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STAGE 2 BUSINESS AND ENTERPRISE FOLIO TASK 4 – ESSAY - MARKETING Marketing is more than just advertising and plays an important role in the success of a business. This essay will analyse the aim of marketing, the necessary considerations when developing a marketing plan and the importance for a business to remain ethical and operate within legal guidelines in their marketing strategies. Newspaper articles were collected to assess the ramifications of unethical advertising and are attached in the appendix. Marketing has the capacity to recognize a product in demand, meet the needs of the consumer, while making a profit for business. There are many elements to marketing that help sell the goods and services of a business, but the term is commonly misunderstood for simply advertising. In addition to gauging profit demand, a successful marketing plan will also include analysis of appropriate location from which to distribute the product as well as analysis of market segmentation. Of all the elements that forge a successful marketing campaign, timing is arguable one of the most crucial features. Well timed anticipation of when the consumer market will have a high demand for a product will result in high sales and profit, but if not timed correctly, the business proprietor may well lose investment capital. In order to obtain a clear indication of who the business is focusing on as their target market, businesses are able to segment the market into geographic, behavioural, psychographic and demographic areas. This enables a business to be able to acquire insight into the characteristics of the targeted consumer, and thereby target marketing practices to suit those consumers. It is vital to research the geographical segmentation before the distribution of the business’ product occurs. The location of the consumer will affect habits and choices, as weather, availability of resources and technology will also influence the customer’s choice. Behavioural market segmentation focuses on patterns of observable behavior rather than surveys on what people would prefer Page 1 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Knowledge and Understanding Provides an early indication of comprehensive understanding of the complex nature and role of marketing. Psychographic market segmentation is based on how the consumer perceives themselves and accommodates a certain look that the consumer wishes to associate with. For example, South Australia’s AFL clubs have extended their range of merchandise from the typical hats, scarves, and guernseys to include such items as food and drink coolers, picnic rugs, car seat covers and window shades. These items meet the needs of their main target group, i.e. supporters, and therefore the clubs are able to sell large amounts of merchandise. The demographic approach analyses a diverse range of characteristics, usually Knowledge and Understanding Provides early evidence that points to in-depth knowledge and understanding of the relationship between business theory and practice, through the use of a relevant example. obtained by the ABS. These include age, income, gender and beliefs. By analyzing these statistics it may lead to discerning suitable product placement, price and effective advertising campaigns. In addition to this market segmentation, consumer choice can be defined as being affected by two influential categories: external and personal influences (refer to Tables 1 and 2). Table 1 – External influence on Consumer’s Choice of product External INFLUENCES EXAMPLES Politics Climate change concerns – turn to energy efficient light bulbs Symbol of Success Purchasing a sports car Pressures Forced to lose weight or suffer heart failure – diet change Page 2 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Knowledge and Understanding Tables 1 and 2 provide evidence of well-considered (rather than indepth) knowledge and understanding of the relationship between business theory and practice. This is inconsistent with other evidence against this specific feature. Table 2 – Personal influences on Consumer’s Choice of Product Personal INFLUENCES EXAMPLES Wealth Level of wealth can influence which products and quality of products purchased Knowledge Expertise and research in an area can guide to the correct choice Needs purchased May have infants therefore baby products (nappies) need to be Self-image Make up and beauty As a business markets their product, four marketing strategies are put in place to ensure that the product has the best chance of generating sales and thereby profit. The first ‘P’ is for ‘product’. This can be in the form of either goods or services and is sold to the consumer to generate income for the business Price is the second marketing strategy and can be an indicator to the products quality – the lower the price, the lower the quality. Promotion is the third tactic and refers to more than just advertising Place or distribution is the final strategy employed to ensure successful marketing. Table 1 provides examples of these four strategies in operation. The strategy on price for example, shows price comparison between two furniture outlets where there is a clear difference between the target markets. Table 3 Strategy The Four Ps in Operation Example/Features Product use, Personal Hygiene Upside down bottle, ready for instant striking appearance. Price Store 1 Furniture Store 1 Furniture Store 2 Price may attract varied markets, wealthy consumer, Store 2 average income Fashion Clothing To set fashion trends and to promote Promotion designers Stores Place trends to Page 3 of 8 Supermarket Chain, Collaboration of resources and Fuel Suppliers Fly Buys reduce costs to attract customers Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Application Indicative of thoughtful application of knowledge and understanding of relevant business ideas and concepts related to marketing. As defined by Princeton University the ethical motive is, “Based on ideas of right and wrong” As marketing strategies are essentially designed to generate higher sales, a business can become ethically questionable in the promotion of its product. As described in the Auckland Correspondent, a New Zealand newspaper, “Air New Zealand gained international publicity by deciding to ‘parade its staff in nothing but body paint to boost sales”. This marketing strategy, although not illegal, is ethically debatable as it may have an adverse affect on society. “One person even laid an official complaint with New Zealand’s advertising watchdog that children would find the ads ‘disturbing’” Risque marketing strategies can also incur a detrimental effect on the business as its reputation is placed in jeopardy. This may cause the public to boycott or protest against the company, diminishing its sales. Unlike the moral dilemmas of unethical marketing, illegal marketing strategies occur Analysis and Evaluation when a business breaks the law and lies to the consumer on one or multiple details of Provides evidence of insightful and well-informed evaluation of the ethical and social implications and consequences to business of unethical marketing. the product. This is known as ‘misleading advertising’, as a business may save resources by deceiving the customer who believes the product is something it is not. In an English article written on the computer company ‘Apple’, the business illegally misled the public on features available on the new ‘iPhone.’ It stated that “all parts of the internet are on the iPhone”, when in fact, the model shown did not support Flash or Java, both of which are integral programmes that are essential to the running of many websites. Legal consequences from misleading advertisements include the removal of the advertisement from circulation, fines and possible lawsuits if the marketing campaign caused an individual or business harm. Further consequences of unethical marketing may result with the business having a damaged reputation and reduced sales. If a business suffers heavy sales losses then it may be forced to reduce their employee numbers to avoid bankruptcy, causing a domino effect in both economic and social terms. Page 4 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Marketing is of vital importance to the success of a business. Through the development of a well researched marketing plan, that includes updated statistics on the areas of segmentation and by incorporating the four P’s, the product has its best chance of generating high sales and profit for the business. An understanding of the needs of the consumers and the factors that influence product choice is essential as this ensures a prosperous business that will thrive indefinitely. However, by promoting unethical and illegal marketing campaigns, the wellbeing of society, and the reputation and financial stability of the business is placed in jeopardy. Word count: 1020 Additional comments A review of the student’s work provides evidence of: Communication comprehensive and highly proficient use of appropriate vocabulary and terminology consistent and appropriate acknowledgement of a range of sources. Page 5 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Knowledge and Understanding The final paragraph of this essay supports the overall demonstration of comprehensive understanding of the complex role that marketing plays in business. Reference List Elements to successful marketing – pg 7 appendix 20/08/09 – http://www.businesslink.gov.uk Features of an optimum location – pg 7 appendix – http://www.businesslink.gov.uk/bdota/action/detail?type Geographical segmentation – pg 7 appendix – Marketing handout Behavioural segmentation – pg 7 appendix 20/08/09 – http://tutor2u.net/business.marketing/segmentation Australian Bureau of Statistics 20/08/09 – http://www.abs.gov.au/demographicstatisticsallstates Product definition – pg 7 appendix 20/08/09 http://www.businesslink.gov.uk/marketing Price definition – pg 8 appendix Promotion definition – pg 8 appendix 20/08/09 http://www.businesslink.gov.uk/marketing Place or distribution definition – pg 8 appendix Prf Mark Dunn – Princeton University 20/08/09 – http://www.definitions.com/ethics Aucklandcorrespondent – newspaper 20/08/09 – http://www.adelaidenow.com.au/unethicalmarketing Akld cdgt – nspr 20/08/09 – http://www.adelaidenow.com.au/unethicalmarketing Reuters – from correspondents in London – newspaper 20/08/09 – http://www.adelaidenow.com.au/misleadingadvertising Page 6 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Bibliography Marketing Handout from class. Internet Sources http://www.businesslink.gov.uk/bdotg/action/detail?type http://www.businesslink.gov.uk http://tutor2u.net/bjusiness/marketing/segmentation http://www.abs.gov.au/demographicstatisticsallstates http://www.businesslink.gov.uk/marketing http://www.adelaidenow.com.au/unethicalmarketing http://www.adelaidenow.com.au/midleadingadvertising http://www.definitions.com/ethics Page 7 of 8 Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010 Performance Standards for Stage 2 Business and Enterprise Knowledge and Understanding A Comprehensive understanding of the complex nature and role of business and enterprise. In-depth understanding and coherent explanation of a variety of business structures, including those of small business in a global environment. In-depth knowledge and understanding of the relationship between business theory and practice. B Well-informed understanding of the complex nature and role of business and enterprise. Some depth of understanding and clear explanation of different business structures, including those of small business in a global environment. Detailed and well-considered knowledge and understanding of the relationship between business theory and practice. C Informed understanding of the nature and role of business and enterprise. Considered understanding and competent explanation of different business structures, including those of small business in a global environment. Considered knowledge and understanding of the relationship between business theory and practice. D Some awareness of the nature and role of business and enterprise. Awareness and description of a business structure, which may be a small business in a global environment. Recognition and some basic understanding of the relationship between business theory and practice. E Limited awareness of the nature or role of business and enterprise. Attempted description of a business structure. Awareness of a relationship between business theory and practice. Page 8 of 8 Analysis and Evaluation Perceptive and discerning analysis and evaluation of the factors involved in current trends, opportunities, and key issues affecting business and enterprise. Insightful and well-informed evaluation of the economic, ethical, social, and environmental implications and consequences of business and enterprise practices in different contexts. Communication Coherent and fluent communication of complex information and ideas about business and enterprise to suit the purpose and audience. Comprehensive and highly proficient use of conventions, vocabulary, and terminology appropriate to business and enterprise. Consistent and appropriate acknowledgement of a range of sources. Well-considered analysis and evaluation of the factors involved in current trends, opportunities, and key issues affecting business and enterprise. Clear and well-structured communication of complex information and ideas about business and enterprise to suit the purpose and audience. Thoughtful and informed evaluation of the economic, ethical, social, and environmental implications and consequences of business and enterprise practices in different contexts. Proficient use of conventions, vocabulary, and terminology appropriate to business and enterprise. Informed analysis and evaluation of the factors involved in current trends, opportunities, and key issues affecting business and enterprise. Competent communication of information and ideas about business and enterprise to suit the purpose and audience. Evaluation of the economic, ethical, social, and environmental implications and consequences of business and enterprise practices in different contexts. Mostly consistent and appropriate acknowledgement of a range of sources. Use of conventions, vocabulary, and terminology generally appropriate to business and enterprise. Mostly appropriate acknowledgement of different sources. Basic description of one or more factors involved in current trends, opportunities, and/or key issues affecting business and enterprise. Some endeavour to communicate basic information and ideas about business and enterprise for a particular purpose or audience. Some consideration of the economic, ethical, social, and environmental implications or consequences of business and enterprise practices. Inconsistent use of basic conventions, vocabulary, and terminology appropriate to business and enterprise. Recognition of one or more factors involved in current trends, opportunities, or key issues affecting business and enterprise. Attempt to communicate one or two ideas about business and enterprise without necessarily taking into account the audience. Limited consideration of any of the economic, ethical, social, and environmental implications or consequences of business and enterprise practices. Limited and isolated use of conventions, vocabulary, and terminology appropriate to business and enterprise. Some acknowledgement of sources. Limited acknowledgement of sources. Application Highly proficient use of technology that meets current business standards. Selective and constructive application of knowledge and understanding of relevant business ideas, concepts, and practices. Proactive and focused selection and use of relevant information from a range of sources. Proficient use of technology that meets current business standards. Thoughtful application of knowledge and understanding of relevant business ideas, concepts, and practices. Well-considered selection and use of relevant information from a range of sources. Competent use of technology that meets current business standards. Competent application of knowledge and understanding of relevant business ideas, concepts, and practices. Considered selection and use of relevant information from different sources. Basic use of technology which may not meet current business standards. Some endeavour to apply knowledge and understanding of one or more business ideas, concepts, and/or practices, which have some relevance. Selection and some use of information from more than one source, with some relevance. Limited skill in using technology. Recognition of the need to apply knowledge and understanding of business ideas, concepts, and practices, which may have some relevance. Attempted use of information from more one or more sources, which may have some relevance. Stage 2 Business and Enterprise annotated response for use from 2011 874004514 (October 2010) © SACE Board of South Australia 2010