L E C T U R E 1 : S U B J E C T I N T R O D U C T I O N + U N D E R S TA N D I N G

M A R K E T I N G A N D VA L U E

PRINCIPLES OF
MARKETING

Andrew (Andy) Zur (he/him)

ajzur@unimelb.edu.au

https://www.linkedin.com/in/andrewzur/

I would like to acknowledge the Wurundjeri People and their Elders past, present, and emerging, and extend that
respect to any First Nations people who are present today. I acknowledge that Aboriginal sovereignty has not
been ceded.
W H AT D O Y O U T H I N K
MARKETING IS ALL ABOUT?
MARKETING IS LIKE AN ICEBERG…

Branding and
marketing
communications

Everything
else
RIGHT NOW…

WE LOOK LEARN
ABOUT THE
SUBJECT &
MARKETING!
SUBJECT LEADERS

• Mr. Andrew Zur • Dr. Kanika Meshram

• Lecturer • Head tutor

• ajzur@unimelb.edu.au • kanika.meshram@unimelb.edu.au
ABOUT ME…

• Teaching experience:

• Principles of Marketing (since 2011)

• Business Negotiations (since 2015)

• Business and Marketing Ethics (since

2011) + Sustainable Business Practices

• The Future of Work (since 2020)

• Organisational Behaviour (since 2013)

• Managerial Psychology (since 2015)

• (Melbourne) Business Practicum (since

2014) + Management Consulting

• Managing Sustainably (since 2021)

ABOUT ME…

• Qualifications:

• Postgraduate: Graduate
Certificate in Commercialisation
for Research Students

• Honours: The impact of cognitive

and affective trust on the
relationship between Australian
exporters and their overseas
buyers (Topics: relationship
marketing)

• Undergraduate: Business
majoring in marketing and
international business
ABOUT ME…

• Passions & interests:

• Video games,
particularly anything

retro Nintendo 🎮
• Building Lego 🤓
• Travel, reading, TV, and

coffee… ☕
 YOUR TEACHING TEAM

Jingjing David Natalya Stefan Paul

Tutorials 16 (2:15pm), Tutorials 26 (2:15pm Tutorials 13 (2:15pm),
Tutorial 19 (9:00am) Tutorials 7
17 (3:15pm), in The Spot-3012) 14 (3:15pm), and
— Thursdays in The (3:15pm) and
18 (4:15pm), and and 27 (3:15pm in 15 (4:15pm) —
Spot-2017 9 (4:15pm) —
22 (11:00am) — The Spot-3033) — Tuesdays on Zoom
Mondays on Zoom
Wednesdays on Wednesdays Tutorial 30 (9:00am) —
Zoom Wednesdays
(FBE-214)
 Y O U R T E A C H I N G T E A M ( C O N T. )

Marie Boris Chris Carol

Precious
Tutorials 24 (2:15pm) Tutorials 10 (9:00am), Tutorials 2 (9:00am in Jianwen Tutorials 20
and 25 (3:15pm) — 11 (10:00am), and The Spot-3012), (11:00am in The
Tutorials 6 (3:15pm)
Wednesdays on 12 (11:00am) — 4 (10:00am in The Spot-2020), 21
and 8 (4:15pm) —
Zoom Tuesdays in FBE-219 Spot-3033), and (1:00pm in The
Mondays in FBE-219
5 (11:00am in The Spot-2018), and 23
Spot-3033) — (2:15pm in The
Mondays Spot-2016) --
Thursdays
WHO TO
C O N TA C T ?

• Discussion boards as first stop

1. Identify the proper thread

2. Search existing answers

3. Post your question

4. Answers will be posted in 48

hours or less

• Mega thread for student interaction

• Save e-mails for personal issues

(e.g. special consideration, career-
related queries)
 WHO TO
C O N TA C T ?
• Lecture content/theory: You email me (Andy
Zur) at ajzur@unimelb.edu.au

• Ask questions after the lecture or at the

Zoom Q&A session on Fridays at 12:30pm

• General assignment and subject

administration: You email Kanika
at kanika.meshram@unimelb.edu.au

• Speci c questions about your tutorial or

your assignment (pre-tutorial activity,
individual essay, group report): You check/
post on the Discussion board FIRST, then if
appropriate email your tutor

• Questions about the research component

tasks (SONA): You email Dr Jingjing Wang
at sona-researchlab@unimelb.edu.au

• Tutorial enrolments: Contact STOP1. We can’t

change your enrolment for you.
fi
 HOW YOU WILL LEARN

Live lectures Tutorials Textbook

Fridays, 10:00am to 12:00pm On-campus and on Zoom Armstrong et al. (2021),
Via Zoom (link via Zoom tab on Canvas) Start in Week 1 Principles of Marketing (8th
Sessions will be recorded and uploaded to Connect the theory to a task ed)
Lecture Capture (company/brand/product) eBook or physical
Objectives: Connect with your fellow Library will have access to
1. Learn key concepts, connect these to students! both
examples
The chapters from the
2. Recap concepts, points of confusion
textbook (and other
3. Address questions (at the end of the
readings) that you are
lecture)
required to read each week
4. Engage with lecturer and fellow
are outlined in the Subject
students
Guide
LEARNING ABOUT MARKETING
• Observe your surroundings

• Think about the products you use

• Consider which brands you like and dislike (and why!)

• Check marketing-related news often:

• www.marketingmag.com.au (Marketing News)

• www.ama.org

• Forbes.com (Consumer, Industry, Retail)

• Business sections on magazines and newspapers

• Academic research: theconversation.com

• HBR Ideacast podcast

• Gruen on ABC iView

 unimelb-mm.sona-systems.com
ASSESSMENT Contact: Jingjing Wang
sona-researchlab@unimelb.edu.au

RESEARCH
COMPONENT
PRE-TUTORIAL PA R T I C I PAT I O N
ONLINE (4X 30 MINUTE
ACTIVITY STUDIES)
(5%) OPTION TO REQUEST
A LT E R N AT I V E A S S I G N M E N T
Alternative assignment
(5%) request deadline Week 3,

Due:
Thursday, 11
August 11.55pm (23:59)
Due: Throughout
Throughout the
the semester
semester via
via Canvas
SONA
1/12 (Weeks 1-12) Look for the MARKETING studies
Submit BEFORE your tutorial You will be emailed your SONA log in
details

Submit: Cadmus In-person/online

A S S E S S M E N T ( C O N T. )
The case will be available in Week 4

INDIVIDUAL GROUP
E S S AY ASSIGNMENT
(10%) (20%)
1,000 WORDS 2,000 WORDS
2-4 STUDENTS
ARTICLE NEEDS TO BE
M AY B E D O N E
FROM JANUARY 2022
I N D I V I D U A L LY U P O N
ONWARDS
REQUEST

Due: Thursday, Due: Thursday,

18 August at 13 October at
11:55pm (23:55) 11:55pm (23:55)
(Week 4) (Week 11)

Submit: Cadmus Submit: Canvas

 FIND
S U P P L E M E N TA R Y
ASSIGNMENT 1 ARTICLES/REPORTS
ABOUT THE BRAND/
C O M PA N Y /
COMPETITORS/
INDUSTRY

HOW A FIND A NEWS

ARTICLE FROM FIND ACADEMIC
C O M PA N Y O R
JANUARY 2022 JOURNAL
B R A N D C R E AT E S
VA L U E F O R
+ ONWARDS WHERE + ARTICLES ABOUT
THIS CONCEPT IS THIS CONCEPT
THEIR
DISCUSSED
CUSTOMERS,
FOR THE These can be from any
C O M PA N Y, A N D e.g. The Guardian, year and they will have
FOR THE
S O C I E T Y AT
The Age/SMH, nothing to do with your
LARGE ABC News brand/company/
(Australia), Forbes, product. It is just about
the theory (minimum of
NY Times
four)
A S S E S S M E N T ( C O N T. )

END OF
SEMESTER EXAM
(60%)

During the exam period: Monday,

31 October to Friday, 18
November
Submit: Canvas
ACTIVE LEARNING

Pre-tutorial activities – Lectures – Discussion boards – Drop-in Q&A sessions – Assignments - Tutorials
 TUTORIALS…

💻📸👩💻🧑💻
Cameras need to be
on and stay on the
entire tutorial!
C A N ’ T AT T E N D Y O U R T U T O R I A L ?
Find another time/day/tutor
Email the other tutor (cc your tutor)
and ask whether if it is okay if you
attend that tutorial
 LECTURE SCHEDULE
TIME/
D AT E WEEK TOPIC
L O C AT I O N
Course introduction: Understanding
F r i d a y, 2 2 J u l y 0 ➡ 1 Pre-recorded
marketing and value

F r i d a y, 2 9 J u l y 1 ➡ 2 Relationship marketing and customer loyalty

F r i d a y, 5 A u g u s t 2 ➡ 3 Consumer behaviour and consumer culture

F r i d a y, 1 2 A u g u s t 3 ➡ 4 Marketing strategy and market research

F r i d a y, 1 9 A u g u s t 4 ➡ 5 Segmentation, targeting, and positioning

F r i d a y, 2 6 A u g u s t 5 ➡ 6 10:00am to Creating value: Products and services

12:00pm
Zoom (Link
F r i d a y, 2 S e p t e m b e r 6 ➡ 7 Communicating value: Promotion
under the
Zoom tab on
F r i d a y, 9 S e p t e m b e r 7 ➡ 8 Canvas) Offering value: Pricing

F r i d a y, 1 6 S e p t e m b e r 8 ➡ 9 Branding

Thursday, 22 September 9 ➡ 10 Services & Experiences

Distributing value: Retail and digital

F r i d a y, 7 O c t o b e r 10 ➡ 11
distribution

F r i d a y, 1 4 O c t o b e r 11 ➡ 12 Future trends in marketing and course review

PRINCIPLES OF MARKETING IS LIKE…
PRINCIPLES OF MARKETING IS LIKE…
SUBJECT OBJECTIVES

• Comprehension of basic theories and models within

marketing

• Analyse and critically evaluate marketing practice

(explain why some marketing activities are more
successful than others)

• Be capable of applying theories and problems

presented in case studies and assignments
W H AT I S A
THEORY?

• A set of hypotheses
related by logical
arguments to explain and
predict a wide variety of
connected phenomena in
general terms
W H AT W I L L W E A C H I E V E I N T H I S
SESSION?
• Find out what marketing actually is

• Understand how our view of marketing has evolved

• Introduce you to the marketer’s ‘toolkit’

• Understand why creating value for customers is the most

important goal for firms

• Outline a value framework

• Find out what the market-oriented firm looks like

 W H AT I S …

“Marketing is the activity, set of institutions, and

processes for creating, communicating, delivering, and
exchanging offerings that have value for customers,
clients, partners, and society at large.”
- American Marketing Association (2007)
W H AT I S
MARKETING?

“Marketing is not a
specialised activity, It is the
whole business seen from
the point of view of its final
result, that is, from the
customer’s point of view.”

- Peter Drucker, 1909-2005

 M A R K E T I N G I S T H R E E I N T E G R AT E D
PROCESSES

DIAGNOSIS S T R AT E G Y TA C T I C S

Source: https://www.marketingweek.com/mark-ritson/
CORE CONCEPTS AND PROCESSES
 S TA G E S O F M A R K E T I N G E V O L U T I O N

Era Time Description

Mass production Mass produced at a low cost. One product. “If produced,
1860s-1920s
era someone will buy”

Competition increased. Persuasion needed. Profit and

Sales 1920s-1940s price focused rather than quality of the products or
customer focused.

Marketing Refinement. Advertising, sales, promotions, and anything

1940s-1960s
department m a r k e t i n g r e l a t e d a l l g r o u p e d t o g e t h e r.

G u i d e a c o m p a n y ’s d i r e c t i o n . A l l e m p l o y e e s i n v o l v e d .
Marketing
1960s-1990s “Customer is king” and becomes main focus. Distribution
company
and pricing strategies are refined.

Focus shifts to creating and maintaining long-term

Relationship
1990s-2010 relationships with customers with the main goal of
marketing
f o s t e r i n g c u s t o m e r l o y a l t y.

Societal/mobile Focus shifts to connecting with customers in real-time.

2010-present
marketing The customer is in the “driving seat”.
M A R K E T I N G O R I E N TAT I O N S T H R O U G H
TIME
FROM A PHYSICAL PROCESS
SEQUENCE…

Make the product Sell the product

Design product ‘Cost plus’ price

Materials procurement Sell/advertise

Manufacturing Distribute

Service
… T O A VA L U E D E L I V E R Y S E Q U E N C E …

Communicate the
Choose the value Provide the value
value

Build internal &

Customer value (CV) Organisational value
external
& needs analysis creation
understaning of:

Market segmentation Product & process

- CV framework
& target markets (re)design

Va l u e p o s i t i o n i n g v s . C u s t o m e r- f i r m c o - - CV position vs.
competitiors creation competitors
A SHIFT IN FOCUS…
H O W I S M A R K E T I N G E R A / O R I E N TAT I O N

• Marketing orientation is ultimately concerned with

making the right decisions when implementing the
marketing mix, in relation to a pre-defined market
segment

• 4Ps

• Product, place, price, and promotion

MARKETING
MYOPIA

• Short sightedness by
business firms causing
management to define
their business (and hence
their competitors and
market opportunities) too
narrowly
FOR EXAMPLE:
S O C I E TA L M A R K E T I N G E R A : M A K E
M O N E Y A N D A C T E T H I C A L LY

Benefits to Customers, Employees,

Shareholders, and Communities
C O R P O R AT E S O C I A L I R R E S P O N S I B I L I T Y

• Corporate social irresponsibility (CSIR) can be defined as business doing

wrong in relation to profitability, people (customers, suppliers, or
employees), the environment, community, society, ethics, and business
practices.

• As a theoretical tool for business analysis, it helps companies identify

areas in which they are not doing particularly well as a way of developing
a process of continuous CSR business improvement. It serves to
demonstrate to management and stakeholders the importance of doing
the right thing and putting in place policies, strategies, and practices to
minimise damage that can result from irresponsible attitudes,
behaviours, and actions. It can help businesses become proactive as
opposed to reactive in areas that cover the responsibility agenda.
 CSIR AND CSR

Economic pro tability

Profitable Not profitable

Socially beneficial
- “Win-win”
- Beyond the “high-hanging
- “Low-hanging fruits” (doing
fruits” (more dif cult, more
the simplest or easiest
effort)
work rst requiring little or
Socially implications

no effort)
- e.g. fair wages, highest
ecological standards
- The business case for CSR
Socially harmful

- Corporate social
- Poor management
irresponsibility
- e.g. pollution, exploitation
- Reputational damage after
a boycott or scandal
of workers
Source: Wickert &
Risi (2019)
fi
fi
fi
 CSIR AND CSR AS TWO ENDS OF THE
SAME CONTINUUM

Corporate social irresponsibility Corporate social responsibility

Environmental de ation and pollution are inevitable and little Environmental degradation and pollution is not inevitable and
precaution is taken should not be tolerated, and it is important to raise awareness
and commit to action

Employees are a resource to be exploited Employees are a resource to be valued

Only basic, and sometimes reluctant, compliance with Compliance with, as well as policy and practical actions that go
legislation pertaining to CSR beyond the minimum legislative requirements for CSR

Ethical issues are on the periphery Ethical issues are central to the organisation

New technologies should be developed and introduced to the New technologies should be developed, tested, evaluated and
market only introduced to the market if they do not cause harm

Treating suppliers and customers unfairly Working fairly with suppliers and customers

Sustainability de ned in terms of business, environmental, and

Sustainability de ned in terms of business survival
community survival and mutual growth

Pro t it the sole purpose of business and should be achieved at Pro t is one of many purposes of business and should be
any cost achieved, but not at any cost

Source: Murphy and Schlegelmilch (2013) adapted from Jones et al. (2009)
fi
fi
fi
fi
fl
CSIR EXAMPLES

VW + diesel emissions scandal Rana Plaza collapse

BP + Gulf of Mexico oil spill Murdoch media + misinformation

COMPLEXITY IN THE BUSINESS CASE
( C O N T. )
• Dual paths – different CSR, different relational mechanism

• Mattingly and Berman (2006); McKinsey report (Bielak et al. 2007)

• “If a company wants to protect its reputation or improve it, it’s much
better trying to avoid bad things happening than to put effort into
doing good.” (Prof David Vogel, University of California)

High nancial
High CSR Opportunities/rewards
performance

Risks/penalties Low nancial

Low CSR performance
fi
fi
COMPLEXITY IN
THE BUSINESS
C A S E ( C O N T. )

• Consumers are willing to

pay a small premium for
ethical products

• BUT they'll punish an

unethically made product
even more harshly, by
buying it only at a steep
discount
HOLISTIC ➡
CONVERGENCE
MARKETING ERA

• Consumption experiences

• Consumer sensations and sense-making

• Neuromarketing

• Biotechnology, nanotechnology

• Marketing networks

• Production-consumption networks

• Sharing economy

• Sustainable marketing

• Growth from Bottom-of-Pyramid (BoP) markets

• Traceable production

• Ingredient concerns

• Limited F2F interaction

• Online retailing for most categories

• Experience translation
A CUSTOMERS DOESN’T JUST BUY A
L A P T O P…
CUSTOMER
V A L U E C R E AT I O N

“The customer rarely buys

what the firm thinks its
selling [them].”

- Peter Drucker, 1909-2005

W H AT I S C U S T O M E R V A L U E ?
All tangible and intangible
desirable attributes of the
Benefit product consumed over
the life of its ownership

Value
=
All tangible and intangible
Cost costs incurred by the
customer over the life of
ownership
W H AT I S
C U S T O M E R VA L U E ?
( C O N T. )

The GOAL: To create

superior perceived value
(where the customer
perceives higher value than
any competing alternative)
V A L U E C R E AT I O N
& DELIVERY

• Value creation is not a

‘shotgun
approach’ (appealing to a
wide market of potential
customers)

• It requires tradeoffs:

• What elements should

we offer the customer?
Which elements should
we deny them?
MARKETING
TOOLKIT FOR
C R E AT I N G &
C O M M U N I C AT I N G
VA L U E

• Product/People

• Place

• Price

• Promotion
PRODUCT/
PEOPLE

• New product & service

development

• Value co-creation

• Building the brand

• The augmented product

• Service quality
PLACE

• Selection of channels &

channel partners

• Finding complementarities
between routes to market

• Design and
implementation of channel
controls

• Design of promotional
plan for channels
PRICE

• Value-based pricing (prices

are based mostly on
consumers’ perceived
value of the product or
service)

• A consumer-based view of
pricing (how much each
customer is wiling to pay)

• Pricing tactics
PROMOTION

• Determination of promotion
objectives

• Development of
communications content &
creativity

• Selection of media

• Design of control/evaluation
methodology

• Timing
ARE YOU MAKING “GOOD” PROFITS OR
“BAD” PROFITS?
• Good profits:

• Earnings from creating customer value, which in turn,

creates customers who are loyal, purchase more of
your product, and recommend your firm to others

• Bad profits:

• Are earned at the customer’s expense

• But your accountant sees only one kind of profit

S O U R C E S O F V A L U E C R E AT I O N

• Relative life-cycle benefits:

• Product

• Services

• Relationship management

• Image
S O U R C E S O F V A L U E C R E AT I O N ( C O N T. )

• Relative life-cycle costs:

• Search

• Acquisition

• Set-up

• Maintenance

• Financing

• Exit
U N D E R S TA N D I N G
CUSTOMERS’
D E F I N I T I O N O F VA L U E

• Customers define benefits

not in terms of product
and service features, but in
terms of results delivered:

• Improved performance

• Improved productivity

• Improved experience

• Reduced risk
T O O L S F O R C R E AT I N G V A L U E
THROUGH BENEFITS

• Product • Support services

• Distribution
• Features
• Installation
• Performance
• Merchandising
• Conformance
• Training

• Reliability • Maintenance

• Packaging • Consulting

• Design • Information management

T O O L S F O R C R E AT I N G V A L U E
T H R O U G H B E N E F I T S ( C O N T. )

• Relationship management • Image

• Competence • Company reputation

• Courtesy • Brand reputation

• Credibility • Atmosphere

• Reliability • Promotion

• Responsiveness • Media/publicity

• Communication
U N D E R S TA N D I N G
CUSTOMERS’
D E F I N I T I O N O F VA L U E

• Customers define costs not in terms

of purchase price, but in terms of
total tangible and intangible costs/
savings over the relationship life
cycle:

• Less money

• Less time

• Less psychic cost (social costs;

added stress or losses to quality
of life associated with having to
think about a transaction)

• Less effort
T O O L S F O R C R E AT I N G V A L U E
THROUGH COSTS

• Search cost • Acquisition cost

• Product availability
• Price level
• Information available and
• Timing
easy to understand

• Relationship management: • Order placement and

fulfilment process
• Competence
• Allowances
• Responsiveness
• Incentives
• Credibility
T O O L S F O R C R E AT I N G V A L U E
T H R O U G H C O S T S ( C O N T. )

• Set-up cost • Maintenance cost

• Service costs (complexity;

• Switching costs
reliability; availability)
(economic and
psychological) • Repair costs

• Understanding how to • Relationship

use the product management

• Installation • Systems management

T O O L S F O R C R E AT I N G V A L U E
T H R O U G H C O S T S ( C O N T. )

• Financing cost • Exit cost

• Processing/administrative • Product

• Deposits
• Replacement cycle
• Credit
• Compatibility
• Subsidies
• Upgradeability
• Flexibility

• Contracts
• Security
T H E VA L U E
PROPOSITION

• Customer-perceived value
(CPV) is based on the
difference between the
benefits customers get and
costs they assume for different
choices

• A Value Proposition consists of

the whole cluster of benefits
the company promises to
deliver, and how it plans to
reduce costs for consumers
 C U S T O M E R P E R C E I V E D VA L U E
Total customer bene t is the perceived value from a given market offering

⬇
To t a l
Image Personnel Services Product
benefit ➡ benefit ➡ benefit ➡ benefit ➡ customer
benefit

Customer
delivered
value

To t a l
Psycholo Energy Monetary
gical cost ➡ cost ➡Time cost ➡ cost ➡ customer
cost

⬆
Total customer cost is the perceived bundle of costs customers
expect to incur in evaluating, obtaining, using, and disposing of the
given market offering
fi
WHICH OF THESE HAS THE HIGHEST
VA L U E ?

$539 $150 (1991) ➡ ~$312 (2022)

WHICH OF THESE HAS THE HIGHEST
VA L U E ?

$399 (1997) ➡ ~$713 (2022)

 C R E AT I N G C U S T O M E R V A L U E L E A D S T O
( L O N G - T E R M ) F I R M VA L U E
Increased Increased volume
customer loyalty

Increased and/or Increased cash flow C U S T O M E R VA L U E

purchases & & experience T O TA L LIFE CYCLE
BENEFITS / T O TA L LIFE
referrals CYCLE COSTS

Premium prices Reduced costs

F I R M VA L U E
MARGIN * VOLUME /
INVESTMENT
NEEDS, WANTS, AND DESIRES

Need: any difference

b e t w e e n a c o n s u m e r ’s
actual state and some
ideal or desired state (it Desire:
can be recognised or Overpowering urges that
latent) dominate ones’ thoughts,
feelings,
and actions.
Desires cannot be controlled,
rather
they take control of the
Wa n t : d e s i re t o s a t i s f y individual.
needs in specific ways
that are culturally and
socially influenced
NEEDS
LAUNDRY PILE OF NEEDS
 T Y P E S O F V A L U E G E N E R AT E D

HEDONIC
U T I L I TA R I A N
The perceived LINKING
The benefit of
benefit of The benefit of being
functionality derived
experiencing socially connected to
from using a product
pleasure, happiness, others
or service
and other emotions

EPISTEMIC
R E P U TAT I O N A L I D E N T I TA R I A N
The benefit of
The benefit of being The benefit of
accessing new
well regarded by c o n t r i b u t i n g t o o n e ’s
knowledge from an
others self-expression
object or experience
E L E M E N T S T H AT
A D D VA L U E
RECAP

• Marketing is an approach to
doing business and not a
specialised function or
department within the firm

• The customer is the starting

point for everything we do in
business

• Marketers have a range of

powerful tools to create value
for, and influence, customers
RECAP
( C O N T. )

• Firms should always be striving

to make good profits

• Creation of sustainable, superior

customer value is the principal
objective of the firm: It’s about
relentlessly reducing life-cycle
costs and/or increasing benefits
to the customer over the
product’s life
READINGS…
Required: Textbook
Recommended: Articles

• Lecture 1:

• Chapter 1

• Lecture 2:

• Chapter 2

• Markey (2020)
 Submit your pre-tutorial online activity BEFORE the start of your
NEXT TIME… tutorial
R E L AT I O N S H I P M A R K E T I N G A N D
C U S T O M E R L O YA LT Y