The role of marketing, types of markets, production, selling and marketing approaches, and the marketing process (HSC Business Studies Topic 2)
“The strategic role of marketing, production, selling and marketing approaches; the marketing process - situational analysis (SWOT, product life cycle), market research, establishing market objectives, identifying target markets, developing marketing strategies, implementation, monitoring and controlling”
Marketing identifies customers' needs and wants and satisfies them profitably. Its strategic role is to create a competitive advantage by matching the business's goods and services to its target market, and it is interdependent with operations, finance and HR. Businesses sell into different types of markets (resource, industrial, intermediate, consumer, mass, niche) and can take a production, selling or marketing approach. The marketing process runs: situational analysis (SWOT, product life cycle), market research, establishing market objectives, identifying target markets, developing marketing strategies, and implementation, monitoring and controlling (financial forecast, comparing actual and planned results, revising the strategy).
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What this dot point is asking
The syllabus covers the role of marketing (strategic role of marketing goods and services; interdependence with other key business functions; production, selling and marketing approaches; types of markets) and the marketing process (situational analysis, market research, establishing market objectives, identifying target markets, developing marketing strategies, and implementation, monitoring and controlling). A "students learn to" point asks you to "analyse a marketing plan for a business", which is exactly the marketing process applied.
The strategic role of marketing
Marketing is the process of planning and carrying out the development, pricing, promotion and distribution of goods and services to satisfy customers' needs and the business's objectives. It is broader than advertising: it starts with research and ends with after-sales relationships.
The strategic role of marketing is to achieve a long-term competitive advantage by:
- identifying customers' needs and wants, and gaps in the market;
- positioning the business's products against competitors in the minds of the target market;
- building brands and long-term customer relationships, which generate repeat sales;
- generating the revenue that funds the whole business.
The syllabus refers to marketing "goods and services". Services (banking, travel, education) are intangible and produced as they are consumed, which is why the extended marketing mix adds people, processes and physical evidence (see promotion and place).
Interdependence with other key business functions
| Function | What marketing needs from it | What it needs from marketing |
|---|---|---|
| Operations | Products of the right quality and quantity, delivered on time, so promises are kept | Sales forecasts and customer requirements to plan production |
| Finance | A budget for research and promotion; cost data to set prices | Sales forecasts for budgets and cash flow |
| Human resources | Trained, customer-focused staff (vital in services) | Information about the customer-service skills needed |
A marketing promise that operations cannot deliver damages the brand. The syllabus also asks you to "explain why goods and/or services are central to both marketing and operations": marketing decides what customers want, and operations must produce it.
Types of markets
| Market | Who buys | What is bought | Example |
|---|---|---|---|
| Resource market | Businesses that extract or process natural resources, and their buyers | Raw materials and natural resources | Iron ore, coal, wheat, timber |
| Industrial market | Businesses buying inputs to make other products | Components, equipment, materials | Steel sold to a car maker; machinery |
| Intermediate market | Wholesalers and retailers buying to resell | Finished goods for resale | A supermarket buying from a food manufacturer |
| Consumer market | Individuals and households | Goods and services for personal use | Groceries, clothing, streaming subscriptions |
| Mass market | A large, undifferentiated market | Standardised products marketed to everyone | Toothpaste, soft drinks |
| Niche market | A small, specific segment with particular needs | Specialised products | Premium skincare, specialist sports equipment |
Industrial and intermediate markets are business-to-business (B2B) markets: fewer, larger buyers, rational buying decisions, personal selling and long-term contracts. Consumer markets are business-to-consumer (B2C): many buyers, more emotional decisions, mass advertising.
Production, selling and marketing approaches
| Approach | Starting point | Assumption | Main focus |
|---|---|---|---|
| Production | The product and the factory | Demand exceeds supply, so whatever is made will sell | Efficient, high-volume production at low cost |
| Selling | The product already made | Customers must be persuaded to buy | Advertising, personal selling, sales promotion |
| Marketing | The customer | The business succeeds by meeting customers' needs better than competitors | Research, customer satisfaction, long-term relationships |
The approaches developed broadly in that order as markets became more competitive. Today most consumer businesses take a marketing approach because customers have many alternatives, can research and compare online, and share reviews publicly.
Example: listening before designing. In July 2026 Bunnings launched PowerPass Pro Rewards for its trade and small-business customers, a tiered loyalty program (six tiers from Member to Black) that earns store credit ($100 in Pro Rewards Dollars after $2,000 of eligible spend in a membership year, then $50 for each further $1,000), fuel discounts and partner offers. Bunnings managing director Mike Schneider said customers had told the business "they wanted more than a discount at the register". Designing the offer around what the target market said it wanted is the marketing approach.
Example: a customer-centred brand. Aesop, the premium skincare brand founded in Melbourne, is built around product design, store design and customer experience for a niche market. L'Oreal completed its acquisition of Aesop in August 2023 at an enterprise value of about US$2.5 billion, showing the value a strong customer-focused brand can create.
The marketing process
Step 1: Situational analysis
Situational analysis is the review of the business's current position and environment. The syllabus names two tools.
SWOT analysis. Strengths and weaknesses are internal (within the business's control: brand, staff, finances, technology). Opportunities and threats are external (outside its control: competitors, economic conditions, laws, social trends). A good SWOT is used, not just listed: match strengths to opportunities and plan to fix weaknesses that expose the business to threats.
A useful case is the reputational threat that ACL breaches create. In October 2024 the Federal Court ordered Qantas to pay $100 million in penalties for continuing to sell tickets on flights it had already decided to cancel (misleading 86,597 people) and for not notifying about 884,000 people of cancellations promptly. Qantas had also committed in May 2024 to pay about $20 million in remediation to affected customers.
- Strengths: strong brand heritage, large domestic network, frequent flyer program.
- Weaknesses: damaged customer trust and regulatory record.
- Opportunities: win back trust through better service and transparent communication.
- Threats: competitors, regulators and customers penalising further breaches.
The marketing plan that follows must address the weakness (trust) before promotion can work.
Product life cycle (PLC). Products typically pass through four stages. The stage shapes the marketing strategy.
| Stage | Sales and profit | Typical marketing strategy |
|---|---|---|
| Introduction | Low sales; often losses because of launch costs | Build awareness with heavy promotion; skimming or penetration pricing; limited distribution |
| Growth | Sales rise quickly; profits appear; competitors enter | Widen distribution; build brand preference; add features; consider price cuts to win share |
| Maturity | Sales peak and level off; competition is intense | Differentiate; defend share with promotion and pricing; extend the life with new uses, variants or markets |
| Decline | Sales and profits fall | Cut costs; reduce range and distribution; harvest profits; relaunch or withdraw |
Not every product follows the curve neatly, and marketing decisions can change its shape, for example an extension strategy (a new version, a new market or new packaging) can lift a mature product's sales.
Step 2: Market research
Market research is the systematic collection, recording and analysis of information about customers, competitors and the market.
- Primary data is collected by the business for its own purpose: surveys, interviews, focus groups, observation, product testing, and analysis of its own sales and loyalty data. It is specific and current but costly and slow.
- Secondary data already exists: Australian Bureau of Statistics data, industry and government reports, competitor annual reports, media. It is cheap and fast but may be out of date or not specific enough.
The research process: define the problem, plan the research, collect data, analyse and interpret it, and report findings to decision-makers.
Step 3: Establishing market objectives
Market objectives are what the marketing plan must achieve. They should be specific, measurable, achievable, realistic and time-bound (SMART) and consistent with the business's overall goals. Common types:
- Increase sales or market share ("grow online sales by 15 per cent in the next financial year").
- Expand the product range or enter new markets.
- Build brand awareness or reputation (measured by surveys).
- Improve customer satisfaction and retention.
"Increase sales" is not an objective; it has no measure or deadline.
Step 4: Identifying target markets
The target market is the group of customers the business chooses to serve. The business first segments the market into groups with similar needs, using:
- Demographic variables (age, gender, income, occupation, family life stage);
- Geographic variables (location, climate, urban or regional);
- Psychographic variables (lifestyle, values, personality);
- Behavioural variables (usage rate, loyalty, benefits sought, occasion).
It then chooses a mass (undifferentiated) approach, a multi-segment approach (different mixes for several segments) or a concentrated (niche) approach. Bunnings' trade program is a concentrated strategy for one segment (tradespeople and small businesses) inside a mass-market retailer. Segmentation is covered further in product and price.
Step 5: Developing marketing strategies
The business designs its marketing mix for the target market: the 4Ps (product, price, promotion, place) and, especially for services, the extended mix of people, processes and physical evidence. See product and price and promotion and place.
Step 6: Implementation, monitoring and controlling
Implementation is putting the plan into action: allocating the budget, assigning responsibilities and setting a timeline. The syllabus then names three elements of monitoring and controlling:
- Developing a financial forecast: estimating sales revenue and marketing expenses period by period. It turns objectives into targets that can be checked.
- Comparing actual and planned results: measuring performance (sales, market share, cost per sale, website traffic and conversions, customer satisfaction) and calculating variances from the forecast.
- Revising the marketing strategy: changing the mix when results fall short or the market changes, for example moving budget between channels, adjusting price, or refining the target market.
A business forecasts quarterly sales of $400,000 from a campaign costing $50,000. Actual sales are $340,000.
- Variance
- $340,000 - $400,000 = -$60,000 (unfavourable, 15 per cent below plan).
- Diagnosis
- channel data show online advertising generated most sales while print advertising generated few.
- Control action
- move the print budget to the online channel for the next quarter and re-forecast. This is monitoring (measure), controlling (act) and revising the strategy.
Both involve promotion, but the selling approach starts with a product already made and persuades customers to buy it; the marketing approach starts with customers' needs. Say what comes first.
A list of strengths and threats earns little. Show how a strength lets the business pursue an opportunity, or how a weakness exposes it to a threat, and what the plan does about it.
The syllabus specifically names a financial forecast, comparing actual and planned results, and revising the strategy. Name all three.
"Increase sales" cannot be monitored. Give a measure and a time frame.
How this dot point appears in the HSC
- Section I: identify a type of market, an approach, a SWOT category or a PLC stage from a scenario.
- Section II: outline steps in the marketing process, distinguish approaches, or explain the role of market research or monitoring (2 to 6 marks).
- Section III: the business report may ask you to analyse the situation of a hypothetical business (a SWOT) and recommend objectives, target markets and strategies, which is the marketing process in full.
- Section IV: evaluate the marketing process or strategies of a business, linked to its objectives.
Exam-style questions
Questions in the style of NESA exam questions on this dot point, each with a worked answer. They are written by ExamExplained unless tagged "Past paper"; the year shows the paper a question is modelled on.
Original6 marksOutline the steps in the marketing process and explain why situational analysis is the first step.Show worked answer →
- Marks guide (Original, modelled on NESA criteria)
- 5-6 marks: outlines all steps in a logical sequence and clearly explains why situational analysis comes first, with cause and effect. 3-4 marks: outlines most steps with some explanation. 1-2 marks: lists some steps.
- Steps
- (1) Situational analysis: a SWOT analysis and the product's position in its life cycle. (2) Market research: collecting and analysing primary and secondary data. (3) Establishing market objectives: specific, measurable targets such as sales, market share or awareness. (4) Identifying target markets: segmenting the market and choosing whom to serve. (5) Developing marketing strategies: the marketing mix. (6) Implementation, monitoring and controlling: putting the plan into action, developing a financial forecast, comparing actual with planned results and revising the strategy.
- Why situational analysis is first
- Every later decision depends on an accurate picture of where the business stands now. A SWOT analysis shows which strengths the business can use to exploit opportunities and which weaknesses and threats it must address, so objectives are realistic. The product life cycle stage determines suitable strategies: heavy promotion suits introduction, while cost control and differentiation suit maturity. Without this analysis, a business could set objectives it cannot achieve or spend its budget promoting a product that is in decline. Situational analysis also identifies what research is needed, so it guides step 2.
Original4 marksDistinguish between a production approach, a selling approach and a marketing approach.Show worked answer →
- Marks guide (Original, modelled on NESA criteria)
- 4 marks: clearly distinguishes all three approaches by their starting point and focus. 2-3 marks: describes the approaches with some distinction. 1 mark: some relevant information.
- Production approach
- The business focuses on producing as much as it can, as efficiently as possible, assuming that products will sell because demand exceeds supply. The starting point is the product and the factory.
- Selling approach
- Production has caught up with demand, so the business focuses on persuading customers to buy what it has already made, through advertising and personal selling. The starting point is still the product, but the emphasis is on the sale.
- Marketing approach
- The business starts by identifying customers' needs and wants through research, then designs and delivers products that satisfy them profitably, and builds long-term relationships. The starting point is the customer.
The key distinction is the starting point: production and selling start with the product, while the marketing approach starts with the customer. Most consumer businesses today use a marketing approach because customers have many choices and can compare products easily.
Original5 marksExplain how a business uses monitoring and controlling to improve the effectiveness of its marketing plan.Show worked answer →
Marks guide (Original, modelled on NESA criteria). 5 marks: explains the purpose of monitoring and controlling, the three syllabus elements (financial forecast, comparing actual with planned results, revising the strategy), and how they improve effectiveness. 3-4 marks: describes monitoring and controlling with some explanation. 1-2 marks: some relevant information.
Model answer. Monitoring means measuring the results of the marketing plan as it is implemented; controlling means taking corrective action when results differ from the plan. First, the business develops a financial forecast that estimates sales revenue and marketing costs for each period, turning objectives into measurable targets. Second, it compares actual and planned results using key performance indicators such as sales, market share, website conversions and customer satisfaction, and analyses any variance. Third, it revises the marketing strategy: if a campaign is under-performing, it may shift the promotional budget to more effective channels, adjust prices or refine the target market. This continuous feedback means resources are directed to what works, objectives are more likely to be achieved and problems are found early, so the plan improves instead of running to the end unchanged.
Practise this
Sources & how we know this
- Business Studies Stage 6 Syllabus (2010) — NSW Education Standards Authority (2010)
- Bunnings renovates tradie loyalty program, offering store credit, fuel discounts and Qantas Points — SmartCompany (2026)
- PowerPass Pro Rewards — Bunnings Trade
- Federal Court orders Qantas to pay penalties for misleading consumers — ACCC (2024)
- L'Oreal completes acquisition of Aesop — L'Oreal (2023)
- Business Studies HSC exam papers — NESA