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Lecture 1

Marketing: Textbook – “A social and managerial process by which individuals and groups obtain what they need and want through creating and
exchanging products and value with others”
AMA – Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.
Customer value: The difference between the benefits the customer gains from having access to or owning and using an offering, and the costs of
obtaining it.
 Correct/Accurate
features, functions, attributes,
or characteristics (such as
aesthetics, quality,
customization, or creativity)
 Appropriate performances:
(such as reliability,
performance quality, or
service–support outcomes)
 Appropriate outcomes:
(such as strategic value,
effectiveness, operational
benefits, and environmental
 Sensory Value:
(such as aesthetics, ambiance,
aromas, feel/tone)
 Emotional Value: (such as
pleasure/enjoyment, play/fun,
excitement, adventure, and
 Social/Relational Value:
(such as relational
or network benefits,
personal interaction,
developing trust or
commitment, and
 Epistemic Value:
(such as curiosity, novelty,
knowledge, or fantasy)

 Self-Identity Worth: (e.g.,
buying a new outfit) or in
giving (e.g., giving
diamonds to a spouse, as
suggested by DeBeers)
 Personal Meaning: (such as
music, comfort foods, and
among many others)
 Self-Expression:
Products such as Calvin Klein
fragrances, Roots clothes, a
Volkswagen Beetle, or Body
Shop lotions allow consumers
to reflect or express their
personalities, tastes, and
 Social Meaning:
BMW, Rolex, and Lee Valley
Tools are purchased
because of their prestige,
status, or image
 Conditional Meaning:
(such as roses on Valentine‟s
 Economic Costs:
minimizing economic costs,
such as product
price, operating costs,
switching costs, and
opportunity costs.
 Psychological Costs:
relational costs include
cognitive difficulty/ stress,
conflict, search costs,
learning costs, psychological
switching costs, and
psychological relationship
costs, such as attachment.
 Personal Investment:
the time, effort, and energy
consumers devote to the
purchase and consumption
 Risk:
(personal risk, operational
risk, financial risk, or
strategic risk) warranties,
refunds, exchange.
Lecture 2
The marketing philosophies:
The production philosophy: holds that customers will favour products that are available and highly affordable.
The product philosophy: is the idea that consumers favour products that offer the most quality, performance and features, and that the
organisations should therefore devote its energy to making continuous product improvements; a detailed version of the new-product idea stated in
meaningful consumer terms.
The selling philosophy: is the idea that consumers won‟t buy enough of the organisations products unless the organisation undertakes a
larger scale selling and promotion effort.
The marketing philosophy: focus‟ on the customer – provide what they want
The societal marketing philosophy: focus on‟ impact on all stakeholders, company, customer, society
Marketing terms:
Needs: States of felt deprivation (physical, social, self expression)
Wants: The form taken by human needs as they are shaped by culture and individual personality.
Demands: Human wants that are backed by buying power.

Market (place): A market is the set of all actual and potential buyers of a product. They share a particular need or want that can be satisfied
through exchange.
- name of a context “clothing”, “DVD” market
- total group of people “baby boomers”
- place where people shop
Offer / Product: The thing that a provider makes available for exchange.

• Goods
• Services
• Places
• Ideas and Ideologies
• People
• Organisations
Satisfaction (delight): The customer‟s conscious evaluation of a product or service feature, or of the product or service itself.
The extent to which a product‟s perceived performance matches a buyer‟s expectations.
What influences whether a customer is satisfied or not?
- how well they think the product or service performed
- the customer‟s past buying experience
- the information and promises made by the organisation
- the price vs the good

Exchange: The act of obtaining a desired object from someone by offering something in return
• Restricted
Simple – two parties, reciprocal
• Generalised
More complex – three parties
• Complex
– Multiple parties, independent
Lecture 3
The marketing environment: The actors and forces outside marketing that affect marketing management‟s ability to develop and maintain successful
transactions with its target customers
Two major components:
1. Microenvironment
The forces close to the organisation that affect its ability to serve its customers:
• the organisation
• market channel firms
• customer markets
• competitors and publics

• Business portfolio
• Capital investments and
resource allocation
• Corporate culture
• Corporate structure

• Product/market portfolio
• Resource allocation
• Product-markets
• Business culture
• Strategic cost management
• Brand Management
• Markets
• Products and services
• Profit-yielding strategies
• Product management
• Profit improvement
Marketing intermediaries help an organisation to promote, sell and distribute its goods to final buyers.
They include:
– Resellers / distributors / retailers: distribution channel firms that help the org. find customers or makes sales to them.
– Physical distribution firms: Warehouse, transportation and other firms that help the org. stock and move goods.
– Marketing services agencies: Advertising agencies, media firms help the org. to target and promote their products.
– Financial intermediaries: Banks, credit companies, insurance comapnies help finance transactions or insure against the risk
associated with buying and selling goods.

CUSTOMERS – the makreting organisation can operate in five types of customer markets
1. Consumer markets*: individuals and households that buy goods and services for personal or household consumption
2. Business markets*: organsiation that buy goods and services for further processeing or for use in their production process
3. Reseller markets: organisations that buy goods and services in order to resell them at a profit
4. Government markets*: government agencies that buy goods and services in order to produce public services or transfer these goods and
services to others who need them.
5. International markets: overseas buyers, including consumers, producers, resellers and governments. Each market has special
characteristics that call for careful study by the seller.
- An alternative provider of the offer sought by the market
- Can be close and have immediate impact on customer or may be anyone trying to get the $ out of the customers hand
A public is any group that has an actual or potential interest in, or impact on, an organisation‟s ability to achieve its objectives.
– Financial publics: influence the organisations ability to obtain funds. (banks, investment houses and shareholders)
– Media publics: are those that carry news, features and editorial opinions. (newspapers, magazines, radio and televison stations)
– Government publics: management must take into account government requirements. (issues of safety, truthful ads, resellers rights)
– Citizen-action publics: org. marketing decisions may be questioned by consumer groups, environmental, minority and public interst.
– Local publics: (neighbourhood residents and community protection organisations) attends meetings, answer questions to community
– General publics: must be concerned with the general publics attitude towards its products, services and activities. (the org image)
– Internal publics: (employees, volunteers, managers, board of directors) newsletters are used to inform and motivate.
Another view of the “microenvironment”
Porter‟s Five Forces
– “Often, however, managers define competition too narrowly, as if it occurred only among today‟s direct competitors. Yet competition for profits goes
beyond established industry rivals to include four other competitive forces as
well: customers, suppliers, potential entrants, and substitute products. The
extended rivalry that results from all five forces defines an industry‟s structure
and shapes the nature of competitive interaction within an industry.”
2. Macroenvironment
The larger societal forces (trends) that affect the whole micro-
environment: PESTN
– Political/legal: Laws, government agencies and pressure
groups that influence and limit various organisations and
individuals in a given society
Legislation regulating business: The federal Trade
Practices Act protects consumers against unfair
business practices, and also protects the interests of
society against unrestrained business behaviour.
Increased emphasis on ethics and socially
responsible action: Business is also governed by
social codes and rules of professional ethics.
– Economic: Factors that affect consumer buying power and
spending patterns.
Changes in income: With increaseing inequality in incomes,
value marketing has become the foal for many marketers
looking for ways to offer today‟s more financially cautious buyers greater value.
Changes in consumer spending pattern: Spending less on one thing (clothes and footwear) and more on another
(medical care and health expenses)
– Social/cultural/demographic: Demography is the study of human populations in terms of size, density, location, age, sex, race,
occupation, and other statistics
Changing age structure of population: Australia‟s population has grown from 1.2 to 1.3 %
Changing household: Working women and mothers have increased. People are marrying later (27-29 year olds)
Geographic shift in population: Moving between states, movement from rural to urban areas, city to suburbs.
Better educated and more white-collar population: Women with higher degrees and main field 15-64 y/o commerce
Increased ethnic diversity: overseas migration
– Technological: Forces that affect new technologies, creating new product and market opportunities
Fast pace of technological change: Organisations who don‟t keep up with technological change will find their products out of date
High R&D budget and increased regulations: banning of unsafe products
– Natural: Natural resources that are needed as inputs by marketers or which are affected by marketing activities
– shortages of raw materials
– increased cost of energy
– increased pollution
– government intervention in natural resource management
Lecture 4
A marketing information system refers to the people, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely and
accurate information to marketing decision makers.
- Marketers need information about anything that affects their relationship with their customers.
- Essentially they need to know and understand the marketing environment (Week 3).
- As this is constantly changing the generation and analysis of
information is a constant process.
ASSESSING INFORMATION NEEDS: The organisation begins by
interviewing their managers and what information they need. The
organisation must decide whether the benefits of having an item of
information are worth the costs of providing it, both value and cost are
often hard to assess.
„what types of info do you need to make decisions?‟
„what types of special studies do you periodically request?‟

Internal records: Information gathered from sources within the company to evaluate marketing performance and to detect marketing problems
and opportunities
– Information through sales and accounting systems
– Product, brand, territory sales and cost data
– Sales person and channel performance data
– Production performance data
– Complaints and customer response data
Marketing intelligence: The systematic collection and analysis of publicly available information about competitors and developments in the
marketing environment
• Actors in the microenvironment
• Government reports
• Trade association publications and shared data
• Magazines, newspapers and books
• Company reports, websites
• Syndicated multi-client market research studies
• Store audits
• Warehouse withdrawal data
• Media usage
Marketing research: The function that links the consumer, customer and public to the marketer through information used to:
– identify and define marketing opportunities and problems
– generate, refine and evaluate marketing actions
– monitor marketing performance
– improve understanding of the marketing process
Information Analysis: All data needs to be turned into usable information on which marketing decisions can be made
– Analysed by managers or specific analysts in the organisation
– This process may include advanced statistical analysis to help learn more about relationships within a data set and
their statistical reliability.
– This is usually done by applying mathematical models that answer questions such as what if? and which is best?
Distributing information: Managers must receive information for making decisions in good time
– Day to day tactical decisions (intranets and extranets)
– Marketing strategy and planning decisions
– The right information, at the right time, in the right format, to the right people
The marketing research process: The function that links the consumer, customer and public to the marketer through information used to:
– identify and define marketing opportunities and problems
– generate, refine and evaluate marketing actions
– monitor marketing performance
– improve understanding of the marketing process

The marketing research process:
1. Define the problem and research objectives
2. Developing research plan for collecting information
3. Implementing the research plan – collecting and analysing data
4. Interpreting and reporting the findings

Value component Market research applications
Understanding Value Market description, customer value analysis; usage and
awareness studies, critical incident studies, market
share, brand image and positioning; monitoring of
community attitudes
Configuring Value New product research, market feasibility studies, brand
extension studies, usability research
Communicating Value Brand health, audience research (TV, radio, newspapers,
magazines, internet); copy testing, advertising testing,
advertising tracking, PR effectiveness, integrated
market communication research
Delivering Value Retail research, research among channel partners, staff
motivation research
2. Develop the plan / design the research
Secondary data
– consists of information that already exists
Primary data
– consists of information collected for the current research purpose.
Start with secondary data!
– Proceed to collection of primary data only when secondary data
sources exhausted or yield marginal returns

Focus Groups
- Very common MR technique
- Definition: An interview conducted by a trained moderator among a small group
of respondents in an unstructured and natural manner
– Groups to test reactions to new brand logo
– Groups to help understand issues in choice of interior features of motor vehicles
– Groups to explore customers‟ moments of truth with Financial Services provider
– Groups to evaluate a TV commercial (message not impact)
Depth Interviews
> Intensive, one-on-one discussion between researcher & respondent
• Typically 30-90 minutes
• Semi-structured
• Aims at insight
> Application areas
– Business to Business research
– When access to groups is limited
– When group discussions might inhibit responses eg
research into condom or tampon use and experiences
> Selection of respondents
– Key informants or judgment „sample
Contact methods
> Information can be collected by mail, phone, personal
interview or online.

Implementing and interpreting
 Implementing the research plan
– After gathering the data, the researcher now
implements the plan. This involves collecting,
processing and analysing the information and
 Interpreting and reporting findings
– The researcher must now interpret the findings, draw
conclusions and report them to management.
– The researcher should present the major
findings that are useful for the main decisions faced
by management.

Public Policy and Ethics in Marketing Research
 When properly used, marketing research benefits both he sponsoring company and its customers. It helps the
company to make better marketing decisions, which in turn results in products and services that meet the needs of consumer more effectively.
However, when misused, marketing research can also annoy customers. Examples include:
– Intrusions on consumer privacy: canbe find $1.1 million if breached (registered as „do not call‟)
– Misuse of research findings: don‟t stretch the truth when advertising findings
– An increase in Codes of Practice: AMSRO has developed a code that governs the handling of information about the subjects of
research for all AMSRO member organisations.

Market research is required to solve specific problems faced by an organisation
Problems can be solved through the application of qualitative and quantitative research projects
The MR process guides the development and implementation of market research projects
MR project can only be successful if the right questions are asked, to the right people, using the right methods

Lecture 5

Psychological characteristics Personal characteristics Cultural characteristics Social characteristics
Motivation: A motive or drive is a need
that is sufficiently pressing to direct the
person to seek satisfaction.
Someone who buys a BMW cause they like
the feel, could be because they want to
show off success but at a deeper level = to
feel young and independent again.
Perception: The process by which people
select, organise and interpret information
to form a meaningful picture of the world.
- selected exposure, distortion and
Learning: Changes in an individual‟s
behaviour arising from experience.
Generalising from past experiences,
discriminating against brands, motivating
Beliefs and attitudes: A descriptive
thought or conviction that a person holds
about something.
Attitude – a person‟s relatively consistent
evaluations, feelings and tendencies
towards an object or idea.
Personality and self concept:
Personality refers to the unique
psychological characteristics that lead to
relatively consistent and lasting responses
to one‟s own environment.
Coffee – high, sociability customers.

Occupation: Manual workers
tend to buy more work clothes
and different sort of cars whereas
those involved in information-
intensive industries tend to buy
more business shirts and ties and
Economic situation: Discount
airlines such as Jet star and Rolex
for elegant classic watches.
Culture: People change their
goods and services they buy over
their lifetimes.
Tastes in food, furniture and
recreation are often age related.

Culture: Culture is the set of
basic values, perceptions wants
and behaviours learned by a
member of society from family
and other important institutions.
Growing up in a different
Sub culture: A group of people
with share valued systems based
on common and life experiences
and situations. Chinese, Italians.
Social class: Relatively
permanent and ordered divisions
in a society whose members
share similar values, interests
and behaviours.
Family and household:
Influenced by family members,
or whether they have children or
disposable income.
Roles and status: Belonging to
family, clubs, organisations.
Each role carries a status
reflecting the general esteem
given to it by society.
Groups: Reference groups –
groups that have direct (face to
face) or indirect influence on a
person‟s attitudes or behaviour.
Membership groups – groups
that have a direct influence on a
person‟s behaviour and to which
a person belongs.
Aspirational groups – groups
which an individual wishes to
belong. (football team)

Buyer decision process:


– Sensing a difference between actual state and desired state

– e.g. hunger

– e.g. marketing communication
cial sources (marketing-driven)
– Inform the buyer

– Legitimise or evaluate products

tion to help make the purchase decision

– Individual consumer
– Buying situation
and these processes, then they may be
able to influence the buyer‟s evaluation
ustomer buys the most preferred brand/alternative
– Product category, Brand, Reseller, Timing, Quantity

Attitudes of others OR Unexpected situational factors

-purchase conflict) can occur
-of-mouth communication is powerful

– Industry, company size, location

– Technology, user status, customer capabilities

– Organisation, power structure, existing relationships,
policies, criteria

– Urgency, application, order size
– Of the buyer(s)

Lecture 6
1.Market segmentation:
– Dividing a market in to distinct groups of buyers with different needs,
characteristics or behaviour who might require separate products or
marketing mixes
– The process of classifying customers into groups with different needs,
characteristics or behaviour
– A market segment is a group of potential buyers who share some
similarities and will likely respond in a similar way to given offer of value
• Artificial grouping
• Consumer segmentation
• Business or industrial segmentation

Four main groups of variables can be identified:
– Geographic calls for dividing the market into diffferent geographical units such as:
• nations, regions, states, municipalities, cities or neighbourhoods.
– Demographic calls for dividing the market into groups based on demographic variables
such as:
• age, sex, family size, family life cycle, income, occupation, education, religion
and nationality.
– Psychographic calls for dividing the market into different groups based on:
• social class, lifestyle or personality characteristics.
– Behavioural calls for dividing the market into groups based on consumer‟s:
• benefits sought; knowledge of, attitude towards, uses for and responses to a
Effective Segments
Effective segments must have the following characteristics
– Measurability
• Can the market segments be measured?
– Accessibility
• Are the segments accessible to the company?
– Substantiality
• Are the segments of an economic size?
– Actionability
• Is the basis of segmentation useful to the company?
2. Target positioning
esulted from steps one and two need to be evaluated and the company needs to select one or more segments with which to
exchange value
– A market target refers to evaluating each market segment‟s attractiveness and selecting one or more of the market segments to enter.

Evaluating market segments (3 to consider)
(i) segment size and growth: The company must first collect and analyse data on current dollar sales, projected sales growth and study rates
and expected profit margins for various segments. Some companies will want to target segments with large current sales, a high growth rate and a
high profit margin. Avoiding direct competition by choosing smaller and less competitive companies (ING)
(ii) segment structural attractiveness: The company must examine several major structural factors that affect long-run segment
attractiveness. A company is less attractive if it contains many strong competitors. Less attractive = if there‟s potential product substitutes. The
relative power of buyers (possess strong increasing bargaining power) relative to sellers, they will try to force prices down, demand more quality.
The power of suppliers of raw materials, equipment, labour and services in the segment are powerful enough to raise or reduce quality or quantity
of ordered goods and services.
(iii) company objectives and resources: If the company possesses the required strengths, this isn‟t enough. It needs to employ skills and
resources superior to those of the competition.

Selecting market coverage strategies for segments:
1. Undifferentiated marketing: A market coverage strategy in which a company might decide to ignore market segment differences and go
after the whole market with one market offer.
2. Differentiated marketing: A company decides to target several market segments and designs separate offers for each.
3. Concentrated marketing: A company goes after a large share of one or a few submarkets.

2: Profiling The Segment

are common to particular groups
demographic and geographic descriptors
before describe
3. Positioning– Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers;
formulating a competitive positioning for a product and creating a detailed marketing mix

– The way the product is defined by consumers on important attributes the place the product occupies in consumers‟ minds relative to
competing products
ffer from its competitors on attributes/benefits considered important by a target
– A market positioning refers to setting the competitive positioning for the product and creating a detailed marketing mix.
Process of positioning
hat the brand and its competitors currently occupy in the minds of the customers
– the position that perfectly matches the target segment‟s ideal attributes

– Repositioning: change existing perceptions, attitudes and beliefs

– Positioning statement: a clear and precise expression of how the brand is to be communicated to the market
Positioning strategies:
- usage occasions (Gatorade summer/winter)
- benefits they offer (toothpaste sensitive teeth)
- against a competitor (Hertz and Avis)
- away from competitors (comparing against other competitors in ads)
- product classes (Dove hand soap = bath oils)
tage: “An advantage over competitors gained by offering consumers greater value” (Kotler, 2010, p.284)
– Product differentiation
• Performance (safety car features), style, design, durability, etc.
– Services differentiation
• Delivery(faster), installation, repair, training, etc.
– Personnel differentiation
• Employees‟ competence(degrees), skills, knowledge, etc.
– Image differentiation
• Company image, brand image(apple and QANTAS), etc.
Differences that’s worth establishing to the extent that it satisfies the following criteria:
– Important: The difference delivers a highly valued benefit to target buyers
– Distinctive: Competitors don‟t offer the difference or, the company can offer it in a more distinctive way
– Superior: The difference is superior to other ways that customers might obtain the same benefit
– Communicable: The difference is communicable and visible to buyers
– Pre-emptive: Competitors cannot easily copy the difference
– Affordable: Buyers can afford to pay for the difference
– Profitable: The company can introduce the difference profitability

is often required due to changes in the macro and micro environment
– Customer needs and fashions
– Competitor repositioning
– Advances in technology
– Changes in government regulations
– Competitors are perceived as too similar and use the same basic positioning strategy
The marketing mix
” (McCarthy, 1960)
– Product
– Price
– Place
– Promotion
der social, organisational,
competitive, and economic issues also of concern to the discipline.”
The extended marketing mix

– The environment in which the service is assembled and where the firm and customer interact

– All human actors who play a part (employees and other customers)

– Procedure, mechanisms and flow of activities

Lecture 7
What is a product?
- The thing (good or service or idea or person) that a provider makes available for exchange
Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or a want
– Goods, Services, Places, Ideas and Ideologies, People, Events, Causes and Experiences
Challenges of services

– Cannot be seen, tasted, felt, heard, smelled before being bought

– Services cannot be separated from providers

– Services are more variable than products as they involve interactions between different staff and customers

– Cannot be stored for later sale or use
Three levels of a product
Core Product
-solving services or benefits that consumers are really buying when they obtain a product

tivation to consume the offer

QANTAS: Time-critical transport
Actual Product
rand name, packaging and other attributes that combine to deliver core product benefits

– Product quality
• Ability of the product to perform its functions: durability, reliability, precision, ease of operation, etc.
– Product features
• A competitive tool for differentiating the company‟s product from competitors‟ products
– Product design
• Style and function, attractiveness, useability, economical to produce and distribute
QANTAS: schedules, inflight services, safety record, meals, seat allocation, duty free shopping, flight booking system
Packaging and labelling
aging decisions: Designing and producing the container or wrapper for the product
– Primary package, secondary package, shipping package

– To contain and protect
– To communicate to customers
• Attract attention
• Describe the product
• Meet legal requirements

A brand is a perception formed from:
– Experiences
– Communication messages
e to the customer

combination of these, intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors”

– part of a brand that can be enunciated, e.g., Special-K, Soho, Ford Falcon, Coca-Cola, Mercedes Benz

– part of the brand that can be seen but not enunciated, e.g. Nike logo, McDonalds logo

– the brand name or brand mark that the seller has exclusive legal right to use, eg. Coca-cola has trade marked its brand name and the special
style of writing (brand mark)

– the legal name of an organisation rather than a specific product, eg. The Coca-Cola Company, Nike, Inc., McDonald‟s Corporation
Augmented Product
additional consumer services and benefits built around the core and actual products
QANTAS: Qantas club, priority baggage, tours, holiday packages, frequent flyer scheme, fly drive packages, Hertz car rental booking
Support services
y part of the augmented product

– Installation, Delivery, Advice, Warranties, Repair, Complaint handling

Product management
Classification of consumer products

– Frequently bought, with minimum of buying effort (e.g. FMCG)

– Buying usually involves comparison of alternatives (e.g. clothing, furniture)

– Unique product characteristics -> special purchase effort (e.g. cars)

– Customer has little knowledge or interest (e.g. life insurance)
Classification of industrial products (goods bought by individuals and organisations for further processing or for use in conducting a business)

– Products which become part of the buyer‟s product (e.g. raw materials – farm products and natural products and manufactured materials and
parts – component materials such as iron, yarn, cement)

– Products which aid in the buyer‟s manufacturing or service operations (e.g. buildings, machinery, office equipment)

– Industrial products which do not enter the buyer‟s finished product (e.g. electricity, paper supplies, legal services)
Product hierarchy
ry: a group of products with functional coherence
duct line: a group of products within a product class that are
closely related
within a product line
– Also known as a stockkeeping unit (sku)
rtment): The set of all product lines and items
that an organisation has
New products

– New to the world
– New category entries
– Additions to product lines
– Product improvements
– Repositioning
– Variations of the above
product development
– “The development of original products, product
improvements, product modifications and new brands through the
company‟s own R&D efforts”

Lecture 8
r using the product or
The many faces of price:

Factors affecting price:
Objectives and strategy

– Survival
– Profit maximisation
– Market share
– Product quality

– The overall marketing mix should reflect the desired positioning
– Price is only one component of the mix, and must be consistent with the other components

– Do not vary with quantity produced or sold
– Larger quantities will each unit will then carry a lower share of the fixed costs

– Vary directly with the level of production

– Sum of fixed and variable, for any given quantity
Customer perceptions
and set the upper limit (price ceiling)
-oriented pricing involves understanding the value the customer places on a product, then setting the price accordingly
Market types

– Commodity product, with many buyers and sellers

– Many buyers and sellers, with differentiated products across different prices

– A few sellers who are sensitive to each other‟s pricing

– One seller
Factors that affect price sensitivity
y of the product to the consumer
f substitutes
stige or exclusiveness of the product
to income
in conjunction with previously purchased assets
Other external factors to consider

– ACCC and Competition and Consumer Act
Pricing strategies
Cost-plus pricing
a standard mark-up to the cost of the product

Break-even analysis
ffer that you have to sell at a
given price in order to cover all of your costs, both fixed and variable
-even volume = Fixed cost / Unit sell price – unit variable cost

Economic Non-economic
Rent Psychological
Salary Personal investment
Fee Risk
Value-based pricing
rather than on the seller‟s cost
enhance perceived value
in the customers‟ minds, then price is set to match
this value
Other pricing approaches
– Economic-value pricing
– Going-rate pricing
– Sealed bid / tenders
– Seller paid on basis of performance of

Product mix pricing strategies

-product pricing
-bundle pricing
Price adjustment strategies

Channel organisation

– A unified network of producers, wholesalers
and retailers

– A network of two or more companies at one
level working together, e.g. Yarra Valley Wine
Growers Association

– Multi-channel distribution systems in which a
firm sets up two or more marketing channels to
reach one or more segments
Channel management

– Selecting channel members
• Based on business experience,
other lines carried, growth,
profitability, cooperation, reputation
– Motivating channel members
• Gaining cooperation e.g. through
higher/lower margins, cooperative
advertising, allowances, contests
– Evaluating channel members
• Monitoring performance of

– Network of handling and storage facilities to hold goods closer to

– Ownership: company-owned or outsourced?
– Number of warehouses: single (centralised) or multiple?
– Location of warehouses?
arehouses, closer to customers:
– Increases customer service levels; but also…
– Increases company costs

– Physical delivery of goods (value)
d on characteristics of customers, product, and mode):
– Water, Rail, Road, Air
– Other (e.g. pipeline, people, electronic)
aster, more reliable transport:
– Increases customer service levels;
– BUT ALSO Increases company costs

– Reducing uncertainty about all of the above!
reduce uncertainty:
– Inventory (e.g. forecasting customer demand)
– Warehousing (e.g. identifying optimum locations)
– Transportation (e.g. planning optimum loads)
Lecture 9
Distribution channels
What are marketing channels?
organisations involved in the process of making a product or service available to users” Kotler, 2010, p.426
makes a product or provides a service with the end customer for that
product or service”
Why use intermediaries?

– Contacts
– Experience
– Specialisation
– Scale of operations

Channel functions


Vertical marketing network
unified network – either one channel member owns the others, has contracts with
them, or wields so much power that they all cooperate”
= success of all firms
Channel design

– Types of intermediaries
• For example, company sales force, manufacturer‟s agency,
industrial distributors
– Number of intermediaries
• Intensive distribution (as many outlets as possible)
• Selective distribution
• Exclusive distribution (limited number of outlets)

– Criteria; economic, control, adaptive
Logistics defined…
he strategic management of the flow of materials and
associated information between suppliers and customers with
the aim of maximising customer value in the long term at the
lowest possible cost
efficient, cost-effective flow and storage of material, in-process
inventory, finished goods and related information from point of
origin to point of consumption for the purpose of conforming to
customer requirements” Kotler, 2007, p.530.
How does logistics add value?

– Location, quantity, time, process, etc.

– Goods held to satisfy customer demand

– Production economies
– Seasonality
– Production process
– Contingencies
– Transport savings

– Increases customer service levels; but also…
– Increases company costs

Message Execution
– Media Vehicle
• Marketing communication tool
(next hour)
– Specific Media decisions
• Reach
• Frequency
Evaluating the Campaign

– Brand Recall
– Product Recall
– Sales
– Market Share
tools are easier to evaluate than others

Public Relations and Publicity

– Building good relations with the company‟s
various publics by obtaining favourable
publicity, building up a good „corporate image‟
and handling or heading off unfavourable
• Includes press releases, product publicity,
corporate communications, lobbying and

– Activities to promote a company or its
products by planting news about it in media
not paid for by the sponsor

al customer (consumer) for their own personal or household use

– Store retailers
– Non-store retailers
– Retail organisations
Retailing decisions
tion, targeting and positioning

– Offer assortment
– Services and extended offerings
– Atmosphere
– The retail “experience”
– Branding
– Pricing levels

– Advertising and other promotion methods
– Salespeople

Lecture 10
Integrated Marketing Communications
consistent and compelling
message about the organisation and its products.

Budget Decisions

– All-you-can-afford
– Percentage of Sales
– Competitive-Parity
– Objective and Task
g Budget Strategy
– Product Life Cycle stage
– Market Share
– Competition and Clutter
– Advertising Frequency
– Product Differentiation

Message Strategy

– Positioning statement as a big idea
– Unique selling proposition (USP) – the key fact, feature
or benefit that is used to drive differentiation in the mind of the consumer
– Appeals
• Rational
• Emotional, Moral

Factors Affecting the Marketing Communications Mix


Tools Used to Communicate Messages
campaign will employ a
combination of the following tools depending on their objectives and the target audience
– Advertising, Public relations / publicity, Direct marketing , Sales promotion, Personal
selling, Sponsorships, Social media
-personal communication by an identified sponsor
make media and vehicle choices
– Broadcast, Print, Outdoor, Interactive
Direct Response
create a direct response from customers
Retailing trends

– Fuel / convenience (e.g. BP)
– Supermarket / fuel (e.g. Safeway, Coles)
– Department / pharmacy

– Category killers
– Supercentres
-store retailing growth
– Online
– Direct marketing

– Payment methods
Points of Differentiation for IMC tools

– Can differ based on reach, medium and
intermediaries used, eg. advertising agencies

– Some tools achieve higher exposure

– People pay more attention to virals,
permission marketing, PR/publicity, personal
– One-way communication more difficult than
two way
Sales Promotion
imary objective of creating an
immediate sale
ools are:
– Samples – in-store, through mail, in magazines…
– Price-offs – short term
– Refunds/rebates – on proof of purchase
– Premiums – free gifts eg glass with purchase of whiskey
– Contests/sweepstakes/games – delayed entry vs immediate
– Bonus packs – 20% extra free…
– POP – in-store displays to encourage purchase
Personal Selling
conversation with one or more prospective purchasers for the purpose of making sales
– The role of personal selling varies by types of business and industry, the nature of the product or service, and the business strategy e.g. retail
selling vs. selling consulting services.
– The salesperson is often seen as „the company‟ in the eyes of the customers and prospects.
– The process of personal selling may involve:
- Generating leads - qualifying leads - making sales calls
– negotiating and closing the sale - following-up to build and maintain the customer relationship
a company, product or brand‟s visibility by associating it with
something the market segment views as positive
– Events and sponsorships are good relationship building activities that can
emotionally bind customers to a company or brand.

– People with cultural, sporting or educational importance
– Cultural and sporting events
– Charities and causes
Changing Face of Marketing Communications

- Product placement
Lecture 11
Global issues in marketing: (1) GLOBALISATION
International Marketing

– Production, Technology, Capital, People, Information, Business
competition in most industries
or Australian businesses to go abroad
Major decisions in International Marketing
1. Looking at the global marketing environment
2. Deciding whether to go international
3. Deciding which markets to enter
4. Deciding how to enter the market
5. Deciding on the global marketing program
6. Deciding on the global marketing organisation
The global marketing environment
Need to understand trends in the macro environment
Deciding whether to go international

– Car manufacturing, Retail, IT-based industries
Deciding which markets to enter

High-level strategic decisions:
– Incremental or simultaneous entry?
– Concentrated or diversified?
Deciding on the global marketing program

– The world as a single market

– The world as a portfolio of national opportunities
– Standardises some core elements, and localises other elements
Deciding how to enter the market

– Joint venturing, Acquiring, Greenfield
– Contract manufacturing
– Strategic alliances
Deciding on the global organisation

– Simply shipping out goods

– One or more functions responsible for offshore activities: marketing, manufacturing, research, finance, planning, personnel

– Worldwide manufacturing facilities, Worldwide marketing approaches, Worldwide financial flows, Worldwide logistics systems

What is Social Media?
“Social media includes web-based and mobile based technologies which are used to turn communication into interactive dialogue between organizations,
communities, and individuals. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the
ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content." Social media is ubiquitously
accessible, and enabled by scalable communication techniques.”
Social media and marketing
-generated content (UGC) or consumer-generated media (CGM).
common thread running through all definitions of social media is a blending of technology and social interaction for the co-creation of value.
Who wants what?

ustomer lifetime value

Traditional Marketing being sidestepped by consumers
– Blocking ads, do-not-call register, IceTV

– On the back of broadband

– E.g. when researching online financial products:
• 47% obtain info from friends/family
• 28% obtain info from company websites
• 20% obtain info from company advertising
Ethical Issues in Marketing

– Planned obsolescence
– Product quality and safety
– Product warranties
– Fair packaging and labelling
– Pollution
– Exclusive territories
– Dumping
– Dealer rights
– Predatory competition
Deceptive practices

– E.g. artifically inflated “Was” prices

– E.g. Overstating product‟s features or performance

– E.g. Misleading oversized-packs

Unsafe products

– Manufacturer indifference
– Increased production complexity (e.g. outsourcing)
– Poorly trained labour
– Poor quality control

Opportunities in Social Media

– Gaining insights from others‟ conversations

– Identifying enthusiastic customers and using
them to influence others

– Enabling customers to help each other

– Providing employees with social media tools

– Bait-and-switch advertising
– False and deceptive
– Promotional allowances
– Bribery

– Price fixing
– Price discrimination
– Price increases
– Deceptive pricing
High prices
due to:
– High costs of distribution
• Intermediaries, inefficiencies, etc.
– High advertising and promotion costs
• Expensive campaigns, excessive
packaging, etc.
– Excessive gross profit margins
• Fair vs greedy?
High pressure selling

– Insurance, gym memberships, electricity,
charity donations
they don‟t need or want
mandatory “cooling-off” periods
rt-term vs long-term
benefits (relationship marketing?)
Planned obsolescence

– Updating styles (e.g. fashion)
– Continually adding new features to make older models obsolete (e.g. electronics industry)
– Using materials that will fail earlier than they should
Marketing’s Impact on Society

– False wants and too much materialism
• “People are judged on what they own, rather than who they are”
– Too few social goods
• Overselling private goods may result in an increase in demand for public services (e.g. cars -> roads)
– Cultural pollution
• Materialism, sex, power, status
– Too much political power
• Lobbying politicians to support an industry‟s interests ahead of society‟s (e.g. oil?)
Actions to Regulate Marketing
. Competition and Consumer Act)

– “An organised movement of consumers whose aim is to improve the rights and power of buyers in relation to sellers” (Kotler, 2010, p.619)

– “An organised movement of concerned citizens, businesses and government agencies seeking to protect and improve people‟s living
Maintaining social responsibility
ld make marketing decisions by considering consumers‟ wants‟ the organisation‟s requirements, consumers‟ long-run interests and
society‟s long-run interests.