.

Case study: Magnum Chocolate Puffery — can ice-cream really make you happy?
 ● A billboard in New Zealand by UnileverAustralasia’s Streets brand was originally ordered to be taken down
for being 'extremely irresponsible’.

● The advertisement showed three types of Streets ice-creams —Paddle Pop, Splice and Magnum — with the
slogan ‘ICE CREAM MAKES U HAPPY’.

● But a local resident complained to theAdvertising Standards Authority in NewZealand, calling the slogan
socially irresponsible due to the obesity issues in the country. The complainant felt that ice-cream should not
be promoted in a way to improve people’s mood due to its high fat and sugar content. He was concerned
about the impact the ad would have on children as well as their parents

Good taste in advertising

This refers to:

● What is acceptable and not offensive to people

● Being aware of a younger audience
● Common agreement as to what society deems acceptable and marketers must be aware of the community
and society's views.

Marketers must ensure that their advertisements are not offensive and are in good taste. This means that
marketers should be aware of and take into account community sensitivities to ensure they maintain their
reputation. In recent times there have been concerns regarding the widespread publicity of the sexualisation of
children in advertising. Businesses must not engage in this practice.

Products that may damage health

All consumer products supplied must be safe and meet consumer guarantees under the ACL

● The marketing of junk food, which is portrayed as an essential part of a balanced diet, is heavily criticised by
nutritionists and health advocates, especially as childhood obesity rates have significantly increased.

Case Study:

Coca Cola, 2015 ‘brotherly love’ commercial representing a relationship between a young boy and his older ‘cool
coke drinking brother’, representation of unhealthy product being ‘cool’ is an unethical practices as it damages
health

● Despite these unethical practices, businesses have found unregulated ways to advertise junk food to children
such as through the proliferation of apps and social media.

Engaging in fair competition

Due to the high intensity of the marketplace, businesses may be tempted to engage in unfair marketing practices to
place them in a better position compared to their competitors. Part IV of the Competition and Consumer Act 2010
(Cth) aims to deter and regulate anti-competitive behaviour by businesses that limit or restrict competition.

Anti-competitive practices prevented under the Competition and Consumer Act 2010 (Cth) are:

● Cartel conduct
● Mergers
● Resale price maintenance
● Exclusive dealing

Sugging: is selling products under the guise (image) of a survey - a sales technique disguised as market research.

It is important to note that sugging is not illegal but rather unethical as it raises issues such as the invasion of
privacy and deception. This can create long-term consequences for businesses as the cooperation of customers
becomes more difficult due to their breach of trust.

CASE STUDY: McDonald’s

→ in 2012, McDonalds was found to have breached Spam Act 2003 by sending text messages regarding happy meal
deals, with no opt out option

→ in 2015, they were accused of not good taste in advertising by focusing on the toy in the happy meal rather than
the food itself
Marketing Processes KEY TERMS/CONCEPTS

● Situational analysis

A marketing plan gives a purpose and direction to all the business’s activities.

All marketing plans should have two main features in common, these include:

1. Realistic in the light of the situational analysis

2. Achievable within the business resources and budgets.

Two key areas of the situational analysis:

1. SWOT Analysis
2. Product Life Cycle
SWOT analysis: involves the identification and analysis of the internal Strengths and weaknesses, and the
opportunities and threats from the external environment.

Strength (Internal factor, something that a business that can control)

Weakness (Internal Factor

Opportunity ( External Factor)

Threat (External Factor, outside )

 ● By conducting a SWOT analysis, businesses are able to gain an indication of their current position in comparison
to the rest of their competitors.

● This allows the business to predict future trends, assess current market share, identity strategies used by
competitors, and analyse changing consumer tastes and preferences.

Therefore, businesses must next determine their position in the product life cycle to identify the marketing strategies
they must implement to achieve profit maximisation.

Case study Apple:

Product life cycle

Product life cycle: consists of the stages a product passes through - introduction, growth, maturity, and
Decline.

Introduction stage: A business aims to raise customer awareness due to slow sales and growth by set- ting its prices
lower than its competitors.

Growth stage: The product is accepted by products. A Business experiences an increase in profitability due to the
increased demand for products.

Maturity stage: business experiences steady profits and sales and continues to advertise their products
in an attempt to differentiate from its competitors.

Decline stage: business profits fall, prices are reduced, and promotion is discontinued. Additionally, some
products decline due to:

• Changing public perceptions on what is fashionable

• The introduction of new leading edge technologies

• New products

• Fluctuations in the level of economic activity

 ● Market research KEY TERMS/CONCEPTS

Market research: is the process of systematically collecting, recording, and analysing information concerning a specific
marketing problem.

The rationale behind market research is that through analysing customer buying behaviour, businesses are able to
minimise the risk of customers disliking their goods and services as well as put them in a stronger competitive position.

Step 1: Determining informational needs

The marketing problem needs to be clearly and accurately stated to determine what needs to be measured.
Through determining information needs, businesses are able to achieve their marketing objectives, meet customer
needs, and achieve profit maximisation.

Step 2: Data collection

There are two main types of data:

Primary data refers to the facts and figures collected from original sources to solve the own business’ problem. Its
three main methods are survey, observation, and experiment.

Secondary data is facts and figures collected by some other person or organisation. For example, the Australian Bureau
of Statistics and newspapers. This has been collected for a separate research problem.
Step 3: Data analysis and interpretation- what do these results mean and how does it impact on the business?

Statistical interpretation analysis is the process of focusing on the data that represents average, typical or deviations
from typical patterns. Businesses tabulate their data by displaying the information in a ta-de, which allows for cross
tabulation which enables businesses to make comparisons between individual categories.

● Establishing marketing objectives KEY TERMS/CONCEPTS

Marketing objectives: are the realistic and measurable goals to be achieved through to the marketing plan.

Marketing objectives should be closely aligned to the business’ overall goals however, they still need to be
primarily customer orientated. The three main marketing objectives are:

1. Increasing market share

2. Expanding the product range

 3. Maximising customer service

1. Increasing market share

Market share: Refers to the business’ share of the total industry sales for a particular product.

To successfully increase market share, businesses should develop an extensive product range so they can
appeal to a variety of different customers. This will further assist in increasing sales and achieving the
strategic role of profit maximisation

2. Expanding the product range

Product range: Is the total mix and range of products offered by a business.

Businesses need to develop an ideal product range and they do this by conducting market research, allowing
marketing managers to uncover the needs and wants of different target markets. Therefore, by design goods
and services that satisfy customer needs, businesses will be able to increase sales and maintain long-term
profitability

3. Maximising customer service

Customer service: Is responding to the needs and problems of the customer.

Businesses that have a high level of customer service will have high levels of customer satisfaction and a
positive reaction from customers regarding their goods and services
 ● Identifying target markets KEY TERMS/CONCEPTS

Target market: a group of present and potential customers a business intends to sell its products to.

The customers within the target market share similar characteristics. Therefore, this allows a business to direct its
marketing strategies to that specific group and satisfy their needs and wants. Identifying a target market allows for an
efficient use of marketing resources, a better understanding of consumer buying behaviour, and an efficient collection
of data to make comparisons over time.

There are two main types of target markets:

● Primary target market: the segment that most of the marketing resources are directed at
● Secondary target market: a smaller and less important market segment

Mass marketing approach

Mass marketing approach: seeks a large range of customers.

A mass market approach assumes that individual customers in the target market have similar or homogenous needs.
In this approach, marketers develop a single marketing mix, meaning one type of product, one promotional program,
one price, and one distribution system.

Market segmentation approach

Market segmentation: occurs when the total market is subdivided into groups of people who share one or more
similar characteristics. Segmentation enables a business to design a marketing plan that meets the needs of a group.

Niche market approach

Niche market: is a narrowly selected target market segment. These target markets are highly specialised and
customised goods and services. Therefore, the price of these specialised goods and services need to reflect their
qualities in which businesses can adopt a price skimming approach to recoup production costs.
 ● Developing marketing strategies KEY TERMS/CONCEPTS

Marketing strategies: are actions undertaken to achieve the business' marketing objectives through the
marketing mix.

Marketing mix: refers to the contribution of the four elements of marketing - product, place, promotion

and price - that makes up the marketing strategy.

After establishing the 4Ps, marketing managers must decide the emphasis placed on each variable, which
can be determined according to the product's position in the product life cycle.

Product

A product refers to anything a business offers to customers in exchange for money.

The business also needs to determine such features including:

1. Product quality

packaging/labelling

Design

Brand name

Guarantee of product.

The goal of a business is to create a product that satisfies the customers’ needs and wants where they are
willing to return.

2. Price

Pricing a product correctly is essential for a business’s success.

Pricing refers to the ‘correct’ price that customers are willing to pay in exchange for a product.

Businesses setting prices too high or low can influence customer behaviours. This equates to:

If too high = customers may seek elsewhere (substitutes) for cheaper alternatives.

If too low = customers may think quality is low and not up to standard & business may be losing
revenue/sales.

3. Promotion

Promotion refers to activities that businesses use to make customers aware, informed and the ability to
persuade customers of their products.

This includes:

Advertising - social media (YouTube, Facebook, Instagram, TikTok)

Personal selling

Relationship marketing

Sales promotion

Publicity

Public relations

4. Place/ Distribution

Channels of distribution refers to the ways of getting the product to the customer.

A business in this case must decide how and where to sell its products.

Businesses should consider:

The physical location

Online presence
Availability of the product to potential customers

Places that products normally go through include:

Intermediaries

Wholesalers

Retailers

Examples: Coca-Cola places their products globally and not just in a few stores, this includes: hotels, clubs,
vending machines, grocers and on airplanes.
 ● Implementation, monitoring and controlling- developing a financial forecast, comparing actual and planned Key Terms/ Concepts
results, revising the marketing strategy

Implementation: is the process of putting the marketing strategies into operation.. Implementation Market Saturation:
involves the daily, weekly and

monthly decisions that have to be

made to make sure the business plan is

Effective. It involves considering how, where and when marketing strategies are to be done.

Monitoring: To observe and check the progress of the marketing plan. The monitoring process requires the marketing
department to gather and report any changes, problems or opportunities that may arise during the marketing plan.

Controlling: is when KPIs (Key performance indicator) are assessed against predetermined targets and corrective action is
taken. During the controlling process, the marketing manager must constantly ask:

● What does the business want the marketing plan to achieve?

● Are the objectives being achieved?

Three basic steps in a control process

1. Setting standards.
2. Measuring and comparing actual results against standards.
3. Taking corrective action.

Developing a financial forecast

FInancial forecast: An estimate of the costs and revenue associated with the implemented marketing strategies.
By measuring sales potential and revenue forecasts for each strategy and comparing these with anticipated expenditure, the
business can effectively allocate marketing resources.

Developing a financial forecast requires:

1. Cost estimate: based on market research, product development, and promotion

2. Revenue estimate: based on how much consumers are expected to buy for what price, and what sales staff predict
they will sell.

Analysing projected costs and revenue allows the business to forecast future profit levels as well as the future success of
marketing strategies.

Comparing actual and planned results

Three key indicators used to measure the success of the marking plan are:

1. Sales analysis: comparing actual sales with forecast sales to determine the effectiveness of the marketing strategy.
 2. Marketing share analysis: comparing the changes in total sales due to its marketing strategy or external forces such
as competitors.

3. Marketing profitability analysis: when the business breaks down the total marketing costs into specific marketing
activities.

Revising the marketing strategy

After conducting a financial analysis, marketing managers must assess which objectives are not being met and take
corrective action if needed.
Changes in the marketing mix could include:

1. Changes in the marketing mix: Constant changes in the environment will lead to changes in the marketing mix.

2. Product modifications: Continual upgrade of product allows a business to maintain a competitive advantage.

3. Price modifications: Needs to be modified in response to changes in the external business environment.

4. Promotion modifications: Will change based on the stage of the product life cycle.

5. Place modifications: Will have to increase the distribution channels as the product becomes more successful. Old
markets may decrease due to demographic changes. Electronics may also be used.

6. New product development:

- Products must be continually developed to achieve long term success.

- A large amount of funds is often spent on research and development.

7. Product deletion: Is the elimination of some lines of products. Out-dated products can have a negative impact on the
image of the business.
Marketing strategies

● Market segmentation, product/service differentiation and positioning

Market segmentation:

Market segmentation: occurs when the total market is subdivided into groups of people who share one or more common
characteristics.

During the market segmentation process, common characteristics shared by individuals can be broken down into
segmentation variables. A segmentation variable is the characteristics of individuals or groups that are used by marketing
managers to divide a total market into segments. There are four main types of segmentation variables.

○ Geographic segmentation: is dividing the total market according to geographics. The marketing mix in one
geographic region can differ from another (e.g. consumers in Jindabyne will need snow chains and heavy outdoor
clothing)

○ Demographic segmentation: is dividing the total market according to particular features of a population including
population size, age, sex, income, and gender.

○ Psychographic segmentation: dividing the total market according to personality characteristics, motives, opinions,
socioeconomic groups, and lifestyles. It focuses on why people behave and act the way they do.
 ○ Behavioural segmentation: is dividing the total market according to the customer's relationship with the product.
This includes customer knowledge of, attitudes towards, use of, or benefits from the product.

Product/service differentiation and positioning

Product/service differentiation: is the process of developing and promoting differences between the business' products or
services and its competitors.

When designing their goods and services businesses try to devise new and innovative ways to distinguish their products
from its competitors. There are four main ways that businesses can distinguish their products from its competitors:

• Customer service-
 - Market research shows desire for ‘personalised’ service: products that are tailored to their individual needs and
wants. Customers may require many different services before, during and after the purchase.

- Require ‘caring’ service: to be treated honestly, courteously and efficiently.

- Want high quality and value: a business needs to establish favourable conditions for service by offering fair prices and
high-quality products.

• Environmental concerns

• Convenience

- Consumers in today’s society are often busy and always on the go which enables consumers to select products that
are of convenience e.g. consumer buying pre-made meals means they save time on cooking and prepping breakfast,
lunch or dinner.

• Social and ethical issues- Ethical consumerism involves buying products that are not harmful to the environment, animals
and society.

Example:

- In response to the dislike of genetically modified (GM) foods by consumers, various producers are labelling their
products as GM-free, and organic.

- Fair Trade movement: gaining influence with consumers who are prepared to pay more for guarantees.
Product/service positioning: refers to the technique in which markets try to create an image or identity for a product
compared with the image of its competing products.

Product/service position is also concerned with how potential buyers perceive the product. Due to the competitive business
market, businesses must constantly create a differentiated image of their goods and services, augmenting their marketing
mix to communicate their value.
 ● Products – goods and/or services

- Branding
- packaging

Products: are the goods and services that can be offered in exchange for the purpose of satisfying a need or want.

Branding
Brand: is a name, term, symbol, design, or any combination of those that identifies a specific product and distinguishes it
from its competitors.

There are many benefits to branding, specifically in helping both the business and its consumers. Specifi-cally, a trademark
signifies that the brand name or symbol is registered and that the business has exclusive right of use. The following table
demonstrates the benefits of branding for consumers and businesses.

Benefits of branding for consumers Benefits of branding for businesses

- Identifies the products they like - Gain repeat sales from establishing a recognised
brand
- Reduces the level of perceived risk in purchasing the good
or service - Encourages customer loyalty

- Gain a psychological reward that comes from purchasing - Easier to introduce new products due to familiarity with
the brand
status goods

As brands are classified according to who owns them, they must implement strategies to differentiate them from its
competitors. There are three main brand strategies:
 1. Company name branding : brands owned by the manufacturer that are recognised across the country, widely
available, and offer reliability in quality. For example, Uber Eats

2. Private-label branding: brands owned by a retailer or wholesaler that are usually cheaper because the
wholesaler/retailer can purchase the goods at a lower price. Examples include Coles and Woolworths branded
products

3. Generic branding: are products with no brand name at all.

Packing

Packaging: involves the development of a container and the graphic design for a product.

Packaging acts as a form of communication as certain colours draw conclusions about the product before reading the label.
This is known as colour psychology and assists the business in gaining a sustainable competitive advantage.

The main benefits of using packaging include:

1. Preserving the product

2. Protecting the product from damage

3 Attracting customer attention

4. Assisting with the display of the product

5. Making transportation and storage easier

Labelling

Labelling: is the presentation of information on a product or its package.

Labels: are parts of the package that contain information.

In Australia there are statues and government regulations specifying information that must be included in the tapeling of
certain products. For example, Australian Made Australian Grown (AMAG) labels must be placed on products to signify that
they have undergone transformation in Australia. It is these regulations that protect consumers from misleading or
deceptive claims and unsafe products.

Examples

ingredients

• use-by dates

• country of origin

• operating instructions or serving sizes

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

Price Supply and Demand

Price: refers to the amount of money a customer is prepared to offer in exchange for a product. Supply is the amount of a specific
KEY POINT: good or service that's available in
the market. Demand is the
It is important to remember that pricing methods are different from pricing strategies. Pricing methods provide the 'basic'
amount of the good or service
price whereas pricing strategies adjust the basic price depending on marketing objectives and conditions.
that customers want to buy.
Supply and demand are both
influenced by the price of goods
Too high = lost sales unless superior benefits are offered. and services
Too low =may give the impression that the product is low-quality.

•Businesses can gain control over price by differentiation -> e.g. designer label Nike can charge more than Target

Businesses have to take into consideration a number of factors when determining what is the
‘correct’ price.

these factors include:

– the cost of producing goods or services.

– the price of competitors.

– the product/brand's position in the market. – the image that they are trying to portray.

– the target market for the good or service.

Pricing methods

Cost-based pricing:

● Where a business determines the cost of producing an item, and then applies an adequate profit margin. For example,
 each unit costs $10 to produce. They add a 50% profit margin, therefore selling the product for $15.e.

• There are two major disadvantages:

- There is difficulty in accurately determining an appropriate mark-up percentage.

- The product is priced after production and fails to take into account the other costs incurred in the marketing mix.

Market-based pricing:

● A pricing method that sells the price according to the interaction between the levels of supply and When demand is
greater than supply, there is a shortage of supply, causing the price to increase.

● When supply is greater than demand, there is a surplus of supply, causing the price to decrease.The price of products
change in relation to fluctuations in the level of supply and demand.

Competition-based pricing:

• A pricing method where the price covers production costs and is comparable to its competitors.

• This pricing method is used when there is a high degree of competition from businesses who are producing similar goods
and services.

• After establishing a base price, business can price its goods and services:
- Below its competitors

- Equal to its competitors

- Above its competitors

 - Pricing strategies – skimming, penetration, loss leaders, price points

Price skimming:

● Occurs when a business charges the highest possible price for a product during the introductions
● Consumers pay the higher price for a product's novelty features because of the prestige or status; gives.

• It appeals to those consumers who are status conscious and early adopters.

• To increase a business' sales, a skimming policy will assist in recouping production costs such as research and development
while ensuring quick turnover and profit maximisation.

Case study: Apple (Charges high prices for new Iphones that release each year)

Price penetration:

• This occurs when the business charges the lowest price possible for a product or service so they can achieve large market
share in the short-term.

• The objective is to sell a large number of products during the early stage of the product life cycle in order to discourage
competitors from entering the market.

• However, it is quite difficult to raise prices once the low price has been established.
Loss leaders:

• This occurs when the product is sold at or below its cost price.

• The psychology behind this pricing method is that once customers are in the store, they will usually buy extra products and
spend more than what attracted them.

• Businesses can recover their loss or low-priced items from the sale of additional items.

Alinough this method is successful when the business may be overstocked, if done incorrectly it can

cause the business to lose money.

Price points:

• This occurs when the business sells products only at a certain predetermined price.

• It makes it easier for the customer to find the type of product they need.

• It makes it easier for the business to encourage customers to trade up more expensive models.

Case study: Qantas (economy, premium economy, business class)

Case Study: Rolex, premium/prestige pricing= high prices to create an aura of quality
 - price and quality interaction

Price and quality interaction

The perceived price-quality relationship helps determine the image customers have for products.

Price Points:

Selling products at predetermined prices.

Used mainly by clothing retailers and boutiques.

Prestige or Premium pricing: is a pricing strategy where a high price is charged to give the product an aura of quality and
prestige.

Prestige pricing is based on the tendency for consumers to assure expensive products are superior to lower cost products.
Higher-priced and infrequently purchased items imply a strong price-quality relationship.

However, some consumers believe that high prices just reflect expensive packaging which may reduce sales as there is little
difference between high and low priced products.

The level of price and quality interaction varies between products.

• Infrequently purchased, higher priced items, generally display a strong price quality interaction.

• Lower priced items such as groceries, don’t necessarily display as strong a relationship.

• At higher prices, small changes in price result in small changes in quality.

• At lower prices, small changes in price might result in larger variations in quality.
 ● Promotion

SYLLABUS:

Students learn to: Assess why a mix of promotional strategies is important in the marketing of goods and services

Promotion: are the methods used by a business to inform, persuade, and remind a target market about

its products.

Promotion mix: are the various promotion methods a business uses in its promotional campaign.

Aims of promotion:

● Attract new customers through awareness

● Increase loyalty by reinforcing image
● Provide information so customers can make informed decisions

● A mix of promotional strategies is vital to cater to diverse needs and attract as many potential customers as possible,
as different strategies will appeal to different people.
- elements of the promotion mix – advertising, personal selling and relationship marketing, sales promotions,
publicity and public relations
Advertising

Advertising: is a paid, non-personal message communicated through a mass medium.

Advertising media: refers to the many forms of communication used to reach an audience.

With a wide range of consumer choice, advertising is an essential tool that is required for marketing success as it aims to
increase the business' sales, profits, and market share. Through advertising, businesses are able to reinforce a positive
attitude about the business. When devising and proposing a marketing campaign, marketing managers must consider the
different types of advertising media available to align the campaign with the business' promotional objectives as well as the
target market.

The different types of advertising media include:

● Mass marketing
● Telemarking
● E marketing and social media marketing
● Direct marketing catalogues
● Billboards

Personal selling and relationship marketing

Personal selling: involves the activities of a sales representative directed to a customer in an attempt to make a sale.

By pursuing personal selling, businesses create customer loyalty by automatically meeting individual customer needs,
establishing a customer base to increase sales.

● Personal selling brings to the forefront advantages of modifying the marketing message to meet individual needs,
thus providing a consumer-centric experience that creates long-term relationships between the customer and
business due to the high-quality before and after sales service.

CASE STUDY: Apple (Genius Bar)

Relationship selling: is the development of long-term, cost-effective, and strong relationships with individual customers.

● Relationship marketing aims to create customer loyalty by meeting the needs of customers on an individual basis. To
effectively take advantage of relationship marketing, businesses can introduce a loyalty program to encourage
customer feedback, experience, and innovation in order to gain a sustainable competitive advantage

● By utilising loyalty cards, businesses can identify consumer patterns in their scan data, providing individualised
discounts and promotional offers to its target market. This relationship marketing approach emphasises customer
loyalty by offering repeat rewards to customers, identifying trends to maintain customer retention, increase sales,
and achieve profit maximisation.

CASE STUDY: IKEA ( FAMILY cards provide members with special offers e.g. discounts)

CASE STUDY WOOLWORTHS AND COLES: Introduced during the early 1990s with the Fly Buys loyalty reward program
operated by the Coles Group. In 2007 the Woolworths Everyday Rewards scheme was introduced.
Sales promotions

Sales promotion: is the use of activities or materials as direct inducements to customers.

By engaging in sales promotion, businesses can provide short-term incentives that motivate customers to purchase the
business products. This attractive marketing strategy aims to entice new customers, encourage trial purchases of products
and increase sales by existing customers, thus allowing for profit maximisation.

● Sales promotion, which is generally used in conjunction with other marketing strategies, is used to increase the
effectiveness of the business' other promotional activities, aiming to increase immediate customer purchases.

● Coupons – redeemable means for consumers to obtain a discount when purchasing a good service.

● Point of purchase displays – are the strategically placed displays used to get a product noticed and purchased.

● Premiums – a gift given to customers in return for purchasing the product.

● Buy one, get one free – Not only sparking interest, it can also clear stock when businesses have too much remaining.

● Product samples – a free item that consumers receive. It can be in the form of a taste test. It might lead to a purchase
and repeat sales afterwards.
Publicity and public relations

Publicity: is any free news story about a business' products. This allows businesses to enhance the image of their goods and
services while simultaneously raising awareness and broadening customer reach .Social media is also a form of publicity.
Youtube reviews of this product can be posted on the businesses instagram page. By posting multiple content videos, the
audience would be more likely to share the posts within their own network, generating further publicity, which ultimately
increases market share.

A business can post content to social media profiles to give the audience a chance to engage with the product’s features. .
By posting great content, your audience may be more likely to share your posts within their own network, generating
further publicity.

Through engaging in publicity, businesses are able to highlight the product's favourable features which in turn, assists in
reducing any negative connotations surrounding the business.

Public relations: are those activities aimed at creating and maintaining favourable relations between a business and its
customers. Public relations exposes a business or idea to an audience by using unpaid third parties as outlets. This enables
businesses to work with the media, acting as a cost effective marketing strategy that attracts interest surrounding the
business' activities.
– The communication process – opinion leaders, word of mouth
The communication process

The communication process is vital in allowing the public to get an idea of what the business has to offer. Marketing
managers must ensure that they use appropriate channels to ensure that this message is effectively delivered by the
business, and correctly received by consumers.

Two methods of communicating with consumers are:

1. Opinion leaders–people organisations with known and trusted opinions

that can influence others. Marketing managers use these people to endorse
their products in the hope of generating sales and profit. Actors, athletes,
musicians and models are regarded by some groups as opinion leaders and
many businesses use celebrity endorsement.
2. Word of mouth– when the conversations amongst consumers can influence others. Consumers tend to be sceptical about
information provided by businesses, and often tend to find the endorsements given by peers to be more trusted. Think of
how Google reviews and TripAdvisor play a vital role in Australia when determining places to go to e.g. restaurants.

The importance of a mix of promotional strategies

Theory summary

QANTAS uses a wide variety of promotion strategies in order to meet their marketing objectives
● Place/distribution
Place or distribution: are the activities that make the products available to customers when and where they want to
purchase the item.

– distribution channels

Distribution channels: are the routes taken to get the product from the factory to the market.

There are traditional distribution channels such as producer to consumer and producer to wholesaler to retailer to
consumer. These two distribution channels are the most commonly used. However, more innovative distribution methods
such as non-store retailing have evolved. Non-store retailing are retailing activities conducted away from the traditional
store. Two rapidly developing methods are telemarketing and internet marketing.
– Channel choice – intensive, selective, exclusive Key Terms/Concepts

Channel choice: refers to the number of outlets a firm chooses for its products. Market saturation arises when
the volume of a product or
service in a marketplace has
Intensive distribution: been maximised. At the point of
saturation, a company can only
. This is when businesses wish to saturate the market. achieve further growth through
. The business' goods and services are readily available in various stores and locations. new product improvements by
taking existing market share
Selective distribution:
from competitors or increasing
• This is when the business is using only a moderate proportion of all possible outlets. overall consumer demand.

• The customer is prepared to travel to specific retail outlets.

Exclusive distribution:

* This is when the business uses only one retail outlet for a product in a large geographic area.

• It is commonly used for exclusive and expensive products.

– Physical distribution issues – transport, warehousing, inventory

Physical distribution: are all those activities concerned with the efficient movement of the products from the producer to
the consumer.

Transport: the method of transportation a business uses depends on the type of product and degree of service they wish to
provide. Four common methods of transportation are rail, road, air, and sea.

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

Inventory control: is a system that maintains quantities and varieties of products. Too much stock incurs high storage costs,
and too little stock could result in a loss of sales or 'stock-out costs.
 ● People, processes and physical evidence

People

People: refers to the quality of interaction between the customer and those within the business who will deliver the service.

Consumers make judgments about a business based on how employees treat them. This requires detailed product
knowledge, attending to cost concerns and professionalism in order to deliver high-quality customer service. Therefore,
businesses should develop a consumer-centric organisational culture and put it into practice.
Processes

Processes: refer to the flow of activities that a business will follow in the delivery of its service.

Businesses must ensure its processes and procedures are customer friendly and satisfy their needs. Therefore, businesses
with insufficient processes will lose customers and damage its reputation. Marketing management must ensure their
processes are effective to achieve customer satisfaction.

Physical evidence

Physical evidence: refers to the environment in which the service will be delivered.

Additionally, physical evidence includes the location of where the service is being provided and the materials needed to
carry out the service such as signage, brochures and business cards. Customers initially purchase services on trust and make
judgements based on physical evidence. Therefore, businesses who provide high-quality physical evidence create an image
of value and excellence.
 ● e-marketing

E-Marketing: Is the use of the internet to perform marketing activities.

The internet allows businesses to interact with customers in a more efficient and cost-effective manner while still delivering
a personalised service. This assists businesses in gaining brand awareness as well as sales growth. Recently, the internet has
become the fastest growing sales method in Australia.

Social media marketing

Social media marketing: is a form of online advertising using social media platforms to deliver target commercial messages
to potential customers.

Social media marketing is a cost-effective use of social networking platforms to increase brand exposure and increase the
frequency of their advertising methods. This is reflective of the shift away from traditional advertising styles and towards
non-store retailing. The use of social media campaigns will allow businesses to promote their products, attract new
customers, and encourage existing customers to purchase more in a bid to increase sales and market share.
 ● global marketing

- global branding
- standardisation
- customisation
- global pricing
- competitive positioning

SYLLABUS:

Students learn to: Explain how globalisation has affected marketing management.
Global branding

Global branding: is the worldwide use of a name, term, symbol, or logo to identify a seller. When deciding to engage in global
branding, marketing managers need to ensure the brand provides rele-vat meaning and experience to people across multiple
societies and cultures. To successfully achieve this, it is crucial for businesses to account for a brand's capabilities and
competencies, strategies of competing brands and outlooks of consumers in the competitive global market.

Through undertaking worldwide market research, businesses can segment the global market which allows for the
centralisation of specific marketing strategies in specific countries. Global branding has become increasingly prevalent as it
creates worldwide uniformity and allows businesses to take advantage of efficiencies such as economies of scale by
adopting a standardised marketing mix. However, the main advantage of global branding is that it allows for global
recognition despite language or cultural barriers.

Standardisation

Standardisation: is a global marketing approach that assumes the way the product is used and the needs it satisfies are the
same all over the world.

The increasing prevalence of globalisation has seen standardisation occur in accordance with the developments in
international trade and the removal of trade barriers. The 'one marketing plan that fits all' approach that is emphasised in a
standardised marketing strategy, has allowed businesses to adopt identical marketing mixes in domestic and global markets.

Adopting an effective unified marketing framework globally enables businesses to develop a consistent global image of the
business. Standardisation has allowed businesses to achieve their maximum productive capacity, allowing them to exploit
economies of scale in a bid to reduce costs while still delivering high-quality products.

Customisation

Customisation: is a global marketing approach that assumes the way the product is used and the needs it satisfies are
different between countries.

By adopting this philosophy, businesses customise their marketing plan to the economic, political, and Sociocultural
characteristics of the target country. Customisation allows businesses to tailor their products according to the needs of an
individual or a group, encouraging an increase in customer retention while achieving profit maximisation. Despite
differences in customer preferences globally, customisation allows businesses to build global brand recognition, which leads
to the homogenisation of consumer acceptance

and adoption of goods.

Global pricing

Global pricing: is how businesses coordinate their pricing policies across different countries.

As price is the only element of the marketing mix that generates revenue, it is critical for businesses to select an appropriate
global pricing strategy. There are three main types.

Customised pricing:

• This occurs when customers in different countries are charged different prices for the same product.

• Many businesses will use the cost-based pricing method to price their goods in order to cover the added costs of
transportation.

Standard worldwide price:

• This occurs when businesses charge customers the same price for a product anywhere in the world.

• However, there are two major risks:

- A domestic business may undercut the standardised price.

- Fluctuations in the exchange rate may negatively impact the imported price.
Market customised pricing:

• This occurs when businesses set prices according to local market conditions.

• This pricing strategy allows for more flexibility as marketers can vary the price according to the level of demand.

• Fluctuations in the exchange rate also pose a major risk for global businesses.

Competitive positioning

Competitive positioning: relates to how a business will differentiate its products.

Global businesses need to ensure their products are of higher quality in comparison to their competitors, allowing them to
garner larger market share, broaden customer reach, and gain a sustainable competitive advantage. Without a successful
differentiation strategy, businesses require additional time, money, and effort to encourage new customers to purchase
their products and existing customers to make repeat sales. To successfully differentiate, it is critical for businesses to
conduct research and development, and implement leading edge technologies to become product leaders in the competitive
market.