role of marketing

interdependence with other key business functions

Marketing concept → a business philosophy that states that all sections of a business to satisfy
customers
Marketing plan → a document that lists activities aimed at echoing marketing outcomes

CASE STUDY:
Kathmandu:
- The finance function will use management strategies that ensure funding for any marketing
initiatives
- Human resources needs to foster a team-driven approach that encourages workers who
embody the spirit, culture and attitude of the brand to generate innovative and competitive
products.

strategic role of marketing goods and services → the process of creating a product then developing
and implementing strategies that aim to promote, price and distribute the product to the market

Profit maximisation → a maximum difference between total revenue coming into the business and
total costs

production, selling, marketing approaches

Production approach (1820’s-1920’s)

- Focused on the production of goods and services, ‘if we make it, they will buy it”

- Focused everything into production with no consideration of marketing

Selling approach - stage one (1920’s-1960’s)

- Focused on competition, increasing spending on advertising and sales representatives

Marketing Approach - stage two (1980’s to present)

- Customer oriented, marketing strategies, business plan in order to achieve business goals

types of markets

resource, industrial, intermediate, consumer, mass, niche

Market = a group of individuals, organisations or both that need/want products, have the money, are
willing to spend their money, are socially and legally authorised to purchase the product.

Resource Market

- consists of those individuals or groups that are engaged in all forms of primary production,
including mining, agriculture, forestry and fishing.

Industrial Market

- industries and businesses that purchase products to use in the production of other products or
in their daily operations.

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Intermediate Market

consists of wholesalers and retailers who purchase finished products and resell them to make a profit.

Consumer Market

- consists of individuals - this is, members of a household who plan to use or consume the
products they buy.

Mass Market
- the seller mass-produces , mass-distributes and mass-promotes one product to all buyers.

Niche Market
- also known as a concentrated or micro market, is a narrowly selected target market segment.

CASE STUDY:
McDonald’s → retailing goods to individual consumers, therefore, a consumer market
Kathmandu: buys wool - from resource market to sell.

influences on marketing

Factors influencing customer choice

Physiological influences

- Factors within an individual influencing buying choice

- Perception (view), motives (reasoning for doing something), attitudes (feeling about a product),
personality (characteristics), learning (information) and self-image

Sociocultural influences

- Forces exerted by other people/groups

- Social class, culture and subculture (beliefs), family roles, peer groups

Economic influence

- Economy movement influencing consumer spending, in relation to (un)employment.

Government influence

- Policies directly influencing spending habits

- consumer laws → in 2011, a single national consumer law was introduced (Australian Consumer
Law → ACL)
- → covers: product safety, labelling, market prices, price monitoring, industry codes,
mergers & acquisitions → breaches of the act result in the ACCC issuing on the spot
fines of thousands of dollars

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 CASE STUDY:
McDonald’s → a growing ‘foodie’ mentality has forced McDonalds to offer more healthier options
(salads, wraps) → legal regulations mean the publishing of calories on foods

Apple: Apple products don't communicate with androids - family (group chats)

Consumer laws

Deceptive and misleading advertising

Bait & switch advertising

→ advertising a product cheaply to entice customers, and when they run out customers have to buy a
more expensive product.

Dishonest advertising
→ using deceptive words saying that a product has a quality that it does not

price discrimination
→ setting of different prices in separate markets (eg. different geographical location)

implied conditions
→ unspoken and unwritten words of a contract → eg. the product must be of acceptable quality, match
the description, care in delivering service

warranties
→ designed to offer a degree of protection to the customer if the goods are faulty or the service is not
carried out with care.

CASE STUDY:
Apple:
- Must be compliant in all countries
- Must sell at same price everywhere
- Warranties – 1 year warranty states entitlement to replacement or refund for major
failure/compensation for reasonable foreseeable loss/damage

Ethical influences

Truth & accuracy in advertising

→ advertising - a paid, non-personal message communicated through a mass medium

→ advertising should be as truthful as they are held morally responsible
→ shouldn't have: untruths in concealed facts, exaggerated claims (puffery), vague statements

Good taste in advertising

→ what is acceptable and not offensive to people → eg. being aware of a younger audience

Products that may damage health

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→ federal codes restrict the advertising of junk foods on channels for kids

Engaging in fair competition

→ Competition & Consumer ACT 2010 (prohibits: cartel conduct, misuse of power, exclusive dealing,
resale)

Sugging

→ selling under the disguise of a survey (market research)

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 process

Situational analysis

SWOT
- The identification and analysis of the internal strengths and weaknesses of the business and the
opportunities and threats from the external environment.
- A business must constantly monitor changes, looking for opportunities to exploit and threats to avo

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Product life cycle

- Stages that a product passes through: introduction, growth, maturity and decline

CASE STUDY: Mcdonalds

→ strengths = goodwill, global brand, market share

→ weaknesses = poor operating performance, protecting intellectual property
→ opportunities = expansion into countries, reinvesting in restaurant, SMA
→ threats = negative publicity, commodity price increase, interruptions to supply chain

CASE STUDY: Apple

Maturity stage of product life cycle – sales relying on replacement purchases rather than first-time
buyers → need for new and innovative products or increasing production of cheaper models →
differentiating continuation through innovation or targeting money conscious consumers who want
older models (eg large number of iPhone 4 sales particularly in Asia)

Kathmandu:

Market research

- The process of systematically collecting, recording and analysing information concerning marketing
problems

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- 3 step process → 1. Determining information needed, 2. collecting data from primary(eg. surveys) and
secondary (eg. industry reports) sources, 3. Data analysis & interpretation

CASE STUDY: McDonalds

→ in 2005, asked 2602 people in Australia what they hope to see in McDonalds products
→ found more people wanted healthier options
→ as a result they improved use of vegetable oil, salt reduction, seared chicken

Kathmandu
- who is buying the active products
- when they made the purchase
- the most popular stores
- other products purchased at the same time.

Established market objectives

1. Increasing market share → gaining share in the total industry sales for a particular product

2. Expanding the product mix → expanding product range to better understand customers’ needs

3. Maximising customer service → meeting and exceeding the expectations of customers in all aspects
- Can be done through asking customers what they want, anticipating market trends, R&D.

CASE STUDY: McDonald's

→ 3 pillar approach = 1. Retaining existing customers, 2. Regaining lost customers, 3. Converting

casual customers

Kathmandu

- increased brand awareness,

- new product development
- pricing and promotion strategies
- increased Summit Club membership,
- improved in-store customer experience and global expansion.
- A strong environmental position that focuses on sustainable products is also a prominent
feature.

Identifying target markets

Target market

→ a group of present and potential customer to which a business intends to sell its products to -
Customers in target market share certain characteristics

Mass marketing

→ seeking a large range of customers, developing a single marketing mix, one distribution channel to
reach all customers

Market segmentation

→ total market is subdivided into groups (demographic, geographic, psychographic)

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Niche market

→ narrowly selected, needs often neglected by large businesses

CASE STUDY: Kathmandu’s

The target market is broad and is reflected in its diversity of products. Kathmandu has categorised
its market into the following groups:

- young and serious (aspirational achievers)

- young and casual (fun seekers)
- middle aged and serious (experienced enthusiasts)
- middle aged and casual (family adventurers)
- older and serious (rediscovers)
- older and casual (appreciators).

Developing marketing strategies

Product
→ good or service exchanged for money
- Determining features of the product (quality, packaging, design, brand name & guarantee)

Price
→ the ‘correct’ price is the amount of money a customer is prepared to offer for a product
- The method that the business uses to price a product

Promotion
→ methods used by a business to inform, persuade and remind customers about its products
- Forms of advertising, personal selling, relationship marketing, publicity, public relations

Place/Distribution
→ channels of distribution - getting the product to the customers

CASE STUDY: McDonald’s

→ enhancing digital capabilities to elevate customer experience → redefining customer convenience
(delivery) → creating a more personalised & enjoyable experience

Kathmandu

- there are traditional Christmas sales in major cities like Sydney and Melbourne
- diversified into a summer range of clothing (it is often thought of as a predominantly winter
brand).

Implementation, monitoring and controlling

Implementation

is the process of putting the marketing strategies into operations

Monitoring

is the process of measuring actual performance against planned performance & report

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Controlling

involves the comparison of planned performance against actual performance & make changes

CASE STUDY:

McDonald’s
→ mymaccas app used to increase sales as a result of loss of sales between 2015 & 2016

Qantas:
Quantas introduced Jetstar to increase aviation market share after Virgin

Marketing strategies

Marketing segmentation

A business will implement a specific marketing mix to each segmented target market to increase sales,
market share and profits. The consumer market can be segmented into demographic, geographic,
psychographic and behavioural variables

Demographic:
Dividing based on features such as size, age, sex, income, cultural background and family size. Is widely
used because it's easily measured

Geographic:
process of dividing total market into regions because consumers in different geographical locations
have different tastes and preferences

Psychographic:
Market is divided based on personality characteristics such as motives, opinions, socioeconomic group
and lifestyle. These variables focus on why people buy the products they do.

Behavioural:
dividing product based on customers’ RELATIONSHIP to the product . Such as the customers’
knowledge of, attitude towards, use of, or benefit sought from the product. Identifying what the
customers want from the product. Includes : purchase occasion, benefits sought, loyalty, usage rate.

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 CASE STUDY:

McDonald’s

- Demographic

McDonald’s uses demographic variables to focus marketing initiatives to specific age groups. Eg.
Happy Meals contain a toy which appeals to young children, while the expansion of McCafe barista-
made coffee, sweets and table service appeal to older customers

- Psychographic

Pressure to improve diets and maintain a healthy lifestyle has influenced the development of
McDonald’s healthier options, which include grilled chicken, salads, water and fruit

- Geographic

As the marketing mix varies in different geographic locations, market segmentation by geography
allows McDonald’s to add or alter menu items to suit local tastes
Products specific to certain geographic locations
Australia - Aussie BBQ Angus
Japan - Chocolate Fries, Teriyaki McBurger
Thailand - Pork porridge

Product/service differentiation and positioning

Product/service Differentiation

- the process of developing and promoting differences between business’s products or services
and those of its competitors

- Points of differentiation: quality of service, convenience, more features, value of money

Product/Service positioning

- the technique which marketers try to create an image of identity for a product compared with
the image of its competing product - Done in relation to the chosen target market

CASE STUDY:
Hermes
- Positions itself as a luxury / exclusive brand by use of scarcity marketing / price and
branding

Products

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Products
→ goods and services that can be offered in exchange for the purpose satisfying a need or want - A
combination of tangible and intangible components - Total product concept: the tangible and
intangible benefits that a product possesses

Branding
→ a name, term, symbol or logo that identifies a specific product and distinguishes it from its
competitors. - Brand name is that part of the product that can spoken - Powerful marketing tool -
Helps to identify specific product, evaluate product value, gain repeat sales, encourage customer
loyalty

Packaging
→ involves the development of a container and the graphic design for a product - Preserves the
product, protects the product, attracts consumers attention

Labelling
→ presentation of information on a product or its packaging - name , description, date mark, country
of origin, warnings

CASE STUDY:

McDonald’s → people are able to recognise the golden arches

→ using package to make claims (‘beef: great taste’ , ‘100% beef’)

Price

Pricing methods

Price refers to the amount of money a customer is prepared to pay in exchange for a product.
- Price too high can mean loss of sales, price to low gives a bad quality impression
- Pricing methods are influenced by internal and external factors

Cost-based
→ derived from the cost of producing or purchasing a product then adding a mark-up

Market-based
→ setting prices according to the interaction between levels of supply and demand

Competition-based
→ the price covers costs and is comparable to the competitors price.
- Either below, equal to or above the competitors

Pricing strategies:

Price skimming
→ charging the highest possible price, during the introduction stage
- Used to recover costs of R&D

Price penetration
→ charging the lowest possible price
- Used to achieve large market share

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Loss leaders
→ a product sold at or below cost price
- Used to gain customers willing to buy other products as well

Price points
→ selling products at predetermined prices

Price bundling
→ buying several products for a comprehensive package

Price & quality interaction

→ ‘you get what you pay for’ → products of high quality are sold for more due to higher manufacturing
prices

CASE STUDY:

McDonald’s
→ ‘loose change menu’ (loss leader) - enticing customers to buy a cheap option as well as a more
expensive
→ price bundling with family boxes, value meals
→ price points, higher quality burgers are more expensive

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