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LCCI International Qualifications

Certificate in Marketing
Level 3

Model Answers
Series 3 2009 (3025)

For further Tel. +44 (0) 8707 202909


information Email. enquiries@ediplc.com
contact us: www.lcci.org.uk
Certificate in Marketing Level 3
Series 3 2009

How to use this booklet

Model Answers have been developed by EDI to offer additional information and guidance to Centres,
teachers and candidates as they prepare for LCCI International Qualifications. The contents of this
booklet are divided into 3 elements:

(1) Questions – reproduced from the printed examination paper

(2) Model Answers – summary of the main points that the Chief Examiner expected to
see in the answers to each question in the examination paper,
plus a fully worked example or sample answer (where applicable)

(3) Helpful Hints – where appropriate, additional guidance relating to individual


questions or to examination technique

Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success.

EDI provides Model Answers to help candidates gain a general understanding of the standard
required. The general standard of model answers is one that would achieve a Distinction grade. EDI
accepts that candidates may offer other answers that could be equally valid.

© Education Development International plc 2009

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise
without prior written permission of the Publisher. The book may not be lent, resold, hired out or
otherwise disposed of by way of trade in any form of binding or cover, other than that in which it is
published, without the prior consent of the Publisher

Page 1 of 23
QUESTION 1 COMPULSORY

Your company manufactures garden tools for home use and is facing intense competition from
international manufacturers. As a result, the company is losing stockists and therefore sales, as they
switch to cheaper products. As a Marketing Manager, using any five elements of the marketing mix,
prepare a marketing plan for this product range for the next two years.

(i) Outline your proposed strategy for the next two years (10 marks)
(ii) Give your tactics for carrying out these strategies. (10 marks)

Present your answers in bullet point format using the 5 x 2 ten cell matrix. Your tactics must be
relevant to the strategies you propose.

(Total 20 marks)

3025/3/09/MA Page 2 of 23
MODEL ANSWER TO QUESTION 1

ELEMENT STRATEGIES TACTICS

ƒ to increase the portfolio of ƒ to develop new varieties of


products by Dec 2010 power tools during 2009/11
Product ƒ research into new
ƒ to improve the quality and materials and
durability of products by 2011 manufacturing methods for
tools during 2009

ƒ to become the price leader for ƒ to use premium pricing in


quality goods by 2011 line with improved quality
of goods
Price ƒ to attain a ROI of 18% by
2011 ƒ to introduce activity based
costing to reduce operating
costs by 15% by Dec 2010

ƒ introduce products into new ƒ introduce products into


channels by Dec 2010 supermarkets, dept. stores
etc during 2009/10
Place ƒ explore possible franchise,
ƒ begin entering international
licensing and agency
markets by June 2011
opportunities during
2009/10

ƒ launch intensive mass


ƒ to create 80% awareness of
media advertising by
new improved quality products
March 2010
in the target markets by Dec
Promotion ƒ gain the endorsement and
2010
sponsorship of “celebrity”
ƒ to establish the brand as the
garden people from TV by
premium quality brand in the
the end of 2010
market by 2011
ƒ introduce an interactive
ƒ enable customers to purchase
website for eCommerce by
goods online for direct delivery
June 2010
by Jan 2011
Process
ƒ install relevant technology
ƒ install a customer help line
with trained staff to operate
with 0800 (free call) facility by
it 24/7 by Dec 2010
Jan 2011

3025/3/09/MA Page 3 of 23
QUESTION 2

You are the Marketing Manager for a fast food company that sells cheap meals in 240 outlets in your
own country. Your board of directors has made the strategic decision to expand into foreign markets
as quickly as possible.

Write a report to your Managing Director explaining:

(i) the method you intend to use to carry out this expansion (2 marks)
(ii) the reasons you have chosen this method (4 marks)
(iii) the advantages and disadvantages of the method you have chosen. (12 marks)

(Candidates are awarded 2 marks for the correct report format and layout) (2 marks)

(Total 20 marks)

3025/3/09/MA Page 4 of 23
MODEL ANSWER TO QUESTION 2

To: Managing Director


From. A. Candidate
Date. 5th June 2009
Subject. Fast Food Operation entering International Markets

1. Method of entry
1.1 The recognised entry method under the conditions imposed, is by the use of a franchise

2. Reasons for this method


2.1 It is the fastest means possible of gaining entry and distribution
2.2 It involves minimal cost to the company as there is very little investment in property,
fixtures and fittings
2.3 It allows reasonable control over the operations due to contractual obligations of the
franchisee

3. Advantages of the franchise method


3.1 allows for quick market entry (and withdrawal)
3.2 requires relatively low levels of investment
3.3 very limited ongoing overheads
3.4 provides access to ready made markets
3.5 operators have local knowledge of the markets
3.6 provides a high degree of control over the operations
3.7 on-going royalty fees and percentage of profits

4. Possible disadvantages of franchise


4.1 selecting the right franchisee
4.2 possible damage to the brand/image if a franchisee fails or fails to meet standards
4.3 possible problems in maintaining a standard price with fluctuating exchange rates
4.4 control of franchise network in geographically dispersed regions
4.5 possible logistical problems of supplying a product
4.6 standardising the quality of service and operations required
4.7 franchisee may withdraw and open up a similar operation as a competitor

3025/3/09/MA Page 5 of 23
QUESTION 3

Toys-2-Go is a company that makes children’s toys and games. The company would like to carry out
research before launching a new type of game. Write a report to your Managing Director briefly
explaining:

(i) the five procedures (or stages) of a research project (10 marks)
(ii) the importance of CATS in a research project. (8 marks)

(Candidates are awarded 2 marks for the correct report format and layout) (2 marks)

(Total 20 marks)

3025/3/09/MA Page 6 of 23
MODEL ANSWER TO QUESTION 3

To Managing Director
From: A. Candidate
Date: 5th June 2009
Subject: Market research

1. The stages of the research process


1.1 Correctly identifying the problem or the area of games research that is needed to be
carried out
1.2 Devising the most suitable method of carrying out the research:
1.2.1 careful selection of the sampling method to be used
1.2.2 devising a relevant questionnaire to obtain the required information
–this is normally pre-tested before being used in the main research
project
1.2.3 deciding on the relevant techniques and methods that will be used
to analyse the data received.
1.3 Collecting the data:
1.3.1 using the relevant research skills and techniques for obtaining
secondary data
1.3.2 carrying out the required number of interviews
1.3.3 monitoring and spot checking of interview staff
1.3.4 random checking of completed surveys for accuracy.
1.4 Analysing the data:
1.4.1 using the relevant techniques to convert the data into meaningful
information
1.5 Presentation of the report:
1.5.1 the information has to be presented in the relevant format for the
person reading the research results
2. The importance of CATS

2.1 C = Cost:
2.1.1 the cost of employing a research agency or staff costs
2.1.2 the costs of preparing the actual research survey
2.1.3 travelling expenses, possibly accommodation and meal costs
2.1.4 the opportunity costs of management time
2.1.5 the costs of having the data analysed and correctly presented
2.1.6 organisations have to be certain that the benefits and the value of
the information that is likely to be obtained will exceed the financial
costs of carrying out the research. If it does not then carrying out
the research would be a pointless and wasteful exercise.
2.2 A = Accuracy
2.2.1 correctly identifying the problem or area to be investigated, failure
to do so would result in data being collected that could be
irrelevant to the problem at hand
2.2.2 devising a suitable research method, selecting a relevant sample
and devising an appropriate survey questionnaire
2.2.3 the training of the interviewing staff carrying out the survey
2.2.4 the correct analysis of the data
2.2.5 accuracy in research is vital owing to the fact that managers will
base their strategies and decisions will be made on the research
results. Inaccurate research could lead to the wrong decisions
being made.
2.3 T = Time
2.3.1 time to physically carry out secondary research
2.3.2 time to interview people
2.3.3 time to analyse the data collected
2.3.4 time to prepare the analysed data in a suitable report format
2.3.5 the longer the time taken for the research the greater likelihood of
2.3.6 competitors getting to know about it

3025/3/09/MA Page 7 of 23
MODEL ANSWER TO QUESTION 3 CONTINUED

2.3.7 the time factor is also essential, research has to be timely to be of


use. If research is not presented within a suitable time period, the
data and information obtained might already be out of date by the
time the report is presented.
2.4 S = Security
2.4.1 the agency or staff employed must not pass any information to
other people
2.4.2 the greatest care possible must be taken to try and ensure that
2.4.3 competitors do not get access to any information
2.4.4 data when it has been collected and analysed must be stored very
securely for possible future use
2.4.5 reports should only be supplied to properly authorised people
within the organisation and is not for general knowledge.
2.4.6 trying to keep the actual research project secret from competitors
can be very difficult, with the relevant controls and checks it should
be possible to keep the actual information from leaking into their
hands.

3025/3/09/MA Page 8 of 23
QUESTION 4

Acme is a company that manufactures and sells digital music players (MP3). Write a report to your
managing director briefly explaining:

(i) your identified target market, using any available segmentation bases (8 marks)
(ii) five methods available to evaluate one of the segments you have chosen. (10 marks)

(Candidates are awarded 2 marks for the correct report format and layout) (2 marks)

(Total 20 marks)

3025/3/09/MA Page 9 of 23
MODEL ANSWER TO QUESTION 4

To: Managing Director


From: A. Candidate
Date: 5th June 2009
Subject: Segmenting markets

1. Identifying target market


1.1 Demographics
1.1.1 customers are very likely to be 15 –30
1.1.2 could be male or female
1.1.3 likely to have a reasonable education
1.1.4 could be any of A to C2 socio-economic groups
1.2 Geographic
1.2.1 initial sales are very likely to be to city dwellers, spreading to the
suburbs
1.3 Geo-demographics
1.3.1 careful analysis of the ACORN or MOSAIC bases could highlight
specific geodemographic segments – young people living in
expensive apartments. Families with teenage children in the
suburbs, etc.
1.4 Psychographics
1.4.1 using attitudes, opinions, interests and life styles to select those
people with a strong interest in music, etc.

2. Evaluation of potential segments


2.1 Distinctive
2.1.1 are there sufficient differences in the segment to separate it from
other segments in the market
2.2 Accessible
2.2.1 can it be reached and communicated to with the promotions mix,
is there a distribution channel that can be employed
2.3 Measurable
2.3.1 can the segment be measured in terms of potential customers,
potential revenues and levels of profitability
2.4 Sustainable
2.4.1 is it worth catering for, is it a segment that will endure over time
or is it likely to be a fad
2.5 Serviceable
2.5.1 can it be served with existing products or are new products
required. If new products are required, has the organisation got
the resources and knowledge to produce them
2.6 Defendable
2.6.1 could we compete with competitors or indeed “fight off” other
competitive entrants into the market
2.7 Acceptable
2.7.1 is the segment and the products needed to satisfy it acceptable
within the organisation’s mission statement and its corporate
philosophies and ideals

3025/3/09/MA Page 10 of 23
QUESTION 5

(a) Draw, and correctly label, a diagram to illustrate Maslow’s Hierarchy of Needs model.
(5 marks)

(b) Identify two different types of product that marketers offer to satisfy each level of need.
(5 marks)

(c) Draw and correctly label a diagram to illustrate the communication process.
(6 marks)

(d) Give four different examples of “noise” that can interfere with the communication process.
(4 marks)

(Total 20 marks)

3025/3/09/MA Page 11 of 23
MODEL ANSWER TO QUESTION 5

(a)

5 Self
actualisation

4. Need for self


esteem

3. Need for love and friendship


social needs

2. Safety and security needs

1. Physiological needs

(5 marks)

(b) Products to satisfy need:

ƒ physiological needs - food, liquids, basic clothing, warmth

ƒ safety and security needs - shelter (homes, accommodation), health care products
insurance policies, pensions

ƒ social needs - memberships to clubs, presents for family and friends,


romance and affection (products related to) family holidays

ƒ esteem needs - cars, homes, clothes, status possessions

ƒ self actualisation - expensive hobbies, exotic holidays, luxury cars, expensive


jewellery, works of art.

3025/3/09/MA Page 12 of 23
MODEL ANSWER TO QUESTION 5 CONTINUED

(c) The basic communications model is illustrated below.

Encodes the
message to
be sent

Decodes
the
message
sent

MEDIA or RECEIVER
SENDER CHANNEL

FEEDBACK

d) Candidates may offer any from:

ƒ physical barriers
ƒ physical difference
ƒ language used, dialects, jargon, acronyms
ƒ media used
ƒ media clutter
ƒ body language
ƒ mental or physical distractions.

3025/3/09/MA Page 13 of 23
QUESTION 6

(a) Identify and explain the four major characteristics of services, giving a suitable example of each,
to illustrate your understanding of them.
(12 marks)

(b) Explain, with a suitable example of each, what is meant by:

(i) boundary staff (4 marks)


(ii) the service factory. (4 marks)

(Total 20 marks)

3025/3/09/MA Page 14 of 23
MODEL ANSWER TO QUESTION 6

(a) The four major characteristics of services are:

Intangibility:
Services are intangible. Unlike physical products, they cannot be seen, tasted, felt, heard or smelt
before they are bought. You can not see the result of a dental filling until it has been carried out.

Inseparability:
Services are typically produced and consumed simultaneously. Where as products are
manufactured, put into stock, shipped to retailers, and bought still later for consumption. When a
person renders a service, then the service provider becomes part of the service. Since a client is
invariably present as well, the provider-client relationship becomes an essential part of the service.
You can not order a new hairstyle over the telephone and ask that the hairdresser deliver it – you
have to be present to have it created on your head.

Variability:
As a service relies on who provides them, where they are provided, when they are provided and
how they are provided, they can become very variable in the end result. An employee with full
training and all the correct equipment in the correct environment is likely to perform a much better
hair style than an apprentice using household scissors in her kitchen.

Perishability:
Services can not be stored. An empty seat on an aeroplane at 3-30pm today can not be sold to a
customer tomorrow. That seat has perished, been lost. The empty table in a restaurant at 7pm can
not be offered to a customer at 10pm when the restaurant is full – again it has perished.

(b) Boundary staff:


This is the generic name given to all personnel directly involved in interacting with the customer in
the provision of a service. The sales assistant who speaks to a customer, the waiter who serves
the customer’s meal, the dentist who provides dental treatment. All are considered boundary staff
– they come into direct physical contact with the customer during the provision of a service.
Although a chef is an essential part of a service operation (in cooking the food) they are not
boundary staff, nor the person in the stockroom responsible for ensuring stock reaches the sales
floor.

(c) The service factory.


Anywhere a service is performed is regarded as “the service factory”. The lawyer meeting with a
client in his office, the hairdresser creating a new hairstyle for a customer in the salon, the garage
mechanic carrying out repairs to a customer‘s car in a garage, the waiter serving a meal to a
customer in a restaurant. All these events take place in what is referred to as “the service
factory”.

3025/3/09/MA Page 15 of 23
QUESTION 7

Write a report to your managing director briefly explaining:

(i) the role and function of each member of an industrial decision making unit (DMU)
(8 marks)
(ii) why knowledge of each role is so important
(2 marks)
(iii) the communication messages or information required in dealing with such roles.
(8 marks)

(Candidates are awarded 2 marks for the correct report format and layout) (2 marks)

(Total 20 marks)

3025/3/09/MA Page 16 of 23
MODEL ANSWER TO QUESTION 7

To: Managing Director


From: A. Candidate
Date: 5th June 2009
Subject: Industrial decision making unit.

1. Members of and roles of an Industrial Decision Making Unit

1.1 Starter (or initiator) this is the person (or department) who first realises the need to
purchase some product or service
1.2 Advisor this is the person (or department) whose advice will be sought in selecting
the most relevant product or service that is to be bought. This may be as a result of
some technical knowledge or possible previous experience
1.3 Decision maker this is the person (or department) who has the overall responsibility
to make a yes or no decision as to whether the purchase will be made
1.4 Purchaser this is the person (or department) who will actually place the order
1.5 End user this is the person (or department) who will make use of, or receive the
benefits, from the product or service that is bought

1.6 Gatekeeper this is the person(s) who may control access to other members of the
DMU or possibly the flow of information being sent to members of a DMU
1.7 Financier the one who is responsible for the payment of the products or
services received (probably accounts management or department

2. Why knowledge is of importance to marketing department:

2.1 to identify gate keeper and their level of importance


2.2 identify the advisors and the type, level and importance of the advice offered
2.3 identify eventual decision maker, or if a group decision who is the major force in the
decision unit and the level of their importance
2.4 the financier as to the type of payment and terms they prefer
2.5 initiator (or starter) - how and where do they gain their initial information or desire
from

3 Communication messages:

3.1 Starter/End user new model, product benefits, ease of use, aesthetics, innovation
3.2 Advisor ease of use, added benefits, durability, technical specifications
3.3 Decision Maker warranties, guarantees, service maintenance, ease of
use,additional benefits
3.4 Purchaser ease of delivery, delivery terms, value for money, stock availability
3.5 Financier methods of payment, credit terms, payment dates, residual values

3025/3/09/MA Page 17 of 23
QUESTION 8

Explain the differences between the following:

(a) The Internet and a website


(4 marks)
(b) A domain name and a URL
(4 marks)
(c) A hyperlink and a banner link
(4 marks)
(d) Permission marketing and viral marketing
(4 marks)
(e) A transactional website and an interactive website.
(4 marks)

(Total 20 marks)

3025/3/09/MA Page 18 of 23
MODEL ANSWER TO QUESTION 8

(a) The Internet


The Internet is a global system of interconnected computer networks that interchange data by
packet switching using the standardized Internet Protocol Suite (TCP/IP). It is a "network of
networks" that consists of millions of private and public, academic, business, and government
networks of local to global scope that are linked by copper wires, fibre-optic cables, wireless
connections, and other technologies.

A website
A website is a back-construction from the proper noun World Wide Web is a collection of
Web pages, images, videos or other digital assets that is hosted on one or more web servers,
usually accessible via the Internet. Frequently a website is referred to as a “home in cyber-space”

(b) A domain name


A domain name is a single name given to a collection of web pages belonging to an individual or
organisation. Once registered it becomes the sole property of the owner and can not be used by
anyone else (either individual or organisation). Various categories of domain names exist with the
primary level being .com. Secondary levels include .co.uk, net, biz, etc.

A URL
Uniform Resource Locator is an address which also specifies where the identified
resource is available and the protocol for retrieving it. It is the internet term for any individual web
page in the World Wide Web – every page in the world wide web has its own URL.

(c) A hyperlink
A hyperlink is a line of text within a web page that if clicked will take the viewer to another page
within the website, or indeed to another completely different website.

A banner link
This is a Java applet link, often in graphic format (usually an advertising link) which if clicked may
open up an provide animated information or take the user to another different website.

(d) Permission marketing


This is a form of direct marketing carried out via email communication, where the recipients of the
emails have already given their permission in advance to be contacted with such.
Viral marketing
This refers to the phenomenon whereby users of the Internet forward information about products
or services they are familiar with to other users by contacting them via email, chat rooms,
community boards, etc.
(e) A transactional website
This is a website that allows the buying and selling transactions to take place on the Internet. It is
a reactive site that responds to the requirements that customers state.

An interactive website
This type of website has all the facilities of a transactional site, however it is proactive in that it can
make suggestions to customers and respond to their enquiries and requests. Two way dialogue is
a feature of such a site, where mutual communication is encouraged and promoted.

3025/3/09/MA Page 19 of 23
QUESTION 9

(a) Give a suitable definition of a sales promotion.


(2 marks)
(b) Give six different reasons why an organisation might use sales promotions.
(6 marks)
(c) Briefly explain four possible disadvantages of a sales promotion for an organisation.
(4 marks)
(d) Briefly explain four advantages of a sales promotion for customers.
(4 marks)
(e) Briefly describe 4 different examples of sales promotions.
(4 marks)

(Total 20 marks)

3025/3/09/MA Page 20 of 23
MODEL ANSWER TO QUESTION 9

(a) Sales promotion is defined as:

“ A range of short term tactical marketing techniques designed to add value to a product or service in
order to achieve sales and marketing objectives.”

(b) Any 6 answers from the following


ƒ to assist a new product launch
ƒ to gain increased sales
ƒ to increase market share
ƒ to reduce manufacturer's stocks
ƒ to avoid a price war
ƒ to combat a competitors new product entry into the market
ƒ in retaliation to a competitor's promotion
ƒ to encourage trial purchase
ƒ to persuade or tempt customers to act
ƒ to reduce stock levels by an end of season clearance
ƒ to promote sales out of season
ƒ to encourage brand switching
ƒ to stimulate the organisation’s cash flow.

(c) Any 4 from:


ƒ loss of profits when products are bought by good regular customers who would still buy at
full price with no offer
ƒ too many promotions can damage the brand image
ƒ too many promotions can result in the wrong corporate image being created
ƒ sales promotions cost money and can even end up with the organisation making a loss
ƒ brand switchers will only buy whilst promotion lasts and then desert the product
ƒ larger competitors could retaliate with a superior promotion.

(d) Any 4 from:


ƒ they provide added value
ƒ reduce financial risk when trying a new product
ƒ allow for stocking up of a regular purchase item
ƒ free bonus products
ƒ obtain goods at lower prices than they would normally pay.

(e) Any 4 of the following:


ƒ money off coupons:
ƒ extra product: multiple packs
ƒ free or reduced price for a multi-buy product (BOGOF – BTGT)
ƒ competitions
ƒ premium give aways
ƒ token offers
ƒ simple cash discount
ƒ happy hours.

3025/3/09/MA Page 21 of 23
QUESTION 10

Briefly explain the following terms used in marketing:

(a) Sales plan (2 marks)


(b) Market audit (2 marks)
(c) Positioning (2 marks)
(d) SMART (2 marks)
(e) BCG Matrix (2 marks)
(f) Variable costs (2 marks)
(g) After marketing (2 marks)
(h) Joint venture (2 marks)
(i) 24/7 trading (2 marks)
(j) Loss leader. (2 marks)

(Total 20 marks)

3025/3/09/MA Page 22 of 23
MODEL ANSWER TO QUESTION 10
(a) Sales plan
This is a summary of the proposed, planned or forecasted sales in monetary values for an
organisation for a specified period, usually one year. A total “master” figure is obtained for the
organisation. This total figure is used in the organisation’s master budget. It can be compiled in
numerous ways to reflect territory, product or personal sales targets.

(b) Market audit


A market audit is a comprehensive, systematic, independent and periodic examination of an
Organisation’s marketing environment, objectives, strategies and activities with a view to
determining problem areas and opportunities and recommending a plan of action to improve the
company’s marketing performance.

(c) Positioning
Positioning is defined as creating a concept within the minds of an identified target audience. It is
how the target audience perceive an organisation’s products or services in comparison to similar
offerings from competitors.

(d) SMART
This is the acronym that is applied to the formation of objectives. It stands for Specific,
Measurable, Achievable, Realistic and Timed.

(e) BCG Matrix


This refers to the Boston Consulting Group Matrix. This matrix compares market growth with
market share and uses such categories as Problem Child, Stars, Cash Cows and Dogs. It is
comparable to the four stages of the Product Life Cycle.

(f) Variable costs


These are the costs incurred by an organisation in direct proportion to the level of production.
Such items as raw materials, labour are in this category for the more you produce, the more raw
materials and labour you would need.

(g) After marketing


After marketing is all those actions that take place after a sale has been completed to retain the
customer. They are carried out to ensure complete satisfaction for the customer, in the hope of
building up customer loyalty and gaining repeat purchases from them.

(h) Joint venture


This refers to the act of two (or more) organisations agreeing to co-operate together resulting in
the formation of a new independent company. Each partner in the agreement will have a share of
the assets and control in the new company.

(i) 24/7 trading


This refers to the ability of Internet selling operations to be available 24 hours a day - seven days
a week. As the Internet is global and time differences between nations varying by many hours –
this allows anyone in the world to purchase from a website at a time that is convenient to them.

(j) Loss leader


This is a sales promotion tactic of selling a good at break-even price (or maybe even below cost)
in the hope that it will lure customers into buying other goods.

3025/3/09/MA Page 23 of 23
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