Fundamentals of Marketing

0 · How to Use Thisread first

MKB1700 is assessed by quizzes 10% (best 9) · written 35% (weekly reflections + a "What is Marketing" essay) · a concept-map artefact 15% (~Wk11) · and an interactive oral exam 40% — a THRESHOLD HURDLE (in-person, 1-on-1: you explain & defend your concept map).

The WIN is not listing terms — it is mastering the whole framework and how the concepts CONNECT. That's exactly what the concept map + oral reward. Treat this sheet as the connective map: foundations → customer → STP (Side 1), the mix → planning → "how it connects" (Side 2).

1 · What Is MarketingW1 · Ch1

AMA definition: marketing is the activity, set of institutions & processes for creating, communicating, delivering & exchanging offerings that have value for customers, clients, partners & society. Creating/communicating/delivering = right good/service/idea, right place & time; value exchange = mutually beneficial.

Business rationale: Profit = revenue − expenses; revenue comes from customers (current + future) ⇒ the task is "get customers & keep them coming back."

Marketing as a philosophy: puts customer, partner & society at the heart of decisions (Felton 1959 — integrate & coordinate all functions for long-run profit).

2 · The 5 Orientationsan evolution

1. Production — make it cheap & available (assume demand)
2. Product — best quality/features (risk: myopia)
3. Selling — push hard, sell what we make
4. Marketing — find & satisfy customer needs (customer-led)
5. Societal — needs + society's long-run welfare

A firm's chosen orientation sits in its internal environment.

2b · Triple Bottom LineFig 1.6

How to measure beneficial exchange & the societal orientation: Environmental · Social · Economic. Reused in Pricing objectives & in Planning control.

2c · Exchangedefine

Obtaining a desired product by offering something in return. Types: restricted (2 parties) · generalised (3) · complex (many independent). Org ⇄ Value ⇄ Customers, extended to Society.

3 · Customer ValueW1 · the spine

Value (Zeithaml 1988) = what you get (benefits) relative to what you give up (costs/sacrifices).

Smith & Colgate (2007) — the unit's signature model & the course spine; 4 value types (recurs in Product, Price & involvement):

Satisfaction = performance vs expectations; shows in post-purchase behaviour; happy employees ↔ happy customers. No CLV formula — the unit frames it as "current + future revenue."

Worked read: Garnier micellar water = functional (cleansing) + experiential (feel) + symbolic ("natural" self-image) — name the type, then the benefit that proves it.

4 · Needs · Wants · DemandsW2

Need = state of felt deprivation (physical, social, self-expression). Want = the form a need takes, shaped by culture & individual. Demand = wants backed by buying power. Need=hunger → want=a specific food → demand=funds for the week. Marketers shape wants, they do not create needs.

4b · Maslow's HierarchyFig 4.3

Lower needs first (a need must be largely met before the next motivates); reused in motivation:

1. Physiological — food, water, shelter
2. Safety — security, stability
3. Love/belonging — relationships
4. Esteem — status, recognition
5. Self-actualisation — fulfilment

4c · Key TermsW2

Product = a good, service or idea offered for exchange (goods/services/places/ideas/people/orgs). Market (Kotler) = the set of all actual & potential buyers; size set by demand. Customer vs consumer: customer = purchaser (for self or others); consumer = user. Marketing mix = the controllable 4/7 Ps.

4d · Why It Connectsfor the map

These foundations are the root nodes of the whole map: a need becomes a want, the firm offers value through an exchange, and the four value types decide which benefits the later mix must deliver. Maslow + value types map a need-level onto a value-type — a high-scoring link to draw.

5 · The EnvironmentW3 · Ch2

All forces affecting the firm's ability to create/communicate/deliver/exchange value — continuously monitored. Three layers: Internal → Micro → Macro.

Internal (directly controllable): leadership, structure, the marketing dept & its links to HR/Finance/R&D, the firm's chosen orientation, and employees (job satisfaction ↔ customer satisfaction) as a source of competitive advantage.

5b · Microenvironmentthe industry · can influence

"The industry" — the firm can influence but not control:

• Company — other internal functions
• Suppliers — inputs; close ties = advantage; the value chain (farmer→…→retailer)
• Intermediaries — resellers, distributors, agencies, financiers
• Customers — B2C, B2B, reseller, govt, international
• Competitors — direct (similar product) vs indirect (same need)
• Publics — media, govt, financial, community groups

Competition levels: budget → generic need → product category → form → brand. Market structures: pure / monopolistic competition, oligopoly, monopoly, monopsony (reused in Price).

5c · Macro · PESTELcannot control

Disposable income = gross − tax. Discretionary = disposable − fixed essentials (rent, food).

Worked read: in a cost-of-living squeeze (E), shoppers trade down to Bunnings DIY or Kmart own-brand — an economic force a marketer cannot control but must respond to in the mix.

5d · SWOT (intro)full in W10

The environment scan feeds a situation analysis ("where we are"); SWOT summarises it. Internal S/W = controllable, vs industry average; external O/T = affect everyone. (Full treatment + SMART objectives on Side 2.)

6 · Buyer BehaviourW4 · Ch4–5

Simple model: environment → (marketing stimuli + influences) → decision process → purchase.

High involvement → extended decision-making; low → habitual. Consumer decision process · 5 stages:

1. Need recognition — gap actual vs desired (internal/external trigger)
2. Information search — experiential, commercial, personal, public sources
3. Evaluation of alternatives — choice set + evaluative criteria
4. Purchase decision — brand/retailer/timing/quantity; can be disrupted by others & situations
5. Post-purchase — satisfaction → future behaviour; cognitive dissonance; word-of-mouth

Situational factors also act: physical surroundings, social setting, time pressure, mood. "Perception is reality" — buyers selectively expose, attend, distort & retain.

6b · Influences (Fig 4.1)4 families

• Cultural — culture, subculture, social class
• Social — reference groups (membership/aspirational/dissociative), opinion leaders, family & life cycle, buying roles (Initiator→Influencer→Decider→Buyer→User)
• Personal — demographics, lifestyle/psychographics (AIO), personality & self-concept
• Psychological — motivation (Maslow), perception (expose→attend→distort→retain), beliefs/attitudes, learning

Involvement: low (habitual/impulse) vs high (extended search). Perceived risk = financial/social/emotional/physical/functional (links to cost/sacrifice value).

6c · B2B BuyingFig 5.1–5.2

Buyers: producer, reseller, govt, institutional. Traits: professional, formal, fewer/larger, close ties, derived demand (from consumer demand).

Buy classes: straight rebuy → modified rebuy → new task. Process like B2C but more formal (specs, vendor proposals, supplier review).

6d · BB Connectsfor the map

Buyer behaviour is the bridge between the customer node & STP: the influences (cultural/social/personal/psychological) are the raw material for segmentation bases, and the decision stages map onto the promotion ladder (Side 2). Perceived risk = cost/sacrifice value.

7 · STPW5 · Ch6

Levitt's "Marketing Myopia" (1960): think segments, not products. Target marketing process (Fig 6.5): Segment (identify, evaluate, profile) → Target (select) → Position (image + mix per segment).

Segmentation = partition a market into groups likely to respond similarly to the mix; within-group similarity > between-group. Coverage strategies: mass/undifferentiated · differentiated · concentrated (depends on resources, product/market variability, PLC stage).

7b · Segmentation Basesconsumer

Benefit segmentation (Haley 1968) groups by benefits sought, not descriptive traits — the Australian snack-food segments (nutritional/weight-watcher/guilty/party snackers) are the worked example. Effective segments = SMAP: Substantial · Measurable · Accessible · Practicable/responsive.

7c · Targetingchoose

Select segments to serve effectively & profitably — weigh segment attractiveness (competition, potential, substitutes) vs company fit (resources, objectives, skills, profitability).

7d · Positioningthe mind

Create an image of the brand relative to competitors in the target's mind; differentiate on attributes that matter. Process: map current positions → find the ideal point → continue or reposition → build the mix → write a positioning statement.

Differentiation bases (Kotler): product · services · personnel · image. Competitive advantage = offering buyers greater value than rivals. The mix per segment must be consistent with the positioning, internally coordinated & sustainable.

7e · Profiling & B2B Basesafter clustering

After clustering on behaviour/psychographics, profile each segment with demographic/geographic descriptors so you can find & reach them. Business markets segment by macro-variables (industry, size, end-use, application) + micro-variables (purchasing stage, experience, situation).

Worked read: Arnott's targets "guilty snackers" (benefit base) yet profiles them by age/metro/income so the media buy can reach them.

8 · Perceptual Mapspositioning tool

Plot brands on two axes buyers care about (e.g. price × quality) to see gaps in the market and where your brand sits vs rivals (denim-jeans example: Lee/Levi's/Wrangler).

how to build one1 pick 2 buyer-relevant attributes
2 plot competitors by perception
3 plot the ideal point (target's want)
4 spot the gap → position there

8b · Repositioningflagship case

Triggers: changing needs/fashion, competitor moves, new tech, regulation, "sameness."

Kmart Australia (Roberts et al. 2015): from near-zero profit to $289m EBIT by repositioning to "cut-price chic" — fewer lines, lower prices, on-trend own-brand. The unit's signature STP case: a deliberate shift of the perception in shoppers' minds.

8c · Value Propositionlink to the mix

The mix for each segment must be (1) consistent with the desired positioning, (2) internally coordinated, (3) sustainable long-term. This is the hinge from Side 1 (who & where) to Side 2 (the 4Ps that deliver it).

8d · Side-1 Through-Linefor the oral

One sentence to rehearse: read the environment → understand the customer & their value → segment, target & position → (Side 2) build a mix that delivers that value. Every node on Side 1 hangs off "creating customer value."

8e · Positioning Statementwrite one

templateFor [target segment] who [need],
[brand] is the [category] that [key benefit]
because [reason to believe], unlike [competitor].

A good statement is the brief for the whole mix — it names the segment, the value, and the point of difference each P then delivers.

8f · Foundations Recapside-1 in one line

Marketing creates & delivers customer value through exchange. Read the environment, understand needs & value, then segment-target-position. Side 2 = the 4/7 Ps + the plan.

9 · The Marketing MixW5 · 4Ps → 7Ps

4 Ps (McCarthy 1960) = the controllable variables a firm combines to satisfy a target market & meet objectives: Product · Price · Place · Promotion.

7 Ps (services) add People · Process · Physical evidence — needed because services are Intangible · Inseparable · Heterogeneous · Perishable (the four service challenges).

The mix must deliver the positioning chosen in STP — every P serves the target's value type.

10 · ProductW6 · Ch7

A good, service or idea offered for exchange — Levitt: "a cluster of value satisfactions." Goods–services continuum runs pure-good → pure-service.

Total Product Concept · 4 levels:

1. Core — the fundamental benefit bought
2. Expected/Actual — features, design, quality, packaging, branding
3. Augmented — warranty, delivery, advice, service
4. Potential — all that's possible in future

Relationships: product mix → product line → item/SKU. Consumer classes: convenience · shopping · specialty · unsought (each implies effort, risk & the other Ps — e.g. convenience→intensive distribution, specialty→exclusive).

10b · Brandinga promise of value

A name/term/symbol/design that identifies & differentiates (Kotler) — a promise, a heuristic, an asset. Terms: brand name · brand mark · trademark · trade name. Strategies: individual / family / extension; manufacturer / private-label / generic; co-branding & licensing.

10c · PLC & New ProductsFig 7.3–7.5

Product Life Cycle: Introduction → Growth → Maturity → Decline (each stage = different objective + 4Ps; intro price often cost-plus, growth shifts to penetration).

NPD process: idea generation → screening → concept test → strategy → business analysis → development → test marketing → commercialisation.

Diffusion of innovations: Innovators 2.5% · Early adopters 13.5% · Early majority 34% · Late majority 34% · Laggards 16%. Rate ↑ with relative advantage, compatibility, trialability, observability; ↓ with complexity.

Adoption process (AIETA): Awareness → Interest → Evaluation → Trial → Adoption — the individual's path that aggregates into the diffusion curve.

11 · PriceW7 · Ch8

Price = "a measure of value to both buyers & sellers" — the only P that earns revenue; ties to cost/sacrifice value. 4 influences: Company (objectives & cost) · Customer (perception & demand) · Competition · Legal/ethical (ACCC; price-fixing, deceptive pricing).

Objectives: profit, market share, positioning, long-term prosperity (+ Triple Bottom Line). What price can do: signal quality, gain position, manage demand & competition.

11b · Cost & Break-Eventhe floor

Costs set the price floor. Cost-plus adds a mark-up to unit cost.

cost-plusUnit cost = Variable cost + Fixed cost ÷ Unit sales
Sell price = Unit cost + Mark-up

break-even volumeBEQ = Fixed cost ÷ (Price − Unit variable cost)
e.g. $40,000 ÷ ($20 − $12) = 5,000 units

11c · Setting the Pricevalue-based

Value-based: set by buyers' perceived value — ceiling = perceived value, floor = cost. Also competition-based (going-rate, sealed-bid) & performance-based.

Demand: price elasticity = sensitivity of quantity to price. Elastic (sensitive) vs inelastic; sensitivity ↓ with necessity, few substitutes, prestige, low share of income.

11d · Skimming vs Penetrationnew-product

Adjustments: discounts/allowances, segmented, psychological ($9.99), geographic, dynamic. Mix pricing: bundle, captive, by-product, optional, line.

Worked read: Kmart = everyday-low + psychological points; Qantas = dynamic demand-based fares.

11e · Price Connectsfor the map

Price is the most visible expression of positioning (premium vs value) and is bounded by customer value (the ceiling) and cost (the floor). It draws on the competitive structure from the environment topic and on elasticity from demand. A captive/optional case = Apple iPhone accessories.

12 · Place / DistributionW8 · Ch10

The channel = the chain between producer & consumer. Intermediaries (resellers, distributors, agents, physical-distribution & financial firms) add efficiency & reduce the number of transactions (the Weet-Bix/milk/bread grid).

Channel levels: Producer→Consumer (direct) · +Retailer · +Wholesaler+Retailer · +Agent/Broker. B2B mirrors this with industrial distributors. More levels = wider reach but less control.

12b · Distribution Intensitymatch the product

Structures: Vertical marketing systems (unified producer-wholesaler-retailer) · horizontal · hybrid/multichannel · franchising (Coca-Cola Amatil bottling).

12c · Channel Powermanage it

Manage risk, power & conflict (vertical & horizontal). Arnott's vs Coles: a Tim Tam supply/price dispute showing a powerful retailer pressuring a manufacturer — channel power decides who captures margin & shelf space.

12d · LogisticsFig 10.2

Physical distribution flow: order processing → inventory → warehousing → transport (road/rail/sea/air/pipeline). Cost trade-off: more warehouses/faster transport ↑ service level and ↑ cost — minimise total cost at the target service level. Info systems cut uncertainty.

Retailing = selling to final consumers; decisions on assortment, atmosphere, service, price; trends = giant/category-killer & non-store/online.

12e · What Channels Domember functions

• Collect market information
• Promotion & customer contact
• Matching & negotiation
• Physical distribution & financing
• Risk-taking

Place connects: the channel must be consistent with the positioning — intensive for a convenience good, exclusive for a specialty/luxury brand. Distribution intensity ties straight back to the product class (Side 2 col 1).

13 · Promotion / IMCW9 · Ch9

IMC = coordinating all promotion to send one consistent, effective message to the target — and to stay consistent with product, price & place (Palmer 2012).

Communication model (Fig 9.1): Sender → encode → message/media → decode → receiver, plus noise + feedback + overlapping fields of experience. Purposes: inform · persuade · remind.

13b · Hierarchy of EffectsNOT AIDA

The unit's buyer-readiness ladder (in place of AIDA):

the ladderAwareness → Knowledge → Liking →
Preference → Conviction → Purchase

• Cognitive (think) — awareness, knowledge → provide facts
• Affective (feel) — liking, preference, conviction → shift attitudes
• Behavioural (do) — purchase → stimulate action

Match the tool to the buyer's stage on the ladder.

13c · Push vs Pulldirection

Push — promote to the channel (trade deals, personal selling) so they push product to buyers. Pull — promote to consumers (advertising) so they demand it from retailers.

13d · The Promotion Mix6 tools

1. Advertising — paid, mass; low cost/exposure but easy to ignore
2. Personal selling — one-to-few; can close but costly
3. Sales promotion — samples, coupons, contests; immediate sale
4. PR & publicity — credible but uncontrolled
5. Sponsorship & events
6. Direct & digital — mail, telemarketing, social, "viral"

Garnier @ Australian Open = an IMC touchpoint case. Evaluate via brand/product recall, sales, share — tied to objectives.

13e · Promotion Connectsfor the map

Promotion communicates the positioning set in STP, and the hierarchy-of-effects ladder mirrors the consumer decision process (awareness↔need recognition, conviction↔evaluation, purchase↔purchase). IMC's whole point: every P sends one consistent message about the value promised.

Tool-to-stage: advertising/PR build the cognitive rungs; sales promotion/personal selling push the behavioural rung (purchase).

14 · Marketing PlanningW10 · Ch2 & 15

Cycle: Understand → Create → Communicate → Deliver, wrapped in research. Brooksbank (1990) 7-stage process:

1. Adopt the marketing philosophy
2. Define the business mission (IKEA vision)
3. Conduct situation analysis
4. Develop marketing objectives
5. Formulate marketing strategy
6. Design the marketing organisation
7. Implement marketing control

Situation analysis (Fig 2.5): four lenses — Company (internal) · Market · Competitive · Environmental (PESTEL). Mission = a clear long-term vision of products, markets & values (IKEA's vision vs business idea).

14b · SWOT & SMARTsummarise · set

SWOT summarises the situation analysis (no new info). Internal = Strengths/Weaknesses (controllable); external = Opportunities/Threats (industry-wide). ~5 factors/box, all traceable to evidence.

SMART objectivesSpecific · Measurable · Actionable ·
Reasonable · Timely

14c · Control & Metricsa plan ≠ a document

Control loop: set goals → measure → evaluate → corrective action. Marketing metrics (awareness, preference, loyalty, satisfaction) link to financials (sales, share, ROI); Triple Bottom Line reused as a value/control measure.

Objectives split: financial (profit, cash flow, ROI, ROS) + marketing (unit sales, market share, distribution penetration, new products, price). "A plan is not just a document" — implementation is the critical element.

15 · Marketing ResearchW11 · Ch3

MkIS (Fig 3.1): three inputs to a decision-support system — market intelligence ("what others say") · internal reports ("what you know") · market research (commissioned for a specific problem).

Types: exploratory (gather info) · descriptive (characteristics) · causal (if-this-then).

15c · Improving ProfitBrooksbank

Two levers: increase volume (expand/penetrate the market, convert non-users, raise usage rate, win competitors' customers) or improve productivity (raise price, cut costs, rationalise the product mix).

15b · The Research Process5 steps

1. Define the problem — symptoms vs problem → research brief
2. Research design — method & plan
3. Data collection
4. Data analysis
5. Findings — report: brief, method, results, limits, insight

Data: secondary first (ABS, Nielsen, Roy Morgan, IBISWorld — already exists) then primary (collected for this purpose). Methods: quant = surveys, experiments; qual = depth interviews, focus groups, observation. Ethics: AMSRS code + Privacy Act.

16 · HOW IT CONNECTSthe concept-map cheat

The whole unit is one value chain — the spine to draw & defend:

the through-lineENVIRONMENT (micro/macro)
→ understand the CUSTOMER & their VALUE
→ STP (segment · target · position)
→ MARKETING MIX (4/7 Ps deliver the value)
→ PLANNING & CONTROL (research feeds back)

Every concept is a node hanging off "creating & delivering customer value."

16b · The Through-Lineslink labels that win

• Value threads all of it: needs→value types→positioning→each P
• Smith & Colgate value reappears in Product, Price & involvement
• PESTEL/competition feeds situation analysis & SWOT
• STP → mix: positioning dictates every P
• Hierarchy of effects ↔ buyer decision process stages
• Research wraps the whole loop (Understand→Deliver)

17 · Oral Exam Discipline40% · hurdle

You explain & defend your map 1-on-1: why each node, why its level, why each labelled link. Justify placement & relationship wording, not just terms; rehearse "X links to Y because…" out loud; pin a real case to each big concept.

Key cases: Kmart (repositioning) · Arnott's–Coles (channel power) · Garnier @ Aus Open (IMC) · Coca-Cola Amatil (intensive/franchise) · snack-food (benefit segmentation) · IKEA (mission).