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Ancestry DNA and the integrated promotional campaign

It has become an article of faith in marketing that the elements in the promotional mix must planned, blended and carefully integrated into the overall marketing communications program.  But, what exactly does integration mean in the context of a promotional campaign?


Integration can occur at many different levels, namely:

  • Integration of promotional tools: selecting the right blend of promotional tools for the purpose or task at hand;
  • Integration of timing: timing messages so that they operate to support each other and reach potential customers at different junctures, depending on when they are most receptive to different types of message;
  • Integration of message: ensuring that messages contain consistent elements so that the overall tone, look and feel of the campaign enables consumers can make mental linkages across various messages or media.

In terms of integrating promotional tools, it is important to match each promotional activity (i.e. advertising, PR, personal selling, sales promotion, direct marketing and digital marketing) with the communications objective. For instance, advertising and public relations, are excellent tools for creating broad base market awareness, but are less effective at stimulating a sale. As consumers approach the actual purchase, they may turn to other types of promotion such as personal selling or direct marketing.  A carefully planned communications program will include a blend of tools in a way that messages move the customer through the various stages of the purchase decision – from need recognition through to purchase and post-purchase stages.

In terms of message integration, it is not essential that messages conveyed via different tools are identical. Clearly, media releases which are often part of a PR program are very different to persuasive messages used in advertising.  However, messages should include a similar tone and at least some common elements so that each message looks like it is part of a coherent, integrated campaign.

Ancestry DNA

Ancestry DNA is a specialized product offered by the online genealogical service The product offered involves genetic testing that allows members to learn more about their ancestral heritage going back as far as 200,000 years. It is designed to complement Ancestry’s standard genealogical service which involves research and maintenance of family trees using standard genealogical sources such as parish records, civil registrations of births, deaths and marriages as well as census records, electoral rolls and other publicly available documentary sources.

Taking the DNA test is relatively simple. For a fee of around $200, customers are sent a home testing kit.  The person provides a saliva sample into a test tube and returns the kit along with relevant documents and their payment.  In a lab, the DNA is extracted, amplified and analyzed. The sample is then compared with a database of haplotypes (a set of closely linked genes) that have been identified in specific ethnic groups or populations. This matching allows a person to be identified with those populations where that person shares a common ancestry.  About 6-8 weeks later, the person is sent a report, providing details of approximately 30 different ethnic origins.  In some instances, the analysis will also reveal close relatives such as 3rd or 4th cousins or even half-brothers or sisters!

Ancestry DNA was available in the US and UK at the time of the Australian launch in mid-2015.  Australia was seen as a strong market opportunity as DNA testing had proved to be very popular in countries with high levels of immigration.

Launch publicity

The launch campaign, was a challenge because the promotional budget was minimal and there were no local users to feature in human-interest stories with media appeal. Instead, the idea was to encourage journalists to take the DNA test and share their personal story and discovery about their past – this made them ‘the user story’.   The campaign was known as: “Australia, where do you think you come from?”

Samantha Armytage and David Koch (Kochie), hosts of the high rating breakfast TV show, Channel 7 Sunrise, agreed to take the DNA test and be part of a live interview in which their DNA results were revealed to the public.  In an unexpected turn, the DNA results revealed that TV personality, Samantha Armytage was related to the Ancestry interviewer, contributing to a powerful human-interest story that generated considerable hype.

Since its highly successful launch, Ancestry DNA has maintained a constant stream of promotional activity designed to engage audiences.  The main promotional activities consist of:

  • Ancestry (Australia) and AncestryDNA (Australia)websites:  The website is the mainstay of product promotions. It is a constant feature, providing information about the process and payment. However, the company must use other promotions to drive consumers onto the website.
    • Television advertisements: A series of television commercials where users reveal their personal stories designed to highlight how AncestryDNA can provide information that is not accessible via standard genealogical research methods.  All television commercials (TVCs) use the tag line, “Discover the Story Only Your DNA Can Tell” and each TVC has the name of the person whose story is revealed. (See, for example, “Sally”;   “Tim”; “Monica”; “Aprilla and Debriella” (twins)
    • Sponsorship of broadcast television programs:
  • Social Media: AncestryDNA has channels on multiple social media sites including Facebook and Youtube.  These sites carry the tag line, “Discover the Story Only Your DNA Can Tell” and include a multiplicity of personal stories as well as extended interviews and bonus footage of those who appeared in the television commercials.  (See, Ancestry on Facebook; Ancestry on Youtube)


Discussion Questions

There is no article to read this week. Instead, we encourage you to view some of AncestryDNA’s promotions by following the links embedded in the case study. Try to view a range of different messages as used in various types of promotions e.g. one advertisement, one website and one digital content piece.

  1. Devise a list of evaluation criteria that could be used to assess message integration across different promotional tools in a given campaign.
  2. Applying the evaluation criteria developed in Question 1, evaluate the effectiveness of message integration in AncestryDNA’s current promotional campaign.
  3. Comment on AncestryDNA’s overall promotional campaign.


Further Research and Links:

Hamzelou, J., “DNA testing firms are cashing in our genes. Should we get a cut?” New Scientist, 4 October, 2017  [Article discusses some ethical considerations involved in DNA testing in genealogy] 


Amazon’s Australian adventure

Global giant, Amazon plans to enter Australia’s retail sector have been widely discussed in the media, and have the major retail incumbents more than a little nervous. 

Although no firm announcement has been made about Amazon’s plans in relation to its product offerings, mode of operation or start date, Amazon has been treating local media to a ‘drip-feed’ of interviews and press releases, allowing the local media to construct a coherent narrative about what consumers can realistically expect.

Amazon has said that it will offer a vast array of services; including take-away food, groceries, clothing and electronics. As part of its commitment to consumers, Amazon promises “low prices, vast selection, and fast delivery.”   Amazon will come into direct competition with Australian grocery retailers and department stores, most of which already operate both bricks and mortar outlets and online delivery models.

Amazon’s distribution model

Internationally, Amazon has two distribution models in play:

Amazon “Prime Now”: Amazon’s Prime Now program is the standard e-commerce model. Subscribers order goods from a vast array of offerings through Amazon’s flagship website.  Goods are stored at massive warehouses which in Amazon-speak, are known as “customer fulfillment centres.”  Within these centres, customer orders are processed and fast shipping ensures that member orders are delivered promptly to the customer’s door.   

According to an Amazon spokesman, the customer fulfillment centres are much more than very large warehouses. Instead, the fulfilment centres will have the “robotics technology… to deliver better operating efficiencies.”  In other words, Amazon plans to generate savings in labour costs by replacing human workers with capital in the form of robotics.

Amazon “Go”:Amazon recently launched its ‘bricks and mortar’ concept amid some controversy. Labelled Amazon ‘Go’, this concept refers to a convenience store, but without checkouts. Goods will be tagged electronically and shoppers will be billed for the purchases through their smartphone upon exit.

In the short term, Amazon plans to enter the Australian market with its straight e-commerce model, Prime Now. Amazon has already set up a giant provisioning warehouse in Melbourne’s and the search for a suitable site for the Sydney market is well underway. In addition, Amazon has already begun recruiting staff. 

A senior manager for Amazon Global Logistics has indicated that any attempt to launch build Amazon ‘Go’ bricks-and-mortar retail outlets in Australia will have to wait until “has become more established in the country and analysis determines the market will support physical stores."

Amazon views Australia an "attractive" market. The company has prior experience in the Australian market, having launched Amazon Kindle here in 2012. The Australian market has characteristics that are similar to countries where Amazon has been successful. Australia has a “growing, high-income population; population concentrated in a relatively small number of cities and adequate population density; high internet penetration and online shopping propensity; high retail labour costs; and attractive retail sector profitability.

Amazon has suggested that it will be fully operational by October-November, 2018.   Within five years of entry, it expects to have reached at least 5 percent share of market.

However, critics of Amazon have indicated that in a, sparsely populated country, such as Australia, Amazon will experience difficulty emulating the success it has achieved in the US, Canada, the UK and elsewhere.  Distribution and logistics are a major challenge in Australia due to the vast distances between major cities and regional towns  which tends to result in higher shipping costs. For Amazon, Australia’s unusual population distribution means that many customer fulfillment centres are required to deliver on the promise of fast delivery and customer convenience.

Discussion Questions

Read the following article and consider the discussion questions below:

Lara Pearce, “Amazon: Everything You Need to Know about its Plans for Australia,” Huffington Post, 22 August, 2017

  1. Briefly compare the Australian market with one other market where Amazon is currently operating (e.g. USA, UK, Canada).
  2. Discuss the advantages of entering the market with an e-commerce model before launching a bricks-and-mortar model in terms of distribution.
  3. The term, “customer fulfillment centre,” has been criticised on the grounds that it is a neologism. (A neologism is a newly coined word that has not yet entered common usage and is often used to describe meaningless terms or terms that are only understood by those who are ‘in the know.’)  What are your thoughts on the term?
  4. The factors that are likely to be critical to Amazon’s success are its website and its competitiveness in the cost of distributions. Discuss any other factors that are likely to be critical to a successful Australian market entry.
  5. The profiles of an e-commerce shopper and those who shop at physical stores are thought to be quite different. Use your research skills to develop a profile of the online shopper.
  6. What steps can major Australian retailers such as Coles, Woolworths, Aldi, Myer, Harvey Norman etc. take to buffer themselves against any erosion of market share following the entry of a major player such as Amazon.


Further Research and Links:

Roy Morgan Research, “Can Australia’s supermarkets Stand Up to AmazonFresh?” [Media Release No. 722], 1 May, 2017

Roy Morgan Research, “Amazon set to benefit from Australians’ love affair with online shopping,” [Media Release No. 7199], 29 March, 2017


Roy Morgan Research, “The ‘retailtainment’ effect: Aussies made 90 million more trips to the shops last financial year!” [Media Release No.  7075], 2 December, 2016


Electric Cars: Speeding or Crawling into the Future?

Adoption rates for new products are influenced by a complex mix of environmental and customer-related factors.  Five factors that are often cited as being very influential in an innovation’s rate of adoption[1]:

Relative advantage: the degree to which the innovation is perceived to be superior to existing products or alternatives.

Compatibility: the degree to which the innovation fits the values, experiences and lifestyles of potential adopters.

Complexity: the degree to which the innovation is perceived to be difficult to understand or use.

Trialability: the degree to which an individual can experiment with, or trial the innovation prior to adoption.

Observability: the degree to which the results of using the innovation can be observed or described to others.

Consumers’ willingness to change their existing behaviours and adopt new technologies is an area of uncertainty for car manufacturers. If socially and environmentally desirable technologies are to achieve widespread market penetration, a concerted effort involving all stakeholders – manufacturers, dealers, governments and media agencies can be most useful.

Electric vehicles (EVs) represent an innovative product. EVs use a rechargeable battery as its only power source. They must be charged at home, at work or at dedicated public charging stations.

EVs have clear advantages over other types of vehicle. Compared with internal combustion vehicles (ICVs), EVs produce low emissions, are virtually noise-free, are relatively inexpensive in terms of fuel costs and have fewer moving parts which means that maintenance and repair is relatively simple and inexpensive. Although EVs are generally more expensive to purchase than ICVs, the purchase price is rapidly decreasing, meaning that they are becoming an affordable option. In addition, major improvements to the EV battery has extended the distance that can be covered before recharging and reductions have been made to the time required to recharge.

In Europe and parts of Asia, where an industry-wide approach has been used for electric vehicles, adoption rates appear to be speeding up.  A recent report from financial analysts, Bloomberg, predicts that sales of EVs will accelerate rapidly and account for more than half of all vehicles by 2040. Some analysts have suggested that we are on the cusp of a revolution and that the end of the combustion engine is in sight.

France and Britain have both announced that they will ban sales of petrol and diesel cars by 2040. Other nations including India, the Netherlands, Germany and Norway are discussing plans to phase out the internal combustion engine. In China, where air pollution is a major problem, the government has imposed strict quotas for the production of electric vehicles.  Across Europe, diesel is no longer the default option for fleet buyers. China and Norway are currently the global leaders in the adoption of EVs.

In light of such initiatives, manufacturers have been developing long term plans for the production of fuel efficient vehicles. On Wednesday, Volvo announced that it would phase out the traditional combustion engine and that all of its new models starting in 2019 would be hybrids or entirely battery-powered. VW has also announced that it will offer electric versions of all its models by 2030. Other manufacturers including Mercedes, BMW and Land Rover have followed suit. 

In spite of the increased availability of EVs, Australian consumers are failing to embrace the technology. Electric car sales which initially showed rapid increase, have moved into reverse. The first Australian sales of electric vehicles began in 2010. As the table below illustrates, sales of electric vehicles currently account for less than 0.1 percent of total new vehicle sales and have been in decline since 2014. Sales of hybrid vehicles fare somewhat better, showing modest year-on-year growth.

New Vehicle Sales in Australia by Fuel Type


(number of vehicles)





Electric Vehicles





Hybrid Vehicles




















All new vehicle sales






(a)   Excludes heavy vehicles

(b)   Excludes sales of Tesla vehicles (Tesla chooses not to share data)

Source: “Electric vehicles – How can we do more?” Government News, 15 March, 2017


Closer scrutiny of sales shows that the bulk of sales for both electric and hybrid vehicles go to commercial buyers, where the vehicles find their way into company fleets. According to VFACTs data for 2014, of the 1,135 electric vehicles in 2014, only 321 were bought by private buyers and of the 2014 hybrid vehicle sales, only 3 went to private buyers.

So, what are the obstacles to the adoption of EVs in Australia?

Analysts have pointed to a number of problems or issues that potentially impede mass market adoption of EVs. These include:

  • The high cost of electric vehicles
  • The high cost of replacement lithium batteries
  • The lack of charging infrastructure to support EVs
  • The time taken to recharge
  • Lack of consumer awareness
  • Lack of government incentives such as subsidies and rebates

Technological improvements have ameliorated some of these obstacles. The cost of lithium batteries, for example, has declined by two thirds. Tesla is working on reducing the time it takes to recharge batteries.  Some of the newer EV marques have also extended the average range from around 100 km to 500km while others such as the BMW i3 are sold with a ‘’range extender’’ which lifts the available range to 300 kms

A major psychological barrier that affects Australian consumers more than consumers elsewhere, is the problem of so-called “range anxiety.”  Prospective EV drivers worry about the prospect of being stranded with a flat battery and without access to recharging facilities. In a vast continent, such as Australia, range anxiety is seen as a major impediment to widespread adoption.  

Discussion Questions

Read the following article and consider the discussion questions below:

Angela Macdonald-Smith, “Electric Vehicles in Australia are Stuck in the Slow Lane,” Australian Financial Review, 23 August, 2017

  1. From the consumer’s perspective, prepare an inventory of the costs and benefits associated with owning an electric car. Given that the purchase price for the majority of EVs is currently around $60,000, do you think the benefits outweigh the costs?
  2. Draw a graph (line-chart) that shows the sales of electric and hybrid vehicle sales for the period covered by the data in the article.  Compare your sales curves with the sales curve in the typical product life cycle. What comments, if any, would you make about the extent to which your sales curve is “typical” of new products generally?
  3. Discuss the extent to which “range anxiety” a unique impediment in Australia?
  4. What can Australia learn from the experience in California, as described in the article?

Further Research and Links:

Australian Bureau of Statistics, Sales of New Motor Vehicles, August, 2017

EV Volumes [Detailed sales analysis for the Chinese market]

Federal Chamber of Automotive Industries (FCAI)  [Selected sales data for the Australian market]

Inside EVs  [Detailed sales analysis for the U.S. market, 2010 -2017]

Rorke, J., Potential Early Adopters of Electric Vehicles in Victoria, Department of Transport (Victoria), n.d. (circa 2014)


[1] These five factors which are very widely cited in text-books are based on Rogers, E.M., Diffusion of Innovations, 5th ed., New York, The Free Press, 2003, pp 11-12.


Product, Services & Brands: Offering Customer Value

Tangible products typically have an outer package with a brand, logo and a label containing instructions on how to use the product. Packaging and labelling is not just concerned with providing basic information about function, quality and usage, but may also help to promote the product or brand. But, what about intangible services? How do they ‘’package’’ themselves?  How do they make themselves appear more tangible and more concrete in the eyes of consumers?

The way that services present themselves is sometimes known as ‘’evidence management’’   and this might involve such considerations as the design of premises – both interior and exterior; signage; logos; staff uniforms and the entire livery of artefacts from office stationery through to promotional brochures.   This type of evidence enables the service to communicate messages about the company’s values and assists consumers to form realistic expectations about the service encounter.

Aldi, the low-price supermarket, has recently upgraded its ‘’packaging.’’ Aldi has managed its ‘’evidence’’ on two fronts. Firstly, it has upgraded and modernized its store formats and secondly, it has also refreshed its corporate logo. 

Aldi, which currently operates 466 outlets across Australia, trialled the new in-store layout throughout 2016. The updated store format features clearer signage, redesigned shelving, expanded wooden produce bays, LED lighting and extended chillers.  The changes in store format are part of an overall change in product strategy. Aldi has announced its plans to increase the number of product lines. In the past, Aldi stocked just 1350 different product lines (compared with between 20,000-25,000 at Coles and Woolworths). However, Aldi will be adding an additional 100 lines to the products it carries and will feature an increased emphasis on fresh produce.

Aldi’s logo refresh is relatively subtle. Aldi's current logo features a yellow and orange frames as a border, and containing the letter "A" at the top with the word ‘’Aldi’’ immediately underneath. All of the lettering appears on a navy background.  The refreshed logo features an additional colour in outer frame, and the letter "A" is curved rather composed of straight lines.  (To view examples of Aldi’s logo evolution over time, including the new logo refresh click on this article in a metropolitan daily  or this article in a trade magazine.) This logo, which represents the first change in 20 years, is part of a global initiative. It has already been rolled out in China and is being rolled out in the US, UK and Australia simultaneously. According to an Aldi spokesperson, the new logo change “reflects the tech, modernity and cool that has been introduced to the Aldi brand in recent years."

These changes are part of Aldi’s regular strategic planning processes. The Aldi brand and its vision, mission and values is updated every seven years in line with the changes in society habits, health knowledge and opportunity.


Discussion Questions

Read the following article and consider the discussion questions below:

Jon Springer, “Aldi Modernizes Logo Match Store Change,” Supermarket News, 20 March, 2017

  1. Briefly discuss the role of ‘’packaging’’ for intangible products. Give examples of different types of services and their ‘’evidence management’’ to illustrate your discussion.
  2. Aldi is on record with a commitment to remaining 25 per cent cheaper than the major supermarkets. Discuss the ways that Aldi’s store layout communicates the concept of “value for money” to consumers.
  3. According to one brand analyst, “The general rule of thumb in marketing is that any logo refresh should be undetectable.”  
    1. Why do you think that a brand refresh should be barely detectable?
    2. Comment on Aldi’s logo refresh. 

Further reading and resources

“The Aldi Effect,” Roy Morgan Research, [Media Release No 6297], 22 June, 2015

“Home-Brands Have a Way to Go with Grocery Buyers,” Roy Morgan Research, [Media Release No 6242], 21 May, 2015  (Note: Includes a basic profiles of grocery buyers, by retail outlet]

“Supermarket Sweep: Aldi’s Share of the Aussie Market Still Rising,” Roy Morgan Research, [Media Release No. 6762], 15 April, 2016 [Note: Includes analysis of supermarket share of market over time]



Behavioural Battle Ground: Demographic vs Behavioural Data?

Two years ago, Mark Ritson, a columnist for the trade magazine, Marketing Week, posed the question, “Is behavioural data killing off demographics?”  The author argued that with access to behavioural data sourced from online search activity, website browsing or social media interactions, marketers are now in a position to buy consumer’s “eyeballs based on what [people] have previously looked at, rather than the age or gender of the skull that they happen to reside within.”  In spite of the prediction implied in Ritson’s question, the jury is still out and the relevance of behavioural/ demographic data continues to be debated.

Demographic segmentation (i.e. segmentation or targeting based on age, gender, family size, occupation, socio-economic status etc.) was developed in the early twentieth century at a time when marketers only had access to group level data. For instance, some of the earliest attempts to segment markets were based on studies of tax registers, city directories and census data to show the proportion of educated vs illiterate consumers or the earning capacity of different occupations in specific regions or suburbs.

While demographic segmentation may have been useful in the past when marketers had access to little else, its relevance is coming under increasing scrutiny in the emerging ‘big data’ era. Today, marketers have access to data at the level of the individual consumer. The case against demographics is that it:

  • Is overly descriptive and fails to provide insights into customer motivations
  • fails to provide sufficient demarcation between individuals with similar age or gender profiles, but widely varying interests, perceptions and experiences
  • Is not a good predictor of future brand choices or shopping behaviour
  • fails to identify sufficiently narrow clusters or groups
  • is static (unchanging); consumers are dynamic (constantly changing)

On the other hand, behavioural data reveals patterns of consumer behaviour and attitudes are more appropriate for targeting consumers.   The trade press is replete with examples of how modern marketers are using behavioural data to reach consumers when they are in the highest state of readiness to buy.

For example, the Target chain in the US recently used behavioural data to identify expectant mothers, and the key to this was to identify target customers very early in their pregnancy, preferably in their second trimester.

Most shoppers don’t buy everything they need at one store. Instead, they shop around and buy different product categories at different stores.  The typical customer would only visit Target when they need products which they associate with Target. But Target is a mass market retailer that sells a broad range of different products – from cleaning supplies through to clothing and furniture. For Target, the key challenge is to convince consumers that Target is the only store they really need.  But, this is a tough challenge.

However, in each consumer’s life, there are brief periods when traditional purchasing routines fall apart and buying habits are suddenly in state of flux.  These tend to be major life-stage milestones or major life-changing events. One such moment is the imminent birth of a child.  At this time, prospective parents are exhausted and overwhelmed by the new purchases they need to accommodate the baby’s arrival. At this time, their shopping patterns and brand loyalties are up for grabs.

As Target’s marketers explain, “timing is everything.”  Most expectant mothers begin purchasing products for baby when they are in their second trimester. As soon as the baby is born, the competition for goods increases because new parents are barraged with offers, incentives and advertising for all manner of baby goods.  The key for Target was to identify expectant parents in order to reach them before any other retailers knew a baby was on its way.

Target’s Marketing Team used some very clever predictive analytics to develop a “pregnancy prediction score” for shoppers. This is how they did it. First, they isolated shoppers who had voluntarily opted into the stores’ Baby Shower Registry. Second, they began monitoring these shoppers’ purchases looking for patterns. It soon became clear that expectant mothers started purchasing an array of items such as scent-free lotions, scent-free soaps, extra-large cotton balls and an increase in spending on household cleaning items. Third, the predictive analysts applied these observed purchasing patterns to regular female shoppers which allowed them to assign a pregnancy prediction score to each female customer. Finally, Target used this information to send prospective customers catalogs and other information about the range of maternity wear and baby products.

Discussion Questions

Read the following article and consider the discussion questions below:

David Burrows, “Is behavioural data killing off demographics?” Marketing Week, 4 September, 2015

  1. Target’s predictive analytics in this example were based on a key life event and the purchasing patterns that surround it. Identify 2-3 other major life events that are likely to be associated with major changes in purchasing. Briefly explain how each event might be associated with specific purchase categories.
  2. Briefly outline the benefits of behavioural data in segmentation and targeting.
  3. Briefly outline the arguments in favour of using demographics in segmentation and targeting.
  4. Discuss the privacy considerations associated with the use of behavioural data.
  5. Do you think that behavioural data means the end of demographics and psychographics? Justify your position.

Understanding Customers: Is it Child‘s Play?

LEGO has developed a reputation for its deep understanding of customers. A family-owned company founded in Denmark in 1932, LEGO is the world’s largest toymaker manufacturing products pitched at the premium end of the market.

The company was almost forced into bankruptcy in the early 2000s. Since then has done more than simply survive, it has prospered with the help of a strong survival plan, and some interesting brand extensions that show a rich and deep understanding of the LEGO consumer.

LEGO is now involved in theme parks, video games, movie deals, retail stores as well as some profitable licensing deals with Time-Warner and Disney. These ventures have helped to create more interest in the toy bricks with the result that the company has enjoyed booming growth for the past decade or so. The company reported a 25 per cent rise in annual sales in 2016.

The core of Lego’s business is the humble construction brick which has remained constant for more than eighty years. However, as the environment has changed, Lego has been forced to adapt by understanding those changes while remaining true to its core business. Children’s experiences around the core product have evolved, and kids today interact with the product through multiple touchpoints.

 According to a LEGO spokesperson, “fun and construction [has been] at the core of our play experiences. Whether it’s playing with physical bricks, video games, apps, watching movies and videos or reading magazines, we have evolved to be where the kids are. As time, media and technology change, we have found ways to successfully deliver on our play promise of creating fun, playful experiences that inject humor into the narrative.”

A key question that LEGO continually asks is: What engages our audience? The question is deceptively simple, but answering it is complex. So, how do LEGO’s brand extensions illustrate their understanding of the consumer?

Play Materials: 

The humble construction brick is at the heart of the LEGO range. LEGO’s play materials target consumers in the age range 0 – 16+ years. The company divides its range into play materials 0-5 years, 4-9 years and 7-16+ years; all of which are sold through conventional retail outlets. In addition, an educational range available to schools; branded as LEGO DACTA, it is sold through specialist channels.

LEGO uses crowdsourcing to gather ideas for new play materials. To that end, it has a dedicated website, LEGO Ideas, where consumers can submit their ideas for new LEGO play materials. Any idea that gains 10,000+ votes is considered for possible product development.

LEGO also uses teams of child testers around the globe. Kids are recruited to play with potential new products and only those that pass are deemed to be ‘fun’  

For the past decade, LEGO has supported the core product with LEGO Club magazine which goes out to all 6 million members of LEGO Club across 18 markets worldwide. Recognising that children are increasingly using digital platforms, LEGO recently, introduced Lego Life, a social media app targeted at children under 13 with the goal of providing kids with a safe space where they can inspire and become inspired to build more with LEGO bricks.  Every aspect of LEGO Life embodies the “sense of play, creativity, and humor inherent in the LEGO brand.”

LEGO Licensing:

LEGO has linked up with feature film producers, publishers and software developers to license the use of LEGO merchandise. Profitable licensing franchises have included Harry Potter and Star Wars. More recently, a LEGO Batman proved to be a popular addition to the range.

Lego Movies:

LEGO has also partnered with Time-Warner in the movie business. The Lego Movie, a full-length feature released in 2014, brought in $US468.2 million ($610.4 million) at the box office.  The LEGO Batman Movie and The Lego Ninjago Movie scheduled for release in 2017.

LEGO’s foray into the movie business means that it must pursue teenage audiences who are heavy movie-goers. In practice, this means a big focus on digital marketing, including an Instagram account for Lego Batman since last summer.

LEGO Attractions:

LEGO Attractions include LEGOHouse in Denmark, LEGOland Parks operating in seven countries,  LEGO Discovery Centres are now operating in eight countries including Australia.

LEGOland Discovery Centres, target children aged 3-10 years and include access to soft play areas, a brick pools consisting of more than 2 million bricks, LEGO cinema, interactive rides Factory tour, creative workshops, café and birthday rooms as well as a LEGO Shop. LEGO’s  Melbourne Discovery Centre, which cost some $12 million to build, opened at Chadstone earlier this year amid some controversy when adult LEGO users found that they had to be accompanied by a child to gain admission.

Other Educational Programs

When researching the topics and themes that interested their customers, LEGO discovered that kids are fascinated with outer space. This insight led to a partnership with the space agency, NASA in what is known as the “Bricks in Space” campaign.

 In 2011, when NASa’s spacecraft, Juno, set off for Jupiter, three LEGO “crew members” were on board. These crew members were figurines of the Roman god Jupiter, his wife Juno, and Galileo Galilei, the Renaissance astronomer who made many important discoveries about our solar system. This campaign was not associated with any push to sell products; it was simply an attempt to provide valuable, relevant and engaging content.

Earlier this year, LEGO released a set of figurines to coincide with Women’s History Month. These figurines include NASA employees Margaret Hamilton, Katherine Johnson, Sally Ride, Nancy Grace Roman, and Mae Jemison. The concept, which was user-submitted, had originated in the LEGO Ideas website.

Wherever possible, Lego tries to exploit synergies between products in the LEGO range. When consumers watch the movie, “that theatrical experience is then shared through a play experience and that could result in consumers buying new sets or even playing with old ones,” according to a LEGO spokesperson. When communicating with consumers, Lego notes that  "what is very different in the mindset… it's not just the product alone that the kids expect. Kids are living in the very multidimensional world and they are so used to having multitudes of different touch points around themes that they love. They want to be able to see something online…engage with an app, they want to play a game, they want to be able to see another kid unboxing the product and building something with it. So we look at it as a 360 holistic experience and that's where we get the ideas to develop the multitude of the different touch points. But everything connects."

Discussion Questions

Read the following article and consider the discussion questions below:

Tony Featherstone, “Five Lessons from Lego,” The Age, 9 April, 2015

  1. Select any one (1) LEGO product of your choice and draw a flowchart that illustrates the steps of the consumer decision process (See Figure 5.4 in the text for a generic example, but note that this will need to be customised for the product selected). For each step, indicate who is involved in the decision roles (i.e., initiator, influencer, decider, buyer and user.)
  2. Briefly explain the difference between the purchaser (buyer) and the user.
  3. Comment on how LEGO’s understanding of the different consumer markets informs the company’s marketing program.

Further Research and Links:

Lego Attractions

Lego Discovery Centre (Melbourne)

Legoland Discover Centre on Facebook


‘Data Analytics’ is Watching You!

Have you ever completed a Facebook Quiz? You know the ones – they range from the inane (If you were an animal, what would you be?) to knowledge of popular culture (How much do you know about rock music?) and may even include more personal topics (How Irish are you?).   Every time you complete one of these quizzes, you are effectively providing Facebook with information about yourself, your personality, your values, beliefs and more.

Each quiz typically includes 20 questions, and each question has been carefully designed to reveal valuable data about on each individual who completes it.  Like most people who complete these quizzes, you probably have gone right ahead and answered the questions, waited for your score and may even have posted your results on social media for your friends to admire. You may think that the quiz is little more than a bit of harmless fun, a trivial diversion and a minor form of entertainment. But, everywhere you go in cyberspace, you leave behind a digital footprint and  “bits of you float off into cyberspace.”

A commercial market exists for this type of data. Big data analytics companies are able to purchase data sets from Facebook and other social media companies such as Twitter, Instagram and Snapchat. The Facebook data not only includes your responses to quiz questions along with any other personal information you have previously provided to Facebook; but also includes your ‘likes,’ preferences, click-throughs and other interesting facts about you. By combining, this data with other information, including ‘Cookies’ installed on your computer, search histories obtained from Google and data collected from any apps you may have installed on your computer or tablet to reveal a very comprehensive profile of your preferences and personality.

On its website, the UK data analytics company, Cambridge Analytica (CA), claims that it uses such “data to change audience behaviour.” That’s a big claim! And, CA’s claim does not appear to be promotional puffery; rather the claim has some substance. Cambridge Analytica has been credited with influencing the UK vote to leave the European Union (i.e., ‘Brexit) and also for Donald Trump’s success in the US Presidential election.  The Trump campaign reportedly spent $8million buying data that enabled it to send micro-targeted messages to individuals that were designed to press their ‘hot’ buttons and tip them towards voting for Trump.

A recent study carried out by the Psychometrics Centre at Cambridge University found that Facebook ‘likes’ are highly predictive of personality and can be used to predict an individual’s political views, religious affiliations, sexual orientation, intelligence and even their drug use.  According to Centre Director, Michael Kosinski, this research shows that it is possible to make predictions about people simply based on innocuous facts such as " the music they listen to, or the movies they watch, or the books they read."  According to Kosinski, the best predictors of high intelligence include “Thunderstorms,” “The Colbert Report,” “Science,” and “Curly Fries,” whereas low intelligence was indicated by “Sephora,” “I Love Being A Mom,” “Harley Davidson,” and “Lady Antebellum.”  The algorithms used in the Cambridge study are very similar to those used by companies to tailor their advertising and loyalty programs to consumers.

Cambridge Analytica uses a technique called ‘behavioural microtargeting’ which profiles members of the population using data acquired from Facebook and other social media outlets and then targets them with customised messages or offers. The company claims to have 5,000 data points on every US adult.  Already active in the UK and the US, Cambridge Analytica has recently set up an office in Sydney and will shortly be fully operational in Australia.

Cambridge Analytica will not be the first Australian outfit to use psychometric profiling and behavioural microtargeting. Local firm, Quantium, is operating in this area and claims to have datasets on 22million Australians and its clients include Woolworths, NAB and Foxtel.

As more companies begin to use data analytics, the sophistication of the algorithms will increase, leading to the emergence of more robust models. Further, as the cost of data processing and storage continues to decline, it is expected that sophisticated data analytics will be used by more and more companies and organisations for a broad range of applications.

On the other hand, some commentators have warned that the ready availability of such data can have negative implications. Personality profiling can be applied to large numbers of people without obtaining their consent, and possibly without their even noticing.   In effect, this means that individuals may inadvertently supply information to commercial organisations, companies, government institutions and social media friends (Lambiotte & Kosinski, 2015).

Discussion Questions

Read the following article and consider the discussion questions below:

Data Analytics Takes a Quantum Leap, Business First Magazine, 29 July 2016

  1. In the past, the cost of market research has meant that it was beyond the reach of all but large enterprises. Do you think that the availability of data analytics will make this type of research more affordable for small and medium-sized companies?
  2. List and describe some of the possible applications for data analytics.
  3. Discuss the privacy considerations surrounding data analytics.

Further Research and Links:

Cambridge University, Psychometrics Centre  (for a selection of conference papers and journal articles published by the Psychometrics Centre, go to: Recent Publications)

Cambrige Analytica

Quantium (Australia)

Lambiotte, R. & Kosinski, M., (2015) “Tracking the Digital Footprint of Personality,” Proceedings of the Institute of Electrical and Electronic Engineers. (See: Psychometrics Centre Publications for a link to the paper)


Department Stores’ Strategies Put to the Test amid Massive Changes to the Retail Environment

Australia’s two big department stores’ strategies have been fully tested as the retail environment undergoes significant changes.  The challenges confronting both Myer and David Jones are enormous as they try to maintain market share and brand image in the face of stiff competition and weak consumer sentiment.

The four big department stores; Myer, David-Jones, Target and K-Mart control 93 percent of all department store retail sales.  Of that, the two top-tier department stores, Myer and David-Jones, control 30 percent of total department store sales. However, indications are that all four department stores are beginning to lose their grip and their future is uncertain as they struggle to cope with the new retail environment.

The changing retail environment

On the competitive front, department stores face intense competition from an an increasing string of new international market entrants such apparel retailers, H & M, Uniqlo, Topshop and Gap. In the new retail environment, department stores not only compete with bricks and mortar outlets, but increasingly compete with online retailers as well.  The much-trumpeted and imminent arrival of Amazon in the online retail space has most major retailers nervous about potential for further erosion of market share.

According to a recent Ibis World report, households have scaled back discretionary spending and instead have focused on paying down debt and increasing their savings. This has resulted in volatile consumer sentiment and a general flattening of retail sales over the past few years.  The retail sector is growing at around 1% per annum, a considerably slower pace than the overall economy.  And, according to the most recent data available from the Australian Bureau of Statistics, department stores’ sales are growing at a mere 0.3 percent.

As a response to competitive pressures, apparel retailers have engaged in heavy discounting over the past five years or so.  However, discounting has become such a standard feature of the retail landscape, that an inadvertent consequence has been the creation of an entire generation of highly price-conscious consumers - a boon to the discount department stores such as K-Mart and Target – but not in the best interests of the up-market department stores.  

Faced with flat retail sales growth, Myer and David Jones have increased the proportion of house/private label brands and exclusive brands in an effort to boost perceptions of uniqueness and to minimise direct competition. Both stores are pruning costs by streamlining their supply chains and are undertaking more direct sourcing. In addition, all major retailers, Myer and D-Js included, are investing heavily in online platforms as a means of growing sales.  Apart from such obvious similarities, Myer and David Jones have developed very different strategic responses to the changing environment.

David Jones’ strategy

David Jones has focused most of its attention on winning and holding onto the premium end of the market.  It has developed its own private label clothing lines. Central to D-J’s fashion strategy is the continued search for high profile designer labels with which it can develop exclusive relationships. 

David Jones long term growth strategy includes growth through new store openings. Throughout 2016, D’J’s opened new stores at Pacific Fair in Queensland; its first international store in Wellington, New Zealand; a boutique format store in Sydney’s Barangaroo precinct and announced plans to open a store in Brisbane’s James Street in 2018. It will also be building new outlets at Sydney’s Elizabeth St, at a cost of up to $200 million and a new food outlet at Sydney’s Market Street.

The new food store is part of a long-term plan to upgrade its food business and roll out new stand-alone food outlets designed to offer a more complete “customer experience” that will include in-store dining services, such as an oyster bar and retail food sales. These new food stores will offer more private label David Jones products, as well as a “curated” selection of the highest quality Australian and imported foods. D-J’s has engaged high profile celebrity chef, Neil Perry, to work on the offerings.  

D-Js has been performing well over the past two years, but is showing some signs of strain. Its sales to December 2016 increased by just 4 percent, compared with 8.4 percent in the previous reporting period.  According to a D-J’s spokesperson, the poor outcome was a result of poor execution of its private label strategy and discounting.

Myer’s strategy

While David Jones is expanding its floor space with new stand-alone food outlets, Myer appears to be moving in a different direction.After showing falling profits for six continuous years, Myer announced a turnaround strategy at the end of 2015.  Dubbed ‘New Myer,’ the strategy is a five-year, $600 million plan that aims to tailor the offering at each store according to the needs and wants of its customer base in each locality while also improving services to the 5 million Myer One loyalty card members.

The first step in Myer’s strategy is to boost productivity with a 20 percent reduction in its total floor space. Accordingly, Myer has announced that it will exit its store at Logan and shrink the size of its outlets at Cairns, Blacktown and Castle Hill.  It has also announced that it will abandon its plans to open new stores in Darwin, Coomera and Tuggerah.

At the same time, Myer has recently opened two new stores recently – one in Sydney’s Warringah and another in Melbourne’s west at Werribee.  However, as the CEO of Myer, Werribee, points out, the new stores are not like any ordinary department store. An essential part of the ‘New Myer’ strategy is that stores must align their product and service mix to the needs of the local customer segments. Gone is the tiled walkway, and in its place blond timber flooring which provides greater flexibility to increase or decrease floor space devoted to product display.  Service counters have been consolidated to just two banks located at opposite ends of the shop floor, and these payment hubs will be stocked with smaller items and accessories to encourage impulse purchasing. The store will include value-added services such as an in-store café, free Wi-Fi, smart-phone recharging services and an online digital hub to centralise Myer’s click and collect services.

Myer’s sales and profits reports show mixed results. In May this year, analysts were reporting that the strategy was gaining traction, but by June analysts were claiming that it had hit a roadblock. Nevertheless, Myer CEO is sticking to the long-term plan which was essentially about "responding to the external environment in a way that preserves the integrity of the 'New Myer' strategy that is built around customer service, engaging retail experiences and wanted brands, while continuing our focus on efficiency and productivity."

Discussion Questions

Read the following article and consider the discussion questions below:

John Dagge, “Myer chief backs turnaround as going gets tougher,” Herald-Sun, 11 May, 2017

  1. Briefly outline the environmental challenges that face retail stores.
  2. What do you think retailers mean by a focus on ‘the customer retail experience’?
  3. Briefly outline Myer’s strengths and weaknesses.
  4. Explain how two stores in the same operating environment can develop such different strategic responses.
  5. Comment on Myer’s strategy. Do you think they are following the right direction?

Further Research and Links:

Australian Bureau of Statistics, Retail Trade Australia, Catalog 8501.0, 2017

David Jones [Look for the corporate information link at the bottom of the page]

Myer [View a summary of Myer’s current strategy by downloading any one of the recent annual reports]

Roy Morgan Research, “Online Shopping on the Rise for Most Categories,” [Media Release  6095], 19 March, 2015

Roy Morgan Research, “The Retailtainment Effect: Aussies made 90 million more trips to shops last year,” [Media Release 7075], 2 December, 2016


A Media Landscape in Transition

Australia’s media landscape is in transition.  The way that consumers use media is changing rapidly. Of all the changes in media usage that are evident, arguably changes to the way we consume TV and online have been the most profound. These changes will have a major impact not only on how marketers spend their advertising budgets, but also on the types of creative messages designed to reach and engage audiences.

Television Viewing

A total of 93.5 per cent of all Australians watch TV. But our notion of what it means to ‘watch TV’ is changing. According to a report released by OZTAM,  the average Australian watches 2 hours and 39 minutes of broadcast TV daily. This is 31 minutes less than in 2010. Approximately 28 per cent of the time people spend with the TV sets is actually spent on non-broadcast activities.

Two notable changes in viewing are the increase in the time spent watching catch-up television and the time spent using TV for non-broadcast purposes.  Around 3 per cent of all broadcast TV viewing time-shifted (i.e. watched at a time other than the original broadcast time, sometimes called ‘long tail viewing’).

TV sets can now be used for many purposes other than watching broadcast programming. Today, people are using it for video on demand, subscription TV, video games, watching DVDS and watching network catch up services. More than a third of viewers are now watching on demand services including pay TV (e.g. Foxtel) and subscription video on demand (e.g. Netflix). 

We are watching less TV and our viewing is now spread across more devices. The typical Australian household now has 6.4 screens, the majority of which are internet-enabled.  Viewers are now watching television or videos across a broader range of screens including mobile phones, laptops, PCs or tablets. Closer scrutiny of viewing by demographic segments shows that the changes are much more pronounced in younger demographics. For example, children aged 6-13 years now spend about 12 hours per week using the Internet, compared to just 6½ hours per week watching television.


Listening to radio remains an important part of the daily routine for most Australians. The average Australian listens to 3 hours and 23 minutes of radio daily.  However, subtle changes are evident in radio listening patterns. Just under 65 per cent of listening involves live Australian radio. More than one third of listening now involves other formats including:  foreign radio (1%); podcasts (4%); streaming (9%); online music videos (4%) and other miscellaneous types (7%). Live radio listening is strongest amongst those aged 40+ while streaming is strong amongst those aged 10-39 years.  

Print: Newspapers & Magazines

The persistent decline in newspaper circulation and readership is a topical subject. As the nation’s readers switch to digital news media, our appetite for the printed newspaper has been waning drastically.  More than half of all Australians now access news via digital media and the proportion is considerably higher amongst the under 30s, many of whom access news via their smartphones.  Age-based differences are also apparent with news preferences. Among the 18-24-year segment, online platforms are the preferred mode for accessing news, while some 70 per cent of those aged 55+ prefer traditional platforms. 

Subscriptions for the metropolitan dailies are increasing, albeit slowly. Australians, it appears, like their international counterparts, are reluctant to pay for access to online news services. The Sydney Morning Herald app was one of the top five most-accessed news apps among digital users.

Australia’s love affair with magazines continues unabated. However, while readership figures remain buoyant, circulation is slowing. This suggests that people still love reading magazines they don’t feel the need to own a copy. Instead, readers are sharing copies of favourite titles among friends or relatives, or reading magazines in other formats.  The most widely read magazine categories are food and entertainment with almost 6 million Australians reading an issue in any given month followed by general interest titles with 4.5 million readers in a given month. 


Australia ranks third place in global digital media consumption.  Australians engage in some form of digital media usage almost 16.5 hours each week. As noted in this preceding discussion, Australians are now using the Internet for a wide variety of purposes - to access radio, video, catch-up TV, music streaming, news media, magazine content as well as for general surfing and e-commerce purposes.

Advertising dollars tend to follow the punters. So, it is hardly surprising to note that digital advertising expenditure is showing record growth rates.  However, advertisers need to be wary about making wholesale shifts of advertising expenditure away from traditional media and into digital formats.  The 52 per cent of Australians who like to access news via social media exhibit a very different profile to those who regularly access news via print or dedicated news websites such as  It would be foolhardy for advertisers to shift expenditure out of serious news sites and into social media while expecting to reach the same consumers and generate the same advertising effects.

Some commentators warn that the demarcation between traditional media and digital media is not especially helpful. Clearly some media, such as radio and newspapers, can be accessed in both a traditional format and a digital format.  


Discussion Questions

There is no prescribed reading for this session. Instead learners are encouraged to explore the links embedded in the article and in the further research list below. When you have a good grasp of how Australians are using main media, consider the following discussion questions:

  1. For a demographic segment of your choice (e.g. people aged 18-24; people aged 25-39 or women aged under 30; men aged under 40), prepare a profile of the segment’s media habits. (Hint: You will need to explore the reports in the further reading section to write a thorough profile)
  2. Discuss the implications of changing media habits for marketers and advertisers.
  3. Comment on the ‘traditional vs digital classification’ that has been used in marketing texts for decades. Has the usefulness of this classification passed its ‘use-by’ date?
  4. Discuss the advertising implications of the apparent changes in media usage. In your answer think about creative executions, advertising expenditure and measures of advertising effects.

Further Research and Links:

Edison Research, Share of Eye Report, 2016

OZTAM, Multi-Screen Report [Australia], Quarter 4, 2016

GFK, Australian Share of Audio, [Report] for Commercial Radio Australia, 2016

Nielsen Media, Digital Measurement Report, 2016

PQ Media, Global Consumer Media Usage [Executive Summary], 2016

Reuters Institute for the Study of Journalism, Digital News Report, Oxford University, 2016

Roy Morgan Research, Readership [Portal], 2017


Music to Their Ears: Trends in the Distribution of Music

With the advent of music streaming in the late 1990s, commentators thought that the sales of physical formats would soon become obsolete.  But close analysis of music sales by format reveals some surprising consumer preferences.  Older formats, such as vinyl records, appear to be making a comeback.

Streaming gave the music industry a much-needed boost following the bleak period of the late 1990s when peer-to-peer file sharing websites such as Napster eroded sales causing significant damage across the entire sector.

Music streaming is generally understood to mean the process of accessing content, usually audio or video, via a digital device or computer. Live streaming refers to a situation where the user is listening to music in ‘real time’ instead of downloading and storing the file to a computer. In other words, live music streaming provides a service, where the listener pays a subscription fee for the right to listen to music, but does not take ownership of the music format. A different option is on-demand streaming where the user downloads the music file for use at a later date.  In contrast, when consumers purchase music in a physical format such as vinyl, CD or DVD, they make a tangible purchase and take ownership of the format which allows them to listen whenever they please.

The use of paid music streaming has grown rapidly. From a low base in the early 2000s, music streaming now accounts for 50 percent of global music sales. Subscriber streaming services such as Spotify, SoundCloud and Apple Music now boast more than 112 million customers globally.  In Australia, streaming accounts for almost three quarters of the total market.

Music streaming has provided musicians with the opportunity to take distribution into their own hands and offered a choice of different channels to reach the marketplace. Established artists might continue to sign with record labels who manage the marketing and distribution of physical formats such as CDs, vinyl and DVDs. Less established artists and ‘indie’ (independent) performers, however, might choose to distribute their music via online distribution outlets or stream music via one of the many competing streaming services now available to consumers.

For performing artists, it is no longer a question of either physical or digital formats as the main distribution mode. Many artists are now electing to provide their music in multiple formats. "It seems that a lot more artists are using vinyl as a way to give their fans a tangible way of showing their fandom, while also providing a digital download so that their music can be consumed on the go," says Dan Rosen, Chief Executive of the Australian Record Industry Association (ARIA).

Data released by ARIA reveals a renewed interest in vinyl records.  Sales of vinyl in this country increased by 35 per cent in 2016, the sixth consecutive year that vinyl has shown sales increase. This pattern is being noted around the world. In Britain, vinyl sales rose 53 per cent, according to the British Phonographic Industry while in the US a Nielsen Music report showed vinyl sales accounted for 11 per cent of total physical album sales in 2016, the 11th consecutive annual rise for vinyl.

Analysts, searching for an explanation for the resurgence in vinyl have pointed to nostalgia. Millennials and Baby Boomers, they claim, are coveting outdated things and repackaging them as contemporary culture. However, this explanation may be too simplistic. Sales of vinyl are not simply confined to nostalgic Baby Boomers. Matt Huddy, Manager of Sydney's Red Eye Records, pointed out that younger generations are showing an interest in their parents’ turntables and vinyl recordings. "We get kids as young as 12 in with their parents. They've dug the turntable out of the garage and they want Taylor Swift on vinyl," he said.  

Retailers point to the consumer’s desire for physical ownership. "Some people buy vinyl for the sound, but others buy because it's a purely physical form," says, David Clark, manager of 78s, an Independent Record Store in Melbourne. "With a vinyl album, you get the complete package. With the visuals and the text, it's not just the music. It incorporates the social aspect of the scene, information about the band members, the artwork, the dress. The cultural sides of the music – visually and aesthetically – are attached," he said.

Discussion Questions

Read the following article and consider the discussion questions below:

Danielle McGrane, “Vinyl Gets Another Spin Around Australia,’’ The Age, 3 April, 2017

 (Note: This article is also reproduced in The Sydney Morning Herald)

  1. Obtain the data sheet for time series, wholesale sales by value for Australian music, 2007 -2016 from the ARIA Industry- Statistics (Direct link: and answer the following questions:

a)      Plot a graph that shows the relationship between the total sales of Physical, Digital and Total sales.

b)      What patterns do you detect in the sales of different music formats?

c)      Which music format is growing most rapidly?

d)      Which format is beginning to show declining sales?

e)      When did sales of vinyl albums begin to pick up?

  1. Discuss the ways that consumers derive value from (a) music streaming and (b) vinyl records.
  2. Do you believe that the consumer shift to vinyl represents a long-term trend or a passing fad? Justify your position.  

Further Research and Links:

Australian Recording Industry Association (ARIA) especially see the “Statistics Page” for sales figures by recording format and other related data.

International Federation of the Phonographic Industry


Psychological Pricing: The Demise of the Terminal Digit ‘9’?

Psychological pricing is a term that refers to a broad range of pricing tactics designed to achieve a psychological effect. In other words, sellers price goods based on the psychology of prices rather than on economic factors. Prices can be used to signal both value and quality. Of all the psychological pricing tactics, the use of the terminal digit ‘9’, as in $9.99 or $29.99, is arguably the most well-known.  The use of the terminal digit nine, is also known as the ‘nine-fixation.’[1] However, some indications suggest that retailers are finally set to abandon their love affair with price tags ending in the number ‘9’.

Psychological prices are predicated on the assumption that, for any given purchase decision, consumers carry around mental price points which establish a floor price and a ceiling price that form the basis of an upper and lower limits for an acceptable price range. Sellers believe that by pitching the actual price tag just below the consumer’s reservation price, they increase the apparent value of an offer.

Retailers have long demonstrated a preference for terminal digit nine pricing. Some commentators have suggested that the terminal digit nine price tag has been popular since the advent of cash registers in the 1880s. Yet, empirical support for the effectiveness of the ‘nine-fixation’ in pricing is inconclusive. Even after the one cent coin was withdrawn from circulation in 1990, price tags displaying the terminal digit nine have remained a constant feature in the Australian retail landscape.   But all that is set to change.

In April this year, Woolworths announced that it was planning to round out all its prices to numbers that end with a zero.  According to a Woolworths spokesperson, this does not mean that all prices will automatically be rounded up; rather some will be rounded up and others will be rounded down to arrive at the end number ‘0’. For Woolworths stores, which carry some 20,000 different brands, this change to pricing policies involves a substantial undertaking.

Woolworth’s nearest rival, Coles, is expected to follow suit by eliminating or reducing the number of prices ending in ‘9’.  The Sydney Morning Herald made a simple study of the most recent Coles’ catalog and found only a handful of prices that did not end with a ‘0’.  Collectively, the Woolworths and Coles duopoly control around 73 per cent of all grocery expenditure with the implication that other retailers will study their lead very carefully. However, Aldi, has no current plans to change its pricing policy, in which the terminal digit nine remains a prominent feature.

For retailers, the end of odd number pricing has a number of benefits. It will reduce the need to carry costly small change floats; reduce the amount of manual handling of cash tills and it will make pricing the large number of products simpler and easier.

For customers,  rounded prices are easier to remember and should make price comparisons simpler.  However, some customers have argued that the process of rounding up will actually earn the retailers a few extra cents on many items, especially for customers who typically pay using cards.

The demise of the nine-fixation is likely to see the withdrawal of the five-cent coin according to the Royal Australian Mint. Demand for the five-cent piece has been in decline for the past few years. And, if supermarkets eliminate odd number pricing, this will have a major impact on the demand for five-cent coins.

Discussion Questions

Read the following article and consider the discussion questions below:

Catie Low, “Woolworths Making Cents of a Simpler Shop,” Sydney Morning Herald, 13 April, 2017  (Note: This article is also reproduced in The Age)

  1. How can you explain the long-term popularity of terminal digit nine pricing?
  2. As a consumer, what are your thoughts about prices ending with the number ‘9’? Do you really perceive a price of say, $99.99 being significantly different than a price tag of $100?  Does the realization that when you come to pay, the retailer cannot give you change of one cent at the register, make any difference to your thinking?
  3. Do you believe that consumers will benefit from the end of terminal digit nine pricing? Justify your position.
  4. Not all psychological pricing is designed to signal a budget price. Discuss at least two (2) types of psychological pricing tactics that are designed to signal quality.

Further Research and Links:

Bizer, G.Y. and Petty, R.E., "An Implicit Measure of Price Perception: Exploring the Odd-Pricing Effect", in Advances in Consumer Research, Vol. 29, Susan M. Broniarczyk and Kent Nakamoto, Valdosta, GA, Association for Consumer Research, pp 220-221.

[1] Some retailers prefer using the terminal digit ‘5’ or ‘7’ as in $29.95 or $199.97 in which case the practice is known as ‘odd number pricing’, ‘just below pricing’ or the ‘left-digit bias.’ In both cases the seller’s objective is to pitch the price within the consumer’s tolerance around an acceptable price range for a given purchase decision. 


Wearable Devices: The Next Generation

Wearable devices have been touted as one of the major innovations for the 21st century.  Many of us will have already become familiar with simple wearables such as smart watches and fitness tracking bracelets which perform many similar functions to that of a smart phone.  However, newer technologies will soon outstrip these simpler technologies and provide many new marketing opportunities.

The term, ‘wearable device’ is a broad term that refers to  any mobile electronic device worn on a user’s body or attached to their clothes.  Market analysts, CS Insight, expect the wearables market to reach $14 billion by the end of this 2017  while Morgan Stanley predict that it will become a $1.6 trillion business in the not too distant future.

Wearables represent an industry which is still in its infancy, but one that offers enormous potential to marketers. The first generation of wearables were often large, clumsy devices which often tended to impede natural movements. Many of the early product developments tended to focus efforts on solving the engineering challenges rather than consider the “cultural engineering” aspects needed to make wearables look stylish and therefore gain broader market acceptance. For example, a computer tablet that needed to be held during use, prevented a user from normal social interactions.  However, the new generation of diverse wearable technologies are smaller, sleeker and capable of being integrated in much more unobtrusive ways.  They can be integrated into fashion in a manner that does not alter the clothing’s outward appearance nor interfere with the user’s natural movements.

More and more electronic devices are being embedded into clothing, either for functional or fashion reasons. According to Wearable Devices Magazine, wearable devices, which integrate fashion and customization are the hottest things to come to the market in a generation.   The advent of wearable fabrics constructed from cloth woven with conductive yarn has enabled clothing to be transformed into digitally-enabled touchscreen-like surfaces.  Other technologies currently under consideration or in the prototype stage and undergoing trials include the use of embedded wireless biosensors that assess the user’s mood and can be linked to applications that play videos or music to energize or relax the wearer. 

A number of analysts have suggested that smart clothing represents the next step into the future.  Some of the opportunities being canvassed in the trade press include:

Next generation sportswear (athletic footwear and clothing) that tracks tracking physical activities (also known as physiolytics): The new generation sportswear typically combines multiple technologies, such as biosensors and wireless communications, devices to  make tracking performance easier, data transmission faster and more secure and at the same time, provide the wearer with quantified feedback on performance.  For example, Google and Levi’s have partnered to develop the ‘commuter jacket’; a garment designed specifically for cyclists that incorporates GPS navigation and uses touch or gesture sensitive areas on the jacket sleeve to allow users to connect with a variety of applications or the wearer’s smartphone.

Mood jackets: Mood jackets use a variety of embedded biosensors to evaluate the wearer’s mood and can be linked to other applications to assist the wearer to change an undesirable mood state. A specific example of an embedded biosensor, currently being tested, is a galvanic skin conductor integrated into clothing and which not only measures the user’s stress levels, but provides the wearer with biofeedback which can be used to improve mood, reduce anxiety, energise the wearer or to improve sleep quality. 

Proximity sensing clothing: Clothing that utilizes infra-red sensors which light up when they detect another infra-red source. One such example is in the form of a T-shirt sold in pairs, and currently marketed to lovers as a novelty gift for special occasions such as Valentine’s Day. The T-shirt features love hearts which light up and alert the wearer when their lover, wearing the matching T, is in close proximity.

Active clothing: Active clothing covers a broad range of possibilities including the integration of music players into coats and jackets or the use of electroluminescent and LED displays, often linked to music, to create active clothing.

The possibilities to integrate technology into clothing are numerous. The biggest challenge facing wearables is the absence to date of a “killer app”.  Companies, such as Google, are investing substantial sums researching wearables in an effort to identify the killer apps that add value to consumers’ lifestyles.

Discussion Questions

Read the following article and consider the discussion questions below:

Lee Bell, “The Best Wearable Tech and Health and Fitness Gadgets of 2017,” Forbes Magazine, 3 April, 2017

  1. At what stage of the product life cycle do you believe wearable devices are currently in? Justify your answer. 
  2. Thinking about wearable fashion:

(a)   Use your creative thinking skills to come up with a list of at least five potential product concepts.

(b)   For each concept you have identified, identify the unique product benefit and suggest the potential target market.

  1. Discuss the factors that might hinder the market’s willingness to adopt wearable technologies.
  2. Do you believe that the widespread use of wearable devices raises privacy concerns for users?

 Further Research and Links:

Samuel Gibbs, “The 10 Most Influential Wearable Devices,” The Guardian, 3 March, 2010

Nielsen International, “Who’s Wearing Wearables?” Media Release, 12 April, 2017

Wearable Devices Magazine


Coca-Cola: A Consumer-Centric Brand Portfolio Strategy

Coca-Cola is one of the world’s most iconic brands. The company’s portfolio features more than 500 brands, of which a total of 21 are said to be billion-dollar brands. Globally, Coca-Cola dominates the market for carbonated beverages with 48.6 percent share of market.  However, in some geographic markets, Coca-Cola holds up to 72 percent of market share. The company operates the world’s largest distribution system with bottlers and franchises in more than 200 countries.

In spite of its long-term success, Coca-Cola cannot afford to rest on its laurels.  Instead, it must continually monitor market trends and adapt to the changing landscape. Recent global trends indicate that consumer tastes are changing on multiple fronts. Consumers around the globe are showing a preference for natural food and beverages, less sugar in food and beverage formulations and a desire for more functional benefits such as nutrition. Shopping habits are also changing – consumers are demonstrating a greater desire for convenience in the form of smaller shops, home delivery services, online ordering and vending machines in convenient locations.

Changing consumer preferences are beginning to take a toll on the sales of sugar-based carbonated drinks around the globe.  Research from Ibis World shows that global per capita consumption of sugary, fizzy drinks has been in decline for more almost a decade, and predicts that over the next 10 years, the carbonated drink industry will experience a difficult operating environment. In the Australian market, carbonated soft drinks have been losing "share of throat" to bottled water for the past eight years- falling from 57.5 per cent of the market in 2008 to 50.5 per cent in 2015, while bottled water has risen from 10.4 per cent to 20.4 per cent.

Consumer preferences are shifting to healthier alternatives such as juices, mineral waters, enhanced water-based drinks, sports drinks and energy drinks. Analysts suggest that energy drinks are one of the new growth categories. Globally, sales of energy drinks, by volume increased by 10% in 2015. Energy drinks capacity to deliver a quick, energy boost resonates with consumers wanting more functional benefits.  Sports drinks, also known as hydration drinks, are another major growth category.

When a company, such as Coca-Cola Limited, already holds 50-70 percent share of market, there is little to be gained from attempts to steal share away from traditional competitors with clever marketing, price-discounting and intensive promotions. And, when the total market demand for a category is in decline, any market win will be small gains made in an ever-shrinking market base. In such situations, marketers need to think about ways to grow the total market and look for organic growth.

Rising to the challenges of a difficult operating environment, Coca-Cola launched its revamped brand portfolio strategy in February this year in what has been described as the first major brand overhaul in 130 years. Coca-Cola calls its strategy a “consumer-centric brand portfolio.”

“The Coca-Cola Company has grown to be bigger than brand Coca-Cola,” said James Quincey, President and Chief Operating Officer when unveiling the strategy. “The brand Coca-Cola will always be the heart and soul of The Coca-Cola Company, but the company has outgrown its core brand. The company needs to be bigger than our core brand.”

The brand strategy is consumer centric in that it also takes into account consumer changing tastes and preferences for low-sugar/ no-sugar drinks as well as drinks in emerging categories. The company is making a conscious effort to shape the brand portfolio in a very deliberate way. It acknowledges the World Health Organisation’s guidelines that sugar should not account for more than 10 percent of daily caloric intake.

The company has broadened its portfolio into five category clusters including sparkling soft drinks; energy drinks; juices, dairy and plant-based drinks; waters and sports drinks, and ready-to-drink coffee and teas.

 Coca Cola

Key elements in the customer-centric brand portfolio include:

  • Unite core Coke brands under a new one-brand packaging strategy, using Coke’s rising red disc logo across all Coke brands (including Classic Coke, Diet Coke, Coke Zero, Coke Life and flavoured Cokes)
  • Focus on sales value rather than sales volume
  • Reformulate existing brands to reduce sugar by reformulating existing beverages while preserving the taste consumers love
  • Accelerate expansion in the portfolio of low-sugar/no-sugar brands
  • Focus on no-sugar brands e.g. Coke Zero to be rolled out to each of the company’s geographic market
  • Use of clear, easy-to-find calorie information right up front so you can make informed choices without the guesswork.
  • Rolling out non-traditional alternatives globally (e.g. organic tea, coconut water, grab-and-go coffee, and juices)
  • Increase variety of smaller, more convenient packages (600 ml bottles, 375 ml, 250ml small cans and 150 ml mini cans (currently 40% of brands are available in smaller sizes)
  • Continued investment in innovation, especially in carbonated soft drink category in local, regional markets
  • Scale up successful new product launches for global roll-out

In delivering the new brand strategy, Quincey did not focus on the traditional competition; that is the Coke versus Pepsi wars. He didn’t ask how much market share his company steal away from arch rival, Pepsi. Instead, he asked, “What's the total human daily per capita consumption of fluid?” The answer was eight glasses per day, of which Coke’s share was just half of one glass (approximately 6% share). Thus, he concluded, there were many opportunities for the Coca-Cola company to grow its share.

In framing the competitive landscape as ‘all other beverages’, Quincey was sending a clear signal that the company was diversifying its brand portfolio; shifting the focus away from carbonated beverages and attempting to achieve organic growth across a broader range of drinks that are more in line with changing customer preferences.

Discussion Questions

Read the following article and consider the discussion questions below:

Shoup, Mary Ellen, “Coca-Cola’s Focus on Still Beverage Portfolio Pays Off in Q4, while Soda Sales Slide,” Beverage Daily, 9 February, 2017

1. a) Describe, in your own words, the ‘share of throat’ concept.

b) Why is ‘share of throat’ a more useful measure of company performance during changing market conditions?

 2. Explain how the revamped brand portfolio delivers customer value

3. Why do you think the Coca-Cola company is focussing on growth in value rather than growth in volume?

4.Historically, the Coca-Cola company categorised brands as carbonated or still. Do you think that the five category clusters represents a more coherent way of organising the division of brands?

4.Comment on the revamped brand portfolio. Do you think that Coca-Cola is on the right track? What recommendations would you make, if any, to ensure that the brand offerings are in line with changing customer preferences and current beverage trends?


Further Research and Links

Australian Beverage Council

Jay Moye, “Quincey at CAGNY: 'We Are Going to Be a Total Beverage Company'” Coca-Cola Company [Media], 23 February, 2017

World Health Organisation, Reducing Consumption of Sugar-Sweetened Beverages to Reduce the Risk of Childhood Overweight and Obesity, 2015




Millennials: The new target for high-ticket items

Since those who belong to the so-called millennial generation began to attain the age of 30, they have become an important target market for marketers of high-ticket items such as new cars, travel, gourmet dining, property and investments.

Millennials, also known as Generation Y, make up Australia’s largest generational group. They were the first generation to have grown up in a digital environment and their access to digital technologies has shaped their worldview. The ubiquity of digital information and the ease with which millennials access digital information, has changed the way they search for information generally and product-related information in particular. It has also changed the way that this generation makes purchases.

Millennials’ purchasing choices made headlines in Australia late last year when Bernard Salt, a columnist for the Australian newspaper, advised young people to forgo expensive avocado on sourdough toast for breakfast and instead save for a deposit on a new home.  Salt’s commentary caused an extraordinary debate amongst journalists, commentators, bloggers and individuals using social media to put their own point of view.

Marketers are obsessed with understanding the millennial generation. Yet, marketers often struggle to penetrate the millennial mindset and identify their ‘hot buttons’ – that is, what motivates the typical millennial to make a purchase or to select one brand over another.

Part of the difficulty, in terms of understanding millennials, is that the literature is replete with contradictory and confusing stereotypical images. For many marketers, millennials are “ambitious, urban dwelling, highly educated, big-spending consumers of technology products and high-end experiences.” On the other hand, social commentators have called millennials, “impatient, overly self-confident, self-absorbed, self-important, lazy, easily bored, spoilt, constantly in need of positive affirmation, and disloyal.”  

Recent research findings highlight some of the differences between millennials and the older generations, Baby Boomers and Generation X. Investment advisers say a record number of young people are entering the share market. Some millennials are using shares as a means of saving for a home deposit, while others simply like the flexibility of the share market. 

Compared to older generations, millennials are delaying their entry into the property market. They tend to stay at home for longer, or continue to live in rented or shared housing.   Although housing affordability is a concern for Australian millennials, some are finding ways to live the ‘Australian dream’, by owning their own home. They tend to be conservative borrowers, and focus on value rather than amenities. They look for smaller houses, units or apartments in areas that are undervalued and seek out properties that can be ‘fixed up’ or remodeled. In a market where interest rates are low and house prices are rising rapidly, young home owners can take advantage of the increased equity in the property to borrow for renovations.

Millennials spend a lot more time researching the property market before purchasing. However, the amount of information available can be daunting and information overload is a major issue.  One real estate agent has observed a trend towards the use of buyer’s agents to assist in property purchases. “We’re seeing a trend towards using a buyer’s agent. Younger people are… very different to their parents’ generation. They value their time more and they’re outsourcing.”

Millennials also love overseas travel, gourmet foods and retail shopping. Australian millennials are much more likely than non-Millennials to have taken their last holiday overseas. They are seeking out action-oriented holidays, but they are also eco-conscious.  Compared to Baby Boomers who exhibit a preference for classic destinations such as England and Europe, millennials favour Asian holiday destinations. Millennials are more than twice as likely as other Australians to have booked their last holiday via mobile internet.

Millennials represent the fastest growing source of spending power around the globe. Their attitudes, shopping behavior and their preferences are set the shape the future of purchasing.


Discussion Questions

Read the following article and consider the discussion questions below:

Ben Ice, “Technology-Based Loyalty Features: Key to Appealing to Millennials,” Marketing Magazine, 20 January, 2017

  1. Which generational cohort do you belong to?  (See Chapter 3 of your text for a definition and brief outline of core characteristics of the main generational segments) e.g. Millennials are generally defined as those born between 1977 and 2000 although some define them as those born between 1980 and 2004 and other definitions may also apply. 
  2. Do you think social commentators are accurate when they describe millennials as “impatient, overly self-confident, self-absorbed, self-important, lazy, easily bored, spoilt, constantly in need of positive affirmation, and disloyal”?  How would you respond to these commentators?
  3. Why do you think marketers struggle to understand millennials?
  4. For a product or service of your choice, use your research skills to prepare a brief profile of the typical millennial purchaser. In your profile try to include basic information about the purchaser’s attitudes to the product category and how they acquire product category information to inform their brand choices.  (Hint: Consider searching the websites of reputable commercial market research companies such as Nielsen or Roy Morgan, for topline survey findings about millennials and their purchasing habits. When searching, don’t forget to consider using alternative search terms. Millennials are also known as Generation Y and occasionally, Generation Me.)


Further research and links

CBRE (Hong Kong), “Asia-Pacific Millennials Framing New Regional Lifestyle Trends” [Media Release with topline survey findings], 27 October, 2016

Roy Morgan Research, “Holiday Habits of Millennials,” [Media Release], Finding number 6873, 7 July, 2016  

Optus, Generation ‘We’ not ‘Me’ Report, 2014


The Power of Consumer Behaviour: ‘Fair’ Milk Prices

When we think about consumer behaviour, we tend to think of individuals making decisions about purchases for their own use or making decisions on behalf of a small group of closely related family or friends. From time to time, however, we witness consumers making decisions that can force changes in market behaviour. And, that is exactly what happened in Australia in 2016; consumers used their collective buying power to force milk processors and retailers to reconsider a pricing strategy that the community generally considered to be unfair.

At issue was the wholesale and retail price of a humble product; milk. The background to this event was well-canvassed in local media throughout most of 2016.  In February of last year, dairy co-operative, Murray-Goulburn announced a drastic reduction in the farm-gate price it would pay to dairy farmers.  Other dairy processors, Fonterra and Bega, quickly followed suit.

At the time when processors made the announcement about wholesale prices, the farm-gate price for milk was already suppressed due to a range of environmental factors, including a glut in milk supply and a complex set of economic factors operating across Asia, where much of Australia’s milk was exported.  The price cut was so drastic, that the amount processors was willing to pay, was lower than the cost of production. Not only was the price cut severe, but the processors also applied the price cut retrospectively, leaving many farmers with the burden of reimbursing processors for the ‘overpayment’ made in previous year. For some dairy farmers, these developments meant that their farms were no longer viable. A number of farmers mortgaged their properties, determined to ride out the storm, while others simply went out of business.

Many consumers suspected that the large supermarkets, especially Coles and Woolworths, were behind these developments, as retailers needed to support their long-running milk price war, where privately branded milk had been sold at around $1 per litre for at least a decade. Together, Coles and Woolworths control about 80 per cent of all supermarket sales.  The wholesale price cuts, allowed the supermarkets to reduce retail milk prices even further, and they were soon offering milk as low as 60 cents per litre. The retail price of milk was so low that it was cheaper to purchase milk than bottled water. If the supermarkets were pressuring the dairy processors for cheaper wholesale prices, there was no hard evidence to support that premise and the supermarkets emphatically denied all such suggestions.

The consumer response was swift and dramatic.  In the first instance, many consumers stopped buying the supermarket’s private-branded milk in favour of premium-branded products. Photographs of empty premium milk shelves began appearing on social media sites across the nation, while one newspaper reported that “premium brands were walking out the door as consumers offer[ed] their support to embattled Aussie dairy farmers.”  But the consumer advocacy group, Choice, warned consumers paying a higher price at retail level, did not mean that processors would pass the additional payment onto the farmer. "While it's OK if processors are getting more money, a lot of consumers are paying more for milk under the belief that by buying branded milk the farmers are going to get more," said Mr Godfrey, a Choice spokesman. As the weeks passed, consumers demonstrated that they were learning about how to manage a coherent and effective campaign, around the issue of milk prices and milk branding.  Blogs and social media websites were soon flooded with lists of milk brands recommended for those consumers who wanted to support farmers.  A petition on gathered more than  161,000 signatures (more than 10,000 had signed within days).Various members of the public began dedicated Facebook pages with the express purpose of supporting farmers and sharing information about the consumer-led campaign.

As the milk crisis unfolded, throughout the year, the story was barely out of the spotlight. Both traditional and new media platforms picked up the story with relish. Celebrities and media personalities weighed in on the issue, lending their support to the plight of farmers. For instance, AFL legend, Kevin Sheedy, called for a boycott on cheap milk and urged the public to give farmers a “fair go.”  Academic, journalist and The Project’s, Waleed Aly, made a highly publicized and impassioned plea, urging consumers to support dairy farmers and  “buy local.’  Traditional news outlets published data showing that sales of $1 per litre milk in supermarkets had fallen by 15 per cent and that Australian shoppers were paying up to 90 per cent per litre more for premium milk.

Individual politicians, in every Australian state with a substantial dairy industry, began applying pressure to government departments to provide financial support for primary producers. And, while the wheels of government often move slowly, both state and federal levels of government, yielded to public pressure inside the year, announcing various support packages.  For instance, the Federal Government announced a concessional loan program to assist farmers in August, 2016 and in January,  2017 the ACCC announced an forum to hear from dairy farmers on the issue of milk prices.  

Clearly, the consumer-generated rally cry had an impact. Within two months of increasing prices, Fonterra announced that it would lift farm-gate prices.  Fonterra, at the time of making this announcement, said that the company had “was listening” and understood that “changes need to be made.” 

The events surrounding the Australian milk crisis provide a topical example of an informal consumer pressure group; that is, a loose collection of individuals acting in a concerted manner, in an attempt to force companies to change undesirable or anti-social behaviour. While these types of collective purchasing actions are relatively rare, they highlight the power of consumers to effect change and they serve to remind marketers that consumer groups should not be ignored.


Discussion Questions

There is no prescribed reading for this week. Instead, students are encouraged to explore one or more of the hyperlinked news items within the case study in order to learn about the changing environmental situation in the milk industry and the range of consumer responses.  Consider the following discussion questions:


  1. If you were planning to purchase milk, would you select milk priced at $1 (per litre) or a comparable milk product for $2 or more? Would you consider the brand reputation and company history in your purchasing considerations? Or, would you base your decision on price alone? There is no right answer, but try to explain your answer in terms of internal and external influences on purchasing.
  2. Why do you believe that a product as humble as milk generated such public interest and media attention?
  3. To what extent do you think that online social networks enabled consumers to act in a concerted manner and present a coherent national campaign in response to the milk crisis?
  4. What types of reference groups were evident in shaping consumer attitudes to the milk crisis?
  5. How do you think consumers planning to make a milk purchase, evaluated the milk alternatives during 2016? It may be worth considering two groups of consumers here:
    1. Those who continued to purchase cheaper milk products
    2. Those who switched to premium branded milk


Further reading and links:

Daniel Graham, “What $1 prices mean for the Dairy Industry: Unbottling the Mysteries Around the Cost of Milk,” Choice Magazine, 4 January, 2017

Deloitte, “Tough Times for Dairy Farmers,” The Agribusiness Bulletin, January, 2017


‘Big’ data, ‘thick’ data and customer insights

“Big” data was the marketer’s buzz word in the mid- 2010s. And, while big data is probably here to stay, marketing researchers have moved on.  According to the American Marketing Association, the new buzz words in marketing research are “thick” data and consumer insights. So, what are these concepts and what can they tell us about the future of marketing research?

“Big” data refers to the voluminous data generated through the multiplicity of sources accessible to modern marketers, including; internal data such as sales transaction records and customer relationship databases; commercial research findings drawn from surveys of focus groups, traditional media such as TV viewer profiles, social media including Twitter tweets and product review websites; sensor-generated data such as the Internet of Things (IoT) as well as a plethora of digitally sourced data sets such as Google Analytics. Big data is characterized by transactional data – typically quantitative in nature and including charts and tables outlining relatively simple observations of consumer behaviour or consumer attributes.  Big data is not so much about the size or expense of the data generated, but rather the volume of little bits of data that marketers must sift through, analyse, interpret and collate. Ultimately, marketers must determine which bits of data are relevant to a given problem or research question.

While the ready availability of data to inform market research questions has been welcomed by most marketers, it has added to the complexity of the marketer’s role and the time spent in reviewing research findings.  The sheer volume of data available today has forced marketers to develop new techniques for both the analysis and storage of the data collected.  Big data analytic techniques include predictive analysis, text content analysis, machine learning, data mining, descriptive statistics and natural language processing. And, an increasing number of software companies is developing programs to help marketers analyse big data, including Google, Oracle, Amazon Web Services, Microsoftand IBM. Yet, as many commentators warn, access to more data and bigger data does not necessarily translate into meaningful or actionable insights based on the consumer’s mindset.

“Thick” data refers to more specific, granular data that helps companies understand their target market but places that understanding into some sort of background or context that seeks to provide explanations for the observed behaviour.  The term, ‘thick’ comes from anthropology where it refers not just to descriptions of behaviour, but also to the context of that behaviour so that the behaviour can be understood by outsiders.  Thick data often relies on a mix of traditional quantitative data sources combined with qualitative data sources and uses deep analysis to reveal patterns or themes. Thick data helps to put the flesh on the bones of big data; it attempts to humanize it. Thick data helps marketers to build profiles of the typical consumer and the motivations that inform their brand attitudes and purchasing behaviour.

Whereas, big data answers “what” type questions, “thick data’ answers “why” type questions. In other words, big data describes what customers are doing and what they look like, often in relatively simple demographic terms while thick data seeks to understand why customers behave in certain ways. 

A customer insight takes the decision-maker’s focus to the next level by seeking to identify actionable insights that arise from the data. "It is a fresh and thought-provoking perception (about the consumer, the category, the brand and so on) that can be applied to improve a business solution, to challenge a marketing strategy, stimulate a different communication idea.” A useful way to think about the distinction between big data and insights is that data provides facts, but the insight tells a story which marketing decision makers can act on.

Simply having access to high quality market research is no longer sufficient to deliver a competitive advantage. Marketers don’t make decisions based on facts. Instead they rely on rich interpretations of the facts to build strong narratives about their customers. Technological advances, especially in digital-generated data and online/ mobile research methodologies, mean that most marketers can have access to quality information. As the research environment evolves, the real competitive advantage will come from the unique ways that marketers process data and turn it into customer insights.

Research is beginning to show that companies which are more focused on customer-insights are more successful. In spite of the imperative to develop fresh and meaningful customer insights, the World Association of Advertising Research (WARC) notes that too many market researchers are still data-gatherers.  Some Insights teams are harnessing the expertise of anthropologists, ethnographers and sociologists to help provide a deeper social and cultural understanding to generate meaningful and actionable customer insights.  The American Marketing Association has pointed to a recent trend showing that Insights teams are being used much earlier in the product development cycle. For instance, digital testing techniques allow marketers to test consumer reaction to specific product designs or packaging. This enables modifications to be made prior to full scale production.  

Marketers are constantly in search of deeper and richer understandings around the “why” of consumer behaviour – what makes consumers tick, what motivates them to purchase brand X over brand Y, what does a brand have to do to encourage consumers to switch brands, how to design a brand or a customer experience to maximise satisfaction and ultimately brand loyalty. The types of questions that marketers ask remain constant, but the ways that marketers approach the search for answers to such questions is undergoing substantial change.

Discussion Questions

Read the following article and consider the discussion questions below:


  1. Explain, in your own words, the distinction between data drawn from market research reports and a customer insight.
  2. Why do you think marketers have become more interested in developing customer insights?
  3. Generating consumer insights from big data is difficult for many marketers. What types of skills do marketers require to improve their capacity to turn data into insights?
  4. Briefly discuss the advantages of using an Insight Team.
  5. Consider the following statements taken from various market research reports and state whether you think each represents a data fact, thick data or a consumer insight. Justify your selection.
    1. Australian kids aged 6 to 13 spend an average of almost 12 hours a week using the internet
    2. Australians spend over two billion dollars a week on groceries; most of it going to the two big supermarket chains, Woolworths and Coles.
    3. In the modern household, a television set is not considered as an electronic device, it is a piece of furniture.
    4. 39% of Australians agree they are attracted to new things and ideas, up from 34% ten years ago. Conversely, just 21% say they are cautious when it comes to newness—down from 24% a decade ago.
    5. A grocery shopper, exhausted from a day’s work, will choose the most convenient supermarket rather than the one with the cheapest prices


Further reading and links:

Green Book, Research Industry Trends, 2015  




The Rise and Fall of China’s Luxury Market

The rise of Asia’s middle class contributed to a growing appetite for Western goods and luxury brands. Wealthy Chinese consumers’ love affair with designer labels and luxury brands has become legendary and saw many multi-nationals falling over themselves to set up retail outlets in China’s most populous cities. (Click the title to read on.)

A Mission for the Modern Zoo

Just as the circus was forced to reinvent itself in the 1980s, amid mounting public pressure over the morality of performing animals, the modern zoo is also undergoing a process of reinvention in the 21st century. (Click the title to read on.)

Banking on a Sale: Personal Selling in the Finance Sector

The issue of remuneration for bank employees has been very much in the spotlight this year, as the banking industry gears up for a review of bank practices. The self-funded industry review follows a series of scandals and represents a direct response to community concerns about trust. (Click the title to read more.)