è CHAPTER 1: OVERVIEW OF MARKETING

Marketing is the activity, set of institutions and processes for creating, capturing,
communicating, delivering and exchanging offerings that have value for customers, clients,
partners and society at large

Clients tend to be a service sector, business-to-business, longer term relationships than

customers. Partners are suppliers, distributors, and competitors.

Marketing Entails an Exchange

Customers’ vs. Consumer
Consumer is the person who uses the produce/service and they may also be the customer if
you buy it then use it. If you buy a gift for a child you are the customer but not the consumer.
The consumer is the user.

Each party to the exchange gives up something of value. The customer usually gives up
money; however, sometimes they also give up time and information. The firm gives up the
good or service. The exchange in the end is mutually beneficial.

Marketing Requires Product,

Price, Place and Promotion Decisions

Ø Product: Creating Value

The fundamental purpose of marketing is to create value by developing a variety of offerings,
including goods, services and ideas, to satisfy customer needs.

Goods: are items that you can physically touch.

Services: are intangible customer benefits that are produced by people or machines and
cannot be separated from the producer.
Ideas: Include concepts, opinions and philosophies;, intellectual concepts such as these can
also be marketed
 Ø Price: Capturing Value
How much customers are willing to pay so that they are satisfied with the purchase and the
seller achieves a reasonable profit

Price shouldn’t be too high for your target customers to pay.

Ø Place: Delivering the Value Proposition

Place, or supply chain management, describes all activities necessary to get the product to the
right customer when the customer wants it
Without a strong and efficient marketing channel system, merchandise isn’t available when
customers want it, resulting in poor sales and low profits
Online is best option

Ø Promotion: Communicating Value

Promotion is communication by a marketer that informs, persuades and reminds potential
buyers about a product or service to influence their opinions or elicit a response

Marketing can be Performed

by Individuals and Organisations

The same product, a desktop computer, can be sold from firm to firm, from firm to consumer,
and then be used consumer to consumer to sell C2C
 Ø Stakeholders

Society Customers

Employees Supply
Chain

Marketers affect many stakeholders. Customers represent one stakeholder group but others
include all those in the supply chain, employees and society at large.
Supply chain partners include manufacturers, agents, wholesalers, retailers and so on.
Companies market to employees with employment marketing, also known as internal
marketing, to recruit and retain the best employees.

Firms become value driven by focusing on four activities:

Sharing information: marketers share information about customers and competitors and
integrate it across the firm’s various departments (this will be further discussed in the chapter
Marketing Research).

Balancing benefits with costs: marketers constantly measure the benefits that customers
perceive against the cost of their offerings.

Building relationships with customers: marketers have realised they need to think about their
customers in terms of relationships rather than transactions (CRM).

Marketing is Pervasive
Across Channel Members
Firms do not work in isolation. Manufacturers buy raw materials and components from
suppliers which they sell to wholesalers, retailers and other businesses after they have turned
materials into products. Every time these are bought or sold, they are transported to a
different location and can be stored in a warehouse. This is often known as the supply chain
or marketing channel.

Why is Marketing Important?

Marketing Enriches Society

• All the top companies focus on factors other than financial profitability
• Good corporate citizenry could include:
greener products
healthier food options
safer products
reduced carbon footprint

Marketing can be Entrepreneurial

• Entrepreneurs organise, operate and assume the risk of a business adventure that aims
to satisfy unfulfilled needs
• For example:
OzHarvest
Magic Millions
TPG
 Ø SUMMARY
- Marketing strives to create value in many ways
- Value represents the relationship of benefits to costs
- The best firms integrate a value orientation into everything they do
- Successful firms integrate marketing throughout their organisation.
- Marketing helps facilitate the smooth flow of goods through the supply chain.
- Firms ‘do the right thing’ by considering the environmental impact and ethical practices.

è CHAPTER 2: DIGITAL MARKETING

Three types of digital consumers.

1. Digital media savvy who are proactive in their internet usage. Consider younger age
cohorts vs older. Use Facebook as an example—millennials are using it less but baby
boomers more.
2. Hybrid users use the internet as a functional part of their lives. Think about the
benefits of eBay and Gumtree as a way to 'recycle' unwanted goods.
3. Reluctant users only use the internet when they need to.

The three broad categories:

• Dominant digital - users where the internet is an integral force in their lives
• Hybrid - users who will use good technology solutions where available
• Reluctant - users who use it but not actively

Active consumers are those that play a significant role in how and where brand interactions
occur. As a result there is some loss of control over what the company does in an online
environment and the firm cannot control all the brand–consumer interactions (touchpoints).

Eword of Mouth (eWOM)

• Electronic word of mouth occurs outside the control of the firm
• It can be seen as a positive aspect because consumers have the ability to engage with
other consumers

Websites
Usually the main digital channel
Good websites are interactive, engaging and have social resources

Search Engines
These are often set as home pages
It's more important for firms to have relevant key words and content with good hyperlinks
Search engine optimisation

Email
One of the most powerful marketing tools
20% of emails in Australia don't reach their intended recipient
Often used as a 'confirmation' for digital activity such as buying goods, booking services, etc
Mobile Phones
The biggest growth area in digital marketing

The 4E Framework for

Social Media

Excite: Offer must be relevant to the targeted customer. Relevancy can be achieved by
providing personalized offers.

Educate the Customers: Provide potential customers with the opportunity to learn about the
value proposition and benefits. This information may not be new but it may also remind.
Sites such as Blogger, Twitter, Youtube and Reddit can all aid in this.

Marketers must take advantage of the opportunity to educate potential customers about the
product's value proposition and communicate the offered benefits. Social media marketing
needs to be well designed to ensure that this happens.

Experience the Product: Provide information about a firm’s goods and services, how they
work, how to use them and where they can be obtained.
Simulate real experiences.

One of a website's most useful contributions may be the vivid information it provides about a
firm's goods and services: how they work, how to use them and where they can be obtained.

Engage the Customer: Action, loyalty and commitment. Positively engaged consumers lead
to more profitability.

By encouraging the use of social media tools such as blogging and micro-blogging, firms
ensure that customers actively engage with the firm's products and their own social networks.
Positively engaged consumers tend to be more profitable consumers, purchasing 20 to 40 per
cent more than less engaged customers.

Customer Engagement
Customer engagement includes:
Listening to customers—via market research, blogs, review sites
Responding—via twitter, Facebook and other Social media sites
Involving—particularly opinion leaders and/or bloggers, and analysing consumer behaviour
on social media
Empowering—consumers answering other consumers questions, the notion of 'co-creation'.

Ø SUMMARY
• There are dominant, hybrid and reluctant digital consumers, all with different needs.
• The popularity of social and digital media means that consumers are now in control
and can compare prices and product features globally while demanding better service
as a result of word of mouth.
• Integrating marketing communications must now take into account a range of digital
channels such as websites, search engines, email, social media and smart phones
• The 4E framework recognises that marketers must excite, educate, experience and
engage with consumers within the digital environment
• Mobile technology is the dominant focus for digital marketing with many people
using price, fashion or location apps.
• Social customer relationship marketing (CRM) is a strategy that focuses on customer
engagement via listening and responding, involving and empowering consumers.
• Data management as a means to understand consumer behaviour on digital channels
is also an important tool.

è CHAPTER 3: MARKETING ETHICS, SUSTAINABILITY AND

CSR

Firm Goals

Greed and short Serious long-term

term profit seeking consequences

Creating value Long-term

over the long run success

Profit is important to the success of the firm. But how the firm makes that profit can have a
dramatic impact on the firm’s future.
Business Ethics: The moral or ethical dilemmas that might arise in a business setting

Marketing Ethics: Examines the ethical problems that are specific to the domain of marketing
 Competing Outcomes

Dangerous flaw in new

model of hybrid car

Delay Continue
production production

Potential
Delayed
injury to
revenue consumers

Possible Loss of
layoffs revenue

Loss of
bonuses

Ethics and Corporate Social Responsibility (CSR)

CSR involves considering of the impact of the company’s actions and operating in a way that
balances short term profit needs with society’s long term needs, thus ensuring the company’s
survival in a healthy environment.
 Socially Socially Irresponsible
Responsible

Ethical firm not

Both ethical and
Ethical

involved
socially
with the larger
responsible
community

Questionable firm
practices, yet
Unethical

Neither ethical nor

donates a
socially responsible
lot to the
community

A Framework for Ethical Decision Making

Step One: Identify Issues

In a marketing research firm, ethical issues might include:
• data collection methods—not informing respondents that they are being observed
• hiding the true purpose of a study from respondents—telling them they are an
independent research company, but actually doing research for a particular politician.
• using results to mislead or even harm the public—results of a pharmaceutical study.
 Using
results to
mislead
or even
harm the
public

Marketing
research
firm issues
Hiding the
real Data
purpose collection
of the methods
study

Step Two: Gather Information and Identify Stakeholders

Identify all ethical

issues and relevant
legal information
Identify all
relevant
stakeholders and
get their input
on any identified
ethical issues
Step Three: Brainstorm and Evaluate Alternatives

The alternative solutions depend on the type of ethical issue and how the stakeholders are
affected.

Step Four: Choose a Course of Action

Alternatives are then evaluated and a course of action is chosen. The chosen course
represents the best solution for the stakeholders using ethical best practices.

Integrating Ethics into

Marketing Strategy

Planning Phase

Implementation
Phase

Control Phase

Planning Phase:
• The mission or vision statement sets the overall ethical tone for planning
• Mission statements can be used as a means to guide a firm’s SWOT analysis
• By incorporating ethics into the firm’s mission statement, the firm sets a standard for
its subsequent ethical decision-making. The mission statement signals the firm’s
strategic priorities.

Implementation Phase:
Is your advertising campaign deceiving people?
Control Phase:
1. Check successful implementation
2. React to change
Any plan requires constant evaluation and revision, and this truism applies particularly to the
evaluation of ethical issues.

Corporate Social Responsibility

Employees: ensure a safe working environment

Customers: a firm must consider the effects on existing and future customers
Marketplace: when one firm leads the way in CRS, others tend to follow
Society: companies cannot ignore societal demands that they act responsibly

Ø SUMMARY
• Being part of an ethically responsible firm should be important to every employee.
• To be socially responsible, a firm must take actions that benefit the community.
• Firms should be able to identify and carry out the four steps in ethical decision-
making.
• Ethical and socially responsible considerations should be integrated into the firm’s
mission statement.
• CSR must benefit customers, employees, the marketplace and society.

è CHAPTER 4: ANALYSING THE MARKETING ENVIORNMENT

In all marketing activities, the consumer is at the centre. Anything that affects consumers
affects marketers. Any change in one of these environments will probably require an
adjustment to the firm’s marketing mix. By identifying potential environmental trends, firms
often can take proactive steps.

Ø Immediate Environment (Micro-environment)

Company Capabilities

• Core Competency

Competitors
• Know their strengths and weaknesses
• Use a proactive rather than reactive strategy

Competition also significantly affects consumers in the immediate environment. It is

therefore critical that marketers understand their firm’s competitors, including their strengths,
weaknesses (or SWOT), and likely reactions to the marketing activities.

Corporate Partners
• Firms are part of alliances
• Align with competitors, suppliers etc
 Firms must work together to create a seamless system that delivers goods and services to
customers when and where they want them. Consider the partnership between Qantas and
Emirates. They have developed a corporate partnership to increase the effectiveness and
efficiency of their global operations.

Ø Macroenviornment

Culture
Shared meanings, beliefs, morals, values and customers of a group of people

• Country Culture: Visible nuances such as artefacts, behaviour, dress, symbols,

physical settings, ceremonies, language differences, colours, and tastes and food
preferences.
• Regional Culture: The region in which people live in a particular country

Firms often remove brands from the market because of their poor overall sales, but this
strategy can backfire when those brands have strong regional support.

Demographics

Indicates the characteristics of the typical consumer in a specific target market

- Generational Cohorts

Gen Z: Digital Natives do not know a world without the internet and social media. This
connectedness also appreciates diverse cultures and awareness of international terrorism.
Parents are often from Gen X who share a familiarity with many products and brands.
Gen Y (or millennials): one of the larger cohorts (25% of Australian population), many of
whom are changing the workplace by showing lower employer loyalty, higher
entrepreneurial skills influenced by technology and higher career expectations than previous
generations. Parents are often Baby Boomers.
Gen X: First generation to experience the impact of ‘no fault divorce’ in Australia,
influencing their tendency to be ‘helicopter’ parents to Gen Z, tend to get married later and
have children later than the Baby Boomers. Possibly the most cynical generation.
Baby Boomers: Most of this group are now close to or over 60 years of age which will have
an impact of society’s ability to care for them as they age. See themselves as individualistic
with a desire to maintain their youth. Despite being the generation with 40% of Australia’s
wealth, very few marketing activities are directed at them. Despite not growing up with the
internet and social media, they have quickly adopted the technology within their everyday
lives.

Income
• Income distribution is polarised in Australia.
• Many middle-class families have felt the decline in purchasing power in recent years.
• Marketers can have just as much success in targeting lower income groups as those
with higher incomes.

Social Trends

Thrift
Health and
Wellness
Greener
Concerns Consumer
s
Privacy Time-poor Technological
Society Advances
Concerns

Thrift: Consumers are provided with more information to compare goods and services,
along with the lingering impact of the GFC which has made them more price sensitive, and
opportunities for business aimed at money saving. However some trends suggest that
consumers are also treating themselves to ‘small luxuries’ (e.g. expensive make up) rather
than large luxuries (overseas holidays)

Health & Wellness: 14 million Australians are overweight or obese and this trend is
continuing for children and young people Obesity has overtaken smoking as the leading
cause for premature death so the Australian government has taken steps to introduce strict
laws for marketers wishing to advertise products, particularly to children. Interest in health
products, such as gyms and specialist diet programs are also popular.

Greener consumers: 98% of Australian households recycle waste so demand for green-
oriented products is growing.
Privacy concerns: The internet has created an explosion of accessibility to consumer
information, so laws are being developed around the world to combat the management of
this, however they are still to be developed in Aust/NZ.

Time-poor: Many consumers claim to be time poor despite the average hours worked per
week declining in Australia. Technology has also made multi-tasking more prevalent, thus
reducing the amount of time consumers have to pay attention to marketing messages. Self-
service options for many companies (e.g. airlines, supermarkets, petrol stations) give the
impression that the customer has more control over how they manage their time.

Technological advances: Consumers have constant access to the internet via WiFi, 3G and
4G networks. Smartphones and tablets have only extended this. Accordingly more websites
are now tailored to consumers behaviour;

Economic Situation
• Inflation is the persistent increase in the price of goods and services
• Foreign currency fluctuations can influence consumer spending
• Interest rates represent the cost of borrowing money

Political/Legal Environment
• This comprises political parties, government organisations and legislation
• Includes such bodies as the Australian Competition and Consumer Commission
(ACCC), the Reserve Bank of Australia (RBA), and the Australian Tax Office (ATO),
to name a few

Ø SUMMARY
• Everything a firm does should revolve around their customer. The firm
must discover their needs and wants and then provide a valuable product
that can satisfy them.
• Collaboration with partners and an understanding of their competitors
helps to add value.
• A firm must also understand cultural issues and demographics to identify
specific customer groups.
• The economy will influence patterns of consumer spending.
• Technological advances helps marketers provide consumers with more
products, and provide services more efficiently.
• Generational cohorts are groups of consumers from the same generation,
usually defined within a period of years.
• Social trends such as thrift, health and wellness, green marketing, privacy
and a time-poor society will impact what consumers purchase and
consume.
 è CHAPTER 5: CONSUMER BEHAVIOUR

Ø The Consumer Decision Process

Need Informatio Alternative Post

Purchase
recognition n search evaluation purchase

This model represents the steps that consumers go through before, during and after making
purchasing decisions.

Need Recognition

The consumer decision process begins when consumers recognise that they have an
unsatisfied need. Consumer needs can be functional, which pertain to the performance of a
product, or consumer needs can be psychological, which pertain to the personal gratification
consumers associate with a product.

Information Search
After a consumer recognises a need, he or she must search for information about the various
options that exist to satisfy that need. In an internal search for information, the buyer
examines his or her own memory and knowledge about the product. In an external search for
information, the buyer seeks information outside his or her personal knowledge base to help
make the buying decision.

One important factor that affects a consumer’s search process is perceived benefits versus
perceived costs.

Another factor affecting the consumer search process is locus of control.

Locus of control actually indicates how much control people think they have over the
outcomes of various activities, such as purchasing a product.
Some people sense their own internal control, whereas others feel virtually powerless. The
former engage in more search activities.

Actual or Perceived Risk

There are three types of risk associated with purchase decisions that can delay or discourage a
purchase.

Performance risk involves the perceived danger inherent in a poorly performing product.

Financial risk is associated with a monetary outlay and includes the initial cost of the
purchase, as well as the costs of using the item or service.

Social risk involves the fears that consumers suffer when they worry others might not regard
their purchases positively.

Physiological (or safety) risk refers to the fear of an actual harm should the product not
perform properly.

Psychological risks are those risks associated with the way people will feel if the product
does not convey the right image.

Evaluation of Alternatives

- Attribute Sets
Research has shown that a consumer’s mind organises and categorises alternatives to aid his
or her decision-making process.

Universal sets include all possible choices for a product category. A subset of the universal
set is the retrieval set, which are those brands or stores that can be readily brought forth from
memory. Another is an evoked set, which comprises the alternative brands or stores that the
consumer states he or she would consider when making a purchase decision.
 - Evaluate Criteria

Evaluative criteria consist of a set of important attributes about a particular product.

Determinant attributes are product features that are important to the buyer and on which
competing brands or stores are perceived to differ.

• Consumer decision rules are the set of criteria that consumers consciously or
subconsciously use to quickly select from among several alternatives
• Compensatory: to trade one product characteristic against another
• Non-compensatory: to make a choice on the basis of one characteristic regardless of
the others

Purchase and Consumption

Retailers use the conversion rate to measure how

well they convert purchase intentions into actual
purchases.

Post purchase
 - Customer Satisfaction
• Marketers can take several steps to ensure postpurchase satisfaction, such as:
o demonstrating correct product use
o building realistic expectations
o providing a money back guarantee
o encouraging feedback
o periodically making contact with customers

- Post purchase Dissonance

o Postpurchase dissonance, or ‘buyer’s remorse’, is the psychologically
uncomfortable state produced by an inconsistency between beliefs and
behaviours that in turn evokes a motivation to reduce the dissonance.
o Warranties and guarantees aid in minimising this.

- Customer Loyalty
o Loyal customers will buy only certain brands and shop at certain stores, and
they include no other firms in their evoked set.
o Loyalty is a combination of behaviour (the purchase) and attitude (liking the
brand).

Negative Word of Mouth

Negative word of mouth occurs when consumers spread negative information about a
product, a service or a store to others.

Ø Factors Influencing the Consumer Decision Process

Psychological Factors: Motives

Maslow categorised needs into particular groups to represent a theoretical progression.

Physiological: basic biological necessities of life. These are generally met within developed
countries but less developed countries may not be in the same situation.
Safety needs: pertains to protection and physical wellbeing
Love needs: relates to consumers’ interaction with others.
Esteem needs: allows people to satisfy their inner desires.
Self-actualisation: occurs when you feel completely satisfied with your life and how you
live.

Physiological Factors: Attitudes

• An attitude is a person’s enduring evaluation of their feelings about, and behavioural
tendencies towards, an object or idea
• Attitudes are learned, long lasting and develop over time
• Attitudes are comprised of cognitive, affective and behavioural components

Other Factors:

• Perception is the process by which consumers select, organise and interpret

information to form a meaningful picture of the world
• Learning refers to a change in a person’s thought process or behaviour that arises
from experiences
• Lifestyle is the way consumers spend their time and money to live
Social Factors

Family members will make decisions about products they will all consume or use. This adds
complexity to decision making once relationships such as parent-child, parent-adolescent,
husband-wife are considered.

Reference groups are those people an individual uses as a basis for comparison regarding
beliefs, feelings and behaviours.

Culture is shared meanings, beliefs, morals, values and customs of a group of people. This
is the link for the 2014 Super Bowl ad for Coke that caused a lot of controversy at the time.

Situational Factors

• Situational factors tend to influence psychological and social issues:

Purchase situation
Shopping situation
Temporal state

The purchase situation can change despite psychological and social factors, while the
shopping situation is dependent on the store environment including store atmosphere, sales
people, crowding, demonstrations, promotions and packaging.
The temporal state relates to time of day and type of person the consumer is.

Involvement and Consumer

Buying Decisions
Involvement is the consumer’s degree of interest in the product.
Types of Buying Decisions

Extended problem solving occurs during a purchase decision that calls for a lot of effort and
time.

Limited problem solving occurs during a purchase decision that calls for, at most, a
moderate amount of effort and time.

Impulse buying is a buying decision made by customers on the spot when they see the
merchandise.

Habitual decision making describes a purchase decision process in which consumers engage
little conscious effort.

Ø SUMMARY
• The decision making process comprises five steps: needs recognition, information
search, evaluation of alternatives, purchase and post purchase.
• Factors that will influence the decision-making process include social, psychological
and situational aspects.
• The more interested consumers are, the more they’re likely to engage in extended
decision making.
• Less involved consumers will engage in limited, habitual or impulse purchasing.

è CHAPTER 6: SEGMENTATION, TARGETING AND

POSITIONING

Previous chapters addressed how to plan marketing strategy; this chapter focuses on how
firms use that strategy to identify the target markets they will serve.
Step 1: Establish Overall Strategy or Objectives

Any strategy must be consistent with the firm’s mission statement and be based on the
current assessments from SWOT analyses.

Step 2: Segmentation Methods

• Geographic: customers are sorted into groups on the basis of where they live
• Demographic: customers are grouped based on their age, gender, income and
education. This is because these measures are easy to identify
• Psychographic: delves into how consumers describe themselves
• Psychographic differs from demographic as consumers self-select based on how they
choose to occupy their time and the underlying reasons for this
The vertical dimension indicates the level of resources whilst the horizontal dimension shows
the primary psychological motivation for buying.

Other Segmentation Methods:

• Benefit segmentation groups consumers on the basis of the benefits they derive from
products
• Behavioural segmentation divides consumers into groups on the basis of how they
use the product, including occasion and loyalty

It is best to use multiple segmentation methods

A popular mix of segmentation is geodemographic segmentation which uses a combination

of geographic, demographic and lifestyle characteristics.

Step 3: Evaluate Segment Attractiveness

Marketers first must determine whether the segment is worth pursuing, using several
descriptive criteria

Is the segment…?
Identifiable? It is important that segments are distinct from each other.
Substantial? It needs to be large enough to generate profits and have suitable buying power.
Reachable? It must be accessible through persuasive communication and product
distribution. The Internet has enabled more people to be reached more easily, but various
areas around the world simply cannot be served because they aren’t accessible to marketing
messages or because there isn’t adequate distribution.
Responsive? It must have consumers in it that will react similarly and positively.
Profitable? It must have potential to be profitable via market growth, competiveness and
access.

Step 4: Selecting a Target Market

In general, a company matches their competencies with the attractiveness of target markets.

Segmentation Strategy

Undifferentiated: where everyone is considered a potential user of its product

Differentiated: target several market segments with a different offering for each
Concentrated: a single, primary target
Micromarketing: more common in business markets but becoming easier in consumer
markets with the growth of social media.

Step 5: Develop Positioning Strategy

Positioning refers to the process of defining the marketing mix so that target customers have
a clear, distinctive, desirable understanding of what the product does or represents in
comparison to competing products.
The first circle represents customer needs and wants, the second circle represents the benefits
the company provides. The final circle represents the benefits provided by the competitors.
The best situation is if a firm’s product offering overlaps with customer needs and wants but
no overlap with competitor’s offerings.

Positioning strategies generally focus on either how the product affects the consumer or how
it is better than competitors’ goods and services.

When positioning against competitors, the objective is to play up how the brand being
marketed provides the desired benefits better than do those of competitors.

Firms thus position their goods and services according to value, salient attributes and
symbols, and against competition.
 Ø SUMMARY

• Firms may choose psychographic, geodemographic, benefit and behavioural

segmentation.
• It is recommended that several criteria be used to determine a segment’s
attractiveness. A segment must be identifiable, substantial, reachable, responsive and
profitable.
• Targeting strategies include undifferentiated, differentiated, concentrated and
micromarketing.
• Targeting strategies include undifferentiated, differentiated, concentrated and
micromarketing.
• A firm’s value proposition communicates the benefit(s) a product offers consumers.
• Positioning refers to how consumers think about a product in relation to a
competitor’s offerings.
• When developing a positioning strategy, a perceptual map is often used to outline
how the firm’s product is perceived in comparison to their competitors’ products.

è CHAPTER 7: MARKETING RESEARCH

The Marketing Research Process

• Managers consider several factors before embarking on a marketing research project:
Will the research be useful?
Will it provide insights beyond what the managers already know?
Is top management committed to the project?
Is it value for money?
How big or small should the project be?

Step 1: Defining Objectives and Research Needs

Step 2: Designing the Research

In this step, researchers identify the type of data needed and determine the type of research
necessary to collect it

Step 3: Data Collection Process

Step 4: Analysing Data and Developing Insights

The problem today is

not too little data but,
in many instances, too
much. Firms are
drowning in data, and
their challenge is to
convert that data into
information.
Step 5: Action Plan and Implementation

A typical marketing research report would start with a two page executive summary. This
would highlight the objectives of the study, methodology and key insights. The body of the
report would go through the objectives of the study, issues examined, methodology, analysis
and results, insights and managerial implications. It would end with conclusions and any
limitations or caveats. Many consultants today provide an executive summary, Powerpoint
presentation of the report, questionnaire and tabulated study results.

• Australian Bureau of Statistics (ABS) is a source of inexpensive external data

Inexpensive External Secondary Data

• Census data is collected in Australia every 5 years
• But it may not always meet the researcher’s needs, giving it relevancy and timeliness

Secondary data are plentiful and free, whereas syndicated data generally are more detailed
but can be very costly.

Syndicated External Secondary Data

• Syndicated data can be purchased from commercial research companies:
Ipsos, AC Nielsen and IBIS World
• Scanner data is another form of quantitative data collected via the use of scanner
systems
• Panel data is information collected from a group of consumers over time
 Primary Data Collection Techniques

• Qualitative research is used to understand the phenomenon of interest through broad

open-ended responses
• Quantitative research consists of structured responses that can be statistically tested

Primary Data Collection Techniques: Qualitative versus

Quantitative

Managers commonly use several exploratory research methods: observation, in-depth

interviewing, focus group interviews, and projective techniques.
If the firm is ready to move beyond preliminary insights, it likely is ready to engage in
conclusive research, which provides the information needed to confirm those insights and
which managers can use to pursue appropriate courses of action.

Qualitative Research

• Observation entails examining purchase and consumption behaviours through

personal or video camera scrutiny
• Social Media provides valuable information as contributors are rarely shy about
providing their opinions about the firm’s products
• In-depth Interviews use trained researchers to ask questions, listen and record the
answers, then pose additional questions to clarify or expand a particular issue
• Focus Group Interviews involve a small group of people coming together for an
intensive discussion on a particular topic

Survey Research
Survey research is a systematic means of collecting information, usually via a
questionnaire

Structured questions are closed ended questions that provide a discrete set of response
alternatives.
Unstructured questions are open ended.
 • Experimental research systematically manipulates one or more variables to
determine which ones have a causal effect on the others

Experimental Research

Emerging Technology and the Ethics of Using Customer

Information
A strong ethical orientation must be an integral part of a firm’s marketing strategy and
decision making. It is extremely important for marketers to adhere to ethical practices when
conducting marketing research.

Technology and Ethics

• Firms voluntarily notify their customers that any information provided to them will be
confidential and not sold on to other companies
• However laws have yet to catch up with advances in area such as social media,
neuromarketing and facial recognition software

Ø SUMMARY

• Marketing research is a five-step process consisting of defining objectives and

research needs, designing the project, collecting data, analysing data, and finally
interpreting data and providing insights.
• Secondary data comprises information that has been previously collected.
• Primary data is collected to address specific research needs.
• Secondary data is easier and generally less expensive but because it is usually
collected for reasons other than those pertaining to the specific problem, it may be
dated, biased or insufficient, and therefore may not answer the question.
• Market researchers should gain permission to collect information on consumers.
• This information should only be used for the purpose of conducting marketing
research and not when the intent is to sell products or to fund-raise.

è CHAPTER 8: PRODUCT AND BRANDING DECISIONS

Core

customer value: the basic problem-solving benefits that consumers are seeking
Actual product: attributes such as brand name, features/design, quality, and packaging
Associated services: (or augmented product) include the non-physical aspects of the product
such as warranties, financing, product support and after-sales service
Types of Products

Consumer products are goods and services used by people for their personal use. Marketers
further classify these products by the way they are used and purchased.

Specialty: consumers have a strong preference for and will expend considerable effort to
search for the best suppliers
Shopping: products about which consumers will spend a fair amount of time comparing
alternatives
Convenience: products for which the consumer is not willing to spend any effort to evaluate
prior to purchase
Unsought: products consumers do not normally think of buying or do not know about at all.

Product Mix and Product

Line Decision
• Product mix is a complete set of all goods or services offered by the firm
• Product lines are a group of associated items that consumers tend to think of as part
of a group
• Product breadth represents the number of product lines offered by the firm
 • Product depth equals the number of products within a product line

Companies sometimes need to change the breadth and/or depth to realign with the firm’s
resources, address changing market conditions or meet internal priorities

Branding

• Brand awareness is key. Consumers cannot buy products they don’t know exist
• Branding provides the firm with ways to differentiate its product offering from that of
its competitors
 What Makes a Brand?

Value of Branding for the Customer

Facilitate

purchasing: Brands with familiar attributes help consumers make quick decisions about
their purchasing.
Establish Loyalty: Over time consumers trust certain brands and become less price sensitive.
Protect from competition: Strong brands are somewhat protected from the competition
because they are more established and have a more loyal customer base.
Are Assets: Brands are assets that can be legally protected through trademarks and
copyrights.
Impact Market Value: Well known brands can directly impact the company’s bottom line.

Brand Awareness
• Brand Awareness measures how many consumers in a market are familiar with the
brand, what it stands for and whether they have an opinion about it

Brand Equity
• The Perceived Value of a brand is the relationship between the product’s benefits
and its cost
• Brand Associations reflect the mental links that consumers make between the brand
and its key product attributes such as logo, slogan or a famous personality

Brand Equity: Brand Loyalty

• Brand Loyalty occurs when a consumer buys or consumes the same brand’s product
repeatedly over time, rather than using multiple suppliers within the same category
• Consumers are often less sensitive to price
• Marketing costs are much lower
• Firm insulated from the competition

Brand Extension

• Brand Extension refers to the use of the same brand name in a different product line
• A Line Extension is the use of the same brand name within the same product line and
increases the product line’s depth
 Co-branding and Licensing

Co-branding is the practice of marketing two or more brands together, on the same package
or promotion
Brand Licensing is a contractual agreement between firms, whereby one firm allows another
to use its brand name, logo, symbols and/or characters in exchange for a negotiated fee

Brand Repositioning
Brand repositioning or rebranding refers to a strategy in which marketers change a brand’s
focus to target new markets or realign the brand’s core emphasis with changing market
preferences

Packaging
• Packaging is an important element with more tangible (or physical) benefits than
other brand elements
• The Primary Package is the one the consumer uses, for example the toothpaste tube
• The Secondary Package is the wrapper or exterior carton that contains the primary
package

• Packaging aims to:

catch consumers’ attention
offer a promotional tool, for example by the use of ‘new’ or ‘improved’ in the wording
allow for the same product to appeal to different markets with different sizes

• Firms may change their packaging:

as a subtle reminder of repositioning the product
to attract a new market
to appear more up to date to its current market
to encourage consumers to feel they are receiving something tangible in return for paying
higher prices

Product Labelling
• Labels provide information needed for the purchase and consumption of the product
• Information must comply with general and industry-specific regulations
• Many products highlight specific ingredients, vitamin/nutrient content and country of
origin

Ø SUMMARY
 • The core customer value of the product includes brand name, quality level, packaging
and additional features.
• Consumer products tend to fall into four groups – specialty, shopping, convenience
and unsought.
• Breadth, or variety, entails the number of product lines, whereas depth is the number
of categories within one specific product line.

• Brands enable people to make decisions more easily and encourage customer loyalty.
• Brand equity comprises brand awareness, brand associations, brand loyalty and the
concept of perceived value.
• Firms need to decide if they should offer a manufacturer or private label brand, a
corporate brand versus a collection of brands and/or individual brands.

• They also need to decide if they want to reach new markets or extend the current one,
co-brand with another brand or license their brands to other firms.
• A brand extension uses the same brand name for a new product in new or existing
markets.
• A line extension is an increase of an existing product line by brand.
• Packaging and labels help to sell the product and facilitate its use.

è CHAPTER 9: DEVELOPING NEW PRODUCTS

Why do Firms Create

New Products?
• All firms must innovate as this means evolving to better meet the needs of the market
Markets are dynamic
Consumer needs are ever
changing
• When new products
have become accepted
they continue to be
produced and tweaked
to ensure they are still
relevant
 Product innovation – six categories
of new product
1. Repositioning - existing products for new markets or with new applications.
2. Improvements - to existing products in existing markets
3. Additions to existing product lines - in existing markets or new, related market
segments.
4. Cost reductions – product modifications to lower costs.
5. New-to-the-world – innovations new to the company that create new markets or
market segments.
6. New product lines – for the company entering established markets for the first time.

Diffusion of Innovation
 Innovators
• Help product gain market acceptance
• Positive word of mouth can bring on early adopters
• Enjoy taking risks !!
• Regarded as highly knowledgeable

Why do new products fail?

Internal factors
• Lack of top-management commitment
• Poor launch strategies
• Commitment without consideration of market potential
• Poor organisational culture
• Poor NPD process
• Poor strategic fit
• Inadequate market research
• Inadequate competitive analysis

External factors
• Misreading customer needs
• Overestimation of demand
• Poor product design/quality
• Lack of differentiation
• Poor product positioning
• Inadequate distribution support
• Competitive retaliation
• Market segment too small

How Firms Develop

New Products
Firms must constantly scan the environment looking for new product ideas. Depending on the
company strategy, different sources are used.

Product Development

A
Market Testing
prototype
allows consumers to
interact physically with
the product
Premarket test are conducted by research firms, such as ACNielsen (BASES II).
Because test marketing reveals a new product to competitors, it might be inappropriate to
expose some new products this way.

Product Launch

Trade

Promotions: promotions to wholesalers and retailers

Trade Shows: an opportunity for a concentrated range of manufacturers to present their
products to retailers
Introductory price promotion: a limited duration, lower than normal price
 Evaluation of Results

Marketers cannot only celebrate success but also must understand failure. The question of
why a product failed is just as important as why another succeeded. An underperforming
product may require further development.

Product Life Cycle

The PLC represents an important tool managers use to plan their marketing activities.
• Introduction: is characterised by initial losses to the firm due to its high start up costs
and low levels of sales revenue
• Growth: a growing number of available product versions, the market becomes more
segmented and consumer preferences varied.
• Maturity: adoption of the product by the late majority and intense competition for
market share among firms. Firms may enter new geographical markets and/or new
segments. Alternatively new products with improved features and/or new uses may
be introduced.
• Decline: firms may position themselves within a niche segment or completely exit
the market

Ø SUMMARY
• Firms need to innovate to respond to changing customer needs, present declines in
sales, diversify their risk and respond to shorter life cycles.
• The diffusion of innovation theory can help firms predict what types of customers will
buy their products.
• These types include innovators, early adopters, early majority, late majority and
finally, laggards.
• When firms innovate, they go through several steps:
• idea generation
• concept testing
• product design
• test market
• product launch.
• The product life cycle helps firms make marketing decisions on the basis of the
products’ stage in its life cycle.
• Knowing where a product is in its life cycle helps managers to determine its specific
strategy.
 è CHAPTER 10: SERVICES: THE INTANGIBLE PRODUCT

Services Marketing Differs from Product Marketing

Intangible
• Cannot be touched, tasted or seen like a product
• Requires the use of cues to aid customers
• Atmosphere is important to convey value
• Images are used to convey benefit of value

Consumers use cues to judge the service quality of dentists, including the quality of the
furnishings, whether magazines are current and diplomas are on the wall.
The BIG4 Holiday parks uses its advertising to evoke images of happy families and friends
enjoying their holiday.

Inseparable Production and Consumption

• Production and consumption are simultaneous
• Little opportunity to test a service before use
• Lower risk by offering guarantees or warranties

Heterogeneous
• Possible variability in service quality if more human input is required
 • Marketers can use the variable nature of services via a micromarketing segmentation
strategy customised to meet the consumers’ needs exactly

Perishable
• Services cannot be stored for use in the future
• It is critical that marketers can tackle the critical task of matching demand and supply

The Knowledge Gap: Understanding Customer

Expectations
 Evaluating Service Quality
Service quality is the customers’ perceptions of how well a service meets or exceeds their
expectations

Understanding Customer Expectations

• A voice-of-customer (VOC) program collects customer inputs and integrates them
into managerial decisions
• A zone of tolerance is the area between customers’ expectations regarding their
desired service and the minimum level of acceptable service

Zone of Tolerance
 The Standards Gap:
Setting Service Standards
The standards gap is the difference between the firm’s service standards and the actual
service it provides to customers

Quality service requires constant investment in training and monitoring. Similar to any other
strategic element, service quality flows from the top down. Rewards and incentives must be
in place to support service quality commitments.

The Delivery Gap:

Delivering Service Quality
The delivery gap is the difference between the firm’s service standards and the actual service
it provides to customers

• Empowering means allowing employees to make decisions about how services are
provided to customers.
• Support and incentives for employees is when management provides support to the
service providers in several ways and gives them incentives. This support can be
emotional support and/or instrumental support.
• Technology can be employed to reduce delivery gaps.

The Communications Gap:

Communicating the Service Promise
The communications gap refers to the difference between the actual service provided to
customers and the service that the firm’s promotion program promises
 Service Quality and Customer Satisfaction and Loyalty
• Good service quality leads to satisfied and loyal customers
• Assuming none of the gaps occur or are at least too wide, then customers should be
more or less satisfied
• A service provider that does a good job one year is likely to keep customers satisfied
the next

Service Recovery

Listen to the customer – when the company and customer work together, the outcome is
often better than either could achieve on their own.

Find a fair solution – customers want to be treated fairly whether that means distributive
(customer’s perception of benefits they received for the cost) or procedural fairness (the
perceived fairness of the process used to resolve the issue).

Resolve problems quickly – the longer it takes to resolve a service failure, the more irritated
the customer will become and the more people they are like to tell.

Ø SUMMARY
• Unlike products, services are intangible, inseparable, variable and perishable.
• The knowledge gap reflects the difference between customers’ expectations and the
firm’s perceptions of these.
• The standards gap is the difference between the firm’s perceptions of customers’
expectations and the service standards it sets.
• Reliability refers to whether the service provider consistently provides an expected
level of service.
 • Responsiveness means that the service provider notes consumers’ desires and
responds to them.
• Assurance reflects the service provider's own confidence in its abilities.
• The communications gap refers to the difference between the actual service provided
to customers and the services that the firm’s promotion program promises.

• Empathy refers to the service provider's recognition and understanding of consumer

needs.
• Tangibles are the elements that go along with the service.
• The zone of tolerance is the area between customers’ desired service and the
minimum level of service they will accept.
• Some service failures are inevitable and require the firm to involve the customer in
the service recovery, find a fair solution that compensates the customer and resolves
the problem quickly.

è CHAPTER 11: PRICING CONCEPTS FOR ESTABLIHSING

VALUE

Price
Price is the overall sacrifice a consumer is willing to make to acquire a specific product.
Price includes money that must be paid to the seller but it may also involve other sacrifices
like time, travel costs, taxes and shipping costs.

The Price-Quality Relationship

Most inexperienced consumers use price as an indicator of quality
Price becomes crucial when consumers have little knowledge about certain products/brands

The 5 Cs of Pricing
 The 1st C: Company Objectives

Each firm has a specific orientation in the marketplace that dominates its pricing strategy.
Profit-oriented firms do not use value as a consideration but rather focus on generating a set
level of profit from each sale.

The 2nd C: Customers

 Demand Curves

The 3rd C: Costs

• Variable Costs
Vary with production volume
• Fixed Costs
Unaffected by production volume
• Total Cost
Sum of variable and fixed costs

Variable costs are the costs that vary with production value.
Fixed costs are those costs that remain essentially at the same level, regardless of any
changes in the volume of production.
The total cost is the sum of the variable and fixed costs.

Break-even analysis is
the point at which the
number of units sold
generates just enough
revenue to equal the total
costs. It enables
managers to examine the
relationships between
cost, price, revenue and
profit over different
levels of production and
sales.
 Total Variable Cost = Variable Cost per unit X Quantity
Total Cost = Fixed Cost + Total Variable Cost
Total Revenue = Price X Quantity

Fixed Costs
Break-Even Point (units) =
Contribution per unit

The 4th C: Competition

The 5th C: Channel Members

• Manufacturers, wholesalers and retailers can have different perspectives on pricing
strategies
• Manufacturers must protect against grey market transactions

• A grey market employs irregular but not necessarily illegal methods by

circumventing authorised channels of distribution to sell goods at prices lower than
those intended by the manufacturer.
 Considerations for Setting Pricing Strategies

Pricing strategies

Cost-based determine the final price to charge by starting with the costs and a profit added.
This method does not recognise the role that consumers or competitor prices play

Competitor-based is when firms set prices according to their competitors and also to reflect
the way they want consumers to interpret their own prices relative to the competitive
offerings

Value-based include approaches to setting prices that focus on the overall value of the
product offering as perceived by the consumer. Value-based may include improvement value
(the manager estimates the improvement value of the product relative to other comparable
products) or the cost of ownership (where consumers may be willing to pay more for a
particular product because over time it will cost less to own than a cheaper alternative).

New Product Pricing Strategies

Market penetration sets an initial low price for the introduction of a new product with the
aim to build sales and profit quickly.

Price skimming is a strategy that occurs in many markets, particularly for new and
innovative goods or services, and involves consumers being willing to pay a higher price to
obtain the new product.
 Business Pricing Tactics and Discounts

Ø SUMMARY
• The four pricing orientations include profit-oriented, sales-oriented, competitor-
oriented and customer-oriented.
• When prices go up quantity sold generally goes down, however with some products
such as prestige ones, demand can actually increase with price.
• Price elasticity measures the extent to which changes in price affect demand.
• A break-even point occurs when the units sold generates enough profit to cover the
total costs of producing those units.
• There are three types of price competitive levels – monopoly, monopolistic
competition, and an oligopolistic competitive market.
• The three methods that firms use to set their prices are cost-based, competitor-based
and value-based.
• Price skimming strategy is used when the product is perceived as breaking new
ground, to signal high quality, limit demand and recoup investment quickly.
• Market penetration strategy builds sales and market share quickly to discourage other
firms from entering the market.
• Marketers use a range of tactics to provide lower prices to customers, including
markdowns, quality discount, seasonal discount, coupons, rebates, price bundling,
leader pricing and price lining.
• Firms use a range of tactics to reduce prices to businesses including seasonal
discounts, cash discounts, quantity allowances and zone pricing.
 è CHAPTER 13: INTEGRATED MARKETING
COMMUNICATIONS, ADVERTISING AND PR

Integrated Marketing Communications (IMC)

• Communication is the process of conveying a shared meaning between individuals
and/or between individuals and organisations
• Marketing communications are more specific and related to the marketing mix that is
targeting a group of consumers

• The goal of IMC is to ensure all the various marketing mix elements work together to
deliver a consistent message
• Therefore, IMC takes the best of each communications medium and combines it to
achieve the most effective marketing communications campaign possible.

• IMC represents the Promotion P encompassing a variety of communication

disciplines:
Advertising
Personal selling
Sales promotion
Public relations
Direct marketing
Online/Social media

The AIDA Model

The AIDA model provides a basis for understanding how marketing communications works
 The Lagged Effect
• Advertising does not always have an immediate impact
• Multiple exposures are often necessary
• It is difficult to determine which exposure led to purchase

Elements of an Integrated Marketing Communication Strateg

Advertising
• Most visible element of IMC
• Extremely effective at creating awareness and generating interest
• A paid form of communication delivered by a medium (e.g. radio, TV)
• Encourages the consumer to take action
Choosing the Right Medium
 Public Relations (PR)
• Public relations is a relatively passive tactic
• The importance of PR has grown as the cost of other media has increased
• Consumers are becoming more sceptical about marketing, and PR is becoming more
important

Direct Marketing
• Direct marketing communicates directly with target customers to generate a response
• It is a growing element of IMC given the improvement and popularity of technology
• Marketers have been able to build databases thanks to consumers’ increased use of
credit and debit cards, loyalty programs and online shopping

Ø SUMMARY
• The communication process involves a sender, the message, a
communication channel and a receiver.
• AIDA is the basic model identifying the components of capturing
consumers interest.
• Advertising, direct marketing using technology, PR and social media are
all IMC channels.
• Designing an advertising campaign can take up to 7 steps from the point
of identification to execution.
• Advertising aims to inform, persuade and remind customers.
• Advertising appeals are either informational or emotional.
• Firms can use mass or niche media to reach their target market.
• A PR tool kit includes publications, video and audio programs, public
service announcements, annual reports, media kits, news releases and
electronic media.
• Sales promotions are special incentives or excitement building programs
that encourage consumers to purchase.
• The IMC budget can be determined by either the rule-of-thumb or
objective and task method.
• Marketers rely on a mix of traditional and non traditional methods to
determine IMC success.