Introduction to marketing

Definition of marketing
- Marketing is something that happens throughout the organisation
- It’s an orientation that puts the market at the centre of business decisions
- The marketing department is not the only department in the organisation concerned with
creating, communicating and delivering value OR marketing exchanges
- For example
o Product teams
o Sales teams
o Financials

Value – a perception

- A customer’s assessment of the utility of an offering based on perceptions of what is

received and what is given
o Form utility: transforming raw materials/knowledge into a usable product/service
o Place utility: making offering available to customers
o Time utility: having offerings available when they are needed
o Possession utility: allowing customers to own (or use) a product/service
- Value referred to the ‘total offering’
o Reputation of organisation
o Features of products
o Associated ideals
o Quality and price
- Value is hard to quantify/measure
- Can change interpersonally and situationally
- Value = quality / price
- Value evolves continuously and is unique for each individual

Marketing exchange
- Value is not solely for the customer
- Value is also necessary for the seller
- A mutually beneficial exchange must take place for marketing to be successful
- Exchange: the mutually beneficial transfer of offerings of value between the buyer and seller
- A successful marketing exchange involves:
o Two or more parties, each with something of value desired by the other party
o All parties must benefit from the transaction
o The exchanges must meet both parties’ expectations (e.g. price, quality)
- We engage in daily marketing exchanges
- Seller deem a transaction valuable when it is able to generate:
o Profits
o Prestige
o Ability to educate, delight, motivate and engage (in the case of non-for-profits
Marketing for who:

- Marketing is focused at meeting the needs and wants of various stakeholders

- These include:
o Customers
o Clients
o Partners
o Society at a large

The marketing evolution

- Trade
- Production orientation
- Sales orientation
- Market orientation
- Societal market orientation

Ethics, Corporate social responsibility and sustainable

marketing
- Corporate social responsibility
o Businesses have an obligation to act in the interest of societies that sustain them
- Sustainability
o Business philosophy that is needed to ensure our future

The marketing process

- Involves understanding, creating, communicating and delivering an offering for exchange of

value

The market

- A market is a group of customers with heterogeneous (different) needs and wants

- Examples include:
 o Geographic markets (Australia vs America)
o Product markets (smartphone vs tablets)
o Demographic markets (university students vs highschool students)

The marketing mix

- A set of variables that a marketer can exercise control over in creating an offering for
exchange
- Traditionally known as the 4 P’s
o Product
o Price
o Place
o Promotion
- Also includes people, process, physical evidence

Product:

- Anything offered to the market

- Can be a good, service or idea
- Best understood as a bundle of attributes
o Features and functions of the product

Price:

- The amount of money a business demands in exchange for its offerings

- Pricing is a complex marketing decision that must take account of many factors, including:
o Production, communication and distribution costs
o Required profitability
o Partners’ requirements
o Competitors’ prices
o Customers’ willingness to pay

Promotion

- Describes the marketing activities that make potential customers, partners and society aware
of and attracted to the business’s offering
- Promotion should not be thought of merely as advertising
- While advertising is an important component of promotion, many organisations use other
methods to promote products as well
- Often, a combination of promotional methods used

Place

- The means of making the offering available to the customer at the right time and place
- Largely a logistics function
- Marketers need to understand how logistics impact their ability to deliver a product at a time
and place that suits customer needs or wants
 Topic 1: The marketing environment
Marketing environment
- All of internal and external forces that affect a marketer’s ability to create, communicate,
deliver and exchange offerings of value
- Environmental analysis: process that involves breaking the marketing environment into
smaller parts in order to gain a better understanding of it
o Helps marketers develop a strategy and direction
o From factors under marketer’s control – identifies strengths and weaknesses
o From factors not under control – identifies opportunities and threats

Internal environment
- The parts of the organisation, the people and the processes used to create, communicate,
deliver and exchange offerings that have value
- The organisation can directly control its internal environment
- Strengths and weaknesses are internal factors that positively and negatively affect the
organisations ability to compete in the market place

External environment
- The people and processes that are outside the organisation and cannot be directly controlled
- Divided into the macro environment and micro environment
- Marketers seek to influence external environment
- Opportunities and threats: external factors that positively and negatively affect the
organisation’s ability to serve the market

Micro-environment
- The forces within an organisation’s industry that affects its ability to serve its customers and
clients – target markets, partners and competitors
- The micro environment consists of customers, clients, partners and competitors

Customers and clients

- Marketers must understand the current and future needs and wants of their target market
o Understand what their customers value
o Identify changes in customer preferences
o Be willing and able to respond to changes
o Anticipate how needs and wants might change
o Be able to influence customer preferences

Partners

- Partners include:
o Logistics firms – storage and transport
o Financiers – banking, loans, insurance and electronic payment infrastructure
o Retailers
o Wholesalers – storage and distribution
 o Suppliers

Competitors

- Five differing structures of competition in the microenvironment

o Monopoly – one main supplier dominates the market
o Monopsony – one main buyer dominates the market
o Oligopoly – few main players; entry barriers high
o Monopolistic competition – numerous competitors; striding to differentiate
o Pure competition – numerous competitors; undifferentiated products
- Marketers must ensure their offerings provide their target market with greater value than
their competitors’ offerings
- Marketers seek to understand their competitors’ marketing mix, sales volumes, sales trends,
market share, staffing, sales per employee and employment trends

Macro-environment
- The macro-environmental framework has been called the PESTEL framework.
- Macro-environmental factors include:
o political forces
o economic forces
o sociocultural forces
o technological forces
o environmental forces
o legal forces

Political forces

- The influence of politics on marketing decisions

- Politics is directly relevant through
o Lobbying for favourable treatment
o Lobbying for favourable regulation
o The effect of political issues on international marketing

Economic forces

- Factors that affect how much people and organisations can spend and how they choose to
spend it
- Economic forces include income, prices, the level of savings, the level of debt and the
availability of credit

Sociocultural forces

- The social and cultural factors that affect people’s attitudes, beliefs, behaviours, preferences,
customs and lifestyles
- Demographics:
o Statistics about a population: age, gender, race, ethnicity, educational attainment,
marital status, parental status and so on.

Technological forces

- Technology allows a better way of doing things

- Technology changes the expectations and behaviours of customers, clients and suppliers
Environmental forces

- Natural disasters, weather and climate change

- Growing ecological awareness and social changes influence how firms will operate

Laws

- Legislation enacted by elected officials

Regulations

- Laws and regulations govern what marketing organisations can and cannot legally do
- Laws and regulations fall into the following categories: privacy, fair trading, consumer safety,
prices, contract terms and intellectual property

Situational analysis
- Identifying the key factors that will be used as a basis for the development of marketing
strategy
- Ongoing process that combines organisational objectives and situational analyses to
formulate plan that moves the organisation from where it currently is to where it wants to be

Marketing metrics

- Marketers need to be able to isolate the key, or most important, factors that need to be
addressed to continue to compete effectively in the market

SWOT

- Analysis that identifies the internal strengths and weaknesses and the external opportunities
and threats in relation to an organisation.
o Strengths: Attributes of the organisation that help it achieve its objectives.
o Weaknesses: Attributes of the organisation that hinder it in trying to achieve its
objectives.
o Opportunities: External factors that are potentially helpful to achieving objectives.
o Threats: External factors that are potentially harmful achieving objectives.
o Strengths and weaknesses are internal factors (directly controllable by the
organisation)
o Threats and opportunities are beyond the organisation’s direct control.
 Topic 2: Market Research
Market Research
What is market research?

- A business activity that discovers information of use in making marketing decisions

- Essential component of understanding the market
- Should contribute to improved performance

The marketing process

- Market research informs many

types of decisions, including:
o Market segmentation
o Sales performance
o Product
o Price
o Place
o Promotion
Marketing information system

Big data

- Big data: integration of data from across sectors and collaborating partners
- Big data has changed marketing practice
- Improvements are constantly being made and more links are possible
- Linking data informs decision making
- Systems are being created to help more people understand complex data
- By understanding what people do and when, where and why, we can build explanations that
1. Describe people’s current behaviour
2. Identify trends
3. Identify changes in behavioural patterns over time
4. Identify opportunities and areas for action
- A lot of online businesses naturally use and are able to generate big data
- User’s watch history, search queries, time spent scrolling/watching the show
- Demographic, internet-based behaviour, browsing behaviour

Insight

- As the sheer volume of data has grown, so has the need for insight
- According to the UK’s National Social Marketing Centre, insight is a piece of understanding
that guides strategy
- Insight is generated from a combination of analytics and market research and the deep
understanding that emerges about what moves and motivates people
Components of market research
Market research considerations

- Before understanding a market research, the following factors should be considered:

o Relevance
o Timing
o Availability of resources
o Need for new information
o Cost-benefit analysis
- Ethics in market research:
o Market researchers have an ethical responsibility to their clients or employers and to
those who participate in the research

Defining the research problem

- The question that the market research project is intended to answer

o Needs to be clearly specific
o Needs to enable the organisation to make marketing decisions
- As the research proceeds the original questions may be redefined
- Setting a good research problem is important
- The decision maker is aware of only 10% of the true problem
- Leads to wrongly defining the research problem
- If 90% of the problem is submerged, we cannot find a solution
- Marketers quite often prepare a market research brief
- Make sure their problem is well defined
- A research brief generally states the
1. Research problem
2. Information required
3. Timeframe
4. Budget
5. Any other conditions of the project
 Example: Old Spice Deodorant
- Founded and manufactured originally by the Shulton
Company in 1938
- Acquired by P&G in 1990
- In 2002 Unilever acquired Axe
- Axe begins to take off
- How does Old Spice successfully reposition itself for a
younger target market?

Designing the research methodology

- Detailed methodology created to guide the research project and address the research
problem/question
- Multiple approaches possible: how you frame your research question will determine the
type of research method

- Exploratory research: gathers more information about a loosely defined problem

- Descriptive research: solves a particular and well-defined problem by clarifying the
characteristics of certain phenomena
- Casual research: assumes that a particular variable causes a specific outcome and then, by
holding everything else constant, tests whether the variable does indeed affect that outcome
- Hypothesis: a tentative explanation that can be tested

Example: Old Spice Deodorant

- Descriptive research required
How does Old Spice successfully reposition itself for a younger target market?
- Exploratory
How do we reposition Old Spice from being an old man’s brand?
- Casual
Will one-to-one sales activities increase positive perceptions of Old Spice among 12-24-
year-olds?
Data types

- Primary data: data collected specifically for the current market research project
- Secondary data: data originally gathered or recorded for a purpose other than to address the
current market research problem, information that is already available
- Where possible, marketers should always seek to learn from available data sources to avoid
unnecessary data collection.
 Example: Old Spice Deodorant
- Secondary data first
- Found out that 60% of toiletries buyers were women
- Instead of launching male centric ads
- “Man Your Man Could Smell Like” campaign (February 2010)
- Isaiah Mustafa American Footballer.

- Nearly 105 million YouTube views

- 1.2 billion media impressions
- National broadcast and international media
- 27x followers increase on Twitter
- 8x increase in Facebook interaction
- 3x increase in website traffic
- Emmy nomination
Qualitative research

- Research intended to obtain rich, deep and detailed information about the attitudes and
emotions underlying a consumer’s behaviour
- Often used for exploratory research
- Qualitative research techniques such as interviews and focus groups

Interviews

- Depth interviews that are researcher driven

- Structured vs semi-structured
- More focused, easy to steer conversation in intended direction
- More natural – can lead to unknown discoveries
- Interviewer can bias the results on solicitation and interpretation
- Relatively long duration

Focus groups

- Involves a group of respondents that are brought together, introduced to an idea, concept or
product and their observations and interactions are observed
- Great way to get multiple perspectives
- Give rise to common issues not foreseeable by researchers
- Good moderator VERY important
- Participants can influence each other
- Role of social influence is very strong

Quantitative research

- Research that collects information that can be represented numerically

 - Usually used for descriptive and casual research
- Quantitative market research approaches include: survey, experimentation, observation and
neuroscience
- There is a global shift towards quantitative
- Quantitative research is useful for:
o Monitoring market size
o Identifying market patterns and trends
o Predicting the success of proposed marketing campaigns
o Tracking customer perceptions for existing products
- Can (mostly) be more generalisable than qualitative research methods, we can sample larger
pockets of the population

Surveys

- Surveys tend to be the most common quantitative research tool

- Can be interviewer-led or self-response
- They rely on the research to formulate questions that can elicit a relatively closed answer
- All surveys are prone to distortion as people’s reported behaviour does not precisely match
their actual behaviour
- Low response rates

Experiments

- Involves manipulating variables of interest whilst holding everything else constant

- Often used for casual research
- Variable of interest = independent variable
- Outcome variable = dependent variable
- Artificial settings don’t always reflect real life
- Other variable not being measured could be influencing the outcome

Biometrics

- Often called neuro-marketing

- Involves monitoring participant’s physiological response to stimuli
- Can include heart rate, emotional response, brain activity
- Provides actual behaviour
- Extremely expensive and invasive
- Cannot tell us how

Collecting data

- Data must be collected according to the methods specified in the research design and ethical
practices must be followed
- During research, processes are applied to ensure the research design is properly followed
o Responses are to be recorded correctly
o Biases are to be minimised
o Errors are not to be induced
- Data can be stored or collected in-house or it can be outsourced
- Outsources to an agency taking on the responsibility of the data collection, scraping or
mining processes
 - Population: all of the things (often people) of interest to the researcher in the particular
research project
- Sampling: the process of choosing members of the total population
- Sample: the group chosen for the study
o Random sampling: each member of the population has a random chance of being
sampled
o Stratified sampling: each member is grouped on a characteristic and a sample is
extracted from that
o Quota sampling: the population is divided into groups based on a number of
characteristics.
Researcher chooses arbitrarily from them
o Convenience sampling: participants are selected on the basis of who is available
- Given that time and financial resources are limited, budgeting and scheduling need to be
planned and managed to ensure most benefit is derived from the investment in market
research
- Budgets can be determined by estimating the likely actual cost of each phase of the project
or determining the amount of time that each phase is likely to take and then applying a
standard cost estimate to the hours
- A market research project is a substantial investment
- During a project, some phases must be completed before others can begin
- It is important to note that the project must also be able to accommodate revisions as it
proceeds. The market research process is not always a straightforward, linear path from start
to finish
- A number of tools exist to help project managers maintain control of projects
- The most commonly used are Gantt charts and the critical path method

Analysing data and drawing conclusions

Data analysis

- Once data has been collected, it needs to be filtered and organised

- Depending on how the data was collected, it may be necessary to perform some quality
control techniques to eliminate invalid data
- Once data is cleaned, results need to be analysed
- A wide range of analytical techniques is available and researchers and analysts need to
understand which analytical techniques are appropriate for the data in hand
- Quantitative data analysis: statistical analysis in various programs (e.g. R, SAS, SPSS, Excel,
Python)
- Qualitative data
o Looking at results as rich detailed information
o Reduction
o Coding

Reporting the findings

- Once data is analysed and conclusions drawn, the findings must be presented in a format
that will enable the marketing decision-makers to use the information
- Reporting should be concise and to the point
- Market researchers most typically report key findings in presentation formats (e.g.
PowerPoint or reports)
Presenting the results and marketing recommendations

- Market research is a continuous process

- It is essential that marketers evaluate the effectiveness of each and every marketing activity
undertaken to optimise effectiveness
- By undertaking high-quality research we can deliver irrefutable evidence of the return on
investment
- Findings can build business cases for future projects
 Topic 3: Consumer and Buyer Behaviour
Consumer behaviour
What is consumer behaviour?

- Consumer behaviour is the term used to describe the analysis of the behaviour of individuals
and households who buy goods and services for personal consumption
- An understanding of consumer behaviour informs every decision made about the marketing
mix
- The range of possible consumer behaviours is almost limitless
- However, we can identify a range of consumer decision-making behaviour
- From simple habitual decision-making behaviours at one end to highly complex extended
decision-making behaviours at the other

Influences on consumer behaviour

- Range of factors that may influence a consumer is virtually limitless
- Studying them systematically and comprehensively is a mammoth task
- Develop awareness and sensitivity to the issues that may influence an organisation’s target
market

Situational Influences

- Situational influences on consumer behaviour are perhaps the easiest to understand

- The principal situational influences may be classified as:
o Physical
o Social
o Time
o Motivational
o Mood

Nudge theory

- Makes (positive) advantage of situational influences

- Involves slightly altering the environment – choice architecture
- Make people behave in a predictable way
 - Does so in a way without disposing of alternatives
- Does not provide significant incentives to for the behavioural change

Group influences

- Consumers’ purchasing decisions are profoundly affected by group factors

- Or influences from groups with which the individual interacts
- Group influences comprise of:
o Social factors: the influence of other people
o Cultural factors: the influence of the values, beliefs and customs of the person’s
community

Cultural factors

- Cultural factors come from the level of the whole society or of major groups within society
- From a marketing perspective, this level of analysis corresponds with that of the mass
market
- Concerned with the aggregate behaviour of markets as a whole
- Social class is of interest to marketers when can explain or reliably predict differences in
buyer or consumer behaviour

– Culture:

- The broadest group influence on behaviour is arguably

that of culture
- A precise definition of ‘culture’ is perhaps debatable
- A system of knowledge, beliefs, values, rituals and
artefacts by which a society or other large group
defines itself
- Culture is multidimensional and includes both tangible
and intangible elements
- Various cultural frameworks exist that seek to
categorise these influences
- Hofstede found that national cultures could be
distinguished by variations across four core dimensions
1. Power distance
2. Uncertainty avoidance
3. Individualism
4. Masculinity
- Power distance: the extent to which the less powerful
members accept and expect unequal power distributions
- Uncertainty avoidance: to what extent members tolerate uncertainties
- Individualism: focus on the rights and concerns of each member. Antonym = collectivism
- Masculinity: extent to which members stress different expectations for men and women

– Subculture

- Group of individuals who differ on some influential dimensions

- Extracted from the broader culture in which they are immersed
- Important to consider when their shopping and purchasing behaviour is significantly
different from the remainder of the population
 - In this case, they may represent a distinct and commercially significant marketing
opportunity

– Social class

- Individuals of similar social rank within hierarchy

- Often better to pay attention to economic indicators
o Income
o Occupation
o Educational background
- Socioeconomic status can be useful concept where the primary focus is on ‘purchasing
power’

Social factors

- The social level is concerned with developing an understanding of the behaviour of the
individual within the wider group
- From the traditional domain of ‘social psychology’
- Focused on understanding how the group influences the behaviour of its individual members
- Typically, through group pressures on the individual to conform with group norms
- Such influences are collectively known as social factors
- A reference group is any group to which an individual looks for guidance
- Guidance on what is appropriate
o Values
o Attitudes
o Behaviours
- The influence of reference groups is particularly strong when the individual lacks previous
experience as a guide for behaviour
- Or where that behaviour carries a level of social risk

– Reference groups

- Three major types of reference groups have been identified

1. Membership reference groups: those we are part of already
2. Aspirational reference groups: those we want to be associated with
3. Dissociative reference groups: those we don’t want to be associated with
- Some individuals occupy the role of opinion leader
o A reference group member who provides relevant and influential advice about a
specific topic of interest to group members

– Family

- For most people, the social group with the most influence over their behaviour is the family
- The family life cycle describes the stages through which most families pass
Individual factors

- Factors that influence the consumer’s behaviour which operate independently of social
circumstances
- Known as individual factors
- Relate to personal and psychological characteristics
- These factors can be measured for an individual and are presumed to differ significantly
between individuals
- In large part, they explain the individual’s purchase process and final product choice

Personal characteristics

- At the level of individual buyer or consumer, we can identify a range of personal

characteristics
- These have been shown to exert a significant influence on consumers’ choice processes and
ultimate purchase decisions
- These personal characteristics, in some ways, constitute an individual’s identity and, in this
sense, are objective and relatively stable in the short term

– Demographics

- Demographic factors describe the general make-up of the population

- Describe using existing objective, measurable characteristics that are either assumed or
demonstrated to be related to the purchase or consumption of products
- Demographic factors should always be used as part of the description and explanation of
consumer behaviour
- In many cases, these demographic characteristics will be sufficient for the marketer’s
purposes

– Lifestyle

- Defined by how they spend their time and how they interact with others
- Significant difference between an individual’s actual lifestyle and their preferred lifestyle
- Consumers regularly purchase products that play a role in their lifestyle
- They also often purchase products to enhance or express their preferred lifestyle
o Such products are aspirational or symbolic in nature
– Personality

- The most distinctive characteristic that defines an individual’s behaviour

- Notoriously difficult to measure reliably
- While relatively consistent and enduring, it does change throughout life
- Changes are normally in response to social and environmental influences and personal
experiences

Psychological characteristics

- Psychological characteristics describe internal factors that shape:

o Thinking
o Aspirations
o Expectations
o Behaviours of the individual
- These characteristics are particular to the individual
- Independent of their situational and social circumstances

– Motivation

- Used to describe the individual’s internal drive to act to

satisfy unfulfilled needs or achieve unmet goals
- Often specific to the individual and situation, but some
motives are consistent over time across the population
- The most widely recognised theory of motivation is
Maslow’s hierarchy of needs

– Beliefs and attitudes

- Beliefs and attitudes make up the ‘mental map’

- Consumer rely upon these when making judgements and
products for which there is no readily apparent need
- The three components that make up an attitude are:
1. The cognitive component
2. The affective component
3. The behavioural component

– Perception

- Perception is the psychological process that filters, organises and attributes meaning to
external stimuli
- Perception is selective and can result in the following:
o Selective exposure
o Selective attention
o Selective distortion
o Selective retention

– Learning

- Learning is the process by which individuals acquire new knowledge and experiences
- They can apply to future problems, opportunities and behaviour
- Behavioural learning theories stress the role of experience and repetition of behaviour
 - Cognitive learning theories describe learning that takes place through rational problem
solving, and that emphasise the acquisition and processing of new information

Consumer decision-making process

- The consumer decision making process involves five stages

- These stages are typically present in all consumer buying decisions
- The relative importance and duration, and in some instances, the sequence of each varies
considerably from one decision to another

- There are expectations to this process

o Habitual decision making: involves little involvement with the purchase
o dified decision making: involves seeking limited information to evaluate options for
infrequent purchases within familiar product categories
o Extended decision making: involves high level of involvement with the purchase
decision in a protracted, deliberate and detailed way
- A further category of decisions – namely, impulse purchases – are made with very little
involvement and, arguably, no planning or forethought
- In such instances, the purchase decision is taken before the buyer has even recognised a
need
- The level of involvement is fundamentally important to the type of marketing that will be
effective
Buyer Behaviour
Business markets

- Business markets are made up of individuals or organisations that purchase products for one
or more of the following three purposes
1. To resell the product
2. To use the product in the production of other products
3. To use the product in their daily business operations
- The overall business market comprises four major categories
1. Reseller markets
2. Producer markets
3. Government markets
4. Institutional markets
Reseller markets

- Reseller markets buy products in order to sell or lease them to other parties for profit
- Wholesalers purchase products from suppliers and producers for resale to other
intermediaries
- Industrial distributors purchase products from producers and sell them on to organisational
buyers
- Retailers purchase products from suppliers, manufacturers or other intermediaries for resale
to consumers

Producer markets

- Producer markets purchase products for use in the production of other products or for use in
their daily business operations
- They operate across all sectors of the economy – primary, secondary and tertiary (services)
industries
- The share of GDP generated by manufacturing in Australia and NZ has been steadily declining
as manufacturing moves to lower-cost countries
- Recently, many service roles have been ‘offshored’

Government markets

- The government sector represents a substantial provider and purchaser of goods and
services
- Demand can fluctuate widely due to ‘fiscal’ policy which is used to attempt to smooth
macroeconomic fluctuations or as governments of competing political persuasions alternate
in power
- The time, cost and uncertainty make many companies reluctant to do business with
government, regardless of the potential sales revenues

Institutional markets

- Many organisations are neither public nor for-profit

o They commonly have charitable or social objectives (e.g. schools, universities,
religious organisations, hospitals, charities)
- The markets in which these organisations buy and sell products are known as institutional
markets
- NFP organisations typically have different goals and fewer resources than commercial
organisations
- Marketing to such organisations will often be less financially profitable, but overall the NFP
sector still comprises a very substantial market

Business buying behaviour

- Business purchases usually take the form of a straight rebuy, a modified rebuy or a new task
purchase
- The level of involvement is also reflected in the buying approach the business takes, which
may involve some or all of the following:
o Negotiation
o Description
o Inspection
o Sampling
 - A straight rebuy occurs when buyers purchase the same products routinely from established
vendors under already-established terms of sale, often through an automated or semi-
automated ordering system
- A modified rebuy usually involves some degree of evaluation of alternative product options
- When a business identifies a new problem or introduces a new process or product, it will
often need to make a purchase in a product category for the first time. This is known as a
new task purchase

The business decision-making process

- The business decision-making process involves the same basic stages as the consumer
- decision-making process.
- For business purchases most stages are more protracted and formalised.
- The business decision process will vary between straight rebuys, modified rebuys and new
task purchases
 Topic 4: Segmentation, Targeting and
Positioning
Knowing the market
- A market is a group of customers with heterogeneous needs and wants
- Consumers and businesses vary considerably in their needs, wants and demands
- It is virtually impossible for an organisation to successfully appeal to every consumer or
business
- To overcome this problem, marketers seeks to identify and understand those parts of the
total market to which it can offer the most value

Introduction

- Identifying potential customers and

understanding their needs is fundamental
to market success
- Consumer markets consist of households
and individuals that buy products for
private consumption
- Market segmentation enables the
organisation to form a strategy for a group,
or segment, that has common features,
rather than try to market to everyone
- The organisation develops the most effective marketing mix for each segment. This approach
is known as the target marketing concept

Target marketing
- Individuals and organisations in a market have different
wants, needs and demands
- The choice of marketing strategy typically involves a
degree of compromise
- Compromise between the necessity to respond to the
particular desires of potential customers and the
objective of achieving the lowest possible production and
marketing costs
- Principally done through achieving economies of scale
- Target marketing is based on three premises:
o Individual buyers or groups of buyers can be
identified
o Sellers understand the needs of buyers
o Sellers seek to shape their offer to meet the
needs of target buyers
- Buyers have common wants, needs and demands
o Mass marketing
 - Buyers have unique wants, needs and demands
o One-to-one marketing
- The market contains subgroups
o Target marketing: target specific subgroups

Mass marketing

- A mass marketer sees buyers as having common wants, needs and demands
- A single product offering is created, communicated and delivered to meet the needs of most
people in the market
- This is an undifferentiated approach to marketing
- Organisations that practice mass marketing can capture very large markets at very low cost
per unit, ensuring high levels of profitability
- This strategy is a characteristic of commodity products and global mass market products
- E.g. Coca-Cola has diversified to add Diet Coke, Coke No Sugar, Vanilla Coke, etc.

One-to-one marketing

- The one-to-one marketer seeks to appeal to each customer by providing a unique,

customised offering that will meet their individual needs
- Many small services businesses take a one-to-one marketing approach
- A one-to-one approach usually results in higher unit costs and a more restricted market
- These conditions typically form the basis of a focus or niche strategy

Target marketing based on segmentation

- When choosing target markets, the organisation will generally consider three factors
1. Its own resources
2. Market demand
3. Competition
- With a differentiated targeting strategy, an organisation identifies a range of target market
segments
- These cover the majority of the total market
- For each market segment the organisation develops a tailored marketing mix

Product and market specialisation

- Small organisations with limited financial resources frequently adopt one of the following
specialised approaches to target marketing
o Product specialisation
o Market specialisation
o Product-market specialisation
 - Specialisation approaches work if:
(1) The market is characterised by a wide range of needs and product preferences
(2) Clear market segments/product categories are identified
(3) Market is clearly divided
(4) Market segments/product categories are profitable enough
(5) Segments/product categories are actionable

The target marketing process

- The target marketing process is a fundamental

component of marketing strategy for any
organisation
- The process involves three main stages, with each
requiring detailed analysis and decision making
o Segmentation
o Targeting
o Positioning

Market segmentation
- The first stage of the target marketing process is market segmentation
- There are two steps in the market segmentation phase
1. Identifying variables that can be used to define meaningful market segments
2. Profiling the market segments so they can be assessed in the second stage of the target
marketing process

Identify segmentation variables

- Segmentation variables are characteristics that buyers (i.e. individuals, groups or

organisations) have in common and that might be closely related to their purchasing
behaviour
- The possible variables for segmenting consumer markets fall into four broad categories
1. Geographic
2. Demographic
3. Psychographic
4. Behavioural

Geographic segmentation

- Geographic variables are reliable predictors of customer needs and purchasing behaviours
for a wide range of products
- Useful geographic variables include:
o Climate
o Local population density
o Region
o Topography
o Urban, suburban, and rural location
Demographic segmentation

- Demographic segmentation is based on demographic variables, which are related to the

quantifiable social characteristics of populations
- Useful demographic variables include:
o Age
o Ethnicity
o Household composition
o Income
o Gender

Psychographic segmentation

- Like demographic and geographic variables, psychographic variables (psychology plus

demographics) are based on consumer characteristics
- Psychographic segmentation is based on differences in:
o Psychological traits (personality attributes and motives)
o Geodemographics
o Lifestyles (the expression of the two former categories)

Behavioural segmentation

- Behavioural segmentation is not based on consumer characteristics

- Likely to be a better indicator of market segments and their purchasing behaviour
- Behavioural variables include:
o Benefit expectations
o Brand loyalty
o Occasion
o Price sensitivity
o Volume of usage
Segmenting business markets

- Business markets are often characterised by a small number of buyers, each of which might
display a very close relationship with the seller
- Traditional market segmentation variables may be less relevant
- ‘Customised’ or ‘one-to-one’ marketing may be the most logical approach
- Demographic equivalent relates to industry
- Geographic indicator of buyers in a certain area

Effective segmentation criteria

- An almost limitless number of segments can be created using segmentation variables

- It is crucial that the segments are evaluated against the following criteria to ensure the
segment is worthwhile in pursuing
o Measurability
o Accessibility
o Substantiality
o Practicability

Profile market segments

- Having identified the range of ways in which market segments can be described, the next
task is to develop a market segment profile
- This describes the typical potential customer in the market segment – the common features
shared by members of market segments and how they differ between market segments
- Segment profiles will typically be described in terms of a number of segmentation variables

Market targeting
- Market targeting involves a systematic examination of the range of possible market segments
o Potential sales volume
o Potential revenues
o Ability of the organisation to satisfy the expectations
- It requires a close understanding of competitors
- How their offerings are seen by potential target market segments
- It is important to realise that no company or brand can be all things to all people

Evaluate potential segments

- The evaluation of potential market segments involves detailed and rigorous analysis of:
o Sales potential
o Competitive situation
o Cost structure
 - SWOT is a good tool to use
o Strength and weaknesses
▪ Evaluate what the company’s strengths and weaknesses are
o Opportunities and threats
▪ Evaluate whether target market is attractive
▪ Evaluate whether target market is good fit with the company’s strength and
weaknesses

Select target markets

- Estimating market potential in each target market segment is important

- It determines whether the chosen target market strategy will lead to healthy sales volumes
and sustainable profitability
- Selecting particular market segments (and deciding to ignore others) is therefore at the heart
of the marketing concept
- The organisation is no longer referring to an individual buyer or the entire mass market – it is
now a target market segment or segments

Positioning
- Positioning describes how target markets perceive the organisation’s offer relative to
competing offers
- It is how customers distinguish the organisation, its products and its brands from competitors
- Consideration for when they are selecting from among the available alternatives
- Notice that positioning is based on customer perceptions
- May or may not closely correspond with the product’s objective characteristics

Determine positioning for each segment

- To determine the appropriate positioning for its products, an organisation needs to

undertake detailed market research
- To understand its current position in the minds of its target market segments
- A common technique for determining positioning is called perceptual mapping
- Typically produces two-dimensional maps showing how each of the competing brands relate
to each other in terms of a range of product attributes
Brand positioning

Brand re-positioning

Analysing current positioning

- Establishing an organisation’s current positioning is

of strategic importance
- It should be undertaken based on rigorous analysis
and market research
- Some commonly used positioning variables include:
o Attributes
o Use/application
o Product user
o Price and quality
o Product class
Determine the marketing mix for each segment

- The final step in the target marketing process is to determine an appropriate marketing mix
for each target market segment
- The marketing mix for each segment should:
o Be consistent with the desired positioning
o Be internally consistent
o Be sustainable in the long term
 Topic 5: Product
Introduction
- The product is what the marketer takes to the market to get consumers to buy or engage in
some type of exchange
- Products rarely stay the same and will change to suit new technology and changing tastes
- Developing, launching and positioning products can be difficult and uncertain

Products: Goods, Service, and Ideas

- Product plays a vital role in the marketing process
o Without a product, a marketer has nothing to offer
- A product is defined as a good, service or idea offered to the market for exchange
- Goods are physical, tangible offerings that are capable of being delivered to a customer
- Services are intangible offerings to the market
- An idea can also be offered to the market in the form of a concept, issue or philosophy

Total product concept

- Products have many different features that can provide value

for customers, clients, partners and society
- The total product concept is a way of viewing a product as
the totality of value and benefits it provides to the customer
- It is crucial for marketers to understand that when customers
choose a product, they do not purchase a ‘thing’; rather,
they buy a solution to a problem
- Core product: the fundamental benefit that responds to the customer’s problem of an
unsatisfied need or want
- Expected product: attributes that actually deliver the benefit that forms the core product
- Augmented product: a bundle of benefits that the buyer may not require as part of the basic
fulfilment of their needs
- Potential product: all possibilities that could become part of the expected or augmented
product

Example: mobile phone

- Core product: reliable, accessible communications

- Expected product: conveniently sized phone with an easy-to-read screen and keypad
- Augmented product: access to a variety of downloadable apps, superior sound quality or the
ability to use the device for ‘virtual’ tickets
- Potential product: contactless ‘tap and pay’, capacity to use virtual reality headsets

Product relationships

- Many organisations produce multiple products or several different styles of a product

- The relationships between the organisation’s products can be described as follows
o Product item – particular version of a product that can be differentiated from the
organisation’s other products by characteristics
 o Product line – a set of closely related product items
o Product mix – set of all products an organisation makes available to customers

Product classification

- Consumer products are products purchased by households and individuals for their own
private consumption
- Consumer products are classified into one or more of the following main categories
o Shopping products
o Convenience products
▪ Staple, impulse, emergency
o Specialty products
o Unsought products

Shopping products

- Involve moderate to high engagement with the decision-making process

- Expected to last a long time
- Purchased relatively infrequently
- Stocked up small number of retail outlets
- Sell in low volumes
- Reasonably large profit margins
- Examples include:
o Electrical appliances
o Furniture
o Cameras
o Clothing

Convenience products

- Frequently purchased
- Stocked up large number of retail outlets
- Sell in high volumes
- Low profit margins
- 3 further categories:
o Staple products
o Impulse products
o Emergency products

Specialty products

- Unique characteristics desired by their buyers

- Consumers know exactly what they want
- Pre-selected by consumers
- No close substitutes or alternatives
- Available at a limited number of outlets
- Purchased infrequently
- Sell in low volumes
- High profit margins
Unsought products

- Unknown or unconsidered by the consumer

- Challenge = making consumers aware
- Marketing communication efforts are crucial

- Business-to-business (B2B) products are products purchased by individuals and organisations

for use in the production of other products or for use in their daily business operations
- B2B products can be classified into three categories:
o Parts and materials
▪ Raw materials, components
o Equipment
o Service and supplies

Product lifecycle
- An organisation needs to be adept at developing new products and successfully launching
them into the marketplace
- The products must then be effectively managed to ensure their ongoing profitability
- Consider environmental changes
o Technological changes
o Changes in fashion
o Actions of competitors
- The way products progress through the life cycle varies with the product and the marketing
environment

Overview of the product life cycle

- The product life cycle (PLC) has five stages:

o New product development
o Introduction
o Growth
o Maturity
o Decline

New product development

- The new product development process sets out eight phases for introducing products
1. Idea generation
2. Screening
3. Concept evaluation
4. Marketing strategy
5. Business analysis
6. Product development
7. Test marketing
8. Commercialisation
Product adoption process

- Marketers need to understand how a consumer perceives

a new product, learns about it, and decides to adopt it
- This typically entails five sequential stages, which form the
product adoption process:
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption

Introduction stage

- Considerable investment required

- Goal: build awareness and interest
- Lag in building sales
- Sales recoup R&D costs
- Minor profits towards end

Growth stage

- Increase in popularity, sales and profit

- Dependent on welcomingness of market
- Competitors begin to enter the market with similar products

Maturity stage

- Novelty wears off

- Competitors more of and established
- Sales peak and profitability fails
- Decision to determine future of the product
o Change marketing mix (move back to growth)
o Leave the market and allow decline

Decline stage

- Sales and profit fall

- New products entering
- Little interest
- Drop or change the product

Diffusion of innovation

- The diffusion of innovation describes how innovations are adopted by the market over time
- It suggests that the influence of social groups on the decisions made by individuals how new
products and ideas are adopted
- The speed and pattern of market penetration for a new product innovation usually differ
substantially between markets
- The categories of product adopters are defined by both their product adoption behaviour
and characteristics that lead them to that behaviour
 o Innovators
o Early adopters
o Early majority
o Late majority
o Laggards

Product differentiation
- Product differentiation is the creation of products and product attributes that distinguish one
product from another (e.g. design, brand, image, quality, features)
- Most of a product’s differentiating features are part of the augmented product layer of the
total product concept
- Product differentiation must not be viewed as a static concept
- Marketers usually modify, upgrade and reposition products during their life cycle to maintain
or improve their competitive advantage

Branding
- Brand refers to a collection of symbols intended to create an image in the customer’s mind
that differentiates a product from competitors’ products
o Name
o Logo
o Slogan
o Design
- Brand image is the set of beliefs that a consumer has regarding a particular brand
- When marketers make decisions about products, the decisions must relate to the product’s
brand and brand image

Brand name

- A brand name is a part of a brand than can be spoken and can include words, letters and
numbers
- A brand mark is the part of a brand not made up of words – it often consists of symbols or
designs
- To protect the brand, an organisation can register it as a trade mark with the relevant body
(e.g. IP Australia, or the Intellectual Property Office of New Zealand)

Brand equity

- A well-known brand can be very valuable to an organisation in financial and non-financial

terms
- The added value that a brand gives a product is known as brand equity
- For marketers, the brand:
 o Identifies the organisation’s products
o Differentiates the organisation’s products from competing products
o Attracts customers
o Helps introduce new products
o Facilitates the promotion of same-brand products
- Brand loyalty exists when the customer: shows a highly favourable attitude towards a
specific brand
o The customer would then prefer to buy that brand
- Brand equity metrics: measuring the value of brands is extremely useful to organisations
- High brand equity can be a valuable asset for a company and provide a strong competitive
advantage
o Brand assets (e.g. trade marks and patents)
o Stock price analysis
o Replacement cost
o Brand attributes
o Brand loyalty
o Willingness-to-pay analysis

Brand strategies

- When developing brands within a product mix, an organisation may decide to pursue the
following possible strategies
o Individual branding: uses a different brand on each product, giving each its own
specific identity
o Family branding: uses the same brand on several of the organisation’s products
o Brand extension: gives an existing brand name to new product in a different
category

Brand ownership

- Manufacturer brands: owned by producers and are the most common type of brand
- Private label brands: owned by resellers, such as wholesalers or retailers, and are not
identified with the manufacturer
- Generic brands: products that only indicate the product category
- Some organisations can enter a licensing agreement to use the names and symbols of other
brands for a fee
- Franchising: has many parallels with licensing

Co-branding

- The use of two or more brand names on the same product

- The use of co-branding has grown recently as organisations try to:
o Capitalise on the brand equity of multiple brands
o Improve the perceived value of a product
o Maintain existing branding after another organisation’s brands are acquired

Packaging
- Packaging can become an important recognisable way for customers to identify a particular
product, much like a brand
- Marketers may want to change the package to:
 o Express to customers that the product changed in some way
o Update the style of package or logo to broaden the customer appeal
o Emphasise certain elements to further differentiate it from the competition

Labelling

- Labelling usually forms part of the package and provides identifying, promotional, legal and
other information
- This information can be an important factor in a customer’s decision to purchase
- At its most basic level, the label identifies the product and brand name, but can also provide
useful information
- Some of the information provided on labels is compulsory

Managing products
- The product strategy is a central and complex part of the organisation’s marketing mix
- From the new product development process through the remaining parts of the product life
cycle, there are many decisions to be made which affect the success of the product
- These decisions are not simply made once and implemented; rather, product strategy
consists of ongoing evaluation and responses to the changing marketing environment

Approaches to management

- Managing the product may require coordination and cooperation across different business
departments
- A business may employ product managers to manage particular products or product lines, or
brand managers to manage a particular brand within the organisation’s portfolio of brands
- Another alternative is to appoint a market manager who will be responsible for managing
the marketing activities aimed at a particular part of the target market

Managing products through the life cycle

- Marketers must determine which life cycle stage their product is in to make appropriate
decisions related to the marketing mix.
- Line extensions are the most common form of ‘new’ product. They are variations or
derivatives of an existing product added to the product line, rather than superseding the
original product.
- There may be the need to change an aspect of the marketing mix to reposition the product.
- Eventually products may become obsolete. Product obsolescence may be either planned or
unplanned
 Topic 6: Price
Introduction
- Price is a measure of value to both buyers and sellers.
o Buyers need prices that reflect product worth and what they can pay.
o Sellers need prices to cover their costs and provide sufficient profit margin to justify
the risk.
- Price is directly related to profitability:
o Profit = (price x sales volume) – total costs
- If a buyer and seller cannot agree on the value expressed in the price, the transaction is
unlikely to proceed.
- Price serves as a visible expression of the value.

Intricacies of pricing

- ‘Price shoppers’ or ‘price seekers’ will always be a key market segment in almost all markets.
- In today’s internet-driven markets, price shopping has become a more dominant market
driver.
- The web has made price comparison shopping much easier and more efficient.
- Other segments seek lower prices for greater value. (price aversion)

Pricing objectives
Determining pricing objectives

- More specific pricing objectives tend to focus on various combinations of the following
issues:
o Profitability
o Long-term prosperity
o Market share
o Positioning
o What the customer is prepared to pay
- Pricing objectives should be specific, measurable, actionable, reasonable and timetabled
(SMART goals)

Not-for-profit pricing

- While not-for-profit organisations do not seek to make profits, they do generally seek a
return on their activities and many charge for their products
- Their pricing objectives may be to generate enough funds to sustain their activities.
- Alternatively, a not-for-profit organisation may price its products to make them appealing to
their target market.
- In such circumstances, state and provincial governments will often subsidise such loss-
making services as part of their ‘service obligations’.
The legal environment

- All organisations are subject to laws and regulations when establishing prices.
- A number of government regulations and laws seek to prevent activities aimed at controlling
or manipulating prices.
- Under Australian Consumer Law, there is a clear intention and expectation that pricing to
consumers should be explicit and transparent.
- Consumers should not be the subject of deception or discrimination.
- They should know clearly the total price before purchasing.

Selecting the pricing method

- Like all marketing decisions, pricing decisions should be based on an understanding of the
customer.
- The value of the product to the customer places a ceiling on prices.
- The organisation must ensure it obtains value from the marketing exchange.
- The organisation’s costs place a floor on prices.
- Organisations must make pricing decisions that make their products competitive in the
marketplace.

Fixing the price

- Pricing can be based upon:

o Costs
o Demand
o Competition

Demand pricing
Demand considerations

- Demand exists when consumers are willing and able to buy a product.
- Demand for a product arises when it can fulfil an unsatisfied need or want of a consumer.
- Understanding the nature and extent of consumer demand is central to the formulation of
pricing strategy.
- Demand-based pricing sets prices according to the level of aggregate/individual customer
demand in the market.
- Surge pricing is based on the immediate/current market demand

The demand schedule and demand curve

- A demand schedule is simply a table that shows the actual or estimated quantity demanded
for a particular product at particular prices.
- For the vast majority of products, there is an inverse relationship between price and quantity
sold — as price rises, the quantity sold falls, and vice versa.
- Hence the demand curve has a downward, or negative, slope.
- Prestige products are an exception.
Price elasticity of demand

- The sensitivity of the quantity demanded to changes in price is known as the price elasticity
of demand.
- In numerical terms, it is the percentage change in quantity demanded relative to a given
percentage change in price.
- Price elasticity of demand varies from product to product and industry-to-industry

- Demand is said to be price elastic if e d is greater than 1 (i.e. if the percentage change in the
quantity demanded exceeds the percentage change in the price).
o Demand is, thus, price sensitive.
- Demand is said to be price inelastic if ed is less than 1 (i.e. if the percentage change in the
quantity demanded is less than the percentage change in price).
o Demand is, thus, price insensitive
Ethical issues of demand-based pricing

- Demand-based pricing can often lead to very high profits, but can lead to other problems
- Would it be ethical to increase the price of insulin by 1,000%?

Cost pricing
Pricing based on costs

- In cost-based pricing, the selling organisation adds a percentage or dollar amount to the cost
of the product.
- Cost-plus pricing is often used when it is difficult or impossible to determine the costs of the
product until it has been made or completed.
- Markup pricing is used by wholesalers and retailers and involves adding a percentage of their
purchase cost to determine the resale price

Cost and revenue analysis

- Profits represent the difference between total revenues and total costs.
- Costs establish a price floor, below which prices are not sustainable for a for profit
organisation.
- Price floor is something that can be introduced by the government.
- If priced near cost, a product is called a price leader; if priced below cost, it is called a loss
leader.

Break even analysis

- A break-even analysis determines the volume of unit sales at which total costs equals total
revenue. This is known as the ‘break-even point’.
 - Estimating the break-even point is a crucial starting point for pricing, especially for new
products.
- Break-even analysis can be conducted for a specific period, a project or the life of a product.

- Break even point: the quantity at which Total Revenue = Total Cost
- Firms start making profit after the BEP
- Price X Quantity = Total Fixed Cost + Total Variable Cost

Example
A pizza maker spends:
- $500 on rent
- $200 on insurance
- $300 on utilities
When he makes one pizza, it costs him $5 worth of material (flour, water, cheese, etc)
He has priced his pizzas at $15. What is the BEP?

Marginal analysis

- Marginal analysis is concerned with understanding the effect on costs and revenue when a
company produces and sells one more unit of product.
- Marginal analysis can be useful in pricing individual units of output or to individual buyers.
- Profit is maximised by selling the quantity at which marginal cost equals marginal revenue.
- Marginal analysis requires detailed data on actual and estimated costs and revenues at all
volumes and prices. It is difficult to implement precisely.

Competition pricing
Competition considerations

- Competition-based pricing involves setting prices based on the prices charged by

competitors.
 - Competition-based pricing serves to ensure that an organisation maintains its sales volumes
and market share, but it does not guarantee profitability.
- Price competition is therefore a difficult strategy to sustain over the long term.
- Unless an organisation enjoys clear market or cost advantages

Understanding competitors’ pricing

- In price-sensitive industries, organisations monitor their competitors’ prices on a daily or

even more frequent basis.
- The likely response of competitors to the organisation’s pricing will in part be determined by
the competitive structure of the industry.
o Oligopoly
o Monopoly
o Perfectly competitive

Alternatives to competing on price

- Organisations with a strategy of differentiation focus on product attributes such as

uniqueness, quality, brand, image or service.
- When it is feasible, non-price competition is clearly preferable to price competition as it gives
the organisation greater power to decide on the profit margin per unit sold.
- Therefore, for most organisations, non-price competition should form the basis of the
competitive strategy.

Business-to-business pricing

- Business-to-business marketing relationships between suppliers and organisational buyers

tend to be close, long-term and formal in nature.
- This leads to pricing practices that are more formal than those in consumer markets.
- Pricing is also often more complex and open to negotiation in business markets than in the
consumer market.
- Business purchasers are more likely than private consumers to consider lifetime costs
involved in a purchase.

Pricing for intermediaries

- Organisations will only choose to deal with intermediaries who can add value to the
organisation’s offering.
- Most producers recommend a final retail price or ‘list price’ that consumers should pay, but
each intermediary needs to make a profit.
- To ensure the profitable operation of the various partners involved in getting products from
the producer to the consumer or organisational buyer, various discounts apply to
transactions in business markets
Price management
The psychology of pricing

- Consumer purchasing behaviour is usually based on a rational evaluation of value.

- The relative importance of price varies between individual consumers.
- An important indicator of the importance of price in consumers’ purchasing decisions is the
perceived uniqueness or differentiation of the product.
- Different market segments will have varying levels of sensitivity to price

Pricing throughout the product life cycle

Pricing new products

- Penetration pricing uses a low launch price below market price.

o Gain maximum sales volume
o Rapid market share
o Turnover of a new product.
- Price skimming involves charging the highest price that customers who most desire the
product are willing to pay.
- Over time, the price is lowered to bring in larger numbers of buyers, again at the highest
prices that these buyers are willing to pay

Pricing established products

- Differential pricing is the practice of charging different buyers different prices for the same
(or equivalent) product.
 - A related approach is special-event pricing. This approach links discounted prices across an
organisation’s entire product range with some special or seasonal event. Special-event
pricing is designed to increase total sales volumes.
- Such a campaign requires the pricing strategy to be combined with promotion. Such an
approach is called promotional pricing.

Setting and managing the final price

- Once implemented, the price must always be monitored in relation to all of the factors we
have discussed as they can change over time.
- Pricing is perhaps the most flexible element of the marketing mix. This flexibility ensures that
pricing is the most dynamic and volatile element of the marketing mix.
- The internet has made prices more visible, more flexible and, consequently, more
competitive than ever before.
 Topic 7: Promotion and Communication
What is promotion?
- The marketing activities that make potential customers, partners and society aware of and
attracted to the business’s offerings
- Its not only about sales or advertising

What are marketing communications?

- It Is another term for promotion that refers to communicating a message to the marketplace

Objectives of promotion

- Support marketing objectives

- Demonstrate features and benefits of products
- Distinguish from competitor offerings
- Encourage product trial and create demand
- Increase awareness about and goodwill for the organisation
- Build a relationship between customer and brand
- Increase general awareness and goodwill towards an organisation
o When this is linked to product sales, this is known as caused-related marketing

A model of communication

- Communication process: a message is encoded and sent by a sender or source, via a

message channel or medium, to a receiver or target audience, who decodes the message
and responds by some form of feedback
- Anything that interferes with the effectiveness of the communication process is referred to
as ‘noise’
- Also influenced by the ‘fields of experience’ → what the participants in the communication
process know about each other and how it influences the way they encode and decode
messages
Integrated Marketing Communications (IMC)
- When carefully combined and coordinated to achieve a consistent and effective message,
the promotional approach is known as the IMC
- The idea behind IMC is that the planning of each part of the promotion mix should not be
done in isolation
- IMC is the term given to the coordination of promotional efforts to maximise the
communication effect
- The goal of IMC is to consistently send the most effective possible message to the target
market
- The best return on promotional efforts is achieved when there is a high degree of
consistency, and hence synergy, across the four areas of promotion

The promotion mix

- Various combinations of promotional methods are used to promote a specific product

- The following is a list of the four main elements of the promotion mix:
o Advertising
o Public relations
o Sales promotion
o Personal selling
- The most effective choice and mix of promotion elements will vary with...
o Specific goals of the marketing effort
o Individual product characteristics
o Individual target market characteristics
o Nature of the marketing organisation itself
o Resources and budget available to the marketer
- The appropriate promotion mix is likely to change over time as each of those characteristics
changes and as the effectiveness or otherwise of the current promotion mix is evaluated

Pull policies and push policies

- Pull policy: an approach in which the producer promotes its product to consumers
- Usually done through advertising and sales promotion, which then generates demand
upward through the marketing distribution channel
- Push policy: an approach in which the product is promoted to the next organisation down
the marketing distribution channel

Advertising
- Advertising: the transmission of paid messages about an organisation, brand or product to a
mass audience
- The main benefit of advertising is the ability it offers to reach a lot of people at a relatively
low cost per person
- Product advertising usually aims to demonstrate the features and benefits of the product
and to promote the product or group of products above competitors’ products

Creating an advertising campaign

- Within the IMC strategy, the overall advertising plan is known as the advertising campaign
- Any decisions about advertising should be made in the context of an IMC approach
- The more complex and ambitious the campaign, the more likely it is the marketing
organisation will engage the services of a specialist advertising agency
- Key steps in creating an advertising campaign:
o Understand the market o Allocate resources
environment o Select media
o Know the target market o Produce the advertisement
o Set specific objectives o Place the advertisement
o Create the message strategy o Evaluate the campaign

- Understand the market environment:

o Advertising cannot be viewed in isolation
o Emerging issues in the marketing environment may affect the advertising campaign
▪ Technological changes
▪ Competitor actions
o Need for a situational analysis
- Know the target market (audience):
o If you are sending a message, it is important to know about who you are sending the
message to
▪ Demographic factors
▪ Lifestyle factors
o Marketing organisations that run advertising campaigns that are not built on
knowledge of the target market set themselves up to fail
- Set specific objectives:
o A marketing organisation contemplating an advertising campaign will probably know
the overall aim of the campaign
o Often objectives will be set with the sight to increase sales, but there need to be
clear, measurable communication objectives
o Once these are correctly defined, it can facilitate later evaluation of the campaign’s
success
- Create the message strategy
o A main messaging approach needs creating
▪ E.g. emotional vs. rational
▪ Type of emotional appeals
o Intimately linked to knowledge of the target market and to the specific objectives of
the advertising campaign
o A lot of research is put into understanding which strategies are more effective
- Allocate resources
o Determine a budget for its advertising campaign
o Budget will be based on its financial and other resources, the objectives of the
campaign and what it expects the return on the investment to be
o What is the right amount of capital and labour to invest?
o Businesses can chose to:
▪ Match its competitors’ spend
▪ Set a certain percentage of sales or revenues aside
▪ Make an educated guess
▪ Work backwards from the objectives to determine what will be required to
produce the appropriate advertising
- Select media
o Marketing organisations can chose among a variety of media, each with their own
special characteristics
o Two of the most important considerations in choosing media are are reach and
frequency
o Reach measures what proportion of the target audience is exposed to the
advertisement at least once (how many)
o Frequency measures how many times each target market member is exposed to the
advertisement (how often)
 - Produce the advertisement
o The marketing organisation must create content (based on the message strategy)
and then work out how best to present that content
o Small organisations may undertake the creative execution themselves
o Large scale organisations might contract an advertising agency
o The creative services may include copywriting, graphic design, illustration, scripting
and photography
o Advertisements should aim first to grab the potential customer’s attention
▪ Attention economy
• Attention is one of the most valuable resources in the digital age
• Increasing problem for advertisers
• Consumer attention span of 8 seconds
• AIDA is becoming an increasingly more difficult task

- Place the advertisement

o Involves the buying and placement of media space and time
o Dedicating people and resources to ensure the campaign proceeds
o Monitoring effectiveness
o In some cases it may be ended early if unsuccessful
- Evaluate the campaign
o Advertising campaigns can be evaluated before (pre-tests), during and after (post-
tests) the campaign is run
o During the campaign, its effectiveness can be monitored by measuring changes in
sales and enquiry levels, and any extra publicity generated by the campaign
o After the campaign, its effectiveness can still be measured through the changes in
sales and enquiry levels, as well as by conducting market research to assess the level
of attention or awareness, such as brand recognition or brand recall

Legal issues in advertising

- While the advertising sector is largely self-regulating, there are a number of legal restrictions
on what can be advertised and how
- While some promotions undoubtedly stretch the truth or add ‘puffery’ (exaggeration),
outright lying is not only illegal, but damaging to customer relationships
Public relations
- Public relations is a term used to describe promotional efforts designed to build an sustain
good relations between an organisation and its stakeholders
- Stakeholders include customers, employees, neighbours, shareholders, regulators,
governments, competitors, the media and society in general
- Public relations is also used reactively to counter poor publicity or as a part of crisis
management

Approaches and methods

- Publicity is the exposure a marketing organisation receives when it obtains free coverage in
the media
- Positive coverage is preferred, but many marketers adhere to the old idea that ‘any publicity
is good publicity’
- Organisations can generate publicity by promoting something newsworthy to news media
- One of the highest-profile public relations tools is sponsorship

Public relations as a profession

- Many organisations and individuals use public relations specialists to manage their publicity
- This is particularly the case among celebrities and public identities, whose publicists have the
dual role of ensuring regular positive media attention while minimising negative press
- Given the complexity of running a public relations campaign to deal with an incident,
marketing organisations should prepare contingency plans and materials so they can make a
response quickly and efficiently

Sales promotion
- Sales promotion offers extra value to resellers, salespeople and consumers in a bid to
increase sales
- The main benefits of sales promotions are to smooth out sales in periods of low demand and
to facilitate retailer support

Consumer sales promotions

- Sales promotion methods aimed at the consumer

o Free samples
o Premium offers
o Loyalty programs
o Contests
o Coupons
o Discounts
o Rebates
o Point of purchase promotions
o Event sponsorships

Trade sales promotions

- Trade sales promotions are aimed at business purchasers and are run by producers or
industries to present products to business customers.
 - Major examples are conventions and trade shows.
- Trade sales promotions are not aimed at consumers. As such, they are push policy methods.
- Trade sales promotion methods include the following.
o Trade allowances.
o Gifts and premium money.
o Cooperative advertising.
o Dealer listings.

Personal selling
- Personal selling is the use of personal communication with consumers to persuade them to
buy products.
- Personal selling is the most expensive form of promotion as it requires the full dedication of
a salesperson, or sales representative, to a customer.
- It does have strong advantages over the impersonal forms of promotion — in particular that
the salesperson can tailor the promotion to the customer’s needs, adjusting the promotion
as they receive feedback from the customer.

Managing a sales force

- Salespeople are the public face of a business. They are crucial to the customer’s experience
of interacting with the business, and determine not only whether the customer makes a
purchase, but whether they will repurchase in the future and initiate positive or negative
word of mouth about their experiences.
- Retailers and/or sales managers need to both choose salespeople carefully and manage
them effectively.

Additional forms of promotion

Ambush marketing

- Ambush marketing is the presentation of marketing messages at an event that is sponsored

by an unrelated business or even a competitor.
- Ambush marketing is legal and can be extremely successful.
- Major events are becoming more sensitive to ambush marketing and taking steps to reduce
its impact and protect sponsors.

Guerilla marketing

- Guerrilla marketing is used to describe any aggressive and unconventional marketing

approach.
- Its aim is simply to grab the attention of consumers when they are unaware.
- It was more commonly used by small businesses that could not afford large-scale marketing
efforts, but this is changing due to the large amount of publicity it can generate.
- Its effectiveness relies on its ability to take its target unawares — they don’t expect it, so they
don’t filter it out.
Product placement

- Product placement is the paid inclusion of products in movies, television shows, video
games, songs and books.
- It can be featured or incidental.
- Product placement of one product or brand often also involves the exclusion of competitors’
products and brands.

Viral marketing

- Viral marketing is the use of electronic social networks to spread a marketing message.
- Because the marketing message is spread by friends and colleagues it has greater credibility
— and is more likely to be considered — than marketing messages sent via mass media.
- The flipside of viral marketing is that it can go very wrong.

Permission marketing

- Permission marketing is the broad term given to activities that are centred around obtaining
customer consent to receive information and marketing material from a company.
- Marketers actually ask and gain permission to contact the customer.
- This reduces waste and may encourage genuine customers who want to ‘opt in’ and be
informed about new stock or sales

Sponsorship

- Sponsorship is the paid association of a brand with an event or person.

- As media become more and more fragmented with smaller, niche audiences, the pay-off on
the extraordinary sums of money required to sponsor events diminishes.
- Social consciousness and environmental awareness are prompting consumers to think about
the overall activities of marketing organisations, rather than to analyse and accept the
promotional message in isolation.
 Topic 8: Place (Distribution)
Why is distribution important?

- Distribution is concerned with placing products in the hands of the consumer

- Key element that determine:
o Form utility
o Place utility
o Time utility
- As well as…
o Exchange efficiencies
▪ Making transactions as economical as possible by establishing and managing
efficient exchange processes

Distribution channels
- Requires a chain of individuals and organisations
- This chain exists between producers and consumers
- Flow of this chain is what we call a distribution channel

Direct distribution

- Manufacturer sells directly to the consumer.

- Often referred to as a one-level distribution channel.
- Increased in use in recent years.
- For example: Apple, Dell.
- Can bring great benefit to consumers
o Personalisation.
o More value for money

Indirect distribution channel

- Manufacturers use marketing intermediaries to sell to indirectly sell to the customer.

- Intermediaries take on various responsibilities on behalf of the manufacturer.
- The shift of responsibilities can
o Be more cost effective.
o Make use of greater knowledge/skills
o Provide better service outputs to the final consumer.
 - It’s not uncharacteristic of brands and companies to use multiple distribution channels
- For example, apple

Business-to-business product distribution channels

- Products used in the production of other goods or services or in day-to-day business

operations
- Main intermediaries are agents and industrial distributors
- A distribution channel can consist of both, one or neither of these between the producer and
the organisational buyer

Supply chain management

Distribution channel partnerships

- Each party has expectations and obligations.

- Different amounts of power in the supply chain.
- Relationship management is crucial.
- Not all arrangements are successful.

Horizontal integration

- When organisations at the same level are combined under one management structure.
- A channel member on the same level buys out a competitor.
- For example,
o Facebook
o Instagram
Vertical integration

- When different stages of the distribution channel are combined

- Vertical marketing system
o A distribution channel in which all stages occur under a single management structure

Franchising

- Type of business where you sell products to the right to use the main elements of the
business model are licensed to each other
- Franchisor:
o Rights to the business model
o Provides services such as advertising, business know-how and supplier networks
o Stipulates standards and rules by which the franchisee must abide
o Promises exclusive rights to a certain area
- Franchisee:
o Pays the franchisor a fee/or percentage of the sales
o Supplied labour and capital
o Operates the business in accordance with the standards

Marketing intermediaries
Wholesalers

- Wholesaling comprises exchanges in which products are bought for resale, for use as inputs
in other products, or for some other use in a business
- Wholesaling does not include transactions with end consumers
- A wholesaler is simply an organisation primarily engaged in wholesaling

Major wholesaling functions

- Wholesalers act as the connection between producers and retailers and offer benefits to
both
- For many producers, these benefits – and the fact that wholesalers, being specialists, can
provide the services more efficiently than the producer can perform them itself – outweigh
the financial costs of dealing with wholesalers in the marketing channel
- Merchant wholesaler: independently owned (not owned by the producers)
- Manufacturers’ wholesalers: also known as manufacturers’ sales branches and offices, are
similar to merchant wholesalers, but are owned by the producer itself and thus represent a
form of vertical integration.

Retailers

- Retailing describes any exchange in which the buyer is the ultimate consumer of the product.
- Retailing excludes transactions in which the buyer intends to resell the product or use it in
the making of another product.
- Other businesses may undertake retailing, but their primary focus is on something else.
- Many types of organisations undertake retailing, whether or not they are primarily retailers.
The marketing organisation must decide what retailing approach (or approaches) is suitable
for its products.
Retailing considerations

- Location
o The natural geographic area from which customers will be drawn.
o Proximity to competitors.
o Proximity to complementary retailers.
o Customer access to public transport and public parking.
- Positioning
o Retail positioning refers to the practice of identifying a gap in the market and
targeting it by creating some distinguishing feature in the mind of customers

Types of retailers

- There are many different forms of retailer, each offering relative strengths and weaknesses
for the customer and the producer or wholesaler.
- Specialty retailers
- General merchandise retail stores
- Online retailing
- Other forms (direct marketing, telemarketing, catalogue marketing, door-to-door selling)

Agents

- Agents are engaged by buyers or sellers on an ongoing bases to represent them in

negotiations with other marketing channel participants
- The main types of agents are as follows
o Manufacturers’ agents
o Selling agents
o Buying agents
o Commission merchants.

Brokers

- Brokers are engaged on a short-term or one-off basis to negotiate on behalf of buyers or

sellers.
- They have a more limited role than agents.
- Their value is in their specialist knowledge and well-established contacts in their industries.
- The insurance and mortgage broking industries have been widely criticised over the past
decade, as some brokers have guided their customers towards products that maximise the
broker’s income rather than providing the most suitable product.

How many and which intermediaries to use?

- Forms and functions

o Physical distribution
o Distribution of services
- Market coverage
o Intensive distribution
o Exclusive distribution
o Selective distribution
- Service outputs
o Bulk breaking
o Spatial convenience
 o Product variety and assortment
o Waiting and delivery time
o Information provision
o Customer service

Physical distribution
Forms and functions

- Physical products need to be moved from producers to consumers via a number of activities
that are collectively known as physical distribution.
- Physical distribution involves order processing, inventory management, warehousing and
transportation.
- Physical distribution activities can be performed by any member of the distribution channel.

Order processing

- All activities involved in managing the information required to receive, handle and fill a sales
order.
- Minimise costs; maximise customer satisfaction.
Inventory management

- Involves managing stocks of products to ensure availability

- Aim is hold enough stocks to fit customer demand and minimise holding costs (associated
with storage or expiry)
- Inventory based on:
o Order lead time
o Usage rate
o Safety stock
- Just-in-time (JIT) approach

Warehousing

- Use of facilities to store and move goods.

- Important tool in inventory management.
- Many businesses buy or lease space.
- Alternative option: distribution centre
- Type of warehouse focused on moving rather than storing goods.

Transport

- Transportation is the process of moving products from their place of manufacture to

their place of consumption.
- The key modes of transportation are road, rail, sea, air and — somewhat less obviously —
pipelines.
- Specialist transportation companies (freight forwarders)

Distribution of services
Physical inputs

- The creation and delivery of most services products requires physical inputs.
- The service business must ensure that the various physical inputs it needs to deliver the
service are available.

Scheduling

- Scheduling in service businesses is designed to smooth demand.

- Some businesses can not so easily control demand for their services, e.g. a hospital

Delivery infrastructure

- Some services are distributed via a physical infrastructure.

- Some service providers bring the service to you.
- For example, the electricity supply to your home is delivered via an extensive network of
above-ground, underground and undersea cables.
- The web has expanded the range of services available in this format, e.g., internet banking.
Market coverage
Intensive distribution

- Distribution via every suitable intermediary.

- Covers a wide range of the market.
- Preferred when high sales target/low margins.
- Convenience products.

Exclusive distribution

- Distributes products through a single intermediary in any given geographical region.

- Helps keep focus simple for a firm.
- Give an impression of exclusivity.
- Often done by luxury brands.

Selective distribution

- Distributes products through intermediaries chosen for some specific reason.

- Good when there is not a need to be on every market shelf.
- Also gives an impression of prestige.
- Allows to select based on service outputs.

Service outputs
- Bulk breaking: Allow customers to buy in required sizes and quantities.
- Spatial convenience: Reduces the transportation requirements between customer and seller.
- Product variety and assortment: Variety- breadth of classes of goods
o Depth- within the same category
- Waiting and delivery time: Reduces the time period between consumption, ordering and
receiving.
- Information provision: Facilitates education to customers about
o Product attributes
o Usage capabilities
o Pre-purchase services
o Post-purchase services
- Customer service: All the services that make it more easy and less difficult for customers.
Topic 9: Services and International Marketing
Services Marketing
Introduction
- The strong growth of the services sector over the
past few decades in many ways has been the result of
external macro-environmental forces.
o Economic changes
o Social changes
o Technological advances
- Services now account for the major share of total
economic activity in developed economies.
- The services sector provides the most jobs, by far, of
all sectors of the economies of developed countries.

Service dominant economies

- Service industries generate about 70% of the
national incomes of Australia and NZ.
- Private-sector organisations in Australia and
NZ are the primary providers of services
including retail, property and construction,
with the government sector being a major
provider in defence, health, education and
welfare.
- The most rapidly growing service industries
are communications, education and health.
- The finance, tourism and hospitality
industries can be quite volatile.

‘Service outputs’ and ‘service’

- Services are, distinguished from goods — services are not ‘things’; rather, they are deeds,
activities or performances.
- Service is the activity, deed or performance that delivers value.
- Service outputs involved in the distribution of a good.
- Marketers need to be concerned with offering a competitive range of services and ensuring
those services are delivered with the highest standards of customer service.
Service product classification

- Consumer services are those services purchased by individual consumers or households for
their own private consumption.
- Business-to-business services (or professional services) are those services purchased by
individuals and organisations for use in the production of other products or for use in their
daily business operations.

The services marketing mix

- The following characteristics formally distinguish services from goods.
o Intangibility
o Inseparability
o Heterogeneity
o Perishability.
- Each of these characteristics has important consequences for the development of the
marketing strategy for service products.

Unique characteristics of services

Intangibility

- The characteristic of services that most fundamentally distinguishes them from goods is their
intangibility.
- Because a pure service is an activity and not an object, it cannot be easily perceived by the
five physical senses.
- However, pure services are very rare. Most products contain elements of both goods and
services.

- Intangibility makes it more difficult to promote the features and benefits of service
attributes.
- 2 over-arching strategies to reduce uncertainty:
o Use tangible cues...
▪ Logos, uniforms, brands
▪ Servicescape/physical evidence.
 o Reduce the level of risk perceived by customers through such techniques as...
▪ service guarantees,
▪ testimonials
▪ positive word-of-mouth.

Inseparability

- For most services, it is impossible to separate the production of the service and the
consumption of the service.
- The inseparability of services presents a significant challenge in the marketing and delivery of
services.
- Buyers and sellers of services are frequently ‘co- producers’ of the service, it can be very
difficult to control quality and, hence, customer satisfaction.
- Service providers need to be concerned with both their technical skills and their customer
service delivery.
- Production and consumption occur together in time, or simultaneously.
- In this context, many ‘people processing’ services are delivered in real time.
- For most professional service providers, their services cannot be mass produced
- Limits to how many patients or clients can see.
- Need to provide appropriate hours of provision.

Heterogeneity

- The inevitable variations in the service provided give services the characteristic of
heterogeneity.
- For service marketers, the challenge is to provide a product with a reasonably consistent
level of quality that matches customers’ expectations.
- It is important to measure and manage service quality in order to ensure consistently high
performance.
- This should be a continuous process (e.g. ‘mystery shoppers’, customer service surveys,
online customer reviews and ‘benchmarking’).
- The key strategies for the marketer to address:
o To develop service delivery systems.
o Manage customer expectations.
o Invest heavily in staff training.
o Select customers carefully.

Perishability

- Perishability refers to the inability to store services for use at a later date — they are ‘time
bound’.
- The challenge that perishability presents to marketers is to balance supply and demand over
time in such a way as to maximise availability, demand and profitability.
- Key strategies to balance demand:
o Manage demand over time
o Stimulate demand
o Restrict demand
o Increase supply / capacity
Summary

- The intangibility, inseparability, heterogeneity and perishability of services create a range of

issues for marketers.
o Inability for customers to inspect and evaluate a product prior to consumption
o Inevitable variability in service quality
o Inability to store product.

Extended services marketing mix

- The unique characteristics of services suggest an additional range of variables to consider

(along with the 4 Ps) when formulating the marketing mix.
- These new variables have been conveniently labelled to make up the 7 Ps marketing
framework.
o People
o Process
o Physical evidence.

People

- The people involved in the extended services marketing mix are those coming into contact
with customers who can affect customers’ experiences and perceived value.
- The most influential and controllable factor in service delivery is the organisation’s staff.
- A key issue for the delivery of high standards of customer service is the concept of
‘empowerment’, which enables staff to respond to the particular needs of individual
customers

Process

- This refers to all of the systems and procedures used to create, communicate, deliver and
exchange a service offering.
- The key concern is that the process delivers the service in a way that at least matches the
customer’s expectations.
o Functional expectations
o Customer service expectations.
- It is generally advisable to be ‘efficient first and friendly second’. Service providers should
therefore rightly focus their attention primarily on the delivery of effective and efficient
service.

Physical evidence

- The intangibility of services makes it difficult for customers to evaluate the quality and
suitability of services.
- Customers look to tangible cues (logos, staff uniforms, architecture and décor) and other
physical evidence as a way of evaluating the service prior to purchase.
- The physical environment should be designed to shape customers’ experiences, expectations
and behaviour.
Services marketing challenges
- There are three key issues which make the marketing of intangible services more difficult to
manage than the marketing of tangible goods.
1. Achieving a sustainable differential advantage in marketing services
2. Managing profitable customer relationships
3. Delivering consistently high levels of customer service.

Managing differentiation

- Services do not usually enjoy the protection of legal patents or copyright and can be more
readily mimicked by competitors.
- For service organisations, the sources of sustainable differentiation are relatively few.
- Another potential source of differentiation is in distribution coverage or quality.

Developing profitable customer relationships

- For many service organisations, long-term survival depends upon the ability to create and
maintain profitable relationships with target customers or customer segments.
- The problems of high customer turnover, together with high average transaction volumes,
but low transaction values, mean that many customers may never be profitable.
- The challenge is to measure the profitability of individual customers and, particularly, to
develop close relationships with profitable customers.

Delivering consistent customer service quality

- The intangible nature of services makes it

difficult for customers to evaluate some of
the services they receive.
- Services can be evaluated in terms of the
following.
o Search qualities
o Experience qualities
o Credence qualities.
- In delivering high levels of customer
service, organisations need to consider four key issues.
1. Understand customers’ expectations
2. Establish service quality standards
3. Manage customers’ service expectations
4. Measure employee service performance.
International Marketing
Introduction
- International marketers need to understand the similarities and differences that exist in the
marketplaces and marketing environments in which they operate.
- International marketing has presented both huge opportunities and threats for
organisations.
- Even businesses that do not choose to actively participate in international marketing may
find themselves competing with businesses and products from overseas.

International marketing fundamentals

A global village?

- The global village/global citizen/global market concept is derived from the process of
globalisation.
- Globalisation is the process through which individuals, organisations and governments
become increasingly interconnected.
- This has consequences for national identity, national sovereignty, economic activities, laws
and culture.
- Almost every aspect of our lives is touched by globalisation.

Standardisation versus customisation

- A key decision faced by international marketers is whether to standardise or customise their

offerings.
o Standardisation refers to applying a uniform marketing mix across international
markets, with only minor modifications to meet local conditions.
o Customisation (adaptation) refers to carefully tailoring the marketing mix to the
specific characteristics and wants of each market.

Global trade

- An organisation contemplating moving into the international markets faces numerous

decisions and risks.
- The Australian Trade Commission (Austrade) is a government agency that provides advice,
marketing intelligence and support to organisations to help them reduce the cost, time and
risk involved in their international marketing efforts.
- The New Zealand Trade and Enterprise agency performs a similar role.
The international marketing environment
- A set of forces is at play — political, economic,
sociocultural, technological, environmental and
legal — in the international marketing
environment.
- Ideally, international marketers should
understand the international market in the
same ways they would understand their local
market.

Political forces

- Alliance and agreements: some alliances favour trade between countries, enhancing the
chances of success, while others can work against international marketing goals
- Country-specific political factors: marketers need to understand the political system of each
target country and understand its influence on business and commerce
Economic forces

- Global economy: the economic conditions within any specific country are likely to be
significantly influenced by the global economy
- Country-specific economic factors: the economic environment in a particular country will to
some degree determine the relative attractiveness of that country as a potential target
market

Sociocultural forces

- Sociocultural forces are among the most important factors at play in the international
marketing environment.
- They are often the forces that display the most subtlety and complexity.
- Each international market is likely to have sociocultural variations within it.

Example
International marketing fails
- ‘Finger-lickin good’ translated to ‘Eat your fingers off’ in China
- BMW mis-used UAE national anthem
- Dolce & Gabbana ‘rasict’ ads
BBC. (2019, January 2023). 'Racist' D&G ad: Chinese model says campaign almost ruined career.
BBC Word News Asia. https://www.bbc.com/news/world-asia-china-46968750
Technological forces

- Technology has become a great enabling force in international marketing over the past 20
years.
- Technology has created, revolutionised and destroyed entire industries (e.g. the introduction
of digital television has caused the demise of the video rental market).
- A great influence of technology in the sphere of international marketing is the infrastructure
available in different foreign markets.

Environmental forces

- The health and sustainability of human civilisation are dependent on the oceans, lands, and
flora and fauna.
 - International marketers need to understand the relationship between their commercial
activities and the environment.
- The Global Green Economy Index evaluates the efforts of countries to create environmentally
sustainable economies, focusing on efforts to invest in clean energy technology, sustainable
forms of tourism and improved domestic environmental quality.

Legal forces

- Marketing organisations must be aware of the laws in force in the markets in which they
operate to ensure their marketing mix complies with all legal requirements.
- Some countries restrict trade practices through laws and regulations. International marketers
need to be aware of trade barriers such as the following.
o Tariffs
o Quotas
o Embargoes.

Why and how organisations go international

- Internationalising can be a profitable way of expanding a business.
- Internationalisation can help businesses to become more efficient.
- Businesses that internationalise also increase their potential to gain new knowledge.
- Diversifying risks is a potential advantage of internationalising.
- Internationalisation activities can help the wider community by creating jobs and wealth for
all partners in the business activity.

Selecting overseas markets

- The ‘easiest’ (i.e. lowest risk)

international markets to enter are those
which share similar cultural and business
practices and a common language with
the domestic market, and that are
geographically close.
- Selecting an international market
involves a two-step approach.

Methods of market entry

- Choosing a market entry mode is a management function, but the marketer must
understand the implications of each mode of entry in order to devise the best marketing
plan.
- Different entry modes will require different structures. It is important that the company is
structured in a way that allows the business to be resourced and managed appropriately.
- The mode of international market entry depends on a wide array of environmental and
organisational factors.

Exporting

- Exporting is an approach to international marketing involving the sale of products into

foreign markets while remaining based in the home market.
 - Direct exporting is an approach to exporting in which the marketing organisation deals
directly with the international market.
- Indirect exporting allows marketing organisations to access the international market without
having to develop the expertise and contacts required to successfully place products into
what is often a relatively unfamiliar market.

Contractual arrangements

- Licensing: a business in a foreign country manufactures and sells the products of the home
country company (the licensor) and pays a commission on the sales it makes.
- Franchising: a business (the franchisee) pays the franchisor a fee in return for the right to
market the franchisor’s product.
- Contract manufacturing: a domestic business pays a foreign business to manufacture its
product and market it in that foreign country under the domestic company’s name.

Strategic alliances and joint ventures

- A business that does not wish to or cannot make a direct investment in a foreign market may
choose instead to form an international strategic alliance with a business based in that
country.
- In a joint venture arrangement, rather than form an alliance, the two businesses actually
form a new business together in the target market and forge a new identity for it, distinct
from the parent businesses

Direct investment

- Foreign direct investment involves outright ownership of a foreign operation.

- Direct ownership involves a long-term commitment, considerable investment and
acceptance of risk, and would usually only be pursued by an international marketer who was
highly confident of success.
- Most marketers would only consider direct ownership once they have experience and
success using the other approaches to international marketing

Born global

- A born global business is one that views the whole world as its market from day one.
- It will source materials from the most efficient country to source them, locate manufacturing
operations in the country that provides the optimum conditions, manage itself from
wherever it pleases and sell to anyone who wants its products anywhere in the world.
- This business model is not suitable to all industries or products. Most born global marketing
organisations are internet-based, e.g. eBay.

The international marketing mix

- The product mix needs to respond to customer preferences.
- Branding is also an important consideration.
- Pricing is one of the most complex issues facing international marketers. Not only must
pricing be sensitive to the local conditions in each market, but it must also reflect the costs
involved in the international marketing effort
- Language barriers, advertising regulations, differing media infrastructure and differences in
market maturity are factors that can require significant changes to promotional efforts in
different markets.
- International marketing introduces an enormous range of distribution (place) challenges (e.g.
the need to transport products over a much larger distance, exchange rate fluctuations, and
appropriate use of marketing intermediaries).
 Topic 10: Social and NFP Marketing
Introduction
- A marketing philosophy centres on making customers happy – and doing it better than
competitors can
- The importance of the marketing philosophy is increasingly being recognised by
governments across the globe
- Today, governments in developed nations such as Australia and New Zealand are faced with
many social problems, such as tobacco use and obesity
- Social marketing can help governments tackle these problems

Social Marketing
What is social marketing?
- A process that uses commercial marketing principals and techniques to influence target
audience behaviours that will benefit society, as well as the individual
- It seeks to integrate research, best practice, theory, audience and partnership insight to
inform the delivery of competition-sensitive and segmented social change programs that are
effective, efficient, equitable and sustainable

Scope of social marketing

- Social marketing is used by organisations such as:

o Government departments
o Universities
o Corporate organisations
o Non-profit organisations
o Marketing research firms
o Advertising agencies and consultants
Benchmark criteria for social marketing
- Alan Andreasen put forward six social marketing criteria, with the aim of distinguishing it
from other change disciplines (such as public health).
1. Behaviour change
2. Audience research
3. Segmentation
4. Exchange
5. Marketing mix
6. Competition

Behaviour change

- Behaviour change is considered the bottom line for social marketers

- In practice it is found that many social marketing practitioners and researchers often aim to
change attitudes, awareness and behavioural intentions rather than focusing on the actual
behaviour itself
- Evaluation is used by social marketer to identify activities that could increase the
effectiveness of the intervention

Audience research

- Audience research provides an opportunity for the social marketer to learn about the target
audience and to understand how to best design an intervention for that specific audience
- A qualitative approach could include focus groups, interviews and/or literature reviews
- Quantitative methods used for formative research may consist of surveys, observations
and/or analysis of previously collected data

Segmentation

- Segmentation can be based on one or more of demographic, psychographic, geographic,

behavioural and epidemiological factors
- Social marketers can choose different targeting strategies to reach the market

Exchange
 - Exchange has been debated widely by social marketing researchers, because it is not always
present in social marketing campaigns
- Exchange describes something that a person has to give up in order to get the proposed
benefit
- Exchange can be difficult to detect when analysing social marketing campaigns
- Understanding what the alternatives are to the desired behaviour can provide insight into
what would represent a valuable exchange to the target audience

Marketing mix

- Regardless of which marketing mix you choose, emerging evidence suggests that social
marketing will deliver greater behaviour change when more marketing mix elements are
applied
- Social marketing efforts should extend beyond communications, and a full marketing mix
should be directed at initiating new behaviour and encouraging repeat behaviours
- Product
o Product may take different forms in social marketing, namely tangible and intangible
- Place
o Place refers to where and when the target audience enter into an exchange
- Price
o Price is widely debated in social marketing, as the use of dollar pricing in social
marketing interventions is rare
o Some social marketers explain that price is viewed in terms of the cost or sacrifice
exchanged for the benefit (product)
o This mixes the concept of price with exchange, which is concerned with
understanding what a consumer has to give up in order to get something
- Promotion
o When planning integrated social marketing communications, social marketers need
to emphasise the mix.
o Tactics that are known to drive consumer behaviour (e.g. direct selling, price
discounts, loyalty schemes and sales promotions).
o Advertising and public relations activities should be used to remind the target
market of the social brand.
o Messages need to be relevant and connected with behaviour-inducing strategies.

Competition

- Recognising and addressing the competition of the behaviour targeted by an intervention

remains a key ingredient to success for social marketers.
- Social marketers have to understand what other behaviours are competing for the chosen
target audience’s time and attention in order to develop strategies that minimise the impact
of the competition

Three social marketing streams

- Promoting behaviour change in social marketing can be achieved through three main
streams:
1. Downstream
2. Midstream
3. Upstream
 - Each stream differs in the target audience and the way of measuring behaviour change
- Social marketing scholars suggest that action at all levels is needed in any comprehensive
approach to delivery

Downstream social marketing

- Downstream social marketing is focused on individual behaviour change and is the most
dominant stream in social marketing literature.
- The downstream concentrates on individuals seeking to change their own behaviour.
- The majority of downstream social marketing considers behaviour change as voluntary, and
seeks to provide offerings of greater value than continuation of the risky behaviour by the
individual being targeted

Midstream social marketing

- Midstream measures target behaviour change at the collective level

- Communities that social marketers might consider can include religious organisations,
families, friends and clubs
- Midstream social marketing may be considered preferable to downstream social marketing
because it has the potential to affect a larger number of people

Upstream social marketing

- There is increasing evidence to suggest that ‘changing contexts’ by influencing the

environments within which people act can change behaviour
- Upstream social marketing is concerned with influencing public policy, prioritisation and
budget allocation
- Target audiences of upstream social marketing may include ministers and their staff, judicial
organs, peak body representatives, lobbyists, and activists

What is (and is not) social marketing?

- Social marketing was initially proposed as a means to change ideas to benefit the society as a
whole. This is now referred to as integrated social marketing communication.
- Over time definitions of social marketing have shifted from emphasising the promotion of
ideas towards actual behaviour change.
- Social marketing efforts should be directed at initiating new behaviour and encouraging
repeat behaviours.
- What distinguishes social marketing from its parent discipline of commercial marketing is the
end goal.
o Commercial marketing is concerned with profit.
o Social marketing is concerned with changing or maintaining behaviours to achieve a
social good.
- Social marketers often have the job of persuading people to change to a less desired
behaviour (e.g. drink less alcohol, exercise more).

Not-for-profit Marketing
- Not-for-profit marketing refers to the marketing activities of organisations or individuals
intended to achieve objectives other than conventional business goals such as profits.
- Many NFP organisations practise marketing in the same way as commercial organisations
and so their methods, objectives and tools are similar.
- Many NFP organisations are competing for clients or members and do so by providing
desirable products and client satisfaction, while building long-term relationships
- While NFP organisations often enjoy strong community support, this support also brings with
it strong community expectations regarding what is considered appropriate for such NFP
- organisations.
- These expectations limit the range of marketing activities that the community will accept
(e.g. the use of aggressive telemarketing through commission-based fundraising
organisations)
 Topic 11: Digital Marketing and Marketing
Analytics
Digital marketing
Introduction
- Digital marketing is professional marketing practice applied to the digital space
- Virtually all businesses are online in some capacity
- It is important to remember that the availability of and nature of technology is quite
different around the world
- Any organisation wishing to participate in digital marketing must be aware of the relevant
legal and ethical issues

Digital Marketing
What is digital marketing

- All of the activities involved in planning and implementing marketing in the electronic
environment
- This includes the internet and web on computers, tablets and smartphones, and other
information and telecommunications technologies
- Digital marketing allows consumers to interact deeply with the marketing organisation
without the need for dealing with an actual person

Characteristics of digital marketing

Profiling

- Profiling refers to the process of getting to know about potential customers before they
make a purchase and to find out more about existing customers
- Marketing organisations can gather information about their customers in the digital
environment through the following methods:
o Requiring registration
o Use of cookies on websites
o Competitions

Interaction and community

- Other than an in-person interaction, digital marketing offers the most opportunity for
interaction between the marketer and the customer
- Interactivity can occur in many ways, including the following
o A virtual customer service officer
o A real customer service officer
o Email newsletters and RSS feeds
o Survey participation
o Online communities
Control

- Individuals exercise varying degrees of control over their interaction with marketing
- Push advertising: refers to advertising sent from the marketer to the customer
- Pull advertising: refers to advertising that the customer actively seeks out
- Control is the ability of the customer to determine how they interact with the marketing
message and to influence the presentation and content of the marketing message

Accessibility and comparability

- The web provides individuals with more ability than ever before to research products,
compare products and seek the opinions of others about products
- Their research is conducted outside the influence of a salesperson
- Customers are far more informed about products and competing products than ever before

Digitalisation

- The ability to deliver a product as information or to present information about a product

digitally
- Some products can be completely digitalised (e.g. music)
- While not all products can be completely digitalised, many retailers are finding that there
services can be (e.g. online shopping)

Digital marketing methods

Paid, owned and earned media
- Paid media: any digital advertising that a business pays for
- Owned media: any digital media channel owned by a business in which content is controlled
and governed by the organisation
- Earned media: content that is generated via people outside of the business

Brochure sites:

- Websites that are online advertisements for the organisation

- Usually present product and contact details in a highly visual and eye-catching way, but offer
little other functionality
- They are particularly useful for service businesses who seek to present a portfolio of work
that shows the customisation of their offering
- They often suit the limited budget of a small business, or one that offers a highly customised
service or bespoke products

Social media; viral marketing; portals

Social media:

- Social media describes the various websites using technologies and experiences that involves
online communities where members contribute to and build the community and content
- Spaces where users can substantially control their own online experience through
customisation and interactivity.
- These websites do not just allow users to retrieve information but encourage interactive
information sharing and user-generated content.
 - Social media forms part of the earned media strategy a marketer may engage for the
business

Viral marketing

- Viral marketing is the use of social networks to spread a marketing message via earned
media.
- Because viral marketing messages are spread by friends and colleagues, they have a much
greater chance of being considered than traditional advertising.
- Viral marketing online is very much controlled by the online community and some
businesses have paid a heavy price for trying to manipulate online word-of-mouth or use
social networking sites for commercial purposes

Portals

- A portal is a website that is designed to act as a gateway to other related sites.

- The popularity of the portal has declined as search engines have become more powerful and
as users have realised they can often better find content themselves.
- Portals are still widely used by government where the intention is to provide citizens with a
starting point from which to access all government services

Search engine optimisation; search engine marketing

Search engine optimisation

- Search engine optimisation (SEO) means tailoring certain features of a website to try to
achieve the best possible ranking in search results returned by a search engine.
- An enormous industry has developed around SEO and numerous businesses exist that
specialise in providing SEO services to other businesses.
- The effectiveness of SEO has also declined as users have become knowledgeable and cynical
about how businesses work to appear among the top hits on search engines

Search engine marketing

- Many search engines now seek paid advertising to place on search results pages.
- The advertisements that appear at the top of search results are known as sponsored links or
‘ads’.
- Sponsored links are appealing to businesses because they are only returned for searches that
are relevant to the advertised product, effectively ensuring the link is placed more
prominently than links that are returned purely due to SEO efforts

Email, SMS and MMS

- While spam is an unwelcome and illegal approach to marketing, legitimate email and SMS
marketing can be an effective way to build customer relationships.
- When a business makes a sale, a well-timed follow-up email can help reduce purchase
dissonance and can prompt a further purchase.
- The chances are that an SMS will be read (and perhaps responded to) within minutes of
receipt.
Apps; VR; e-commerce
Apps

- A phenomenon that has coincided with the increased availability, affordability and consumer
uptake of smartphones.
- The development of application software (or ‘apps’) to run on these mobile devices.
- Australian consumers are becoming increasingly mobile-active, with an estimated 17.9
million smartphone users in Australia and 15 million of us having access to a tablet device.
- Apps (e.g. Ticketmaster) have the capability to:
o find events you like
o access setlists for shows you have attended
o turn on auto-location to find nearby events
o access your account and see past or upcoming orders
o integrate with social media
o access artist and venue info

VR – the new technological frontier for marketers

- When Facebook launched the virtual reality system Oculus Rift, it was difficult to predict the
roll-on effect, but the business community knew this was something that needed to be taken
seriously.
- Virtual reality (VR) is not new; it has been experimented with since the 50s and 60s.
- VR has now expanded into retailing

E-commerce

- When the marketing exchange occurs via the internet, mobile phone or other
telecommunications technology, it is known as e-commerce.
- E-commerce is particularly attractive to small, niche businesses.
- The web enables them to reach consumers across the globe, potentially making viable a
business that would not be able to generate adequate turnover just through local customers

Ethical and legal issues

- Digital marketing raises many ethical and legal issues that need particular attention because
of the:
o pervasive nature of modern information technologies
o personalised nature of digital marketing
o international nature of modern information technologies
o failure of laws and international agreements to keep pace with technological change
and the innovative use of new technologies.

Privacy

- One of the main focuses of digital marketing is to gather information about customers and
potential customers to use in formulating marketing strategy.
- Virtually everything an individual does in the online world leaves a digital footprint.
- For many people, collection of the information itself is not a problem (although privacy
advocates oppose it). What most people are concerned with is how the information is used.
- There are few laws or rules aimed directly at regulating privacy protection online
Misleading or deceptive conduct

- Companies must be honest and truthful in all their business dealings and, if they are not,
they are liable to be punished by the law.
- Unfortunately the internet is used by some people to fraudulently obtain money from
others.
- Online fraud has grown to be a multi-million dollar global industry.

Spam

- The most prevalent type of spam is advertising-related email (36%). The second most
common is adult-related in subject (31.7%). The third most common is unwanted emails
related to financial matters (26.5%).
- In Australia, the relevant legislation is the Spam Act 2003. In New Zealand, it is the
Unsolicited Electronic Messages Act 2007.

Evaluating digital marketing effectiveness

- Practitioners actively engaged in digital
marketing know that it is notoriously
difficult to measure the effectiveness of
digital marketing campaigns.
- Online advertising is one area that offers
further potential for marketers to assess
effectiveness.
- Deciding on a particular metric that
quantifies an aspect of marketing
performance can be invaluable
information for the online marketer to
know how successful a marketing activity
is
Marketing analytics
Introduction
- The use of large amounts of data, sometimes referred to as ‘big data’, is part of a data-driven
approach to marketing.
- Data analytics is the art and science of turning large quantities of data into meaningful and
commercially valuable information.
- Data analytics combines databases, machine learning and statistics, and applies this to
practical problems

The significance and importance of data

- Rather than a lack of data, marketers now have almost too much data.
- If the data is structured, it means it is stored in a relational format in tables (such as
Microsoft Excel) that are composed of rows and columns.
- Unstructured data is not organised in any manner. It is usually textual data such as tweets,
blogs or product reviews, but can also be unorganised numeric data
- The proper use of information from big data is what creates value for a company.
- As the amount of data available becomes very large, it becomes important to look at ‘useful
data’ rather than just ‘big data’.
- Gartner first reported the use of three V’s for describing big data: volume, velocity and
variety.
- Some industry analysts have expanded the definition of big data and included four more:
validity, veracity, value and visualisation.

Understanding and obtaining data

- For data analytics to be effective, an organisation must know the context in which the data
was gathered and entered into the database and make sure the data measured what it was
supposed to measure.
- If data can’t reliably be made anonymous, customers will be less likely to provide it.
- To help make sense of the data, marketers must often use a specialised analyst called a data
scientist
- If the data is in an internal management information system (MIS), the IT department can
help the marketing team obtain the data using structured query language (SQL).
- SQL can be used to clean up errors in the data.
- Another benefit of SQL is that the data is kept in a remote location.

Sources of data

- Databases
o The information stored in databases can be organised using a database management
system (DBMS).
- Internet of Things
o A term used to describe a system of electronic devices that are connected to a
network, such as the internet.
 - Scanner data
o Scanner data, also known as scanner panel data, is detailed data on sales of
consumer goods.
- • Web data
o • There are a few ways to get data from the web.
▪ ‘Scrape’ the data from the website
▪ Use web-based application programming interfaces (APIs)
▪ Extract data from PDFs that are posted online.
- Mobile data
o There are projected to be more than 4.78 billion smart phone users in the world in
2020, and their phones all have tracking and search history information on them.
- Social media data
o Social media groups can be thought of as online focus groups, and can be very
informative even though they are secondary data.
- Survey data
o Historically, marketing analysts obtained data by surveying people from their target
markets and analysing that data.
o A drawback to online surveys is that the company’s marketing analyst is unable to
know if the respondents are responding truthfully

Data issues

- Spurious correlation
o A big problem in analytics is the presence of spurious correlation, which is where
variables that have nothing to do with each other appear to be related
- Data leakage
o Data leakage occurs when data from the model is shared with data that was not
used in the modelling processes – test data
- Noisy data and data preparation
o Although data is now cheap and abundant, it is also very ‘noisy’ or ‘dirty’, which
means it can contain all sorts of issues such as extreme values, missing data,
incorrectly measured data, corrupted data, and so on.
o Another issue is the absence of data, known as missing data.
- Computing resources
o There are two issues related to computing resources. One is having the physical
hardware capacity to store and distribute the data. The other resource bottleneck is
having the software to analyse the data
- Analysis resources
o Marketing data scientists use commercial software packages such as SAS, Minitab,
Tableau, SPSS, Matlab and Stata
- Storage resources
o To help reduce the burden and cost of storing terabytes of data, in general we should
be focused on keeping current customer data.
o A way to get around the issue of data storage is using cloud computing.
o What data format is used in analytics depends on the size and type of data

Data governance

- The high volume of data available means many organisations now regard it as a monetised
asset/commodity.
 - Others argue that since data can be cleaned and aggregated to fit a purpose, it is not a true
raw commodity.
- Large companies often now have a chief data officer (CDO) who is in charge of data
governance and security.

Data-driven marketing
- A data-driven organisation is one that rests on a base of well-governed data.
- Companies now need to be aware of and using data analytics to drive decision making.
- In today’s environment, where there are few remaining areas of differentiation in marketing
capabilities, you need to have the ‘right’ people who are trained in using statistical software
as well as understanding business processes and how the data was obtained

Data and analytics

- Data are facts about or details of objects that can be compiled into information.
- Analytics is the process of organising data into meaningful information.
- The benefits of analytics comes from not only using the right analytics, but also using the
right data to generate insights
- To truly be effective in using data, an organisation must integrate the data from multiple silos
and departments

Data-driven decision making

- Data-driven marketing refers to the marketing insights and decisions that arise from the
analysis of data about or from consumers.
- One of the easiest ways to become a data-driven organisation is to provide dashboards for
the organisation so that employees at all levels can see and use data to help them in their
jobs
- The key to insightful data and analytics is transforming the data into meaningful objects for
the business
- Data-driven marketing approaches to analytics must use the SMART principle, just as in any
other marketing campaign
- One of the more important issues in marketing is determining which marketing channel is
the most important for driving sales.
- This is known as attribution modelling, which seeks to find out which touchpoint is most
instrumental in a customer’s purchase decision
- There are many different types of marketing that are data driven.
o Customer relationship management (CRM)
o Dashboards
o Customer lifetime value
o Social media listening

Customer relationship management (CRM)

- A form of technology that companies use to manage and analyse customer interactions and
data throughout a customer’s life cycle
- The goal of a CRM is to improve business relationships with customers, assist in customer
retention and drive sales growth
 - By using CRM, we can keep customers engaged with our product, and if done properly, we
can have them become an extension of the internal sales team

Dashboards

- A dashboard is a data visualisation tool that displays the current status of metrics and key
performance indicators (KPIs) for an enterprise
- Dashboards consolidate and arrange numbers, metrics and sometimes performance
scorecards on a single screen. They provide aggregated data to users who do not need to see
individual-level data
- Companies such as Salesforce offer dashboard products that are used for customer contact
and CRM

Customer lifetime value (CLV)

- Customer lifetime value (CVL) assesses a customer’s value over their lifetime as a customer
- Using data collected from customers over time, we can see how much a customer has
purchased and how often
- If a customer has high lifetime value, it may be worth marketing to them
- Part of using a customer’s lifetime value is forecasting future sales

Social listening

- Social listening is the process of judging how a brand or organisation is being talked about on
various social media platforms
- Since reviews and social media comments about a company or its product are valuable data,
marketing analysts can better tailor a good or service based on the voice of the customer

Data-driven results

- A data-driven result is the empowerment that comes with transformative knowledge of

customer, guest, product, patient or fan information, as well as ongoing access to relevant,
real-time data in an easy to understand format
- This enables businesses to make educated, actionable and profitable decisions
- The proper use of data analytics for marketing decisions can require an organisation to
change the way they have been operating, which can be difficult and time consuming

Data analytics in marketing

- Marketing analytics is the practice of measuring, managing and analysing marketing

performance.
- Descriptive analytics is the simplest type, and is typically used to explain what has happened.
- Predictive analytics forecasts what might happen in the future.
- Analytics can be used for customer insight, segmentation and targeting, as well as
automating menial tasks

Methods of data analytics in marketing

Marketing analytics

- In order for marketing analytics to be successful, there must be a business case as well as
appropriate data and an ability to deploy an analytics situation.
 - Predictive modelling, k-means clustering, association rules and visual data analytics are
examples of different types of analyses that might be used depending on the specific
business case
- A popular method for implementing an analytics project within an organisation is still the
cross-industry process for data mining (CRISP-DM) methodology.
- Due to the large volumes of data available to analysts, one of the main focus of marketing
analytics is data reduction

Artificial intelligence and machine learning

- Machine learning
o Machine learning involves the study of algorithms that can extract information
automatically.
o For marketing, machine learning is mostly used to make predictions and understand
the market.
o There are three major types of machine learning.
1. Supervised
2. Unsupervised
3. Reinforcement
- Many industries that have been using business intelligence (BI) are now shifting to artificial
intelligence (AI).
- Machine learning is a type of AI (the converse of this is not true though).
- AI uses customer data to anticipate a customer’s next move such as digging into a customer’s
online information to customise a product offering for them.
- Another use of AI in marketing is the deployment of chatbots

Data ethics and the future of marketing

- Being relatively new, there are still some issues related to the field of analytics.
- However, as organisations become obsessed with data and the potential cost savings, there
may be too much overreliance on data.
- Many customers fear that their personal data is being misused by companies.
- Organisations must realise that in marketing analytics, there are opportunity costs

Legal and ethical issues in data analytics

- An issue with big data is that sometimes there is too much data to go through and analyse,
but sometimes it is not ethical to analyse data.
- Data snooping is a serious issue in analytics. This is when an analyst picks a model to confirm
what they want to prove. The ethical issue related to data snooping is that of confirmation
bias.
- A data breach is when information is intentionally or unintentionally released from a secure
location in a company

Analytics skills for data analytics

- To be prepared for a data centric world, even non-quantitative marketers need to have basic
numeracy and data literacy skills.
- Lack of knowledge of statistics can lead to serious errors in analytics interpretation.
- Marketers that use a combination of human intuition, data and analytics to inform marketing
strategies are better positioned for the future job market
Future of data analytics in marketing

- It is important that analytics is valued at all levels of an organisation.

- A ‘real time’ business is about being able to make a decision at the ‘real time’ it matters.
- To do this effectively, companies need to integrate data with their business processes.
- It is important to ensure there is a balance between real-time data and having enough data
to be statistically valid