Extensive Notes on Topic 2 – Marketing

Resource Description

 

Role of Marketing

 

• Process of developing a product and implementing series of strategies aimed at correctly promoting, pricing & distributing the product to a core group of potential customers.
• Involves researching changing nature of consumer preferences and ensuring resources of the business are directed towards developing a product that satisfies its target market.  
• Aims to maximize sales, increase market awareness & maximize consumer choice and satisfaction.

 

Strategic Role of Marketing Goods and Services 

Marketing aims to serve the interests of both the business and society:

 

1. Choice

• Marketing provides consumers with choice as businesses are striving to differ their products from those of competitors. 
• Preference could be achieved through price, product quality & reputation or consumer loyalty. 

 

1. Improved Standard of Living

• Businesses are constantly improving their products features so they can develop their income streams and provide consumers with better products to enhance their lifestyles. 
• e.g. several types of milk are now available to cater for diverse range of health concerns consumers may have 

 

1. Employment

• Source of employment and income → consumers can purchase goods/services to satisfy their needs and

 

1. Brand Awareness

• Extent to which consumers are aware of a products existence as well as its features, price and possible place of purchase.
• Strong brand awareness = remains in mind of consumers, influences their decision.
• Often achieved through strong and effective advertisement campaigns  

 

1. Increasing Market Share

• Refers to % of total sales business has within a particular market compared to its competitors.  Achieving increased market share increases sales and profitability. 

 

Interdependence with Other Key Business Functions 

• Operations

• Incorporate info on consumer wants gathered by marketing department 
• Successful marketing = boosted production (requires increased materials + labour)
• Marketing must develop strategies to sell the product 

• Human Resources

• Relies on HR to hire, train and develop employees who sell the output of the business and conduct research.
• Responsibility of well-trained marketing employees to successfully connect the customer with the products 
• Marketing process makes it clear to the business who they should hire to produce the desired product

• Finance

• Assesses financial viability of marketing campaigns and fulfilling consumer needs.
• Establishes budgets and forecasts 
• Marketing aims to sell what the business produces which in turns benefits profitability.

 

Production, Selling, Marketing Approaches

 

1. Production-Oriented (1820s – 1920s) 

• Focused on production of goods and services where it was assumed high quality products ensured success. 
• Businesses emphasized low-cost manufacture achieved through large scale manufacturing. 

 

1. Selling Approach (1920s – 1960s) 

• Managers believed they could overcome the issue of increasing competition with good sales teams.
• Emphasized persuasive sales techniques such as radio ads and door-to-door salesmen to convince they had the better product. 

 

1. Marketing Approach (1960s – present)

• Based on researching what consumers want and developing products accordingly. 
• Stage 2 (80s to present): with changing social and economic conditions in the past three decades, the approach has been further developed with greater customer orientation and relationship marketing (to encourage brand loyalty & repeat sales). 

 

Types of Markets

Resource	Provides factors of production (labor, capital assets, land, enterprise) to firms producing goods and services for consumers.  Includes mining, agriculture, fishing and forestry. e.g. farmers purchase machinery, seeds and fertilizer
Industrial	Industries and businesses purchasing finished products to use in production of other products or in daily operations e.g. Toyota buying parts from local suppliers
Intermediate	Consists of wholesalers and retailers who purchase finished products and sell them again to make a profit.  e.g. Woolworths
Consumer	Individuals and households who intend to use or consume the products they buy. Consumer markets can be divided into two categories: Mass market Seller mass produces, mass distributes, and mass promotes one product to all buyers.  Products not targeted to a specific group as it is assumed all customers in the market have similar needs & wants e.g. electricity or petrol   Niche market Narrowly selected target market segment consisting of buyers with specific needs or lifestyles e.g. different magazines appealing to specific market

 

Influences On Marketing 

 

Factors Influencing Customer Choice “PEGS”

1. Psychological 

Personal characteristics influencing buying behavior and attitudes to certain products:

• Perception: image that a particular product has in the mind of consumers → marketing campaigns should promote positive image of the product to targeted customer group. 

 

• Motive: reason for buying the good or service- may be comfort, health, safety, ambition, pleasure or approval of others.

 

• Attitudes & beliefs: shaped by one’s environment and life experiences- includes ethnic, religious beliefs, political persuasions and attitudes to social issues. 

 

• Personality & Self-Concept: behaviors, characteristics of the customer and how they view themselves

 

• Learning: changes in an individual’s behavior caused by information and experiences → marketing strategies that assist customers learning about the business encourages brand loyalty.  

 

1. Sociocultural

• Social class: Influences type, quantity and quality of products bought (e.g. higher income earners may purchase luxury cars to symbolize status)

 

• Culture and subculture: values, beliefs, behaviors and traditions shared by a society determines what people wear, what and how they eat, and where and how they live. 

 

• Family and household role: research show most women still make buying decisions related to healthcare products, food and laundry supplies.

 

• Peer groups: buying behavior may change to match friends (e.g. if friend has bad experience at a shop or if peer group wears distinctive clothing you may purchase clothing based on this influence).

 

1. Economic

• Influence of general economic trends (unemployment levels, interest rates, economic growth/decline) along with socioeconomic status which is determined by the persons level of income, occupation and education. 

 

1. Government 

• Depending on prevailing economic conditions, government will put in place policies to expand or contract the level of economic activity → influence business activity & customer’s spending habits and therefore the marketing plan
• Business behavior controlled by Competition and Consumer Act 2010 (Cth)
• Age restrictions placed on alcohol, tobacco