Handouts for students

Year 11 Business Management

Topic: 7Ps of Marketing

I. Product

Task 1: Distinguish between products and services.

Products are tangible. Services are intangible. A car is a product because a person can
buy and own it as a property. Meanwhile, a taxi drive is a transportation service and a
person who takes the drive does not own the car as a property.

Task 2: Identify whether the following are products or services.

a) Apple iPhone Product

b) Commonwealth personal bank account Service

c) Nike shoes Product

d) Supreme T-shirt Product

e) Bupa’s health insurance Service

f) Taylor Swift concert ticket Service

g) Uber’s Taxi ride Service

h) Hotel stay at InterContinental Melbourne Service

i) Thankyou body wash Product

j) Coca-cola Product

I. Product packaging

Case study 1. The Tiffany Blue Box

Step 1: Navigate to the link below.

https://www.tiffany.com.au/world-of-tiffany/blue-box-story/

Step 2: Explain the importance of having a trademarked colour Tiffany Blue® or “1837
Blue” for its box. Why does Tiffany claim that the Blue Box makes hearts beat faster?

Step 3: What do you think about the saying that “Packaging is a product itself”?

The packaging is minimalistic but creates a sophisticated luxury feeling. It is important

that students recognised that the “unboxing” experience is a type of service that
comes with the product because it is intangible. According to Mull (2021), “Even the
most mundane of purchases has taken on a matryoshka-like quality. […]In the past
two decades, this premium on aesthetics has created a packaging arms race.
Packaging is now typically developed right along-side the product that will go inside it,
 not as a last step before the product meets the public.”

Case study 2. What do you notice from colour changes? Why are notifications all
red?

In “attention economy, time is currency. These apps sell advertisements, so

consumers’ time is their profits. If consumers spent more time on these apps, they
would make more money. As a result, it is important for students to realize that “if you
don’t pay to use a product, you are the product”. Students should be confronted with
questions such as “What is genuinely worth your attention? On an uninterrupted
basis?”

Case study 3. Identify the “dark patterns” on websites that trick consumers to
spend more.

“If you’re an Instagram user, you may have recently seen a pop-up asking if
you want the service to “use your app and website activity” to “provide a
better ads experience.” At the bottom there are two boxes: In a slightly
darker shade of black than the pop-up background, you can choose to “Make
ads less personalized.” A bright blue box urges users to “Make ads more
personalized.”

This is an example of a dark pattern: design that manipulates or heavily

influences users to make certain choices. Instagram uses terms like “activity”
and “personalized” instead of “tracking” and “targeting,” so the user may not
realize what they’re actually giving the app permission to do. Most people
don’t want Instagram and its parent company, Facebook, to know everything
they do and everywhere they go. But a “better experience” sounds like a
good thing, so Instagram makes the option it wants users to select more
prominent and attractive than the one it hopes they’ll avoid.”
Morrison, S. (2021, April 1). Dark patterns, the tricks websites use to make you say yes,
explained. Vox. https://www.vox.com/recode/22351108/dark-patterns-ui-web-design-
privacy

Watch this video: How dark patterns trick you online: https://youtu.be/kxkrdLI6e6M?
si=9uXwPBq4BEvay5Hb
Gray, C. M., Kou, Y., Battles, B., Hoggatt, J., & Toombs, A. L. (2018, April). The dark
(patterns) side of UX design. In Proceedings of the 2018 CHI conference on human factors
in computing systems (pp. 1–14).

Nagging, interface inference and forced action respectively.

Case study 3. List three functions of the packaging. Explain the importance of
packaging in relation to the success of Dollar Shave Club’s razors.

“Sometimes, packaging arbitrage is the reason for existence for a whole company.
Dollar Shave Club, the direct-to-consumer start-up, didn’t make or even design its own
razors. Instead, it bought inexpensive ones from the Korean brand Dorco, wrapped
them in slick, Millennial-bait branding, and found a sector of the market that hadn’t yet
been spoken to by the old guard of Schick and Gillette. In 2016, Unilever bought Dollar
Shave Club for a reported price tag of $1 billion.

Product and packaging developers are constantly trying to figure out how to make
things worth a second look. If everything around you seems more designed than it used
to be—uncluttered labels, sans serif fonts, clean lines, matte finishes—that’s why.”
Mull, A. (2021, November 22). The package is the message. The Atlantic.
https://www.theatlantic.com/magazine/archive/2021/12/unboxing-packaging-
shopping-delight/620523/

Functions of packaging:

 Acting as an advertisement, attracting attention and new customers

 Building image, brand recognition, and positioning of the product in the
marketplace.
 Differentiating the product from that of its competitors
 Protecting the product during transportation packaging
 Tamper-proofing the product
 Providing consumer information – ingredients, manufacturer and country of
origin.

Case study 4. ANZ debit card

What do you notice about the changes in ANZ debit card design? Why?

Before

After

Front of the card: All information is moved to the back of the card. All that is left is a
logo.

Back of the card: The customers are not required to sign.

Case study 4. Compare and contrast the use of earth tones colour in the
packaging of Milo and Fiji Water.
Source: Thanh Van. (2021, July 19). Nestlé Vietnam and MILO champion campaign to say
no to plastic straws. Vietnam Investment Review. https://vir.com.vn/nestle-vietnam-and-
milo-champion-campaign-to-say-no-to-plastic-straws-85790.html

For some companies, like Milo, sustainability means figuring out how to make
packaging sustainable; for others, it means making their stuff look that way.

Any company can adopt the aesthetic signifiers of sustainability (think earth tones and
clean design). Brands that don’t care about waste are free to use the same colours
and fonts as the companies that do. (Mull, 2021)

This is the difference between green-packaging and green-wash packaging that aims
at environmentally conscious consumers.
Case study 5. Well-designed packaging

“At its best, well-designed packaging means that some stuff doesn’t get discarded at all,
because it’s sturdy and beautiful enough to be repurposed.” (Mull, 2021)

Task: Brainstorm ONE packaging item in your house that is repurposed and describe its
features.
II. Price

Task 4: Complete the table below.

Key question: How do you price this product? How do you decide the selling price?

Case study 1. Mark-up percentage Case study 2. Competition-based

pricing

Case study 3. Price skimming Case study 4. Price penetration

Case study 5. Psychological pricing Case study 6. Bundle pricing

Pricing Strategies Definition Used for which products?
Mark up percentage  A profit is added to the  Manufacturers sell
cost of producing the their milk, bread,
product cheese, etc. at a mark-
 This is the price at up to the retail stores.
which the product is  Retail stores sell
available in the clothes, bags, shoes,
market. glasses, etc. at a mark-
up.

Competition-based pricing  Setting the price based  Nike and Adidas

on the price of  McDonald's, Burger
competitors. King, and KFC
 Apple and Samsung

Price skimming  Charge an initial high  Commonly used in

price because some electronic market
customers want to be when a new product is
the first to buy the introduced
product and are willing
to pay the premium.
 Then lower it over
time to attract more
price-sensitive
customers.

Penetration pricing  Charge an initial low  A bank offering a free

price to attract new savings account for six
customers to gain months.
market share  A streaming service
 Then increase it over offers free trials if you
time. sign up for the first
time.
 “Freemium”
Premium pricing  Keep the price Designer clothes, LVMH
artificially high to Luxury cars, watches
encourage favorable
perceptions among
buyers, based solely
on the price
 Psychological pricing  Pricing designed to Apps
have a positive Retail stores
psychological impact.

Bundle pricing When a business sells a Fast foods

package of goods or
services for a lower total
price than the individual
price of each component
of the bundle.

Task 5: Recommend the most appropriate pricing strategies for businesses below.
Justify your answer.

a) Family restaurant

b) A streaming service (Netflix, Disney+)

c) Luxury car company

d) E-commerce store on Amazon

e) Pharmaceutical products

Task 6: Identify pricing strategies that Apple used to sell its iPhone. Evaluate the
success of such strategies. Suggest ONE change Apple can make so customers will not
be upset when price skimming is used.

On September 5, 2007, Apple reduced the price of the 8 GB iPhone model by one-third,
dropping it from US$599 to US$399. Customers who had purchased the iPhone early
expressed frustration at how quickly Apple had cut the price of the iPhone, which was
released on June 29. Responding to numerous upset emails from iPhone users, Mr. Jobs
publicly apologized and announced that Apple would provide a $100 credit at Apple
stores to all customers who had paid the original price. In a letter posted on Apple's
website, Mr. Jobs wrote in a letter posted on Apple's Website, "Our early customers
trusted us, and we must live up to that trust with our actions in moments like these".

Wingfield, N. (2007, September 7). Steve Jobs offers rare apology, credit for iPhone. The
Wall Street Journal. https://www.wsj.com/articles/SB118910651781519626

Pricing strategies are penetration pricing and psychological pricing. The

penetration pricing was not successful because it caused first buyers who paid
the premium upset. One suggestion is that Apple could provide free gifts or
coupons for early purchases. So once the price is dropped, early buyers won’t
be so angry.
III. Place

Place or placement refers to where your customer can actually buy your product.
Additionally place, like price, signifies a certain value to the customer. For example, if you
want to signal exclusivity, you will not want to stock your product at every retail store. Look
at Rolls Royce — they have one store for the whole state in the USA; it is a very exclusive
product.

Task 7: Describe three different distribution models and give three examples for each
model.

Distribution models Definition Example

Intensive distribution Every retail store Grocery items

Selective distribution Selected outlets in Estee Lauder sells its

specific location products at shopping malls
and luxury department
stores.

Exclusive distribution Carefully selected Luxury cars (Rolls Royce)

resellers (typically one Luxury watches (Patek
per geographical area) Phillippe)

Task 8: Construct flow charts showing a direct distribution and an indirect

distribution.

Direct distribution

Indirect distribution
IV. Promotion

Promotion is the communication that businesses initiate with customers. It includes the use
of advertising, sales promotion and public relations to inform and persuade customers.

Task 9: Complete the table below.

Promotion techniques Concept Examples

Advertising Advertising is designed to List five different forms of
inform, compare and advertising media.
persuade, remind and
Newspapers, TV, Radio,
reinforce customers about
Magazines, Social media,
the products.
Outdoor advertising
(billboards, sides of buses,
etc)
 Sales promotion Sales promotion is the use List three types of sales
of incentives to encourage promotion.
increased sales.
Buy one get one (BOGO),
free shipping, free
samples, sales discount,
etc.

Public relations Publicity is a free form of List five examples.

mass communication with
the aim of attracting Press release, product
favourable attention to a launches, special events,
business sponsorships, product
placement, celebrity
endorsements, affiliation
links, etc.
Personal selling Product is sold by a
salesperson.

Direct marketing A form of communicating List three examples.

an offer directly to the
individual consumer. Tele-sales, direct emails,
texting campaign

Case study 1. Read the article: Korean TV’s Unlikely Star: Subway Sandwiches

Identify the promotion strategies used by Subway in South Korea. Discuss one
advantage and one disadvantage of using that strategy.

Berkman, S. (2021, March 14). Korean TV’s Unlikely Star: Subway Sandwiches. The New
York Times. https://www.nytimes.com/2021/03/14/business/media/subway-product-
placement-korea.html

Public relation (product placement)

Case study 2. Watch the video: Truman Show advertisements

Identify the promotion strategies in Truman Show. Discuss one advantage and one
disadvantage of using that strategy.

Truman Show advertisements: https://youtu.be/18jl1Wr5TRw?si=rJuiABvZKTJJROhy

Public relation (product placement)

Case study 3. Image analysis.

Identify the promotion strategies in the image below. Discuss one advantage and one
disadvantage of using that strategy.

Public relation (sponsorships)

V. People. Physical evidence. Processes

The original 4Ps of marketing is extended to 7Ps of marketing for the service industry.

Task 12: In context of an airline company, complete the table below.

Marketing mix Concept Apply to an airline

company
People People refer to all the staff Who do customers interact
that come into contact with when using the
with the customers service?

Cabin crew, airport staff,

ticketing staff

Process Process refers to the What kinds of process do

elements of the service customers go through
that the customers when using the service?
experience
Ticketing, Checking in,
Flying

Physical evidence Physical evidence refer to What is the environment in

the ability and the which the service is
environment in which the delivered to customers?
service is delivered
The lounge, the plane
VI. Case study

Evaluate the marketing mix for Warby Parker.

1. Product – Where did it fit in the product life cycle? What brand values are signalled by
its packaging and product design?

2. Price – What pricing policy do you believe was adopted for this product? How did it
compare to the price of a competitor’s product?

3. Place – Where can you buy the product?

4. Promotion – What techniques were used to attract you to the product?

5. People – Were the salespeople good at their job and did they convince you to buy the
product?

6. Process – Was the purchasing and aftersales service good?

7. Physical evidence – What do customers se/feel/experience when buying this product?

Warby Parker: Disrupting the Eyewear Industry

Warby Parker offers a winning value proposition – fashionable, quality glasses at an

affordable price – and its commitment to doing good in the world makes it a star in the
eyes of customers. The company was immediately successful, reaching its first-year
sales goal within three weeks of launching. Warby Parker has since distributed over a
million pairs of glasses, with sales over $100 million. Its most recent funding round
values the company at $1.2 billion.

Business Model

Warby Parker’s mission is to “to offer designer eyewear at a revolutionary price, while
leading the way for socially conscious businesses.” To this end, Warby Parker sells most
frames for just $95, including prescription lenses. The company started selling
exclusively online and has since opened twenty retail stores.

Operating Model

Vertical Integration

The founders understood that the high prices were largely due to concentration of
power in a single company, Luxottica, which controls 80% of the high-end eyewear
market. Luxottica designs and manufactures frames for major brands, such as Chanel,
Ralph Lauren, Prada, and Armani, via licensing agreements, and owns brands such as
Oakley, Ran-Ban, and Persol.

Warby Parker has created a low cost structure by cutting out the middleman; it designs
its own frames, hence avoiding licensing fees, sources its own raw materials, and works
directly with manufacturers. For example, the company procures acetate from a family-
run Italian company and titanium from Japan. Frames are manufactured in China and
shipped to the United States through a third party logistics company. Lenses are
polished, shaped, and inserted into frames at domestic optical labs. By negotiating
directly with its partners, Warby Parker keep costs low, and it enforces strict service
level agreements to maintain quality.

Sales Channels: E-Commerce and Brick & Mortar

Warby Parker began by selling glasses through its website, which helped to minimize
costs. Warby Parker created a Home Try-On experience to meet the needs of a
customer base accustomed to trying on glasses in person. Customers select five frames,
receive them in the mail, and have five days to try them out before sending them back.
After choosing a frame, customers submit orders online and receive their glasses in the
mail. If the customer is dissatisfied, the glasses can be returned or exchanged within 30
days; Warby Parker covers all shipping costs. The combination of the try-on service, free
shipping, and generous return policy provides a comfortable and convenient consumer
experience.

Warby Parker has expanded beyond e-commerce and now operates 20 retail stores
across 15 cities throughout the country, which support its brand and offer additional
services (e.g., many provide optometry exams). Its stores are booming, averaging
$3,000 per square foot of retail space (Tiffany’s sells $3,043 per square foot). The stores
feature library-inspired designs that align to Warby Parker’s quirky brand. Along with its
own stores, Warby Parker sells through select boutiques.

Organization & Culture

Co-CEOs Dave Gilboa and Neil Blumenthal co-lead Warby Parker, with sales and
marketing functions reporting to Dave and customer service and technology functions
reporting to Neil. Warby Parker emphasizes high touch customer service, and the
customer service group, known as “Customer Experience” is the company’s largest
department. Warby Parker recruits college graduates as its customer service reps, who
are expected to be promoted after a couple of years answering calls.

Reference:

Warby Parker: Disrupting the Eyewear Industry. (2015, December 12). Harvard Business
School. https://d3.harvard.edu/platform-rctom/submission/warby-parker-disrupting-the-
eyewear-industry/