Contents
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Contents
Volume 18 • Number 4 • August 2010 Contents The Wiggles........................................................................................... 2 Introduction....................................................................................... 2 Who Are The Wiggles?...................................................................... 2 Identifying And Satisfying A Need: For Consumers And Purchasers... 3 The Wiggles Target Markets............................................................. 3 Building A Brand. .............................................................................. 3 Achieving Global Success.................................................................. 4 A Successful Business Model............................................................ 4 Five Factors For Success.................................................................. 4 Conclusion......................................................................................... 5 References. ....................................................................................... 5 Web Marketing: To Web Or Not To Web? Or How To Web?................. 6 Introduction....................................................................................... 6 Marketing.......................................................................................... 6 Web Marketing. ................................................................................. 6 How Can A Business Use The Web In Marketing?............................... 6 Why Use Web Marketing?.................................................................. 7 Customer Relations Management . ..................................................... 7 Crowdsourcing. ................................................................................. 7 Affiliate Programs............................................................................. 7 Weighing Up The Pros And Cons........................................................ 8 Conclusion: Web Marketing And The Future...................................... 8 References And Further Reading ...................................................... 8 Media Watch. ......................................................................................... 9 Big Changes For Superannuation....................................................... 9 Lower Fees........................................................................................ 9 Superannuation Strategy................................................................... 9 Busidate is published and distributed by: Warringal Publications PO Box 166 East Kew VIC 3102 • Telephone (03) 9857 0253 • Facsimile (03) 8678 1118 • Website www.warringalpublications.com.au Subscription information: Full-rate subscription $65.00 per annum • ISSN 1837-8161 • Copyright 2010 The Wiggles By Ian Biddle Past Head Teacher, Social Science Jamison High School Part-time Lecturer, Education Method, University of Western Sydney The Wiggles, in terms of length of survival and level of financial and other achievements have been remarkably successful. They have certainly identified a real consumer need and have developed a range of products to effectively satisfy these needs. The Wiggles have effectively established and maintained a sustained competitive advantage. Introduction The Wiggles are a business. To survive, a business must satisfy a real need and establish and maintain a competitive advantage. This competitive advantage may be in areas such as product advantage or price. The business must also ensure that consumers are well aware of the product and it is available and suitably accessible. Who Are The Wiggles? This situation applies to a wide range of providers of products and services varying from running shoes to international travel. To survive entertainers must also satisfy a need and do this in an efficient manner. However aspects such as price are less significant and the ability to best satisfy the quite complex aspects of consumer needs are more vital. At the core of The Wiggles are four middle-age men who wear skivvies and sing and perform to quite young children. • Murray Cook: The Red Wiggle • Jeff Fatt: The Purple Wiggle • Anthony Field: The Blue Wiggle Survival in the broad area of the entertainment industry and particularly that of performers is difficult and the survival rate is exceptionally low. Factors for this include: • Sam Moran: The Yellow Wiggle The Wiggles are however much more than this. The business encompasses aspects such as: • Associated characters such as Dorothy the Dinosaur, Captain Feathersword, Wags the Dog, Henry the Octopus and many others. These characters are played by a range of actors. • Vast numbers of suppliers and potential suppliers • Relatively low costs of entry for performers who are often willing to work for low returns • Quite high costs for the providers of entertainment services, as opposed to the performers • Troupes of dancers and singers for tours and shows. Often over 70 staff are involved on tours. • A difficulty to identify and satisfy the wide range of consumer needs • Managers such as Paul Field and Mike Conway. • A range of associated merchandise such as lunch boxes and big red car beds. • The fickle and changing nature of consumer tastes. Figure 1: Wiggles Line-Up Source: Wikipedia Commons ~2~ being challenged and they are thrilled by basic movements and simple choreography, a limited number of objects and activities and as well, the feeling of empowerment. • Involvement in theme parks in countries such as Australia and the United States of America. • Recording studios and child entertainment centres. • Highly successful T.V. shows, DVDs and CDs. Figure 2: the Finger Wagging Picture The success of The Wiggles is quite remarkable. Their income in 2007 for example exceeded $45m. They have been BRW top entertainment earners for four years in a row. They have sold over 17 million DVDs and four million CDs and as a result have received many industry awards. The Wiggles have been awarded honorary doctorates and they have recently been appointed Members of The Order of Australia. Identifying And Satisfying A Need: For Consumers And Purchasers The products of entertainers are aimed at specific target markets e.g. country and western music and science fiction movies have specific audiences. The Wiggles and similar providers such as Hi5 also have specific target markets, that is, preschoolers and infants. An issue for such businesses is that the primary consumer of the product does not have the ability to make the purchase. Parents and other adults are quite willing to purchase Wiggles products as they perceive these products to be good value and educational. The Wiggles have worked hard on their wholesome image and this has served them well in them achieving a high degree of acceptance by these purchasing adults. The Wiggles Target Markets Primary consumers: preschoolers and young children who have a demand for interesting and enjoyable experiences Richard Saverman from McCann-Ericson believes that the Wiggles have very successfully highlighted to the parents/adults the benefits of Wiggles products but also still focussing on satisfying the demands of young children. Major purchasers: their parents and associated adults. Have the income to buy DVDs and CD’s, associated products and concerts. They are seeking an educationally sound product that is value for money The Wiggles Product Manager, Paul Field, suggests that the Wiggles have resisted relying on ‘pester power’ as a means of selling their products. Pester power is a concept that implies that the marketer builds up children’s demand for a product with the realisation that children have a great power in persuading parents (pestering) to make the purchase. This is particularly relevant in areas such as junk food and electronic toys. Juliet Scher in ‘Born to Buy’ suggests that children are no longer bit players in purchasing. Matt Balogh from Integrity Research believes that over 50 per cent of adults take children with them when they buy products and in the US, children under 12 directly influence over $600 billion of household spending each year. STUDENT ACTIVITIES Define these terms in their correct business usage Competitive advantage, target market, brand, licensed products, franchise, AUSTRADE, copyright, succession planning, business model. 1. Identify reasons why most entertainers or acts have a limited business life cycle. 2. The Wiggles is much more than four middle aged men in skivvies. Describe the associated characters, facilities and events that are part of the business. 3. Briefly state their achievements to date and why, in your opinion, The Wiggles business formula is such a success. 4. Define the age of their target market. 5. How has the educational background of The Wiggles characters influenced the style of their performances? 6. Parents ultimately make the purchasing decisions. What factors influence them to buy Wiggles products? Children have certainly increased in significance in consumer decision making. This is due to factors such as: • Older children are now consumers in their own right, often with part-time jobs and large allowances • Smaller family size, dual incomes and later births have increased the amount available to spend on children The Wiggles have successfully developed products for the young target market but which are also quite acceptable to the adults who pay the purchase price. Not all providers have achieved both these goals. Lego for example provided products that adults believed were good value and educational but were seen to be boring by many children, and many products that are superficially appealing to young children are considered unsuitable by the adult who makes the purchasing decision. • Time poor parents to reduce guilt, substitute money for time. Paul Field states however that the Wiggles never endorse junk food and that it is a healthy thing to say ‘no’ to your children sometimes. The Wiggles success has relied upon products that appeal to young children but are seen as very suitable by adults. Building A Brand Business success is increased by creating and capitalising on brand image. The Star Wars brand created more revenue (over $23B) from the sale of associated products than it did from cinema tickets. The BBC earns over $1B from the sale of products such as Thomas the Tank Engine book and DVD’s. Three of the Wiggles have degrees in Early Childhood education. Kathleen Ward from Macquarie University believes that the appeal of the Wiggles is partly due to the fact that they understand that children have short attention spans, they enjoy ~3~ Hi-5 does not cover costs from concert ticket sales, but relies heavily upon the sales of merchandise. partners, the insistence upon maintaining brand quality, and the combination of great products based on a solid educational background has help establish and maintain The Wiggles as a major global entertainment force. Licensed products are now worth $64B in the US and account for 50 per cent of the total toy market. Capitalising on brand image is not new, Charlie Chaplin sold ‘Little Tramp Sweets’ in the 1920’s. The Wiggles have continued this tradition and they now sell over 550 spin off products in 67 countries. These range from band-aids to ring tones. A Successful Business Model Many initially successful entertainers fail to survive due to poor management practices and limited long term planning. The Wiggles have through careful organisation and management avoided most of the problems that plague many other entertainers. The Wiggles organisation has a shrewd merchandising arm. The Wiggles are featured at theme parks in the USA and Australia, they own entertainment centres in Texas and their own production facilities. These add to the already substantial income from their core activities. Originally the Wiggles were informally organised but they became consolidated in 2005. The Wiggles performers are directors and Mike Conway was appointed General Manager and Paul Field, General Manager of Operations. There is a close link and overlap between the entertainers and management. Material copyright was maintained and they maintain ownership and control of their production facilities. The Wiggles were not to become entertainers who earn vast sums for others. STUDENT ACTIVITIES 7. Explain ‘pester power’ as a marketing tool. Describe a product where this technique is used. 8. Formerly, parents were the main decision makers and purchasers of children’s products. Give reasons why this is changing. 9. The Wiggles have carefully developed a wholesome and healthy image. How has this assisted their market penetration? 10. Visit the Wiggles website at <www.thewiggles.com.au>. Develop a two column table that shows features of the site that would appeal to adults and children 11. Visit the on-line shop. Describe the variety of merchandise available. 12. Modern marketing is focused on what the ‘customer really wants’ and on developing ‘relationships’ with customers. How has The Wiggles business model achieved this? 13. Develop a word wheel with ‘building a brand’ in the centre. Show marketing linkages on the spokes of the wheel. 14. Branding creates a very profitable revenue stream. Give examples of successful merchandising in the entertainment and toy industries. Entertainers, even successful ones, often have a limited period of fame, popularity can be quite ephemeral. The Wiggles who started in the early 1990’s look like continuing well into the future. One reason is the attention to succession planning and a low reliance on individual personalities. When Greg Page had to leave due to ill health there was an experienced understudy Sam Moran, to become the new yellow Wiggle. Various actors play the associated characters, for example Paul Paddick (Captain Feathersword) is talented but it is Captain Feathersword who appeals to the audience and not Paul. Five Factors For Success Why were the Wiggles successful and why did this continue? Below are some factors that may explain these phenomena: Achieving Global Success Australia has 22 million people and this limited the growth of the Wiggles. According to James Thomson from BRW, 75 to 80 per cent of Wiggles income comes from overseas. Paul Field stated that there was no formal export plan and the Wiggles became Exporters of the Year by just doing what they enjoy. This is an oversimplification. 1. They understand the needs of their target audience. Their educational background combined with their musical experience from ‘The Cockroaches’ helped them achieve this understanding. 2. They provide a quality product that appeals to both children and adults. Entertainers rely on cultural identification. What appeals in some cultures does not in others. The Wiggles found that however, young children have only a low level of cultural identity. Material presented to overseas audiences did not have to change much. The Wiggles believe that being Australian, the most multicultural country in the world, greatly reduced the need to diversify their product. 3. They avoid short term trends and fashions and stick to a proven formula which is timeless. This has been aided by the fact that the audience is in a narrow age band, each year a large section move on but a new group of younger children take their place. 4. They sought global markets to expand their potential audience. The universality of the product and the increasing importance of the undifferentiated global consumer have helped this expansion. The use of the successful franchise model has also been significant. The model for much of the overseas expansion has been the franchise method rather than using agents. Austrade research indicates that 10 per cent of Australian businesses use the franchise model. Successful examples include Boost Juice in India and Mexico and Baker’s Delight in Canada. Cheryl Scott and Tim Harcourt from Austrade believe that careful, proactive initial selection and ongoing training is vital to protect the brand image and ensure a successful franchise arrangement. Tim Harcourt suggested that ‘the successful selection of franchise 5. They established and followed a successful business model. The entertainers have been careful and insightful managers who together with their specialised management staff have maintained control of quality and carefully planned for the long term. ~4~ STUDENT ACTIVITIES Conclusion 15. Export success has been achieved by using the franchise model. Identify its features. Indeed the Wiggles are a business and a successful one, even by international standards. Despite being entertainers, who are usually strangers to successful business practices, the Wiggles have highlighted key factors that contribute to the success of any business. A real need has to be identified and a product or service developed to satisfy the need. The characteristics and demands of the target market must be clearly understood. The product provided must be of quality so as to maintain and sustain the marketing advantage. 16. How long have The Wiggles been performing 17. Construct an organisational chart that would describe The Wiggles organisational model 18. Explain why the unexpected departure of Greg Page (the yellow Wiggle) didn’t lead to difficulties. References Business success however does not only depend on the 4 P’s. Effective management and planning are also essential. The entertainment industry has many examples of appealing products but destructive management practices. The Wiggles have been successful and have survived due to a fortunate combination of excellent products and sound management practices. Horsley, Michael 2003, Business Studies, Heinemann, Melbourne. Pilch, Judy, 2004, Australia and Global Business, Pearson, Melbourne. The Wiggles Official Web Site: <www.thewiggles.com> Elliott, T. It’s a wiggly wiggly world, S.M.H. 13/1/2010 Fraser, J. The Wiggles go to the top of the class, S.M.H. 20/9/2010. Neill, R. Toy Story, The Australian, 1/12/2007. Sams, C. Wiggles four degrees better, S.M.H. 4/6/2006. A.B.C. Online, U.S. success key to cracking rich list, abc.net.au/news/stories 13/4/2006. A.B.C. Online, Wiggles floored by Australia Day Honours, abc.net.au/news/ stories 26/1/201 B.&T. Marketers plug into pester power, <www.bant.com.au> 30/03/2010 Media Awareness Network, How marketers target kids, <www.mediaawareness.ca> 30/3/2010. NSW Business Chamber, Born global; the Wiggles, <www. nswbusinesschamber.com.au> 19/3/2010. Figure 3: The Wiggles stage, Oakland Arena, California, USA Source: Author: heydrienne from San Francisco, Wikipedia Creative Commons ~5~ Web Marketing: To Web Or Not To Web? Or How To Web? By Rachel Mules Head Teacher HSIE at Newtown High School of the Performing Arts marketing. This means that businesses are focussed on providing the goods and services that customers really want, and develop relationships with customers to ensure they understand the needs of customers and are able to respond to those needs. Introduction Ever wondered why the ads on Facebook target your particular age group? Have you wondered why your internet security provider offers to help you out by automatically renewing your subscription each year? Have you or your parents given payment details to an online business that you use regularly which stores those details for future purchases? Do you recall seeing ‘Do you tweet? Follow us on Twitter’ on a website, or ‘subscribe to our RSS feed’? Welcome to the world of web marketing. Web Marketing Web marketing, e-marketing, i-marketing, internet marketing, online marketing… Whatever you call it, it’s everywhere you look. Web marketing can be defined broadly as the use of the internet and related technologies in the marketing process. Marketing How Can A Business Use The Web In Marketing? Marketing refers to the combination of business activities designed to plan, price, promote and distribute goods and services to customers. Web marketing is a cost effective way to undertake a range of marketing activities, from planning and conducting market research, through implementation to monitoring and controlling of marketing strategies. A business can use the web for the The marketing concept refers to the modern view of marketing, which is based on customer orientation and relationship Figure 1: Web marketing CRM software Integrate with Twitter RSS feeds Provide a search engine on your website Integrated chat Web Marketing Automatic renewals Website Banner ads Emails Google Ads Affilate program on the internet ~6~ Social networking sites eg. facebook If a business is going to use web marketing to increase sales and perhaps expand market share, here are some ideas to think about. collection, analysis and interpretation of data, learning more about the target market including customer and buyer behaviour. Further, the nature of the web and the software available makes it easy to implement, monitor and control marketing activities and revise the marketing strategy where necessary. Think about the information that you provide when you sign up to social network media such as Facebook; and not just in the initial sign up when you provide information such as your age, gender and date of birth. Every application you add says something about you, as does every type of game you play or every quiz you complete. STUDENT ACTIVITIES Define these terms in their correct business usage. Relationship marketing, social networking site, crowdsourcing, interactive, blog, outsource, niche marketing, psychological, sociocultural, cost effective 1. What is the modern view of marketing? 2. What does web marketing involve? 3. As a group, gather examples of web marketing in the course of web browsing. Attempt to categorise their activities. 4. On the pretext of being a simple application or survey, design a series of questions that would reveal valuable information about a potential customer’s personal information and buying behaviour. 5. Visit The Australian Bureau of Statistics website. Search ‘Australian schools’ and develop a brief profile of the number of schools, students and teachers. 6. Compare and contrast the suitability of public access information such as the ABS site with web marketing sources. 7. Should there be concerns about the type of information gathered, its storage, security and privacy? 8. List the types of businesses more likely to use web marketing techniques. 9. Why do businesses advertise on social networking sites such as Facebook and Twitter? 10.Develop a typical demographic profile of a Facebook user. Describe a range of products that this person will likely buy in the near future. There are a range of web based techniques businesses can use in their marketing. Exactly which technique or combination of techniques will depend on the nature of the business and the goals of the business owners. Here are just some of the possibilities for a business to consider: Why Use Web Marketing? According to the Australian Bureau of Statistics (ABS) 72 per cent of Australian households have home internet access; 86 per cent of these have broadband; 79 per cent of children use the internet, increasing with age as 96 per cent of 12 to 14 year olds use the internet. Households most likely to have internet access will typically have children under 15 years old, be located in metropolitan areas and be above low income levels. This sort of information should send a signal to business owners about the potential of web marketing in reaching customers in Australia, not to mention overseas. The use of web marketing will depend on the type of business, its size and the goals of the owners. Businesses that might make the greatest use out of web marketing include businesses that can easily mail or email their products/services to customers, businesses that have a presence in a national or global market, businesses that want to expand into new markets and perhaps go global. In Australia, businesses which derive a greater percentage of their income from the internet tend to be in industries such as Information, Media and telecommunications; Financial and insurance services; Professional, scientific and technical services; Rental, hiring and real estate services. Customer Relations Management Customer relations management (CRM) software can be purchased by a business to manage the customer relationship marketing process via: • Tracking purchases • Payments information • Tracking customer communications • Service calls/follow up • Customer feedback • Customer service A localised business whose owners do not want to expand into new markets may not have as much use for web marketing, although it can still play a role. For example, a restaurant in Melbourne with an excellent website including photographs and menus, will attract customers travelling to Melbourne from other parts of the country or overseas. It might not be worth the time and money, however, to advertise on Facebook or to have a following on Twitter. Crowdsourcing Crowdsourcing is when a business invites ideas or contributions to a topic. A business could use this to get feedback on their product/service, price, and service or on the website itself, and use this information to make improvements and enhance customer satisfaction. Affiliate Programs The use of social networks such as Facebook in marketing may suit some businesses but not others. Facebakers.com is an organisation which provides statistics and information about Facebook use. According to this organisation, only a few companies make it to the top online company pages of Facebook, with most being actors, musicians, personalities and games; and most Facebook users mainly participate in games and personal communications. Further, the Facebook demographic is mostly 18–44 year olds. So, having knowledge of this sort of information is useful when considering which web marketing tools or strategies to use. An affiliate program is when you have a link to your business website on another business’ website; that business is known as your ‘affiliate’. You pay the affiliate business according to how many times customers click onto the link to your website. Next time you’re online, look out for this type of web marketing. Tips for a good business website • Make sure that it is engaging, especially to your target market. • Look at other websites to see what works and what does not. • Make sure it is easy to use. ~7~ • You can develop a website cheaply and easily or pay an expert to produce your website (outsource). Conclusion: Web Marketing And The Future • Add new content regularly and often. What makes web marketing unique, apart from its ‘newness’ and accessibility to such a large market, is its ability to create marketing strategies directed towards individual customers – finding out detailed information about the psychological, sociocultural and economic backgrounds of individual customers and their buying behaviour; and its interactivity – creating a two way relationship with customers, using customer feedback and communication to continually improve marketing strategies and develop the customer relationship into the future. • Make it interactive, perhaps with a game or a simple quiz. • Include images and perhaps a video. • Add an RSS feed. • Invite customer feedback, for example include a blog, feedback forms, crowdsourcing • Ensure fast response to queries and feedback • List your website in a directory that is likely to be picked up by Google Whatever the size, nature or goals of a particular business, an investigation into the potential for web marketing to suit that business should be seriously considered by any business owner. • Join an affiliate • Include key words on each page of your website that people are likely to use in a search STUDENT ACTIVITIES • Enter your key words into a Google search and look at the suggestions Google shows 11. How can customer relations software assist in marketing? 12.Compare and contrast crowdsourcing and affiliate programs as forms of information gathering for marketing. 13.Outline the main advantages and disadvantages of using web based marketing techniques. • Pay for advertisements in a search engine such as Google or Yahoo so that your business appears first • Recommend other products when a customer has made an order Weighing Up The Pros And Cons References And Further Reading ‘Clicking for Gold: How internet companies profit from data on the web’, The Economist, 25/2/10 <http://money.howstuffworks.com/affiliate-program1.htm> accessed 5/4/10 ‘Children’s participation in cultural and leisure activities’, ABS publication 4901.0, 1/12/09 ‘Household use of Information Technology 2008–9’, ABS Publication 8146.0, 16/12/09 ‘Business use of information technology 2007–8’, ABS Publication 8129.0, 20/8/09 <www.facebakers.com> accessed 5/4/10 R. Mohammed et al, Internet Marketing: Building Advantage in a Networked Economy, 2nd Edition, McGraw-Hill, 2003 4web marketing accessed 30/3/ <http://www.4webmarketing.biz/marketingmedia.htm> International chamber of commerce accessed 30/3/10 http://www.iccwbo.org/policy/marketing/id30750/index.html Even though there are many benefits of using web marketing, businesses need to think carefully about whether or not it will be useful and if so, which are the best strategies to use. Businesses need to think through the positives and negatives and issues to be dealt with to ensure the most effective marketing strategy. Figure 2: Benefits/Issues re web marketing Benefits that can be gained by using web marketing include: • Relatively cheap • Interactive • Potential for niche marketing – target individual customers easily • Customer orientation • Access to a much greater market • Makes ‘going global’ easier • Collect and analyse data efficiently • Range of businesses to outsource to if you don’t have the expertise Issues that need to be considered in relation to web marketing include: • Impersonal compared with phone calls or direct contact • Need to keep website up to date • Need prompt follow up of customer feedback or queries • Security issues with online payment - adds an extra cost • Making and receiving international payments can be complicated • Lack of experience and skills in this area • Competing with other businesses which may be far advanced with web marketing • Growing market both in Australia and globally ~8~ Media Watch by Bruce Watt Big Changes For Superannuation Labor’s reform agenda is about to sweep through superannuation.. This is the compulsory savings program for Australia’s 11 million workers, to assist them in retirement. The Cooper Review’s recommendations into superannuation aim to make it cheaper, safer and easier. Since it was introduced nearly 20 year ago it has generated a savings pool of $1.3 trillion, but while it generated returns better than inflation, it has not functioned as efficiently as it could. Superannuation for most people is now their biggest asset outside the home. One of the proposed changes is to increase super contributions from nine to 12 per cent of employee’s wages over the next decade. This would increase the retirement income of an average worker over a lifetime by over $100,000. Lower Fees Commissions, incentive based payments and kickbacks to financial advisers though have reduced returns to investors in many superannuation schemes. On average, retail funds charge annual fees of two per cent, industry funds one per cent and lost funds charge two and half per cent. Retail funds such as AMP, exist to make profits for their shareholders while industry funds return profits to its members in the form of lower costs. Adviser commissions on insurance, which can be up to 30 per cent of the premium, will be banned and trailing commission on advice will also be removed. One problem with superannuation is that as workers move from job to job, they lose track of their superannuation. Over $13 billion exists in lost or unclaimed superannuation accounts and many people have multiple superannuation funds, each being eaten up with management fees. In total Australians pay $46 million in fees every day. The government wants fees reduced to one per cent. One recommendation of the report is the introduction of a cheap default fund known as MySuper to reduce costs by 40 per cent. At present there are nearly 447 superannuation fund, as well as 438,000 DIY (do it yourself) funds. MySuper could replace 80 per cent of those. The Cooper review has called for greater consolidation in the industry to reduce costs. The government would like the number of funds to fall to 74 by 2035. Superannuation Strategy Superannuation is an investment strategy whereby pooled funds of investors are applied to a range of investments. In simple terms, there are three areas for investment. These are cash, shares and property. Within each of these categories are many options. For example, with cash, investments can be in fixed interest deposits, government bonds or many other options. Shares can be domestic or international, and property can be residential, retail or commercial. The final return will depend on many factors. In general, the higher the fees charged, the lower the return will be. Also, investors can choose different options depending on the amount of risk that they want to be exposed to. An example of a portfolio allocation of funds could be 15 per cent in cash, 50 per cent in shares and 35 per cent in property. In general, the lower the risk, the lower the return. Younger investors, with a longer timeframe to invest, may choose the higher growth strategy. Shares or property will return a larger long term return than cash. However, as the Global Financial Crisis (GFC) showed, those with high exposures to international shares suffered high losses, some as much as 40 per cent. Older investors, content to protect their nest egg, may opt for a lower risk strategy and choose to invest a larger percentage of their funds in cash. Superannuation funds offer subscribers different growth and risk options. STUDENT ACTIVITIES Define these terms in their correct business usage: reform, inflation, asset, commission, kickbacks, fund, fixed interest deposits, bonds, portfolio, Global Financial Crisis, nest egg. 1. Why has the Australian Government commissioned a report into the superannuation industry? 2. Who actually pays the superannuation contribution? What impact may these changes have on this group? 3. In addition to an annual management fee, what other monetary benefits can financial advisers currently receive from superannuation funds? 4. Explain how superannuation entitlements may become ‘lost’. 5. Which recommendation of the Cooper reviews is the government adopting to make superannuation cheaper and easier? 6. Describe a longer term reform to make superannuation more efficient. 7. State the three asset classes that investment funds can be applied to. 8. Explain the phrase, ‘the lower the risk, the lower the return’. 9. Suggest a strategy for a younger employee to adopt to maximize final retirement benefits. 10.Identify dangers of adopting a high risk, high return strategy. Warringal Publications are producers of excellent resources for teachers and students. For further information on study guides for senior secondary students in New South Wales and Victoria call (03) 9857 0253 or log on to www.warringalpublications.com.au General Editor: Bruce Watt, Head Teacher HSIE, Port Hacking High School Student Activities Writer: Bruce Watt Managing Editor: Denise Michie