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EXAM REVISION:

ADVANCED MARKETING
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CONCEPTS AND
APPLICATIONS
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Lecture notes

Table of Contents
The Marketing Management Process ...................................................................... 4
What is marketing? ............................................................................................................................................ 4
THE NEW CONSUMER ...................................................................................................................................... 4
MARKETING CHALLENGES ............................................................................................................................ 4
WESTBERGS MARKETING CHALLENGES ............................................................................................... 5
SOLUTION .............................................................................................................................................................. 5

Marketing Management Process ............................................................................ 6

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Marketing Analysis ............................................................................................................................................ 6

Sources of Information .................................................................................................................................... 6
Outcomes of External Analysis ..................................................................................................................... 6
Industry/Market Analysis .............................................................................................................................. 7
Market Attractiveness ...................................................................................................................................... 7
Porters Five Forces Model: ............................................................................................................................ 7
1.
Potential Entrants .............................................................................................................................. 7
2.
Industry Competitors ........................................................................................................................ 8
3.
Substitutes ............................................................................................................................................. 8
4.
Buyers ...................................................................................................................................................... 8
5.
Suppliers ................................................................................................................................................. 8
Porters 5 forces model in summary ........................................................................................................... 8
Structural Analysis and Competitive Strategy ....................................................................................... 8

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Competitive Market Strategy .................................................................................. 9

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Competitor Analysis: ......................................................................................................................................... 9

Competitive Strategies ..................................................................................................................................... 9
Sources of Competitive Advantage ............................................................................................................. 9
Competitive positions ....................................................................................................................................... 9
Market Leader Strategies ............................................................................................................................. 10
Market Challenger Strategies ..................................................................................................................... 10
Market Follower Strategies ......................................................................................................................... 10
Market Nicher Strategies ............................................................................................................................. 10
Basic Competitive Strategies ...................................................................................................................... 10
Value Disciplines .............................................................................................................................................. 11
Company Orientation .................................................................................................................................... 11

DEMAND & FORCASTING ANALYSIS ...................................................................... 12

Company Sales Forecast ............................................................................................................................... 12
The Sales Forecasting Process ................................................................................................................... 12
Forecasting Models ......................................................................................................................................... 12
Selecting the Forecasting Technique ...................................................................................................... 12
Time Series Moving Average Models .................................................................................................. 12
Time series models Exponential Smoothing .................................................................................... 13
Time Series Models Least Squares Model ......................................................................................... 13

MARKETING METRICS ........................................................................................... 14

The Future of Marketing .............................................................................................................................. 14
Why is an understanding of finance important for marketers? .................................................. 14
Alternative Ways to Increase Profit ........................................................................................................ 14
Why use ratio analysis? ................................................................................................................................ 15
Analytic Ratios .................................................................................................................................................. 15
Break Even Analysis ....................................................................................................................................... 15
Contribution Analysis (by product) ........................................................................................................ 15
Mark-ups ............................................................................................................................................................. 15

PLANNING: Product Strategy ................................................................................ 16

Ansoff Product/Market Expansion Grid ................................................................................................ 16

Objectives ........................................................................................................................................................... 16
New Product Portfolio ................................................................................................................................... 16
Market Entry Strategies ................................................................................................................................ 17
Elements of Successful Market Entry ..................................................................................................... 17
12 Dimensions of Business Innovation .................................................................................................. 17

Database Marketing ............................................................................................. 18

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Customer Attraction and Retention ........................................................................................................ 18

Database Marketing Strategies .................................................................................................................. 18
The Profit Dynamic of Relationships ...................................................................................................... 18
Ladder of Loyalty ............................................................................................................................................. 19
Dialogue Marketing ........................................................................................................................................ 19
Example of relationship segmentation .................................................................................................. 19
Database Marketers believe .................................................................................................................... 20
Benefits to the company ............................................................................................................................... 20
Benefits to the Customer .............................................................................................................................. 20
Paybacks .............................................................................................................................................................. 20

Direct Marketing ................................................................................................... 21

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Definition: ........................................................................................................................................................... 21
General Advertising vs Direct .................................................................................................................... 21
Special Features of DM .................................................................................................................................. 22
Generic Objectives of a DM Campaign .................................................................................................... 22
Decision Variables of DM ............................................................................................................................. 23
The Audience and the Offer ........................................................................................................................ 23
Media .................................................................................................................................................................... 24
Direct Mail .......................................................................................................................................................... 24
Creative ................................................................................................................................................................ 24
Timing/Sequencing ........................................................................................................................................ 24
Customer Service ............................................................................................................................................. 25
Measurement .................................................................................................................................................... 25
Marketing and the Web ................................................................................................................................ 26
Basic Website Design Principles ............................................................................................................... 26
The Web Visitor ............................................................................................................................................... 26
Benefits of a website ...................................................................................................................................... 26
McKinseys Digital Marketing Framework ........................................................................................... 26
Online Brand Communities ......................................................................................................................... 27
Social Media ....................................................................................................................................................... 27
Remember .......................................................................................................................................................... 27
Factors affecting Price ................................................................................................................................... 28
PRICING POLICY PROCESS .......................................................................................................................... 29
8 steps to better pricing ............................................................................................................................... 30

Implementation, Control & Evaluation of the Marketing Effort ............................. 31

Reasons for poor implementation ........................................................................................................... 31
The control process ........................................................................................................................................ 31
Annual plan control ........................................................................................................................................ 32
Evaluation of marketing productivity .................................................................................................... 32
Marketing efficiency and effectiveness .................................................................................................. 33
Improving Marketing Effectiveness and Productivity .................................................................... 33

LECTURE 1

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The Marketing Management Process

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What is marketing?

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Marketing is an organizational function and a set of processes for creating, communicating

and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders. AMA, 2004

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^(The marketers deliver the value)

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Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large. AMA, 2007, 2013
^(The customers determine the value), (who are stakeholders specifically)

THE NEW CONSUMER

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Customisation (make it mine)

Communities (let me be a part of it)
Multiple channels (let me call, click or visit)
Competitive value (give me more for my money)
Choice (give me search and decision tools)

WIND, 2008

MARKETING CHALLENGES
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Getting a seat at the table

Living in a global world
Spanning silos
Energising brands
Defining a new category or subcategory

AAKER, 2010

Being a play in the worlds social issues

WESTBERGS MARKETING CHALLENGES

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SOLUTION

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Passive ! active
Intrusive organisation! invitational
Controlled ! customer controlled
- Customer experiential opportunities
- Customer generated content
- Customer as co-producer/co-creator
- Customer as advocate
- Communicate to engage

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Customer communication
o New media and fragmented media
Brand equity
o Zara
Product differentiation/value proposition
o Nike/apple
Mass-customisation/one-to-one marketing
o Mini cooper
Corporate citizenship/social responsibility
Accountability measurability

LECTURE 2
Marketing Management Process
Analysis

Control &
Evaluation

Planning

Marketing Analysis

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External Environment
o Macro environment
" Political
" Legal
" Economic
" Technological
" Socio-cultural
" Demographic
" Natural environment

o Micro environment (industry)

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Implementation

Sources of Information

Census Bureaus
Consumer Surveys
Social Researchers
Trade Pubs and Professional Journals
Research Companies
Government Reports
Newspapers/Magazines
Overseas Information

Outcomes of External Analysis

Identification and understanding of opportunities and threats facing the

organization both present and potential.
Successful companies recognize and respond profitably to opportunities
presented by unmet needs and trends in the environment.

Porter
The key aspect of
the firms
environment is the
industry(s) in which
it competes

Industry/Market Analysis
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Actual & Potential market size

Market growth
Market profitability
Cost structure
Distribution systems
Trends and developments
Key success factors
# Understand attractiveness of a market
# Understand the dynamics of the market

Market Attractiveness

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the markets profit potential as measured by long term ROI as achieved by its
participants
a markets appropriateness for a particular firm depends not only on
attractiveness but also on how the firms strengths and weaknesses match up
against competitors

Porters Five Forces Model:

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Forces driving Industry Competition

1. Potential Entrants
- Threat of new entrants/barriers to entry:
o Economies of scale
o Product differentiation
o Capital requirements
o Cost disadvantages
o Access to distribution
o Government policy

3. Substitutes
- Threat of substitute products or services:
o Ie. Products which can perform the same function
- Substitute products of importance:
o Ie. those subject to trends improving their price-performance tradeoff
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2. Industry Competitors
- Intensity of rivalry among existing competitors
o Numerous or equally balanced competitors
o Slow industry growth
o High fixed costs
o Lack of differentiation or switching costs
o High exit barriers

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4. Buyers
- Bargaining power of buyers
- A buying group is powerful if:
o An industrys products are standard or undifferentiated
o Buyers are concentrated or purchase large volumes relative to seller
sales
o The products represent a significant fraction of the buyers costs or
purchases
o Quality is not important
o Backward integration a possibility

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5. Suppliers
- Bargaining power of suppliers
- A supplier group is powerful if:
o It is dominated by few companies;
o It has built up switching costs;
o It is not obliged to contend with other substitute products; or
o The industry is not an important customer of the supplier group

Porters 5 forces model in summary

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The collective strength of the 5 forces determines the profit potential of the
industry
A firms strategy should recognise and address the strongest forces
Strategists need to find a position in the industry where the company can
best defence against these forces or influence them in its favour

Structural Analysis and Competitive Strategy

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Once the forces affecting competition in an industry and their underlying

causes have been diagnosed, the firm is in a position to identify its strengths
and weaknesses relative to the industry
An effective competitive strategy takes offensive or defensive action in order
to create a defendable position against the five forces competition

LECTURE 3
Competitive Market Strategy

potenial
entrants

Competitor Analysis:
See Kotler et al, 2004 Figure 21 1

1. Identifying the companys
competitors
2. Determining competitors objectives
3. Identifying competitors strategies
4. Assessing competitors strengths
and weaknesses
5. Estimating competitors reactions
6. Selecting competitors to attack and
avoid

Industry
compeitors

subsitutes

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Figure 1 Porters 5 Forces Model

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Strategies to give the company or its product(s) the strongest competitive

advantage.
Competitive Advantage - an advantage over competitors gained by offering
the consumers greater value, either through lowering prices or by providing
more benefits that justifies higher prices.
RE Pana Chocolate;
o Most interest are competitors who seem to be doing the same
offerings part of the strategic group

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Competitive Strategies

Sources of Competitive Advantage

Relational advantages
Legal
Organisational
Human resource
Product
Pricing
Promotion
Distribution

Competitive positions

Based on role in the target market

o Market leader

buyers

o Market challenger
o Market follower
o Market nicher

Market Leader Strategies

To remain market leader, company tries to

o Expand total demand how?
" New users, new uses, more usage
o Protect market share how?
" Innovation, value, fix weakness
o Expand market share how?
" Profitability

Increase market share by attacking market leader or other firms

o Frontal attack
o Flanking attack
o Encirclement attack
o Bypass attack
o Guerrilla attack

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Can learn from leaders experience and

o Clone
o Imitate
o Adapt

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Market Follower Strategies

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Market Challenger Strategies

Market Nicher Strategies

Target sub-segments, closely meet needs and therefore justify higher

margins
Specialisation
o Customer specialist
o Product specialist
o Quality-price specialist
o Service specialist

Basic Competitive Strategies

Porters generic competitive strategies

o Overall cost leadership
o Differentiation
" Kitkat
o Focus
o Middle-of-the-road


Target scope

Advantage
Low cost

Broad (industry
wide)

Cost leadership
strategy

Product
uniqueness
Differentiation
strategy

Narrow (market
segment)

Focus strategy
(low cost)

Focus
(differentiation)

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Operational Excellence best cost

o Focus on price and convenience
Customer Intimacy best solution
o Segmentation, CLV
Product leadership best product
o Innovation

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Value Disciplines

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Competitor-centred vs. customer centred

Market-centred

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Company Orientation

Treacy and Wiersema

LECTURE 4
DEMAND & FORCASTING ANALYSIS
Company Sales Forecast
The amount of sales (in units or dollars) a firm expects to achieve during some future
period under a given marketing plan and expected market conditions.

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The Sales Forecasting Process

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Forecasting Models

Time Series
o Moving average
o Exponential smoothing
o Linear least squares
Causal Models
o Statistical demand analysis/multiple regression & correlation
Judgemental Models
o Composite of sales force opinions
o Survey of buyers intentions
o Expert opinion

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Selecting the Forecasting Technique

Considerations
o Time horizon
o Cost
o Technical
o Sophistication
o Pattern of data
o Accuracy
o Ease of application

Time Series Moving Average Models

Suited to short term forecasts and are most effective when past sales are
reasonably stable
Data from consecutive past periods are averaged to make an estimate of
sales for the next period

Are also called smoothing models since they level out small random
fluctuations

Strengths
o Ease of use, minimal investment if data available
o Accurate under stable conditions
o Smoothes out small random fluctuations
o Can compensate for trend depending on model
Weaknesses
o Require a large amount of historical data
o Lags behind change
o Assigns equal weight to each period

Time series models Exponential Smoothing

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Sales value for more recent periods are given a greater weighting, since
recent periods usually have a greater impact on future sales
Experimenting with different alphas and comparing MADs can select the
appropriate weighting, or alpha.
Strengths
o Ease of use
o Provides more weight to recent data
o Less data storage than moving averages
o Reasonable accuracy for short term results
Weaknesses
o Time involved in finding appropriate alpha
o Can suffer from a large error due to large random fluctuations in
recent data

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Time Series Models Least Squares Model

May be appropriate if there is a linear trend in the data
Time periods are the independent or predictor variables and sales are the
dependent variables

LECTURE 5
MARKETING METRICS
The Future of Marketing

...Boards want quantified results...

...Marketing measurement is the hot issue on everyones agenda...
Certainly the ones progressing up the ladder are the ones who speak equally
well creatively as they do financially.
...It is crucial for marketers to understand the whole business...and to
emphasise the marketing contribution.
Learning the language of the boardroom whether its through sales,
accountability or finance is crucial.

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Why is an understanding of finance important for marketers?

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Private sector organizations are profit-driven: all strategic decisions

ultimately influence profit and profitability.
Owners invest their capital in businesses to increase its value: managers must
recognize this and make decisions, which yield wealth to owners.
Every marketing decision has a financial consequence.

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Alternative Ways to Increase Profit

Kotler, P. et al (1980:52)

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Financial accounting
o Balance sheet
o *Statement of Profit & Loss
Management Accounting

Why use ratio analysis?

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To compare performance from one year to the next

To compare performance with industry standards or competitors
To identify favourable or unfavourable trends and take action

EXAMPLE

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Gross margin % =
Net Profit % =
o Stockturn rate = Cost of Goods Sold / Avg. Inventory at Cost
= 175,000 / ((60,000 + 45,000)/2)
(average inventory at cost = (opening inventory +closing inventory)
= 3.3 times
o Ratios are only useful in comparison ie. with previous years figures,
with competitors or industry standards
Used to examine relationship between sales and costs
B/E (units) = FC/CM (per unit) or SP-VP per unit

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Break Even Analysis

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Analytic Ratios

Contribution Analysis (by product)

The amount of money available to cover FCs

Contribution Margin = sales VC
CM/unit = Selling price VC per unit
Sales


$300
Less: variable costs
100
Contribution margin
200
Less: fixed costs

100
Net income

$100

Mark-ups

See App.1 in Kotler 3rd Edition

LECTURE 6
PLANNING: Product Strategy

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Ansoff Product/Market Expansion Grid

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Objectives

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Primary objective:
Secure future volume and profit growth
Also strategic objectives
- Externally driven:?
- Internally driven:?

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New Product Portfolio

Davis and Moe (1997)


Market Entry Strategies
# Pioneer
# Fast Follower
# Late Entrant

Elements of Successful Market Entry

Successful Late Entrants are characterised by:

o A focus on peripheral target markets or niches

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Successful Pioneers are characterised by one or more of these strategy

elements:
o Large entry scale
o Broad product line
o High product quality
o Heavy promotional expenditure

Successful fast followers are characterised by one or more of these strategy
elements
o Larger entry scale than the pioneer or leapfrogging the pioneer with
superior
" Product technology
" Product quality
" Customer service

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12 Dimensions of Business Innovation

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The creation of substantial new value for customers and the firm by chaning one or
more dimensions of the business system
SOURCE: SAWHNEY et al. (2006)
Offerings Innovative new products or services
Platform Common components/building blocks
Solutions Customised offerings
Customers Unmet needs or new segments
Customer Experience Redesign customer interactions
Value Capture Create new revenue streams
Processes Improve efficiency and effectiveness
Organisation Change form, function or activity scope
Supply Chain Change sourcing or fulfilment
Presence Create new channels
Networking Create integrated offerings
Brand Leverage the brand into new domains.

LECTURE 7
Database Marketing
Process of collecting relevant information about customers and prospects in order to
learn as much as possible about their needs and then utilise this data to provide the
right product, at the right price, at the right time using the appropriate
communication.

Customer Attraction and Retention

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Firms can increase market share three ways

- Attract new customers
- Do more business with existing customers and
- Reduce customer attrition

Database Marketing Strategies

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Customer Retention (tactics and targets)

Customer re activation (identifying and analysing)
o Track a customers purchase pattern (e.g. Special offers, personalised
messages we havent seen you in a while etc.)
Product/Service strategies (segmentation and identifying needs)
Promotion: Prospecting
o Prospects vs customers
" Someone you believe should be a customer
Promotion: Cross-selling

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McClymont and Jocumnsen (2003)

The Profit Dynamic of Relationships

Figure 2 Ladder of Loyalty

Ladder of Loyalty

1.
2.
3.
4.
5.

Advocate
Client
Customer
Prospect
Suspect

Dialogue Marketing
Kalyanam and Zweben, 2005

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Foundation Dialogues
o Acquisitions, service follow ups, win backs
Level 1 dialogues:
o Event notifications, repurchase reminders, inventory and price alerts,
overstock outreaches
Level 2 dialogues
o Defection interventions, lifecycle progressions, category and brand
RFM transitions
" Recency, frequency, monetary
" The most recent purchaser, the more valuable they are likely
to be
" Frequency, the more often they purchase from you
" Monetary, the more money they spend on you
" + Quantity may be used but RFM more commonly referred to

Level 3 Dialogues
o Onsite personalised interactions

Example of relationship segmentation

(Kalyanam and Zweben, 2005)

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Decliners:
o Number and recency of visits are dropping
Incliners:
o Number and recency of visits are rising
Inactive
o No visits for a long period of time
Inactive
o No visits for a long period of time
New business:
o Only one recent visit
Past due
o No visits for a designated period of time, but not yet considered
decliners
Due now:
o Not yet considered decliners but need a tickler to bring them in now
Ad Hoc:
o everyone else

Database Marketers believe

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Certain customers are more important than other customers

Customers are likely to share certain characteristics
Prospective customers are likely to look like current customers
o What do they look like, m/f, young old, education level, values,
lifestyle etc.
Past consumer behaviour is the best predictor of future behaviour
To determine the true worth of a customer, you have to calculate lifetime
Value
Customers are more important than non-customers
o Focus on retaining the ones you have

Benefits to the company

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Identify most profitable customers (RFM criteria)

o If you dont have many, you better not lose them
Identify and qualify the best prospective customers
Identify and qualify the best prospective customers
Identify past customers who are still prospects
Identify opportunities and develop strategies (cross-sell and up-sell)
Improve effectiveness of advertising and promotion

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Benefits to the Customer

Unique products
o Financial benefits
- Information
o Better use the product, improve life
- Service
- Personal attention
! Develop more of a one-to-one relationship

Consider pana, low involvement low price product, what are the benefits of getting
involved?

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Paybacks
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Increase revenue
o Cross selling
o New business acquisition
o Customer retention
Expense reduction
o Cost effective targeting
o Elimination of redundant marketing activities
o Direct marketing savings
o Relationship management
" Streamline processes to streamline management

LECTURE 8
Direct Marketing
Definition:

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Direct marketing is an interactive system of marketing that uses one or more
advertising media to effect a measureable response and/or transaction at any
location, with this activity stored on a database. Australian direct marketing association

Interactive system
- Two-way communication, communicating a particular message or image
around a product or service sometime at some point when your looking for
a product youre going to think of a particular brand

Direct marketing involves a media
- Could use traditional media such as television, newspapers, magazines, or
direct response media.

- How is direct marketing different to your traditional brand advertising?
o You are looking for a response, which you want to be able to measure
o Have to include in the advertising some way a customer can get in
contact with you such as texting or responding through a website.
o A measurable response eg. so and so responded to us because they
got our email
o The activity needs to be stored on a database, information capture, in
order to help you learn more about your customer.
o Junk mail is poorly targeted direct marketing communication.

- Traditional advertising is trying to create a particular image in the consumers
minds.

General Advertising vs Direct

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General advertising works to build image/awareness

o Changes ATTITUDES
Direct marketing helps build image/awareness but works to generate
response, asks for action
o Changes BEHAVIOUR
e.g get them to fill in a questionnaire, take a test drive - trying to change
behavior and get them to do something
-In CA#7 trying to get the recipient or the customer to do something
-The response depends on what is logical depending on the product and
relationship with that recipient


Special Features of DM

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Lists or a marketing database

o There are lists of peoples contact details that you can gain access to,
make the initial contact and when people respond to you, you can
add them to your database. More importantly its about getting a
response and a measurable response.
o Need to include some way to communicate with you

Direct measurement of response
o What do you have to offer the customer
Precision targeting
Personalization
o Trying to get their attention e.g. could personalize the message by
using the customers name
Call for immediate and specific action
o You want a quick response, if youre selling a car its not expected that
a customer will make a purchase based on a email you send them,
ideally you want them to do something relatively quickly.
o Must think about how you will get them to respond, by providing an
incentive, may have to give them deadlines and reasons to why they
should respond sooner rather than later.
Invisible strategy
Ability to test
o Can test whether you get a better response if you offer a discount,
versus a free gift
o Because youre measuring how people respond, you can find out
which communication is the most effective.

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Generic Objectives of a DM Campaign

-Think about who Pana should target and what they are trying to achieve
E.g. trying to invite a certain value of customer to an information evening at the caf.
- Sales
- Lead generation
- Lead qualification
o Ask some questions to screen who you should be following up
- Maintenance of customer relationships
o Find out more about your customers and what theyre interested in

Decision Variables of DM

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The target audience and objectives of the campaign

o Might decide to focus on a particular demographics, geographics, or
reasons why they by certain chocolate why are they motivated to
buy? Because they have specific health concerns or environmental
concerns such as fair trade
o Because you want a measureable response, you need measureable
objectives.
o e.g. are you trying to sell 100 bars of the newest flavour?, or $10,000
worth of sales over the mothers day period?
The offer
o What you are presenting to your target
audience, the features, the benefits, the price
Media
o Can decide whether its going to
These variables
be physical mail or just email
can be tested
Creative
Timing/sequencing
o Is communication going to be linked to a
specific event such as Christmas or Easter
Customer service
o When the customer does respond, how is the
response then handled?

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The Audience and the Offer

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The complete proposition made by the marketer to a customer or

prospective customer
o Something to do with the product and service, whether it be a specific
product or a whole range of products
o Translating the product into benefits, could be different benefits that
customers appreciate such as quality and health benefits, may or may
not include the price
o Infomercials always break down the price to make it more attractive.
o There might be different ways in which we want to communicate this
price
Includes the product/service, price, incentive, payment terms
o Might have an incentive associated with a response date, those that
reply before a certain date receive an incentive.
o What makes the most sense for the audience we are communicating
to?
Also, risk reduction mechanisms
o E.g. money back guarantee if the customer is not satisfied with the
product, testimonials, who would be meaningful for the customers to
listen to? Advocates?
o Scientists or a well-known mother with children that the audience
relate to.
o Could be things like a discount to trial a product

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Media
Main media (mainsteam)
o Television
o Radio
o Newspapers
o Magazines
! These are very mass media, not looking for a response as such
- Direct media
o Telemarketing
o Direct mail
o Letterbox drops
o Electronic media
! Can be more one-to-one in the communication approach
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Direct Mail

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Still is very heavily used for direct marketing purposes, physical mail is still
often preferred
o May want to hire a list of people to contact
The most extensively used medium in direct marketing
Uses either a rental list or company database
Strengths:
o Selectivity
o Flexibility in format
o Personalization
o No competition
o Most controllable
o Capacity to involve recipient

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Creative

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- Copy design
- Involvement techniques
- Personalization
- Response mechanism
! Certain characters, certain colours, taglines that you may want to incorporate into
your advertising and direct marketing e.g. emails

Timing/Sequencing
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One shot versus campaigns

Combination of media
o Difficulty in communicating with people in their offices because of
gate-keepers, such as receptionists and people that screen the calls
for the business people.
o Images can be very impacting
o Leave behinds are something to remind people of you, such as a
magnet to stick on the fridge (ANZ mini white board campaign
Magna-doodle)

Customer Service
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To assist in positive response to the offer ie. 1-800 numbers, free limited time
trial, payment options
Speed and accuracy of order fulfilment, customer inquiries and complaints,
returns policy

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General marketing
o Advertising reach
o Frequency
o CPM
o Awareness
o Recall
o Message takeout
o Purchase intention
Direct Marketing
o Cost per contact
o Response rate
o Cost per response
o Average sales value generated
o Cost per $1 sale

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Measurement

LECTURE 9
Marketing and the Web

Design for target audience(s)

Have an objective(s) for the site
Easy to navigate/usability (multiple options)
Be consistant with the brand
Provide value
Interaction and customisation
Home page is key
Legibility and platform independent
Engage/customer feedback
Integrated

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Directed information seekers

Undirected information seekers
Bargain hunters
Entertainment seekers
Directed buyers

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Benefits of a website
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(Lewis and Lewis)

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The Web Visitor

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Basic Website Design Principles

Interactivity aids recall

Timely easy to update
Extensive reach
Customer is proactive
Potential to develop database
Flexibility and no sales pressure for customer opportunities to build customer
relationships

McKinseys Digital Marketing Framework

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Attract
o Invite customers to the site
Engage
o Generate interest and participation by;
" Creative programming
" Interactive content
" User-generated content
" Transaction capabilities

McKinsey

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Retain
o Make sure customers come back by dynamic content, digital
communities and proprietary/unique content
Learn
o About customer preferences by information capture
Relate
o Customise interaction and value delivery by personalised/customised
products/services and real-time interactions

Online Brand Communities

A brand community is a specialised, non geographically bound community, based
on a structured set of social relationships among admirers of a brand.
(Muniz and OGwinn, 2001)

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77% of consumers said they interact with brands on Facebook primarily through reading posts and updates
from the brands.

17% of respondents said they interact with brands by sharing experiences and news stories with others
about the brand, and only 13% of respondents said they post updates about brands that they Like.

56% of consumers said they are more likely to recommend a brand to a friend after becoming a fan on
Facebook

51% of consumers said they are more likely to buy a product since becoming a fan on Facebook

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Networking platforms
Customer engagement
Provide information
Provide exclusivity/belonging
Emotional engagement

(Marigold and Faulds 2009)

Th

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Social Media

78% of consumers who Like brands on Facebook said they Like fewer than ten brands

Source: Chadwick, Martin, Bailey 2011

Remember
Technology is merely a facilitator for a marketing strategy that focuses on customer
benefits.
$ The web should be an integrated part of an organisations overall marketing
strategy.

LECTURE 10
Pricing Approaches and Strategies

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Reading: Dolan, R.J (1995) How do you know when the price is right? Harvard
Business Review, September-October, 174-183.

Pricing becoming critical;
- Technology making job for marketers much harder
- media helping customers to access information
- becoming increasingly transparent and comparable

Eg. Apps that scan barcodes that give you the cheapest price

Brick and mortar shops becoming show rooms how can marketers encourage
people to come into store and actually make a purchase?

Chocolate:
Pana 45gm, $6.50, $14.44/100gms
Dairy Milk 220gms, $5.36, 2.44/100gms
Woolworths select - 200gms, $3.21, $1.61/100gms

How do you justify the differences in these prices?
- Distribution costs
- Production process costs
- Positioning brand
- Inputs and quality of those ingredients

Factors affecting Price

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Internal factors
External factors
o Competitors prices and offers
o Disposable incomes
o Consumer lifestyles
o Type of market
" Pure competition
" Monopolistic
" Oligopolistic
" Pure monopoly
o Customer perceptions of price and value
Marketing objectives
Marketing mix strategy
Costs

PRICING POLICY PROCESS

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Factors affecting Consumer Price Sensitivity

Dolan, 1995

Customer Economics
Will the decision maker be paying for product?
Relative cost of item?
Is the buyer the end user?
Does a higher price signify higher quality?
Customer search and Usage
Is it costly for the buyer to shop around?
Are other factors besides price important to the buyer?
Is the buyer able to compare price and performance of
alternatives?
o Is the buyer able to switch suppliers?
" Competition
o How is the product perceived to differ form competitors?
o Are there any intangibles affecting buyers decision?

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1. Selecting the pricing objective

a. Survival (usually short term as not sustainable) Eg. HEAVILY
discounting
Figure 3 Setting Pricing Policy
b. Profit maximisation
c. Market share maximisation
(penetration pricing)
d. Product-quality Leadership
e. Market skimming
2. Determining Demand
a. Estimate demand curve
b. Price sensitivity of Buyer
c. See inelastic and elastic demand

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3. Estimating Costs
a. Fixed costs and variable costs
- Analysing Competition
o Rivalry amongst existing competitors

Figure 4 Cost Considerations

4. Analysing Competition
a. Rivalry amongst existing competitors
i. Competitors price/value (especially strategic group)
ii. Competitive reaction to past price moves
iii. Competitors strategy
iv. Capacity to retaliate
v. Rivalrous nature of industry

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5. Selecting a pricing Method

a. Cost based approaches
i. Cost plus pricing, break even analysis, target profit pricing
ii. Buyer based approaches (value pricing)
iii. Competition based pricing

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Figure 6 Breakeven analysis

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Figure 5 The Market and Demand

6. Selecting the Final Price
a. Develop pricing structure

8 steps to better pricing

"
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Assess what value your customers place on your product/service

Look for variation in the way customers value the product
Assess customers price sensitivity
Identify an optimal pricing structure
Consider competitors reactions
Monitor price at the transaction level
Assess customers emotional response
Analyse whether the returns are worth the cost

Dolan, 1995

LECTURE 11
Implementation, Control & Evaluation of the Marketing Effort

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Reading: marketing productivity: issues and analysis

Implementation
- Marketing planning addresses the what and why of marketing activities
- Implementation addresses the who where when and how
Aaker

Reasons for poor implementation

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Isolated planning
Trade-offs between long terms and short term objectives
Natural resistance to change
Lack of specific implementation plans

The control process

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Goal setting
o What do we want to achieve?
Performance measurement
o What is happening?
Performance diagnosis why is this happening?
o Why cant we forecast, things that werent anticipated.
Corrective Action
o What should be done about it?

Annual plan control

Checking ongoing performance against the annual plan and taking corrective
action when necessary.
Sales analysis
o Measuring and evaluating actual sales in relation to sales targets.
o May involve analysis by product, territories, channels etc

Market share analysis
o To monitor company performance relative competition

Marketing expense-to-sales ratios
o Ratio of marketing expenses to sales will help ensure that the
company is not overspending to achieve its goals.

Customer attitude tracking.
o Qualitative measure
o To monitor changes in attitudes of customers, dealers and other
marketing system participants before the affect sales results
o May use complaint/suggestion systems, customer satisfaction
surveys, lost customer analysis

Profitability control
o Measure profitability of various products, territories, customer groups
and channels.
o Helps management determine whether any products or marketing
should be expanded, reduced or eliminated

Strategic control
o Used to critically review overall marketing effectiveness, often using a
tool called the marketing audit
o Marketing audit is a comprehensive examination of a companys
environment, objectives, strategies and activities to determine
problem areas and opportunities which may impact on the companys
overall marketing performance

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Evaluation of marketing productivity

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(Sheth and Sisodia)

Desired output of marketing is to acquire and retain customers profitability
Productivity includes both efficiency (doing things right) and effectiveness
(doing the right things)
Marketing productivity is the quantifiable value added by the marketing
function, relative to its costs

Marketing efficiency and effectiveness

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Sheth and Sisodia

Satisfied customers will allow for effective resource efficacy and greater
return.
How to measure expenditure?

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Improving Marketing Effectiveness and Productivity

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Sheth and Sisodia

Effectiveness
Leveraging database technology
Front line information systems
The right employees
Productivity
o Functional level changes
" Change from market to customer focus
" Focus on customer retention as well as acquisition
Productivity
o Corporate level changes
" Marketing as an investment not an expense and evaluated on
impact on customer equity