Marketing, Third Edition
By Dhruv Grewal, Michael Levy, Shane Mathews, Paul Harrigan, Tania Bucic and Foula Kopanidis
Contents:
About the authors xviii
About the Australian authors xxi
About the digital authors xxiii
Acknowledgments xxiii
Digital resources xxiv
New to this edition xxvi
Text at a glance xxx
Case matrix xxxiv
Overview of marketing xxxix
PART 1 Assessing the marketplace 1
CHAPTER 1 OVERVIEW OF MARKETING 2
What is marketing? 4
Marketing is about satisfying customer needs and wants 6
Marketing entails an exchange 6
Marketing requires product, price, place and promotion decisions 7
Marketing can be performed by both individuals and organisations 11
Marketing impacts various stakeholders 12
Marketing helps create value 13
How do marketing firms become more value driven? 16
Sharing information 16
Balancing benefits with costs 16
Building relationships with customers 17
Connecting with customers using social media platforms and digital tools 17
Why is marketing important? 19
Marketing expands firms’ global presence 20
Marketing is pervasive across marketing channel members 20
Marketing enriches society 21
Marketing can be entrepreneurial 21
Summing up 24
Key terms 24
Marketing applications 24
Quiz yourself 25
Net savvy 25
Superior service 1.1
Skiing industry offers service enhancements 9
Social media and mobile marketing 1.1
Mobile marketing: changing the landscape of advertising 11
Ethical and societal dilemma 1.1
Making a family business more valuable
by addressing gender inequality in the coffee market 12
Ethical and societal dilemma 1.2
Free fruit for children: what could go wrong? 13
Adding value 1.1
Jeans: from workwear to image-wear 14
Case study 1.1: Amazon.com.au: from A to Z in Australia
By Dr Eugene Chan, Monash University 18
Case study 1.2: Why Telstra and not Belong?
By Dr Eugene Chan, Monash University 22
Chapter case study: Getting real with Dove
By Dr Eugene Chan, Monash University 25
CHAPTER 2 DIGITAL MARKETING 29
Distinctly digital consumer elements 32
Digital channels 35
Websites 37
Search engines 38
Email 38
Social media 39
Social media marketing 41
The 4E framework for social media 41
Customer engagement 42
Excite the customer 42
Educate the customer 43
Experience the product 44
Going mobile 44
Price-check apps 45
Fashion apps 46
Location-based apps 46
Digital strategy 47
Customer engagement 47
Customer data management 52
The future of digital marketing 53
Virtual worlds, augmented reality and wearable technology 53
Summing up 56
Key terms 57
Marketing applications 57
Quiz yourself 57
Net savvy 57
Adding value 2.1
The Commonwealth Bank invests in its future 36
Adding value 2.2
Engagement at Booking.com 37
Case study 2.1: BMW: the innovation leader making the technological shift towards
digitalisation By Victoria Jennifer Harrison, Deakin University 39
Adding value 2.3
Dropbox educates its customers 43
Superior service 2.1
Telstra’s social customer service 45
Adding value 2.4
Co-creation with LEGO® 49
Case study 2.2: Sukin: the power of digital marketing in building a brand
By Victoria Jennifer Harrison, Deakin University 50
Superior service 2.2
Moshi Monsters 55
Adding value 2.5
Careers in social media marketing 55
Chapter case study: Coca-Cola: ‘Share a Coke’ By Harleen Dhillon, Deakin University 58
CHAPTER 3 MARKETING ETHICS, SUSTAINABILITY AND CSR 63
The scope of marketing ethics 67
Ethical issues associated with marketing decisions 67
Creating an ethical climate in the workplace 68
The influence of personal ethics 71
Why people act unethically 71
Ethics and corporate social responsibility 73
A framework for ethical decision-making 76
Step 1: Identify issues 76
Step 2: Gather information and identify stakeholders 76
Step 3: Brainstorm and evaluate alternatives 76
Step 4: Choose a course of action 77
Integrating ethics into marketing strategy 79
Planning phase 79
Implementation phase 80
Control phase 81
Corporate social responsibility 83
Employees 85
Customers 85
Marketplace 86
Society 86
Summing up 87
Key terms 88
Marketing applications 88
Quiz yourself 89
Net savvy 89
Case study 3.1: Shopkins: ‘Real Little’ brands for real little hands
By Dr Delane Osborne, Curtin University, and Dr Carol Osborne, Murdoch University 70
Adding value 3.1 Etiko: wear no evil, do no harm 72
Adding value 3.2 War on plastic bags: are Australian supermarkets taking action? 75
Social media and mobile marketing 3.1
Believe me . . . I’m a celebrity 80 Social media and mobile marketing 3.2
Ethics, information and Facebook: how my data becomes your data 81
Case study 3.2: Barramundi: an Australian icon? 86
Chapter case study: Greenwashing: walking the green talk
By Dr Eugene Chan, Monash University 89
CHAPTER 4 ANALYSING THE MARKETING ENVIRONMENT 95
A marketing environment analysis framework 97
The immediate environment 98
Company capabilities 98
Competitors 98
Corporate partners 98
Macroenvironmental factors 99
Culture 99
Demographics 100
Social trends 107
Technological advances 112
Economic situation 114
Political/legal environment 115
Responding to the environment 115
Summing up 118
Key terms 118
Marketing applications 119
Quiz yourself 119
Net savvy 119
Ethical and societal dilemma 4.1 The next target: infants? 101
Superior service 4.1
Chemist Warehouse for Chinese consumers 106
Adding value 4.1
Comparison sites 107
Adding value 4.2
When best is good enough: Netflix’s stellar predictive analytics 110
Case study 4.1: When video games and politics collide
By Dr Jacqueline Burgess, University of the Sunshine Coast 110
Superior service 4.2 Grocery retailers help time-poor consumers 112
Social media and mobile marketing 4.1
TransferWise making banking easier 113
Case study 4.2: The sustainability of luxury fashion
By Dr Jacqueline Burgess, University of the Sunshine Coast 116
Chapter case study: Greensteel at the Whyalla Steelworks
By Dr Jacqueline Burgess, University of the Sunshine Coast
120
PART 2 Understanding and targeting the marketplace 125
CHAPTER 5 CONSUMER BEHAVIOUR 126
The consumer decision process 129
Need recognition 129
Search for information 130
Factors affecting consumers’ search processes 132
Evaluation of alternatives 134
Purchase and consumption 138
Postpurchase 139
Factors influencing the consumer decision process 143
Psychological factors 144
Social factors 147
Situational factors 148
Involvement and consumer buying decisions 153
Extended problem-solving 153
Limited problem-solving 154
Summing up 155
Key terms 155
Marketing applications 156
Quiz yourself 156
Net savvy 157
Adding value 5.1
Engaging with brands: the Instagram effect 131
Ethical and societal dilemma 5.1
The obesity epidemic and fast foods 133
Ethical and societal dilemma 5.2
Fit to wear the healthy/natural/organic label 135
Social media and mobile marketing 5.1
Shopping online with friends 137
Case study 5.1: Tourism Australia uses ingenious Hollywood magnet to pull in American visitors
By Victoria Jennifer
Harrison, Deakin University 141
Adding value 5.2 Judging a product by its cover 150
Case study 5.2: ‘Paytm karo’: situation changes everything
By Victoria Jennifer Harrison, Deakin University 151
Chapter case study: Influence of advertising on consumer behaviour
By Victoria Jennifer Harrison, Deakin University 157
CHAPTER 6 SEGMENTATION, TARGETING AND POSITIONING 165
The segmentation, targeting and positioning process 167
Step 1: Establish overall strategy or objectives 168
Step 2: Segmentation methods 168
Step 3: Evaluate segment attractiveness 178
Step 4: Select target market 180
Step 5: Develop positioning strategy 183
Positioning methods 186
Positioning using perceptual mapping 187
Summing up 190
Key terms 191
Marketing applications 192
Quiz yourself 192
Net savvy 192
Adding value 6.1
Samsung’s many markets 170
Social media and mobile marketing 6.1
Google’s your match 174
Social media and mobile marketing 6.2
Australian Open rebranding 175
Case study 6.1: The Coke story heard around the world
By Dr Eugene Chan, Monash University 177
Social media and mobile marketing 6.3
Spotify’s segments for everyone 180
Superior service 6.1
Customers flock to The ICONIC 182
Adding value 6.2
Zara’s changing logo and positioning 188
Case study 6.2: Starbucks in Australia: a failure to understand
By Dr Eugene Chan, Monash University 189
Chapter case study: One company, multiple brands
By Dr Eugene Chan, Monash University 193
CHAPTER 7 MARKETING RESEARCH 197
The marketing research process 200
Step 1: Defining the objectives and research needs 201
Step 2: Designing the research 201
Step 3: The data collection process 202
Step 4: Analysing data and developing insights 202
Step 5: Action plan and implementation 204
Secondary data 204 Inexpensive external secondary data 205
Syndicated external secondary data 205
Internal secondary data 208
Primary data collection techniques 210
Observation 211
Social media research 212
In-depth interviews 215
Focus group interviews 216
Survey research 217
Panel and scanner-based research 220
Experimental research 220
Advantages and disadvantages of primary and secondary research 221
Emerging technology and the ethics of using customer information 222
Summing up 225
Key terms 226
Marketing applications 226
Quiz yourself 227
Net savvy 228
Adding value 7.1
Ipsos Australia 207
Superior service 7.1
Data capture and banking incentives 209
Ethical and societal dilemma 7.1
Who is watching whom? 211
Ethical and societal dilemma 7.2
How digital characters work 214
Superior service 7.2
When the sky is the delivery: drones in action 216
Case study 7.1: Many facets of the Ruby
By Dr Leanne Brereton, University of Wollongong 219
Case study 7.2: Digitally ethical connections
By Dr Leanne Brereton, University of Wollongong 224
Chapter case study: Yarra Valley Water and ‘Make every drop count—
Target 155’: the value of market research By Dr Leanne Brereton, University of Wollongong 228
PART 3 Value creation 235
CHAPTER 8 PRODUCT AND BRANDING DECISIONS 236
Complexity and types of products 239
Complexity of products 239
Types of products 240
Product mix and product line decisions 241
Increase depth 242
Decrease depth 242
Decrease breadth 243
Increase breadth 243
Branding 245
Value of branding for customers and firms 246
Brand equity 247
Branding strategies 251
Brand ownership 251
Naming brands and product lines 252
Brand and line extensions 253
Co-branding 254
Brand licensing 254
Brand repositioning 254
Packaging 255
Product labelling 256
Summing up 257
Key terms 258
Marketing applications 258
Quiz yourself 259
Net savvy 259
Social media and mobile marketing 8.1
Lynx effect: Lynx Anarchy fragrance 243
Case study 8.1: Zara: never out of fashion By Shivani Gupta, Deakin University 244
Ethical and societal dilemma 8.1
Burger wars in India: fast-food chains are finding creative ways to enter a no-beef market 248
Case study 8.2: Modibodi product innovation in personal hygiene
By Katrina McCarter, Founder and CEO, Marketing to Mums 250
Ethical and societal dilemma 8.2
Pure water? Or pure spin? 256
Chapter case study: Coca-Cola promotes no-sugar consumption
By Dr Aila Khan and Dr Felicitas Evangelista, Western Sydney University 259
CHAPTER 9 DEVELOPING NEW PRODUCTS 265
Reasons firms create new products 268
New products for growth 268
Changing customer needs 269
Market saturation 271
Managing risk through diversity 272
Fashion cycles 272
Improving business relationships 272
Diffusion of innovation 273
Innovators 275
Early adopters 276
Early majority 276
Late majority 276
Laggards 276
Using the diffusion of innovation theory 277
How firms develop new products 278
Idea generation 278
Concept development 282
Product development 283
Market testing 283
Product launch 284
Evaluation of results 286
The product life cycle 288
Introduction stage 289
Growth stage 289
Maturity stage 290
Decline stage 292
The shape of the product life cycle curve 292
Strategies based on product life cycle: some caveats 293
Summing up 294
Key terms 295
Marketing applications 295
Quiz yourself 296
Net savvy 296
Adding value 9.1
The demand for reusable bags 270
Ethical and societal dilemma 9.1
Innovation at all costs? Privacy concerns at the forefront 271
Ethical and societal dilemma 9.2
Drones 275
Adding value 9.2
LifeStraw: Innovation designed for the other 90
per cent 280
Social media and mobile marketing 9.1
From luxurious and expensive to fast and casual 281
Superior service 9.1
Coca-Cola Freestyle 286
Case study 9.1: Low-fat chocolate: love it, like it, hate it?
By Dr Nguyen (Beo) Thai, University of Wollongong 287
Adding value 9.3 New options to better serve customers 291
Case study 9.2: Vinyl is making a comeback
By Dr Nguyen (Beo) Thai, University of Wollongong 293
Chapter case study: Do co-working spaces really work?
By Dr Nguyen (Beo) Thai, University of Wollongong 296
CHAPTER 10 SERVICES: THE INTANGIBLE PRODUCT 301
Services marketing differs from product marketing 304
Intangible 304 Inseparable production and consumption 306
Heterogeneous 306 Perishable 306 Providing great service: the service gaps model 308
The knowledge gap: understanding customer expectations 309
Evaluating service quality using well-established marketing metrics 310
Evaluating the zone of tolerance 312
The standards gap: setting service standards 314
The delivery gap: delivering service quality 314
The communication gap: communicating the service promise 317
Service quality and customer satisfaction and loyalty 319
Service recovery 321
Listening to the customers and involving them in the service recovery 322
Finding a fair solution 323
Resolving problems quickly 324
Summing up 324
Key terms 325
Marketing applications 325
Quiz yourself 326
Net savvy 326
Adding value 10.1
SugarSync cloud backup 305
Case study 10.1: Pet insurance— a service from the heart
By Dr Rajeev Sharma, Charles Darwin University 307
Adding value 10.2 Wolgan Valley service quality 310
Social media and mobile marketing 10.1
Growth of digital marketing in Australia 316
Ethical and societal dilemma 10.1
Fake reviews 317
Superior service 10.1 Amazon: Prime service 319
Case study 10.2: Visiting Uluru— a new set of expectations
By Dr Rajeev Sharma, Charles Darwin University 320
Social media and mobile marketing 10.2
Spotify cares 321
Chapter case study: Happy Airways— how to keep the passengers happy!
By Dr Rajeev Sharma, Charles Darwin University 326
PART 4 Value capture, delivery and communication 331
CHAPTER 11 PRICING CONCEPTS FOR ESTABLISHING VALUE 332
The five Cs of pricing 336
Pricing: 1. Company objectives 336
Profit orientation 336
Sales orientation 337
Competitor orientation 338
Customer orientation 338
Pricing: 2. Customers 338
Demand curves and pricing 339
Price elasticity of demand 340
Pricing: 3. Costs 344
Variable costs 344
Fixed costs 345
Total cost 345
Break-even analysis and decision-making 345
Markup and target return pricing 347
Pricing: 4. Competition 347
Pricing: 5. Channel members 349
Macro influences on pricing 350
The internet 350
Economic factors 353
Considerations for setting price strategies 353
Cost-based pricing methods 353
Competition-based pricing methods 354
Value-based pricing methods 354
New product pricing strategies 355
Pricing tactics 358
Pricing tactics aimed at consumers 358
Business pricing tactics and discounts 362
Summing up 364
Key terms 365
Marketing applications 365
Quiz yourself 366
Net savvy 366
Adding value 11.1
Price in-store, online and in new markets 338
Ethical and societal dilemma 11.1
The verdict: Apple conspired to raise prices on e-books 342
Superior service 11.1 Great service lowers price elasticity 343
Case study 11.1: Your next cup of coffee 349
Social media and mobile marketing 11.1 Pricing on eBay 352
Case study 11.2: Operating a tall ship in a price-sensitive marketplace
By Vikki Baldwin, University of Notre Dame 357
Superior service 11.2 Leasing for cashflow 360
Chapter case study: The role of pricing in Australia’s streaming media: a case of Netflix versus Disney+
By Shivani Gupta and Shriya Sivaji, Deakin University 367
CHAPTER 12 SUPPLY CHAIN, CHANNEL MANAGEMENT AND RETAIL 371
The importance of marketing channel/ supply chain management 374
Marketing channels add value 376
Marketing channel management affects other aspects of marketing 377
Designing marketing channels 378
Direct marketing channel 378
Indirect marketing channel 378
Managing the marketing channel and supply chain 378
Managing the marketing channel and supply chain through vertical marketing systems 379
Managing marketing channels and supply chains through strategic relationships 381
Making merchandise flow through marketing channels 386
Distribution centres versus direct store delivery 386
The distribution centre 387
Inventory management through just-in-time inventory systems 389
Retailing 391
Choosing retail partners 392
Channel structure 393
Customer expectations 393
Channel member characteristics 394
Distribution intensity 394
Identify types of retailers 395
Food retailers 395
General-merchandise retailers 396
Services retailers 399
Benefits of stores for consumers 400
Browsing 400
Touching and feeling products 400
Personal service 400
Cash and credit payment 400
Entertainment and social experience 400
Immediate gratification 401
Risk reduction 401
Benefits of the internet and multichannel retailing 401
Deeper and broader selection 401
Personalisation 401
Expand market presence 402
Effective multichannel retailing 403
Integrated CRM 403
Brand image 403
Pricing 404
Supply chain 404
Summing up 404
Key terms 406
Marketing applications 406
Quiz yourself 407
Net savvy 407
Adding value 12.1
How will 3D printing alter the supply chain? 375
Ethical and societal dilemma 12.1 Do customers care more about
the newest iPhone or about working conditions in China? 382
Social media and mobile marketing 12.1
Virtual store fronts? What would this mean for the supply chain? 384
Case study 12.1: Retail theft: the dark side of retailing
By Dr Saalem Sadeque, Central Queensland University 385
Case study 12.2: The road ahead for Village Cinemas
By Dr Saalem Sadeque, Central Queensland University 390
Superior service 12.1
Terry White Chemists and online doctor consultation via Skype 398
Superior service 12.2
The globalisation of online retail 402
Chapter case study: Hypercompetition in the Australian retail sector By
Dr Saalem Sadeque, Central Queensl and University 407
CHAPTER 13 INTEGRATED MARKETING COMMUNICATIONS 411
Communicating with consumers 414
The communication process 414
How consumers perceive communication 417
The AIDA model 419
Awareness 419
Interest 420
Desire 420
Action 420
Elements of an integrated marketing communications strategy 421
Advertising 421
Step 1: Identify target audience 423
Step 2: Set advertising objectives 423
Informative advertising 423
Persuasive advertising 423
Reminder advertising 424
Focus of advertisements 424
Step 3: Determine the advertising budget 425
Step 4: Convey the message 425
The message 425
The appeal 426
Step 5: Evaluate and select media 426
Mass and niche media 427
Choosing the right medium 427
Determining the advertising schedule 428
Step 6: Create advertisements 428
Step 7: Assess impact using marketing metrics 431
Public relations 433
Sales promotions 435
Types of sales promotion 435
Using sales promotion tools 437
Personal selling 438
Direct marketing 439
Online marketing 440
Planning for and measuring IMC success 441
Goals 441
Setting and allocating the IMC budget 442
Measuring success using marketing metrics 442
Traditional media 443
Web-based media 443
Planning, implementing and evaluating IMC programs: an illustration of Google advertising 443
Summing up 447
Key terms 448
Marketing applications 449
Quiz yourself 450
Net savvy 450
Adding value 13.1
Arts Centre Melbourne ‘Fuelling imaginations’. Agency: Ogilvy Melbourne 415
Social media and mobile marketing 13.1
Tasty: a revolution in marketing or just the latest example of IMC? 417
Ethical and societal dilemma 13.1
Volkswagen tries to put emissions woes behind it as it vows to ‘Think New’ 429
Ethical and societal dilemma 13.2
When make-up companies really do make up models’ faces 430
Case study 13.1: Consumers shopping big for ‘Little Shop’
By Dr Delane Osborne and Dr Carol Osborne, Curtin University 432
Adding value 13.2 Puma’s use of Google Analytics 445
Case study 13.2: Star Wars: an integrated marketing force
By Dr Eugene Chan, Monash University 446
Chapter case study: An ‘All Mitey’ battle
By Shriya Sivaji and Manasa Ramakrishnan, Deakin University 450
Quiz yourself answer key 455
Appendix 1 Understanding ethics using scenarios 458
Appendix 2 Using secondary data to assess Customer Lifetime Value (CLV) 461
Glossary 464
Index 476
Online Appendix Writing a marketing plan