2010/11 D I S T A N C E L E A R N I N G M B A

Marketing
STUDY BOOK

Study Book: Marketing

Copyright © University of Bradford 2005, 2007, 2009, 2010, 2011 First published 2005 Second edition 2007 Third edition 2009 Fourth edition 2010 Fifth edition 2011 MBAMUK_SB_5_2011 University of Bradford Richmond Road Bradford BD7 1DP BRADFORD UNIVERSITY SCHOOL OF MANAGEMENT Director of Studies Jonathan Muir Senior Administrator Linda Moore Module Development Team Sally Burrows, Monique Cuthbert, Kyoko Fukukawa Keith Hanning, David Jobber Julian Rawel, Christine Swales Module Leader Keith Hanning Bradford University School of Management Emm Lane Bradford BD9 4JL Tel: 01274 234374 Fax: 01274 232311 Email: m.j.hayes2@bradford.ac.uk Website: http://www.bradford.ac.uk/management This Study Book may not be sold, hired out or reproduced in part or in whole in any form or by any means whatsoever without the University’s prior consent in writing.

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Bradford MBA

Contents
Introduction to the Module Your module leader Module aims and objectives Learning and study approach Assessment Assignment Unit 1: Introduction to Marketing Introduction Objectives The buyer–seller relationship Marketing as an attitude of mind Marketing creates customer value Marketing approaches The marketing mix Summary Powerpoint and lecture audio Additional reading and resources References/bibliography Unit 2: Marketing Planning Introduction Objectives Planning or strategy Marketing audit and strategic focus Marketing objective Implementing the marketing plan Marketing organisation Marketing control Summary Powerpoint and lecture audio Additional reading and resources 7   7   7   7   11   11   15   15   16   16   18   20   21   21   24   25   26   26   27   27   27   28   31   31   32   34   34   35   36   37  

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Study Book: Marketing Unit 3: Marketing Environment and Auditing Introduction Objectives The marketing audit The marketing environment Internal analysis Bringing it all together – SWOT analysis Summary Powerpoint and lecture audio Additional reading and resources References/bibliography Unit 4: Understanding the Market Introduction Objectives Understanding the customer How do consumers make decisions? How do organisations buy? Market segmentation Segmentation process Target marketing Positioning Summary Powerpoint and lecture audio References/bibliography Unit 5: Marketing Research Introduction Objectives Marketing reseach Type of marketing research The reseach process Data collection Applying research Summary Powerpoint and lecture audio Additional reading and resources References/bibliography 4   39   39   40   40   40   43   44   45   46   47   47   49   49   50   50   50   54   56   60   64   64   65   66   68   69   69   69   70   71   72   73   74   75   76   77   77   Bradford MBA .

Contents Unit 6: Product/Service and Branding Introduction Objectives Product Service Product analysis Branding Brand extension and stretching Three product/service marketing strategy models New product development Summary Powerpoint and lecture audio Additional reading and resources References/bibliography Unit 7: Pricing and Distribution Introduction Objectives Price Pricing methods Pricing strategy Place: type of distribution Who uses distributors? Summary Powerpoint and lecture audio Additional reading and resources References/bibliography Unit 8: Marketing Communications Introduction Objectives Development of marketing communications Defining marketing communications The communication process Communications planning Marketing communications as part of marketing strategy Message development Evaluating effectiveness Bradford MBA 79   79   79   80   81   85   87   88   90   92   93   93   95   95   97   97   98   98   100   102   105   106   109   110   111   112   113   113   114   114   115   117   120   120   125   129   5 .

Study Book: Marketing Summary Powerpoint and lecture audio Additional reading and resources References/bibliography Unit 9: Revision Introduction Objectives Marketing plan Business mission External marketing audit Internal marketing audit SWOT analysis Marketing objectives Core strategy Marketing mix decisions Budget Organisation and implementaiton Control Summary References/bibliography Appendix Model Answers to Activities Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6 Unit 7 Unit 8 130   131   133   133   135   135   135   136   137   137   138   139   140   140   141   142   142   143   144   144   145   145   147   148   154   156   157   158   160   6   Bradford MBA .

and refine analytical. however. most recently with Masco Corp (USA).. Keith is Director of Studies for the undergraduate collaborative programme for the School of Management delivered in the Institute for Integrated Learning in Management (IILM) in India (New Delhi and Gurgaon). develop the ability to apply these concepts and principles to practical marketing situations. problem-solving and creative skills.Introduction to the Module YOUR MODULE LEADER Keith Hanning Before he joined the School of Management. this module is designed to enable you to:  build knowledge and understanding of the key concepts and principles of marketing. In particular. He is also Director of Studies for the School's executive education programme with Accent Group. sales and general management positions in the manufacturing industry.. He also taught at Huddersfield University and Bradford College and on a number of professional and management development courses including those of the Chartered Institute of Marketing. Keith held marketing. MODULE AIMS AND OBJECTIVES The module is to provide you with a comprehensive introduction to contemporary marketing theory and practice. It is strongly advised that you progress through the module studying 1 unit per week. Bradford MBA 7 .   LEARNING AND STUDY APPROACH Approach to studying the Marketing module As a distance learning/part time student you will be studying this module at a time and place that fits around your other commitments...

Simply reading the textbook and the Study Book will not be sufficient.g. McGraw-Hill. noting particularly the key issues. By following this study regime you will leave yourself plenty of time to recuperate and prepare for the assessment. You should also make the effort to read the various cases and vignettes interspersed throughout the textbook. Textbook You should have received a copy of the module textbook: Principles and Practice of Marketing (2010). you will find that the issues addressed on your tutor group discussion board. Model answers to all the activities are provided in the Appendix. David Jobber. It is strongly advised that you follow the prompts provided and engage with all the materials. you will be directed to read specific pages. 6th edition. academic and nonacademic papers). This textbook forms an essential and central part of your study. a case study or an academic paper) and note down some key points/issues then you are strongly advised to do so. 8   Bradford MBA . If you follow the study pattern suggested (completing 1 unit per week) you will finish the final unit of this module on (or around) 28th March 2011. or to look at cases or figures featured in the textbook. The materials include: Study Book activities and case studies As you progress through the Study Book you will be asked to complete a series of short activities. In order to develop your understanding of Marketing you will be prompted to complete a number of exercises and consult a variety of information sources (e. As such if the Study Book advises you to consult additional materials (e.Study Book: Marketing If you do this. You may also find the review sections at the end of each chapter useful in checking your knowledge and understanding of the chapter content. audio of on-site lectures.g. Module Study Book This Study Book will provide you with an insight into the subject of Marketing. At various points in the units. You must read the chapters or the page references as specified at the beginning of each unit. Completion of these activities is absolutely essential if you are to develop a good understanding of Marketing. With this in mind you should aim to start your studies the week commencing 17th of January 2011. during the on-line lectures (if available) and the live online tutorials will correspond closely to your own studies. This is when the Blackboard materials for this module will be made available.

provide model answers (if appropriate) and close the discussion. thoughts and comments on the Discussion Board. Elluminate live tutorial Throughout the duration of the module you will be required to attend four live on-line Marketing tutorials conducted by your module tutor. your module tutor will summarise the comments/issues raised.Introduction to the Module Lecture materials Audio from the Marketing lectures provided to full-time on-site students and the corresponding power point slides are available to distance learning/part time students (see the Marketing Blackboard site and click on the menu item entitled: ‘Power Point & Lecture Audio’). real-time discussions on key issues and concepts with other students and academics. Each week a different issue (and the related tasks) will be introduced in the Study Book.icio.us resources can be found under ‘External Links’ in Blackboard. I would strongly advise that you follow this instruction. These on-line tutorials will allow you to experience something close to a real on-site tutorial with each tutorial session providing you with an opportunity to engage in detailed. Throughout the Study Book you will be advised to listen to the audio and consult the power point slides at key moments.us materials available via the Marketing Blackboard site provide you with a collection of highly contemporary writings on key marketing issues.us The Del.icio. I strongly advise that you use this resource in order to develop your understanding of contemporary marketing issues.icio. The subject and materials for each live on-line tutorial are outlined in the appropriate unit of the Study Book. You will be required to answer the corresponding questions on the Discussion Board for you and your tutorial group to consider. please note that your Bradford MBA 9 . The Discussion Board The Discussion Board is a tool in Blackboard which allows you to engage in a discussion on a particular issue(s) regardless of your location. At the end of the discussion. It is vital that you engage with these discussions and post your ideas. However. Your tutor will closely monitor the discussions and provide feedback throughout. Del. The discussions will take place weekly and each discussion will last for 5 days. The Del. By engaging in the discussions you will start to learn from other students and gain alternative perspectives on the issues being addressed.

As a distance learning student you will be provided with an opportunity to submit two pieces of work that your module tutor will assess and give you detailed feedback.g. For more information on how to access and become involved in the Atrium go to the ‘How To’ guidelines available on Blackboard Internet resources The world wide web provides a very useful resource for you. You will also have access to a comprehensive bank of multiple choice questions in Blackboard allowing you to monitor your understanding and get instant feedback on your understanding and progress. Sites well worth checking out include: http://www. Often this occurs within tutorials where students can answer questions and can gain feedback on their understanding of a particular idea/concept. where you can find a relevant article on a particular subject) as well as more personal issues (e.Study Book: Marketing module tutor will provide exact details of the on-line tutorial sessions (e.g. Each week your module leader will visit the Atrium and add to the discussion by posting relevant materials and/or comments.uk (The Chartered Institute of Marketing) 10   Bradford MBA . particular websites will prove useful when you want to analyse business organisations or when you wish to read informed opinion regarding marketing issues. As such you may be directed towards certain web-based resources as you read through the Study Book. For more information on how to access and become involved in the on-line tutorials go to the ‘How To’ guidelines available on Blackboard Formative Assessment On-site students receive feedback all the time on their progress and understanding.g.co.cim. time/date) once the module has commenced. The Atrium The Atrium is an on-line social space which allows you to discuss general issues to do with your studies (e. comments on world events. Further to this. The two opportunities for formative feedback relate to issues discussed in Units 4 and 7 (see relevant units in the Study Book for further details). Please note: none of your answers to these formative tasks will count toward the final grade – they are optional exercises that allow you to test (and receive feedback on) your understanding of key concepts/theories and ideas. photographs you wish to share with other students).

font size 12.msi. Please note the appendices must not exceed 15 pages. presenting a SWOT analysis in a table without adequate discussions will not be credit worthy. Time New Roman. Assignment task The assignment consists of the following two tasks. insightful and balanced way.Introduction to the Module http://www. 1. have worked in the past. table of contents. for example. Once your assignment has been marked. or perhaps would like to work in the future.000 words) – to prepare a marketing plan for an organisation of your choice. and to critically reflect the process you have gone through during the development of your assignment. Marketing Plan (approximately 3. or you can choose any organisation that particularly interests you.5 spacing.marketingpower. ASSIGNMENT The assignment should be submitted in the form of a report and should be typed or word-processed. Tables and figures are only an aid to the proceeding discussions. 1. it should comprise no more than 3.g. tables. footnotes. The organisation you choose can be where you are currently working.500 words. your view of the company’s current marketing activity / use of the marketing mix) and Bradford MBA 11 . The marketing plan should include the audit (e. ASSESSMENT The module is assessed by 100% individual assignment. you will receive written feedback from your tutor. Assignment aim The aim of the assignment is to demonstrate your understanding of a number of marketing concepts covered in the module and your ability to apply the concepts to current practices of organisations in a meaningful. references and appendices. not including front cover. diagrams.org/ (Marketing Science Institute) For further information on additional resources see the sections in Blackboard entitled ‘Additional Learning Materials’ and ‘External Links’. Thus.com (American Marketing Association) http://www.

Your reflexive account should provide a good balance between practical/process issues involved with the development of your marketing plan and the theoretical perspectives contained within the textbook and other module materials. Unit 9 – Revision. The reflective account is specifically aimed to draw links between textbook accounts of preparing a marketing plan and your own practical experiences of doing this in the current module. If any doubts regarding the suitability of your choice. you should contact your tutor to discuss the issue further. to reflect on activities and thoughts (for example – “Today I did … this led me to think about my assumptions … and the way I have …). Such a diary has several functions:   to record activities undertaken. These diary entries are not assessed – it is for your own personal use in developing your reflexive account. A template for a marketing plan and detailed notes of what should be included in each section can be found in Unit 9 of the Study Book. in order to address the following issues in your reflexive account:   What happened? What were your reactions and feelings? Bradford MBA 12   .g. STP and design of the marketing mix) that you propose are appropriate in the future. The reflexive account should include elements on:  An assessment of what aspects of marketing plan development process worked well and what was problematic. To do the above. What you have learnt from the assignment in relation to the role of marketers in an organisation and in a society. 2. you may ask a number of questions reflecting on your own experiences and learning. Reflexive account (approximately 500 words) – to write a reflexive account of your experiences and learning during the preparation of the above marketing plan. The reflexive account provides you with an opportunity to reflect on the project you have undertaken. includes key issues and questions need to be addressed in the assignment report.. we encourage each person to keep a personal diary while completing the coursework. Reflections on yourself as a marketer (whose inclination is to put their attention to the needs of the customer).   As a way of approaching this part of the coursework. or a specific territory rather than on one major global corporation.Study Book: Marketing marketing recommendations (e. You are advised to focus on a division of a company.

Navigate to your file and click Open. The next page gives you the opportunity to review your submission. Do not include your name in the title.g.Introduction to the Module  What was good/bad about the experience? What were the positive/negative aspects? What general conclusions can you come to from this e. your style of working and approach to learning? What will you do differently in this type of situation in the future?    You are encouraged to begin writing your research diaries as soon as you start your assignment. You will then be emailed a receipt to your university email address which will include your assignment identification reference.g. For further information on how to submit your assignments using Turnitin go to the ‘How To’ section of Blackboard (Under ‘My Organizations’) and review the materials: ‘How to Submit an Assignment Electronically’. about the role of marketing in an organisation and in society? What specific conclusions can you come to from this e. The First and Last name boxes are automatically filled. scroll to the bottom of the page and click Submit. Wait while your file is uploaded to the server.g. Check that your details are correct. This should be the module title and your UB number e. Bradford MBA 13 . Click on this link. Click Upload. At this point you have not submitted and can return to the submission page to start again if you so wish. All assignments will be submitted electronically via the module Blackboard site. Submitting the assignment All assignments must be submitted as a single file. go to ‘Assessment’ → ‘Assignment Submission’. Click the Browse button to upload your file. You should then see a link entitled: ‘View/Complete’. You will then be taken to a submission page. If you are happy with that this is the correct paper and want to continue to submit. ‘Marketing 10001234’. about you as a marketer. In the submission title box provide the title for your submission.

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Marketing Multiple Choice Questions.2 (see ‘Video Resources. Unit 1 – An Introduction to Marketing’ in Blackboard) Other: 1. We can also regard it as a business function and process concerned with the set of activities necessary to obtain and service demand for an organisation’s products.’ We can think of marketing as a philosophy that underpins and drives the activities of an organisation. Unit 1 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio.6 (see ‘Formative Exercises. Unit 1 Multiple Choice Questions – Activity 1.1 (see ‘Video Resources. Unit 1 Discussion Board – Activity 1. Unit 1 – An Introduction to Marketing’ in Blackboard) INTRODUCTION Reading: Jobber. In this first unit.7 (see Case 2 in Jobber. Chapter 1 Key audio/video: 1. ‘H&M Gets Hotter’) 3. Jobber. The working definition of marketing that we use expresses this idea neatly: ‘The achievement of corporate goals through meeting and exceeding customer needs better than the competition. Unit 1 – An Introduction to Marketing’ in Blackboard) 2. ‘Philip Kotler on Marketing Strategy’ – Activity 1. We examine this in detail in later units. we provide an overview of marketing by looking at the complexity of delivering an ever-changing set of products and services Bradford MBA 15 . pages 33–36. Chapter 1 The concept and practice of marketing is concerned with putting the customer first. Unit 1 – Professor Jobber’s Introduction’ in Blackboard) 2. ‘Introducing the Module: Professor David Jobber – Activity 1.Unit 1: Introduction to Marketing Key reading: 1. All elements of marketing serve to determine the approach of organisations and ultimately their business performance.

meet and satisfy. you should be able to:     define the marketing concept define marketing as a business orientation and as a business activity distinguish between different business orientations recognise the management issues involved in creating an integrated marketing driven organisation define what is meant by the Marketing Mix and understand how the elements of the mix from an overall marketing management process  THE BUYER–SELLER RELATIONSHIP In describing what happens between the production and acquisition by a customer of a product.000 people. Few large cities existed – even London in 1780 only had a population of 300. Up to the late 18th century. 16   Bradford MBA . Much of the actual selling was mediated by direct contact between seller and buyer. OBJECTIVES By the end of this unit.Study Book: Marketing within a business context that is broad. By watching this video you will gain an initial understanding of the Marketing discipline and the requirements of the module you are about to study. Europe was primarily an agrarian economy with a widespread population living in small towns and villages. which manages the relationship between the organisation and the customer. characterised by direct contact between sellers and buyers. This process is now a highly differentiated and complex function within the organisation. we look at the philosophy of marketing and marketing orientation and the role of marketing within modern organisations.1 – WATCH AND LEARN Go to the Marketing Blackboard page. Click on this and you will see a video entitled: ’Introducing the Module: Professor David Jobber’. Click on the menu item entitled ‘Video Resources’. little changing community whose needs were easy to measure. More specifically. marketing has developed from the idea of a simple exchange process. good or service. On the left hand side you will see a row of menu items you can click on. You should then see a folder named ‘Unit 1 – An Introduction to Marketing’. Production of goods and services was on a small scale for local use and directed at a stable. ACTIVITY 1. Goods were typically sold or bartered for within the locality in which they were made. subject to economic fluctuations and has to deal with volatile consumer tastes and demands.

marketing as a discipline will continue to evolve in order to provide Bradford MBA 17 . the mechanisation of production began to bring a reliable. Having satisfied local needs. medicines and foodstuffs to working people. choice. Many of us have far more consumables and goods than we can possibly need. For example. In the context of these beginnings of a truly international market. and towns grew. With increased disposable income.Unit 1: Introduction to Marketing It is easy to forget that this simple exchange form of ‘marketing’ still exists today. technological and economic environments have forced managers in all sectors of business activity to consider the broader factors which shape their markets and influence consumer choice. No doubt. Manufacturers needed to find ways to differentiate their product from that of their competitors. with the exception of pre-Republican France that began industrialisation in the early 19th century. social. Advertising was used as a means of making the customer aware of product availability and the benefits on offer. groceries started to sell basic products such as soaps. in the so-called ‘developed’ world. Today. Allied to this growth was the birth of large manufacturing companies such as Ford and Lever Brothers. consumers became more sophisticated and manufacturers competed to provide a greater choice than staples for basic needs. for example in small agricultural market communities that hold livestock and produce markets. goods could be marketed to a wide range of national and international customers. Many brand leaders established during this period are still market leaders today. Increased competition and fast-changing political. Development of mass production techniques demanded stimulation of mass consumption. in many cases. Even bartering is widely carried out in developing countries. In the mid-1800s. Companies such as Fry and Pears packaged their products to protect and preserve the goods. so marketers have to devise more and more sophisticated mechanisms to differentiate the ‘value’ of their offerings from those of their competitors. In recent years. marketing has developed as a management discipline in its own right. in most of mainland Europe. standard and quickly produced diversity of goods. practical marketing techniques initially developed for consumer goods such as soap and foodstuffs have subsequently been applied and adapted for industrial goods and services in the private and public sector in response to competitive pressures. Kellogg’s Cornflakes celebrated its centenary (100 years) in 1998. the buyer–seller relationship became more distanced. Retailers set up branches all over the UK as the idea took hold. but this also gave them an important opportunity to establish quality and value in the minds of the customer by use of a brand. encouraged by the co-operative movement. From the late 18th century. In this context. outweighs our ability to discriminate purely on price and quality. These organisations engaged in mass production for home and overseas markets.

Contrast this to Canon’s development of the digital camera and Kodak’s tardy response. MARKETING AS AN ATTITUDE OF MIND The marketing concept suggests that organisations need to focus their attention on the needs of the customer. Organisations which are truly marketing oriented are outward-looking. The concentration on production capability and costs (how much can we make and how will we sell it?) gives rise to an inward-looking business philosophy.3. the organisation creates product or service solutions that serve and satisfy the needs of current and potential customers better than the competition.2 and 1. not merely the recipient. The customer is relegated to last place – as someone to be overcome with aggressive sales methods. actively seeking to understand the customers and their needs before making decisions about which markets and which groups of customers to serve.Study Book: Marketing practical frameworks to help managers make appropriate decisions in a complex environment. Look at Figures 1. 18   Bradford MBA . The customer is the starting point for business activity. Consider the situation with cameras: In the 1990s. easy-to-load cameras which provide a range of formats but it was a full year before Canon and other camera manufacturers could respond. in the simplest form. Not all organisations are the same.2 shows. Some are market driven and some are focused more on the production of goods for a diverse and widely dispersed customer base – a base that need not necessarily include the general public. then an organisation that is marketing orientated will be aware. Having identified potential market opportunities. If customer needs change.3 on page 5 of the textbook. of course. The productionorientated model in Figure 1. This can provide a significant competitive advantage over other suppliers who are not geared up to take immediate advantage of the situation. of that imminent or actual change. Kodak launched its APS system to meet the demands for simple. Contrast this basic model with that of the marketing-orientated model in Figure 1. through its research function. the way that many industries have thought of ‘marketing’. the key difference here is the level of responsiveness to the customer and their needs. Marketing in this type of organisation is largely confined to a support function concerned with promoting and selling the product on offer.

4 on page 9 of the textbook when assessing the success of a particular business philosophy.1 in Jobber (page 8) may help you decide – Is business philosophy as clear cut as this? Describe the function of marketing in your chosen organisation. You should then see a folder named ‘Unit 1 – Introduction to Marketing’. What is the business purpose of that marketing function? Consider the organisation in terms of the efficiency/effectiveness quadrant in Figure 1. On the left hand side you will see a row of menu items you can click on. Click on this and you will see a video entitled: ‘Philip Kotler on Marketing Strategy’. drives it to exploit latent and undeveloped opportunities. the philosophy of a customer-driven organisation.3 – STOP AND THINK Consider your own organisation or an organisation with which you are familiar.2 – WATCH AND LEARN Go to the Marketing Blackboard page. By contrast. all personnel in an organisation understand where their company is going and how they might help it to get there regardless of whether their function is or is not customer facing. which of the two business philosophies – ‘production-oriented’ or ‘customer driven’ – prevails? The checklist in Table 1. By watching the video you will gain an understanding of current issues surrounding marketing strategy. production-orientated management becomes focussed on unit cost of an often quite limited range of product or service in order to achieve organisational objectives. Click on the menu item entitled ‘Video Resources’. ACTIVITY 1. featuring Philip Kotler from Northwestern University discussing marketing strategy at the London Business Forum. In the first type of organisation. The organisation goes where customers’ needs are detected and seeks to fulfil those needs by being responsive to the customers. Of equal importance.Unit 1: Introduction to Marketing Focus of effort There is also the issue of management focus in the two types of organisation. Bradford MBA 19 . which adopts a marketing-orientated stance in the world market. ACTIVITY 1. In your view.

how the customer defines value!) is one we will return to in Unit 3. uncertainty about making the right choice. cost of making the wrong decision). since once we can understand what drives customers to buy.3 – Stop and Think Answer: MARKETING CREATES CUSTOMER VALUE Having introduced the idea of matching what we can produce to customer need.Study Book: Marketing Activity 1. we can begin to look at issues in the wider marketing environment. growth and ‘success’. However. let us now return to the idea of a marketing philosophy driven by a customer-focused marketing orientation. the key ideas of perceived benefit and perceived sacrifice are important to explore now. We can identify a number of value parameters:   meet and exceed customer expectation – not just on price in a service sector industry – provide a quality environment in which customers feel valued and comfortable in a manufacturing sector setting – provide a customer service which exceeds that of the competition. The difficult problem of how we define customer ‘value’ (or more correctly. How do we define customer value? Customer value = Perceived benefits – perceived sacrifice Or we can put this another way: the gain (acquisition of the product or service) must outweigh the pain of acquisition (cost. The idea we touched on above of a ‘successful’ company and that of ‘profit’. difficulty of obtaining the item. links directly with the idea of customer ‘value’ and organisational ‘values’. service. We can then begin to comprehend how organisational strategies built on evaluating and responding to the wider environment can ensure company survival.  20   Bradford MBA .

page 13.4 – READ AND LEARN Read the example of McDonald’s outlined in Jobber. High performing companies are (among other factors) more committed to marketing research and tend to emphasise market share as a way of evaluating marketing performance. a company develops its Marketing Mix containing four main elements:     product price promotion place. They form the backbone of marketing activity. From your own experience of entering a McDonald’s restaurant. Make sure that you understand the key concepts of ‘perceived benefit’ and ‘perceived sacrifice’. how do you personally rate McDonalds in terms of value? MARKETING APPROACHES Now we look at how the organisation sees and promulgates its marketing strategy through its marketing activities and approach. Hooley and Lynch (1985) teased out the marketing characteristics of high and low performing companies (based on reported profits). The way marketing executives in the study perceived and articulated the marketing function through their marketing activities can be seen in their model of marketing approaches. Let us examine each one in turn: Product (or service) The product or service decision is fairly self-evident.Unit 1: Introduction to Marketing As a company. ACTIVITY 1. In a study of 1. THE MARKETING MIX Based on an understanding of its customers. you need to match your customers’ values and beliefs and reflect them in your product range and in the advertising and promotion that surrounds it. Bradford MBA 21 . There is no doubt that McDonald’s is a globally ‘successful’ company.700 senior marketing executives. marketers must conduct research into the products that customers actually want or need.

promotion is only one part of marketing and covers a range of marketing communications from advertising to public 22   Bradford MBA . However. Supermarkets in turn can offer ‘loss leader’ items to shoppers to entice them into buying other non-discounted goods. there was a rise of 17% in the growth of small businesses. More leisure meant people were travelling for social reasons. We look in detail at price in Unit 7. for example. Procter and Gamble. they developed a large. The marketing environment in terms of prices offered by the competition is a key factor which marketers setting prices must take into account. boxy car designed almost as an extension of a social living and business space and set the scene for the proliferation of people carriers. often offer preferential rates to their large supermarket customers over those offered to small corner shops. the Renault Espace people carrier launched in 1989 in the UK. for example. Suppliers. Renault got it right. The price of oil had remained stable for the past 8 years.Study Book: Marketing The skill of the marketer is in commissioning the right kind of research and being able to analyse the often-conflicting ‘evidence’ which comes out of that research. Supermarkets with traditionally narrow profit margins over a large range of goods are particularly sensitive to pricing both in terms of what they charge for a product and how much they pay their suppliers. this meant that the function and place of the car in society was changing (or indeed had changed). Promotion Promotion is often perceived by the general public as being synonymous with ‘marketing’. Pricing and price setting is a sensitive area for marketers where price levels are in part determined by the manufacturing and distribution costs over which they do not necessarily have complete control. Disparate information perhaps. Relative stability in petrol prices meant that buyers weren’t necessarily seduced by ‘economy’. Consider. We look in detail at product and service management in Unit 6. but that those smallish families had more leisure time. Social research showed that people weren’t having bigger families. In the late 1980s in Britain. Price Price decisions can affect the perceived value of a product or service and is a key determinant in the value equation we read about earlier – benefit of acquisition versus the sacrifice required by the customer. but to a skilled marketing department at Renault. small business people were using their vehicles for business purposes.

In terms of promotional advantage over the competition. however. Consider. News of shortages was broadcast on all major UK television channels with pictures of queuing at major stores. offer it at precisely the right price and promote it in a sensitive and well-defined way. consider the relevance of the Marketing Mix to this Bradford MBA 23 .Unit 1: Introduction to Marketing relations. the success of a new product launch depends on the manufacturer’s ability to negotiate and secure shelf space in the outlets of increasingly powerful retailers. ACTIVITY 1. In many cases. for example. limited availability can prove to be an advantage. Generally. the launch of Tellytubbies dolls in the UK in Christmas 1997. Three other elements of the Marketing Mix – People. Place You develop a great product or a superb service. for example. If you are working in the voluntary and not-for-profit sector. it needs to deliver the benefits which customers seek and to satisfy their underlying needs and wants. We look at distribution in detail in Unit 7. How should goods and services be brought to the attention of the customer? How will the target audience be made aware of the product or service’s features and benefits? Should they be advertised using mass media or should there be an element of personal selling? Will publicity alone help sales? Will customers convert their interest into purchase? We examine these issues in detail in Unit 8. However. Sometimes. Overall. We could argue that the fact that demand outstripped supply was a marketing planning decision to increase long-term customer demand. for the Marketing Mix to be successful it should be well blended to create competitive advantage. Process and Physical Evidence – sometimes known as the ‘Services Marketing Mix’ should also be taken into account. becoming less important as virtual shelf space via the internet takes a more prominent distribution position. Demand soared and Tellytubbies dolls became one of the highest selling Christmas toys of 1997. The choice of distribution outlets for goods and services can also affect the image of the brand.5 – STOP AND THINK Consider the value of the Marketing Mix to your understanding of your own organisation’s marketing activities. the Tellytubbies campaign scored highly. This is where the importance of the final part of the Marketing Mix becomes clear. We discuss these in Unit 6. Note the seasonal introduction of this product. it can all be wasted effort if the goods are not in the right place for the customer to make the purchase. Physical shelf space is however.

You should note the following key points:   Marketing historically is a human activity concerned with exchange Marketing ideas have developed. How can a model so dependent on the profit motive have relevance to organisations set up with different organisational objectives? Activity 1. function and a process Marketing planning is linked with organisational objectives and structures Marketing is a key business activity tied to organisational effectiveness and efficiency      24   Bradford MBA . non-profit or profit-motivated sector of the economy. we can see that the marketing function has a central role in the success and survival of any organisation whether it is in the service.5 – Stop and Think Answer: SUMMARY Reading: Summary/Review in Jobber. Marketing ensures that the right product or service is developed and made accessible to the right customers at a price they are willing to pay. especially in the last 50 years. to reflect what is now a highly complex and differentiated organisational activity Contemporary marketing is about relationship management Marketing is customer-focussed Marketing is a business philosophy.Study Book: Marketing sector. various methods of reaching audiences and key inputs to make in the design of the marketing plan. pages 25–27 From our overview. Marketers have many tools to draw on in that delivery process including research techniques which we will look at in the next unit.

6 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit.Unit 1: Introduction to Marketing   Good marketing gives good value to customers The Marketing Mix (4Ps) should be blended to match corporate resources and customer needs and to create competitive advantage POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. However. In the same folder. Question 1: To what extent is H&M marketing oriented? Question 2: What is the basis of the customer value H&M provides for its customers? Question 3: Do you consider the marketing of disposal clothes contrary to societal welfare? Bradford MBA 25 . Click on the menu item entitled ‘Formative Exercise’. You should see a folder named ‘Unit 1 – Introduction to Marketing’. Click on the button entitled ‘PowerPoint and Lecture Audio’. Click on this and then click on ‘Unit 1 – An Introduction to Marketing – MCQs’ and work through the questions provided. On the left hand side you will see a row of menu items you can click on. On the left hand side you will see a row of buttons you can click on. there may be discrepancies between some of the issues addressed in this unit and the lecture. Click on this and you will see an audio entitled: ‘Unit 1 Lecture Audio’. In order to do so go to the Marketing Blackboard page. Listen to the audio and consult the lecture slides at the same time. ACTIVITY 1.7 – DISCUSSION BOARD Complete Case 2 ‘H&M gets Hotter’ (Jobber. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. The Audio and Powerpoint slides cover the main topics in this unit. ACTIVITY 1. since the materials are specially designed for the on-site MBA programme at Bradford. Please focus on the areas that are applicable to/have been discussed in this unit of the DL MBA Marketing module. you also click on ‘Unit 1 Lecture Powerpoint Slides’. pages 33–36) and post your answers to the following questions on your tutor group Discussion Board (your tutor group can be found under ‘Groups’ in Blackboard).

You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 1 An Introduction to Marketing’. Carpenter and Sherry (2006) and Verhoef and Leeflang (2009). Gebhardt. 65–74. REFERENCES/BIBLIOGRAPHY Hooley G J and Lynch J E (1985) ‘Marketing lessons from UK’s high-flying companies’. Click on the menu item entitled ‘Additional Learning Materials’. 26   Bradford MBA . Click on this and you will see two academic papers by Gebhardt. Journal of Marketing Management. Carpenter and Sherry (2006) paper presents a conceptual model to explain how firms create a market orientation. relating it to market orientation and firm performance. Verhoef and Leeflang (2009) paper provide a fresh look at the antecedents and consequences of the marketing department’s influence within the firm. On the left hand side you will see a row of menu items you can click on. 1(1).Study Book: Marketing ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 1 then go to the Marketing Blackboard page.

delivering and evaluating the success of strategy. Unit 2 – Marketing Planning’ in Blackboard) INTRODUCTION In this unit. In the first part of the unit. Unit 2 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. we concentrate on strategy and planning. implemented and controlled in a way to ensure that organisational business objectives can be met. Where appropriate. and apply them in given settings identify a range of marketing objectives 27   Bradford MBA . Live on-Line Tutorial’ in Blackboard) 4.Unit 2: Marketing Planning Key reading: 1.7 (see Jobber pages 30–32.5 (see ‘Formative Exercises. Unit 2 – Marketing Planning’ in Blackboard) 2. Unit 2 Discussion Board – Activity 2. Coca-Cola vs Pepsi case study) (See ‘Groups. Unit 2 Multiple Choice Questions – Activity 2. OBJECTIVES By the end of this unit. you should be able to:  detail the specific steps in developing a marketing plan. Unit 2 On-Line Live Tutorial – Activity 2. Jobber. and list the key topic headings in a marketing plan identify the elements of a marketing audit. we clarify these terms. ‘Strategic Marketing Planning’ – Activity 2. you will need to link to other units. Unit 2 – Marketing Planning’ in Blackboard) Other: 1. We explore how the ideas we are going to learn in this module can be brought together into a unified whole.6 ‘Marketing Metrics’ 3. Chapters 2 and 21 Key audio/video: 1. Marketing Multiple Choice Questions. Then we concentrate on marketing strategy and some useful tools for devising.4 (See ‘Video Resources.

You may be already familiar with some of the following ideas. others may be new.   PLANNING OR STRATEGY Before we look at marketing planning issues in detail it is important to recognise and discriminate between some key terms we use in our discussion of strategy and planning. You can think of these ideas in linear terms (Figure 2. the marketing planning process. Figure 2. however.1: The objectives tree company mission | organisational objectives | business objectives/business strategy | marketing objectives | marketing strategy | operational objectives Compare Figure 2.1).1.1 with that found in the textbook Figure 2. page 40. to see how the marketing planning process fits into broader organisational strategy. 28   Bradford MBA . make sure that you can distinguish between the following terms:       business mission business objectives organisational objectives strategic objectives strategic thrust core strategy They are interdependent ideas but differ in the role they play in the organisation and what they do to help the organisation meet the business goals.Study Book: Marketing  detail the role of portfolio models and the Ansoff matrix as frameworks for identifying and evaluating strategic options distinguish between strategy and tactics define appropriate measures of marketing control in given settings.

The role of strategic planning is to ensure that a plan is designed which will enable the organisation to meet business and organisational objectives (see Jobber. for example. ACTIVITY 2. marketing and organisational objectives? What is the level of inter-relatedness of these three top level objectives? Does it have a stated mission? If it does. deliver business objectives in line with the stated mission. while strategic management ensures that all parts of the business. pages 38-39). including marketing. which empowers staff and helps support the business objectives. try and compare this with its business objectives.1 – Stop and Think Answers: Marketing management is crucial to strategy because it is marketing which moderates and manages the interface between the company and its environment. When we distinguish between marketing planning and strategic planning. The aim is that organisations have correlating business and organisational objectives that are mutually supportive. What are the organisation's business.1 – STOP AND THINK Consider your own organisation or one that you are familiar with. Marketing planning is important to ensure that the Marketing Mix for the product or service matches customer need as well as looking for opportunities to market other products to new markets. For example. to cascade a cultural climate through the company. Company X may have the business objective of growing by 20% this year and an organisational objective which supports that. Bradford MBA 29 . the important factor to recognise is that marketing planning is part of broader strategic planning.Unit 2: Marketing Planning Marketing planning serves the objectives of the marketing strategy which in turn serves the objectives of the strategic plan. Activity 2.

Senior Management team. In a marketing manager’s ideal world. 30   Bradford MBA . many organisations exhibit elements of both typologies – it is rare to find an organisation in which all departments conform to one form of orientation. They would market one product only. have a forward-thinking marketing team who would devise a successful marketing strategy which would translate directly into a workable and achievable marketing plan. however things are seldom so simple. This is an example of how marketing must market itself internally within the organisation to ensure that its messages are understood and hopefully acted upon. every department would recognise. Chief Executive Officer or Management Committee (depending on the form of constitution taken by the organisation). which have a strong marketing team. even in organisations which overtly declare themselves to be customer driven. The organisation naturally would be run along lines of a successful marketing-orientated business. marketing management activities and the wider organisational strategic plan. own and support the objectives set for them by the marketingled Board of Directors. pages 4–6). implementing and controlling the mission statement. such as finance. It is also the role of marketing to inform the wider strategic plan of any need to change focus. You may want to look back at Unit 1 and remind yourself about the differences between a production-orientated organisation and a marketingorientated organisation (Jobber. business objectives. It can be a source of conflict in organisations. organisational objectives and overall strategy. In their internal structure. based on what marketing research finds about changes in the wider environment. for example. but where the strategic focus is drawn from another department. Marketing would be responsible for setting. companies would be easy places to run.Study Book: Marketing There are inevitably some marketing management decisions to be made to decide the direction and scope of the marketing plan and to keep it on target and a marketing strategy is often devised to include marketing planning ideas. In real life. there can be disagreements or gaps between various levels of the strategic and operational planning process and this may affect the success of the marketing plan. Conflict is also potentially present between marketing and sales departments who may share the same objectives but can interpret the path to those objectives quite differently. We look at this in more detail when we investigate marketing implementation and application.

Note Figure 2. let us see how they fit into the wider marketing planning process. In itself the audit is only of benefit if we use the information to make informed choices about our next move. objectives. planning issues centre around the marketing management areas of mix decisions (the 4 or 7 Ps). Marketing planning at the business level ends with marketing objectives – after that. it is the objectives which inform core strategy. page 42) defines a marketing audit as: “A systematic examination of a business’s marketing environment.1. we need to know where we already are. Bradford MBA 31 . Before we can decide where we would like to be.Unit 2: Marketing Planning MARKETING AUDIT AND STRATEGIC FOCUS In Unit 3 we introduce the concept of analysing the marketing environment and internal strengths and weaknesses of an organisation – the start of the marketing planning process. implementation and methods of control. It is clear that marketing teams need strategic thinkers to come up with the core strategy and organisers to process and deliver that strategy. Competitive advantage cannot be won without clear objectives or strategic thrust. strategies and activities with a view to identifying key strategic issues. up-to-date information is critical to the relevance and usefulness of the finished audit. pages 48–55.” MARKETING OBJECTIVE Before we focus on the two areas of objective setting for marketing. As you can see from the diagram. This whole planning process is predicated on some key planning questions:       Where are we now? How did we get there? Where are we heading? Where would we like to be? How do we get there? Are we on course? The first three questions form the backbone of the marketing audit. problem areas and opportunities. You can see here the link between the ideas we discuss in Unit 5 about marketing research. ‘The Rewards of Marketing Planning’. page 40 in the textbook the marketing planning process. Read from the heading ‘Marketing Objectives’ in Jobber. Jobber (2010. The need for accurate and complete.

page 775.3 on page 780 to see how people deal psychologically with change. pages 775–780 noting the relationship between strategy and implementation shown in Figure 21. how the strategy should be carried out. ACTIVITY 2. but by Richard Hooker writing in about 1580 and as quoted by Dr Johnson in the Preface to the English dictionary. even from worse to better. people and operational management.5 and read the explanatory text on pages 781–785 to help you identify possible change slowing and halting strategies.2.” Implementing marketing strategy involves the key management skills of resource. “Marketing strategy concerns the issues of what should happen and why it should happen.1. invites you to differentiate between aspects of strategy and implementation. Are you aware of any barriers or forms of resistance to the implementation of marketing ideas or solutions? Look at Figure 21. where things will happen and when action will take place. Check out the four ways of combining strategies and implementation shown in Figure 21. Jobber. Implementation focuses on actions: who is responsible for various activities. You may find it interesting to look at the transition curve in Figure 21.2 – STOP AND THINK Think about your own organisation or one with which you are familiar. 32   Bradford MBA .” This is not a quote by Drucker as you might think.Study Book: Marketing IMPLEMENTING THE MARKETING PLAN The implementation of anything new involves organisational change and more specifically change management strategies are required to overcome resistance and deliver performance. judiciously exercised in line with organisational concerns like culture and process these can help meet planning objectives. Read Jobber. We also look at issues concerning control and organisation of the implementation process and how. “Change is not made without inconvenience.

commitment and participation in change and business objectives are essential for the growth of a company that is dedicated to delivering a quick response to changing market conditions. One key tool in a marketing manager’s kit is the idea of the internal market and a way to drive change is to develop marketing responses to internal organisational challenges. Vignette 21. Does it work? How could it be developed? Does your organisation have a change master? If it does. This reading covers all the key aspects of internal marketing.2 – Stop and Think Answers: Read Jobber. Read Jobber. If you are a member of a large organisation you may have an internal newsletter or e-letter or even (like IBM) various glossy journals informing you about the business of the company and inviting your response.2. IBM see their staff as internal customers – and their support.Unit 2: Marketing Planning Activity 2. Developing implementation strategies. All worthwhile plans and strategies necessitate substantial human and organisational change inside companies. Internal marketing comes from services marketing – where staff are trained and motivated within the organisation and channels of communication are opened to allow dialogue about key organisational issues. While you are reading. page 795. Marketing managers need something practical to help think through strategies to drive change. If you don’t have an internal marketing strategy what would be the benefits of devising one? How would you decide on the focus of a strategy? Bradford MBA 33 . reflect on your own organisation’s internal marketing strategy. pages 785–795. then you may find it useful to identify the activities such a person undertakes which effect change.

www. Responsibilities are clear but as product ranges grow and the markets served increase. on page 797. This audit forms the starting point for the control process. Note the particular features of the product-based organisation and the market-centred organisation.com.Study Book: Marketing MARKETING ORGANISATION Let us now look at the marketing organisation and consider how companies organise their marketing function. Return to the model of the marketing planning process. you will see the relationship between the first three questions we posed earlier and the marketing audit. Jobber. Check Figure 21. This kind of conflict is very common in an organisation that is organised along functional lines. When considering the issues of strategic control. Other forms of marketing structures are possible which take more account of marketing objectives and customer requirements. The Objectives Tree (above). Does this look familiar to you? Many organisations are structured along similar functional lines. page 796 in Jobber. Read Jobber. No one has full responsibility for a particular product or market. Check its website. IBM follows a kind of matrix organisation. and Figure 2. to learn more about how it organises its sales and marketing. ‘Potential conflict between marketing and sales’.IBM.1.9. We have explored ideas of strategic objectives. Turn to Table 21. page 40. When you consider operational control you need to be clear about the three main ways. the whole structure is put under stress.1.1. Figure 2. pages 801–810 Make sure that you understand the differences between strategic control and operational control. MARKETING CONTROL Marketing control is the final part of the marketing planning process. to see the relationship between strategic objectives and operational management. Read the description on pages 795–798 of this type of organisation. In order to answer the final question of the six that we posed at the beginning of this unit – ‘Are we on course?’ – we need to have some control and evaluation mechanisms written into our plan. marketing objectives and operational and marketing planning options in some depth. Take particular note of the characteristics of the marketcentred organisation and the matrix organisation. 34   Bradford MBA .

Click on the menu item entitled ‘Video Resource’. 35      Bradford MBA . You should then see a folder named ‘Unit 2 – Marketing Planning’. On the left hand side you will see a row of menu items you can click on. The video provides some insights of how a process of developing a marketing plan can be managed. Activity 2. market share analysis. We need to understand the human/organisational issues surrounding good or poor marketing strategy implementation. Click on this and you will see a video entitled: ‘Strategic Marketing Planning’. SWOT help us to plan “where we are going”. sales analysis. SUMMARY We can summarise this unit by noting the following main issues:  Marketing planning is part of overall organisational or business planning.4 – WATCH AND LEARN Go to the Marketing Blackboard page. Marketing control measures help us to understand the effectiveness of our marketing activity. The Marketing Audit helps us to understand “where we are”.Unit 2: Marketing Planning ACTIVITY 2. Marketing strategies are a sub set of overall business strategies.3 – STOP AND THINK Explain what is meant by: Profitability analysis. and customer satisfaction measurement (this may be carried out within your own organisation).3 – Stop and Think Answers: ACTIVITY 2.

page 803–810 (‘Operational Control and the Use of Marketing Metrics). you also click on ‘Unit 2 Lecture Powerpoint Slides’. Click on the button entitled ‘PowerPoint and Lecture Audio’. there may be discrepancies between some of the issues addressed in this unit and the lecture. In order to do so go to the Marketing Blackboard page. On the left hand side you will see a row of menu items you can click on.5 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit. Read Case 1 Coca-Cola vs Pepsi (Jobber. Click on the menu item entitled ‘Formative Exercise’. You should see a folder named ‘Unit 2 – Marketing Planning’. What are the strengths and weakness of these metrics? ACTIVITY 2. On the left hand side you will see a row of buttons you can click on. Discuss the marketing metric used in your organisation. Click on this and you will see an audio entitled: ‘Unit 2 Lecture Audio’. ACTIVITY 2. since the materials are specially designed for the on-site MBA programme at Bradford. Click on this and then click on ‘Unit 2 – Marketing Planning – MCQs’ work through the questions provided. ACTIVITY 2. Listen to the audio and consult the lecture slides at the same time. However. You should then see a heading entitled ‘Marketing Multiple Choice Questions’.7 – ON-LINE LIVE TUTORIAL Jot down your answers to questions 1. In the same folder. 2 and 3 outlined below and be ready to discuss these issues during the on-line live tutorial (your module tutor will have posted details of when this tutorial will take place). The Audio and Powerpoint slides cover the main topics in this unit.Study Book: Marketing POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page.6 – DISCUSSION BOARD Read Jobber. Please focus on the areas that are applicable to/have been discussed in this unit of the DL MBA Marketing module. If you are unsure about how to access the on-line tutorial using the Elluminate software go to the ‘How To’ guidelines in Blackboard for further instruction. pages 30–32) 36   Bradford MBA .

Bradford MBA 37 . European Journal of Marketing. 38. Click on this and you will see: Shaw. You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 2 Marketing Planning’. does PepsiCo’s greater diversification give the company over Coca-Cola? Question 3: Assess Coca-Cola’s part-ownership of innocent drinks from the point of view of both companies. Click on the menu item entitled ‘Additional Learning Materials’. 5/6. On the left hand side you will see a row of menu items you can click on. American Marketing Association. if any. ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 2 then go to the Marketing Blackboard page. Click on this and you will see a podcast entitled ‘How to Work with IT’ by Marketing News. There is also a podcast available. 694-719) – The paper discusses potential conflicts between R&D personnel and Marketers and its cross cultural comparison during the process of new product development. This will provide an idea about what sort of issues marketers incline to emphasise in comparison to their counterparts. Click on the menu item entitled ‘Additional Learning Materials’. This provides some insights of how marketers work with members of IT department to implement marketing activities. You should then click on ‘Additional Audio’ see a folder entitled ‘Unit 2 Marketing Planning’. Shaw and Enke (2004) ‘Relationships between engineers and marketers within new product development: An Angle-German comparison’.Unit 2: Marketing Planning Question 1: Assess both Coca-Cola and PepsiCo in terms of their level of marketing orientation? Question 2: What advantages.

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Most companies find it difficult to influence the former but easier to influence at least some of the latter. From this position. Unit 3 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. A marketing-oriented organisation looks outwards to the environment in which it operates. Chapter 2 (pages 42–48).5 ‘Marketing in an Economic Crisis’ (see ‘Reading. Unit 3 – Marketing Environment and Auditing’ in Blackboard) 2. Jobber. adapting its strengths and weaknesses to develop strategies and tactics to take advantage of new opportunities and to limit the risk from potential threats created by the environment. we can start to develop effective marketing strategies. Bradford MBA 39 . Unit 3 Multiple Choice Questions – Activity 3. All companies have to work according to external influences which affect them. Finally we develop a SWOT analysis which matches the external opportunities and threats of the marketing environment to the internal strengths and weaknesses of the marketing organisation.4 (see ‘Formative Exercises. Firstly we study the key influences from the external marketing environment – the macro and the micro. In this unit we look at the two principal elements of the Marketing Audit. We then take a look internally at the organisation. and Chapter 19 (pages 705–713) Other: 1. Unit 3 Marketing Environment and Auditing’ in Blackboard) INTRODUCTION No company operates in a vacuum. Unit 3 Discussion Board – Activity 3. Chapter 3. in order to understand its key marketing strengths and weaknesses.Unit 3: Marketing Environment and Auditing Key reading: 1. Unit 3 Marketing Environment and Auditing’ . Marketing Multiple Choice Questions. Dealing with a Recession’ and ‘Ethical Brands in a Recession’ in Blackboard) 3.

Chapter 3 and Chapter 19 (pages 705–713) The marketing environment describes the areas in which the organisation operates and the context within which the organisation makes its marketing plan. The challenge for the organisation is to be able to identify and measure the strength of each element and make decisions which directly provide solutions or responses to changes perceived in that environment. you should be able to:   understand the marketing environment identify the key macro elements of political. environmental. 40   Bradford MBA .    THE MARKETING AUDIT The marketing audit is a means of identifying key issues facing organisations and how prepared/competent they are to deal with these issues. THE MARKETING ENVIRONMENT Read Jobber. proceeds internally and finishes with a summary SWOT analysis.  The environment in which any organisation operates is made up of two interdependent elements – the macro element and the micro element. social. an organisation needs to:    be in position to take up opportunities to develop its market be ready to defend itself against competition be able to forecast changes in the environment which may affect its future keep up with technological change. legal and technological factors develop an understanding of the key competitive micro forces understand the basics of the internal audit develop the SWOT analysis. For example. economical.Study Book: Marketing OBJECTIVES By the end of this unit. We start by looking at Figure 3.1 on page 78 in Jobber. Let us look at each of the two elements in turn. There are many reasons why marketers need to have an understanding of this. It starts externally (the environment).

with his Five Forces Model. These are the challenges in the micro-environment that an organisation has to meet to be competitive in the market:  rivalry amongst the current competitors in the industry 41 Bradford MBA . The micro-environment is best described through what Porter. Whereas the macro-environment is made up of influences to which companies need to adapt. worldwide currency fluctuations Physical environment – environmental factors play an increasingly important part in influencing consumer choice and shaping government regulation. The micro-environment Let us look now at the micro-environment of an organisation. the physical environment has been added as an additional factor to consider when developing the marketing plan.Unit 3: Marketing Environment and Auditing The macro-environment This is also called the wider or far environment. social values. social trends Legal/Political situation – government attitude to business. production processes and administration of the organisation. pages 705–708). the influence of pressure groups. the media and the public in general and the impact it may have on their activities. political movements. the micro-environment includes influences over which most companies can exert some type of control. legislation to control or support business activity Economic state of the wider market – national GDP. SLEPT is an acronym given to this far environment – it is made up of elements in the larger world which are subject to change and which are outside the direct control of the organisation. For this reason. The SLEPT factors concern the:  Social factors – lifestyle patterns. Note political lobbying is one example of how a company can try to indirectly control government policy. population distribution. Technological aspects – new technology in business affecting communications.     The effective organisation is one that can take account of and quickly adapt its internal processes and marketing activity to cues from events in the macro-environment. new materials for use in products. income levels. Jobber. business controls. sector growth rates. Marketers must be aware of the environmental opinion of governments. calls the ‘structural determinants of the intensity of competition’ (Porter 1980. one part of the far environment.

housing) or one you choose in the UK or your own country.1 – STOP AND THINK Assess the macro environment (SLEPT) for one of the following products (tobacco. soft drink. Activity 3.2 – STOP AND THINK Drawing on the discussion in Jobber (pages 705–708) construct a five forces model of the industry in which your company operates.Study Book: Marketing     bargaining power of customers bargaining power of suppliers and distributors threat of new entrants into the industry threat of substitute products or services ACTIVITY 3. How strong is your company and where does it exhibit competitive strengths and weaknesses? 42   Bradford MBA .1– Stop and Think Answers: ACTIVITY 3. mobile phones. cosmetic.

Unit 3: Marketing Environment and Auditing Activity 3. how appropriate are our marketing strategies? What are the objectives of the organisation? What is its competitive advantage? What customer groups does it target and how clear is its proposition and position? How does it apply its core competences to the marketing environment and subsequent application of the Marketing Mix? Marketing systems Information helps us to understand external and internal influences and performance. Chapter 2. Listed below are some key elements of an internal marketing audit that need to be understood and acted upon: Strategic issues Firstly. The quality of marketing information and the marketing research that feeds that information may well dictate the quality of the application of the Marketing Mix. Marketing structures We discussed integrated marketing orientation in Unit 1. pages 42–48 Understanding the external environment is one thing.2 – Stop and Think Answers: INTERNAL ANALYSIS Read Jobber. What is the role and organisation of marketing within a company? How important is marketing seen to be? How closely aligned to the Marketing Mix is the marketing department? How marketing orientated is the organisation? Bradford MBA 43 . Matching this to internal competencies is another.

sales by product. Opportunities and Threats. Typically we will match Strengths to Opportunities to develop competitive advantage whilst ensuring that Threats combined with Weaknesses do not result in competitive disadvantage. Chapter 2. pages 42–48 SWOT analysis is a useful tool for helping us to bring together the key elements of our environmental and internal analysis. customer or region and costs. So. the impact of our product. we need to ensure that our weaknesses do not become vulnerable to the external environmental threats.  The rule is always to look at the strengths and weaknesses from an internal perspective and opportunities and threats from an external perspective.and micro-environmental influences to the opportunities and threats boxes of the SWOT. Concurrently. we might also try and convert our weaknesses to strengths or our threats to opportunities. SWOT analysis stands for Strengths. promotion and distribution strategy needs to be matched to our operating results. They form the basic assessment of business. The principal means of applying our analysis to the SWOT is as follows:  allocate as appropriate the results of the internal analysis to the strengths and weaknesses boxes of the SWOT allocate as appropriate the macro. Marketing Mix effectiveness To our understanding of our results we need to add an evaluation of how well (or not) we are applying our Marketing Mix. price.Study Book: Marketing Operating results Operating results include profits and margins. BRINGING IT ALL TOGETHER – SWOT ANALYSIS Read Jobber. Creatively. 44   Bradford MBA . Weaknesses. From a marketing point of view we need to understand how we can match the strengths within our organisation with the opportunities presented to us in the environment.

Activity 3. SWOT analysis is a useful tool for bringing the key marketing audit information together.3 – Stop and Think Answers: SUMMARY Knowledge and understanding of the marketing environment in which the organisation operates and the context within which the organisation makes its marketing plan are essential if an organisation is to gain competitive advantage.3 – STOP AND THINK Create a SWOT analysis of Sony based on the information provided in Case 5 (Sony Shockwave.Unit 3: Marketing Environment and Auditing ACTIVITY 3.   Bradford MBA 45 . We need to gain a detailed understanding as to how competent we are internally to meet the pressures of the marketing environment. pages 101–106). Jobber. You should note the following key points:  The marketing environment should be scanned continuously for opportunities and threats.

you also click on ‘Unit 3 Lecture Powerpoint Slides’. Click on the menu item entitled ‘Formative Exercise’. ACTIVITY 3. Click on the button entitled ‘PowerPoint and Lecture Audio’. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. Click on this and then click on ‘Unit 3 – Marketing Environment and Auditing – MCQs’ work through the questions provided. On the left hand side you will see a row of menu items you can click on. since the materials are specially designed for the on-site MBA programme at Bradford. there may be discrepancies between some of the issues addressed in this unit and the lecture. ACTIVITY 3. On the left hand side you will see a row of buttons you can click on. 46   Bradford MBA . Please focus on the areas that are applicable to/have been discussed in this unit of the DL MBA Marketing module. Click on this and you will see an audio entitled: ‘Unit 3 Lecture Audio’.5 – DISCUSSION BOARD Go to the Marketing Blackboard page. Click on the measure item entitled ‘Reading’. Click on this and you will see two papers entitled: ‘Dealing with a Recession’ and ‘Ethical Brands in a Recession’. Read the papers and post your response to the following questions on your group Discussion Board (your tutor group can be found under ‘Groups’ in Blackboard). Listen to the audio and consult the lecture slides at the same time.4 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit. You should then see a folder named ‘Unit 3 – Marketing Environment and Auditing’. Is this a sensible thing to do? Question 2: What are the opportunities. In the same folder. if any. On the left hand side you will see a row of menu items you can click on. The Audio and Powerpoint slides cover the main topics in this unit. Question 1: During economic crises many organisations respond by reducing their emphasis on marketing. However.Study Book: Marketing POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. organisations may exploit during the current economic crisis. You should see a folder named ‘Unit 3 – Marketing Environment and Auditing’. In order to do so go to the Marketing Blackboard page.

This is an interview with one of authors of The Distribution Trap: Keeping Your Innovations from Becoming Commodities who argue ‘mega-distributors to dilute the value of their products and services. You should then click on ‘Additional Audio’ see a folder entitled ‘Unit 3 Marketing Environment and Auditing’. Click on this and you will see a podcast entitled ‘The Distribution Trap’ by American Marketing Association. REFERENCES/BIBLIOGRAPHY Porter M E (1980) Competitive Strategy: Techniques for Analysing Industries and Competitors. www. New York: Free Press. Bradford MBA 47 . Click on the menu item entitled ‘Additional Learning Materials’. On the left hand side you will see a row of menu items you can click on. imposing costs and changes in strategic direction and operational control’ (from AMA podcast website.Unit 3: Marketing Environment and Auditing ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 3 then go to the Marketing Blackboard page.com).marketingpower.

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7 (see ‘Video Resources. Unit 4 Marked Formative Assessment – Activity 4. ‘Repositioning: Marketing in an Era of Competition. These three areas make the buying and selling process truly ‘win-win’. market segmentation.8 (see ‘Video Resources. ‘McDonalds Repositioning of the Golden Arches’) 5. Through understanding buying behaviour. Bradford MBA 49 . market segmentation (the current unit) and marketing research (Unit 5). Live On-Line Tutorial’ in Blackboard) 4. Change and Crisis’ – Activity 4. Unit 4 On-Line Live Tutorial – Activity 4. The unit will cover one of the most important marketing tools. Unit 4 – Understanding the Market’ in Blackboard) 2. Unit 4 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Unit 4 Discussion Board – Activity 4. The Story of Stuff’) 3. Unit 4 Understanding the Market’ in Blackboard) INTRODUCTION In this unit. Unit 4 – Understanding the Marketing’ in Blackboard) 2. Unit 4 Multiple Choice Questions – Activity 4. an organisation can improve effectiveness of the marketers’ task of matching the supplier’s offerings to the customer’s needs. ‘The Story of Stuff (2007) – Chapter 5: Consumption’ – Activity 4.10 (see Jobber pages 297–299. 5 and 8 Key audio/video: 1. Jobber.7 (see ‘Formative Exercises.6 (see Video Resources. Unit 4 – Understanding the Market’ in Blackboard). we look at buyer behaviour and market segmentation.9 (see Jobber pages 141–143 Case 7 Cappuccino Wars) (‘Groups. We review the importance of understanding the market as the first step in delivering the organisation’s marketing objectives.Unit 4: Understanding the Market Key reading: 1. Marketing Multiple Choice Questions. Other: 1. Chapters 4.

impact on organisational success. in terms of their purchasing decisions.      UNDERSTANDING THE CUSTOMER Consumer buying behaviour has been defined as ‘the decision process and acts of individuals involved in buying and using products and services’ (Dibb. pages 109–120 Figure 4. you should be able to:  describe different types of consumers and the various roles they perform explain the decision making process for both household and organisational consumers identify and discuss a range of situational. list the main variables used in segmenting consumer and industrial markets select different targeting strategies for selected situations using segmentation and positioning as the basis of marketing planning.  HOW DO CONSUMERS MAKE DECISIONS? Read Jobber. We need to understand the behaviour of our buyers and why they make the purchasing decisions they do because:  Customers’ reactions to the organisation’s marketing strategy. We look first at some of the general principles and use examples of consumer and organisational buying behaviour to illustrate them. Can you see any weaknesses in this model of buying behaviour? We will look at two different kinds of customers – consumers and organisational customers. 2001).2 on page 119 of Jobber shows a simple linear process. In general terms. which leads to a consumer purchase. 50   Bradford MBA . they both follow the same sorts of buyer behaviour and a supplier would follow the same general principles. and Customers’ needs can be satisfied only if marketers get the Marketing Mix right. personal and social influences on consumer behaviour.Study Book: Marketing OBJECTIVES By the end of this unit.

a car. based on analysis of facts. a suit. lack of interest. a decision to buy a suit might have been triggered by an advertisement or a job interview. and how did you respond? Would you characterise this decision as a ‘rational’ one.’ ‘The house seemed just right. but it looked great.’ ‘Well.1 – STOP AND THINK Think of a major purchase you have made recently – a holiday. the need to move house may have been triggered by the arrival of a new baby. not the mind – ‘I just fell in love with the feel of the car. etc or use the Internet? Did you do research by ‘walking around’ – visiting neighbourhoods where you might like to live. I didn’t really need that new suit. emotions can play a far larger part in the decision than we would assume.’ Post-purchase – Did you make the right decision? Bradford MBA 51 . when we make a decision on a major purchase. answer these questions about the process you followed in making this purchase: Need recognition – How did you decide that you needed to buy this item? Did other people help you to decide that you needed it? If so. Many purchases are made by the heart. be honest. Now. or was it more ‘emotional’? For example. a house. or already own one of these items? Evaluation of alternatives – What process did you go through when you were weighing up the different alternatives? Did you evaluate them in a systematic way? Did you use checklists or a table? Did you do this evaluation with others or on your own? Did you work out the evaluation criteria in advance or as you went along? Did you ‘short list’. or was the decision obvious? Was it hard to decide? What was the deciding factor? Purchase – Now. test driving a car. and so on? Did you ask the opinions of people who already live there. what did they do. how rational do you think the basis for your decision was? How much did emotions – desire.Unit 4: Understanding the Market ACTIVITY 4. newspaper advertisements. impulse – figure in your decision? Interestingly. Information search – Were there alternative suppliers? How did you find out information about the alternatives? Did you do paper based research for example consumer research articles. impatience.

the psychological wish to purchase may exist and marketers can tap into this at a later date. 52   Bradford MBA . the existence of a need may not activate the decision-making process at all because of need inhibitors. Which criteria would you characterise as objective and factual. then the competitive context would be reduced to ‘just-in-time’ exchanges and marketing would become a very different discipline focusing on logistics and distribution. Lack of resources is a keen inhibitor of need.1 – Stop and Think Answers: Jobber lists a number of ‘choice’ criteria used when evaluating alternatives. let’s look at a more modest buying decision.1 on page 118. Now. which meet their clearly expressed needs and wants. But importantly. Note Table 4. then the objective of companies would be to supply these ideal customers with goods and services. and which do you feel are more subjective? Is the distinction blurred? Also. If all purchases were based on an ideal customer who knows exactly what he or she requires.Study Book: Marketing Activity 4. If this were the case. We have looked at a major purchase.

nutritional content) Past experience (taste. What informed your choice? Put a tick by any of the following that applied:           Brand name Special offer Unit price Package size Habit – it’s the kind you always buy Location on the shelf Ingredient information (cleaning agents. Bradford MBA 53 . and a purchase of soap powder. tinned food. assembling the alternatives. tea or coffee – where you had a choice to make. cleaning efficiency) Your children asked for it Other criteria. consider what factors would cause or encourage you to change to a new supplier or package size. We take shortcuts because the purchase simply is not that important to us or carries low risk.Unit 4: Understanding the Market ACTIVITY 4.2 – STOP AND THINK Think about a recent visit to a supermarket. Did you find it hard to identify the factors that influenced your choice? If you chose the product because it is the one you always buy. the reality is that we rarely go through the process of carefully identifying our needs. Activity 4.2 – Stop and Think Answers: For many of the goods we buy. consciously assessing each option and taking the best.

Blackwell and Miniard (see Figure 4. With a low-involvement purchase. the brand name and advertising are all important extrinsic cues to remind the consumer to purchase. Many supermarkets’ own-labels mimic the shapes. Note Table 4. Brand loyalty and store loyalty are both habits. Note Vignette 4. This points out how emotions and feelings influence our purchase behaviour Look at Engel. but that the buyer may not be the decider who makes the choice about what to buy. pages 122–134. page 110) takes account of the fact that not only might the user not be the buyer. The model by Engel. Explore buying decisions for a major purchase within your own buying centre. with over 60% of purchasing decisions made in store. Read Jobber. Buyers do not have time to do much information processing in say the supermarket setting. When purchases are repeated.1 on page 120 about experiences and consumer behaviour. Blackwell and Miniard's five roles of people in the buying process on pages 110–111 in Jobber.Study Book: Marketing These are low-involvement purchases.1 in Jobber. colours and designs of the brand leaders. so they look for cues to inform them about the product. Many supermarket purchases are totally unplanned. The familiar appearance of these look-alikes cues the buying response at the expense of the branded product. Where the two 54   Bradford MBA . Note on page 68 the roles adopted within families to achieve decision making. perhaps it includes a partner or children or a parent. the choice may come down to impulse. Marketers try to understand these influences on buyers and manipulate what they know about consumers to increase the standing of their products or services. People develop confidence in the reliability of certain cues and learn to base their choices with the help of extrinsic cues. Our discussion here leads onto other buying centres – those in organisations.2 (page 122 of Jobber) on the consumer decision-making process and level of purchase involvement. and consider the five-role model. Look at your own buying group. consumers settle into buying habits and buy without much reflection or consideration of alternatives. The kind of packaging used on a product. HOW DO ORGANISATIONS BUY? Organisational buying behaviour follows many of the same general principles as consumer buying behaviour – including a significant emotional content in many organisational buying decisions.

Unit 4: Understanding the Market

behaviours differ, perhaps, is in the more overt use of a rational model in organisational buying decisions. This can give the process more consistent structure than would be found in many consumer buying decisions, even of the high involvement type. Look at Figure 5.1 Jobber, page 149 and compare it to the simpler but similar model (Figure 4.2) in Chapter 4 on page 112. What do you think are some of the reasons for the more detailed process on page 149? One reason may be that the buying centre in an organisational buying decision is more professionalised and has more clearly defined authorities and responsibilities than a typical consumer buying centre. Often, the organisational buying decision will involve much higher value decisions than a consumer buying decision. Compare a personal decision to buy a car with an oil exploration company deciding on a contractor to build a drilling platform – or a decision by a large retailing chain about a supplier of men’s shirts to a personal decision to buy a suit. The important point here is that it is likely to be a buying centre of more than one person, each with very clearly defined responsibilities. That does not mean that an organisational buying decision is purely objective with no emotional content. The establishment of strong personal ties is a key factor in many successful long-term buyer–seller relationships. Furthermore, it is not unusual for a supplier whose representative has made a bad impression on the potential customer to be excluded from consideration.

ACTIVITY 4.3 – STOP AND THINK
Read Case 10 Jobber, pages 177–179 Identify the different roles in the Decision Making Units of their own organisations and their criteria for selection of their suppliers. Activity 4.3 – Stop and Think Answers:

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Now read Chapter 5 on Organisational Buying Behaviour. As you read, look for the following key concepts, which are the main ideas you should examine in this chapter. These are the ideas that you should highlight or take notes on:
    

characteristics of organisational buying roles in the decision making unit influences on purchasing behaviour strategic partners ‘national account’ management.

Suppliers invest considerable sums in the teams that manage the relationship with a key customer. They recognise that there is an emotional component in organisational buying decisions. Successful teams never forget that one of their prime objectives is to ensure that the customer perceives that the cost of change – changing to an alternative supplier – is higher than the cost of remaining with the incumbent supplier. That is why the kinds of customer services discussed at the end of Chapter 4 are so important. In the following, we will step back inside the selling organisation and look at another marketing tool that puts our understanding of buyer behaviour to good use.

MARKET SEGMENTATION
Marketers operate with limited resources – production capacity, staff and money. As competition gets keener, the time available to capitalise on new opportunities and react to threats reduces. From your study of buyer behaviour you know that customers are different; they have different needs and wants and make their purchases in different ways. One single Marketing Mix is unlikely to suit everyone, but few organisations can afford to undertake custom manufacture, especially in consumer markets. So marketers are constantly seeking to find ways to maximise the efficiency and effectiveness of the resources they deploy. One way of making their marketing more efficient and effective is by segmentation. What is segmentation? It is the process of identifying groups of individuals (or organisations) with some common characteristics that can be used to explain or predict buyer behaviour in response to a set of Marketing Mix stimuli. Finding and understanding these clusters of buyers and the characteristics that set them apart from each other have significant implications on the success or failure of a marketing strategy.

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The key strength of market segmentation is that it allows organisations to identify and concentrate on the most promising opportunities relative to their own strengths and weaknesses and the position of their competitors. It determines:
    

direction of marketing strategies selection of markets to target development of the Marketing Mix realistic marketing and sales objectives decisions about the cost effectiveness of communications strategies.

From the customer’s point of view, segmentation makes it more likely that firms will produce goods or services that fit closely with what the customer wants and is made aware of through appropriate advertising. Perhaps it is easier to illustrate the concept with an example. Do you remember the lifestyle categories in Chapter 4? Read Jobber, page 129 and look at the category ‘The reformers’. This is a broad market segment – its members share certain characteristics, for example, ‘self-confident and involved’, ‘have broad interests’, ‘issues oriented’. If a marketing organisation can develop products that this segment is interested in and can promote them effectively, the marketing strategy is more likely to be successful than if the company just launches random products in random ways. For example, this segment could be interested in an organic and local produce because the segment enjoy natural food and is concerned about ecology. The product could be introduced in publications that the segment is known to read or during a television programme that the segment is known to watch. As the segment is known to be interested in health and education, a public relations action could be to sponsor local events promoting healthy diet for local school dinner programmes and hospitals. From product development to promotional campaigns, marketing attention is focused on selecting the appropriate segment and meeting the needs and wants of this segment – this is called targeting. Marketers segment organisational markets too, but they do this slightly differently. Organisational markets can be macro-segmented, most notably by industry or size. The offshore oil industry is a good example of a macrosegment. The work is high risk, capital intensive, with a long-term payback. Projects are complicated, and a delay in one activity can result in very large financial penalties. Thus, a sub-contractor’s speed of response and flexibility are crucial differentiators. Sub-contractors who can develop services that meet the segment’s needs are more likely to be successful than those who are not so responsive.
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Chapter 8 on Market Segmentation and Positioning. which five ACORN classifications would you see as your highest priority segments (below is a list of the ACORN targeting classification)? Which ones would you not choose to target? Why not? 58   Bradford MBA .4 – STOP AND THINK You have seen that there are many more ways to describe groups of consumers than the familiar UK social classes. Where would you place yourself? If you were designing a promotional campaign to sell new kitchens. Look back at the organisational decision-making roles described on page 148. You should highlight or take notes on these topics:          market segmentation definition benefits of segmentation consumer segmentation methods macro-segmentation micro-segmentation target marketing differentiated marketing and focused marketing key tasks in positioning keys to successful positioning. As you read. Now read Jobber.Study Book: Marketing The other main type of organisational segmentation is micro-segmentation that looks at the particular characteristics of the different members of the organisational buying centre. ACTIVITY 4. look for the following key concepts. Read page 272 of Jobber about the ACORN and MOSAIC segmentation systems . which are the main ideas you should investigate in this chapter.

Affluent working families with mortgages 03 . flats 17 .Old people.Larger families. flats 16 . converted flats 19 .Multi-ethnic young.Mature couples. larger houses 05 .Student flats and cosmopolitan sharers 21 . detached houses 08 .Well-off working families with mortgages 11 .Farming communities 07 .Well-off professionals. larger houses and converted flats 14 .Low income singles.Villages with wealthy commuters 04 .1: ACORN targeting classification Category Group Type Wealthy Executives Wealthy Achievers Affluent Greys Flourishing Families Prosperous Professionals Urban Prosperity Educated Urbanites Aspiring Singles 01 .Affluent urban professionals.Affluent mature professionals. detached houses 12 .Student Terraces Bradford MBA 59 .Suburban privately renting professionals 20 .Prosperous young professionals. prosperous suburbs 10 . small rented flats 23 . multi-ethnic areas 22 .Singles & sharers.Well-off managers.Large families & houses in rural areas 13 . smaller detached houses 09 .4 – Stop and Think Answers: Table 4. flats 18 .Older Professionals in detached houses and apartments 15 .Young educated workers.Unit 4: Understanding the Market Activity 4.Older affluent professionals 06 .Well-off managers. large houses 02 .

Elderly singles.Working families with mortgages 29 . the trick is to find the right one! A viable segment has:  identity (or uniqueness) – it distinguishes between clusters of customers relevance – it is related to the producer’s core competences or Marketing Mix  60   Bradford MBA . unemployment 47 . semis and terraces 42 . single parents 49 .Singles & single parents.Skilled workers. retired). older couples 34 .Home owning. affluent. single parents. high rise estates 55 .Old people in high rise flats 54 . flats 37 .Lower income people.Council terraces.Council flats. home owning areas 28 .Council flats.Retired home owners 33 . routine jobs. unemployment. terraces 26 . In fact.Study Book: Marketing   Starting Out 24 . crowded flats Secure Families Comfortably Off Settled Suburbia Prudent Pensioners Asian Communities Moderate Means Post Industrial Families Blue Collar Roots Struggling Families Hard Pressed Burdened Singles High Rise Hardship Inner City Adversity SEGMENTATION PROCESS There are many ways of segmenting a market or splitting it up into clusters of customers with similar characteristics.Low income Asian families 39 .Older people. no kids) and grey panthers (active. low income.Low incomes. high unemployment. semis 45 .Older rented terraces 44 .Established home owning workers 31 . small semis 46 .Middle income.Middle income.Young couples.Low rise terraced estates of poorly-off workers 48 . many children.Multi-ethnic purpose built estates 56 .Crowded Asian terraces 38 . terraces 43 . flats and terraces 25 .White collar singles/sharers.Mature families in suburban semis 30 . But for the marketer.Low income.Skilled older family terraces 40 . semis 35 . dinkies (dual income. single elderly people 51 .Younger white-collar couples with mortgages 27 . urban professionals). unemployment 53 . poorly educated 50 . purpose built flats 36 .Multi-ethnic. puppies (Punjabi urban professionals).Home owning Asian family areas 32 .Low income larger families.Large families.Older people. marketing research agencies spend a lot of time seeking new ways to split markets and some of their terminology has entered our general vocabulary – yuppies (young. many singles 52 .Young family workers 41 .

you will not be able to target your marketing efforts at the group with a particular identity. they are not readily accessible either. there may be a cluster of surgeons who are left-handed. stability – it is likely to continue for some time measurable – its very characteristics mean that its size. You could decide to split your market for scissors into accountants and non-accountants – but this is not a great deal of use to you unless it explains some differences in purchasing behaviour. All kinds of people use scissors – children. potential and performance can be measured profitable – unless there are particular reasons to the contrary. Bradford MBA 61 . surgeons – all for different purposes. What about people who are setting up their own business? There are many of them. tailors. The marketer must understand the buyers and know their characteristics in order to pull out the common threads that correlate to differences in buying behaviours. lacks relevance. Imagine that you are researching the market for scissors for the purposes of segmentation. and accountancy and the use of scissors would appear to be unrelated. this segment is probably not economically viable due to its size. therefore. Unless they are prepared to pay a high price. and they will be buying basic office equipment – but unless you can identify them. hairdressers. a direct mail database or something similar. This segmentation. You can choose any way to segment this market.Unit 4: Understanding the Market  accessibility – it allows clusters to be specifically reached by some combination of marketing communications size – it is big enough to be economically viable. a segment should result in a profitable result for the producer. As you can see segmentation is not a matter of good luck but good marketing research. However. gift-buyers. Unless you can locate a specialist magazine for new businesses.     An example illustrates what we mean.

You need to identify exactly the people who are seeking the specific benefit. Or put another way. much less tried them! The important point is that younger eaters appear to prefer less ‘crunchy’ savoury snacks than older eaters. develop profiles for Mix for those segments Target marketing Market 3. fresh breath – and you cannot identify them by this need alone. and you wanted to increase your sales.1 above. An examination of the toothpaste market might reveal that one cluster primarily seeks fresh breath. select target markets (one or more segments) 5.1: Market segmentation. Identify bases for segmentation 2.5 – STOP AND THINK Look at Figure 4. the benefit sought from the product is the degree of crunch. Research has shown that the single most important criterion for purchase is texture. another wants to combat gum disease and a third wants something designed for sensitive teeth. develop measures of segment attractiveness 4. ACTIVITY 4.2 which shows a map of the UK savoury snack foods market. You also need to build a picture (profile) of the typical segment buyer so that if the segment is viable. develop Marketing for each target market In practice. Whilst this is useful data. target marketing and market positioning Market segmentation positioning 1. what kind of texture do you think the product should have? Why? If you were the brand manager for Tubaloops. If you wanted to develop a product that would appeal to potential savoury snack eaters in the 15 to 20-year-old age range. It is not important if you have never heard of some of these products.Study Book: Marketing Figure 4. for example. which age group would you target? 62   Bradford MBA . develop positioning for each target 6. you can assemble a Marketing Mix that will target and attract the buyers in that segment. it is not a great deal of use on its own to a marketer who wants to develop a Marketing Mix for each target market. for example. you can start with customer needs or with the benefits sought: the bases in Figure 4.

2: UK savoury snack market Texture hard Wheat crunchies Tubaloops Hula hoops Discos Niknaks Nibbis Skips Age Years Golden lights 15 French fries Quavers Monster munch Wotsits Quarter backs Ringos Soft Brand position ‘Ideal’ position 20 25 Roysters Phileas ffogg 5 Space raiders 10 Activity 4.Unit 4: Understanding the Market Figure 4.5 – Stop and Think Answers: Bradford MBA 63 .

Positioning has been defined thus: “Positioning starts with a product. Successful positioning provides a platform on which to develop an effective Marketing Mix for the segments to be targeted. an institution or even a person. Focused or niche marketing – is the targeting of one segment of the market. But positioning is not what you do to the product. Customised marketing – is a specialised area where companies produce high value items and work closely with customers to produce goods to individual customer specification.Study Book: Marketing TARGET MARKETING As Jobber makes clear. and ‘commercially viable’. ‘supplied efficiently’. the whole point of segmentation is to enable effective target marketing. Correctly chosen targets increase the likelihood that the product or service will be successful – and thus it is more efficient and ultimately more effective. a piece of merchandise. note the way the author uses phrases like ‘similar requirements so that they can be served effectively’. a service.10 on page 285 of Jobber.9 and 8. POSITIONING Look at Figures 8. Having identified segments in the market place. Market segmentation is all about how producers identify groups of customers. It allows companies to direct their efforts at meeting the needs of one set of customers and marketing activities can be devoted to understanding and catering for those needs. the task for the marketer is to assemble a Marketing Mix that will deliver the benefits sought by the customers in those segments. Positioning is what you do to the mind of the prospect” (Ries/Trout) 64   Bradford MBA . Look at the discussion at the beginning of Chapter 8. Positioning is all about how customers perceive alternative offerings from producers. the organisation must choose which ones to serve. (page 284). a company. Having chosen one or more segments. Jobber gives the examples of Saga and Bang and Olufsen. Differentiated marketing – exploits the differences between marketing segments by designing a specific Marketing Mix for each segment. There are four strategies of target marketing: Undifferentiated marketing – with no regard for customer requirements.

Click on the measure item entitled ‘Audio Resources’. On the left hand side you will see a row of menu items you can click on. leading to a clear understanding as to the nature (and hopefully quality) of the offered product/service Credibility – due to the above. The marketer needs to understand:     how customers buy what ‘choice’ criteria are used who is involved in the decision when and where purchases are made. Click on this and you will see a podcast entitled ‘Repositioning: Marketing in an Era of Competition. SUMMARY On Consumer Behaviour: we have looked at buying decisions from the perspective of the buyer – whether a consumer or an organisational buying centre. but are not in a position to do so 65 Bradford MBA . Change and Crisis’. You should then see a folder named ‘Unit 4 – Understanding the Market’. pages 285– 286):  Clarity – the customer can clearly understand the proposition of the producer Consistency – the message and actions of the producer are consistent.Unit 4: Understanding the Market Fundamental to the success of any positioning strategy is adherence to the 4 Cs principles of competitive positioning (see Jobber. the proposition delivered to the customer is believable Competitiveness – the producer always develops a position based on its credible competitive advantage.6 – WATCH AND LEARN Go to the Marketing Blackboard page.    ACTIVITY 4. This is an interview with Jack Trout who is author of the above titled book and he talks about how brands should be repositioned to react to the financial crisis. Marketing is not an exact science or a straightforward business discipline. It can be difficult to target marketing effort and to understand buyer behaviour for a number of reasons that include:    buying is a human activity customers don’t always have well-focused requirements customers may be interested in making a purchase.

there may be discrepancies between some of the issues addressed in this unit and the lecture. On segmentation: the main issues discussed are:  segmentation allows organisations to focus on their efforts and make efficient use of resources. not the mind many purchases are made through impulse or habit many purchases are made by those who are not the end user. On the left hand side you will see a row of buttons you can click on. In order to do so go to the Marketing Blackboard page. 66   Bradford MBA .Study Book: Marketing    many purchases are made by the heart. You should see a folder named ‘Unit 4 – Understanding the Market’. Listen to the audio and consult the lecture slides at the same time. Click on this and you will see an audio entitled: ‘Unit 4 Lecture Audio’. Click on this and then click on ‘Unit 4 – Understanding the Market – MCQs’ work through the questions provided. Click on the button entitled ‘PowerPoint and Lecture Audio’. In the same folder. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. Click on the menu item entitled ‘Formative Exercise’.7 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. and effective positioning benefits the customer and the supplier. The Audio and Powerpoint slides cover the main topics in this unit. On the left hand side you will see a row of menu items you can click on. However. you also click on ‘Unit 4 Lecture Powerpoint Slides’.  POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. ACTIVITY 4. since the materials are specially designed for the on-site MBA programme at Bradford.

Unit 4: Understanding the Market ACTIVITY 4.or low-involvement decision? Question 3: Assess the coffee chains’ moves to expand the offerings they provide for their customers. pages 141–143) Question 1: Why have coffee bars been so popular with consumers in the UK? Question 2: You are considering visiting a coffee bar for the first time. What would influence your decision to visit a coffee bar? Is this likely to be a high. Read Case 7 Cappuccino Wars (Jobber. Question 4: Coffee bars are mainly located in the centres of towns and cities. Click on the measure item entitled ‘Video Resources’. You should then see a folder named ‘Unit 4 – Understanding the Market’. On the left hand side you will see a row of menu items you can click on. 2. Click on this and you will see a video entitled: ‘The Story of Stuff (2007) – Chapter 5: Consumption’. Watch the video and post your response to the following questions on your group Discussion Board (your tutor group can be found under ‘Groups’ in Blackboard). If you are unsure about how to access the on-line tutorial using the Elluminate software go to the ‘How To’ guidelines in Blackboard for further instruction.8 – DISCUSSION BOARD Go the Marketing Blackboard page. 3 and 4 outlined below and be ready to discuss these issues during the on-line live tutorial (your module tutor will have posted details of when this tutorial will take place). Question 1: What are the challenges and opportunities marketers face near future? Question 2: Do you agree with the precept ‘A Customer is Always Right?’ – Would consumer needs and want drive a principle of what companies ought to provide in the market? Why? ACTIVITY 4. Are there other locations where they could satisfy customer needs? Bradford MBA 67 .9 – ON-LINE LIVE TUTORIAL Jot down your answers to questions 1.

Email your reply to your module tutor who will provide you with formative feedback on your answer. After you have read the case write up your responses to the 4 questions listed concerning the issue of positioning (max words 1. REFERENCES/BIBLIOGRAPHY Dibb S (2001) Marketing: Concepts and Strategies. MA: Houghton Mifflin.Study Book: Marketing ACTIVITY 4. 68   Bradford MBA . Joseph Pine talks about what consumers want – authentic experiences – and how to give them to customers.10 – MARKED FORMATIVE ASSESSMENT Go to the textbook and read the case on pages 297–299 ‘McDonalds Repositioning of the Golden Arches’. MA: Boston. fourth edition. On the left hand side you will see a row of menu items you can click on. Boston. You should then click on ‘Additional Video’ see a folder entitled ‘Unit 4 Understanding the Market’. Click on this and you will see a video entitled: Joseph Pine @ TED: The author of Mass Customization.000). Click on the menu item entitled ‘Additional Learning Materials’. ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 4 then go to the Marketing Blackboard page. rather than products or services.

Jobber.Unit 5: Marketing Research Key reading: 1. ‘Market Research Techniques: Focus Groups’ and ‘Understanding the P-value’ – Activity 5. People often refer to this as market research rather than marketing research. We need information to help us understand the market and the motivations of prospective consumers within it.5 ‘Mind Reading’ (see see ‘Video Resources. Marketing Multiple Choice Questions.2 (See ‘Video Resources.4 (see ‘Formative Exercises. We need to understand both the market and our performance within it. Chapter 7 Key audio/video: 1. Unit 5 Multiple Choice Questions – Activity 5. Unit 5 – Marketing Research’ in Blackboard) INTRODUCTION In this unit we study marketing research. you should be able to:  understand the importance of and relationship between research and information system in marketing decision making 69 Bradford MBA . Unit 5 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. In Unit 3 we discussed how no company can exist in a vacuum. Unit 5 – Marketing Research’ in Blackboard) Other: 1. In Unit 4 we looked at the motivations of buyer behaviour and the market. Unit 5 – Marketing Research’ in Blackboard) 2. Unit 5 Discussion Board – Activity 5. Market research researches the market whilst marketing research researches both the market and the marketing activity undertaken by a producer looking to sell its products or services in that market. OBJECTIVES By the end of this unit. Unit 5 – Marketing Research’ in Blackboard) 3. This is an important difference. No company can exist without the information needed to understand what is needed to effectively compete.

the chances of making a good decision or calculating a risk are improved by having the right information at the right time. 2000). 70   Bradford MBA .    MARKETING RESEACH So far.mrs. however. The importance of this definition is the qualitative nature of finding out what our customers really think and the cost effective possibilities of doing so. SMEs. Kotler describes marketing research as the ‘systematic problem analysis. What do the words ‘marketing research’ mean to you? A person standing in the street with a clipboard and a questionnaire? ‘Nine out of 10 dentists use Colgate’? Well. want.Study Book: Marketing  distinguish between research and intuition in solving marketing problems learn the difference between primary and secondary research gain a sense of the relative advantages and disadvantages of marketing research tools understand the overall marketing research process and the importance of positive use of marketing research. determine your competitive advantage and segment your market and position your product or service. Managers cannot make objective decisions without reliable information and. think. we have talked about the necessity of understanding buyer behaviour – both personal and organisational – and about the benefits that understanding can have for a marketing organisation. large organisations will employ large market research agencies. potential buyers and competitors. The importance of this definition is the word “disciplined”.org. Yes. Now we look at just how you learn about the behaviour of buyers. although risk-taking is part of management. This enables you to identify market opportunities. the marketer can then use marketing research to track the effect of that decision. “A cost effective way of finding out what people believe. model-building and fact-finding for the purposes of improved decision-making and control in the marketing of goods and services’ (Kotler 2004). Three other definitions of marketing research are also worth examining. “The disciplined collection and evaluation of specific data to help understand customers” (Chisnall. a prerequisite of marketing planning. Having made decisions based on research. organising research in a methodical manner and ensuring that research objectives are clearly stated. yes. but marketing research is far more. need or do” (Market Research Society www. Marketing research should never be considered as a hugely expensive exercise.uk). can feel comfortable with a much more hands-on DIY approach. Disciplined means following a process.

Unit 5: Marketing Research “The systematic and objective process of generating information to aid making marketing decisions”. (Zikmund. or reasons for. in itself increasingly complex due to the rapidly increasing range of goods and services on offer in the world market place and close competition across country boundaries. PR campaigns. Impact of elasticity distribution research – relative attractiveness to customers of distribution channels promotion research – evaluation of how well a company’s products and services are promoted. This could be every month. Firstly “systematic”: this refers to the timeliness of market research. “objective”: the research process needs to be unbiased and produce results which are objective.     Marketing research is one part of the wider marketing information system (MkIS) companies develop to support their marketing strategies and business objectives (see Figure 7. The process of marketing research is a dynamic one and must be continuous if it is to reliably inform marketing decision making and ultimately influence sales and profits. one new consumer brand has been launched every day. TYPE OF MARKETING RESEARCH Using the Marketing Mix as a guideline. marketing research:  product or service research – the design. Comparative data can only be developed over a period of time. Successful research depends on using comparative data. no matter how unpalatable that might be for the company in question. marketers need to understand that research needs to be undertaken on a regular basis. economic and cultural context pricing research – effects of pricing changes or tactics. through exhibitions. production and styling of products and services to match consumer expectations and market trends customer research – buyers and their behaviour in the wider social. 2003). This process of decision making is. Secondly. The challenge for researchers is to keep abreast of these highly dynamic markets and to be able to predict future trends. Technical advances in a number of disciplines such as data warehousing. advertising and merchandising. even every 12 months. there are a number of core types of. The importance is to do it at regular intervals. For example. every six months. Accordingly. for example. development. page 218 in Jobber). on average during the last two decades.1. decision-support systems and data mining techniques now allow marketers to handle huge Bradford MBA 71 . There are two important elements here.

or by an actual marketing research department in-house/agency – objectives/interpretation done in-house with an agency commissioned to do fieldwork  72   Bradford MBA . ACTIVITY 5. What does this tell you about its approach to their marketing research? Activity 5. perhaps from the marketing department.Study Book: Marketing volumes of data and integrate sources of customer information to provide help in new ways of segmenting markets. In 1994 in the UK.1 – STOP AND THINK Find out what marketing research is carried out for your own company or one you are familiar with.1 – Stop and Think Answer: THE RESEACH PROCESS We have discussed the fact that research should be an ongoing process which a company undertakes to obtain information about their customers and competitors. the effectiveness of their promotional campaigns and the effectiveness of their selling strategies. Unilever launched Persil Power. All this has resulted in a fundamental shift in the importance attached to marketing research. a new detergent containing an ingredient that unexpectedly rotted clothes. but the mistake is estimated to have cost the company £57 million (Source: Marketing Business. May 1998). There are three ways to carry out marketing research:  in house – by individuals. It was withdrawn from sale after a few months as the problem came to light. This emphasises the fact that managers need sound information on which to base their decisions and reduce the uncertainty in the planning process. The cost of failure to understand the market and the customer is high. how their products are perceived by customers. Wider scale pre-launch testing might have revealed the fault. and identify its type of their research. An estimated one in two new product launches fails.

customer records. Secondary research (also known as desk research) is normally the first form of data collection due to the fact that its very existence makes it quicker and cheaper to obtain. Once the means of conducting research have been decided. think and behave and is very much focused on the end customer. etc). Qualitative research is used to find out how people feel. perhaps to examine basic market trends or develop greater understanding of sales performance. data collection. secondary data might provide the platform on which to build additional research. etc) and externally (company and government statistics. Resulting actions to be taken. trade journals. are primary and secondary research. This additional research is known as primary (or field) research. research reports. This will often be undertaken by smaller and more specific surveys – on-line.    DATA COLLECTION The key generic research categories as outlined in the Research Process section above. an organisation wishing to launch a new product might use secondary research to understand the dynamics and growth trends of the market. then a typical research process will be adopted:   research planning – develop the research brief and objectives exploratory research – source available secondary data.Unit 5: Marketing Research  use the full services of a marketing research agency – this includes research design. Primary research is frequently split into qualitative primary research and quantitative primary research. in-depth telephone interviews. researchers will seek to prove the accuracy of the qualitative research through the use of quantitative research. Secondary data can be sourced internally (sales reports. In other cases. Develop complementary primary qualitative research quantitative research – descriptive or experimental research to further understand how consumers think or act data analysis and interpretation – evaluation of the data collected and its impact on the research objectives presentation and action – presentation of key findings to commissioning personnel. but will then need additional research to understand whether the proposed new product will be of interest to that market. by Bradford MBA 73 . customer enquiries. interpretative data and issue presentation. Qualitative research can only reach a small proportion of the potential market and is expensive to develop. An issue might be completely researched through the use of secondary data. creative focus groups and now. Typical methods of primary qualitative research are through face-to-face discussions. Accordingly. on-line chat rooms and observation. For example.

ACTIVITY 5. pages 227–242 for more detailed discussion on the types of primary research that can be used. Frequently this can be compromised by a lack of setting of clear and precise research objectives. The second video is an example of how a quantitative analysis can be used to estimate whether there is any faulty in the production process of chocolate bars. Click on the menu item entitled ‘Video Resources’. representative sample of the potential market and will either prove or disprove that found in the qualitative research. we must question. Click on this and you will see two videos entitled: ‘Market Research Techniques: Focus Groups’ and ‘Understanding the P-Value’. The data will be gathered from a larger. in the street or over the telephone. 2. 3.Study Book: Marketing mail. 74   Bradford MBA . Companies need to focus on the outputs they expect from the research so as to match the inputs. Now we investigate a case study to see how well you can apply the guidance. Briefly describe the business problem.3 – STOP AND THINK Read the following scenario. their strengths and weaknesses.. ACTIVITY 5. Suggest what research methodology or methodologies may be relevant to answer these objectives. why do it in the first place? Chapter 7 contains a lot of practical guidance on developing a marketing research project.e. On the left hand side you will see a row of menu items you can click on. If a decision cannot be made as a result of market research. Write a clear set of research objectives. You should then see a folder named ‘Unit 5 – Marketing Research’.2 – WATCH AND LEARN Go to the Marketing Blackboard page. The first video is an example of how a focus group is being carried out to find out whether a particular design feature of product (i. APPLYING RESEARCH Marketing research is of no use unless it can be used for the positive development of the organisation. a flip top of a salad dressing bottle) would attract more consumers. do the necessary research and complete the following tasks: 1. Now read Jobber.

The Regional Manager has been given a small but adequate budget by Head Office to spend on research. Research data can be original (primary) or secondary (desk research – published information). You have been contacted by the Regional Manager for a chain of hotels aimed mainly at the business market.Unit 5: Marketing Research Scenario: You are a Research Executive for a full service Research Agency. Four out of the six hotels seem to be able to achieve this but in two of the hotels there has been a recent rise in customer complaints and a fall in bookings. recording and analysis of data concerning the marketing of goods and services from producer to consumer or user. promotions and sales. There are four kinds of research: product. Bradford MBA 75 .    A useful way to end this unit is to quote from Chisnall (2000): “Without valid and reliable information. Good research gives insight into market sectors and helps inform the planning process. management decision making would soon degenerate into some crazy game of chance”. What initial measures would you suggest? Activity 5. Research methodologies can be quantitative or qualitative. customer. This Manager has six hotels under their jurisdiction and it is their job to ensure consistent and high levels of service are achieved.3 – Stop and Think Answer: SUMMARY We can summarise this unit by noting the following main issues:  Marketing research embraces objective and systematic gathering.

You should then see a folder named ‘Unit 5 – Marketing Research’. ACTIVITY 5. 76   Bradford MBA . Watch the video and post your response to the following questions on your group Discussion Board (your tutor group can be found under ‘Groups’ in Blackboard). The Audio and Powerpoint slides cover the main topics in this unit. ACTIVITY 5.5 – DISCUSSION BOARD Go to the Marketing Blackboard page. In the same folder. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. Click on the menu item entitled ‘Formative Exercise’. since the materials are specially designed for the on-site MBA programme at Bradford.Study Book: Marketing POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. there may be discrepancies between some of the issues addressed in this unit and the lecture. On the left hand side you will see a row of menu items you can click on. Click on this and you will see an audio entitled: ‘Unit 5 Lecture Audio’.4 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit. However. Listen to the audio and consult the lecture slides at the same time. Click on this and then click on ‘Unit 5 – Marketing Research – MCQs’ work through the questions provided. You should see a folder named ‘Unit 5 – Marketing Research’. Question 1: What are possible benefits of the application of neuroscience technology to marketing research? Question 2: What are ethical implications of the application of neuroscience technology to marketing research? Question 3: Should there be a clear code of ethics to regulate the application of neuroscience technology to marketing research? If so. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. Click on this and you will see the video entitled: ‘Mind Reading’. In order to do so go to the Marketing Blackboard page. On the left hand side you will see a row of buttons you can click on. Click on the menu item entitled ‘Video Resources’. you also click on ‘Unit 5 Lecture Powerpoint Slides’. Click on the button entitled ‘PowerPoint and Lecture Audio’. On the left hand side you will see a row of menu items you can click on.

which types of research they best support. Dibb S (2001) Marketing: Concepts and Strategies. Strategic Alliances for SSI. NY: McGraw-Hill. London: Thomson South Western Bradford MBA 77 . eleventh edition. Kotler P (2004) Marketing Management Analysis. NJ: Prentice Hall. Zikmund W (2003) Exploring Market Research. REFERENCES/BIBLIOGRAPHY Chisnall P M (2000) Marketing Research. Boston.Unit 5: Marketing Research should the code be applicable in the global context or bearing cultural uniqueness of the country in question? ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 5 then go to the Marketing Blackboard page. New York. eighth edition. Click on this and you will see a podcasts entitled ‘Building Effective Online Communities for Market Research’ by American Marketing Association. fourth edition. Englewood Cliffs. On the left hand side you will see a row of menu items you can click on. He comments on how online communities differ from panels. You will see a folder entitled ‘Unit 5 Marketing Research’. Click on the menu item entitled ‘Additional Learning Materials’ and then click on ‘Additional Audio’. This is an interview with Andrew Moffat. how you can successfully recruit members. Planning and Control. MA: Boston. Vice President. and what you should do to ensure they deliver maximum value. MA: Houghton Mifflin. He argues the importance of online communities as marketing research tools to create the flow of ongoing feedback on their products from their consumers.

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Unit 6 Multiple Choice Questions – Activity 6. Unit 6 – Product/Service and Branding. it is essential that the Marketing Mix is developed and successfully targeted in the market place.7 (See Jobber pages 377–379. and identifying some similarities and differences. Chapters 9. Unit 6 Discussion Board – Activity 6.6 (see ‘Video Resources. Case 19 Unilever’s Quest) (see ‘Group. OBJECTIVES By the end of this unit. Unit 6 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. A key element of the Marketing Mix is the product or the service a firm offers. Unit 6 – Product / Service and Branding’ in Blackboard) 2. Creating a Corporate Identity: Virgin’s Branding Strategy’ in Blackboard) 3. We start this unit on product and services management by defining a product and a service. pages 391–398) and 22 Other: 1. Unit 6 On-Line Live Tutorial – Activity 6.Unit 6: Product/Service and Branding Key reading: 1. 11 (pages 383–387. Marketing Multiple Choice Questions. 10. Live-Online Tutorial’ in Blackboard) 4. Unit 6 Product/Service and Branding’ in Blackboard) INTRODUCTION To ensure that the objectives set out in the marketing plan are met. Jobber. you should be able to:     explain what products and services are identify product and service characteristics explain what brands are and their benefits explain the process and issues in product management Bradford MBA 79 .5 (see ‘Formative Exercises.

even tangible products can have quite intangible benefits. 80   Bradford MBA . We can describe products in terms of features and benefits: Features – these characteristics are discernible and help describe the product’s purpose. Benefits – people buy products and services for the benefits they offer. Charles Revson made a famous comment about Revlon. and then to put together a Marketing Mix which delivers the right bundle of benefits. In the store. places. performance or effort that cannot be stored or physically possessed. Products and services differ largely in their tangibility. colour. we sell hope”. organisation and ideas. which sums this up nicely: “In the factory. They include the technical specification.” (Dibb 2001) We can define a product as anything that is capable of satisfying customer needs. Benefits could include:       good value for money prestige good design ease of use safety economy in use. we make cosmetics. use or consumption that might satisfy a want or need. There are physical products and service products but they are all designed to satisfy customer needs. You need to be clear about the differences between a product and a service. services. the price and any special offers. packaging and availability. persons. acquisition. The marketer needs to understand the benefits that customers are seeking to satisfy their needs.” Services can be defined more specifically as: “An intangible product involving a deed. It includes physical objects.Study Book: Marketing  describe and discuss strategic options in product and brand management PRODUCT Kotler (2005) defines a product: “A product is anything that can be offered to a market for attention. rather than the features themselves. although as you will soon see.

Unit 6: Product/Service and Branding This idea of features and benefits has implications for the focus of marketing communications as we see in Unit 8. and identify six more products and services which can be placed in the continuum. and consider their features and benefits (as above).1 – STOP AND THINK Think about your own company’s product or one with which you are familiar. which we will explore later. Jobber tells us that ‘the percentage share of gross domestic product attributable to the service sector rose from 38 per cent in 1970 to almost 50 per cent by 1990’ (page 792). Activity 6. ACTIVITY 6. Bradford MBA 81 .1 – Stop and Think Answer: SERVICE Services are the biggest growth sector in the EU. ACTIVITY 6. Services differ from products in some fundamental ways.2 – STOP AND THINK Study Figure 22. the physical goods-service continuum (Jobber. page 823).1. but first try the next activity.

Study Book: Marketing

CLOTHING CARPETS MACHINERY

PURE GOOD

PURE SERVICE

SOFTWARE DESIGN MARKETING RESEARCH PSYCHOTHERAPY

Adapted from Jobber (2010, page 823, Figure 22.1) Activity 6.2 – Stop and Think Answer:

There are four characteristics of services: intangibility, inseparability, variability and perishability. Intangibility – A service product is made up of intangible attributes, which concern deed, performance or effort. You cannot experience a service until you take part in it – it is impossible to judge before you have done so. Service providers may use ‘tangible’ features to help consumers evaluate services. An advertising agency may have expensive, stylish offices to indicate their success and care for good design. A private school may produce a glossy brochure and offer parent visits to meet the staff and open days to get a flavour of the service offered. Also unlike a product, the customer does not own the service, for example, a play in a theatre; they experience it.

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Unit 6: Product/Service and Branding

Consider the case of the Ford Motor Company. Ford has developed the company into being both a service and product supplier. Cars can be sold to customers or leased. Prior to the mid-1990s, leasing was mainly available to businesses as a way to finance a fleet of cars. Ford retains ownership of the vehicles and a company pays a certain amount per month for their use. This leasing arrangement has recently been extended (but it is not called leasing) to private buyers as a way of cutting down the cost of ‘ownership’. Customers effectively lease the car for 2 years then have the option of returning the vehicle to Ford or paying a prearranged price to affect true ownership. The success of this among private buyers has moved the focus of the company towards service provision from a previously strong product sales orientation in the private buyer market. Inseparability – A product is produced in a location away from the customer and then distributed to the market. But the production and consumption of a service happens together. The service producer is allimportant in the transaction and interaction with the customer. The immediacy and therefore inseparability of the service product is a key characteristic. Variability – A service varies with the provider of it. Quality levels are difficult to check compared with a tangible product and tend to be subjective compared with a product. For example, a faulty component of a product can be seen and the degree of fault measured using quantitative measuring methods. Service levels are subject to human, subjective judgements. Individual service providers vary in the quality of their service delivery on a day-today basis, simply because they are human and are subject to tiredness, for example. Service recipients likewise vary in their perception of ‘good’ service delivery. Depending on what kind of day you are having, you may score your waiter as ‘excellent’ or ‘average’ perhaps in contrast to the waiter’s own view of the service or their manager’s view. Given this variability and the attendant difficulties of standardisation of services the use of reliable equipment to replace or supplement human providers is sometimes used to ensure the control of standards. For example, drinks machines (if reliable!) deliver in the same way to all customers. The words ‘right first time’ describe the marketer’s response to inseparability and variability. Services cannot be repeated, or even returned. The service must always work effectively. Perishability – Services cannot be manufactured and stored in the same ways that products can. This brings up key issues for service providers concerning supply and demand. At peak times, are there enough staff to
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provide the service? The results of a marketing survey of customer satisfaction levels carried out by National Westminster Bank in the UK in 1994 found that the largest dissatisfier was the amount of time spent queuing in bank foyers at lunch-time waiting for a cashier to be free. Demand for service outstripped supply. National Westminster have since re-distributed staffing levels to cope with peak demand and introduced more ATMs (automatic teller machines) to reduce waiting and ensure cashier service to customers within 10 minutes. The opposite of the demand versus supply paradigm is when supply outstrips demand. In the hotel industry, demand for rooms tends to be less at weekends. Hotel managers need to find more customers to even out the supply–demand equation. Price cutting over weekday rates is one strategy commonly used. Interestingly, this strategy was also traditionally used by airlines. The new breed of low cost airlines has changed this. Instead of reducing prices the closer to departure, in order to sell late seats, these airlines increase prices as departure looms, thus encouraging customers to book early to secure the best deals. Figure 22.2, page 823, summarises our ideas of service characteristics. Read Jobber, Chapter 22, pages 822–825 and 841–847. Here are some characteristics of what organisations may look for in an ‘ideal’ product or service (note that not all the characteristics apply to all products and services):
  

cheap and easy to produce and distribute uniquely satisfies a real need or want in the customer outsells the competition in its core market segment and encroaches into other segments gives an excellent rate of return on investment always in demand – not liable to vagaries of the market place demand grows year after year is immediately identifiable as a brand by the customer is reliable, easy to use, well designed, exhibits high quality standards crosses cultural boundaries and sells just as well in its home country as the rest of the world.

     

ACTIVITY 6.3 – STOP AND THINK
Choose one product or service from your own organisation or one you have worked for and one from a direct competitor. Carry out two

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equipment or machinery will require service in terms of installation.Unit 6: Product/Service and Branding rudimentary product audits using the typography of the ideal product above. lies in understanding what customers perceive as the benefits of the product. since many beliefs about benefits have an emotional base. Because this model puts the customer in the centre. Product analysis helps us to define ideas about features and benefits. which uses this customer-driven model as part of its organisational strategy. this is often carried out by the providers of the machinery. How well did your product/service do versus that of the competitor? Activity 6. and many people are unable to articulate complicated feelings about objects. It shows how products frequently need complementary services to add value. an organisation. The model we consider shows three levels of product. Very often customers cannot articulate this. with the customer and the benefits sought at the centre. The difficulty. Research is directed at gaining a full understanding of what satisfies the customer in terms of the benefits gained from a product or service. For example. of course. The purchase of a plant. Bradford MBA 85 . is more likely to be successful in the areas of:    product planning product development product strategy. Here you will see a link with the ideas we explored in Unit 1 on the successfulness of the marketing-orientated organisation over that of the product-orientated firm. the purchase of a carpet may involve fitting (service) as well as carpet (product).3 – Stop and Think Answer: PRODUCT ANALYSIS Many ‘products’ have aspects of ‘service’ in their make up.

secure and responsible’ are perhaps more pertinent features. getting from one place to another. a car is a complex mixture of the tangible and intangible. The core benefits (also called ‘core product’) is transport. ‘safe. The augmented product is anything that can be offered as a supplement to the basic product to add value. These might include speed. freephone customer care line and a brand magazine are also included. In order to protect or enhance market share. Services such as warranties. In the case of a Porsche. after-sales service. it is vital that products not only have sought-after characteristics. The USP describes the features and benefits. This is the level of product with which you may be most familiar from brochures or advertising information. style and design might be included here. 86   Bradford MBA . Except for the most basic model. The core features (also called ‘expected product’) refers to the characteristics and capabilities which make the car different. but it provides a start. durability.1: Three-level product analysis. As we can see from this three-level product analysis. colour choice. which differentiate your product from that of your competition. but that they offer a unique selling proposition (USP). Augmented product Core features Core benefits Consider a car and let us analyse it in terms of Figure 6.1 above. safety. perhaps its USP is that it confers a ‘young and successful’ image on the driver. special promotional offers such as free insurance.Study Book: Marketing Figure 6. In the case of the Volvo. Physically. A driver purchasing a Volvo family car will have different needs from a driver purchasing a Porsche sports car. this is unlikely to be a major selling point.

  A brand must reflect the attributes and positioning of the product or service. image and identity. You should also be sure that you understand the difference between ownlabel brand. logo. it can develop a brand. Chapter 9. Read Jobber. we normally add a fourth category to the model – potential/intangible product. manufacturer brand and fighter brand. Coca Cola. and above all a reputation for trust and quality. Why is branding so important? Margaret Crimp (1990) says: “A brand is a product or service which has been given an identity: it has a brand name and the added value of a brand image”. Once a product or service is firmly established. You will find key terms and issues about branding. Let’s look at branding in more detail. Bradford MBA 87 . Make sure that you can differentiate between:    product line and product mix product width and product depth product category (product field) brand and variants. Branding is the process by which companies distinguish their product offerings from the competition. Kellogg’s. Brands have a special place in the market place. This brand loyalty gives manufacturers more control over marketing and choice of distribution channels. By developing a strong design.Unit 6: Product/Service and Branding BRANDING It is becoming clear that brands have a key part to play in the idea of products and services. Brand marketing encourages these attributes to be associated by the consumer. since customers have learned that brands can be relied on to provide quality. rather than brand name status. product or service range. It is the brand that is often bought rather than the product or service. for example. for example. strong brand values show through into strong returns on investment. However. We can see here that the branding concept links well with the three-level product analysis outlined above. a brand can grow. Note the following definitions:  Brand name is strictly the groups of words or the letters of the name which can be spoken Brand identity is the name and visuals – the typography. the colour of the pack design or logo and any trademarked slogan. ‘mild green Fairy Liquid’ Brand image distinguishes the product from others in the mind of the consumer – the brand personality of the product or product line.

For example. must be reflected in the whole product field. it is worth noting the disadvantage of branding from the marketer’s point of view. The use of the name is so ubiquitous that is almost used as a noun. brand stretching concerns completely new product categories. the brand name of Hoover is given generic status. This identity can become so well known that it can be simply communicated by association – without the customer being told the brand name. BRAND EXTENSION AND STRETCHING There are two other terms with which you should become familiar. However. Customers’ perceptions of the product. Products can help support or enhance this self-image. Think of sticky tape . looking good. customers who shop for a ‘Hoover’ could be looking to purchase any vacuum cleaner. CK’s target group includes young people who are interested in lifestyle. Branding also helps producers to create separate identities that appeal to different sectors and segments.. How does this coherence develop? What do we mean by base concept? To answer this we need to go back to our discussion of product analysis. 88   Bradford MBA . in the UK. not a trademark in the public’s mind. handbags and accessories (extension) Calvin Klein perfume (stretching) Mars ice-cream bar (extension) Virgin Atlantic (stretching) Virgin Rail (extension) All these products flow from the base concept. Sellotape. and who align self-image with CK’s brand image of sport and health. yes. This way cognitive dissonance is minimised – the customer can perceive the field of products as having a basic coherence and family likeness.Study Book: Marketing A key advantage of branding is that it helps the customer to differentiate between a number of similar products or services.. to maximise the effectiveness of branding the product identity needs to be clearly established and repeated through marketing communications. Consider Calvin Klein. This reduces the value of the brand to the marketer. However. Products have a symbolic value for consumers – they say something that matches the individual’s aspirational self-image. Is perfume a ‘natural extension’ of the clothing brand? The answer is ‘probably’. its benefits and their orientation to and belief in the brand. Examples are:       Dunhill luggage (stretching) Armani belts. Brand extension is the term used to describe the transferring of brands across closely related products.

Good packaging is therefore an important feature of sustaining brand perception. Consider the following example of how brand value was eroded. packaging is the first physical contact a customer has with a product or brand. monopoly and environmental exploitation. an established UK chocolate and confectionery manufacturer. Quality is one of our key characteristics of a good brand. On this basis. Just before Christmas in 1995 in the UK. when mistakes are made. There are some problems associated with branding:  Piracy – Levi jeans. Gerald Ratner very publicly denounced his Ratner jewellery product range as rubbish and singled out his cheapest pair of earrings as ‘costing less than a Marks and Spencer prawn sandwich and worth less’. In 1988. You may be familiar with the case of Nestlé. Nestlé took over Rowntrees. This gaffe allegedly cost the business £50 million and Ratner. This example demonstrates exactly what is rapidly becoming a fact of life – that brands are so important to the market that they are seen as having an asset value on the financial accounts of companies. It should:    show the brand name clearly be the correct size for handling and for customer use of the product give easy-to-read information about the product 89 Bradford MBA . Under attack from cheaper rivals. brands have much to lose. They experience this even before they have used the product itself. do maintain their uniqueness and have a high value in the market place – especially when the name is legally protected by a trademark.Unit 6: Product/Service and Branding Many brand names as you are aware. etc. brands can and are sold. The power of the brand can have a negative effect if its strength is taken for granted. Coca-Cola and Microsoft have been under attack for reasons including labour. Heinz Baked Beans maintained its market position despite wholesale price cutting and competition from ownbrands.   We have talked a lot about the idea of branding. now we look at one aspect of the physical reality of the brand – the packaging. Black Magic. Cartier watches and many other products have all been copied and original manufacturers spend large sums of money to protect their brands Brand name – must be accessible (where appropriate) in all countries and be meaningful in conveying the same product features and benefits as in the producing country Trust – global brands such as Nike. his place on the board. They paid £2 billion more than the estimated net asset value (plant and buildings) in order to own the key brands of Kit Kat. However. Smarties.

A key use of the model is not simply to plot the current PLC position of a product 90   Bradford MBA . With cumulative production. What people perceive as good packaging is an intrinsic cue propelling a customer towards purchase. since packaging in effect is not the actual product and does not itself have the features of the product. On the other hand. Liaising with and making clear these ideas to creative and design staff responsible for package design is a key management task for the marketing manager. specific products and services. rather an indicative one. By the Mature phase of the Product Life Cycle. However. A problem for marketing managers is to ensure that the packaging reflects the qualities. The Product Life Cycle can also take account of the economics of the supply of products to the market. might gain these benefits ahead of the competition.Study Book: Marketing  keep the product in good condition throughout its shelf-life. By the time the Laggards buy. mature and die. the Innovators and Early Adopters have probably moved on and the Decline phase has set in. Cosmetics often have very attractive boxes – sometimes the production costs of a product are outweighed or counterbalanced by the cost of package production. THREE PRODUCT/SERVICE MARKETING STRATEGY MODELS Three models help us to further understand the position of. In the Introduction phase. experience effects and economies of scale take effect and unit production costs decline. the Innovators first pick up and start to use the product. It is about the diffusion of innovation within the market – how new products are adopted and how demand for them grows. These are:    Product Life Cycle Boston Consulting Group Matrix Ansoff Matrix We now look at these models in detail The Product Life Cycle demonstrates how products begin their life. The innovating company who is first to market. attributes and features of a product that they know the customers seek. We could argue that packaging is an important part of the customer’s perceived benefit of a product. Others get to hear about it and Early Adopters purchase the product and act as opinion-leaders to the Early Majority. the following company might learn from the mistakes made by the innovating one! The PLC is not an exact scientific model. the cautious Late Majority is drawn in. it is an irrelevant cue. and potential marketing strategies for.

Typically a Cash Cow might provide funds to support the development of a Star or Question Mark which might in turn replace a Dog. For example. DVDs replacing videos is one such example.1 (Mobile Marketing in a Mature Market. The Ansoff Matrix provides a useful framework for matching product and service choices. Some writers have criticised the BCG growth share box as being too simplistic. as we discussed in this unit. Jobber. Activity 6.2. pages 362–370 noting particularly the BCG matrix in Figure 10.4 – STOP AND THINK Read Vignette 10.Unit 6: Product/Service and Branding or service but to develop different Marketing Mix applications according to the appropriate stage. too static a representation of the live market and being too focused on market share.4 – Stop and Think Answer: The Boston Consulting Group Matrix is a useful addition to the Product Life Cycle in that it encourages marketers to develop a balanced portfolio of products and services. Read Jobber. ‘Stars’. to market choices as we discussed in Unit 3. ‘Question Marks’ or ‘Dogs’. ACTIVITY 6. The BCG represents this by referring to specific products or services as ‘Cash Cows’. a product or service reaching the Decline stage of the PLC might need to be replaced by one in the Introduction or Growth phases. Can you think of any situations for which the ‘box’ does not account or does not help us manage product strategy choices? Read Jobber. page 359) and consider the product life of the mobile phone. Bradford MBA 91 . pages 355–362 and bottom of page 402–409.

The four options are:  market penetration – selling more of an existing product to an existing market market development – selling an existing product or service to a new market product development – selling a new product to an existing market diversification – selling new products to new markets. pages 370–373. NEW PRODUCT DEVELOPMENT Whilst in this module. A forward-looking marketing-orientated corporate culture is an important ingredient in creating products that reflect trends in customer needs and help build a strong competitive position. we can see that life cycle and portfolio strategies can ultimately result in the need for the introduction of new products. a product moving to the Maturity stage in one market might be potentially introduced (market development) in another market. You should try to become familiar with the following concepts:    definition of new product new product development process testing – matching marketing research to new product development Bradford MBA 92   . market penetration is the least risky and diversification the most risky. New products can only be successful if both the company and the product meet the requirements for success at each stage of the product development process. Or. Matched to the PLC. they meet changing needs in the market place.    In terms of risk. the matrix provides four marketing strategy choices. We have already seen why new products are necessary in today’s market. we consider marketing issues concerning the development of new products. These can all relate to the findings of PLC and BCG Matrix analysis. Most new products are in fact product replacements or new lines. In the final part of this unit. we are not specifically concerned with the development of new products. Read Jobber. a product moving to Decline stage might need to be replaced by something completely different (diversification).Study Book: Marketing Sometimes referred to as Strategic Thrust. They replace ageing products. There is higher degree of risk (and reward) with brand new products.

credibility. Product analysis helps marketers find out what makes a product successful. Chapter 11. competence. You should see a folder named ‘Unit 6 – Bradford MBA 93 . SUMMARY We can summarise this unit by noting the following main issues:   Decisions about products are decisions about the Marketing Mix. Branding is a powerful method of positioning a product and of growing customer loyalty. technology allows for enhanced product production. The product mix is about the width. pages 387–388 and 391–402. it can assist in the product planning process. Click on the button entitled ‘PowerPoint and Lecture Audio’. competition increases. but they have limitations. good communication and courtesy. empathy. Products have life cycles which can be used to enable a continuity of products within a brand. depth and breadth of products. reliability. New products are developed to replace existing products or serve new markets. Reasons for new product development include: consumer tastes change. Three-level product analysis shows us that the product is a mix of features and benefits.             POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. On the left hand side you will see a row of buttons you can click on. Service marketing consists of ensuring the quality of tangibles. responsiveness.Unit 6: Product/Service and Branding Read Jobber. Properly managed. Products and services are complex entities made up of tangibles and intangibles. Portfolio models allow marketers to balance net cash users and generators. The Ansoff Matrix helps us to make broad strategic choices based on the level of risk associated with decisions about a product strategy choice. Brand names can add value to a product or product line. the three levels can help extend the Product Life Cycle and help with product development. Brands create individual identities which add value.

Click on the menu item entitled ‘Video Resources’. Click on this and you will see a video entitled: ‘Creating a Corporate Identity: Virgin’s Branding Strategy’. Click on this and you will see an audio entitled: ‘Unit 6 Lecture Audio’. Click on the menu item entitled ‘Formative Exercise’. If you are unsure about how to access the on-line tutorial using the Elluminate software go to the ‘How To’ guidelines in Blackboard for further instruction. Click on this and then click on ‘Unit 6 – Product/Service and Branding – MCQs’ work through the questions provided. ACTIVITY 6. However. since the materials are specially designed for the on-site MBA programme at Bradford.5 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit. The Audio and Powerpoint slides cover the main topics in this unit. Listen to the audio and consult the lecture slides at the same time. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. Post your comments on your tutor group specific Discussion Board. there may be discrepancies between some of the issues addressed in this unit and the lecture. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. In order to do so go to the Marketing Blackboard page. ACTIVITY 6. Consider how the organisations you chose were able to ensure that the brand extension/stretching was a success. Watch the video and note any other brands that have successfully used brand extension and stretching. 94   Bradford MBA . On the left hand side you will see a row of menu items you can click on.Study Book: Marketing Product/Service and Branding’. 2 and 3 outlined below and be ready to discuss these issues during the on-line live tutorial (your module tutor will have posted details of when this tutorial will take place). In the same folder. On the left hand side you will see a row of menu items you can click on. ACTIVITY 6.6 – DISCUSSION BOARD Go to the Marketing Blackboard page.7 – ON-LINE LIVE TUTORIAL Jot down your answers to questions 1. you also click on ‘Unit 6 Lecture Powerpoint Slides’. Click on this and you should then see a folder named ‘Unit 6 – Product/Service and Branding’.

Click on the menu item entitled ‘Additional Learning Materials’. Kotler P (2005) Principles of Marketing. This discusses the importance of branding to non-profit organisations. Click on this and you will see a podcast entitled ‘Branding.. pages 377–379) Question 1: What were the advantages to Unilever of reducing the size of its brand portfolio? What were the risks? Question 2: To what extent does it appear that Unilever followed (i) the BCG Growth-Share Matrix.. Boston: Houghton Mifflin. REFERENCES/BIBLIOGRAPHY Crimp M (1990) The Marketing Research Process.. You should then click on ‘Additional Audio’ and see a folder entitled ‘Unit 6 Product/Service and Branding’.Unit 6: Product/Service and Branding Read Case 19 Unilever’s Quest (Jobber. Upper Saddle River: Pearson. Shmanding. Bradford MBA 95 . Dibb S (2001) Marketing. On the left hand side you will see a row of menu items you can click on. Hemel Hempstead: Prentice Hall.Why Should Nonprofits Care?’ by American Marketing Association. and (ii) the General Electric Market Attractiveness – Competitive Position model approaches to portfolio planning during the FitzGerald era? Question 3: What are the attractions to small companies of buying marginal Unilever brands? What are the dangers of doing so? ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 6 then go to the Marketing Blackboard page. Concepts and Strategies.

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Marketing Multiple Choice Questions. ‘Future Supply Chain 2016’ – Activity 7. on the printed page or on-line. It helps to differentiate goods and services in different segments and is a competitive tool which can help exploit market opportunities. Unit 7 Multiple Choice Questions – Activity 7.Unit 7: Pricing and Distribution Key reading: 1. Other: 1. Price has an important role to play in influencing the nature of an organisation’s exchanges with its environment. Unit 7 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Unit 7 – Pricing and Distribution’ in Blackboard). Unit 7 Marked Formative Assessment – Activity 7. Jobber. All parts of the production and distribution and consumer chain are interested in price – it is the means by which exchange is effected between supplier and user. we look at the price and place elements of the Marketing Mix in turn. ‘I-Tune Face the Threat of Nokia’ ) 4.4 (see ‘Video Resources. ‘Free! Why $0. it has been seen as the element which also focuses on after-sales. More recently. as it is the element where producers and consumers actually meet – in person.5 (see ‘Formative Exercises. Unit 7 Discussion Board – Activity 7.7 (see Jobber pages 659–663. Unit 7 – Pricing and Distribution. Place is unique in the mix.6 (see ‘Video Resources. Bradford MBA 97 . Chapters 12 and 17 Key audio/video: 1. Unit 7 Pricing and Distribution’ in Blackboard) INTRODUCTION In this unit. or relationship building.00 is the Future of Business’ and ‘Pricing the Economist’ in Blackboard) 3. Place (or Distribution) concerns itself with making the product or service available and accessible to buyers. Unit 7 – Pricing and Distribution’ in Blackboard) 2.

but it is essentially different from the other components of the Marketing Mix in two ways: Price is the only variable that generates revenue against recovery of costs and contribution to profit – the others all add to costs. June 1998). PRODUCT PLACE PROMOTION PRICE VALUE 98   Bradford MBA . there is a positive incentive to raise additional funds to provide some contribution to fixed costs and so maximise the proportion of funding directed at the organisation’s primary goals. Any organisation wishing to maximise its profits will want to charge as high a price as possible. Rather. price is one of the controllable variables which marketers use to influence demand. it is the benchmark used by customers to assess the value offered by the rest of the Marketing Mix. Even in the non-profit sector. Businesses which deliver better value for money than their competitors are up to 200% more profitable than those which do not. you should be able to:  differentiate between key approaches to pricing products.     PRICE As one of the 4 Ps. but will be limited by what the customer is prepared to pay. Price is the only variable that does not add value. according to research conducted by PIMS (Marketing Business. and evaluate their strengths and weaknesses in given situations distinguish between strategic and tactical pricing situations explain the strategic and tactical importance of distribution management identify key changes in the distribution environment select appropriate distribution channels for given products and services.Study Book: Marketing OBJECTIVES By the end of this unit.

The price that a marketer sets for a product or service needs to be not too high and not too low. as in many public services where services are free at the point of delivery and publicly funded from taxation. pricing may not seem to have any obvious role for the marketer. You may like to return to Jobber Figure 1. For example. Note the term. they will not necessarily be the lowest priced. It must reflect the costs to the producer of producing products or services and the benefits to the buyer of consuming them. In organisations where there is no direct price to the client or end-user. a low customer orientation at the point of service delivery and costs associated with the poor image of the public sector. These costs add to ‘perceived sacrifice’ and may include waiting times for public sector provision.Unit 7: Pricing and Distribution The price paid shows how much the buyer values the product – but it can also be an essential component of the image of the product. Of course. Firstly. ‘valuable’. However. It is hard for a marketer to get price right. short-term demand for their particular sugar may go up. the right price. However. this works for some products but not so well with others. costs of raw materials. but right! All of us are familiar with promotional sales – when a seller reduces prices in an effort to stimulate demand. Chapter 12. people can only buy so much sugar. ‘Good value’. Secondly. The idea is that. Consider some products you might label as ‘good value’ and ‘value for money’. although the service may be free to the user. if the price is lowered. but not the longterm demand.5 on page 14 to remind yourself about creating customer value. demand for that product will be increased. there are two issues to consider. the bodies who fund the service – for example government run health or education services – have to make decisions on which services offer best value as they are ultimately paid for by local tax payers. ‘value for money’. Read Jobber. exchange rates. If all suppliers of sugar lower the price. but nevertheless you regard them as a fair exchange. ‘low value’ are all descriptions we could assign to familiar brands of products and services – although not everyone would assign the same description to a given brand. Bradford MBA 99 . overall demand is unlikely to go up. There are many external variables – competition. if only one sugar supplier lowers the price. ability of the market to pay – that make setting the right price difficult. there may be significant non-monetary costs to bear.

1 – Stop and Think Answer: PRICING METHODS Marketers would rather not lower prices to stimulate demand. they try to affect demand in various other ways. Even if you had zero costs.1 – STOP AND THINK Consider how your purchasing would change with price reductions and price rises for the following products: books. by manipulating the other components of the Marketing Mix. you could not make a profit unless you sold something. because achieving revenue is the only way to make profit. Activity 7.Study Book: Marketing ACTIVITY 7. electricity and car insurance. The marketer has to take three broad areas into consideration when setting the price: 100   Bradford MBA . petrol. So. coffee. for example:  differentiate the product by adding value and developing the augmented product increase customer loyalty – or at least ensure that it is more trouble for customers to change to an alternative than it is to stay ‘loyal’ promote the benefits and the product’s desirable qualities.    How much more would you buy when the price went down? How much less would you buy when the price goes up? Why? Describe the nature of demand of these products in relation to pricing.   Pricing decisions are very complex.

We will look at each of these in turn. Cost-orientated pricing is the way production-orientated organisations approach pricing. The three methods of pricing – cost-oriented. Many companies establish the price by starting with their own costs. Common industry norms in the UK include mark-ups of:     5–8% on cigarettes 25% on newspapers 30% on fabrics 50–100% on furniture or books. competitor-oriented and marketing-oriented – are actually linked to ideas we have encountered before. Jobber discusses Shapiro and Jackson’s three methods of pricing (Shapiro and Jackson 1978). Producers will often publish recommended retail prices (RRP) that will effectively set the upper and lower limits that retailers can charge. similar to in the USA. Often the percentage chosen is an industry norm. Winkler (1983) found that 80% of companies took little account of market factors and used cost-plus (full cost) pricing. Cost-plus is the simplest way to determine price by adding a markup (a predetermined percentage) to the firm’s costs. the theoretical models are difficult to put into practice. You should recall that there are broadly two orientations businesses can take – a production orientation and a marketing orientation. It is popular with many retailers who buy in finished goods. there have been a number of instances where multiple retailers increasingly want to sell at a discount or a price lower than the RRP. This pricing method starts by asking the question ‘How much did the product cost us to produce?’. This way they sold at a price that at least covered their own costs. however. For example. Recently in the UK.Unit 7: Pricing and Distribution  Organisational factors corporate and marketing objectives stages in the product life cycle costs positioning and image geography custom and practice competition price sensitivity perceived value financial availability  Market characteristics  Customer characteristics Often. Think back to Unit 1 when we looked at differing approaches and orientations to the way that organisations try to achieve competitive advantage. Bradford MBA 101 . a retailer may buy in trousers for £16 and add a 50% mark-up giving a retail price of £24. however.

you are a retailer and you sell goods that have a RRP.000/50 = 800 modems to breakeven PRICING STRATEGY Now read Jobber. pages 422–427. even with a standard mark-up percentage. for example. does the company break-even? This is the point where an activity produces no profit (a surplus) and no loss (a deficit) and is where sales revenue exactly equals the sum of fixed and variable costs. you can use this to establish how many you need to sell to breakeven (cover your costs). without a price war! There is some room for discretion in the price when there is a going rate but to build differential advantage the customer has to see the value of the different price. We can calculate it using the following formula: Total fixed costs/contribution per unit = Number of units to break-even In this example: Total fixed costs/contribution per unit = 40. If. Look at the example below: The cost structure for modems is: Sales price per unit (based on RRP) Variable costs per unit Contribution (sales-variable) per unit Fixed costs £100 £50 £50 £40. For example. The simplest way to do this is by break-even analysis.Study Book: Marketing So. Competitor-orientated pricing focuses on competitors rather than costs to set prices. Competitive bidding can be through a sealed bid – the view is that the cheapest tender is going to be the best ‘value’.000 At what level of unit sales. The marketer wants the product to be viewed by the customer as the best and constant choice of all market offerings. we need to ask the questions: What is the competition charging? What is the going rate? How is that rate set? The going rate seems like a good idea if you want perfect competition but not for a marketer who wants to use price as a way to help differentiate the product from the rest of the market to create differential advantage. This idea has recently come to the UK public sector with the advent of compulsory competitive 102   Bradford MBA . the seller needs to ensure that costs will be covered. Augmenting the product can help to justify an increased price.

believe it appropriate for the suppliers to set the prices based on a cost-oriented. this may have poor results. not the supplier. who is going to pay for the product. de-motivated by low wages. at a higher price than it costs to supply (costorientation). Although it is much more complex. effects on quality of product/service and relationship to overall marketing strategy as well as the more traditional pricing variables discussed earlier in this unit. Now read the rest of Chapter 12 on Pricing Strategy. as a consumer. Marketing-orientated pricing looks at a number of related variables. Which of these products would you. however. These variables include value to customer. The quality of their subsequent product offering may be inferior to the previous standard and not provide the best value. and car insurance). electricity. So. An additional key notion to grasp about the marketing-orientated approach to pricing (see Figure 12. coffee. marketing-orientated pricing is more likely in the long term to achieve a pricing structure that matches the customer’s willingness to pay and thus optimises profit. It is not generally considered a good idea to rely completely on either of these methods when a marketer is setting a product’s price. generally in the face of competition (competitive-orientation).3. Competitor-orientated pricing does look outside the supplier’s own organisation. and it requires astute marketers. rather than one or two specific ones. The latter attitude can be particularly harmful in an organisation that pushes sales targets down the organisation and away from an understanding of the overall costs. although it is the customer. and lack of job security. page 427 of Jobber) is that the pricing decision is dependent on other earlier decisions in the marketing planning process. ACTIVITY 7.1 (books. Bradford MBA 103 . competitive reaction.Unit 7: Pricing and Distribution tendering. the astute marketer needs to take all three bases of pricing into account. their workforce may be under-trained or underskilled. Accordingly. competitionoriented or market oriented basis? Explain why.2 – STOP AND THINK Think again about the products you considered in Activity 7. Lowest bidders may not give the best service. but a ‘just bid whatever it takes to get the business’ mentality can blind the supplier to his own economics. an organisation has to supply what the customer wants (market-orientation). Cost-oriented pricing focuses too much on the economics of the supplier.

Study Book: Marketing

Activity 7.2 – Stop and Think Answer:

The customer wants value for money and quality in line with the price they have paid. The perception of ‘good value’ is one which marketers need to know if they are to set the correct price. In Unit 5, we looked at buyer behaviour related to product/service PLC position; we saw that Innovators are happy to pay a high price for the value of being among the first to own a particular product. Look at Figure 12.4 on page 428 on the sales and time taken for market segments to adopt new products. Price drops as more segments are drawn in and volume increases but marketers need to understand the difference between low price and perceived value. If the price is too low, it might undervalue the product itself. Look at Table 12.4: Conditions for charging low prices, on page 431 of Jobber. Note 4: the ‘make money later’ aspect. To help you with the next activity, here is short review of some definitions you have met in your textbook reading during this section.

Price skimming – setting the price high to recover development costs and make high profits in the short run Marginal cost pricing – setting price at a level which covers variable costs and makes a contribution to fixed costs and profits Mark-up – the amount added to the cost price to allow for an element of profit

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Unit 7: Pricing and Distribution

Product line pricing – prices calculated so that they are equal across a range of goods even though there may be cost differences between products in the range Loss leader – price set at cost or less to attract customers Penetration pricing – a strategy of setting prices at a low level to win market share Price discrimination – charging different prices to different market segments.

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PLACE: TYPE OF DISTRIBUTION
Distribution can take place through a simple or complex distribution chain. At its simplest, it will be a two-participant model where a producer sells directly to a consumer. The last five years have seen massive growth in this model as companies increasingly embrace the internet. Next is the three-participant model. Here a producer sells via a retailer who then sells on to the consumer. Finally, we have the four-participant model, frequently used by small producers or distributors where the producer sells to the wholesaler who in turn sells to the retailer who then sells to the consumer.

ACTIVITY 7.3 – STOP AND THINK
Consider examples of distribution channels that have two participants, three participants and more participants. Think about advantages and disadvantages for each of these channels. Activity 7.3 – Stop and Think Answer:

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WHO USES DISTRIBUTORS?
PIMS data on over 1,800 businesses (PIMS 1998) suggests that about 50% of industrial businesses involve distributors for some portion of their market, whilst distributors are the norm for consumer markets. We can summarise the characteristics of those who use distributors in the following chart: Characteristic Market type Product Life Cycle Product and service type Technological environment Customer base Unit price Buying centre Use distributors Consumer Mature Generic Moderate change Above 1000 Low Professional advisors specify Sell direct Business Introduction/Growth/ Decline Customised Rapid change Below 100 High High Buyer specifies

Importance of purchase Low, moderate

Whilst these findings show general patterns, there are a number of questions that individual businesses need to answer before deciding on their own distribution strategy. These include:

Should we sell direct to the customer, or channel our goods via channel intermediaries? What benefits are there to us as producers in using intermediaries? How would the use of such intermediaries affect the relationship with our customers? What does the use of intermediaries mean for the organisation? Could it mean a reduction in direct sales force? Or an extra burden of administrating supply channels? Or a gain of economies of scale?

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You will see the advantages and disadvantages of using distributors discussed in some detail when you read Chapter 17. In general, we can summarise these as: Control – An advantage of a channel with two participants is that the producer retains control over the marketing process and each aspect of the Marketing Mix. With intermediaries, in return for efficient distribution, the original manufacturer loses some degree of control, particularly if the intermediary is powerful. Legal title for the good is passed along the
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installation and after-sales and repair services. Case study Patsy Klein is the IT manager of a medium-sized company in Scotland with 20 professional staff. By using specialist middlemen. Once a middleman holds stocks. Display of the product at the local level is often a function of the local distributor. have called on the Office of Fair Trading to regulate supermarkets to stop their abuse of buying power. she can buy from an acquaintance. Cost – An advantage of a channel with at least one intermediary is that the producer can push the costs of selling. for example. pricing. offering consumer credit. She is about to buy a new PC for every professional in the company and is doing a preliminary investigation of suppliers. As you read this story. Reach – An advantage of a channel with intermediaries is that they ought to be able to reach more of the market and have useful local knowledge. The producer may be required to cut prices but the benefits are not necessarily passed on to the customer. they also offer specialist functions such as breaking bulk. debt recovery and the investment in finished goods out to the intermediaries. promotion and service levels are made. However. In the UK. which might otherwise be too difficult or expensive to service. The producer’s control is limited to their skills as an influencer and the negotiating power they have over the distributor. The role of the distributor is not simply to store and deliver products. The marketer has to decide whether the choice of distributor fits the image the producer wants to portray. Distributors. decisions about merchandising. This is what she has found out so far: She can buy from one producer online Producer A Patsy. There are fewer lines of contact for the manufacturer. small food manufacturers including farmers. manufacturers can reach niche markets. because her company is not big enough to interest them. segment their own markets and have clear positions within them – their image will rub off on the manufacturer’s products to good or bad effect. Barry’s small company is supplied by one of the producer’s ‘business partners’. the customer She cannot buy from another producer B who has a direct sales force. who holds stocks of the producer’s Bradford MBA 107 . so this leads to lower administration costs too. at best.Unit 7: Pricing and Distribution channel of distribution. Barry. who is an agent for that producer. in consultation. think about how you would cope if you were Patsy. The different forms of distribution channel can have advantages and disadvantages for the customer as well. Image – Distribution decisions reflect directly on the image of the product and the producer. particularly retailers.

as he is not a ‘full service dealer partner’ as he does not represent them exclusively. Producer B Producer B customer PC store Patsy. but not Producer C’s PCs). Producer D will not let Barry service their PCs. 108   Bradford MBA . Patsy. the customer Patsy. and the differentiator is going to be about service response time and service quality. but Patsy can contract with the PC store or with Barry the agent to service them. which are only sold online) Producer B ‘business partner’ Patsy. so she does not want anyone’s PC out of action for any appreciable time. and to discover what the competitors are offering and achieving. Marketers need therefore to set clear objectives covering the level of service before determining distribution policy. but because they have an agreement with the producer. cheap transportation. Maximum service implies large inventories. All she has to do is specify what she needs and request a quotation from Producer A. is aware that her core need is ‘absence of hassle’. (Barry also sells Producer C’s and Producer D’s PCs – but not Producer A’s PCs. the agent Patsy. Barry. with flexible transportation. No distribution system can simultaneously maximise customer service and minimise distribution cost. some basic questions must be answered by marketing research to discover the relative importance of customer services to the target segment. the She can buy from an online retailer (who stocks B. So. Producer B will not service the PCs. the PC store. the customer So far there is no problem for Patsy. the Online Retailer and Colin. Producer B’s staff service them. being a very experienced IT manager. But wait… Producer A will service the PCs only if they are returned to the service point in Ireland. the customer Barry. the agent She can buy from a local PC store (who stock Producer B’s and Producer D’s PCs. low stocks and few distribution points. so choices need to be made. Minimum cost implies slow.Study Book: Marketing PCs. in close proximity to customers. To do this. Colin’s company does not service the PCs. her specification is going to have to be much more complex than she originally thought. Producer B Colin. The PC store and Barry will also service Producer C’s PCs. Online Retailer She can also buy the PCs from her friend Colin who works for a software house that supplies a ‘turnkey’ (hardware and software) system that is suitable for her company. C and D PCs).

Unit 7: Pricing and Distribution Now read Jobber. look for the following key concepts. Chapter 17 on Distribution. Click on the menu item entitled ‘Video Resources’. You’ve read about all the different issues the marketer must keep in mind and all the opportunities for it to go wrong. Bradford MBA 109 . As you read. It is no wonder that companies are constantly changing (or at least tinkering with) distribution channels. All the other elements cost money. You should then see a folder named ‘Unit 7 – Pricing and Distribution’. Place is often the most difficult element of the Marketing Mix for marketers to get right. SUMMARY Price is:     The odd one out of the 4 Ps – it creates revenue. which are the main ideas that you should highlight or take notes on:            Channel intermediary functions Services channels Channel selection factors Distribution intensity Franchising benefits Corporate vertical marketing systems Channel management tasks Sources of channel conflict Physical distribution system components Using physical distribution to improve customer service Economic order quantity. On the left hand side you will see a row of menu items you can click on. Click on this and you will see a video entitled: ‘Future Supply Chain 2016’. ACTIVITY 7. Price is linked to value for money and fair exchange. Pricing is an aspect of positioning.4 – WATCH AND LEARN Go to the Marketing Blackboard page. The video describes challenges of supply chain for consumer products and retail companies.

Price is seen to be an indicator of quality – quality linked to value. However. Listen to the audio and consult the lecture slides at the same time. Click on this and you will see an audio entitled: ‘Unit 7 Lecture Audio’.    POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. the channels chosen by competitors. Brands hold up well against lower price own-brands. Channel strategies involve the choice of the most effective distribution channel. what will they pay? Pricing is linked to the demand for a product or service.Study Book: Marketing  There are three main pricing strategies: – Cost based – what it costs to make + profit = cost to consumer – Competition based – price is placed within competition band – Marketing based – find out about the customers. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module ACTIVITY 7. since the materials are specially designed for the on-site MBA programme at Bradford.   Place is:  Concerned with making products and services available and accessible to the customer. available intermediaries. The Audio and Powerpoint slides cover the main topics in this unit. there may be discrepancies between some of the issues addressed in this unit and the lecture. Click on the button entitled ‘PowerPoint and Lecture Audio’. In the same folder. characteristics of the organisation and its products and service level policies. training. On the left hand side you will see a row of buttons you can click on. motivation and evaluation and managing the conflict that may occur.5 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas 110   Bradford MBA . Channel management includes selection. There are many possible channels of distribution – the right choice depends on an understanding of the customer. You should see a folder named ‘Unit 7 – Pricing and Distribution’. the most appropriate level of distribution intensity and the degree of channel integration. you also click on ‘Unit 7 Lecture Powerpoint Slides’.

On the left hand side you will see a row of menu items you can click on. Mazar and Ariely (2007). Email your reply to your module tutor who will provide you with formative feedback on your answer.7 – MARKED FORMATIVE ASSESSMENT Go to the textbook and read the case on pages 659–663‘i-Tune facing the threat of Nokia’ After you have read the case write up your responses to the 3 questions listed concerning the issue of positioning (max words 1. How can companies do this? Question 2: What is the effect of ZERO pricing on consumer behaviour? ACTIVITY 7. Watch the videos and post your response to the following questions on your tutor group Discussion Board (your tutor group can be found ‘Groups’ in Blackboard). games etc. You should then see a folder named ‘Unit 7 – Pricing and Distribution’. ACTIVITY 7. Click on the menu item entitled ‘Formative Exercise’. On the left hand side you will see a row of menu items you can click on. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. Click on this and then click on ‘Unit 7 – Pricing and Distribution – MCQs’ work through the questions provided. Click on this and you will see an academic paper by Shampanier.00 is the Future of Business’ and ‘Pricing the Economist’. You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 7 Pricing and Distribution’. Click on the menu item entitled ‘Additional Learning Materials’. Question 1: Recent years we have seen many businesses offering their products for nothing (e.g. Click on the menu item entitled ‘Video Resources’.000). ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 7 then go to the Marketing Blackboard page. Click on this and you will see videos entitled: ‘Free! Why $0. This paper discusses the experiments to examine the effect of Zero Pricing by Ariely who appears in the video clip for the Discussion Board in Bradford MBA 111 .6 – DISCUSSION BOARD Go to the Marketing Blackboard page.Unit 7: Pricing and Distribution discussed throughout the unit. In order to do so go to the Marketing Blackboard page. On the left hand side you will see a row of menu items you can click on..). internet communication.

people appear to act as if zero pricing of a good not only decreases its cost. 112   Bradford MBA . 2007: 742). Mazar and Ariely. PIMS Europe Ltd. dramatically more participants choose the cheaper option (i. in the zero-price condition. New York: John Wiley & Sons. Harvard Business Review. REFERENCES/BIBLIOGRAPHY PIMS (1998) PIMS letter 51.6) and his colleagues. Gopal C. Shapiro B P and Jackson B B (1978) ‘Industrial pricing to meet customer needs’. but also adds to its benefits’ (Shampanier. Partsch W and Kamauff J (1998) Supercharging Supply Chains. 119–27. London: Heinemann. The experiments in the paper found that ‘in contrast with a standard cost–benefit perspective. Winkler J (1983) Pricing for Results. chosen by). low quality chocolate priced as Zero cent. whereas dramatically fewer participants choose the more expensive option. Tyndall G.e. Thus. Nov–Dec.Study Book: Marketing this Unit (Activity 7..

Unit 8 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Dove Real Beauty’ in Blackboard) 3. not just in terms of determining appropriate objectives which integrate with the overall marketing plan. Marketing Multiple Choice Questions. choosing the most effective mechanisms to reach them and measuring the results.3 (see ‘Video Resources. Unit 8 – Marketing Communications’ in Blackboard) 2. we look at marketing communications or the promotion element of the Marketing Mix. but in developing messages. ‘Avon SpectraColor Lipstick’. 2. Unit 8 Multiple Choice Questions – Activity 8. Case 30 CRM at Tesco) ( see ‘Groups. Unit 8 Discussion Board – Activity 8. Unit 8 On-line Live Tutorial – Activity 8. Unit 8 Marketing Communications’ in Blackboard). Chapters 13. ‘Does HIV Look Like Me?’ and ‘Inspirational NIKE’ – Activity 8.5 (See ‘Video Resources. Unit 8 Marketing Communications’ in Blackboard). Bradford MBA 113 . Unit 8 Marketing Communications’ in Blackboard) INTRODUCTION In this unit. which will appeal to their target audiences. Unit 8 – Marketing Communications. Most marketers are faced with difficult choices when developing marketing communications strategy.6 (see Jobber. ‘Specsaver Mr Men Offers’. 15 and 16 Key audio/video: 1. Here we examine the nature of the communications process and analyse the requirements of an effective marketing communications plan. We use the term marketing communications to avoid confusion between promotion (one of the 4 Ps of the Marketing Mix) and sales promotion (a short-term tactical tool which is an element of marketing communications).Unit 8: Marketing Communications Key reading: 1. Other: 1.2 (see ‘Video Resources. 14. pages 583–585. Live On-line Tutorial’ in Blackboard) 4. Jobber.4 (see ‘Formative Exercises. ‘Honda The Power of Dreams’ and ‘Nestlé’ – Activity 8.

sales promotion. There is evidence that even the ancient Greeks used advertising for commercial purposes. In 1899 even. Bovril (a blend of meat extract. OBJECTIVES By the end of this unit. This was backed up by advertising and even a vigorous personal selling campaign in bars and pubs! 114   Bradford MBA . direct marketing. and it quickly became established as a major element of commercial life. develop appropriate marketing communications plans for given situations. Other methods of reaching the customer were in widespread use too. although it is likely that advertising was used centuries before this.     DEVELOPMENT OF MARKETING COMMUNICATIONS Marketing communications is not a new phenomenon. During your study of this unit. personal selling. Development of mass production techniques demanded stimulation of mass consumption. advertising was appearing everywhere – in newspapers and magazines. you should be able to:  define the key elements of the marketing communications mix and detail the characteristics of different marketing communications tools use the key stages in planning a marketing communications campaign evaluate the effectiveness of marketing communications in given situations describe the communications process and two alternative modes of how advertising works. The oldest surviving printed advertisement in the UK was produced by Caxton to promote his publication The Pyes of Salisbury in 1477. from each of these categories. so manufacturers had to develop new ways of reaching their customers. railway engines and billboards. collect examples of marketing communications. caramel and spices used as a spread or hot drink) was launched by offering free tastings at the Colonial and Continental Exhibition in London.Study Book: Marketing The six major components of the marketing communications mix are advertising. even on books of matches. Advertising really took off in the nineteenth century during the Industrial Revolution. For example. Eastman Kodak spent US$750. As you read through this unit. good and bad. on buildings. By the 1890s. collect a selection from consumer as well as business-tobusiness and non-profit communications. publicity and the Internet. you will have the opportunity to compare them with examples of good practice and to analyse them using the frameworks from the module. If possible.000 on advertising.

DEFINING MARKETING COMMUNICATIONS In its narrowest sense. In 2009. 24. it was estimated over $421 billion spent worldwide on advertising (PricewaterhouseCoopers. This does not include sales promotion (e. In the UK. exhibitions and conferences. Yet.2% is via internet that indicates developments in IT have led to the rapid growth of direct marketing via electronic media as well as traditional media (e. This broad definition recognises an important point: promotion cannot be developed in Bradford MBA 115 .)..26. Read Jobber.2%). The spending in 2010 is forecasted to increase by 5. and potential customers’. it was the unique power of television to broadcast sound and pictures directly into people’s homes that led to a sharp increase in advertising spend in the 1950s.g. There is an enormous choice of communications media for the marketer. we can define marketing communications as promotion – one of the 4 Ps of the Marketing Mix – and describe it in terms of the six major components of the promotional mix:       advertising sales promotion direct marketing publicity personal selling internet and online marketing. advertising spending is sizeable and accounts over 1% of GDP.. The introduction of the cinema after the First World War. pages 462–468. Marketing Communications represents a very expensive element of the Marketing Mix and so sound planning is essential. However.6bn on UK retail sales promotion. June 2009). Advertising Association statistics estimated total advertising spending (excluding TV sponsorship and Radio Branded content) at £14. TV .Unit 8: Marketing Communications New technologies have always been quickly exploited for their potential as an advertising medium and many such as hot air balloons. However. The Institute of Sales Promotion Ltd. and the costs of publicity and personal sales forces. a wider view adopted by the Chartered Institute of Marketing is that marketing communications is ‘all forms of communication between an organisation and its customers. £25. opened up new ways of communicating with the customer as a captive audience.4% and then expected to fall for 2011.5 billion in 2009.g. but the cost is high. trams and buses are still in use as media today. Chapter 13.

major supermarkets & restaurants (rather than newsagents & take-away restaurants) Pleasure for adults (rather than an everyday economy brand) Skoda cars Calvin Klein jeans Price message Place message Promotion message 116   Bradford MBA . Haagen-Dazs ice cream. Calvin Klein jeans). not just promotion. The organisation must really get to know its customers and what influences their buying behaviour if it is to formulate effective marketing communications strategies.. Another point to note about this definition is the two-way nature of the communications process.1 – STOP AND THINK Explore the message conveyed to consumers by each one of the 4Ps in the examples of product sold in the UK or your own country (for example. ACTIVITY 8. and at worst they will disbelieve the messages and perhaps refuse to buy the product. Use the table below to record your answers. The task for the marketer must be to ensure that the Marketing Mix is integrated to convey a clear and consistent message to the customer.g. If this does not happen. Skoda cars. e. then at best the customer will be confused. To what extent are the messages consistent? Haagen-Dazs ice cream Product message High quality Fresh ingredient Natural flavouring Premium price reflecting high quality and luxury image Mildly discriminated channel.Study Book: Marketing isolation from the overall marketing strategy – each element of the Marketing Mix conveys the message to the target customer.

Language. This could be a brand image and invitation to buy. distractions such as competing messages or interruptions (noise) can affect our understanding. ACTIVITY 8. such as trial or purchase or preventing unwanted behaviour.Unit 8: Marketing Communications THE COMMUNICATION PROCESS The simple communication model is shown in Figure 13. These are feedback responses. You should then see a folder named ‘Unit 8 – Marketing Communications’. sounds and visuals (encoded message) which is communicated (transmission) direct to the buyer. which can be measured by the sender and used to refine future messages and their transmission. if decoded correctly and the message is believed. attitudes or behaviour. Click on the menu item entitled ‘Video Resources’.2 – WATCH AND LEARN Go to the Marketing Blackboard page. Click on this and you will see a video entitled: ‘Honda The Power of Dreams’ and ‘Nestlé’. The supplier (source) strives to develop a clear communication in words. Watch the videos and answer the following questions: Question 1: Who is the intended audience (receiver)? Question 2: What kind of communication tools are used to transmit the message? Question 3: What is the message? Is there only one theme or are there several? Question 4: How do you think the audience will interpret the message and what action are they expected to take? Bradford MBA 117 . it may stimulate a change in the receiver. However. Also.2 on page 466 of Jobber. such as a shift in perception. experience and cultural differences may mean that the messages are interpreted (decoded) quite differently from that intended by the sender. On the left hand side you will see a row of menu items you can click on.

Not only is there no way back but the way forward will accentuate that need. Marketers are making much more extensive use of marketing research to inform decisions and monitor feedback and are shifting to media that facilitate the recording and measurement of individual responses.2 – Watch and Learn Answer: Managing the communications process is a difficult task for marketers and there are several points where the communication can fail. chairman of Unilever. They know how things work and that knowledge is something you couldn’t now take away from them. There is an increasingly active relationship between the buyer and the supplier of goods and services.” (part of an address to UK Department of Trade and Industry. Messages are transmitted via a blend of media or promotion mix. customer or voter. And business will depend more and more on its understanding of what is happening in that consumer’s heart and mind and how changes in society are affecting it. To quote Sir Michael Perry. Between all of us – and with considerable help from the media – we have educated the consumer. That consumer is becoming more and more self-aware and self-confident (as well as more and more sceptical). back in 1996. even if you wanted to. Communicators need to understand their audiences in order to produce compelling messages. The sheer range of 118   Bradford MBA . 1996) There are many new channels of communication. The accelerating pace of change has an important impact on the ways that organisations communicate with their customers and this adds to complexity.Study Book: Marketing Activity 8. but still valid today: “The world belongs to the consumer – whether she (or he) happens to be going under the title of citizen.

much of this success comes from well planned. consumers were still rating them. there are many potential ways to develop and change the ways that organisations communicate with their customers. By now you should be fairly clear about what the communication process is and some of the tools available to the marketer. meet their communications objectives. The legislative framework. limits the choice of messages and media. It is important now to Bradford MBA 119 . over 60% of the UK population read a regional paper at least once a week and 50% read weekly or monthly magazines. For example. Effective communications help to build long-lasting brand value too. To sum up. the cost of media is the single biggest drain on communications budgets. which are cost-effective. receives 135 pieces of direct mail and is assaulted countless times by pop ups and banners every time he/she opens up the “in-box”. Managers need to be able to analyse market communications requirements and plan effective campaigns. Each year the average householder watches more than a thousand hours of television. This contributes to the general level of noise. More than 20 years after General Electric stopped making food blenders. but increasing complexity at every stage of the communications process makes promotion management more difficult. so mistakes are costly. current EU policy is to ban all cigarette outdoor. The receiver. The costs involved mean that marketing communications cannot be a hit-and-miss affair. As one of the largest advertisers in the world. however. Added to this. Supermarket promotions can lift sales by several hundred per cent for example. press and magazine advertising and sponsorship.Unit 8: Marketing Communications choice and the differences in availability of media coverage between countries make media decisions highly complex. which regulates marketing communications. Consumers may not notice the messages or screen them out. Getting the process right can be very successful. is becoming increasingly selective in the screening of messages. manufacturers are prepared to pay retailers to secure shelf space at important positions on the end of aisles. reach the target audience with compelling and appropriate messages and carefully control and evaluate their implementation. In addition. but only a minority will lead to a buying process. As a result.600 posters. for example. is exposed to over 1. Proctor and Gamble estimate that the difference between the value of its assets (£8 billion) and its market value (£37 billion) is mostly accounted for by the value of its home-grown brands. effective communications. Some may entertain and others irritate. The sheer number of these marketing communications makes it impossible for individual consumers to take it all in.

See Figure 13. buying behaviour and awareness. 120   Bradford MBA . internal publics – staff. Marketing communications strategy must be integrated with all other aspects of the marketing strategy. Target audience Segment analysis and target market choices in the marketing plan provide direction on where to channel resources for communication. the resources required and product strengths. and with the overall strategy of the business. their attitudes. the positioning to aim for. All this information helps us to define the tasks of marketing communications:    who to reach (target audience) what to say (message decisions) when. MARKETING COMMUNICATIONS AS PART OF MARKETING STRATEGY As one of the 4 Ps. it also builds a clear picture of the consumer (and those who influence them) that the communications must reach. for example.Study Book: Marketing understand how we plan the process. pages 469–490.3). Other groups in the task environment may require communications too. To understand more about this process read Jobber. such as the dealer network. Marketing communications plans must be made within a framework of decisions regarding segmentation and targeting. external publics – shareholders. such as the segmentation. marketing communication is only one aspect of the broader Marketing Mix and it is important that it is not developed in isolation to avoid conflicting messages (as we saw in Activity 7. pricing and distribution policy. It is important to recognise that the consumer may not be the only relevant target audience. media. and how often to say it (communications mix). government.4 on page 469 of Jobber for the relationship between Marketing Strategy and Communication Strategy. where. so we look at communications planning. These issues are formally set out in the communications plan. should all feed in to the start of the marketing communications planning process. In the process. product. COMMUNICATIONS PLANNING We have already emphasised that communications strategy has to be viewed within the context of the overall marketing plan. The direction developed in the marketing plan. suppliers.

Even in commercial organisations. Objectives also serve as a reference point to evaluate the results of a campaign. today’s communications may pay off in the long term. Many public service communications are aimed at raising awareness or changing behaviour rather than generating sales.Unit 8: Marketing Communications salespersons. Without good objectives. Each group may require different messages and perhaps a different communications mix. or promoting racial equality. A clear statement of objectives operates as an essential communication and coordination device between the organisation and outside agencies that may be involved in working on aspects of the communications programme. A better product may be sweeping the market. There are some circumstances where increased sales may not be appropriate as an objective. Budget may be too low. direct mail about an emergency repair service may convince the householder and be kept for reference but it will not be used until repairs are necessary. argued that sales objectives offer little practical guidance for decision making. There are many variables. The research agency. estimates that it takes up to 32 months for Bradford MBA 121 . Price may be at fault. Communications objectives Read about the theories of how advertising works now (pages 467–468 of Jobber) and bear these in mind when reading the sections on communications objectives (pages 469– 473). setting sales as a communications objective can be problematic. Many factors influence sales. increasing the number of blood donors. long after feedback from measures are needed to inform decision making. in 1961. You may also like to read about salesforce and direct marketing objectives too (pages 521–522 and 558–559). for example. Advertising in certain types of media may take a long time to reach its full audience too. An advertising agency will use the objectives to brief their creative team and co-ordinate the efforts of copywriters. Alternative campaigns can be evaluated against these objectives and appropriate choices made. Milward Brown. Political parties may advertise to generate votes. and if targets are not reached it may not be the fault of the communications campaign. As Reeves (1990) pointed out: “The product may be wrong. gain membership. Distribution may be poor. financial support or reduce the credibility of the opposition.” Russell Colley. A competitor may be outwitting you with strong deals. it is impossible for the manager to guide decision making or to control the implementation of a communications plan. it is difficult to isolate the contribution of advertising and secondly. Firstly. For example. The sales force may not be adequate. media buyers and research departments.

You should then see a folder named ‘Unit 8 – Marketing Communications’. the main concern of marketers is defending and retaining market share. Relevant advertising objectives would be. Colley believed that marketers should analyse the interim steps of the communications and decision-making processes to identify specific communications response objectives. One further argument against sales increase as a communications objective is that in mature markets.3 – WATCH AND LEARN Go the Marketing Blackboard page. to create or widen awareness. to convey a particular message. and any intermediate measures from our understanding of the customer-buying process which help us to monitor and control the implementation of an effective communications programme. unless you estimate the amount sales might have fallen without it. ACTIVITY 8. purchase). However. including sales objectives if goods and services are ultimately purchased. There is an implicit assumption that by changing attitudes or awareness. it is difficult to set measures for the success of marketing communications. On the left hand side you will see a row of menu items you can click on. we therefore affect the behaviour we want to see (for example. but increased sales would be a wider. marketers need to adopt a range of objectives.   In practice. You might have questioned whether intermediate measures such as awareness are of any practical value in themselves in assessing the success of a campaign. ‘Specsaver Mr Men Offers’. Click on the menu item entitled ‘Video Resources’. this is too long to wait to measure performance.Study Book: Marketing readership to reach its full potential in magazines such as Vogue and Cosmopolitan. ‘Does HIV Look Like Me?’ and ‘Inspirational NIKE’. If maintenance is the goal. it is easy to find examples where this simple stepwise process does not hold true:  sometimes changed behaviour leads to changed attitudes – trying a free sample on impulse and forming an opinion as a result sometimes attitudes change but behaviour does not – “I would like to buy but cannot” sometimes behaviour changes but attitudes do not – “I would like to remain loyal but I am overruled for some reason”. or to change attitudes to the brand. marketing objective. Click on this and you will see videos entitled: ‘Avon SpectraColor Lipstick’. Consider and note down which of the adverts is set to achieve any of the following objectives: 122   Bradford MBA . for example.

as discussed above. Firstly. sales are not determined by spend alone. Even within a particular sector. But this assumes that it is appropriate to consider sales as a function of advertising expenditure.3 – Watch and Learn Answer: Setting the budget Different industries place a very different emphasis on communications spend as an element of the Marketing Mix. there is no guarantee that the relationship established from past sales will continue into the future – a new situation might produce a change in the response function.Unit 8: Marketing Communications       create awareness stimulate trial position products in consumers’ minds correct misconceptions remind and reinforce provide support for the salesforce Activity 8. It also depends on quality of communications. Bradford MBA 123 . the shape and parameters of function are not so easy to determine. companies might conduct a marginal analysis by keeping adding to the advertising budget as long as the marginal revenue exceeds the incremental costs. there is wide variation in expenditure. the message and media selected as well as the effect of other Marketing Mix elements. so it appears that there are few general guidelines for setting the communications budget. This can range from 1% to more than 25% of sales value. Even if this is reasonable. In an ideal world. Secondly.

including:         past sales forecast sales and profit marketing environment (competitors. Fill (2009) discusses various ratios including advertising sales. The Institute of Practitioners in Advertising agrees that there is no easy answer to setting budgets. This can then be used to check what the budget will buy in media exposure terms and. a number of methods are used. This is more of a procedure than a single method. the marketer uses as many methods as possible. Broadbent (1984) describes budget setting as a process of finetuning through a cycle of theory. 124   Bradford MBA . The high and low figures provide a range for consideration when setting the budget. objective and task. Essentially. such as executive judgement. Broadbent (1984) makes an important point that budget setting cannot be separated from the rest of the process of marketing planning. Read about the four common budgeting methods. In shaping the budget decision. the total budget is calculated. experimentation and feedback. He recommends the total method to reduce the uncertainty.Study Book: Marketing In practice. economic situation. and therefore no single way to do it. They suggest that an attempt should be made to take account of all factors that influence budget decisions. share of voice and percentage of sales. pages 473–474 of Jobber Which method is the best? It seems that there is no single criterion by which to set budget. expert advice from the advertising agency. executive judgement. etc. marketing managers (proposing). by adding on the production costs. objectives and task and modelling to provide several recommendations for expenditure. four parties are typically involved in this way: senior management (approving). Objectives must be set before the means of achieving them can be worked out and the budget decision is linked directly to what the brand is intended to achieve. the advertising agency (advising) and the media (determining cost levels). Next. check to see if this is feasible given the forecast environment. Each method has its own advantages and disadvantages. the resources availability and the internal political processes.) product performance – actual and perceived sales force quality distribution strength seasonal and regional factors availability and cost of the media and the rest of the communications mix.

Unit 8: Marketing Communications MESSAGE DEVELOPMENT To be effective. influencers and users and the impact of their characteristics and environment (culture. If they are designed to promote a product or service. It certainly demands creativity to produce ideas and images. etc. they must answer the customer question ‘What’s in it for me?’ This stage in the development of marketing communications can be the most exciting. the environment and product characteristics) are addressed. The positioning statement also provides a focus for the advertising platform or basic selling proposition from which any marketing copy and visuals must be built and it also influences media choice. economics.  Does the organisation pass the task of message development onto an external agency as a matter of course? Even if the task is passed onto an external agent there is a need for managers to understand what is involved. Often it is left out of marketing texts altogether and those which do cover the topic may only have little of real substance to offer. Above all. knowledge of buyers. Examples of advice include:   “the page should look and smell like the product” (Krone 1989) Ogilvy’s eleven tenets of good advertising messages includes “avoid superlatives. a positioning statement is created in the marketing plan in order to provide guidance in relation to the target audience and future decisions about the communications objectives. influencers. It will also require considerable skills in production to turn the ideas on paper into an effective communication and to remain within the budget.e. there is little good literature on subject. The process of creating the communication message starts with a thorough understanding of buyers. users. The principal characteristics of the product or service on offer are of particular value too. Sadly.) on buying behaviour. Once these issues (i. Now read Jobber. Bradford MBA 125 . they must also convey the brand clearly and have consistency with the rest of the 4 Ps. pages 284–289 for more information on positioning and repositioning. which have not been used before. and capture the audience’s imagination within a few seconds. We discussed positioning in Unit 3. generalisations and platitudes”. Ogilvy and Mather recommend a “single-minded proposition” – the single most motivating thing you can say about the product. marketing communications must get attention and be relevant to the audience.

the advertising of the Co-operative Bank’s ethical investments and the Body Shop’s buying policy are two good examples. In the UK. The advertisements for the UK car rescue service. shame.Study Book: Marketing With this information. One way to do this is to express the product or service in terms of its benefits rather than its features so that the value to the customer is clearly stated. Emotional appeals attempt to generate positive or negative emotions to stimulate interest. The message content should also take into account what type of appeal is appropriate. as a priority breakdown service for women which showed women stranded in the dark on a lonely road or confronted by an aggressive male generated over 100 complaints to the Advertising Standards Authority in the UK. Moral appeals emphasise the right and proper characteristics of the product or service. A rational appeal might suggest that purchase and use will yield functional benefits for the customer such as fewer problems. This might be conveyed by demonstration of the product or service. action and purchase. pride. value for money or convenience. 126   Bradford MBA . joy. Images can express ideas or feelings that are very difficult to express in words but. body language. humour. The Esso ‘tiger in your tank’ campaign was successfully used in many countries but needed modification in Thailand where the tiger is not seen as a symbol of strength. They may amplify a headline and in certain circumstances form the key elements of the message. shock and fantasy. Automobile Association (AA). once again. this can provide difficulties when crossing country and cultural borders where different regulations. The choice of appeal needs to take account of the characteristics of the target audience and the influence of cultural factors. a comparison with competitor offerings or testimonials from users. symbolism and taboos can present a challenge to the outsider. There are two basic elements to consider:   content format Message content The content should convey the basic reason why the audience should take action – in other words. Other appeals and some examples include guilt. Generating negative emotion such as fear can backfire. the marketer or the appointed agency can begin the task of formulating appropriate messages worded in language understood and used by the customer. Images are powerful means of generating attention and holding it and they are widely used to reinforce written or spoken appeals and build brand personality. it needs a customer focus. love.

but the blend of words. rhythm and pitch. sustain interest and be memorable. illustrations and perhaps colour – each one can serve to enhance or ruin the message. In international markets. for example. men and women are not shown together. the language of the communications message obviously needs translating and there are plenty of anecdotes about brands which have experienced problems when launched in a new country – especially with brand naming. and articulation. Organisations. music and sound effects need to be carefully considered and scripted. or that a shake of the head can mean ‘no’ in many countries but ‘yes’ in others? You can find more examples in Vignette 23. MESSAGE FORMAT AND COMMUNICATIONS MIX DECISIONS The marketer must determine the most effective format to give the message content impact and memorability. speech rate.1 on page 875 of Jobber. body copy. tone of voice and body language can all be scripted and utilised to create a strong message. Language It is important that the customer not only understands the message but interprets it in the way intended by the supplier.   Bradford MBA 127 . yawns. the appeal in a radio advertisement is conveyed by the quality and tone of the voice. it can be surprisingly difficult to design communications that speak the target customer language. For example:  Print media – Typically. sighs. music and sound effects all play a part in the message. Jobber (pages 475–476) highlights the importance of the headline and sets out Ogilvy’s guidelines on print advertisements. appeals and images is influenced by the choice of media. Without the benefit of pictures. For example. Even in domestic markets. may need to conduct detailed marketing research to keep abreast of rapidly changing fashions in language to ensure that their messages are not rapidly outdated. Radio – Words.Unit 8: Marketing Communications International marketers need to be especially aware of cultural and regulatory differences to avoid causing offence and costly mistakes. Even the vocalisation of pauses. did you know that in many countries. TV – Words. the format includes the key elements of a headline. This is essential since the high cost of this medium means that most advertisements are under 30 seconds in length and must work hard to command attention. which supply goods and services to the youth market.

the salesperson must be aware of cultural differences that influence both selling style and the cues from the prospective buyer. and it is not impossible with skilful planning and negotiation. twitter)?       These issues need to be identified and addressed as part of the communications planning process. yet unobtrusive whilst web sites themselves must keep the user interested right through the communications/sales process. Internet – pop ups and banners need to be sufficiently interesting.   Suppose that you have just been appointed to launch the new range of clothing from the multi-faceted UK group. 1-page or 1/2 -page advertisement? Will you use terrestrial or satellite TV advertisements? If so. Your task is to determine how best to spend your communications budget:   Do you advertise in the world famous luxury fashion magazine Vogue? If you advertise in Vogue will you use a 2-page. In international markets. Virgin. Here the salesperson can make use of a vital opportunity to interact with the customer and get feedback on how well the message is received. This is where most of the budget is spent. at what times of the day? Would direct mail be a good option? What promotions would you need to directly encourage sales (e. Personal selling – The format of a typical sales call includes opening.g. A 10% saving on a budget of that size is very worthwhile.Study Book: Marketing  Direct mail – calls to action including actually opening a mailshot are vital. Thereafter. and closing. 128   Bradford MBA . introductory discount price?)? Will public relations play a role in the launch of the new magazine? How can personal selling be used? How can the internet contribute to the communications mix (a magazine website. In straight cash terms. marketers need to ensure that there is sufficient message to elicit the all important response. social networking sites. need and problem identification. use support print or other materials or perhaps even demonstrate the product. For example. The individual can make use of both verbal and non-verbal messages. counter objections. the media planning and buying process is the most important element of many campaigns. presentation and demonstration. Nicorette (nicotine patches and gum to stop smoking) spent £25 million on advertising in the UK alone in 1998. headed by the influential Richard Branson.

the difference between getting the communications mix right and getting it wrong for a brand can be as great as 30% in return on capital employed (Source: Quantifying Marketing’s Impact on Profitability. This pre-testing might take the form of a focus group that is questioned about its attitudes and opinions after exposure to the marketing communications. coupon redemption. store visits. personal selling. Often. several methods have been developed and measures are continually being improved. PIMS Europe Ltd). 14.  Bradford MBA 129 . Unfortunately. even the most innovative sales promotion.Unit 8: Marketing Communications Without an efficient choice and use of the communications mix (e. Post-testing – involves conducting research among the target audience to determine whether the communications objectives have been achieved. will be largely wasted if the communication is unseen by the target audience. The PIMS study into 3. Read the remainder of Jobber. the most brilliant copy and the most original artwork. Post-tests usually attempt to measure whether there has been: – a change in awareness levels – perception and attitudinal change toward the brand or the organisation – behavioural change including enquiries. Despite this. getting the right balance between tools such as advertising. communications are pilot tested in one region before being presented nationally. and sales. 15 and 16.g. EVALUATING EFFECTIVENESS Whatever the budget. Our discussion of communications objectives explored some of these difficulties. Chapters 13. This is a form of live testing that provides feedback on the impact of a campaign without committing the entire budget. since so many variables have an impact on the customer. being selective in your choice of material. PR).500 real businesses in industrial and consumer sectors over several years indicates that there is little correlation between total communications budget and profitability. it is virtually impossible to isolate the specific impact of a single element of the communications strategy. an attempt should be made to evaluate the effectiveness of the communications strategy. However.  Pre-testing – This allows the marketing communications plan and the intended effect to be tested prior to implementation (and prior to expenditure of the main part of the budget).

Our key idea is that while advertising may dominate many communications plans it is not the only way to get over the benefits of your product or service to the target audience. personal selling The target audience needs defining for direction of the most appropriate message Appropriate messages must have the right content and format and delivered via the best fit medium/media Message development process begins with the positioning statement Performance measurement is needed to check effectiveness of any advertising campaign or sales drive. The need for evaluation – if only not to repeat the mistakes of last time again – is an element which needs to be built into all plans. making message and mix decisions and evaluating the effectiveness of communications plans Key elements of the mix are: advertising.Study Book: Marketing SUMMARY In this unit. We can summarise the key issues in this unit as:   Marketing communications plans are the promotion part of the 4Ps Planning process includes – defining communications objectives. advertising is just too expensive for many voluntary organisations. you have covered a lot of ground in terms of the promotion element of the Marketing Mix. publicity. so they heavily bias their communications mix towards publicity. as does control. sales promotions. direct marketing. You have also been introduced to some key aspects of direct selling and the management of sales teams. the effect of images on buyers and the need to set budgets which reflect the objectives of your communications plan. pages 467-468). You have learnt a lot about the language of advertising. In the non-profit sector.      A useful way to end this unit is through a quick comparison of the elements of the marketing communications mix and their position on the AIDA framework which you will have studied when reading the textbook (Jobber. budget setting. 130   Bradford MBA . since personal selling is a high profile part of many industry sectors.

since the materials are specially designed for the on-site MBA programme at Bradford. Listen to the audio and consult the lecture slides at the same time. You should see a folder named ‘Unit 8 – Marketing Communications’. On the left hand side you will see a row of buttons you can click on. Bradford MBA 131 . However. there may be discrepancies between some of the issues addressed in this unit and the lecture. The Audio and Powerpoint slides cover the main topics in this unit. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module ACTIVITY 8. On the left hand side you will see a row of menu items you can click on. In the same folder. Click on the menu item entitled ‘Formative Exercise’. Click on this and you will see an audio entitled: ‘Unit 8 Lecture Audio’. Click on the button entitled ‘PowerPoint and Lecture Audio’.4 – MULTIPLE CHOICE QUESTIONS Now that you have finished this unit of the Marketing module you should test your knowledge and understanding of the key concepts and ideas discussed throughout the unit.Unit 8: Marketing Communications   ADVERTISING STAGE Awareness   Interest   Desire   Action? Interest   Desire   Action Desire   Action Interest ADVANTAGES Builds  awareness   Repetitious   Good  reach Personal  targeting   Can  build  relationships   Can  be  measured Quick  sales/launch  boost   Visible   Competitive Third  party  endorsement   Cost  effective/ higher  readership Interactive   Personal   Can  close  sale Convenience   Customisation   Information DISADVANTAGES Expensive   Impersonal   Difficult  to  close  sale Junk  mail   Poor  reputation   Variable  response Short  term   Cannibalisation   Brand  dilution No  control   Cynicism Costly   Small  reach   Can  be  risky Encourages  comparison   Weak  sites  =  poor   perception DIRECT MARKETING SALES PROMOTION PUBLIC RELATIONS PERSONAL SELLING INTERNET Desire   Action Interest   Desire   Action POWERPOINT AND LECTURE AUDIO Go to the Marketing Blackboard page. In order to do so go to the Marketing Blackboard page. you also click on ‘Unit 8 Lecture Powerpoint Slides’. Click on this and then click on ‘Unit 8 – Marketing Communications – MCQs’ work through the questions provided.

6 – ON-LINE LIVE TUTORIAL Jot down your answers to questions 1. You should then see a folder named ‘Unit 8 – Marketing Communications’. in doing this. On the left hand side you will see a row of menu items you can click on. show how the company has redefined the markets in which it operates and patterns of marketing thinking across the retail sector. Read Case 30 CRM at Tesco (Jobber.Study Book: Marketing ACTIVITY 8.5 – DISCUSSION BOARD Go to the Marketing Blackboard page. 2 and 3 outlined below and be ready to discuss these issues during the on-line live tutorial (your module tutor will have posted details of when this tutorial will take place). Bearing this in mind: Question 1: Can you match up the types of emotional appeal to the advert? Question 2: Why do you think it is important for organisations to engage in such communication with their consumers? ACTIVITY 8. Click on this and you will see a video entitled: ‘Dove Real Beauty’. pages 583–585) Question 1: Evaluate the strategy pursued by Tesco and. If you are unsure about how to access the on-line tutorial using the Elluminate software go to the ‘How To’ guidelines in Blackboard for further instruction. the nature of any problems that others might experience in pursuing a similar approach. Marketing communication is not only used to promote a product but also to communicate the value that an organisation appears to believe in. 132   Bradford MBA . Question 2: The majority of CRM programmes fail to deliver what is promised or expected when they are introduced. Why has the Tesco scheme been so successful when so many others have failed? Question 3: Identify the lessons that emerge from Tesco Clubcard and CRM strategy. Watch the video and post your responses to the following questions on your tutor group Discussion Board (your tutor group can be found under ‘Groups’ in Blackboard). Click on the menu item entitled ‘Video Resources’.

New York. Colley R (1961) Defining Advertising Goals for Measured Advertising Results. London: Pan. ‘Creative Leaders 1977–1987. Majaro S (1982) International Marketing: A Strategic Approach to World Markets. Bradford MBA 133 . A composite of a campaign’. Ogilvy D (1983) Ogilvy on Advertising. You should then click on ‘Additional Video and see a folder entitled ‘Unit 8 Marketing Communication’. Click on the menu item entitled ‘Additional Learning Materials’. London: George Allen and Unwin.Unit 8: Marketing Communications ADDITIONAL READING AND RESOURCES If you wish to learn more about the issues covered in Unit 8 then go to the Marketing Blackboard page. Harlow: FT/Prentice Hall Krone H (1989) Wall Street Journal. NY: Business Books. On the left hand side you will see a row of menu items you can click on. This is Seth’s newest set of perspectives. based on his book Tribes. Association of National Advertisers Fill C (2009) Marketing Communications. REFERENCES/BIBLIOGRAPHY Broadbent S (1984) Leo Burnett Book of Advertising. the evolution of marketing from mass media to hero culture of sorts that led to a change in the way we communicate and spread ideas in the digital age. Click on this and you will see a video entitled: ‘Seth Godin @ TED’.

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Watch the video to gain a concluding overview of the module. Bradford MBA 135 . INTRODUCTION In this unit.1– WATCH AND LEARN Go to the Marketing Blackboard page. you should be able to:  review the steps in developing a marketing plan. OBJECTIVES By the end of this unit. Module Leader Conclusions’ in Blackboard).Unit 9: Revision Key audio/video: Concluding the Module – Activity 9. we revise key issues related to developing a marketing plan presenting a typical format of a marketing plan report.1 (see ‘Video Resources. On the left hand side you will see a row of menu items you can click on. This is ultimately a template for you to write up a marketing plan report. and list the key topic headings in a marketing plan ACTIVITY 9. Unit 9 – Revision. Click on the menu item entitled ‘Video Resources’. The subsequent sections will discuss the key issues and relevant key questions to be addressed in the plan (and in your assessed report). Click on this and you will see a video entitled: ‘Module Leader Conclusions’. You should then see a folder named ‘Unit 9 – Revision’.

SWOT Analysis 7. 12. Executive Summary 3. Internal Marketing Audit Operating Results Strategic Issues Analysis Marketing Mix Effectiveness Marketing Structures and Systems 6. The term ‘Market’ can mean a market segment. an industry sector. the terms of reference are useful to state the objectives of the marketing planning exercise and its coverage. The terms of reference refers to the company or brand on which a marketing plan is being developed and the market in which that plan is undertaken. Marketing Objectives Strategic Thrust Strategic Objectives 8. 11. 1. Business Mission 4. This provides useful headings for you to write up a report in order to present a marketing plan. a geographical area. But it is important to have complete focus before commencing with the work of planning. External Marketing Audit Macroenvironment The Market Competition 5. Budget Organisation and Implementation Control In order to present a marketing plan.Study Book: Marketing MARKETING PLAN The following presents a typical structure of a marketing plan report. Terms of Reference 2. Core Strategy Target Market(s) Competitor Targets Competitive Advantage 9. Marketing Mix Decisions Product Promotion Price Place 10. 136   Bradford MBA .

Unit 9: Revision Executive summary describes the report’s major findings and recommendations. BUSINESS MISSION The business mission is a broadly defined. It provides the basis upon which a plan of action to improve marketing performance can be built. Not every element has to be used. A PEST or PESTL analysis can be used for the analysis. The executive summary should highlight key audit findings and key recommendations. and the technology used. Many companies produce their missions but they do not always necessarily refer to specific products or brands. problem areas. objectives. Macro environment: consists of broad environmental issues that impinge on the business. customer service. It may not be possible to find the company’s business mission. What is important here is that the analysis is appropriate and relevant to the product or brand under the investigation. with a view to identifying key strategic issues. market and market position. A mission statement can dramatically affect the range of a firm’s marketing activities by narrowing or broadening the competitive playing field. enduring statement of purpose that distinguishes a business from others of its type. students frequently cite political stability under the influence “political”. and opportunities. In this case. Bullet-points can be used to present the key points in the executive summary. it is necessary to identify what it is believed to be the mission of the product and brand under the planning. It is designed to provide a busy reader with the major issues contained in the report and therefore should not last more than one page. It should state “what business is the company in?” and “what business does it want to be in?” It may include the markets being served. EXTERNAL MARKETING AUDIT A marketing audit is a systematic examination of a business marketing environment. strategies and activities. This is only any importance if political stability (or instability) has any particular effect on the chosen product or Bradford MBA 137 . The following sections revise the key issues and questions to conduct audit and analysis as well as developing a plan. Areas that can be looked at include innovation. So for example. the customer needs being satisfied. The external marketing audit focuses on the macro environment and the micro environment.

market shares. and geographic region) for sales. INTERNAL MARKETING AUDIT The internal marketing audit focuses on the activities and performance of the company in the light of the external marketing environment.  For the micro environment. size and profitability. customer analysis (who they are. how they rate competitive offerings and how the market is segmented). strengths and weaknesses. It should cover an evaluation of the following four sections. really focus on issues such as customers and competitors. use a simple Porters Five Forces model. channel attractiveness analyses. company capabilities. But again. what choice criteria they use. they are only of importance if they present a strategic threat or the company’s relationship with them presents a marketing opportunity. profit margins and costs. what are their objectives and strategies. As for suppliers. Micro environment includes:  The market: analyses of market size (growth rates and trends). Operating Results This covers operating results (by product. Try and ensure that your identified PEST factors focus on customers and competitors and by inference. distribution analysis (significant movements in power bases. customer. market share.Study Book: Marketing brand. physical distribution analyses and analysis of the role and interests of decision-makers and influences with distributor organisations). New entrants and substitutes are only of importance if it is believed that they present a tangible threat during the period of the plan. Strategic Issues Analysis Strategic issues analysis will answer the following questions:      What are the company’s current marketing objectives? How does the company currently segment the market? What is the company’s competitive advantage (if any)? What are their core competencies? How are the company’s products positioned in the marketplace? 138   Bradford MBA . Competition: analysis of who are the competitors to the company (actual and potential). and any entry barriers that make market entry from new competitors difficult.

and intra and interdepartmental communication. This is a marketing plan and ultimately.e. which has not been discussed in the macro. micro or internal audit.Unit 9: Revision  How are their products placed in terms of market attractiveness and company strength (portfolio analysis)? Each answer will be evaluated to produce strengths and weaknesses. It provides a simple method of synthesizing the results of the marketing audit by summarising the company’s strengths and weaknesses as they relate to external opportunities and threats. refer to the environment). your SWOT must only include information that is relevant to the preceding marketing audit. weaknesses. refer to the company). Bradford MBA 139 .. core competences. The most important thing in this section is to give some information and comment upon effectiveness. Marketing Structures and Systems The marketing structures and systems of the company will be evaluated to identify what exists and its effectiveness.e. marketing training. You need to identify the current 4 or 7Ps. Marketing Mix Effectiveness Each element of the marketing mix (product. Highlight ones that are appropriate and relevant. the marketing planning system and the marketing control systems.12). it succeeds or otherwise on the strength of the marketing mix.5) and in your textbook (e. SWOT ANALYSIS A SWOT analysis is a structured approach to evaluating the strategic position of a business by identifying its strengths. Fig.11.g. competitive advantage and competitive positioning. price and place) will be evaluated in the light of the external marketing environmental analysis. 8. Fig. Any element of the SWOT. Strengths and weaknesses will derive from the internal marketing audit analysis (i. Try using perceptual or positioning maps that are described both in your Study Book (Activity 4. Jobber. opportunities and threats. promotion. Marketing systems include marketing information systems. Importantly. describe each and evaluate each. That is because there is no audit information that would justify such analysis. page 287. is likely to be invalid. page 288. This is an important section. Opportunities and threats will derive from the external marketing audit analysis (i. Marketing structures include marketing organisation. It can then be matched with the mix to strategic issues such as market segment identification. 8.

market penetration is all that is needed. the setting of competitor targets and the creation of a competitive advantage (see the next three sections). If however. details of which you have seen in the study book (Unit 6) and the text book (Jobber. Strategic Objectives Strategic objectives for products need to be set. Strategic thrust is best represented by the Ansoff Matrix. The Ansoff Matrix offers four options: existing products in existing markets (market penetration or expansion). the company will choose competitor targets. It defines where the company wishes to compete. harvest (improve profit margins) and divest (drop or sell product). Weak competitors may be viewed as easy prey and resources channelled to attack them. You might well decide to approach your recommendations on the basis of two or even three Ansoff Matrix areas. A target market is a group of consumers/organizations (segment) that the company wishes to aim its offering and communications at. The options are build sales and market share. pages 370– 373). hold. Target Markets A choice of target market(s) has to be made. new/related products for existing markets (product development). then that is fine. existing products in new/related markets (market development) and new/related products for new/related markets (entry into new markets). 140   Bradford MBA . Two types of objectives need to be considered: strategic thrust and strategic objectives. Strategic Thrust Strategic thrust defines which products to sell in which markets.Study Book: Marketing MARKETING OBJECTIVES As a result of the marketing audit and SWOT analysis. relevant marketing objectives will be set. CORE STRATEGY Core marketing strategy involves the achievement of marketing objectives through the determination of target markets. you feel that for example. The choice of target market may define competitor targets and be influenced by them: market segments with weak competitors may be attractive targets. Competitor Targets Besides targeting consumers/organizations.

Bradford MBA 141 . methods of transportation and inventory levels to be held. price and place (4P’s) and physical evidence. Place Place decisions involve choices regarding the distribution channels to be used and their management. discounts. MARKETING MIX DECISIONS By defining a target market and understanding the needs of their consumers/organizations. Major success is dependent on the company creating a competitive advantage by being better (e. quality and design. credit terms and payment periods. sales and promotions and public relations. You do not need to do a full 7Ps analysis if some of the elements are not appropriate. Promotion Promotion decisions involve choices regarding advertising. Price Pricing decisions involve choices regarding list price. features (that create customer benefits). Do not over generalise. do not simply repeat what the company is currently doing! Develop your own marketing mix. But you must ensure a minimum of 4 Ps. warranties. packaging. and the services that will accompany the product offering. promotion.g. personal selling. This provides the basis of how the company competes. Whatever you do. direct and Internet marketing. the location of outlets. process and people (7P’s). but support your recommendations. superior quality or service).Unit 9: Revision Competitor Advantage A competitive advantage is a clear performance differential over competitors on factors that are important to target consumers/organizations. It is necessary to ensure that a marketing mix is robust and well thought out. or being closer by establishing close long-term relationships with customers. This is a chance to be creative. a marketing mix can be created to meet those needs better than the competition. being faster at anticipating or responding to customer needs than competitors. Product Product decisions involve choices regarding brand names. Decisions have to be made regarding product.

you don’t need to provide a full detailed marketing budget. not simply the marketing communications mix. for the purposes of the assignment within the current module. Remember however. you might then wish to divide that 50% up amongst the different elements of the marketing communications mix. People People decisions involve recruitment. Then you can divide that 100% over the marketing mix and elements within the marketing mix. These can form a natural sub set of Place.g. brand management) or the creation of a marketing department for the first time. BUDGET Every plan needs a budget which must be set according to the objectives of the plan. These focus on who is responsible for various activities. efficiency. Consideration should also be given to implementation issues. Otherwise. These include layout. So. 142   Bradford MBA . think about dividing your budget into percentages. staff dress.Study Book: Marketing Physical Evidence Physical evidence decisions involve choices for service organizations where production and consumption take place simultaneously. and when action will take place. the resources of the organization and the level of ROI required. Yet. Reorganisation may mean the establishment of new marketing structures (e. Process Process decisions involve the ease of purchase/after sales for customers and efficiencies in the supply chain. where things will happen. ORGANISATION AND IMPLEMENTAITON A marketing plan needs a marketing organisation to implement it. motivation and monitoring of people (staff) so that they can implement the other 6 “Ps” of the Marketing Mix. that the marketing budget is for the marketing mix. Some of the figures might be difficult for you to find. training. how the strategy should be carried out. then that’s good. décor. If you can get detailed financial information. if your marketing communications part of the marketing mix accounts for 50% of your budget. So your overall budget represents 100%.

Unit 9: Revision

CONTROL
The aim of control systems is to evaluate the results of the marketing plan so that corrective action can be taken if performance does not match objectives. Demonstrate some simple measures so that you are able to understand whether what is being achieved is related to what is being recommended.

ACTIVITY 9.2 – STOP AND THINK
Below is the questionnaire to bring your attentions to key points in developing your marketing plan (adapted from MacDonald, 2002, xix). Consider the plan you are currently working on for your assignment and identify the areas that you may be able to improve further.

Market structure and segmentation Is there a clear and unambiguous definition of the market you are interested in serving? Is it clearly mapped, showing product/service flows, volumes/values in total, and its shares for the organisation? Are the segments clearly described and quantified? These must be groups of customers with the same or similar needs. Are the real needs of these segments properly quantified, with the relative importance of these needs clearly identified? Differentiation Is there a clear and quantified analysis of how well your company satisfies these needs compared to competitors? Are the opportunities and threats clearly identified by segment? Scope Are all the segments classified according to their relative potential for growth in profits over the next three years and according to your company’s relative competitive position in each? Are the objectives consistent with their position in the portfolio (volume, value, marketing share, profit)? Are the strategies (including products, price, place
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and service) consistent with these objectives? Are the key issues for action for all departments clearly spelled out as key issues to be addressed? Value capture Do the objectives and strategies add up to the profit goals required by your company? Does the budget follow on logically from all the above (or is it merely an add on)?

SUMMARY
This unit revised the issues that need to be addressed when developing a marketing plan. The template of a marketing plan report was presented to help write up a marketing plan report. Each of the subsequent sections discussed the key issues and relevant key questions to be addressed in the plan.

REFERENCES/BIBLIOGRAPHY
McDonald, M (2002) Marketing Plans, Butterworth Heinemann, Oxford.

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Appendix Model Answers to Activities Unit 1
ACTIVITY 1.3
We can use Bradford University School of Management as an example for this activity. The customers, or MBA students, are able to choose from a range of flexible routes and study formats (including the Distance Learning programme you have chosen) to suit their personal circumstances. This flexible package has been developed in response to customer needs – in other words, driven by the market and the opportunities it provides. Compare this with the approach of a UK business school which stuck rigidly to a two-year full-time approach taking the view that anything else was not an MBA – ‘We have a fairly purist view of what an MBA is. It is a general management programme that takes two years, full time.’ Independent on Sunday, 11 October 1998. You may have decided that your organisation falls somewhere between the two extremes offered in the textbook. Perhaps the production orientation and the marketing orientation could be regarded as opposing ends of a continuum. You will, of course, have to decide for yourself what constitutes ‘success’. Profit may in itself not be an appropriate parameter. Voluntary and not-forprofit organisations are also involved in marketing activities in order to win resources and support. Consider for example, The International Red Cross and the Red Crescent Movement – a truly global organisation, highly ‘customer’-driven with a turnover of millions of dollars but entirely non-profit driven.

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Where price is a main determinant in the classical Marketing Mix model.4 You may have concluded that ‘value’ is a rather nebulous term.Study Book: Marketing ACTIVITY 1. ACTIVITY 1. value for money may perhaps better define this area in the not-for-profit sector where this criteria is used by funders and users (key customers of many of these organisations) as a primary effectiveness measure.5 The answer lies perhaps only in terminology. but that it is a crucial notion if we are to understand and address customer need. hard to measure and define in marketing terms. public and voluntary services. in many internal. Different customer sets may seek quite different benefits as we see in Unit 3. Time and energy costs may assume greater importance as perceived sacrifices for customers when assessing the value of goods and services where no direct monetary price is charged – for example. 146   Bradford MBA .

describes these forms of control in detail.Appendix: Model Answers to Activities Unit 2 ACTIVITY 2.3 Jobber. pages 803–810.       Bradford MBA 147 .

Legal/political factors As a global issue. government stability is a fundamental political influence. We have tried to choose typical. In some countries the impact of religious culture is becoming more important. Tangible factors include education and demographics. For example. In other parts of the world. If you are studying in a country other than the UK you will have probably quite different examples. In the developed world one of the key demographic changes is that of a movement towards an older population and one where the traditional nuclear family is less important. From politics comes legislation. disposal income. however. Intangible elements include lifestyle. 148   Bradford MBA . the more stable the environment. Each will have its own impact on a marketing organisation and needs to be carefully understood. attitudes to competition and protection and attitudes to the environment. Every government will introduce its own legislative programme. So.1 As you can imagine there are many issues in each category we could choose to discuss in this response. investment and a whole host of marketing decisions. the more organisations that can plan their operations with some degree of certainty.Study Book: Marketing Unit 3 ACTIVITY 3. neutral examples with which we hope you can identify and apply to your country and organisation: Social factors Social factors are both tangible and intangible. values and expectations and attitudes. This can impact on taxation. This results in significant changes in buying and living habits. in others less. in the developed world political stability is now almost taken for granted. there are far more small properties being built to serve an ever increasing single household population. Again. These in many cases are the result of people’s education (tangible) or culture (intangible). a change in government can have a significant influence on a country’s attitude to business. Will there be a great difference if Democrats replace Republicans in the USA or Labour replace the Conservatives in the UK? Probably not.

Countries such as Germany which are exhibiting a great movement of production to lower cost economies. we need to understand the influences of income. find that as a result consumer confidence is declining. ACTIVITY 3. Technological factors The influence of technology is all encompassing and ever more rapid and changing.2 You will need to take an objective step back and identify the key forces facing and shaping your industry. When consumer confidence declines. so purchasing declines which of course has its own impact on the social and political environments. Companies that exhibit or sell increasingly wasteful products will themselves become penalised or unfashionable as the societies in which they operate develop greater environmental understanding. taxation. patriotism and the general wealth and welfare of the local population. inflation and confidence. Environmental influences can be both government and consumer led. A useful example of the application of 5 Forces is that of the mobile phone network supplier in the developed world: Bradford MBA 149 . From a consumption angle. In terms of market acceptance. Information equates to productivity and marketers need to understand how important it is to predict and keep up with the rapid changes in the technological environment. labour. From production we need to understand costs that businesses face including raw materials.Appendix: Model Answers to Activities Economic factors Economic factors have both production and consumption influences. these then have an impact on quality. taxation and interest rates. Over a decade ago. The increasing globalisation of the world economy means that many companies are now sourcing their products from cheaper. Physical factors These are becoming ever more important as we address the issues of global warming and climate change. Half a decade later the introduction to mass consumption of the Internet changed the way in which companies and individuals communicated with their own external environments. the personal computer revolutionised the way that organisations were able to manage their internal processes. lower cost countries.

For suppliers.     150   Bradford MBA . Experience and strength of brand – Sony has over 60 years of experience. Bargaining power of customers This will be strong because of the competitive rivalry within the industry and the perceived lack of differentiation in the eyes of the consumer. Presence in numerous markets – Not over reliant on one particular market. the market has become something of a commodity as free phones are constantly offered as a sign-up incentive. licenses and marketing is considerable. Threat of substitute products or services This will be medium.Much of Sony’s reputation has been based on producing popular products. Orange and 02 battle for the ever more elusive market share. especially of mobile phones. Broadband could make inroads into general telecommunications but the actual size and portability of the mobile phone will guarantee its survival for many years to come. Bargaining power of suppliers and distributors Many networks own their own distribution. ACTIVITY 3. and the Playstation that have become a phenomenon. Solid image of producing innovative high quality products. Threat of new entrants into the industry This will be weak as investment in networks. Price deals are synonymous with customer acquisition.3 SWOT analysis on Sony Strengths  Global Size and Market Share – Their size and market share still provides Sony with a good foundation.Study Book: Marketing Rivalry amongst the current competitors in the industry This will be strong as providers such as Vodafone. Creates market-defining products – Products such as the Walkman. Power of suppliers is therefore weak.

The much-anticipated launch of the latest Playstation 3 should help buffer profits for the business. Exposure to global markets – Sony sells its products in numerous markets around the world. Alliances with other manufacturers – Sony has aligned itself with the large electronics manufacturer in the world. As a result of this they have reduced the number of products they offer. It once dominated the television market. but still profitable in developing markets. this may reduce Sony’s reliance on any one particular market and take advantage of economic upturns in particular countries. which some analysts suggest leads to a loss of strategic focus. Too broad a product range – Unlike other companies Sony’s sells hundreds of different products. Now it has aggressively tried to rectify the initial mistake by launching its flat screen Bravia range of televisions. and this helps drive profits.5% whilst rivals like Samsung enjoy margins of 14%. most notably for high technology products. New leadership – Giving renewed strategic focus and vision. in fear that it may jeopardise sales of its 151      Bradford MBA .Appendix: Model Answers to Activities  Level of vertical integration – Many of Sony’s products are made from Sony made components. Bureaucratic culture – Stifling organisational structure. This bureaucratic culture led the firm to be too slow in adapting to the changing needs of the market. which are exclusive to Sony.      Weaknesses  Overcapacity – The company still has too much manufacturing capacity like many of its competitors. The company has undertaken a rationalisation programme. Low profit margins – Sony has profit margins around 2. Collapse of Cathode-Ray Television (CRT) market – The market has moved towards flat screen televisions. Sony was slow to establish online music store and develop MP3 products. Strength of ‘Playstation’ Brand – Playstation in the past has brought in over two-thirds on Sony’s profit in the past. Having a large presence in the entertainment industries has stifled Sony’s development of new technology in an effort to protect its interests – For example. Sony was left badly exposed as it viewed flat screen technology as inferior. which has made the turnaround strategy very difficult to implement. Sony’s alliances with companies such as Ericsson in mobile phones. It must rationalise their manufacturing resources. Needs to reduce its cost base. The traditional CRT televisions are on the decline. Japanese Strength in Electronic Engineering Design – Sony possesses strong country of origin effects.

The company needs greater collaboration between its assets.   Opportunities  Expansion of global presence – Needs a greater presence in high population countries. Slow to market products – Playstation 3 has been beset with numerous production delays. and Games. and where there is an increasing appetite for technology products (e. Taking advantage of producing in low cost economies – Sony needs to produce more of its product offering in low cost economies such as China. Utilize electronic platforms to distribute products . so as not to cause channel conflict with existing channel partners. which are experiencing economic growth. New technologies encouraging consumers to buy and upgrade to newer versions – For example. 3G mobile telephones etc. Sony became more concerned about protecting its entertainment interests than developing hit tech products. For Bradford MBA         152   . The business needs greater integration. electronics.This must take place using an integrated channel management strategy.Study Book: Marketing traditional music products. Sony divesting non-strategic assets – The company should focus on three central operations Electronics. so as to leverage its core assets. Entertainment. Further integration and synergy of Software and Hardware aspects of business. with its electronics business. a full year behind schedule. India & China). Over reliance on Playstation brand for profits and huge gamble on BluRay technology in new format wars with rival competitors – If one of these products or technologies flops. which allows competitors enhanced opportunities. it could prove devastating for the Sony brand.  Failing to focus on its core operations – Years of diversification has led to Sony not focusing enough on its core business. consumers buying flat screen technology and demanding high definition televisions.g. Emergence of cornerstone technology that could become an industry standard – It is hoped that Blu-Ray discs will become the industry standard. Model count reduction and investment in manufacturing capabilities to improve efficiencies. Sony’s independent divisions for too long have operated as “silos”. New technologies leading to new product opportunities – For example high definition camcorders. A potentially fatal flaw. These new technologies create new markets.The firm needs to find ways to exploit its dominance in the entertainment business.

which the company can ill afford. making price the key battleground. Haier & Lenovo). Develop crossover products – For example. and growing concerns about copyright theft. akin to the Sony Betamax fiasco. Boardroom clashes with partners such as BMG and Ericsson – Joint ventures do give rise to ongoing tensions between partners if managed ineffectively. Reliant on fickle entertainment industry.g. where success is never guaranteed – Also huge changes taking place within sector. where traditional business models have been altered due to technology. or face the risk of being obliterated through price competition.g. as Stringer is the company’s first non-Japanese leader. 153         Bradford MBA . Increased commoditization of products with no discernable differences apart from prices – Products are becoming increasingly hard to distinguish in terms of quality due to manufacturing improvements. designed by new CEO Howard Stringer – The turnaround strategy may prove divisive. Failure to successful implement turnaround strategy. camcorder.  Creating interoperability – Making Sony products a compelling product offering (e. Changing technology that has changed the competitive landscape New technologies may lead to some products becoming obsolete. games & portable devices).Appendix: Model Answers to Activities example. Sony’s Walkman Phone  Threats  Increased foreign competition – Reduced trade restrictions has led to intensive foreign competition from low cost countries. Chinese technology brands are making huge inroads in markets. Sony has to continually innovate and differentiate. Changing the company’s culture may take quite some time. through a combination of low prices and a solid product range (e. and customers could become disgruntled if their recently acquired technology fails to become the industry standard. and the firm could lose billons if it fails in becoming the next standard format for the next generation of discs. Technologically Leapfrogged – Reduced levels of R&D investment may have led to competitors having superior products on the market and benefiting from cheaper manufacturing efficiencies. Heavily reliant on Japanese market – Sony is heavily reliant on the Japanese market. there are numerous marketing cross over opportunities between its film and games division. R&D investment could be lost if not successful. television. Failure to establish Blu-Ray as a proprietary standard – Blu-Ray disc technology is a big gamble.

where buying is undertaken centrally. Margaret Francis is interested in product sales and customers satisfaction at her store.5 It seems that there is a sector of the market aged 15 to 20 that is not being targeted by any of the current savoury snack manufacturers. the users could be the employees who work in the stores that are re-selling the product. A competitor could launch an above-average hard-textured snack and target this age group.‘buyers’). Bradley Jons as a wholesaler is interested in minimising inventory levels and unsold inventory. Lauren Belles at Greenvales and Bradley Jons at DBW hold the roles of a buyer and a decider for CIC’s new product PLANT-ALL . Whereas. Fred Elliott is interested in achieving sales and target profit margin for garden centre group overall. Described in this case example. Lauren Belles as a retailer is interested in promotional support and reliable. Fred Elliott.  ACTIVITY 4.e. In this case example.  The organisational decision-making process in this example case was not initiated by anyone as this was a proactive attempt by a supplier CIC to sell the new product. Fred Elliott seems favourably disposed to the new product proposition.3 In most organisations there is a Purchasing or Buying Department. and particularly in the absence of Fred’s positive comments. cost-effective supply chain. Anne Sheffield plays the role gatekeeper in DBW’s decision-making unit (DMU) and controls the follow of the information into the DMU. which could well have influenced Lauren Belle’s decision to stock PLANTALL . Tubaloops already has the texture they seek – 154   Bradford MBA . An individual or a group of individuals with authority to select among the purchase alternatives are called ‘deciders’. Margaret Francis is one such person. both Lauren Belles and Bradley Jons are interested in the right price to achieve target profit margin. Certain members of this department will have formal responsibility and authority for signing contacts for purchases (i. Margaret Francis’ observations about CIC’s less than reliable delivery record might have been negatively influenced Lauren Belle. Greenvale’s commercial manager and Margaret Francis store manager at Greevale are influencers. As the purchasing managers.Study Book: Marketing Unit 4 ACTIVITY 4. In addition. By contrast.

Appendix: Model Answers to Activities perhaps it could reposition its brand to be more attractive to this age group. Bradford MBA 155 .

with lapsed users if a current database allows     All these methods represent primary research except for the analysis of complaints. 156   Bradford MBA . The research could be longitudinal to provide ongoing feedback. So objectives here could centre round the following:    To provide guidance for improving service levels To measure service delivery levels To diagnose the problem Methods could be:  Self-completion questionnaires in room.Study Book: Marketing Unit 5 ACTIVITY 5. The key here is to understand levels in the performing hotels as well as in the non performing for benchmarking and learning by best example.3 Objectives would be centred round giving guidance to the regional manager and measuring levels of service. either qualitative or quantitative. at point of departure or sent by post Mystery shopping techniques Analysis of customer complaints (secondary) Staff interviews – they often know what makes the customer happy/unhappy Interviews.

However. the Finish mobile phone company launched its digital music distribution service ‘Comes with Music’ through its handsets to challenge Apple’s iTune monopoly status in the digital music market.. especially in the UK. The product line for mobile phones is not going to move to Decline. pages 659–663). many more classic products (e. Kit Kat) have been in the Mature stage for decades and show no sign of moving anywhere! Perhaps this can be put down to the fact that there are no superior alternatives? Bradford MBA 157 .Appendix: Model Answers to Activities Unit 6 ACTIVITY 6. Rapid take-up has pushed the product through the life cycle but fewer users are prepared to invest in 3G or other new technology to keep it in the Growth phase. On the other hand.g. Coca-Cola. where it has moved rapidly from Growth to Maturity. as described in Case 34 iTune – Facing the Threat of Nokia (Jobber. For example. The competitive pressures of this sector are so great that producers are finding it increasingly difficult to differentiate their products. many high tech products including games and audio/visual systems end their product lives – sometimes in as little as five years. Continuous innovation is critical to sustain in this market.4 The mobile phone market is a fascinating one.

Even price sensitive consumers have to purchase car insurance to be on the road.Study Book: Marketing Unit 7 ACTIVITY 7. Car insurance is essential to car drivers by law. pages 427–443 for full discussions on marketing-oriented pricing. It is expected that the price will be reflect the optimal point between demand and supply for products. there are many cases that demand is also driven by factors such as whether products are essential to consumers’ lives and/or whether the market is monopolistic. they do not have any choice but to purchase it. Consumers do not expect the price of books to go up. the consumer. and your ideas of value so it is the best approach from the consumer’s perspective. However.1 You may buy more items such as books when the price goes down. 158   Bradford MBA . consumers’ preference). Coffee is something many of us regularly consume and it can be preserved for a certain period of time. See Jobber. the demand for car insurance is not necessarily affected by the movement of price as much as books and coffee. You may buy more of items such as coffee when the price goes down. The demand for electricity is another example that is less likely to be affected by price movement. Consumers can do a few things to seek better deals for their insurance policies. Consumers can use their preserves of coffee up or stop consuming it for a while.2 The marketing-orientated approach to pricing focuses on you. And the demand for books is likely to be driven by price movement (and of course. Consumers’ preference and willingness to pay are influenced by a number of factors including product quality. ACTIVITY 7. The book market is highly competitive. Generally. comprising many suppliers. demand for products is likely to be influenced by the level of consumers’ preference and willingness to pay (which is related to their income). However. Advanced technology to date led to the low cost production. product availability and the level of competition. You may also actually buy less coffee when the price goes down. Thus.

or sell direct to the consumer. For the advantages and disadvantages of different types of distribution channel. or sell directly to high-street shops. pages 627–632. read Jobber. Bradford MBA 159 . a computer manufacturer may sell to local dealerships.3 You might have thought of: 2 Participants Computer Dell 3 Participants Insurance – Scottish Widow 4 Participants Pharmaceuticals Doctor GlaxoSmithKline Computer buyer Policy holder Patient Insurance brokers Pharmacist These chains of distribution need not be mutually exclusive.Appendix: Model Answers to Activities ACTIVITY 7.

2 Question 1: Both adverts are intended primarily for the consumer who may be greatly concerned with environment and social issues. For a company with a reputation built largely upon quality and 160   Bradford MBA . The product can be found in major department stores. which has a reputation for quality. whether you are a user of these goods and how you decode the messages from the manufacturer. the simplicity of the little red car and the use of toys in the animation is effective. ACTIVITY 8. The product is being promoted in terms of lifestyle and retailer image. Promotion has relied heavily on links to Volkswagen.1 Your responses may be somewhat different according to whether you are the intended receiver of the messages. although Skoda cars are generally sold through different dealerships. Calvin-Klein jeans are promoted as a designer-exclusive good with a premium price to match. Question 2: Both companies used television as a communication tool to transmit their messages because of its ability to reach a wider audience. Product quality has improved (and it is consistently voted top in customer satisfaction league tables). It highlights the company’s green history and their commitment to educate and inspire. Skoda has done much to improve its image in recent years. that anyone can help reduce impact on the environment. Honda made what is a complicated message easy to grasp. Also you may not have these products in your country.Study Book: Marketing Unit 8 ACTIVITY 8. For Honda. But it also bears a wider audience in the public – those who are generally concerned with corporate responsibility for sustainability. created by Wieden & Kennedy. The ad does succeed in addressing the Honda’s green credentials. has nurtured one of the strongest images for environmental friendliness. Their competitor. The brand name still carries a negative image for many and perhaps the low price reinforces this. Toyota via its Prius model. Question 3: ‘Honda The Power of Dreams’. attempts to communicate environmental issues through the Honda brand in a bid to encourage consumers to form an attachment to green issues.

Nestlé promotes the benefit of a healthier lifestyle. The consumers may consider these products as their alternatives if/when they are to exercise their socially and environmentally minded practices in consumption. ‘Does HIV Look Like Me?’ – to correct misconceptions. The advert draws attention to the fact that all Nestlé’s cereals contain wholegrain (other environmental concerns such as reduced packaging and recycling could be possible avenues for Nestlé to pursue). As part of this. as consumers increasingly demand breakfast cereals that offer the added benefits of a healthier lifestyle and low fat diet rather than simply great taste. people who do ‘things to move us forward. Honda offers tips on how drivers can make simple. consumers may interpret that these companies are providers of socially and environmentally desirable products.Appendix: Model Answers to Activities good fuel economy. the ad does reinforce the message to consumers that the environment is one of the company’s concerns. ‘Inspirational NIKE’ – to remind and reinforce. If the communication is successful.3 Objectives of these adverts are:     ‘Avon SpectraColor Lipstick’ – to provide support for the salesforce. Similarly. Nestlé’s advert addresses environmental concerns of their consumers and highlights the popularity of wholegrain cereals. small changes to their behaviour to make a difference to the world around them. Question 4: Honda says good things come from ‘doers’. ‘Specsaver Mr Men Offers’ – to create awareness. to make stuff better’. ACTIVITY 8. Bradford MBA 161 .

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