What you need to know

Marketing is the process of planning and carrying out the conception, pricing, promotion and distribution of goods and services so that exchanges satisfy both customers and the business. Its role is to identify customer needs and wants and to satisfy them profitably. Over time businesses have moved from a production approach (make it and they will buy), through a selling approach (persuade people to buy what we make) to a marketing approach (find out what customers want, then make it), and more recently to relationship marketing that aims for long-term customer loyalty. Marketing is interdependent with operations (what and how much to make), finance (budgets and pricing) and human resources (sales and service staff).

• Types of markets: resource, industrial, intermediate (resellers), consumer, mass and niche markets.
• Psychological influences on choice: perception, motives, attitudes, personality and self-image, learning.
• Sociocultural influences: social class, culture and subculture, family and roles, reference groups.
• Economic influences: booms and recessions change what consumers can afford.
• Government influences: consumer and competition law enforced by the ACCC, taxes such as GST.
• Ethical issues: truth and accuracy in advertising, products that may harm, marketing to children, pricing practices such as deceptive 'was/now' claims.

Market segmentation divides the total market into groups of customers with similar characteristics so that a marketing mix can be designed for each. The main bases are demographic (age, gender, income, family size), geographic (region, urban or rural, climate), psychographic (lifestyle, values, personality) and behavioural (usage rate, loyalty, benefits sought, occasion). The chosen segment is the target market; the business then positions its product in the minds of that segment relative to competitors.

The marketing mix (7Ps)

Promotion works through the communication process: the business (sender) encodes a message, sends it through a medium, and the customer (receiver) decodes it, with feedback showing whether it worked. Opinion leaders (such as reviewers or influencers) and word of mouth can be more persuasive than paid advertising because they are seen as independent. E-marketing uses websites, social media, email, search advertising and apps to reach customers at low cost, personalise messages and measure results precisely, while global marketing requires decisions about global branding (one brand worldwide), standardisation (same product and mix everywhere, giving economies of scale) versus customisation (adapting to local tastes and laws) and competitive positioning in each market.

Check yourself

1. What is the difference between the selling approach and the marketing approach?
2. Name the four main bases for market segmentation.
3. List the six steps of the marketing process in order.
4. A product costs $24 to make and the business uses a 75% mark-up. What is the selling price?
5. Which pricing strategy sets a deliberately low launch price to gain market share?
6. Give one advantage of standardisation and one advantage of customisation in global marketing.

Answers: 1. The selling approach tries to persuade customers to buy what the business already makes; the marketing approach first researches what customers want and then makes it. 2. Demographic, geographic, psychographic, behavioural. 3. Situational analysis; market research; marketing objectives; identifying target markets; developing marketing strategies; implementation, monitoring and controlling. 4. Mark-up = 0.75 × 24 = $18; price = 24 + 18 = $42. 5. Penetration pricing. 6. Standardisation: economies of scale and a consistent global brand; customisation: better fit with local tastes, culture and regulations.