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Published by odllab, 2019-12-20 04:48:15

BBM104/03 Principles of Marketing

Course code: BBM104/03
Course adapter by: Ms. Yap Li Lian School of Business and Administration (SBA)

Professor Dr Zoraini Wati Abas
Content Adapter: Yap Li Lian
Lead Instructional and Visual Designer: Fauziyah Md Aris Instructional and Visual Designers: Norliza Mhd Rodzi and Nurain Mohd Hassan Language Editor: Ong Cheng Teik
Proof Reading: Khoo Chiew Keen
Margin Setting: Elaine Tan Xin Yi
Cover Page and Content Design: Norliza Mhd Rodzi
Christine Khoo Geok Ling
Online Digital Learning Lab (ODL Lab)
Instructional Design for Engaging Experiences (IDeX) Wawasan Open University
Acknowledgement: This course module has been adapted by the
School of Business and Administration (SBA) from the Online Course Materials for the Principles of Marketing (BBM104/05) developed by Wawasan Open University.
First edition, December 2019
This course material was published to support the learning of students registered with Wawasan Open University. Wawasan Open University does not grant any degree, certification or credits based solely on your completion of this course material.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from Wawasan Open University.
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Wawasan Open University is Malaysia’s first private not-for-profit tertiary institution dedicated to adult learners.

04 05
Part 1 | About the Course
Part 2 | Course Overview
Course synopsis
Course learning outcomes Course content
Study schedule Assessment methods
Part 3 | Course Study Guide
Unit 1 Unit 2 Unit 3 Unit 4 Unit 5
Defining marketing and the marketing process Understand the marketplace and the consumers Creating offerings
Marketing promotions and marketing channel Customer satisfaction and marketing plan
Part 4 | References
Part 5 | Feedback Form

Course Type Credit Hours Learning Hours
Course Title Course Code
: School of Business & Administration (SBA) : Core Course
: 3 hours
: 120 hours
: Principles of Marketing : BBM 104/03
Course Coordinator : Ms. Yap Li Lian Email : [email protected]
Core Reading Material(s) : BBM104/05 Principles of Marketing
Study learning materials, learning activities and self- tests
No. of Hours
10 2
2 Attending 5 tutorial classes (2 hours per class)
Participation in online forum discussions
4 Completing the course assignments (CA1 & CA2)
5 Exam revision
6 Examination
BBM104/03 Principles of Marketing

Course Synopsis
Principles of Marketing is a fundamental course offered in any business degree programme. This course introduces the Concepts of Marketing, which includes analysing the Marketing Environment, conducting Marketing Research, understanding Buyer Behaviour, as well as designing Market Segmentation, Targeting and Positioning strategies, and marketing mix strategies. Areas such as strategic planning, customer satisfaction and marketing plan design are also emphasised.
Keywords: Concepts of Marketing, Marketing Environment, Marketing Research, Buyer Behaviour, Market Segmentation, Targeting and Positioning Srategies, Marketing Mix, Strategic Planning, Customer Satisfaction, Marketing Plan
COURSE LEARNING OUTCOMES (CLOS) y the end of this course, you will be able to:
1. Explain how the Environment and Consumers’ Behaviour affect the Marketing Segmentation,Targeting and Positioning Process and the Marketing mix (4Ps)
2. Present Marketing Mix (4Ps) Strategies to a business organisation.
3. Propose Marketing Mix (4Ps) Solutions to a business organisation using related good practices obtained from the literature
BBM104/03 Principles of Marketing 2

Course topics include:
1. Definition of marketing
2. Strategic planning
3. Marketing research and market intelligence
4. Understanding consumer behavior
5. Understanding business buying behavior
6. Market segmentation, targeting and positioning
7. Product offering
8. Developing and managing product offering
9. Pricing strategy
10. Integrated marketing communications strategy
a) Advertising
b) Sales promotion
c) Public relations
d) Personal selling
e) Direct marketing
11. Channel strategy
12. Customer satisfaction, loyalty and empowerment
13. The marketing plan
BBM104/03 Principles of Marketing 3

(Weekly topic and study activity for each unit)
Unit Week
Topic Focus
Learning Activities
Self- Assessment
Marketing Concept Strategic Planning Process
Busines Environments Porter’s Five Forces BCG Matrix / GE Matrix
Marketing research & business intelligence
Consumer behaviour
Steps in marketing research process Research design Questionnaire design Sampling
Stages in the consumer decision making process Factors affecting buying behaviour
- Situation
- Psychological Societal
1.9 1.10
2.1 2.2 2.3 2.4 2.5
Business buyer behaviour
Market segmentation, targeting and positioning
Marketing Mix - Product Offering
Consumer market vs business market buying
Bases of segmentation Targeting strategies Positioning
Product levels Consumer offerings Branding Packaging
2.6 2.7 2.8 2.9
2.10 2.11 2.12
3.1 3.2 3.3 3.4 3.5
BBM104/03 Principles of Marketing
7 4
What is marketing? Strategic planning
1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
1.1 1.2

COURSE STUDY SCHEDULE (Weekly topic and study activity for each unit) ... continued
Unit Week Topic Focus
Learning Self- Activities Assessment
Developing and managing product offering
New product development process Product life cycle (PLC)
3.6 3.7
Marketing Mix - Price
Marketing Mix –
Promotions Advertising
Integrated marketing communications
Marketing Mix – Promotions Personal selling
The pricing framework Factors that affect price Pricing strategies Pricing approaches
Integrated marketing communications Communications process promotional budget
Selling strategies The sales process Outsourcing sales function
3.6 3.7
4.1 4.2 4.3 4.4 4.5
4.9 4.10 4.11
Marketing Mix - Place
Types of channels Multiple channels Function of channels Channel strategies Channel integration
4.12 4.13 4.14 4.15 4.16
Customer Satisfaction
The Marketing Plan
Customer communities Loyalty management Customer satisfaction
Functions of marketing plan
The marketing plan
5.1 5.2 5.3
5.4 5.5 5.6 5.7
BBM104/03 Principles of Marketing 5

Quiz, Group Work, Presentation, Proposal, Essay, Annotated Bibliography, etc.
TOTAL 100%
The student will be assessed through the following methods
Quiz, Group Work, Presentation, Proposal, Essay, Annotated Bibliography, etc.
Note: The grade for a course is assigned based on the overall score, which combines both the contiuous assessment and the final examination components (please refer to the Student Handbook for details).
BBM104/03 Principles of Marketing 6

1.1 What is marketing?
1.2 Strategic planning
1.3 Marketing research and market intelligence
2.1 Consumer behaviour: How do people make buying decisions?
2.2 Business buying behavior
2.3 Market segmentation, targeting and positioning
3.1 What composes an offering?
3.2 Developing and managing offering
3.3 Price, the only revenue generator
4.1 Advertising, integrated marketing communications and the changing media landscape
4.2 Public relations and sales promotion
4.3 Professional selling
4.4 Using marketing channels to create value for customers
5.1 Customer satisfaction, loyal and empowerment 5.2 The marketing plan
BBM104/03 Principles of Marketing 7

BBM104/03 Principles of Marketing 8

1.4 1.5
What is Marketing
Learning Activity 1.1 Self-Check 1.1
Strategic Planning
Learning Activity 1.2 Self-Check 1.2
The Marketing Research & Market Intelligent
Learning Activity 1.3 Self-Check 1.3
BBM104/03 Principles of Marketing 9

This unit focuses on:
1. Definition of marketing
2. Strategic planning
3. Marketing research
What makes a business idea work? Does it only take money? Why are some products a huge success and similar products a dismal failure? However, with good marketing any company can produce and sell products that consumers want.
In Unit 1, we will cover three (3) areas, namely the definition of marketing, the strategic planning of marketing and the use of marketing research.
BBM104/03 Principles of Marketing 10
Please watch this video. Title: What is Marketing? Duration: minutes

By the end of this Unit 1, you should be able to
1. Define the concept of marketing
2. Describe the value and purpose of strategic planning in marketing 3. Design the gathering of market information
The American Marketing Association defined Marketing as “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.” If you read the definition closely, you will see that there are four (4) activities, or components, of marketing:
01 02
The process of collaborating with suppliers and customers to create offerings that have value.
Generally, describing those offerings, as well as learning from customers.
Getting those offerings to the consumer in a way that optimises value.
Trading value for those offerings.
03 04
BBM104/03 Principles of Marketing
Figure 1.1. The four elements of marketing

The traditional way of viewing the components of marketing is via the Marketing Mix or 4Ps.
1. Product : Goods and services (creating offerings).
2. Promotion: Any type of marketing communication used to inform or persuade target
audiences of the relative merits of a product, service, brand or issue.
3. Place : Getting the product to a point at which the customer can purchase it (delivering).
4. Price : The monetary amount charged for the product (exchange).
Value is at the centre of everything marketing does. What does value mean? When we use the term “value”, we mean the benefits buyers receive that meet their needs.
Figure 1.2. Four activities centred on customer value The Personal Value Equation is
value = benefits received − [price + hassle]
Value varies from customer to customer based on each customer’s needs.
BBM104/03 Principles of Marketing 12

The marketing concept
The marketing concept, a philosophy underlying all that marketers do, requires that marketers try to satisfy customer wants and needs.
Market oriented. Companies operating with the philosophy satisfy customer wants and needs. Market-oriented companies recognise that exchange must be profitable for them to be successful. Product oriented. Beginning with the Industrial Revolution in the late 1800s, companies were production oriented. They believed that the best way to compete was through product innovation and by reducing production costs.
Selling oriented. From the 1920s until after World War II, companies tended to be selling oriented, meaning they believed it was necessary to push their products by heavily emphasising advertising and selling. The Great Depression and World War II in the 1930s and 1940s, resulted in the push approach during the selling era.
Marketing Oriented. In the post-World War II environment, demand for goods increased as the economy soared. Consumers had many choices available to them, so companies had to find new ways to compete. The marketing concept was developed from about 1950 to 1990.
For a better understanding of this topic, please read Unit 1, pg 4 – 13
BBM104/03 Principles of Marketing 13
Please watch this video and recall to Marketing Value. Title: Marketing Concept
Duration: 5.45 minutes

For-profit companies
Who Does Marketing?
Non-profit organisations
Figure 1.3. Who does marketing?
Marketing enables profitable
transactions to occur
Marketing delivers value
Marketing benefits society
Marketing costs money
Marketing offers people career opportunities
Figure 1.4. Benefits of studying marketing
BBM104/03 Principles of Marketing 14

The changing marketing environment
The way business is being conducted today is changing, too, and marketing is changing along with it.
Ethics and social responsibility. Businesses exist only because society allows them to. When busi- nesses begin to fail society, society will punish them or revoke their licences.
Sustainability. This is an example of social responsibility and involves engaging in practices that do not diminish the Earth’s resources.
Service-dominant logic. We use the word “offering” a lot instead of the term product. That is because of service-dominant logic, the approach to business that recognises that consumers want value no matter how it is delivered.
Metrics. Technology has increased the amount of information available to decision makers. Using this data, we can build more effective metrics that can then be used to create better offerings, better communication plans, and so forth.
For a better understanding of this topic, please read Unit 1, pg. 14 – 22
Learning Activity 1.1
Please attempt Activities 1.1 to 1.3 to gauge and improve your learning of this topic.
Self-check 1.1
Please attempt Self-test 1.1 to gauge and improve your learning of this topic.
Have you ever wondered how an organisation decides which products and services to develop, price, promote, and sell? Organisations typically develop plans and strategies that outline how they want to go about this process.
The value proposition
Individual buyers and organisational buyers both evaluate products and services to see if they provide the desired benefits. A value proposition states the specific benefits a product or service offering provides a buyer. It shows why the product or service is superior to competing offers. Companies typically identify different target markets, or groups of customers, they want to reach when they are developing their value propositions.
For a better understanding of this topic, please read Unit 1, pg. 27 – 30
BBM104/03 Principles of Marketing 15

Strategic planning
Strategic planning is a process that helps an organisation to allocate its resources to capitalise on opportunities in the market place. Typically, it is a long-term process. So how and where does strategic planning occur within organisations? Many large organisations have different divisions, or businesses, called Strategic Business Units (SBU). An SBU is a business or product line within an organisation that has its own competitors, customers, and profit centre for accounting purposes.
SBUs may also have their own mission statement (purpose) and will generally develop strategic plans for themselves. These are called business level plans. The different departments, or functions (accounting, finance, marketing, and so forth) within a company or SBU, might also develop strategic plans. For example, a company may develop a marketing plan and a financial plan, which are functional level plans as illustrated in the diagram below:
Business level
(PepsiCo Americas Beverages, PepsiCo Americas Foods, PepsiCo International)
Functional level
(Marketing department, accounting department, human resources department)
Figure 1.5. Strategic planning levels in an organisation
Corporate level
(PepsiCo, Inc.)
BBM104/03 Principles of Marketing 16

Components of the strategic planning process
The strategic planning process includes conducting a situation analysis and developing the organisation’s mission statement, objectives, value proposition, and strategies as shown in the flow chart below:
Situation analysis
Evaluate the external environment
(the economy, competition, political-legal environment, etc.)
Evaluate the internal environment
(the firm’s financial and human resources, technological capabilities, etc.)
Value proposition and strategy formulation
Figure 1.6. Strategic planning process
For a better understanding of this topic, please read Unit 1, pg. 30 – 39
The competitive environment
All organisations must consider their competition, whether it is direct or indirect competition vying for the consumer’s money. Both non-profit and for-profit organisations compete for customers’ resources. Michael Porter, a a leading authority on competitive strategy, developed an approach for analysing industries known as the Porter’s Five Forces Model. The framework helps organisations to understand their current competitors as well as organisations that could become competitors as well as to find the best way to defend their position in the industry as illustrated in Figure 1.7.
BBM104/03 Principles of Marketing 17

Potential new entrants
Bargaining power of buyers
Competitive rivalry (Direct competitors)
Bargaining power of suppliers
Figure 1.7. The Porter’s five forces model.
Please watch the following video explaining Porter’s Five Forces Model of industry competition.
Title: Porter's Five Forces Model of Industry Competition Duration :21.32 minutes
For a better understanding of this topic, please read Unit 1, pg. 40
BBM104/03 Principles of Marketing 18

Market environment
Market environment
Market environment is the combination of macro and micro factors and forces which affect the company's ability to establish a relationship and serve its customers.
Macro environment
The larger societal forces that affects the whole micro environment include-the demographic environment, the political environment, the cultural environment, the natural environment, the technological environment and the economic environment as shown in the diagram below:
Demographic environment
Cultural environment
Political environment
BBM104/03 Principles of Marketing
Macro Environment
Economic environment
Natural environment
Technological environment
Figure 1.8. Macro environment

Micro environment
The forces close to the company that affects its ability to serve its customers include- the internal environment, suppliers, customers, marketing intermediaries, competitors and the public as illustrated in the following diagram:
Internal environment
Marketing intermediaries
Micro Environment
Figure 1.9. Micro environment
For a better understanding of this topic, please read Unit 1, pg. 41 – 46
BBM104/03 Principles of Marketing 20
Please watch the following video explaining the business environment. Title: Business Environment
Duration: 5.29 minutes

The mission statement
An organisation’s mission statement states the purpose of the organisation and why it exists.
Developing organisational objectives and formulating strategies
Objectives are what organisations want to accomplish — the end results they want to achieve — in a given time frame.
Strategies are the means to the ends, or what a company is going to do to meet its objectives. Successful strategies help companies to establish and maintain a competitive advantage that competitors cannot imitate easily.
Export strategies include:
Brand image
Marketing plan
Market penetration strategies Product development strategies Market development strategies
Contract manufacturing Joint ventures
Direct investments
Contract Manufacturing
Joint Ventures
Direct Investments
Low Risk, Low Investment, Low Control
Figure 1.10. Diversification strategies For a better understanding of this topic, please read Unit 1, pg. 48 – 53
BBM104/03 Principles of Marketing 21
High Risk, High Investment, High Control

Strategic portfolio planning approaches
A portfolio planning approach involves analysing a company’s entire collection of businesses relative to one another. Two of the most widely used portfolio planning approaches are the Boston Consulting Group (BCG) Matrix and the General Electric (GE) Approach.
The Boston Consulting Group (BCG) Matrix as shown in the diagram below helps companies to evaluate each of its strategic business units based on two (2) factors:
1. the SBU’s Market Growth Rate
(i.e., how fast the unit is growing compared to the industry in which it competes) and, 2. the SBU’s Relative Market Share
(i.e., how the unit’s share of the market compares to the market share of its competitors).
Question marks
Low market share and high market growth Don’t know what to do with opportunities; decide whether to increase investment.
High market share and high market growth Doing well, great opportunities.
Low market share and low market growth Weak in market, difficult to make profit.
Cash cows
High market share and low market growth Doing well in no growth market with limited opportunities.
BBM104/03 Principles of Marketing
Low Market share High Figure 1.11. The Boston consulting group (BCG) matrix
Market growth

Please watch the following video explaining the Boston Matrix Title: The Boston Matrix (Product Portfolio Management) Explained Duration: 14.13 minutes
The GE approach examines a company’s strengths and the attractiveness of the industry in which it
competes as summarised in the diagram below:
Red: Harvest or divest products; stop investing in new products; markets or
Yellow: Hold market share.
Green: Build market share; invest in new products; markets or technology.
Figure 1.12. The general electric (GE) approach For a better understanding of this topic, please read Unit 1, pg. 54 – 59
BBM104/03 Principles of Marketing 23

Learning Activity 1.2
Please attempt Activities 1.4 to 1.8 to gauge and improve your learning of this topic.
Self-check 1.2
Please attempt Self-test 1.2 to gauge and improve your learning of this topic.
Marketing research is the process of collecting, analysing, and reporting marketing information that can be used to answer questions or solve problems so as to improve a company’s bottom line. Marketing research includes a wide range of activities.
Closely related to marketing research is market intelligence, which is often referred to as competitive intelligence. Whereas marketing research involves solving a specific marketing problem at a specific point in time. Market intelligence involves gathering information on a regular, ongoing basis to stay in touch with what is happening in the marketplace.
Marketing information systems
A certain amount of marketing information is being gathered all the time by companies as they engage in their daily operations.
A Marketing Information System (MIS) is a way to manage the vast amount of information companies have on hand — information which marketing professionals and managers need to make good decisions. Marketing information systems range from paper-based systems to very sophisticated computer systems. Ideally, however, a marketing information system should include the following components:
• A system for recording internally generated data and reports
• A system for collecting market intelligence on an ongoing basis
• Marketing analytics software to help managers with their decision making • A system for recording marketing research information
For a better understanding of this topic, please read Unit 1, pg. 67 – 76
BBM104/03 Principles of Marketing 24

Marketing research
Marketing research is what a company has to resort to if it cannot answer a question by using any of the types of information we have discussed so far — market intelligence, internal company data, or analytics software.
Marketing research can help a business in the following tasks:
• Developing product ideas and designs
• Determining if there is demand for its product so that it knows whether or not to produce it • Identifying market segments for its product
• Making pricing decisions
• Evaluating packaging types
• Evaluating in-store promotions
• Measuring the satisfaction of its customers
• Measuring the satisfaction of its channel partners
• Evaluating the effectiveness of its website
• Testing the effectiveness of ads and their placement
• Making marketing channel decisions
So when exactly is marketing research needed? Keep in mind that marketing research can be expensive. Therefore, you have to weigh the costs of the research against the benefits.
BBM104/03 Principles of Marketing 25

Steps in the marketing research process
The following flow chart shows the steps in the marketing research process:
Steps in the marketing research process
Define the problem (or opportunity)
Design the research
Design the data collection forms
Specify the sample
Collect the data
Analyse the data
Write the research report and present its findings
Figure 1.13. Steps in the marketing research process Click on each steps for more details
For a better understanding of this topic, please read Unit 1, pg. 76 – 105
BBM104/03 Principles of Marketing 26

Step 1: Define the problem (or opportunity)
A problem statement is a concise description of an issue to be addressed or a condition to be improved upon. It identifies the gap between the current (problem) state and desired (goal) state of a process or product. The research objective is (are) the goal(s) the research is supposed to accom- plish.
Step 2: Design the research
The research design is your “plan of attack”. It outlines the data that you are going to gather and states from whom, how and when you will collect the data and how you will analyse it once it has been obtained.
Primary data is information you collect yourself, using hands-on tools such as interviews or surveys, specifically for the research project you are conducting.
Secondary data is data that has already been collected by someone else, or data you have already collected for another purpose.
Ways to gauge quality of secondary data:
• Who gathered this information?
• For what purpose?
• What does the person or organisation that gathered the information have to gain by doing so? • Was the information gathered and reported in a systematic manner?
• Is the source of the information accepted as an authority by other experts in the field? • Does the article provide objective evidence to support the position presented?
Back to Figure 1.13 BBM104/03 Principles of Marketing 27

Primary data sources
Secondary data sources
Census data
Trade associations
Syndicated research and market aggregators
Table 1.0. Examples of Primary and Secondary Data Sources
Exploratory research design
Causal research design
Figure 1.14. Types of research design Click on each types for more details
Types of research design
Descriptive research design
Back to Figure 1.13 BBM104/03 Principles of Marketing 28

Step 3: Design the data-collection forms
If the behaviour of buyers is being formally observed, and a number of different researchers are con- ducting observations, the data obviously need to be recorded on a standardised data-collection form that is either paper or electronic.
Questionnaire design
Most questionnaires follow a similar format. They begin with an introduction describing what the study is for, followed by instructions for completing the questionnaire and, if necessary, returning it to the market researcher.
Open-ended questions, or questions that ask respondents to elaborate, can be included. However, they are harder to tabulate than closed-ended questions, or questions that limit a respondent’s answers. Multiple-choice and yes-and-no questions are examples of closed-ended questions.
Testing the questionnaire
One way to make sure that you do not end up with garbage is to test the questionnaire before sending it out to find out if there are any problems with it. Is there enough space for people to elaborate on open-ended questions? Is the font readable? To test the questionnaire, marketing research profes- sionals first administer it to a number of respondents face to face.
Step 4: Specify the sample
A sample is a subset of potential buyers that are representative of your entire target market, or popula- tion being studied. Obviously, the population has to be defined correctly. Otherwise, you will be studying the wrong group of people. Not defining the population correctly can result in flawed research, or sampling error. A sampling error is any type of marketing research mistake that results because a certain sample was used.
The next step is to put together the sampling frame, which is the list from which the sample is drawn.
There are two main categories of samples in terms of how they are drawn: probability samples and non-probability samples. A probability sample is one in which each would-be participant has a known and equal chance of being selected. A non-probability sample is any type of sample that is not drawn in a systematic way. A convenience sample is one type of non- probability sample. It is a sample a researcher draws because it is readily available and convenient to do so.
Back to Figure 1.13 BBM104/03 Principles of Marketing 29
To see some examples of questionnaires and how they are laid out, click on the following link:

Step 5: Collect the data
Survey data can be collected in many different ways and combinations of ways. The following are the basic methods used:
• Face-to-face (can be computer aided)
• Telephone (can be computer aided or completely automated)
• Mail and hand delivery • E-mail and the Web
Step 6: Analyse the data
Once all the data are collected, the researchers begin the data ceaning, which is the process of removing data that have accidentally been duplicated (entered twice into the computer) or correcting data that have obviously been wrongly recorded .
The information generated by the microsoft excel or a statistical program such as IBM SPSS (Statistical Package for the Social Sciences) is then used to tabulate, or calculate, the basic results of the research. It can be used to draw conclusions, such as what all customers might like or not like about an offering based on what the sample group liked or did not like.
The two (2) most commonly used criteria used to test the soundness of a study are: 1. validity, and
2. reliability.
A study is valid if it actually tested what it was designed to test. If you were to repeat a study and get the same results (or nearly the same results), the research is said to be reliable.
Back to Figure 1.13 BBM104/03 Principles of Marketing 30

Step 7: Write the research report and present its findings
1. Title page. The title page explains what the report is about, when it was conducted and by whom, and who requested it.
2. Table of contents. The table of contents outlines the major parts of the report, as well as any graphs and charts, and the page numbers on which they can be found.
3. Executive summary. The executive summary summarises all the details in the report in a very quick way.
4. Methodology and limitations. The methodology section of the report explains the technical details of how the research was designed and conducted. The section explains, for example, how the data was collected and by whom, the size of the sample, how it was chosen, and who or what it consisted of. It also includes information about the statistical techniques used to analyse the data.
5. Findings. The findings section is a longer version of the executive summary that goes into more detail about the statistics uncovered by the research that support the study’s findings.
6. Recommendations. The recommendations section should outline the course of action you think should be taken based on the findings of the research and the purpose of the project.
Back to Figure 1.13
BBM104/03 Principles of Marketing 31
Please watch the following video explaining the marketing research process.
Title: Marketing Research
Duration: 12.24 minutes

Learning activity 1.3
Please attempt Activities 1.9 to 1.10 to gauge and improve your learning of this topic.
Self-check 1.3
Please attempt Self-test 1.3 to gauge and improve your learning of this topic.
In the first section of this unit, we defined the marketing concept. We also covered the need for marketing as well as the purpose of studying marketing.
In the second section, we defined the value proposition in strategic marketing. We described all the components of the strategic marketing planning process. We also introduced the development of organisational objectives and planning strategies.
In the final section, we covered the gathering and use of information for the purposes of market research and market intelligence. The marketing research process was also explained. We also discussed the use of marketing information systems.
BBM104/03 Principles of Marketing 32

Friesner, T. (2012, March 16). Marketing concept [Video file]. Retrieved from
Friesner, T. (2013, Jan 4). Business environment [Video file]. Retrieved from
Friesner, T. (2013, Jan 4). Marketing research [Video file]. Retrieved from
Kamarulzaman, Y. & Abu, N.K. (2017), ORS principles of marketing. Kuala Lumpur, Oxford University Press.
Kotler, P., & Armstrong, G. (2017). Principles of marketing. London: Pearson
TeachMe Marketing. (2017, March 28). Lesson 1: What is marketing? [Video file]. Retrieved from
Tutor2U. (2016, Apr 4). The Boston matrix (product portfolio management) explained [Vide file].
Retrieved from
BBM104/03 Principles of Marketing 33


2.4 2.5
Consumer Behaviour: How People Make Buying Decisions?
Learning Activity 2.1 Self-Check 2.1
Business Buying Behaviour
Learning Activity 2.2 Self-Check 2.2
Market Segmentation, Targeting and Positioning
Learning Activity 2.3 Self-Check 2.3
BBM104/03 Principles of Marketing 35

This unit focuses on:
Consumer behaviour
Business buying behaviour Segmentation, targeting and positioning
Why do you purchase certain goods? How did you decide on which university to study in? Where do you usually shop and when? Do your friends shop at the same places as you do or at different places?
In consumer behaviour, we will describe how people go about making their buying decisions. We will discuss the consumer decision-making process and the factors that affect the way consumers behave. We will describe the characteristics of business buying behaviour and the stages of B2B buying situations.
Finally, in segmentation, targeting and positioning, we will discuss the process of segmenting the markets, the targeting of the market, and the positioning of the products or services to meet the demand from consumers.
By the end of this Unit 3, you should be able to
1. Determine how Consumers go about making their Purchase
2. Discuss the B2B Buying Process
3. Explain the Concept of Market Segmentation, Targeting and Positioning.
BBM104/03 Principles of Marketing 36

Marketing professionals want to know the answers to these questions. They know that once they have those answers, they will have a much better chance of creating products that you and people like you will want to buy and communicating about the product. That is what the study of consumer behaviour is all about.
Consumer behaviour considers the many reasons — personal, situational, psychological, and social — why people shop for products, buy and use them, and then dispose of them.
The Figure 2.1 below outlines the buying stages that consumers go through. At any given time, you are probably in some sort of buying stage.
You realised you need a better backpack to travel across the country after you graduate.
You begin looking at different backpacks from the web, talking to friends, and visiting stores to look at them.
You decide on the price that you want to pay and certain must haves in a backpack. You then examine each product based on those criteria.
You decide the best backpack for you, based on the evaluation criteria, and decide, when, where and how to purchase it.
You decide if the backpack is everything you thought it would be and meets your needs or not.
an upgraded version of it. Or you throw it or give it away or sell in eBay.
Figure 2.1. Consumer decision making process Click on each stages for more details
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For a better understanding of this topic, please read Unit 2, pg. 4 - 9
Low-involvement versus high-involvement buying decisions
Purchasing a product with no planning or forethought is called impulse buying.
Low-involvement products are not necessarily purchased on impulse, although they can be. Low-involvement products are, however, inexpensive and pose a low risk to the buyer if he or she makes a mistake by purchasing them. Consumers often engage in routine response behaviour when they buy low-involvement products.
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Please watch the following video explaining the consumer decision-making process.
Title: 5 Stages of the Consumer Decision-Making Process and How it's Changed
Duration: 9.05 minutes

By contrast, high-involvement products carry a high risk to buyers if they fail, are complex, or have high price tags. A car, a house, and an insurance policy are examples. Buyers do not engage in routine response behaviour when purchasing high-involvement products. Instead, they engage in what is called extended problem solving, where they spend a lot of time comparing the features of the products, prices, warranties, and so forth.
Limited problem solving falls somewhere in the middle between high and low involvement. Consumers engage in limited problem solving when they already have some information about a good or service but continue to search for a bit more information.
For a better understanding of this topic, please read Unit 2, pg. 9 – 11 Situational factors that affect people’s buying behaviour
Situational influences are temporary conditions that affect how buyers behave — whether they actually buy a product, buy additional products, or buy nothing at all. They include things like physical factors, social factors, time factors, the reason for the buyer’s purchase, and the buyer’s mood.
The consumer’s physical situation
Marketing professionals take physical factors such as a store’s design and layout into account when they are designing their facilities, and store location. Physical factors like these — the ones over which firms have control — are called atmospherics.
The consumer’s social situation
The social situation you are in can significantly affect what you will buy, how much of it, and when. Certain social situations can also make you less willing to buy products.
The consumer’s time situation
The time of day, the time of year, and how much time consumers feel like they have to shop also affect what they buy.
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The reason for the consumer’s purchase
There is no particular reason for customers’ purchase, it could be because of need or wants or even neither.
The consumer’s mood
People’s moods temporarily affect their spending patterns. Some people enjoy shopping. It is entertaining for them. At the extreme are compulsive spenders who get a temporary “high” from spending.
For a better understanding of this topic, please read Unit 2, pg. 12 – 16 Personal factors that affect people’s buying behaviour
The consumer’s personality
Personality describes a person’s disposition as other people see it. The following are the “Big Five” personality traits that psychologists discuss frequently:
02 How diligent
you are
How outgoing or shy
How open you are
to new experience
BBM104/03 Principles of Marketing
How easy
you are to 04 get along
How prone you are to negative mental states
Figure 2.2. “Big Five” personality traits

The Consumer’s Self-Concept
Marketers have had better luck linking people’s self-concept to their buying behaviour. Your self-concept is how you see yourself — be it positive or negative.
Everyone knows that men and women buy different products.
You have probably noticed that the things you buy have changed as you age. When you were a child, the last thing you probably wanted as a gift was clothing. As you became a teen, however, cool clothes probably became a bigger priority.
Two consumers (say, you and your best friend) can be similar in age, personality, gender, and so on but still purchase very different products. To better understand consumers and connect with them, companies have begun looking more closely at consumers’ lifestyles.
For a better understanding of this topic, please read Unit 2, pg. 17 – 20
The Consumer’s Gender
The Consumer’s Age and Stage of Life
The Consumer’s Lifestyle
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Psychological factors that affect people’s buying behaviour
Motivation is the inward drive that we have to get what we need. In the mid-1900s, Abraham Maslow, an American psychologist, developed the hierarchy of needs as illustrated in the diagram below:
Self- actualization: achieving one’s full potential, including creative activities
Esteem needs:
prestige and feeling of accomplishment
Belongingness and love needs:
intimate relationships, friends
Safety needs:
security, safety
Physiological needs:
food, water, wormth, rest
Figure 2.3. Maslow’s hierarchy of needs
Self-fulfillment needs
Psychological needs
Basic needs
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The consumer’s perception
Perception is how you interpret the world around you and make sense of it in your brain. You do so via stimuli that affect your different senses — sight, hearing, touch, smell, and taste. How you combine these senses also makes a difference.
Using surprising stimuli is also a technique. Sometimes this is called shock advertising. The clothing makers Benetton and Calvin Klein are probably best known for their shocking advertising.
Subliminal advertising is the opposite of shock advertising. It involves exposing consumers to marketing stimuli — photos, ads, messages, and so forth — by stealthily embedding them in movies, ads, and other media.
Learning refers to the process by which consumers change their behaviour after they gain information or experience a product. It is the reason why you do not buy a bad product twice. Learning does not just affect what you buy, however, it affects how you shop.
Another kind of learning is operant conditioning, which is what occurs when researchers are able to get a mouse to run through a maze for a piece of cheese or a dog to salivate just by ringing a bell.
Attitudes are “mental positions” or emotional feelings people have about products, services, companies, ideas, issues, or institutions. Attitudes tend to be enduring, and because they are based on people’s values and beliefs, they are hard to change.
For a better understanding of this topic, please read Unit 2, pg. 21 – 25
Consumer’s attitudes
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Societal factors that affect people’s buying behaviour
The consumer’s culture
Culture refers to the shared beliefs, customs, behaviours, and attitudes that characterise a society. Your culture prescribes the way in which you should live.
The consumer’s sub-culture(s)
A sub-culture is a group of people within a culture who are different from the dominant culture but have something in common with one another in terms of common interests, vocations or jobs, religions, ethnic backgrounds, sexual orientations, and so forth.
The consumer’s social class
The following table provides examples of social classes and their buying patterns.
Upper-upper class
People with inherited wealth and aristocratic names (the Kennedys, Rothschilds, Windsors, etc.)
Lower-upper class
Professionals such as CEOs, doctors, and lawyers
Upper-middle class
College graduates and managers
Middle class
Both white-collar and blue-collar workers
Working class
Blue-collar workers
Lower but not the lowest
Used vehicle
People who are working but not on welfare
Lowest class
No vehicle
People on welfare
Table 2.1. Consumer’s Social Class
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Reference groups and opinion leaders
Reference groups are groups a consumer identifies with and wants to join. If you have ever dreamed of being a professional player of basketball or another sport, you have a reference group.
Opinion leaders are people with expertise in certain areas. Consumers respect these people and often ask their opinions before they buy goods and services.
The consumer’s family
Most market researchers consider a person’s family to be one of the biggest determiners of buying behaviour. The fact is that many of the things you buy and do not buy are a result of what your parents buy and do not buy.
For a better understanding of this topic, please read Unit 2, pg. 26 – 30 Learning Activity 2.1
Please attempt Activities 2.1 to 2.5 to gauge and improve your learning of this topic.
Self-check 2.1
Please attempt Self-test 2.1 to gauge and improve your learning of this topic.
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Many businesses do not offer their goods and services to individual consumers at all. Instead, their customers are other businesses, institutions, or government organisations.
The following table summarises different characteristics between business-to-consumer (B2C) and business-to-business (B2B) markets:
Many customers, geographically dispersed
Fewer customers, often geographically concentrated, with a small number accounting for most of the company’s sales
Smaller total ringgit amounts due to
Larger ringgit amounts due to more transactions
Shorter decision cycles
Longer decision cycles
More reliance on mass marketing via advertising, websites, and retailing
More reliance on personal selling
Less rigid product standards
More rigid product standards
Table 2.2. B2C Markets Vs B2B markets: How They Compare
B2C markets versus B2B markets: How they compare?
The demand for B2B products
B2B sellers carefully watch general economic conditions to anticipate consumer buying patterns. The firms do so because the demand for business products is based on derived demand. Derived demand is demand that springs from, or is derived from, a source other than the primary buyer of a product.
Fluctuating demand is another characteristic of b2b markets. A small change in demand for a product by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it. Joint demand occurs when the demand for one product increases the demand for another.
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Figure 2.4. Types of B2B buyers For a better understanding of this topic, please read Unit 2, pg. 39 – 46
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