HPRM301 Marketing Management 1 Notes: Marketing Planning,

Consumer Behaviour and Competitive Analysis

Marketing Audit
A comprehensive, systematic, independent, and periodic examination of a company's
marketing environment, objectives, strategies, and activities with a view to determining
problem areas and opportunities and recommending a plan of action to improve the company's
marketing performance.
Purpose:

• Identify strengths and weaknesses

• Discover opportunities and threats
• Improve marketing efficiency and effectiveness
• Ensure alignment with overall business strategy

The Marketing Audit Process

Define the Scope:

• Identify the specific areas to be audited (e.g., product lines, geographic markets,
marketing channels)

Conduct a Situation Analysis:

Internal Analysis:

• SWOT analysis
• Marketing mix analysis (4Ps)
• Organizational analysis

External Analysis:

• PESTLE analysis
• Competitive analysis
• Customer analysis

Evaluate Marketing Strategies and Objectives:

• Assess the clarity, consistency, and feasibility of marketing strategies

• Evaluate the effectiveness of marketing objectives in achieving business goals

Analyse Marketing Performance:

• Measure key performance indicators (KPIs)

• Compare actual performance to targets and benchmarks
• Identify areas for improvement
Develop Recommendations:

• Propose specific actions to address identified issues and opportunities

• Prioritise recommendations based on potential impact and feasibility

Implement Recommendations:

• Develop an action plan

• Assign responsibilities
• Allocate resources
• Monitor progress and adjust as needed

Key Areas of a Marketing Audit

Marketing Environment:

• Macroenvironment (PESTLE)
• Microenvironment (customers, competitors, suppliers, distributors)

Marketing Strategy:

• Mission, vision, and values

• Target market segmentation, targeting, and positioning
• Marketing mix (4Ps)

Marketing Organization:

• Structure, roles, and responsibilities

• Marketing department’s capabilities and resources

Marketing Systems:

• Planning, budgeting, implementation, and control processes

• Information systems and data analytics

Marketing Performance:

• Sales analysis
• Market share analysis
• Brand equity analysis
• Customer satisfaction and loyalty analysis

Tools and Techniques for Marketing Audit

• SWOT Analysis: Strengths, Weaknesses, Opportunities, Threats

• PESTLE Analysis: Political, Economic, Social, Technological, Legal, Environmental
• Porter's Five Forces: Threat of new entrants, bargaining power of suppliers,
bargaining power of buyers, threat of substitute products, and competitive rivalry
 • Customer Satisfaction Surveys: Measure customer perceptions of product quality,
service quality, and overall satisfaction
• Value Chain Analysis
• Organisational Culture Analysis (Schein, 1985)
• Market Research: Collect data on market size, trends, and customer preferences
• Financial Analysis: Analyse financial statements to assess the financial health of the
marketing function

Strategic and Operational Marketing Planning

Introduction

Marketing Planning: A systematic process of developing marketing objectives and strategies

to achieve organizational goals.

Importance of Marketing Planning:

• Aligns marketing efforts with overall business strategy

• Ensures resource allocation efficiency
• Reduces uncertainty and risk
• Improves decision-making

Strategic Marketing Planning

Step 1: Defining the Business Mission

• A clear, concise, and enduring statement of the organization's purpose.

Step 2: Setting Company Objectives

• Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) objectives.

Step 3: Designing the Business Portfolio

• Portfolio Analysis: A method of evaluating a company's strategic business units

(SBUs) to prioritize investments.
• Boston Consulting Group (BCG) Matrix: Classifies SBUs into four categories: Stars,
Cash Cows, Question Marks, and Dogs.
• Shell Multi-directional Policy Framework

Step 4: Developing Growth Strategies

• Ansoff's Matrix: A tool for identifying growth opportunities through market

penetration, market development, product development, and diversification.
• Porter’s Generic Strategies – Cost leadership, Differentiation, Focus (Differentiation;
Cost leadership), Middle-of-the Road
• Kim and Mauborgne’s Blue and Red Ocean Strategies
• Treacy and Wiersema’s Three Value Disciplines – Product Leadership, Customer
Intimacy and Operational Excellence
Operational Marketing Planning

Step 1: Developing Marketing Strategies

• Target Market Selection: Identifying specific segments of the market to target.

• Value Proposition: Creating a unique selling proposition (USP) to differentiate the
product or service.
• Marketing Mix: Developing the 4Ps (Product, Price, Place, Promotion) to satisfy
target market needs.

Step 2: Implementing Marketing Strategies

• Organizational Structure: Establishing a marketing organization to carry out the plan.

• Marketing Budgets: Allocating resources to marketing activities.
• Marketing Implementation: Executing the marketing plan.

Step 3: Measuring and Controlling Marketing Performance

• Marketing Metrics: Tracking key performance indicators (KPIs) to measure success.

• Marketing Control: Monitoring marketing activities and taking corrective action as
needed.

Key Challenges in Marketing Planning

• Rapidly Changing Market Conditions

• Increasing Customer Expectations
• Global Competition
• Technological Advancements
• Economic Uncertainty

Portfolio Analysis: A Strategic Marketing Perspective

Introduction

Portfolio analysis is a strategic management tool used to evaluate a company's product or

business unit portfolio.

Purpose:

• To assess the strategic position of each business unit.

• To allocate resources effectively.
• To identify opportunities for growth and divestment.

The Boston Consulting Group (BCG) Matrix

• Stars: High market growth, high market share

• Cash Cows: Low market growth, high market share
• Question Marks: High market growth, low market share
 • Dogs: Low market growth, low market share

Strategic Implications:

• Stars: Invest heavily to maintain market leadership.

• Cash Cows: Milk the cash cow to fund other businesses.
• Question Marks: Invest selectively to build market share or divest.
• Dogs: Divest or harvest for cash.

The Shell Directional Policy Matrix (DPM)

The Shell Directional Policy Matrix (DPM) is a strategic management tool used to evaluate a
company's business units and make informed decisions about resource allocation and strategic
direction.

It is a refinement of the Boston Consulting Group (BCG) Matrix, offering a more nuanced
approach to portfolio analysis.

Key Dimensions of the DPM

The DPM is a nine-cell matrix that considers two primary dimensions:

1. Business Sector (Industry) Attractiveness: This dimension assesses the overall

attractiveness of the industry or market in which a business unit operates. Factors such
as market size, growth rate, profitability, and competitive intensity are considered.
2. Competitive Position: This dimension evaluates a business unit's competitive strength
within its industry. Factors such as market share, brand reputation, product quality,
technological capabilities, and cost efficiency are taken into account.

Strategic Implications of the DPM

The DPM provides strategic guidance for each business unit based on its position within the
matrix:

1. Invest/Grow:
o High Attractiveness, High Position: These units represent significant growth
opportunities and should receive substantial investment.
o Medium Attractiveness, Medium Position: These units have moderate
growth potential and require selective investment to strengthen their
competitive position.
2. Hold/Build:
o High Attractiveness, Medium Position: These units have strong growth
potential but require additional investment to improve their competitive
position.
o Medium Attractiveness, High Position: These units are strong performers in
attractive markets and should be maintained.
3. Harvest:
 o Low Attractiveness, High Position: These units are cash cows that generate
strong cash flows but have limited growth potential. The strategy is to maximize
short-term cash flows and minimize investment.
4. Divest:
o Low Attractiveness, Low Position: These units are weak performers in
unattractive markets and should be divested or liquidated.

Advantages of the DPM

• Comprehensive Analysis: The DPM considers both industry attractiveness and

competitive position, providing a more holistic view of a business unit's strategic
potential.
• Actionable Insights: The matrix provides clear strategic recommendations for each
business unit, helping organizations allocate resources effectively.
• Flexibility: The DPM can be adapted to various industries and business contexts.
• Visual Clarity: The nine-cell matrix format is visually appealing and easy to
understand.

Limitations of the DPM

• Subjectivity: The assessment of industry attractiveness and competitive position can

be subjective and may vary among different analysts.
• Data Intensity: Collecting and analyzing the necessary data can be time-consuming
and resource-intensive.
• Oversimplification: The DPM may oversimplify complex business environments and
strategic challenges.

By understanding the Shell Directional Policy Matrix and its strategic implications,
organizations can make informed decisions about their product portfolios and allocate
resources effectively to drive sustainable growth.
The McKinsey Matrix (GE Matrix)
The McKinsey Matrix, also known as the GE Matrix or GE-McKinsey Nine-Box Matrix, is a
strategic management tool used to evaluate a company's business units (SBUs) and prioritize
resource allocation. It was developed by General Electric (GE) in collaboration with McKinsey
& Company.

Key Dimensions of the McKinsey Matrix

The matrix is based on two primary dimensions:

1. Industry Attractiveness:
o Market size and growth rate
o Industry profitability
o Competitive intensity
o Technological intensity
o Regulatory environment
o Social, political, and economic factors
2. Business Strength:
o Market share
o Brand strength
o Product quality
o Cost structure
o Distribution channels
o Technological capabilities

Strategic Implications

The intersection of these two dimensions creates a nine-cell grid, each representing a different
strategic position for a business unit.

• Invest/Grow:
o High Attractiveness, High Strength: These units are strong performers in
attractive markets and should receive significant investment to maintain or
increase their market share.
• Selective:
o Medium Attractiveness, Medium Strength: These units have moderate
potential and require selective investment to improve their position.
• Harvest/Divest:
o Low Attractiveness, Low Strength: These units are weak performers in
unattractive markets and should be harvested for cash or divested.

Visual Representation of the McKinsey Matrix

Advantages of the McKinsey Matrix

• Comprehensive Analysis: It considers both industry attractiveness and business

strength, providing a more nuanced view than the BCG Matrix.
 • Strategic Clarity: The matrix helps identify strategic priorities and allocate resources
effectively.
• Flexibility: It can be adapted to various industries and business contexts.
• Visual Clarity: The nine-cell grid format is easy to understand and communicate.

Limitations of the McKinsey Matrix

• Subjectivity: The assessment of industry attractiveness and business strength can be

subjective and may vary among different analysts.
• Data Intensity: Collecting and analyzing the necessary data can be time-consuming
and resource-intensive.
• Oversimplification: The matrix may oversimplify complex business environments and
strategic challenges.
•

Marketing Planning Models

The SOSTAC® Model: A Framework for Effective
Marketing Planning
The SOSTAC® model, developed by PR Smith, is a popular and effective framework for
planning and executing marketing strategies.

It provides a clear, step-by-step approach to ensure that your marketing efforts are focused,
efficient, and measurable.

The six stages of SOSTAC® are:

1. Situation Analysis:
o Internal Analysis: Evaluate your organization's strengths, weaknesses,
resources, and capabilities.
o External Analysis: Assess the external environment, including market trends,
customer needs, competitor activity, and technological advancements.
o SWOT Analysis: A powerful tool to summarise strengths, weaknesses,
opportunities, and threats.
2. Objectives:
o SMART Objectives: Ensure your objectives are Specific, Measurable,
Achievable, Relevant, and Time-bound.
o Key Performance Indicators (KPIs): Define the metrics you will use to
measure success.
3. Strategy:
o Target Market: Identify your ideal customers.
o Value Proposition: Develop a unique selling proposition that differentiates
your offering.
o Positioning: Determine how you want to position your brand in the market.
4. Tactics:
o Marketing Mix: Implement the 4Ps (Product, Price, Place, Promotion) or 7Ps
(People, Process, Physical Evidence) to execute your strategy.
 o Digital Marketing: Utilize various digital channels like SEO, PPC, social
media, email marketing, and content marketing.
o Traditional Marketing: Consider traditional channels like print advertising,
TV, radio, and direct mail.
5. Action:
o Create an Action Plan: Outline specific tasks, timelines, and responsibilities.
o Allocate Resources: Assign budgets and resources to each tactic.
o Implement the Plan: Execute the tactics effectively.
6. Control:
o Monitor and Measure: Track key performance indicators (KPIs) to assess
progress.
o Evaluate Performance: Analyze the results and identify areas for
improvement.
o Make Adjustments: Modify the plan as needed to optimize results.

The APIC Model in Marketing

The APIC model is a cyclical framework used in marketing planning. It stands for:

• A: Audit
• P: Plan
• I: Implement
• C: Control

1. Audit

• Internal Audit: Assess the company's strengths, weaknesses, resources, and

capabilities.
o Example: A fitness company might assess its brand reputation, financial health,
and employee expertise.
• External Audit: Analyze the external environment, including market trends, customer
needs, competitor activity, and technological advancements.
o Example: The fitness company might analyze fitness trends, consumer
preferences, and the competitive landscape.

2. Plan

• Set Objectives: Define specific, measurable, achievable, relevant, and time-bound

(SMART) marketing objectives.
o Example: Increase gym membership sales by 20% within the next quarter.
• Develop Strategies: Outline the overall approach to achieve the objectives, such as
targeting specific demographics, launching new fitness classes, or partnering with
influencers.
• Create Tactics: Develop specific actions to implement the strategies, such as social
media campaigns, email marketing, and in-store promotions.

3. Implement

• Allocate Resources: Assign budgets and resources to each tactic.

 • Execute Tactics: Implement the marketing plan, such as launching social media
campaigns, creating promotional materials, and training staff.
• Monitor Progress: Track key performance indicators (KPIs) to measure the
effectiveness of the marketing efforts.

4. Control

• Evaluate Performance: Assess the results against the set objectives.

• Identify Deviations: Determine if there are any discrepancies between the planned
performance and the actual performance.
• Take Corrective Action: Make adjustments to the plan as needed to improve results.
o Example: If a social media campaign is underperforming, the company might
adjust the content strategy or increase the advertising budget.

The APIC model is a continuous cycle. After the control phase, the process starts again
with a new audit to identify new opportunities and challenges.

By following the APIC model, marketers can ensure that their efforts are aligned with business
objectives, efficient, and effective.

The RABOSTIC Model: A Comprehensive Approach to

Marketing Planning
The RABOSTIC model is a framework used in integrated marketing communications (IMC)
to plan and implement effective marketing campaigns. It provides a structured approach to
ensure that all aspects of a marketing campaign are considered and coordinated.

The acronym RABOSTIC stands for:

• R: Research and Analysis

• A: Audiences
• B: Budget
• O: Objectives
• S: Strategy
• T: Tactics
• I: Implementation
• C: Control and Evaluation

1. Research and Analysis:

o Internal Analysis: Assess the organization's strengths, weaknesses, resources,
and capabilities.
o External Analysis: Analyze the external environment, including market trends,
customer needs, competitor activity, and technological advancements.
o SWOT Analysis: Identify strengths, weaknesses, opportunities, and threats.
2. Audiences:
o Target Audience: Define the specific group of people you want to reach with
your marketing message.
o Audience Segmentation: Divide the target audience into smaller, more
homogenous groups.
 o Audience Profiling: Develop detailed profiles of each target audience segment.
3. Budget:
o Allocate Budget: Determine the overall budget for the marketing campaign.
o Budget Allocation: Allocate budget to different marketing channels and tactics.
4. Objectives:
o Set SMART Objectives: Ensure objectives are Specific, Measurable,
Achievable, Relevant, and Time-bound.
o Communication Objectives: Define what you want to achieve with your
marketing communications.
o Behavioral Objectives: Specify the desired actions you want your target
audience to take.
5. Strategy:
o Overall Strategy: Develop a high-level strategy to achieve your objectives.
o Messaging Strategy: Create a consistent and compelling message.
o Brand Positioning: Define your brand's unique selling proposition.
6. Tactics:
o Marketing Mix: Utilize a combination of marketing tools, such as advertising,
public relations, direct marketing, and digital marketing.
o Channel Selection: Choose the most effective channels to reach your target
audience.
o Creative Development: Create engaging and persuasive marketing materials.
7. Implementation:
o Timeline: Develop a detailed timeline for implementing the marketing plan.
o Team Coordination: Assign responsibilities and coordinate efforts across
different teams.
o Execution: Execute the marketing tactics as planned.
8. Control and Evaluation:
o Monitoring: Track key performance indicators (KPIs) to measure progress.
o Evaluation: Assess the effectiveness of the marketing campaign.
o Adjustments: Make necessary adjustments to the plan based on the evaluation.

By following the RABOSTIC model, marketers can ensure that their campaigns are well-
planned, executed, and measured, leading to successful outcomes.

Internal Analysis Tool for Competitive Advantage

The Resource-Based View (RBV)
A strategic management framework that suggests a firm's competitive advantage stems from
its unique bundle of resources and capabilities.

It shifts the focus from external industry analysis (like Porter's Five Forces) to internal firm
analysis.

Key Assumptions of RBV:

 • Resource heterogeneity: Firms possess different resources and capabilities.
• Resource immobility: Resources and capabilities are not perfectly mobile across firms.

Core Concepts of RBV

Resources:

• Tangible Resources: Physical assets like land, buildings, and equipment.

• Intangible Resources: Non-physical assets like brand reputation, patents, and
trademarks.
• Human Resources: Knowledge, skills, and abilities of employees.

Capabilities:

• The firm's ability to deploy its resources effectively.

• E.g., Innovation, operational efficiency, customer service.

VRIO Framework

• VRIO stands for:

o V: Valuable: Does the resource or capability add value to the firm?
o R: Rare: Is the resource or capability unique to the firm?
o I: Inimitable: Is the resource or capability difficult to imitate?
o O: Organized: Is the firm organized to exploit the full potential of its resources
and capabilities?

Building Sustainable Competitive Advantage

• VRIO and Competitive Advantage:

o A resource or capability that is valuable, rare, inimitable, and organized can lead
to a sustainable competitive advantage.
o A firm with such resources or capabilities can outperform its competitors and
earn above-average returns.

Implications for Marketing Management

Resource Identification and Assessment:

• Identify the firm's core competencies and strategic resources.

• Assess the value, rarity, inimitability, and organization of these resources.

Resource Development and Enhancement:

• Invest in developing and upgrading resources and capabilities.

• Build strong organizational culture and systems to support resource development.

Strategic Choices:

• Make strategic choices based on the firm's resource strengths and weaknesses.
 • Focus on leveraging core competencies to create value.

Limitations of RBV

Difficulty in Identifying and Measuring Resources and Capabilities:

• Some resources and capabilities, especially intangible ones, are difficult to quantify and
measure.
• It can be challenging to distinguish between core competencies and ordinary
capabilities.

Static Nature: RBV may not fully capture the dynamic nature of competitive advantage, as
markets and technologies evolve rapidly.

Key Takeaways:

The Resource-Based View provides a valuable framework for understanding and analyzing a
firm's competitive advantage. By focusing on internal resources and capabilities, firms can
identify and exploit unique sources of value creation. However, it is important to recognize the
limitations of the RBV and combine it with other strategic frameworks to develop
comprehensive strategies.

Understanding Customers: Consumer Behaviour

The study of how individuals, groups, or organizations select, purchase, use, and dispose of
goods, services, ideas, or experiences to satisfy their needs and wants.

Why is it Important?

• Helps businesses understand customer needs and preferences.

• Enables effective marketing strategies.
• Drives product development and innovation.

The Consumer Decision-Making Process

• Need Recognition: Identifying a need or want.

• Information Search: Gathering information about potential products or services.
• Evaluation of Alternatives: Comparing different options based on various criteria.
• Purchase Decision: Selecting the preferred option and making a purchase.
• Post-Purchase Behaviour: Evaluating the purchase and potential repurchase.

Factors Influencing Consumer Behaviour

• Cultural Factors: Culture, subculture, social class

 • Social Factors: Reference groups, family, roles, and status
• Personal Factors: Age, occupation, lifestyle, personality, and self-concept
• Psychological Factors: Motivation, perception, learning, beliefs, and attitudes

Factors Influencing Consumer Behaviour Explained

• Consumer behavior is a complex interplay of various factors that influence how
individuals make purchasing decisions.
• Understanding these factors is crucial for marketers to develop effective strategies.

Cultural Factors

• Culture: The broadest environmental influence on consumer behavior. It encompasses

a society's values, beliefs, and customs.
• Subculture: A group of people within a culture who share common values and
behaviors.
• Social Class: A hierarchical division of society based on factors like income,
occupation, and education

Social Factors

• Reference Groups: Groups that influence an individual's attitudes, behaviors, and

aspirations.
• Family: The family unit significantly impacts consumer decisions, particularly in terms
of product choices and brand preferences.
• Roles and Status: Social roles and status within a group can influence purchasing
behavior.

Personal Factors

• Age and Life Cycle Stage: Different age groups and life stages have distinct needs and
preferences.
• Occupation: Occupation influences purchasing power and product choices.
• Economic Situation: Income, savings, and debt levels impact consumer spending.
• Lifestyle: Activities, interests, and opinions shape consumer preferences.
• Personality and Self-Concept: Personality traits and self-perception influence product
choices.

Psychological Factors

• Motivation: The internal drive that pushes people to satisfy needs and wants.
• Perception: The process of selecting, organizing, and interpreting information.
• Learning: The process of acquiring new knowledge and behaviors through experience.
• Beliefs and Attitudes: Mental states that influence a person's behavior.

Consumer Motivation

• Consumer motivation refers to the internal and external factors that stimulate consumer
behavior.
 • Understanding these factors is crucial for marketers to develop effective strategies.

Maslow's Hierarchy of Needs

• Maslow's Hierarchy of Needs is a psychological theory that suggests that human needs
are arranged in a hierarchical order.
• As lower-level needs are satisfied, higher-level needs become more important.

The hierarchy, from lowest to highest, is:

1. Physiological Needs: Basic needs like food, water, air, and sleep.
2. Safety Needs: Security, protection, and stability.
3. Love and Belongingness Needs: Social connection, friendship, and intimacy.
4. Esteem Needs: Self-esteem, recognition, and achievement.
5. Self-Actualization Needs: Realizing one's full potential.

Marketing Implications:

• Physiological Needs: Products like food, water, and clothing.

• Safety Needs: Insurance, security systems, and health products.
• Love and Belongingness Needs: Social media platforms, dating apps, and group
activities.
• Esteem Needs: Luxury goods, status symbols, and educational products.
• Self-Actualization Needs: Hobbies, travel, and personal development courses.

Freud's Psychoanalytic Theory

Freud's psychoanalytic theory suggests that human behaviour is influenced by unconscious

desires and motivations.

It proposes three levels of consciousness:

Conscious Mind: Thoughts and feelings that we are aware of.

Preconscious Mind: Thoughts and feelings that can be easily brought to consciousness.

Unconscious Mind: Deep-seated desires and motivations that influence behavior.

Marketing Implications:

• Id: The impulsive and pleasure-seeking part of the personality. Marketers can appeal
to this by emphasizing sensory pleasures and immediate gratification.
• Ego: The rational and realistic part of the personality. Marketers can appeal to this by
providing information and logical arguments.
• Superego: The moral and ethical part of the personality. Marketers can appeal to this
by emphasizing social responsibility and ethical consumption.

Other Relevant Motivational Theories

 • Drive-Reduction Theory: People are motivated to reduce physiological needs like
hunger or thirst.
• Cognitive Dissonance Theory: People seek consistency between their beliefs and
behaviours.
• Expectancy-Value Theory: People are motivated to engage in behaviours that they
expect will lead to positive outcomes.

Consumer Perception

• Selective Perception: The process of filtering information based on personal interests

and beliefs.
• Perceptual Organization: The process of grouping information into meaningful
patterns.
• Perceptual Interpretation: Assigning meaning to sensory information.

Consumer Perception Elaborated

• Consumer perception is the process by which individuals select, organize, and interpret
sensory information to form a meaningful picture of the world.
• It significantly influences consumer behaviour and decision making.

Key Concepts in Consumer Perception

1. Selective Perception

The tendency to focus on information that is consistent with one's existing beliefs and values,
while ignoring or downplaying information that contradicts them.

• Implications for Marketers:

o Clear and Consistent Messaging: Ensure that marketing messages are clear,
concise, and aligned with the target audience's values and beliefs.
o Strong Brand Identity: Develop a strong brand identity that resonates with
consumers and stands out from competitors.
o Leverage Personal Relevance: Tailor marketing messages to individual needs
and preferences.

2. Selective Retention

The process of retaining information that supports one's existing beliefs and forgetting
information that contradicts them.

Implications for Marketers:

• Repetition: Repeat key messages to increase the likelihood of retention.

• Strong Brand Associations: Create strong brand associations to enhance recall.
• Emotional Appeal: Use emotional appeals to create lasting memories

3. Selective Attention
The tendency to focus on specific stimuli while ignoring others.

Implications for Marketers:

• Vivid Stimuli: Use eye-catching visuals, bold colours, and strong headlines to grab
attention.
• Personal Relevance: Tailor messages to individual needs and interests.
• Unexpected Elements: Surprise consumers with unexpected twists or humour.

4. Selective Distortion

The tendency to interpret information in a way that is consistent with one's existing beliefs and
values, even if it means distorting the information.

Implications for Marketers:

• Honest and Transparent Communication: Build trust by being honest and

transparent.
• Address Misconceptions: Actively address and correct any misconceptions about the
brand or product.
• Leverage Social Proof: Use positive reviews and testimonials to influence perceptions.

Factors Influencing Consumer Perception

• Personal Factors: Age, gender, lifestyle, and personality.

• Psychological Factors: Motivation, learning, and beliefs.
• Social Factors: Reference groups, family, and culture.
• Marketing Stimuli: Product design, packaging, advertising, and pricing.

Consumer Learning

Consumer learning is a process through which individuals acquire knowledge and skills that
influence their future behaviour.

Understanding how consumers learn is crucial for marketers to develop effective strategies.

Classical Conditioning

• Classical conditioning is a learning process that involves associating a stimulus with a

response.
• It's based on the idea that a neutral stimulus can be paired with a conditioned stimulus
to elicit a conditioned response.

Example: A popular brand of soda (Coca Cola) might use a catchy jingle in its advertisements.
Over time, consumers associate the jingle with the brand, and hearing the jingle alone can
trigger a desire to purchase the soda.

Operant Conditioning
 • Operant conditioning is a learning process that involves reinforcing or punishing
behaviours to increase or decrease their frequency.

Example: A loyalty program that rewards customers with points for every purchase can
encourage repeat business (e.g., Ecocash points system). The points act as a positive
reinforcement, making customers more likely to purchase again.

Cognitive Learning

• Cognitive learning involves mental processes like thinking, problem-solving, and

decision-making.
• It emphasizes the role of information processing and memory in learning.

Example: A consumer researching a new smartphone might compare different brands and
models, read reviews, and watch product demonstrations. This cognitive learning process helps
them make an informed decision.

Factors Influencing Consumer Learning

• Motivation: The stronger the motivation to learn, the more likely a consumer is to pay
attention to information.
• Cue: A stimulus that triggers a learning response.
• Response: The consumer's reaction to the cue.
• Reinforcement: A reward or punishment that strengthens or weakens the response.

Implications for Marketers

• Brand Building: Create strong brand associations through consistent messaging and
imagery.
• Effective Advertising: Design ads that capture attention and evoke desired emotions.
• Loyalty Programs: Implement loyalty programs to reward customers and encourage
repeat purchases.
• Product Demonstrations: Provide opportunities for consumers to experience products
first-hand.
• Educational Content: Create informative content to educate consumers about
products and services.

Consumer Attitudes

• Consumer attitudes are enduring evaluations of objects, people, or ideas.

• They influence how consumers perceive, feel, and behave towards brands, products,
and services.
• Understanding consumer attitudes is crucial for marketers as it helps them develop
effective marketing strategies.

Components of Attitudes

Attitudes are composed of three main components:

Cognitive Component: This involves beliefs and knowledge about an object or idea.

• For example, a consumer may believe that a particular brand of smartphone is high-
quality and innovative.

Affective Component: This involves feelings or emotions associated with an object or idea.

• For instance, a consumer may feel positive emotions towards a brand due to a positive
brand experience.

Behavioral Component: This involves the tendency to behave in a certain way towards an
object or idea.

• For example, a consumer may be more likely to purchase a product if they have a
positive attitude towards the brand.

Attitude Formation

Attitudes can be formed through various processes:

• Direct Experience: Personal experiences with a product or service can shape attitudes.
• Indirect Experience: Learning about a product or service through information from
others, such as friends, family, or media.
• Cognitive Learning: Forming attitudes based on information and reasoning.
• Classical Conditioning: Associating a product or service with a positive or negative
stimulus.
• Operant Conditioning: Learning through rewards and punishments.

Attitude Change

Marketers can influence consumer attitudes through various strategies:

• Changing Beliefs: Providing new information or evidence to challenge existing

beliefs.
• Changing Feelings: Eliciting positive emotions through advertising, promotions, or
product experiences.
• Changing Behaviours: Encouraging trial or purchase through promotions, discounts,
or free samples.

Example: A car manufacturer may use a combination of strategies to change consumers'

attitudes towards their brand:

• Cognitive Change: Highlight the car's safety features and fuel efficiency in
advertising.
• Affective Change: Create emotionally charged advertisements that evoke feelings of
excitement and aspiration.
• Behavioural Change: Offer test drives and special promotions to encourage
consumers to experience the car first-hand.
Consumer Decision-Making Models

• High-Involvement Decision Making: Extensive information search and evaluation.

• Low-Involvement Decision Making: Limited information search and evaluation.
• Habitual Decision Making: Routine purchases with little conscious effort.

Understanding Organizational Buyer Behaviour

• Organizational buyer behaviour is the decision-making process organizations use to
purchase products and services.
• It differs from consumer behaviour in several ways, including the complexity of the
decision-making process, the involvement of multiple decision-makers, and the
emphasis on rational decision-making.

Major Types of Buying Situations

Straight Rebuy - routine purchase (reordering and repurchase) of items already in use.

• It’s usually characterised by low involvement, relatively lower costs, minimal decision-
making and solely administered by the purchasing department. E.g., Office supplies)

Modified Rebuy - purchase of a familiar product with some modifications (changes desired).

• Moderate involvement, relatively expensive, some evaluation of alternatives. E.g., New

software with additional features

New Task - first-time purchase of a complex or expensive product or service.

• High involvement, extensive information search and evaluation. E.g., New

manufacturing equipment

Systems Selling (Solutions Selling) - buying a packaged solution to a problem from a single
seller. E.g., an Integrated Information Technology system

Key Differences Between Organizational and Consumer Buying Behaviour

• Buying Centre: Organizational buying often involves a buying centre, a group of

individuals who influence the purchase decision.
• Buying Criteria: Organizations typically use specific criteria to evaluate suppliers,
such as price, quality, delivery time, and service.
• Derived Demand: Organisational demand is derived from consumer demand.
• Formal Decision-Making Process: Organizational buying decisions often involve
formal procedures and approval processes.

The Buying Centre

A buying centre is a group of individuals within an organization who play different roles in the
purchasing decision-making process.
The key roles in a buying centre include:

• Initiator: The person who first recognises the need for a product or service.
• Influencer: The person who influences the buying decision by providing technical
information or recommendations.
• Decider: The person who makes the final decision about the purchase.
• Buyer: The person who handles the paperwork and places the order.
• User: The person who will use the product or service

Factors Influencing Organizational Buying Behaviour

• Environmental Factors: Economic conditions, technological advancements, political

and legal factors, and cultural factors.
• Organizational Factors: Organizational culture, policies, and procedures.
• Interpersonal Factors: Relationships between individuals within the buying centre.
• Individual Factors: Personal motivations, risk tolerance, and decision-making styles
of individuals in the buying centre.

The Buying Process

Problem Recognition - identifying a need or problem that can be solved by a product or

service.

• Triggered by both internal and external stimuli

• Internal stimuli – machine breakdown

General Need Description: Defining the characteristics and quantity of the needed item.

Product Specification: Developing the technical specifications for the product.

Supplier Search: Finding potential suppliers.

Proposal Solicitation: Requesting proposals from qualified suppliers.

Supplier Selection: Choosing the best supplier based on criteria like price, quality, and
delivery.

Order-Routine Specification: Finalizing details like delivery, payment terms, and technical
specifications.

Performance Review: Evaluating the supplier's performance and deciding whether to continue
the relationship.
Competitor Analysis, Competitive Strategies, Generic
Strategies, and Strategic Groups
Competitor Analysis

• Competitor analysis involves identifying, evaluating, and selecting competitors.

• It helps businesses understand their competitive landscape and develop effective
strategies.

Key steps in competitor analysis:

Identify Competitors:

• Direct Competitors: Offer similar products or services to the same target market.
• Indirect Competitors: Offer substitute products or services that can satisfy the same
customer need.

Analyse Competitors:

• Strengths: Identify the competitor's strengths, such as strong brand reputation, efficient
operations, or superior technology.
• Weaknesses: Identify the competitor's weaknesses, such as poor product quality, high
costs, or ineffective marketing.

Develop a Competitive Profile:

• Create a profile of each competitor, highlighting their strengths, weaknesses,

opportunities, and threats (SWOT analysis).

Predict Competitor Behavior:

 • Anticipate how competitors might respond to market changes or new strategies.

Competitive Strategies

Competitive strategies are the plans and actions that a firm takes to gain a competitive
advantage over its rivals.

Types of Competitive Strategies:

Generic Strategies

Michael Porter's generic strategies provide a framework for understanding competitive

advantage.

Cost Leadership:

• Focus on reducing costs to offer the lowest prices in the industry.

• Example: Walmart

Differentiation:

• Create unique products or services that customers perceive as superior.

• Example: Apple, Tesla

Focus:

• Target a specific niche market and tailor products or services to meet the unique needs
of that market.
• Example: Specialized sports equipment retailers, luxury brands

Middle-of-the-Road:

No clearly defined strategic focus

Treacy and Wiersema's Value Disciplines

Michael Treacy and Fred Wiersema proposed a framework for achieving market leadership,
focusing on three primary value disciplines:

Operational Excellence

A relentless focus on providing customers with reliable products or services at competitive

prices and delivered with minimal difficulty or inconvenience.

Key Characteristics:

• Efficiency and cost reduction

• Standardized processes
 • Supply chain optimization
• Strong operational capabilities
• Focus on operational excellence

Example: Walmart, a retail giant, excels in operational excellence by offering low prices,
efficient supply chains, and consistent customer experiences.

Customer Intimacy

A focus on building strong relationships with customers and tailoring products or services to
meet their specific needs.

Key Characteristics:

• Customer relationship management

• Customization and personalization
• Customer service excellence
• Understanding customer needs and preferences
• Building customer loyalty

Example: Amazon, an e-commerce giant, excels in customer intimacy by providing

personalized recommendations, easy returns, and excellent customer support.

Product Leadership

A focus on continuous innovation and product development to offer cutting-edge products and
services.

Key Characteristics:

• Research and development

• Product innovation
• Brand building
• Strong product design and engineering capabilities
• First-mover advantage

Example: Apple, a technology company, excels in product leadership by consistently

introducing innovative products like the iPhone and iPad.

Key Considerations for Implementing Value Disciplines:

• Choose One Discipline: It's crucial to focus on one primary value discipline and
maintain threshold standards in the other two.
• Organizational Alignment: Ensure that the organization's culture, structure, and
processes support the chosen value discipline.
• Continuous Improvement: Continuously strive to improve performance in the chosen
value discipline.
• Customer Focus: Maintain a strong customer focus, regardless of the chosen value
discipline.
Strategic Groups

Strategic groups are clusters of firms within an industry that pursue similar strategies.

Identifying Strategic Groups:

• Similar market segments: Target the same customer segments.

• Similar product offerings: Offer similar products or services.
• Similar distribution channels: Use the same distribution channels.
• Similar marketing strategies: Employ similar marketing tactics and positioning.

Benefits of Analysing Strategic Groups:

• Identifying potential competitors: Identify firms within the same strategic group that
may pose a threat.
• Understanding competitive dynamics: Analyse the competitive intensity within a
strategic group.
• Identifying opportunities: Identify opportunities for differentiation or niche
strategies.

Growth Strategies

• Ansoff's Matrix:
o Market Penetration: Selling more of existing products to existing markets.
o Market Development: Selling existing products to new markets.
o Product Development: Selling new products to existing markets.
o Diversification: Selling new products to new markets.

Competitive Strategies for Market Leaders

Expanding Total Market Demand:

• Attracting new users

• Increasing usage rate
• Creating new use situations

Protecting Market Share:

• Continuous innovation
• Strong branding
• Aggressive pricing
• Effective distribution
• Superior customer service

Increasing Market Share:

• Offensive strategies (e.g., frontal attack, flank attack, encirclement attack, bypass
attack, guerrilla attack)
 • Defensive strategies (e.g., position defence, flank defence, pre-emptive defence,
counteroffensive defence, mobile defence)

Other Competitive Strategies

Market Challenger Strategies:

• Direct Attack: Challenging the market leader head-on.

• Indirect Attack: Targeting a less competitive market segment.

Market Follower Strategies:

• Cloner Strategy: Imitating the leader's products and marketing strategies.

• Imitator Strategy: Copying the leader's innovations with slight modifications.

Market Nicher Strategies:

• Specialist: Focusing on a specific niche market.

• Customer Specialist: Serving a specific customer group.
• Product Specialist: Offering a specific product category.

Key Considerations for Competitive Strategy

• Competitive Analysis: Understanding competitors' strengths, weaknesses, and

strategies.
• Customer Analysis: Identifying customer needs and preferences.
• Resource Allocation: Allocating resources effectively to support competitive
initiatives.
• Risk Management: Assessing potential risks and developing contingency plans.
• Continuous Learning and Adaptation: Staying updated on industry trends and
consumer behaviour.