Written by Christopher Melotti
In today’s fast-paced and complex business environment, it’s highly advantageous for everyone within the corporate world to have a strong understanding of all of the active functions and departments in an organisation.
Why? Because it helps you see the bigger picture when undertaking strategic decisions which can ultimately affect the success of that organisation.
And nothing is more important than knowing Marketing: the churning turbine that aims to devise strategy and implement tactics to connect a business to its customers to generate results.
Marketing is a versatile, crucial and ever-changing practise that is often unfortunately misunderstood or underappreciated, but also one with unlimited depth and infinite purposes.
Why should every business professional understand Marketing?
Customers and markets today are volatile, highly educated and evolving every minute of the day with shifting dynamics, demands, demographics and dimensions.
The Marketing department of an organisation must always be moving at an equally high speed to ensure it can answer such a demanding call by:
- researching and understanding the market
- making effective and efficient strategic decisions
Both will ultimately determine how a business becomes and remains successful.
So, I wrote this introductory Marketing Theory Guide to cover all the Marketing fundamentals for every reader seeking to learn more about this amazing practise and expand their understanding of its complexity.
I hope you get as much out of reading this as I did writing it.
ABOUT THE AUTHOR
Christopher Melotti
Brand Comms Strategist, Marketing Advisor & Message Marketer Founder of Melotti Media
Christopher Melotti is a well-established and renowned Australian Marketing Professional who lives by the motto, “Continually challenge, consistently grow, constantly humbled, confidently show.”
Christopher founded, manages and is the Creative Director of Melotti Media Copywriting and Message Marketing Bureau, where he and his team work with a wide range of clients from Government, Medical and Education, to Marketing, Legal Firms, Finance and more.
Chris’ goal is not just to articulate brands and mastermind messaging strategy, but to demonstrate the potential that clear, consistent communications offer businesses. Everything Melotti Media does is about evolving marketing practise by providing superior, relevant value (entertainment and education) through proactive action.
Christopher Melotti is also a highly-sought Business Advisor and Marketing Consultant.
Christopher has won many prestigious awards for his work, the most notable being the Australian Business Champion’s Copywriting Business Of The Year 2022, Australian Achiever Awards 2021 National Winner for Marketing Services and the Chief Marketing Officer (CMO) of the Year award in 2017 (Australian Marketing Institute), and teaches a range of professional business marketing classes across Australia.
Chapter 1: Introduction To Marketing: An Overview
What is Business Marketing?
The essence of Marketing is the entire process of meeting a customer’s need through an exchange of value. This exchange provides them with satisfaction, in return for revenue and profit.
Simple – in theory!
When this total marketing exchange is performed effectively, it will reap the desired results: the customer is pleased, and revenue is made.
However, if poorly executed, customer dissatisfaction can occur, which can have very detrimental consequences, particularly within the highly connected world that exists today.
Of course, it’s far more complicated and technical than this in practise, especially in today’s global economy. This is quite a simplified definition, because Marketing encompasses a whole range of different elements which all combine together to achieve the final outcome, and these can vary from organisation to organisation, consumer to consumer, market to market, and so on.
What roles should Marketing play in a company?
- Marketing is the communication hub to signal and educate customers
- Marketing is the knowledge centre which actively researches and scans the market for trends, opportunities and threats that the organisation can react and adapt to
- Marketing sets the product price to ensure that revenue targets can be achieved whilst providing the customer with the right information for their judgement
- Marketing organises the delivery and logistics of bringing the customer and product together
- Marketing performs research and development into product design and execution so that it meets the customer’s demands appropriately
- Marketing positions and differentiates an organisation’s offering to the market to ensure a competitive advantage over similar products and organisations
- And the list goes on.
In this context, ‘organisation’ encompasses everything from an individual, sole trader, partnership, business, company, multinational and so on. Additionally, ‘product’ refers to both tangible goods, intangible services, and software platforms, as well as a mixture of all.
Why should I learn about Business Marketing?
Marketing is a highly versatile practise that can be applied in so many ways by such a large range of people, so it’s best to keep an open mind and think about how your own company can adopt these marketing concepts.
For example, how a person employs marketing techniques to promote themselves will be vastly different to the way a conglomerate company does, however, the core essence of Marketing behind all cases remains the same.
Let’s now delve into how Business Marketing works.
The Marketing Cycle
The entire process of Marketing revolves around a continuous succession, known as The Marketing Cycle.
- Firstly, there is a general need, want or demand by consumers which, in turn, creates a collective group, known as a segment or market.
- This market, comprised of consumers who all share the same demand, is evaluated for its potential by a company.
- The company looks at several different factors (which will be discussed later) in an attempt to evaluate how profitable it will potentially be, based on factors such as the level of competition that does and could exist, the size, the characteristics, how accessible the customers are, how well the organisation can answer their demands, and so on.
If an organisation deems the market a profitable opportunity, they create a solution to the demand in the form of a product. A product can be a good, a service, a software platform or a mixture of all, and is anything that can be offered to a market that is of value to them. This product is specially designed with specific features which satisfy the market’s requirements to a certain extent, creating value.
An exchange takes place, and then the process repeats.
An Example of The Marketing Cycle
As an example, a financial organisation conducts market research and discovers a niche audience of younger couples between the ages of 20 to 30, looking to purchase their first home. However, the larger banks are currently too restrictive, making it far too difficult for these couples to apply for a mortgage.
The financial organisation may believe this niche is something they can successfully appeal to by offering a more ‘young-couple-friendly’ package. They, therefore, investigate the features that the target audience desires (such as less restriction, more flexible payment options, greater customer service, and so on), whether there are enough potential young couples to make it a viable offering, the level of current and potential competitor activity, and so on, before finally deciding to enter the market.
They then launch a new, more flexible mortgage product and advertise it directly to young couples, filling that niche. These customers take up the offering and gain satisfaction, paying the financial organisation and thus completing the Marketing Cycle.
How does Marketing affect customer judgement?
Marketing directly affects the way a person judges the value of a product, service or platform, and the level of customer satisfaction they receive.
Just because an organisation creates a product tailored to meet a market’s need, doesn’t mean it’s the only one, nor is it the best or worst option available.
All individual consumers subjectively judge their perceived value of your product before, during and after their purchase.
As I said above, Marketing is based on an exchange or trade: this means that a consumer must part with something of value (usually money) for the product in question. This ‘parting’ gives the consumer the ability to weigh up the value and level of satisfaction they gained (consuming the product) against what they have foregone (the cost of obtaining the product).
It’s important to remember that the value trade doesn’t always involve monetary costs alone.
While the majority of products are paid for with money, there are other additional and equally valuable costs which also go into each transaction, such as the amount of time spent on researching alternatives and actually purchasing the product.
For example, when a person wishes to purchase a printed book, they not only factor in the actual monetary cost of purchasing a copy when determining its value, but they also consider (even if it is subconsciously):
- the time spent looking for online book reviews
- the mental exertion of evaluating if they like the story from the synopses
- the time and petrol cost of driving to the shops
- the time expended in finding a parking spot and lining up in the queue,
- and so on.
The same goes for additional benefits.
In the book purchase example, the person may actually enjoy visiting a bookstore and looking at all of the interesting cover art designs sprawled across the boundless shelves, and this, therefore, adds extra value to the individual book because it provides them with the opportunity to visit a store which is essentially a pleasant experience for them.
Customer value, therefore, can be calculated conceptually by dividing total benefits by total costs.
- Total benefits include all of the tangible, physical gains of a product (known as the functional benefits), as well as the emotional benefits that go with the purchase. emotional benefit of being fashionable and making the wearer feel good about themselves.
For example, a new pair of jeans provide the functional benefit of clothing and comfort, together with the emotional benefit of being fashionable and making the wearer feel good about themselves.
- Total costs: include the monetary cost, as well as the exertion of the consumer’s time, energy and even emotion involved in the acquisition of the product.
If a consumer is stressed or anxious about a purchase, this would be considered an emotional or mental cost which can lead to a devaluation of the product in their mind.
Why do you need to know the benefits vs costs value in marketing?
This insight is very useful for Marketers, as the benefits divided by the costs give an insight into a consumer’s value of the entire product purchasing experience.
The person may desire the product, but if they believe the monetary or time costs outweigh the benefits gained, they will value the product low and therefore not endeavour to purchase it.
The same goes for the reverse: if the customer believes that the benefits of the product outweigh the costs, then they will bear the loss of money and the time required to drive to the shops to obtain it, as the overall outcome is a gain for them.
Your customers may also experience:
- turmoil of purchase
- buyer’s remorse.
What is the Turmoil of Purchase?
People can often experience what is known as the ‘turmoil of purchase’, which is the mental expense they experience in acquiring the product, whether that be frustration with queues in a store, not having the correct size or having too many options to choose from, and so on.
Marketers need to consider this as it’s all part of the customer experience.
What is Buyer’s Remorse?
‘Buyer’s remorse’ is a potential emotional conflict that a customer may experience after the purchase, when they begin to analyse how accurate their belief and pre-purchase assessment was compared to now, post-purchase.
That’s why Marketers often provide warranties, guarantees and post-purchase support to eliminate potential remorse.
How Marketing can influence a customer’s perceived value
All of these types of customer experiences must be taken into account by a Marketing department, as success lies in ensuring that a potential buyer always views the benefits as far greater than the costs.
An effective Marketing strategy, therefore, always aims to reassure the customer so they never associate a negative feeling with a particular product.
A good example is the Harley-Davidson motorcycle.
There are many different alternatives of motorbikes on the market more powerful and far cheaper, however, the brand Harley Davidson still offers a lot of value to a certain group of avid motorcyclists, simply because the brand carries more emotional weight than the simple functional benefit. The customer gains more value from the prestige, historical brand reputation and image that the brand represents.
How Marketing impacts Customer Satisfaction
Customer satisfaction is essentially how the expectations of a customer are met by your product, service or platform.
- If a product over-delivers in comparison to what a consumer expected, satisfaction will be very high.
- The opposite is also true for a low level of satisfaction: if a product falls short of the level of needs a customer was expecting to be met, their satisfaction with the purchase will be low.
Marketing efforts aim to ensure that overall customer satisfaction is high so that the product has a positive reputation within the marketplace.
This leads to repeat purchases by happy customers and the spreading of positive word-of-mouth.
People today are forever increasing their expectations due to the rapid evolution of technology, competitors and social media.
Modern marketing is not just about the creation and delivery of the right product: it’s also about managing expectations.
While a product will never please absolutely everyone, it’s important to ensure the greatest satisfaction within reasonable resources and confines.
This leads me to Marketing’s role in nurturing customer relationships.
What is Customer Relationship Marketing?
Managing value and customer satisfaction has created what is known as Customer Relationship Marketing. This basically means that organisations view the consumer as the ultimate judge of their product, and therefore, building a strong relationship with them while satisfying their needs leads to customer loyalty, which is a goal all marketing strategies should strive for.
Customer Relationship Management (CRM) software is commonplace now within most businesses, and consists of database systems which allow the tracking of all interactions between them and each customer. These software packages help foster relationships with specific people by driving positive experiences through techniques such as automated marketing, distributing personalised content, offering discounts, communicating relevant messages, anniversary reminders of purchase dates, and so on.
Why is Customer Retention so important in Marketing?
Retaining customers in a market is a key driver of organisational success, and yet something that is all too commonly overlooked.
While gaining new customers is certainly an objective of Marketing, it’s often far easier (and potentially more profitable) to service and maintain current customers who are already familiar with and like a business’ product, than to be forever searching for new ones.
Losing current customers results in less demand for a product, a drop in brand loyalty, and significant financial loss.
Often, an organisation will encourage feedback, especially complaints, as this means that they can evaluate the weaknesses in their offering and attempt to employ a recovery strategy to retain the customer. It has been shown that making a mistake and then correcting it, be that via an apology, a refund or sending free stock, etc., can greatly increase customer loyalty.
This is because people want to be heard and acknowledged, and when an organisation does this well, they benefit from the resulting advocacy, PR and word-of-mouth.
With the rise of social media, bad feedback can reach further than ever before. This means that bad experiences and publicity can severely cripple a business. Employing a customer recovery strategy which directly addresses such cases can result in avoiding such associated losses.
The Evolution of Marketing Practise
The way a business executes Marketing typically evolves as they grow and mature.
A company often starts at the earlier stages (1, 2 & 3), but you must strive to get to at least 4. The further your company’s Marketing evolves, the more effective your business will be.
1. The Production Concept
This is where you focus on the production of products and selling them to a market as is. However, while this is a cost-effective and fairly simplistic beginning, organisations soon discover that only caring about production doesn’t always fit the demands of a versatile group of consumers.
For example, a new candle brand will often focus more on the oils and the wax, while hoping there is a market for them.
2. The Product Concept
Next, the focus will shift on differentiating a product’s features based on what the company believes. Here, the customer is made to fit the product, and not the other way around which can be very limiting.
Tech start-ups get stuck here a lot. They make their platforms bigger and bigger, cramming thousands of features into them, which typically overwhelms the customer rather than provides more value.
3. The Selling Concept
Following this comes the selling concept, which revolves around utilising heavy promotion and a pushy sales force to drive sales through persistent communication with the market.
Early companies try this, as they’ve mastered the production and product, and are now desperately trying to find a buyer.
We see examples of these all of the time, especially in the digital space today.
4. Marketing Concept (where most businesses are today)
Companies should be striving to reach this step, which involves conducting business by focusing on the customer as the origin. This is done by connecting far better with consumers, segmenting the market and investigating their individual needs first, and then maximising consumer value and satisfaction by tailoring the product to match, setting an appropriate price, communicating effectively and ensuring delivery was convenient.
Basically, it puts the customer first, and answers their need with production, selling and product concepts, rather than the other way around. This is a very internally focused concept and is extremely effective.
Often, organisations take it a few steps further than this.
5. Societal Concept
While not all do this, the benefits of an organisation which focuses on what’s known as the societal concept are quite high. This is basically taking the above marketing concept and adding a socially responsible aspect to it. The societal concept looks externally and not just internally within an organisation.
For example, products can be environmentally friendly, contribute to charities, sponsor events and so on, benefiting the larger community. It revolves around making a profit by simultaneously satisfying consumers and acting in a way which benefits society too.
The positive repercussions of this can be very beneficial for an organisation as consumers seek more from them than just a good product.
I believe we now need to shift forward to the next stage, which I have coined “Empathetic Marketing”.
6. The Empathetic Marketing Concept (where companies should aim for)
Empathetic Marketing means not simply scoping out the consumer and surrounding society alone, then throwing a generic blanket over it all, but delving deeper to really connect to truly understand what the priorities of consumers are and what parts of their external and internal environments actually have relevant meaning to them.
This is completely possible now too, given the advancement in technology: it is up to us as Marketers to catch up, and this marketing theory guide can be the first step in making that change for the better.
What is Empathetic Marketing?
Empathetic Marketing involves focusing on customers as individual human beings living within communities and societies. As such, empathetic marketing strategies work across the entire customer journey, providing value long before and long after the purchase.
This means a brand aims to earn trust, foster a connection and maintain a relationship with customers, rather than seeing them as mere “transactional consumers”.
Why adopt Empathetic Marketing?
The practise of marketing is very different these days, with organisations shifting away from just advertising, and towards what I call Empathetic Marketing: developing a strategy that focuses on catering to the human person, while encompassing the marketing and societal concepts, above.
This means that your Marketing is about creating a thriving brand that people actually want to be associated with, because you have a good culture, a commendable ethos and a vision that communities can feel connected with.
Empathetic Marketing aims to create an infectious movement within your target audiences that your brand leads by going beyond just the transaction and standing for something worthwhile.
Examples of Empathetic Marketing
A few examples of empathetic marketing include:
- Business blogging, which reaches people by providing valuable, entertaining and informative content that engages them in a less intrusive way.
- PR activities draw people in and encourage them to join the conversation, thus creating highly coveted word-of-mouth.
- Podcasting is usually free and enjoyable for people to listen to at their convenience, and if produced well, will gain a following of people who actively download each episode, ending up as advocates.
- Social Media connects people with each other and offers advice and opens forums, thus easing the barriers to purchase.
These examples demonstrate the approach of empathetic marketing in that they treat customers as humans with individuality, not just as consumers with money to be extracted.
The distinctive feature of empathetic marketing is that it encourages all marketing efforts to offer people wholistic value, and not just the final product itself.
By offering interesting content at all stages rather than pretty pictures of the product with a price tag, Marketing is more catered to their satisfaction at all touch points.
Why modern Marketing needs to evolve now
Today’s audiences expect more than noisy, forceful ads.
They want to be catered to, appreciated, wooed and persuaded. They distrust forceful advertising, and instead, look to other sources they deem as more trustworthy. These other sources are essentially other types of marketing executions (for example, blogs, podcasts, etc), so it’s, therefore, crucial for an organisation to provide these avenues, facilitate them or at least participate.
However, this doesn’t mean that you can use marketing to manipulate them in newer, subtler ways.
Today, people are highly educated and informed, and are extremely judgemental about these channels, so effective marketing requires high-quality efforts. Poor executions and uninspired campaigns will fall short.
What today’s Marketing looks like
Today’s marketing channels are new, innovative, fluid and highly digital, and so marketing efforts must reflect this, offering customer engagement, well-researched information, and interactive advice.
The key to successful marketing is to value your customers; engage with them, offer them advice, respond, invest your time in them and customise your offering to them so that their experience is ultimately unique and rewarding.
This is not simply recommended – it is essential, because your target audience now expect it. There are too many competitors out there waiting for your organisation to ‘drop the ball’.
Marketing is no longer about forcing advertising down a customer's throat; it's about getting to know your customers and being interested in what they really want, their preferences and opening communication to build genuine relationships.
Think carefully about them and how your product, service or platform will benefit them. Then proactively actively engage with them to demonstrate your empathetic marketing.
The Marketing Mix: The 8 Ps of Marketing Strategy
When developing your Marketing Strategy, you need to consider the Marketing Mix.
The Marketing Mix includes the 8 strategic pillars of Marketing. Essentially, for every Marketing pillar, you can apply these tactical “levers” to execute your campaigns.
Price
Price refers to the total cost of the product. As already mentioned, this is a monetary cost, as well as other costs such as time, effort and mental exertion.
Beyond just revenue generation, price can be leveraged as a communication tool for your audience. You can be a loss leader, a premium price setter and so on. It all depends on your strategy.
Product
Product (which includes services and software platforms) revolves around all attributes of the product offering that are created by an organisation to satisfy customer needs. This includes invention, engineering, innovation, research and development, concept testing, physical features, packaging, functionality, colour, size, weight and so on.
Promotion
Promotion is the entire spectrum of communication and advertising techniques which educate and persuade customers to be interested in the product.
Place
Better known as distribution, Place encompasses all of the logistical practises employed in bringing the product to the consumer, ranging from physical transportation, electronic delivery, the vertical length and width of a supply chain, inventory control, agents, warehousing, and so on.
Positioning
Positioning refers to the marketing technique of where a specific product sits in the market and how it is viewed by audiences. It’s basically a product’s reputation. For example, is the product a low-cost alternative, or an expensive luxury item with lots of prestige?
People
People describes the human element of the product, platform or service being carried out, such as customer service, client relationships, sales personability, bedside manner, the experience, professionalism and expertise.
Process
Process incorporates all of the steps involved in carrying out the product, platform or service delivery to produce a gain for the customer, such as standard operating procedures, methods, systems, rules and processes.
Physical Evidence
Physical Evidence is the associated tangibles that the provider uses and the customer will experience which have an impact on how they rate the experience. For example, the way a lawyer dresses, the app that a Real Estate agent uses or the quality of the tools a builder uses.
What’s the ideal approach to Marketing?
The best approach to marketing is called the “Wholistic Marketing Approach.”
The Wholistic Marketing Approach is a conceptual philosophy which suggests that a successful organisation unites the four key Marketing elements in one united operation:
- The Marketing Mix (the Marketing Ps, above)
- Customer Relationship Marketing (CRM)
- Internal employee satisfaction, and
- Practising Empathetic Marketing
In other words, if your business is ticking all four of these boxes, then you’re definitely set up for success.
By conducting organisational operations with these four elements, a business ensures that its main priorities offer the greatest potential for growth and progress.
How does Wholistic Marketing support business success?
The marketing function of an organisation lends itself heavily to how successful an organisation is. How?
Well, this is because the marketing function investigates the current position of the organisation, both internally and externally, and then develops strategies, formulates tactics and executes actions which all produce the benefits an organisation strives for.
Everything customers know about a business comes from Marketing – which means your marketing needs to be coordinated and deliberate.
That’s not to say other functions are not also critical!
But the very observant and communicative nature of Marketing, as well as the critical role it plays, means that the way a Marketing department operates can heavily impact an organisation, both positively and negatively.
Introducing The Marketing Plan
A Marketing Plan is an ever-evolving document within an organisation which outlines marketing’s analysis and proposed efforts over a particular time frame to achieve organisational success.
It involves the following elements.
Overview and Executive Summary
As the title suggests, the first section is a quick snapshot of the entire marketing plan that will follow this section.
Current Position
This section outlines everything to do with the organisation’s position as it stands currently, both internally and externally. It analyses the current market and its trends, current competitors, all external related environments as well the organisation’s strengths, weaknesses, opportunities and threats.
Objectives
The range of goals are outlined here, which can include financial goals as well as marketing goals, such as greater share-of-voice, market share, reputation, reducing product lines, and so on.
Strategy
The proposed approach that will be taken in order to answer each objective.
Tactics and Action Plan
Detailed explanations of executable steps of the strategy that will deliver results to achieve the objectives.
Projected Performance
Forecasted results of each deliverable.
Control and Evaluation
This section details how the entire plan will be monitored to ensure that it continues on track, and how it will be amended should circumstances change.
Chapter 2: Understanding Your Marketing Environment
Environments around an Organisation
For marketing efforts to be successful, a thorough understanding of the environments surrounding an organisation is vital because they can have varying impacts, both negative and positive, as well as a mixture of both.
Market Environments can be classified as two types: micro and macro.
- The micro-environment consists of all of the influential parties directly around an organisation, and thus have a close and direct impact. These include the organisation itself, its suppliers, competitors, partner companies, intermediaries, customers, and publics (such as the media, consumer groups and so on).
- The macro-environment consists of all of the influential, over-arching parties that, while aren’t in direct contact with an organisation, have a larger impact due to their nature. These include the demographics or characteristics of the larger markets and society, economic forces, the natural environment, technological forces, political, legal and governmental forces, as well as larger cultural impacts.
Competitive Forces within a Market
Competition always has a direct impact on your organisation, and that impact must be addressed in order to remain successful.
The best way to analyse the competitive strength of your company is to assess five key aspects:
- The current industry competition, or segment rivalry between businesses
- How much power the suppliers have
- How much power the customers have
- The potential threat of new competitors entering the market
- The threat of substitute products
By judging the extent of these five forces, you can determine how tough the competitive force is within a market.
These forces must all be identified and addressed when competing in the segment, and associated strategies devised in your marketing plan.
The role of Market Analysis in Marketing
Marketing must always be able to gain an understanding of the current situation the organisation is in within a market.
By doing so, a marketing strategy and action plan can be devised to:
- correctly leverage strengths
- minimise or remove weaknesses
- capitalise on opportunities and
- defend against threats.
One way to analyse the market is through a SWOT Analysis: Strengths, Weaknesses, Opportunities and Threats.
The first two are internal to the organisation and can be a list of what the organisation does well (strengths) and what it doesn’t (weaknesses). The last two are external to the organisation and comprise of a list of potential events on the horizon that an organisation must always be aware of to ensure that it can perform to either capitalise on (opportunities) or deal with to minimise (threats).
The importance of Market Research in Marketing
Naturally, gathering information and performing research is a fantastic way to gain knowledge about a market. There are many different types of research goals, such as those based on discovering the current level of customer satisfaction, potential new innovations, possible product redesigns to better match customer demands, product testing, promotional research and so on.
Market research follows what is known as the research cycle:
- first, the problem must be clearly defined. The more concrete this definition, the better the research will be as there is a clearer target to aim for.
- Second, a research plan is developed.
- Third, the research is implemented and lastly, the data is interpreted and made available in a report.
An organisation can maximise its use of market research by establishing a strong Marketing Information System (MIS).
What is a Marketing Information System?
An MIS is the title given to how an organisation approaches the entire market research process. An effective MIS weighs up the benefits and costs, and then determines what extent of research is possible and/or required.
After assessing the need for information and research, the MIS must also devise a system for effective data collection, analysis and then the distribution of results to the right parties, to ensure the insights are implemented into the organisation’s overall strategy.
The role of Primary and Secondary Research in Marketing
Upon conducting the research, there are two types of classifications, both with their purpose, benefits and costs.
- Primary Research is when a team conducts a completely new, very tailored and specific research project which aims to directly address the specifically defined problem at hand. While this is expensive in a monetary, resource and timing sense, it produces the most accurate and most detailed information about the problem it is attempting to address because all actions and efforts are specifically designed solely for that one problem.
Primary research usually comes after secondary research has been conducted. This can include observational data, research groups, interviews, subject testing, product trials, customer surveys, questionnaires and so on.
- Secondary research refers to absolutely every prior piece of research ever conducted by other parties or by those on different projects to the defined problem at hand. These include past research plans and projects, internet research, white papers, essays, research journals and so on.
While these forms are cheap, abundant and very accessible, it is data that has been collected by other parties which means it may not perfectly fit the current defined problem, there may be accuracy issues, it may be too old or even biased.
Regardless of research type, to be of any use in powering marketing strategy decisions, market data must aim to be relevant, accurate, current and impartial.
Collecting Data for a Research Project
There are many different ways to collect data, each with their own characteristics, channels and methods.
The Approach
Firstly, the approach. You can focus on the observational approach, which revolves around exploratory research by watching behaviour, for example: focus groups. The second is the descriptive approach, through surveys and questions, and the last is the experimentative approach, which involves utilising groups to determine the cause-and-effect relationship, known as causal research.
The Sample
Choosing a population sample for research is another key attribute which can greatly affect the research outcome. Questions like how many subjects, who is to be surveyed and how the sample is chosen are all important, and must be carefully considered to ensure the correct method is utilised for the purpose of the study.
Probability Sample (Randomly Selected)
Statistically speaking, a randomly selected subject pool is usually the most desirable when conducting research, simply because it minimises biases, providing the purest results as a reflection of the whole population. There are three main types:
- A simple random sample is where all members of the target population have a completely equal chance of selection at random.
- A stratified random sample is where a particular characteristic is chosen first (such as age or location), and then from that specific group, all members have an equal chance of random selection.
- Lastly, a cluster sample is where the total population is divided into subgroup clusters and the research is conducted on those only, rather than the whole population.
Non-probability Sample (Non-Random Selection)
At times, there are reasons for introducing deliberate biases into sample selection by not selecting subjects at random. The following are examples:.
- A convenience sample is where the population most accessible is chosen as access to the whole population is just not possible.
- A judgement sample is where the researcher decides who to choose based on their belief of which population members best represent their target.
- A quota sample is where specific numbers of the population are the goal of the research, rather than random representation.
How to utilise “Big Data” in Marketing
Big data refers to the phenomenon where, today, huge amounts of easily accessible, live data is available pretty much at our fingertips, allowing people to make educated decisions almost instantly. Big data has rapidly changed every market and industry, especially with the rise of social media and the internet.
Marketers must take full advantage of this availability, not only as an information resource, but also to develop innovative and disruptive solutions for the market.
Chapter 3: Assessing Customer Behaviour
Environments Around an Organisation
The Buyer Decision Process
Whether B2B or B2C, a person progresses through a series of experiential steps when acquiring a product to satisfy their needs. They are as follows:
The size, complexity and frequency of this process depends on the buyer themselves and the nature of the purchase. Things like the cost, risk and impact of the outcome all influence the nature of this process.
For example, a buyer will go through more carefully when purchasing a house versus a candy bar.
Problem Recognition
Once a consumer’s actual state and ideal state are not aligned, a consumer senses a problem that requires rectification. If their actual state remains the same, but their ideal state lifts, this is the recognition of an opportunity or want (such as a nicer car or house). If their ideal state remains the same but their actual state falls, this is the recognition of a need (such as hunger or thirst).
Different consumer segments are driven differently, and have different ideal and actual states.
Information Search
After a consumer identifies their need or want, they go on the hunt for information. This can include internal (memory or experience) and external (the internet, commercials, media, reviews, customer service, family and friends) sources.
There is also the bias of plain information (straight facts) versus persuasive information (such as that from an advert). A consumer naturally chooses which kind of information to follow and trust.
At the information search stage, a buyer begins to weigh up total benefits over total costs to determine their own feelings about how certain products may satisfy their needs.
Brand awareness and preference also come into play here, and can sway a person’s perception.
- An evoked set is a list of brands that a consumer is preferential to and leans more towards.
- An inert set are the brands that a consumer is impartial to, and
- An inept set are brands that a consumer will avoid for whatever reason.
A good marketing strategy would be to make genuine and useful information readily available for consumers in the method and channels their categories tend to use more often.
Providing more information to the target market with Content Marketing ensures that your product is always at top of mind when they are at this stage of the process.
Evaluation of Alternatives
After information is collected, a consumer will determine if there are other options or substitutes for their needs so they can determine the optimal gain, given their situation. It varies from consumer to consumer, as some are careful thinkers while others are more impulse buyers, and they may place different value on certain products and industries over others
The current context of the need also has relevance at the alternatives seeking stage.
For example, a consumer weighs up different restaurants depending on if they are eating alone, going on a date, are looking to splurge, celebrate a birthday, and so on. The context of their need places a significant skew on their choices.
Once a consumer has their alternatives figured out, they will rank all options depending on all the different attributes they deem important. The goal of the marketing strategy at this point is to ensure that your product is easy to rank by highlighting all of the features and benefits in order to persuade buyers to rank your product higher as a more viable option.
Decision
This is the point where the consumer decides to act, and it is literally as simple as choosing the alternative that was at the top of their ranking list, offering them the highest utility. While original purchase intentions and engrained preferences do play a part in information search and evaluation of alternative steps, the actual outcome may be very different if an originally unforeseen product offered the best utility.
The aim of the marketing strategy at the decision point is to reduce the perceived risk for the consumer, so utility value is far more appealing.
Post-Purchase Behaviour
After the product is purchased and consumed to fulfil the original need or want, the consumer then determines how satisfied or dissatisfied they are.
Their expectations play a big role in this: did their choice meet, exceed or disappoint their expectations?
A consumer can experience cognitive dissonance, also known as buyer’s remorse, at this stage. Due to the large amount of choice in a marketplace, internal conflicts can occur when the consumer becomes nervous, wondering if they had made the correct decision.
The best marketing strategy to employ here is to only promise what your product can deliver, reassure your customers that they’ve made the right decision and, if dissatisfaction occurs, encourage feedback and rectify the situation to turn them into satisfied customers again.
Influences on Consumer Behaviour
There are several influences that greatly impact buyer behaviour, some more than others. From least to most:
- Culture and Society
- Social (reference groups, family, friends, status)
- Personal (age, life cycle stage, economic situation, lifestyle, personality)
- Psychological (motivation, perception, leaving, beliefs and attitudes)
Culture and society are basically the groups and social norms that a buyer tends to gravitate to and associate with.
Social influences refer to parties externally close to the buyer, such as family and friends. It also refers to the role different parties play, whether or not the buyer is the user, the influencer, the initiator, etc. too.
Personal influences are the factors and attributes of the buyer themselves on a physical level, such as their ages, occupation, etc.
The psychological influences are on an internal, mental level and revolve around the way a consumer thinks. Therefore, their perception, approach to motivation, the way they learn and interpret stimuli, and their ingrained beliefs and attitudes.
Marketing is able to utilise and adapt to these influences in order to reach the target market, catering messages to them personally.
When the Buyer is a Business: B2B Marketing
B2B Marketing is a buzzword for business-to-business marketing and trade.
In other words, not a business to an individual consumer situation. Business-to-business trading also fits into the buyer behaviour model as businesses still act as a buyer on a basic level. The only difference is the process becomes slightly more complex due to their nature.
A common misconception is that B2B marketing is based more on facts than an emotional purchase, as is quite common for an individual buyer, but this isn’t always the case.
While businesses have systems and procedures in place to enact purchasing, the people involved in the process are still people.
The B2B Decision Process
Previously, the five main steps of an individual buyer’s decision process were outlined. For a B2B buyer, the process gains a few extra steps simply due to the nature that purchases are privy to policies and approval systems.
- Problem recognition
- General need description
- Product specification
- Supplier search and short-listing
- Proposal solicitation
- Supplier evaluation and selection
- Order routine specification
- Performance review
Generally, a business’ needs are different to an individual’s needs.
When a business looks to make a purchase, it is usually for the organisation to use in their main course of business, which is why the need has to be elaborately detailed and then suppliers sought to tender for the need fulfilment. Once this occurs and an appropriate supplier is found, routine purchases tend to occur until there is a review.
How to Understand your Customer
In the context of product acquisition, there are a few questions that can be asked to assist in better understanding the target consumer and their buying process.
- What do they think and feel?
- What do they see in the environment?
- What do they hear from close influences?
- What do they say and do?
- What causes them pain and frustration?
- What causes them gain?
The general answers to these questions can help a Marketer piece together a clearer picture of their audience so they can direct efforts to them in a more personalised, and therefore more effective manner.
For example, if a particular business has an issue with their current piece of software, a competing software developer may create and pitch their own version to this business with that issue resolved.
Chapter 4: Adapting Your Market Offering
What is a Marketing Offering?
A market offering is the total scope of products that an organisation offers to customers in a market. A product can be a tangible good, a software platform, a performed service, an experience, an event, a place, information, innovative ideas, industries, and even companies and people themselves (or a combination of a few).
Quite often, a total marketing offering is a combination of many types of products.
These range from a pure good, such as oil or computer components, to pure services such as surgery or investment advice. Generally, most offerings lay in between, such as:
- Fast Moving Consumer Goods, where, for example, bread is baked
- Luxury goods, such as wine or perfume where the bottle is a tangible good but there was a focus on the service of creating it; and
- Even familiar services such as fast food, where the good is the food but the speed is a service.
Understanding the market is vital to all successful marketing strategies, as it allows a tailored and efficient product portfolio to best meet the needs of your customer.
The Categories of Consumer Products
There are four types of products:
- Convenience Products – which are frequently purchased items, usually immediately or on a whim, that require little buyer decision and effort, such as a candy bar or chewing gum.
- Shopping Products – slightly more expensive and have a long life. A customer usually takes a moderate amount of time in research to find the best match for their needs, such as white goods, software or a car.
- Specialty Products – customers make an extra-special effort for these products as they are not common or have unique qualities and are therefore willing to spend more on buying efforts. For example, jewellery or antiques.
- Unsought Products – these are products that the consumer either doesn’t know about or a product that the consumer doesn’t really intend purposely on purchasing, such as taxes, or donating blood.
Naturally, these can vary depending on the individual, but the classifications hold true.
However, the motivation behind the purchase could be positive (excited to go out and buy) or negative (reluctantly buying due to a need).
Types of Services
Services are intangible products that are an action for the benefit of the buyer, but after competition, the buyer doesn’t own anything. Services are a rapidly increasing area of the economy, with approximately 70% of Australia’s Gross Domestic Product (GDP) coming from the service industry.
Services have the following characteristics:
- Intangibility – there’s a lack of physicality when it comes to selling services.
- Inseparability – the provider and service cannot be separated and therefore consumption must be planned at a convenient time for both parties. However, technology has begun to overcome this.
- Variability – the service is performed, so it can be slightly different every time depending on the provider, when, where and how.
- Perishability – services cannot be consumed at a later date.
- Related tangibles – a service usually involves related tangibles such as a builder’s tools or the suit and office of a lawyer. Consumers will judge a service on the related tangibles.
The Consequences of Service Characteristics
Due to their characteristics, mentioned above, services have a unique set of consequences that a consumer faces when looking to purchase them.
- Evaluation- it’s difficult to evaluate satisfaction levels before and even after purchase
- Exposure to a particular service before purchase can only be through word-of-mouth, testimonials and related tangibles.
- The product revolves around imperfect people: it’s very hard to keep the service consistent every time.
- Often, consumers are part of the service delivery (such as education), and they cannot be easily controlled or managed.
The Three Levels of a Marketable Product
A product of any type has three levels.
The Core Customer Value
What is the consumer actually buying? What is the final benefit they receive from the product? For example, with an airline, the core value may be time-critical transport.
The Actual Product
These are the elements the product is made up of, such as brand name, features, design, packaging, etc. With the airline example, this would be the plane, the safety record, the seat allocation, the meals, and so on.
The Augmented Product
These include all external and packaged benefits such as support, warranty, after-sale service, etc. With the airline example, this is the frequent flyer schemes, tour packages, priority check-in, and so on.
The Product Life Cycle
A product goes through several different stages in its overall lifespan. The scope and time frame differ depending on the product and industry, but all products experience this inevitable cycle.
- Product Development – losses and investment costs are high and sales are at zero, as the product is being designed, developed and tested.
- Introduction – the product is first released into the market. Sales are low but begin to climb with time as communication and education start to filter into the market. Investment costs still may be high as tweaks are made and losses are usually still incurred here.
- Growth – the product is growing rapidly as the market begins to notice. Sales climb quickly and profits begin to be made.
4. Maturity – sales are at a peak high and start to plateau out as the market becomes saturated. The product is no longer new but is well-known with a solid reputation. Many companies with a good product or brand will aim to initiate ways to keep it at this phase, such as Coca-Cola soft drinks.
5. Decline – sales start to drop as the market demands new and better products to replace the current one, causing it to fall out of interest.
The need for Innovation and New Product Development
From the product life cycle, it is easy to see how important it is for organisations to continually focus on refreshing their current marketing offering, as well as innovate with new products in order to remain successful.
An organisation cannot continue to focus solely on one brand forever, especially if that product is in the later stages of the product life cycle.
Market changes, whatever they may be, cause an eventual decline for a product, whereas new products are fun and intriguing, spurring growth for an organisation. A new product can be:
- Entirely new to the world, creating a new market or niche
- New for the organisation, entering into a new segment previously untouched by that organisation
- Additional lines to the current product, such as spin-offs, new flavours, and supplement products
- Product improvements through new features and designs
- Repositioning the image and target customer of a current product, causing a whole new segment to gain interest in it
- Cost reductions- reducing the cost increases the appeal of a product
Unfortunately, it’s always not always as easy as just creating a new product. New also implies untested and entering into uncharted territory, meaning that things can go wrong, and new products can fail.
The ways a new product could fail
The main reasons why new products fail could be because:
- the organisation over-estimated the potential demand, and the small sales cannot sustain it
- a bad, rushed or poor product design
- the product is badly positioned, priced or communicated to the market causing backlash
- Research findings were incorrect, causing incorrect judgements to be made
- The costs of research and development become too high or cannot be justified
- Competitors create obstacles and barriers to entry
- The brand becomes ‘stretched’ too far, ruining its reputation with the market
How Customers Adopt a New Product
When a new product is released, there are five major factors that contribute to the rate of how quickly the target market notices and views the product with value.
- Communicability- which is, how well it was advertised and promoted
- Relative advantage- what the product offers better than others currently in the market
- Compatibility- how much does the market have to change their behaviour to utilise the product
- Complexity- or ease of use
- Divisibility, or trialability- can the market give it a trial before committing to buy
New Product Development Stages
An organisation develops a new product in a series of stages.
Due to the rapid product life cycles of current products and times, the whole new product development stages need to be quicker than ever. Some organisations like to wait for a worthy product to go through the entire set of stages, whereas others will engage in innovative churn (where they put almost every product through and see how the market responds) to gain an innovative image.
Each stage is self-explanatory from its name:
- Idea generation
- Idea screening
- Concept development and testing
- Develop marketing strategy
- Business analysis
- Product development
- Test marketing
- Commercialisation
New Product Development Considerations
When developing a new product, an organisation must consider the following attributes:
- The threshold attribute: these are the basic functions that a customer would expect first and foremost when looking at the product to satisfy a need. For example, a dishwasher is expected to clean dishes.
- The performance attribute: these are the features that add a little more satisfaction to the product offering, above the threshold expectation. For example, a dishwasher with specifically programmed cycles which save time and money, or an internal rack that can change shape to fit different dishes.
- The excitement attribute: these are the ‘wow’ factor features, well above the previous two attributes that really impress the customer way beyond their expectations. Innovative products lie here as they offer features never seen before that, presumably, really meet the customer’s needs. For example, the dishwasher that, for some technological breakthrough, never needs washing powder and still delivers clean dishes every time.
These attributes can differ by consumer groups, product type and industry.
Commonly, the excitement attributes downgrade to performance and finally to threshold attributes as time and technology move onward. So what was once a ‘wow’ factor eventually becomes commonplace as other products catch up and copy.
A strong marketing strategy is to invest in improving performance or wow factors rather than improving the threshold attributes, and then promoting it as a point of differentiation. This creates a higher desirability for the product in the customer’s mind.
Chapter 5: Next Steps – speak to a trusted Marketing Advisor
My name is Christopher Melotti and I offer energised business marketing consulting unlike anything you’ve experienced!
I give your brand, business and team a vibrant dose of results-driven vigour aimed squarely at your goals.
Remember: your current “status-quo” or “same-same” has diminishing returns. You don’t want to be there. Let me reinvigorate your trajectory with my unique Australian business marketing advisory services.
Christopher Melotti
Your trusted Australian Message Marketing Strategist, Creative Consultant & Brand Comms Specialist for Businesses & Professionals who aspire to do great things and want to be renowned for it.
christophermelotti.com.au
chris@melottimedia.com.au
0415 522 521
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