Marketing - Influences on marketing Flashcards
Identify the factors influencing customer choice (PEGS)
- psychological
- economic
- government
- sociocultural
Marketers attempt to understand customer choices and buying behaviours to predict trends and modify marketing strategies.
Identify the psychological influences of customer choice (LAMPSP)
Influences within an individual.
- perception: how an individual views something
- motive: reason for purchase
- attitude: holistic feeling about a product
- personality: behaviours or characteristics
- self image: how they perceive themselves
- learning: exposure to a product as a learning experience
Identify the sociocultural influences of customer choice.
Other people or groups that affect an individual’s behaviour.
- family and roles: responsibilities within their family dictate buying decisions
- peer groups: friends that individuals adopt their attitudes and values, influences purchases
- social class: education, occupation, income influences type, quality, quantity of products
- culture and subculture: values, beliefs, behaviours and traditions
Identify the economic influences of customer choice.
Movement of the economic cycle and its impact on customer choice.
- boom: increased economic activity, high levels of employment, rising incomes, increase in spending
- recession: opposite of boom
- interest rates: increased interest rates discourages spending, more difficult to borrow money
- exchange rates: appreciation makes imports cheaper, consumers purchase overseas products more
Identify the government influences of customer choice.
Economic policy measures influence the level of economic activity.
- taxes: higher tax rates reduce disposable income and discourages spending
- subsidies and welfare: government payments to individuals supplement their income and support spending e.g. Jobkeeper
- public service announcement (PSA): raising awareness about issues for the general public
Identify the consumer laws in the influences of marketing (WIPD)
- warranty
- implied conditions
- price discrimination
- deceptive and misleading advertising
Describe the Australian Consumer Law (ACL)
A national application law administered by each state and territory, implemented in 2011 and replaced the Trade Practices Act 1974. This law protects Australian consumers’ rights when buying products in Australia. The Act protects consumers against undesirable practices, such as misrepresentation of product content, place of production, and misleading and deceptive advertising.
Describe the Competition and Consumer Act 2010 (CCA)
Part of the ACL, administered by Australian Competition and Consumer Commission (ACCC). Regulates certain trade practices to encourage fair trading & competition
between businesses; prohibiting business practices which restrict competition. Regulates deceptive and misleading advertising, price discrimination, implied conditions, warranties
Outline deceptive and misleading advertising.
Business advertising must be truthful and fair. It is illegal under the CCA to make statements that are incorrect or likely to create a false impression.
Provide examples of deceptive and misleading advertising
- bait and switch advertising: advertising limited stock products to attract customers to redirect them to more expensive products
- dishonest advertising: advertisements use deceptive words or false claims to make a false impression
- comparative advertising
- fine print and qualifications
- environmental claims
- premium claims
- prizes and giveaways
- country of origin
Outline price discrimination in deceptive and misleading advertising
Involves charging customers different prices for the same product based on what the customer can agree to. It is not illegal under the CCA unless it is deemed to be a misuse of market power and has the potential to substantially reduce competition.
Outline implied conditions in deceptive and misleading advertising
Unspoken and unwritten terms of a contract, assumed to exist regardless of if it was included in the contract e.g. consumer guarantees.
- performing its function (fit for purpose)
- safe, lasting, with no faults
- acceptable looking
- matches descriptions made by the salesperson, on packaging, labels & promotion
Outline warranties in deceptive and misleading advertising
An obligation by the business to repair, replace or refund a defective product. Under the CCA, it is illegal to provide false statements about their warranties. Businesses must clearly state the terms and conditions of the warranty.
What are the penalties for deceptive and misleading advertising?
A breach in consumer protection provisions in the CCA can result in the ACCC taking civil or criminal proceedings against the business or individual.
Identify the ethical influences of marketing (TAPES)
While some marketing strategies may be legal, some can still be considered unethical.
- truth and accuracy
- good taste in advertising
- products that may damage health
- engaging in fair competition
- sugging
What are the five main ethical criticisms of marketing?
- materialism: creating an excessive desire to acquire possessions
- stereotyping: poor representation in ads e.g. gender, race
- sex appeal: overuse of sexual themes can promote unrealistic standards
- product placement: subtly introduces the product idea to customers
- invasion of privacy: consumers may be unaware of their data being collected
Describe truth and accuracy in ethical advertising
Consumers have a right to accurate and truthful information from businesses about their purchases.
- concealed facts: purposely omitting certain information to make a product more favourable
- exaggerated claims: mislead consumers
- vague statements: ambiguous language that can be interpreted differently
Describe good taste in ethical advertising
Advertisements that are not offensive and are well-received by the public. Although it is highly subjective, there is usually common agreement on what society thinks is acceptable. Marketers must be aware of community sensitivities.
Describe products that may damage health in ethical advertising
Consumer products must be safe under the ACL. Two mandatory notification requirements are a risk that the product may cause injury must be recalled and awareness of death/ serious injury associated with a product must be reported within 2 days. E.g. cigarette health warnings, banning junk food ads on children’s TV programs
Describe engaging in fair competition in ethical advertising.
Fair competition must be practiced as part of the Competition and Consumer Act 2010. The amount of competition in the marketplace can tempt businesses to engage in strategies that limit or prevent competition.
Outline examples of anti-competitive conduct that is prohibited by the CCA to engage in fair competition
- cartel conduct: businesses act together while pretending to be competitors
- anti-competitive agreements: contracts amongst competitors that restrict competition
- misuse of market power: businesses with large market power that aim to lessen competition in the market
- exclusive dealing: a business trading with another imposes restrictions on their freedom
- resale price maintenance: involves suppliers setting a price for retailers to sell at
Describe sugging in ethical advertising.
Selling/marketing goods under the guise of research or a survey. Although not illegal, it raises ethical concerns around invasion of privacy and deception, This negatively impacts on market research as consumers refuse to participate in surveys in fear of sugging.
