Summary Notes For Marketing And Customer Value Exam (UTS)

lOMoARcPSD|42774609 Summary notes for exam Marketing and Customer Value (University of Technology Sydney) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Richard Schmi...

lOMoARcPSD|42774609 Summary notes for exam Marketing and Customer Value (University of Technology Sydney) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 24109: Marketing and Customer Value Exam structure  A higher percentage (60%) coming from material covered in the last 5 lectures.  No MCQ in the final exam  5 definitions in action questions e.g. “How does [marketing term] improve performance of company?”  4 marketing concept questions e.g. “In class we learned about [marketing term / case study / example]. First, explain what [marketing term / case study / example] is and then, second, discuss advantages and disadvantages”  2 short essay questions e.g. “What is [marketing term / case study / example]? Explain in detail”  2 case study questions relating to material covered in lectures, tutorials and the textbook for the entire subject Lecture 1: Introduction to Marketing, Marketing Environment and Market Analysis 1.1 Provide an overview of marketing and the marketing process  Marketing = the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.” (American Marketing Association)  The market = a group of customers with heterogeneous (different) needs and wants. o Geographic markets e.g. Australian vs. American market o Product markets e.g. Smartphone vs. tablet market o Demographic markets e.g. University students vs. Highschool students  Customers purchase goods and services for their own or other people’s use  Consumers use the good or service.  Clients are ‘customers’ of the products of not-for profit organisations  Partners are all organisations or individuals who are involved in the activities of the exchange process.  Society is a body of individuals living as members of a Community 1.2 Recognise that marketing involves a mutually beneficial exchange of value  Marketing 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 exchange must meet both parties’ expectations (e.g. quality, price)  Value = Quality / Price. A customer’s assessment of the utility of an offering based on perceptions of what is received and what is given  Value refers to the ‘total offering’ and includes reputation of organization, features of products, associated ideals  Value evolves continually and is unique for each individual. 1.3 Discuss the importance of ethics and corporate social responsibility in marketing. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609  A key issue faced by any manager in the 21st century is the potential for corporate greed, where companies needs to operate in a transparent way to avoided furthering any socio-economic divides  Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs  businesses have an obligation to act in the interests of the societies that sustain them through delivering an overall positive impact (including all of its stakeholders such as owners, employees, customers, partners, society etc.)  Many businesses place a great deal of importance on being (and being seen as) a good corporate citizen and are increasingly devoting resources to ensure their operations act in the interests of all stakeholders  E.g. McDonalds Rainforest Alliance commercial with their coffee beans 1.4 Discuss how marketing improves business performance, benefits society and contributes to quality of life.  Marketing can improve business performance: as it leads to better profits, sales volumes, market share and return on investment when compared to competitors who don’t have a marketing strategy  lead to a higher quality of life: as marketing drives economics growth, creating employment and wealth for the benefit of individuals and society as a whole and also by providing better and safer products 2.1 Describe the marketing environment and the purpose of environmental analysis  Marketing environment = all of the internal and external forces that affect a marketer’s ability to create, communicate, deliver and exchange offerings of value  Environmental analysis = a process that involves breaking the marketing environment into smaller parts in order to gain a better understanding of it.  Environmental (SWOT) analysis is important as it o Helps marketers develop a strategy and direction o From factors under marketer’s control and can identify strengths and weaknesses Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o From factors not under control and can identify opportunities and threats 2.2 Explain the factors at work in the organisation’s internal environment  The internal environment: o The parts of the organisation, the people and the processes used to create, communicate, deliver and exchange offerings that have value. o The organisation can directly control its internal environment. o Strengths and weaknesses are internal factors that positively and negatively affect the organisation’s ability to compete in the marketplace.  The external environment o The people and processes that are outside the organisation and cannot be directly controlled. Marketers seek to influence external environment. o Opportunities and threats: External factors that positively and negatively affect the organisation’s ability to serve the market. o Can be divided into micro-environment and macro-environment 2.3 Understand the importance of the different micro-environmental factors  Microenvironment = the forces within an organisation’s industry that affect its ability to serve its customers and clients, target markets, partners and competitors. o Customers and clients = marketers must understand the current and future needs and wants of their target market, understand what their customers value, anticipate how needs and wants might change, identify changes in customer preferences and be willing and able to respond to changes o Partners = include logistics firms - storage and transport, financiers - banking, loans, insurance, and electronic payment infrastructure, retailers, wholesalers, suppliers o Competitors = 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 2.4 Outline the different types of macro-environmental forces  Political forces = the influence of politics on marketing decisions.  Economic forces =income, prices, the level of savings, the level of debt and the availability of credit.  Sociocultural forces = affect people’s attitudes, beliefs, behaviours, preferences, customs and lifestyles. Includes demographics which refers to statistics about a population: age, gender, race, ethnicity, educational attainment, marital status, parental status and so on.  Technological forces = provides better way of doing things, 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 + regulations = govern what marketing organisations can and cannot legally do including in relation to privacy, fair trading, consumer safety, prices, contract terms and intellectual property Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 2.5 Conduct a preliminary situation analysis. Lecture 2: Market Research 3.1 Discuss the importance of market research as a basis for marketing decision making  Market research = the collection of data to help better understand the market to resolve a research problem and achieve the goals of the marketing plan. It informs market segmentation, sales performance, product, price, promotion and place 1 Defining the research problem 2 Designing the research methodology: planning how you will conduct the data o Exploratory research = gathers more information about a loosely defined problem o Descriptive research = solves a particular and well-defined problem by clarifying the characteristics of certain phenomena o Causal research = assumes that a particular variable causes a specific outcome and then, by holding everything else constant, tests whether the variable does indeed effect that outcome o Hypothesis = a tentative explanation that can be tested 3 Collecting data 4 Analysing data and drawing conclusions 5 Presenting the results and making recommendations  Marketing Information System (MIS) = the system that manages information gathered during operations of the organisation e.g. sales, purchases, promotions, costs, accounting etc. 3.2 Clearly define a research problem to guide a market research project, and prepare a research brief Research problem = the question that the market research project is intended to answer. Needs to be clearly specified. As the research proceeds the original questions asked may be redefined. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Market research brief = A set of instructions that states the research problem, the information required, and specifies the timeframe, budget and other conditions of the project. It will not necessarily propose a methodology or approach for research. 3.3 Distinguish between key data sources and understand different 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  Data mining = processing large data sets to identify patterns and trends not obvious or even discernible by observation.  Quantitative research = research that collects information that can be represented numerically.  Qualitative research = research intended to obtain rich, deep and detailed information about the attitudes and emotions underlying a consumer’s behaviour e.g. interviews and focus groups  Sampling = is the process of choosing members of the total population.  Probability sampling = every member of the population has a known chance of being selected in the sample that will be studied.  Non-probability sampling = a sampling approach that provides no way of knowing the chance of a particular member of the population being chosen.  Sampling error = a measure of the extent to which the results from the sample differ from the results that would be obtained from the entire population 3.4 Understand the research project management process. Understand the importance of effective marketing planning in achieving organisational and marketing objectives. Describe how to manage the implementation of a marketing strategy  Marketing management = the task of understanding the market, and planning, implementing and evaluating market activities.  Marketing plan = communicates how the team plans to get to where it needs/wants to be. It details how to create value, communicate the offering and deliver the offering to the market.  Marketing objectives = most for-profit marketing organisations share the goals of profit (generate wealth for owners), market share growth (long term view to sustainable operation) and customer retention (retain loyalty of existing customers and win new customers). Many organisations also have societal objectives. Objectives need to be SMART (Specific, Measurable, Actionable, Reasonable, Timetabled) Lecture 3: Consumer and buyer behaviour 4.1 Explain why marketers require a thorough understanding of consumer behaviour and its major influences Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609  Consumer behaviour = the analysis of the behaviour of individuals and households who buy goods and services for personal consumption. Involves the what, why, how, when, and where of behaviour  Cognitive dissonance = Occurs when a purchaser has second thoughts or doubts about the wisdom of a purchase they have made. (vs cognitive consistency = the purchase aligns to satisfaction and expectations)  Habitual decision making = Low-engagement purchasing decisions, involving small, routine, low-risk products e.g. you buy a $1 snickers bar and don’t like it  Limited decision making = Limited-engagement purchasing decisions, involving infrequently bought, but familiar, products e.g. some clothing items (may go to a couple of stores first)  Extended decision making = High-engagement purchasing decisions involving high- price, high-risk and/or infrequent, unfamiliar products e.g. you spent weeks researching a new laptop and after a few months it stops working  Impulse buying = low involvement or planning 4.2 Understand the major factors that influence consumer behaviour Situational Group Individual Cultural Social Personal Psychological The  Cultural  Reference  Demographic  Beliefs: descriptive circumstances factors: group: Any factors: the or evaluative consumers system of group to which vital and thoughts that an find knowledge, an individual social individual holds themselves in beliefs, looks for characteristics regarding their when making values, guidance e.g. of knowledge of a purchasing rituals by membership populations, person, idea, or decisions which a reference, such as age, product. Beliefs may  Physical society or aspirational education be based on location other large reference and income. objective  Social group groups,  Lifestyle: how knowledge, opinions interaction defines dissociative an individual or faith.  Time itself. reference spends their  Attitudes: An available  Subculture groups, opinion time and individual’s  Purchase : a group of leader interacts with relatively stable and motivation individuals (influencer) others. consistent thoughts,  Consumer sharing  Family: family  Personality: feelings and mood common life cycle i.e. the set of behaviours towards attitudes, young singles, unique an object or idea. values and young marrieds, psychological  Behavioural behaviours parenthood, characteristics learning theory: that postparenthood, and stresses the role of distinguish non-traditional behavioural experience and them from families, family tendencies repetition of the decision-making that behaviour, most broader roles (who has characterise relevant in low culture. responsibility for an individual, involvement Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 making specific formed purchases e.g. types of through a coffee decisions within complex  Cognitive learning the family) combination theory: learning of genetics takes place through and rational problem experiences. solving, emphasising acquisition and processing of new information, relevant in high involvement purchasing decisions e.g. house  Perception: the psychological process that filters, organises and attributes meaning to external stimuli. Consumer biases such as adding a healthy element to an unhealthy meal will make people perceive the meal as less calories (e.g. McDonalds adding the carrot to the BigMac meal) Maslow’s needs 4.3 Explain the general steps in the consumer decision-making process. 1 Need/want recognition = when a buyer becomes aware of a discrepancy between a desired state and the actual state. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 2 Information search = when buyer searches for information about how to solve the problem. 3 Evaluation of options = a successful information search will usually yield a range of alternative solutions for consideration. 4 Purchase = the brand and product are chosen. 5 Post-purchase evaluation = the buyer continues to evaluate their purchase decision. 5.1 Explain the characteristics of different types of business markets  Business market = individuals or organisations that purchase products for resale, use in the production of other products, or for use in their daily business operations. 1. Reseller markets = retailers (sell to consumers), wholesalers (sell to other intermediaries), industrial distributors (sell to organisational buyer) in order to sell or lease them to another party for profit. 2. Producer markets = purchase products for use in the production of other products or in their daily business operations e.g. buying raw materials or component parts or buying office supplies 3. Government markets = selling products to national (Commonwealth), state (provincial) and local (municipal) governments for use in providing services for citizens. 4. Institutional markets = where non-public, not-for-profit organisations buy and sell products. 5.2 Understand the major issues involved in marketing to business customers  High-value purchases = business purchasing decisions frequently involve very large sums of money (potentially billions of dollars) for high-value products or high-volume purchases.  High-volume purchases = common in the reseller market. Because of the total value of their purchases, resellers can negotiate significant volume discounts on prices. High-volume purchases are also relatively common in the producer market  Price competition and negotiation = in the business market, price competition is intense, as price is open to negotiation based on purchase volumes. Pricing is more complex in business markets  Number of buyers and sellers = there are far fewer buyers and sellers in the business market than in the consumer market. This makes business-to-business marketing relationships between suppliers and organisational buyers tend to be close, long- term and formal in nature. 5.3 Discuss the characteristics of demand in business markets  Derived demand = demand in business markets that is due to demand in consumer markets. Derived demand has a ‘knock on’ (or even ‘snowball’) effect at all levels of the value chain.  Demand fluctuations = business customers make purchase decisions infrequently and based on expectations of long-run demand, resulting in demand that fluctuates more so than in consumer markets.  Joint demand = interdependent demand for products that are used together in the production of another product. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609  Pricing and demand = inelastic demand is relatively independent of price, a common characteristic of demand within industries in the business market. 5.4 Analyse business buyer behaviour and decision making.  Straight rebuy = the low engagement purchase of the same products as previously purchased from established vendors under established terms. Straight rebuys are efficient and convenient for buyers, and offer a reliable source of income for suppliers.  Modified rebuy = the purchase of a product that is similar, but not identical, to one previously purchased, after evaluating a small range of alternatives.  New task purchase = a first purchase in a product category in response to a new problem, process or product. The business will need to engage in an extended information search to develop an understanding of technical alternatives, product specifications, possible vendors and likely price, including consumables and servicing arrangements.  Business buying decision-making process = is the exact same as business to consumer it just exists in a different context  Business purchasing decisions usually involve negotiation, description, inspection and sampling Lecture 4 6.1 Explain the broad concept of a ‘market’  Market = a group of customers with heterogeneous needs and want  It is virtually impossible for an organisation to successfully appeal to every consumer or business (mass marketing – undifferentiated approach)  To overcome this problem, the marketer seeks to identify and understand those parts of the total market to which it can offer the most value. 6.2 Understand the target marketing concept  Target market/market segmentation = subgroups within the total market that are relatively similar in regard to certain characteristics  It is a differentiated targeting strategy, where an organisation identifies a range of target market segments, covering the majority of the total market, and for each market segment develops a tailored marketing mix. The target marketing process involves three main stages, with each requiring detailed analysis and decision making. 1. Segmentation 2. Targeting 3. Positioning. 6.3 Identify market segmentation variables for consumer and business markets, and develop market segment profiles (step 1: segmentation)  Involves firstly identifying variables that can be used to define meaningful market segments: o Geographic: climate, local population density, region, topography, urban, suburban and rural location. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o Demographic = quantifiable social characteristics of populations, such as age, ethnicity, household composition, income, gender. o Psychographic = psychological traits (personality attributes and motives), geo- demographics and lifestyles (the expression of the two former categories). o Behavioural = benefit expectations, brand loyalty, occasion, price sensitivity and volume of usage.  The next stage of segmentation is profiling the market segments so they can be assessed in the second stage of the target marketing process. 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. 6.4 Select specific target markets based on evaluation of potential market segments (step 2: targeting) Market targeting = involves a systematic examination of the range of possible market segments, their potential sales volume and revenues, and the relative ability of the organisation to satisfy the expectations of members of these market segments. It requires a close understanding of competitors, and how their offerings are seen by potential target market segments. 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, which includes measurability, accessibility, substantiality, practicability and stability – segment stays stable long enough for marketing strategy to produce results 6.5 Understand how to effectively position an offering to a target market in relation to competitors and develop an appropriate marketing mix. (step 3: positioning) Positioning = 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 when they are selecting from among the available alternatives. Positioning is based on customer perceptions which may or may not closely correspond with the product’s objective characteristics. Market positioning = The way in which target segments perceive an organisation’s offering in relation to competing offerings. Company positioning = A positioning strategy designed to create a single market perception of the organisation in relation to competitors. Apple vs. Microsoft Brand positioning = A positioning strategy designed to create a market perception of a particular brand, usually based on product attributes. Lexus vs. Toyota A common technique for determining positioning is called perceptual mapping, which typically produces two-dimensional maps showing how each of the competing brands relate to each other in terms of a range of product attributes. The final step in the target marketing process is to determine an appropriate marketing mix for each target market segment. Lecture 5: Product Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 7.1 Define ‘product’ and understand different ways to view and analyse products and product attributes Product = A good, service or idea offered to the market for exchange (think of it like there is a solution to a problem you have) Good = a physical (tangible) offering capable of being delivered to a customer. Service = Intangible offering that does not involve ownership. Idea = Concept, issue or philosophy offered to the market. Product attributes = characteristics that provide the consumer with a benefit of better service Total product concept: o Core product = the fundamental benefits of product e.g. vehicular transportation mode o Expected product = attributes that actually deliver benefits e.g. brand, style, driving experience, safety o Augmented product = benefits buyer may not require as part of basic fulfilment of needs (things that may differentiate from competitor, things you didn’t expect to be included but are happy you have them) e.g. extensive warranty, customer assistance telephone service o Potential product = All possibilities that could become part of the expected or augmented product e.g. self-driving capabilities  Product types: o Shopping products = moderate to high engagement decision making, with the purchase decision based on features, quality and price. o Convenience products (fast-moving consumer goods) = inexpensive, frequently purchased, products bought with low engagement decision- making. o Specialty products = highly desired products with unique characteristics that consumers will make considerable effort to obtain. o Unsought products = purchased to meet a sudden, unexpected need e.g. buying a coffin 7.2 Describe the product life cycle, new product development and the product adoption process  Product life cycle: Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o New product development = where organisation develops idea, undertakes research, prepares prototypes, pre-tests products, and makes modifications before launch. Involves substantial costs and risks for a business o Introduction = where product makes first appearance in the market. The goal is to create consumer awareness, there is little competition and the sales grow slowly and there is usually minimal (mostly negative) profit o Growth = where product experiences increased popularity. The goal is to increase sales while stressing differentiation, there is increased competition and a rapid increase in sales, profit usually peaks, result of new customers and repeat purchasers o Maturity = where total market potential is reached. The goal it to maintain brand loyalty and/or cut costs, maintain current buyers and find new buyers and improve marketing/distribution efficiency to cut costs. There is lots of competition, where the sales/profit rate declines due to fierce competition o Decline = decreased interest in product. The goal is to control sales while devising exit strategy. The competition is reduced and overall sales and profit rate declines rapidly. All products will eventually move into this phase  Product adoption process: 1. Awareness = consumer becomes aware of the new product through promotional activities, word of mouth, incidental. Exposure to the product etc. but still knows little about the product and how it can benefit them 2. Interest = the consumer experiences interest in the product and seeks information to learn more about the product 3. Evaluation = the consumer evaluates the information and decides whether or not they should try the product 4. Trial = the consumer examines and tries out the product and decides whether the new product can satisfy their need or want 5. Adoption = the consumer decides to purchase the product and evaluates it to determine if they will re=purchase in the future  Adoption of innovations o The speed and pattern of market penetration for a new product innovation usually differ substantially between markets i.e. business to business tends to adopt sooner than the business to consumer market (to try and get ahead of others in the market) 7.3 Outline how an organisation can differentiate its products to obtain a competitive advantage Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Product differentiation = the creation of products and product attributes that distinguish one product from another (usually happens in the augmented product) Characteristics that customers may perceive to be differentiators include design, brand, image, style, quality, features and price. Product line extensions = new products that are closely related to existing products in a product line. Often happens during growth & maturity stage e.g. Tim Tams adding new flavours 7.4 Explain the value of branding and the major issues involved in brand management Brand = a collection of symbols (e.g. name, logo, slogan) intended to create an image in the customer’s mind that differentiates a product from competitors’ products. Brand image = the set of beliefs that a consumer has regarding a particular brand. Brand equity = added value that a brand gives a product (recognisable name compared to generic equivalent) i.e. brand recognition Brand loyalty = customer’s highly favourable attitude and purchasing behaviour towards a brand. Brand metrics = value of brand in terms of brand assets, stock price analysis, replacement cost, brand attributes, and brand loyalty. 7.5 Describe the functional and marketing roles of packaging Primary package = holds the actual product Secondary package = the material used to hold or protect the product, it can be removed and discarded after purchase Shipping package = used to carry the product out of the factory, through the distribution channel to the retailer. Labelling = part of the package and provides identifying, promotional, legal and other information. Compulsory label information can include brand name and logo, product name, ingredients list, use-by-date or date of packaging and bar code 7.6 Explain key aspects of product management and positioning through the product life cycle. Igor Ansoff’s Product-market growth strategy: o Market Penetration = selling more of existing products to existing or new customers. Lowest risk o Product Development = new products for current markets emphasising innovation. Risky o Market Development = new markets for existing products. Riskier o Diversification = new products in new markets. Riskiest Lecture 6: Price Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 8.1 Understand the objectives that guide pricing strategies  Price = a measure of value for buyers and sellers  Pricing decisions should reflect the value of the product to the customer.  Pricing decisions need to consider internal organisational factors and external environmental factors.  Prices generally need to yield acceptable profit margins and provide a competitive market offer.  Customers interpret price differently. Some believe that high price reflects higher quality of product (price seeking). Others seek lower prices for greater value (price aversion)  Pricing objectives: o Profits = generated when total revenues exceed total costs. Prices must exceed costs. Profit equals to (price x sales volumes) – total costs o Return on investment (ROI) = the profit required to justify investment in a particular product or project. o Long-term prosperity = pricing based on what is happening in the economy i.e. is there inflation, recession etc. and if so you would want to price a luxury Hawaiian holiday lower o Market Share = low price initially then put price up later o Positioning = Apple is perceived as more prestigious brand and they charge more compared to other companies such as windows o Can also be based on demand, cost, competition  Not-for-profit pricing objectives: o Generating enough funds to sustain activities o Making products/activities appealing to a target market o Encouraging a change in attitude or behaviour among a target market 8.2 Analyse demand to inform the development of an appropriate pricing strategy  Demand = the relationship between the price of a particular product and the quantity of the product that consumers are willing to buy.  Demand curve o A plot of how much people will buy things based on a product’s price (i.e. as the price goes up, the demand decreases and as the price goes down the demand decreases) o Useful for forecasting how pricing will influence sales o Usually has negative slope (right-downward facing) except for prestige products o For prestige products e.g. Lamborghini, the curve bends back because if it gets reduced to too low of a cost then the demand goes down as not as many people want it because it isn’t considered to be as ‘exclusive’ anymore o A shift in line itself, rather than moving along the line may be due to increases in population, overall income increase, lowered taxes, new competitor product, etc. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609  Elastic Demand = the % change in quantity greater than the % change in price (ed >1) Example: Luxury goods, when people respond strongly to the price change and just swap to another brand i.e., there is a noticeable drop in customers  Inelastic Demand = the % change in quantity less than the % change in price (ed< 1) Example: necessities, when people don’t respond as strongly and still purchase the product because they need it/it is essential i.e., there is not a noticeable drop in customers  Ethical issues of demand-based pricing = demand-based pricing can often lead to very high profits, but can lead to other problems e.g. would it be ethical to increase the price of insulin by 1,000%?  Single vs. Flexible price strategy = setting one price for all customers vs. different price for each customer e.g. different movie tickets for students vs adults vs children  leads to greater sales and profit, but can lead to problems (it is hard to enforce) 8.3 Describe the principles of pricing based on cost and revenue analysis  Fixed costs = costs that are constant regardless of the amount of products being sold (e.g. cost of factories)  Variable costs = costs a company incurs to sell additional products (e.g. delivery costs)  Break-even analysis = an analysis designed to estimate the volume of unit sales required to cover total costs  Break-even point = the quantity at which total revenue equals the total costs. BEP (total quantity of units that must be sold to break even) equals to the fixed cost divided by (unit price – unit variable cost)  Price leader = a high-volume product priced near cost to attract customers into the store, where it is expected they will buy other, normally priced and complementary, products.  Loss leader = a high-volume product priced below cost to attract customers into the store, where it is expected they will buy other, normally priced, products.  Marginal analysis = the effect on costs and revenue when an organisation produces and sells one more unit of product. This is all about maximising profits i.e. if we continue to keep selling, how much cost will it incur and how much profit will we make Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 8.4 Explain the role of competitive analysis in determining pricing  Competition based pricing = prices based on the prices charged by competitors. It is generally undesirable to adopt this method unless the seller has a cost advantage arising through low cost production or economies of scale (as the amount of units produced increases, the cost to produce each unit decreases).  Price competition can result in price volatility, where ‘price wars’ can break out as competitors try to match the low prices. This can ultimately force weaker competitors from the market.  In developed economies, long-term price competition can create oligopolies (dominated by a small number of large sellers).  Odd-even pricing = odd prices are perceived as significantly cheaper  Reference pricing = pricing a product at a moderate level and positioning it next to a more expensive model so that customers ‘upsize’  Pricing new products o Penetration pricing = a pricing tactic based on setting a low price in order to gain rapid market share and turnover for a new product. o Price skimming = charging the highest price that customers who most desire the product are willing to pay, and then lowering the price to bring in larger numbers of buyers.  Pricing established products o Differential pricing = charging different buyers’ different prices for the same product. o Promotional pricing = combination of a pricing approach with a promotional campaign. Approaches include price leader (and loss leader), comparison discounting, special-event pricing 8.5 Appreciate the issues involved in pricing for business markets 8.6 Understand how to manage prices as part of the marketing mix. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Lecture 7: Promotion 9.1 Explain promotion (marketing communication) and its role in the marketing mix  Promotion = the creation and maintenance of communication with target markets, also commonly referred to as ‘marketing communication’  Anything that interferes with the effectiveness of the communication process is referred to as ‘noise’.  The communication process is also influenced by the ‘fields of experience’; that is, what the participants in the communication process know about each other and how that influences the way they encode and decode messages.  Objectives of promotion: o The main objective of promotion is to support the organisation’s overall marketing objectives. o In competitive marketplaces, promotion aims to demonstrate that the features and benefits of the organisation’s products offer more value than competing offerings. o Marketing communications aimed at existing customers reinforce the product or brand and encourage repeat purchases or the purchase of other products offered by the organisation. o For a genuinely new product that is unfamiliar to the market, the marketer will first need to create demand for the product itself, rather than its brand specifically. 9.2 Understand the integrated marketing communications approach to marketing promotion and the major elements of the promotion mix  Integrated marketing communications (IMC) = 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 across the four areas of promotion: 1. Advertising 2. Public relations 3. Sales promotion 4. Personal selling The most effective choice and mix of promotion elements will vary with the specific goals of the marketing effort, individual product characteristics, individual target market characteristics, the nature of the marketing organisation itself, and the resources and budget available to the marketer. Pull policy = an approach in which the producer promotes its product to consumers, usually 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. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 9.3 Describe different types of advertising and the steps in creating an advertising campaign Advertising = the transmission of paid messages about an organisation, brand or product to a mass audience. It has the ability 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. Key steps in creating an advertising campaign. o Understand the market environment o Know the target market (audience) o Set specific objectives o Create the message strategy o Allocate resources o Select media o Produce the advertisement o Place the advertisement o Evaluate the campaign. 9.4 Outline the role of public relations in promotion Public relations = a term used to describe promotional efforts designed to build and sustain good relations between an organisation and its stakeholders (customers, employees, society in general etc.), and is also used reactively to counter poor publicity or as a part of crisis management. Publicity = the exposure a marketing organisation receives when it obtains free coverage in the media. Benefits: Credibility, resulting word-of-mouth, low- or no-cost, effectively combat negative perceptions or events. Limitation: Might be received with cynicism (Kendall Jenner Pepsi add campaign) 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. The reaction of firm after firm failure can severely impact firm image and create a perception of unethical/untrustworthy vs. responsible e.g. Apple battery gate 9.5 Explain how sales promotion activities can be used Sales promotion = offers extra value to resellers, salespeople and consumers in a bid to increase sales, especially in periods of low demand and to facilitate retailer support. Sales promotion methods aimed at the consumer: free samples, premium offers, loyalty programs, contests, coupons, discounts, event sponsorships Trade sales promotions are aimed at business purchasers and are run by producers or industries to present products to business customers, such as through conventions and trade shows (are not aimed at consumers, are therefore push policy methods) Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 9.6 Understand the nature of personal selling Personal selling = the use of personal communication with consumers to persuade them to buy products. Many marketing organisations use a sales model to manage the personal selling process: information  needs  product  leverage  commitment or close  follow-up Advantages = salesperson can tailor the promotion to the customer’s needs, adjusting the promotion as they receive feedback from the customer. Disadvantages = most expensive form of promotion (as it requires the full dedication of a salesperson, or sales representative, to a customer). Salespeople = 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. Characteristic of good sales people = listening skills, self-motivation, independence, self-confidence, initiative, persistence, enthusiasm, commitment to sales and job 9.7 Discuss a range of marketing communication options additional to the traditional promotion mix Ambush marketing = the presentation of marketing messages at an event that is sponsored by an unrelated business or even a competitor. Guerilla marketing = used to describe any aggressive and unconventional marketing approach. Its aim is simply to grab the attention of consumers when they are unaware, they don’t expect it, so they don’t filter it out. Product placement = paid inclusion of products in movies, television shows, video games, songs and books. It can be featured or incidental. Viral marketing = 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. Permission marketing = the broad term given to activities that are centred around obtaining customer consent to receive information and marketing material from a company. This reduces waste and may encourage genuine customers who want to ‘opt in’ and be informed about new stock or sales. Sponsorship = 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. Lecture 8: Place (distribution) 10.1 Understand the concept of place and how distribution channels connect producers and consumers/organisational buyers Placing products in the hands of the ultimate consumer is the marketing function known as ‘distribution’ or ‘place’. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Marketing intermediaries = the main organisations and individuals who act in the distribution chain between the producer and end user. Marketing intermediaries are useful and necessary when they can more efficiently connect producers with their customers than can the producers themselves. o Time utility = making products available at the time the consumer wants to purchase them o Place utility = making products available in the locations that the consumer wants them o Form utility = customising products to the consumer’s particular needs o Exchange efficiencies = making transactions as economical as possible by establishing and managing efficient exchange processes. Distribution channels work most effectively when the different parties agree on goals and processes and then cooperate to implement them. o Horizontal channel integration = occurs when organisations at the same level of operation are combined under one management structure. o Vertical channel integration = occurs when different stages of the distribution channel are combined under one management structure. Business to consumer marketing channels o Direct distribution = straight from producer  consumer o Indirect distribution = goes from producer  wholesaler  retailer  consumer o Selective distribution = producer carefully picks out who it is going to o Intensive distribution = give it to everyone/as many people as possible o Just in time distribution = When the buyer choses to precure from the producer when they want it e.g. laptops – only order it when needed Business to business product distribution channels o Channel 1 = producer  organisational buyer (most common) o Channel 2 = producer  industrial distributor  organisational buyer 10.2 Describe the major activities involved in the distribution of goods 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. Transportation = the process of moving products from their place of manufacture to their place of consumption. Freight forwarders = specialist transportation companies that allow businesses with small volumes of freight to combine their products with the products of other businesses so that they can take advantage of containerisation and the efficiencies of larger loads. 10.3 Describe the major activities involved in the distribution of services Physical inputs = all the physical attributes that need to be lined up at a specific time in advance to ensure the smooth distribution/delivery of a service Scheduling = just as producers and sellers of physical products must manage inventory to minimise holding costs yet maximise availability to consumers, service Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 businesses must manage their capacity to ensure customers can be served but that there is not excess labour. Some businesses can not so easily control demand for their services, e.g. a hospital 10.4 Understand the major aspects of retailing 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. Retailing strategy needs to consider location, including the natural geographic area from which customers will be drawn, proximity to competitors, proximity to complementary retailers, customer access to public transport and public parking. 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. Advantages of retailers = add value for customers and producers by creating or providing the following: time utility, place utility, form utility, advice and personal service, exchange efficiencies. Types of retailers = specialty retailers, general-merchandise retail stores, online retailing and other forms of retailing (direct marketing, telemarketing, catalogue marketing, direct response marketing, door-to-door selling, automatic vending). 10.5 Explain the role of agents and brokers in the distribution channel Agents = engaged by buyers or sellers on an ongoing basis to represent them in negotiations with other marketing channel participants. The main types of agents are as follows: manufacturers’ agents, selling agent, buying agents, commission merchants. Brokers = 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, but their value is in their specialist knowledge and well-established contacts in their industries. 10.6 Explain the role of wholesalers in marketing distribution. 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. It does not include transactions with end consumers. Wholesaler = an organisation primarily engaged in wholesaling, acting as the connection between producers and retailers and offer benefits to both. Merchant wholesalers = are independently owned (i.e. not owned by the producer). 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. 11.1 Explain the importance of the service sector to the Australian and New Zealand economies, and the difference between services products and service as the delivery of products 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. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 The most rapidly growing service industries are communications, education and health. The finance, tourism and hospitality industries can be quite volatile. Service = the act of delivering a product. Services = involve a service component. 11.2 Describe how to develop and manage an effective marketing mix based on the unique characteristics of services 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. Process = all of the systems and procedures used to create, communicate, deliver and exchange a service offering. Service providers should focus their attention primarily on the delivery of effective and efficient service, in a way that at least matches the customer’s expectations. 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 inspire confidence in the technical delivery and effectiveness of the service and in the likely service experience. 11.3 Appreciate the major challenges in the marketing of services Intangibility = 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. Inseparability = for most services, it is impossible to separate the production of the service and the consumption of the service. Because buyers and sellers of services are frequently ‘co-producers’ of the service, it can be very difficult to control quality and, hence, customer satisfaction. Another challenge is the inability for customers to inspect and evaluate a product prior to consumption e.g. can’t produce a haircut 5 mins before you get the actual haircut Heterogeneity = the inevitable variations in the service provided. 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’). Perishability = the inability to store services for use at a later date - they are ‘time bound’ e.g. can’t store a flight. The challenge is to balance supply and demand over time in such a way as to maximise availability, demand and profitability 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. In delivering high levels of customer service, organisations need to consider four key issues. o Understand customers’ expectations = such understanding can be achieved best through the use of regular and systematic customer service research. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o Establish service quality standards = once an organisation has determined its customers’ service expectations, it can translate them into service ‘benchmark’ standards, which can in turn be built into staff training and evaluation processes. o Manage customers’ service expectations = Advertising and other promotional vehicles (e.g. websites and in-store promotions) can play an important role. o Measure employee service performance = Training, equipping, motivating and rewarding staff should recognise the importance of customer service as part of the employees’ overall job performance. Lecture 9: Data and Analytics 16.1 Understand the significance and importance of data Data = facts about or details of objects that can be compiled into information. This data can be either structured (stored in a relational format i.e., tables) or unstructured (not organised, usually textual data) Rather than a lack of data, marketers now have almost too much data. As the amount of data available becomes very large, it becomes important to look at ‘useful data’ rather than just ‘big data’. The proper use of information from big data is what creates value for a company. The three V’s for describing big data = volume, velocity and variety. 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. Structured query language (SQL) = helps obtain data in an internal MIS, can be used to clean up errors in the data, keeps the data in a remote location. Sources of data o Databases = the information stored in databases can be organised using a database management system (DBMS). o Internet of Things = a term used to describe a system of electronic devices that are connected to a network, such as the internet. o Scanner data = scanner data, also known as scanner panel data, is detailed data on sales of consumer goods. o Web data = there are a few ways to get data from the web: ‘scrape’ the data from the website, use web-based application programming interfaces (APIs) and extract data from PDFs that are posted online. o Mobile data = 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. o Social media data = social media groups can be thought of as online focus groups, and can be very informative even though they are secondary data. o Survey data = historically, marketing analysts obtained data by surveying people from their target markets and analysing that data (hard to know if the respondents are responding truthfully) Data issues Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o Spurious correlation = where variables that have nothing to do with each other appear to be related. o Data leakage = when data from the model is shared with data that was not used in the modelling process (sometimes known as test data). o Noisy data and data preparation = contain all sorts of issues such as extreme values, missing data, incorrectly measured data, corrupted data etc. o Computing resources = having the physical hardware capacity to store and distribute the data, and resource bottleneck is having the software to analyse the data. o Analysis resources = marketing data scientists use commercial software packages such as SAS, Minitab, Tableau, SPSS, Matlab and Stata. o Storage resources = to help reduce the burden and cost of storing terabytes of data, in general we should be focused on keeping current customer data. 16.2 Understand the concept of data-driven marketing Data-driven marketing = refers to the marketing insights and decisions that arise from the analysis of data about or from consumers. The high volume of data available means many organisations now regard it as a monetised asset/commodity and data sharing across organisations is becoming less common Attribution modelling = seeks to find out which touchpoint is most instrumental in a customer’s purchase decision (i.e. which marketing channel to use to drive sales) Example of data-driven marketing – Netflix: o Netflix launched themselves in France using topics model that transformed a mass of everyday language into a brand opportunity. o Netflix analysed 2 years of digital conversations between French people and processed into different categories of meaning and trained their algorithm. o Interpreted data to come up with 3 essential insights about French: they love culture but are the biggest pirating, love innovation but are sceptical of what’s new, they love revolution but are conservative o Netflix used these insights to make a campaign purely of GIFs and brand awareness boomed in less than 3 months Data driven decision making 1. Customer resource 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. 2. Dashboards = a data visualisation tool that displays the current status of metrics and key performance indicators (KPIs) for an enterprise. 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. 3. Customer lifetime value = 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. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 4. Social media listening = the process of judging how a brand or organisation is being talked about on various social media platforms. Data-driven results = 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. 16.3 Understand analytic techniques used in marketing Analytics = the process of organising data into meaningful information. Analytics can be used for customer insight, segmentation and targeting, as well as automating menial tasks. Marketing analytics = 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. Types of marketing analysis = predictive modelling, k-means clustering, association rules, visual data analytics, cross-industry process for data mining (CRISP-DM) methodology. Data mining = the process of finding anomalies, patterns and correlations within large data sets to predict outcomes. Machine learning = involves the study of algorithms that can extract information automatically, which can be supervised, unsupervised, reinforcement. Machine learning is a type of AI (the converse of this is not true though). Artificial Intelligence (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, also includes the deployment of chatbots. 16.4 Understand data ethics and the future of marketing analytics. Many customers fear that their personal data is being misused by companies. Data snooping = 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 = when information is intentionally or unintentionally released from a secure location in a company. Marketers that use a combination of human intuition, data and analytics to inform marketing strategies are better positioned for the future job market. It is important that analytics is valued at all levels of an organisation. One of the most talked about future areas of data and analytics is quantum computing Lecture 10: Digital Marketing 12.1 Identify digital marketing activities  Digital marketing activities = the activities involved in planning and implementing marketing in the the electronic environment, including the internet and web on computers, tablets and smartphones, and other information and telecommunications technologies. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609  Examples include texting potential customers about an offer/sale, discount vouchers on take-away websites, emailing customer to participate in a survey for a change to win a prize etc. Digital marketing – consumers Advantages Disadvantages  Convenience  Inability to physically examine the product before  Efficiency purchase (Augmented reality – AR – can remedy this)  Risk of privacy and lack of personal service Digital marketing – organisations Advantages Disadvantages  Access to the entire global market  Increased competitions  Easier to collect and store customer  Growing consumer awareness of information privacy concerns  Reduced costs 12.2 Explain the unique characteristics of digital marketing 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, such as through requiring registration and use of cookies on websites and competitions. Interactivity and community = can occur in many ways, including a virtual customer service officer, a real customer service officer, email newsletters and RSS feeds, survey participation and online communities. Control = 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. o Push advertising = refers to advertising sent from the marketer to the customer. o Pull advertising = refers to advertising that the customer actively seeks out. 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 (music). For those that can’t, the service can be digitalised, e.g. grocery stores offering online shopping and delivery. 12.3 Explain specific digital marketing methods Paid media = any digital advertising that a business pays for. Owned media = any digital 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. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Brochure sites = 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. Social media = describes the various websites using technologies and experiences that involve online communities where members contribute to and build the community and content, and where users can substantially control their own online experience through customisation and interactivity. Viral marketing = 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. Portals = a website that is designed to act as a gateway to other related sites. The popularity of the portal has declined (still widely used by governments though as a starting point to access all government services) as search engines have become more powerful and as users have realised they can often better find content themselves. Search engine optimisation (SEO) = tailoring certain features of a website to try to achieve the best possible ranking in search results returned by a search engine. 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’. The link is placed more prominently than links that are returned purely due to SEO efforts. Email, SMS and MMS 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 = coincided with the increased availability, affordability and consumer uptake of smartphones. There are an estimated 17.9 million smartphone users in Australia and 15 million of us having access to a tablet device. Virtual Reality (VR) = the new technological frontier for marketers 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 12.4 Appreciate ethical and legal issues relating to digital marketing 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. The borderless, international nature of the online world makes it complicated to determine which laws apply and who can or should enforce them. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o Failure of laws and international agreements to keep pace with technological change and the innovative use of new technologies. Privacy = 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 Online fraud has grown to be a multi-million-dollar global industry e.g. phishing Spam = the most prevalent type of spam is advertising related email (36%). In Australia, the relevant legislation is the Spam Act 2003. Intellectual property = intellectual property theft has been one of the more difficult areas of the law to enforce, and modern information and communication technologies have greatly increased the problem. Consumer protection methods include: o Use a secondary email address when registering for online services o Install anti-virus software and keep it up to date o Install a firewall o Use email filters to automatically delete spam o Never respond to unsolicited email messages o Read the privacy policy of any organisation you deal with online. 12.5 Discuss the role of digital marketing in an overall marketing strategy. Organisations should generally avoid assuming that all online users are their target market. The pull nature of online marketing means some of the target market will actively seek out the marketing organisation, but this is not a sufficient plan in itself. The organisation must generate awareness of its existence and its offerings. Customer relationship management (CRM) = focuses on using information about customers to produce digital marketing experiences that create, build and sustain long-term relationships. The digital marketing mix: o Product = some products and services have characteristics that better lend themselves to online purchase than others. o Pricing = the online environment enables consumers to easily compare the offerings of numerous online businesses. One particular feature that can be compared is price. o Promotion = the amount of information on the internet has empowered consumers with more product and price knowledge than ever before. The challenge for the marketer is to offer a better value proposition than competitors. o Distribution (place) = the ability of the internet to transfer data in real time between individuals and organisations has led to greater efficiencies in distribution. Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 Lecture 11: International, Social and not-for-profit (NFP) marketing 13.1 Understand the concept of ‘globalisation’ and its consequences for organisations seeking to engage in international marketing  Globalisation = the process through which individuals, organisations and governments become increasingly interconnected, with consequences for national identity, national sovereignty, economic activities, laws and culture.  Standardisation = refers to applying a uniform marketing mix across international markets, with only minor modifications to meet local conditions.  Customisation = refers to carefully tailoring the marketing mix to the specific characteristics and wants of each market. 13.2 Discuss the political, economic, sociocultural, technological and legal forces at play in international markets Political forces = need to consider alliances and agreements (some alliances may favour trade between countries, enhancing the chances of success) and country- specific political factors (understand the political system of each target country and understand its influence on business and commerce) Economic forces = need to consider the global and country-specific economic conditions to determine the relative attractiveness of that country as a potential target market. Sociocultural forces = are often the forces that display the most subtlety and complexity, where each international market is likely to have sociocultural variations within it. Technological forces = technology has created, revolutionised and destroyed entire industries (e.g. the introduction of digital television has caused the demise of the video rental market). Has increased 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. Legal forces = marketing mix must comply with all legal requirements, as some countries restrict trade practices and need to be aware of trade barriers such as the following: tariffs, quotas and embargoes Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 13.3 Understand why and how organisations internationalise  Internationalising can be a profitable way of expanding a business, to help businesses to become more efficient, to increase their potential to gain new knowledge, to diversify risks, wider the community by creating jobs and wealth for all partners in the business activity  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. 13.4 Explain how marketers create, communicate and deliver a product of value in an international market.  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; screening followed by in depth research  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.  Exporting = an approach to international marketing involving the sale of products into foreign markets while remaining based in the home market.  Direct exporting = 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 o 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. o Franchising = a business (the franchisee) pays the franchisor a fee in return for the right to market the franchisor’s product. o 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.  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.  Foreign direct investment = involves outright ownership of a foreign operation. Involves a long-term commitment, considerable investment and acceptance of risk, Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 and would usually only be pursued by an international marketer who was highly experienced and confident of success.  Born global business = 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. Most born global marketing organisations are internet-based, e.g. eBay.  Pricing is one of the most complex issues within the international marketing mix 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. 14.1 Discuss how social marketing aims to change behaviour for social good  Social marketing = 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.  Is used to address a wide range of social (e.g. gambling, domestic violence), health (e.g. smoking, safe sex), environmental (e.g. recycling, water use) and economic issues. 14.2 Understand the social marketing benchmark criteria  Alan Andreasen’s six-point criteria to distinguish social marketing from other change disciplines (such as public health)  Behaviour change = is considered the bottom line for social marketers. Many social marketing practitioners and researchers often aim to change attitudes, awareness and behavioural intentions, rather than focusing on educating or informing about the actual behaviour itself.  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, such as through qualitative approaches of focus groups, interviews, surveys  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 = describes something that a person has to give up in order to get the proposed benefit. This 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 = social marketing will deliver greater behaviour change when more marketing mix elements are applied. o Product = product may take different forms in social marketing, namely tangible (e.g. condoms for safe sex) and intangible (e.g. socialisation for walking in a group). o Place = place refers to where and when the target audience enter into an exchange (e.g. the places in which exchange occurs). Downloaded by Richard Schmitz-Peiffer ([email protected])  lOMoARcPSD|42774609 o Price = price is widely debated in social marketing, as the use of dollar pricing in social marketing interventions is rare. Some social marketers explain that price is viewed in terms of the cost or sacrifice exchanged for the benefit (product). 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. o Promotion = when planning integrated social marketing communications, social marketers need to emphasise the mix tactics that are known to drive consumer behaviour (e.g. direct selling, price discounts, loyalty schemes and sales promotions). Advertising and public relations activities should be used to remind the target market of the social brand, but messages need to be relevant and connected with behaviour-inducing strategies  Competition = 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. 14.3 Understand the three streams of social marketing  Downstream = 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.  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 = concerned with influencing public policy, prioritisation and budget allocation. There is increasing evidence to suggest that ‘changing contexts’ by influencing the environments within which people act can change behaviour. Target audiences of upstream social marketing may include ministers and their staff, judicial organs, peak body representatives, lobbyists, and activists 14.4 Distinguish between social marketing, social advertising and other forms of marketing  Social marketing was initially proposed as a means to change ideas to benefit the society as a whole.  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. Commercial marketing is concerned with profit, whereas social marketing is concerned with changing or maintaining behaviours to achieve a social good. 14.5 Understand the nature of 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. Downloaded by Richard Schmitz-Peiffer ([email protected])