2010/11 D I S T A N C E L E A R N I N G M B A
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: firstname.lastname@example.org 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.
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
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
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
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
.. sales and general management positions in the manufacturing industry. He is also Director of Studies for the School's executive education programme with Accent Group. and refine analytical. however. this module is designed to enable you to:
build knowledge and understanding of the key concepts and principles of marketing.. 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. It is strongly advised that you progress through the module studying 1 unit per week. 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). Keith held marketing. develop the ability to apply these concepts and principles to practical marketing situations. most recently with Masco Corp (USA).
MODULE AIMS AND OBJECTIVES
The module is to provide you with a comprehensive introduction to contemporary marketing theory and practice. In particular.
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. problem-solving and creative skills.Introduction to the Module
YOUR MODULE LEADER
Keith Hanning Before he joined the School of Management.
Study Book: Marketing
If you do this. McGraw-Hill. It is strongly advised that you follow the prompts provided and engage with all the materials. This textbook forms an essential and central part of your study. This is when the Blackboard materials for this module will be made available. a case study or an academic paper) and note down some key points/issues then you are strongly advised to do so. or to look at cases or figures featured in the textbook.
. you will be directed to read specific pages. You must read the chapters or the page references as specified at the beginning of each unit. At various points in the units. 6th edition. you will find that the issues addressed on your tutor group discussion board. By following this study regime you will leave yourself plenty of time to recuperate and prepare for the assessment. 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. Completion of these activities is absolutely essential if you are to develop a good understanding of Marketing. You may also find the review sections at the end of each chapter useful in checking your knowledge and understanding of the chapter content. As such if the Study Book advises you to consult additional materials (e. Module Study Book This Study Book will provide you with an insight into the subject of Marketing.g. Simply reading the textbook and the Study Book will not be sufficient. You should also make the effort to read the various cases and vignettes interspersed throughout the textbook. audio of on-site lectures. 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.g. Model answers to all the activities are provided in the Appendix. academic and nonacademic papers). 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. Textbook You should have received a copy of the module textbook: Principles and Practice of Marketing (2010). noting particularly the key issues. David Jobber. during the on-line lectures (if available) and the live online tutorials will correspond closely to your own studies. With this in mind you should aim to start your studies the week commencing 17th of January 2011.
Each week a different issue (and the related tasks) will be introduced in the Study Book. Your tutor will closely monitor the discussions and provide feedback throughout.icio. It is vital that you engage with these discussions and post your ideas. The Del.icio. By engaging in the discussions you will start to learn from other students and gain alternative perspectives on the issues being addressed. The subject and materials for each live on-line tutorial are outlined in the appropriate unit of the Study Book.us materials available via the Marketing Blackboard site provide you with a collection of highly contemporary writings on key marketing issues. your module tutor will summarise the comments/issues raised. 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.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’). I strongly advise that you use this resource in order to develop your understanding of contemporary marketing issues. At the end of the discussion. provide model answers (if appropriate) and close the discussion.us The Del. 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. Throughout the Study Book you will be advised to listen to the audio and consult the power point slides at key moments. 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
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. I would strongly advise that you follow this instruction. The discussions will take place weekly and each discussion will last for 5 days. However.icio. Del. 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. thoughts and comments on the Discussion Board.us resources can be found under ‘External Links’ in Blackboard. real-time discussions on key issues and concepts with other students and academics.
time/date) once the module has commenced. Each week your module leader will visit the Atrium and add to the discussion by posting relevant materials and/or comments. photographs you wish to share with other students). Sites well worth checking out include: http://www. 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). Often this occurs within tutorials where students can answer questions and can gain feedback on their understanding of a particular idea/concept. comments on world events. 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. 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. 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. 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.g. where you can find a relevant article on a particular subject) as well as more personal issues (e. 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. The Atrium The Atrium is an on-line social space which allows you to discuss general issues to do with your studies (e.cim.g. 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.Study Book: Marketing
module tutor will provide exact details of the on-line tutorial sessions (e.co. Further to this.uk (The Chartered Institute of Marketing)
000 words) – to prepare a marketing plan for an organisation of your choice. footnotes. for example. tables. The organisation you choose can be where you are currently working. 1. Please note the appendices must not exceed 15 pages. references and appendices. 1.
The assignment should be submitted in the form of a report and should be typed or word-processed. and to critically reflect the process you have gone through during the development of your assignment. The marketing plan should include the audit (e. your view of the company’s current marketing activity / use of the marketing mix) and
.com (American Marketing Association) http://www. font size 12. Marketing Plan (approximately 3.500 words.org/ (Marketing Science Institute) For further information on additional resources see the sections in Blackboard entitled ‘Additional Learning Materials’ and ‘External Links’. Time New Roman. or you can choose any organisation that particularly interests you. diagrams. Once your assignment has been marked. 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. not including front cover.Introduction to the Module
http://www. Assignment task The assignment consists of the following two tasks.5 spacing.g.
The module is assessed by 100% individual assignment. you will receive written feedback from your tutor. presenting a SWOT analysis in a table without adequate discussions will not be credit worthy. Tables and figures are only an aid to the proceeding discussions.msi.marketingpower. have worked in the past. or perhaps would like to work in the future. it should comprise no more than 3. table of contents. insightful and balanced way. Thus.
The reflexive account provides you with an opportunity to reflect on the project you have undertaken. Reflexive account (approximately 500 words) – to write a reflexive account of your experiences and learning during the preparation of the above marketing plan. Such a diary has several functions:
to record activities undertaken.
To do the above. You are advised to focus on a division of a company. The reflexive account should include elements on:
An assessment of what aspects of marketing plan development process worked well and what was problematic. STP and design of the marketing mix) that you propose are appropriate in the future. What you have learnt from the assignment in relation to the role of marketers in an organisation and in a society. If any doubts regarding the suitability of your choice. Unit 9 – Revision.. 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. you should contact your tutor to discuss the issue further. Reflections on yourself as a marketer (whose inclination is to put their attention to the needs of the customer). in order to address the following issues in your reflexive account:
What happened? What were your reactions and feelings?
As a way of approaching this part of the coursework. 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.Study Book: Marketing
marketing recommendations (e. to reflect on activities and thoughts (for example – “Today I did … this led me to think about my assumptions … and the way I have …). 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. 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. you may ask a number of questions reflecting on your own experiences and learning. These diary entries are not assessed – it is for your own personal use in developing your reflexive account. 2. or a specific territory rather than on one major global corporation.g.
If you are happy with that this is the correct paper and want to continue to submit. In the submission title box provide the title for your submission.g. Submitting the assignment All assignments must be submitted as a single file.
. scroll to the bottom of the page and click Submit. ‘Marketing 10001234’. The First and Last name boxes are automatically filled. 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’. Click Upload. go to ‘Assessment’ → ‘Assignment Submission’. about you as a marketer. Wait while your file is uploaded to the server. Navigate to your file and click Open.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. This should be the module title and your UB number 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. Click the Browse button to upload your file. You should then see a link entitled: ‘View/Complete’. Do not include your name in the title.g. You will then be taken to a submission page. The next page gives you the opportunity to review your submission. All assignments will be submitted electronically via the module Blackboard site. Check that your details are correct. Click on this link. At this point you have not submitted and can return to the submission page to start again if you so wish.g. about the role of marketing in an organisation and in society? What specific conclusions can you come to from this e.
Unit 1 – An Introduction to Marketing’ in Blackboard)
Reading: Jobber. ‘Introducing the Module: Professor David Jobber – Activity 1.’ We can think of marketing as a philosophy that underpins and drives the activities of an organisation. ‘Philip Kotler on Marketing Strategy’ – Activity 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. Unit 1 – An Introduction to Marketing’ in Blackboard) Other: 1. In this first unit.7 (see Case 2 in Jobber.Unit 1: Introduction to Marketing
Key reading: 1. Unit 1 Multiple Choice Questions – Activity 1. Chapter 1 The concept and practice of marketing is concerned with putting the customer first. Marketing Multiple Choice Questions.1 (see ‘Video Resources. Unit 1 – An Introduction to Marketing’ in Blackboard) 2.2 (see ‘Video Resources. Unit 1 – Professor Jobber’s Introduction’ in Blackboard) 2. All elements of marketing serve to determine the approach of organisations and ultimately their business performance. We examine this in detail in later units. ‘H&M Gets Hotter’) 3. Unit 1 Discussion Board – Activity 1. Jobber. Chapter 1 Key audio/video: 1.6 (see ‘Formative Exercises. Unit 1 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. pages 33–36. 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. we provide an overview of marketing by looking at the complexity of delivering an ever-changing set of products and services
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.Study Book: Marketing
within a business context that is broad. characterised by direct contact between sellers and buyers. Production of goods and services was on a small scale for local use and directed at a stable. subject to economic fluctuations and has to deal with volatile consumer tastes and demands. Click on this and you will see a video entitled: ’Introducing the Module: Professor David Jobber’. Much of the actual selling was mediated by direct contact between seller and buyer.1 – WATCH AND LEARN
Go to the Marketing Blackboard page.
By the end of this unit. This process is now a highly differentiated and complex function within the organisation. which manages the relationship between the organisation and the customer. marketing has developed from the idea of a simple exchange process. little changing community whose needs were easy to measure. You should then see a folder named ‘Unit 1 – An Introduction to Marketing’. we look at the philosophy of marketing and marketing orientation and the role of marketing within modern organisations. On the left hand side you will see a row of menu items you can click on.000 people. good or service. 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. meet and satisfy. Goods were typically sold or bartered for within the locality in which they were made. Few large cities existed – even London in 1780 only had a population of 300. More specifically. Click on the menu item entitled ‘Video Resources’.
ACTIVITY 1. Europe was primarily an agrarian economy with a widespread population living in small towns and villages. 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. Up to the late 18th century.
Advertising was used as a means of making the customer aware of product availability and the benefits on offer. outweighs our ability to discriminate purely on price and quality. medicines and foodstuffs to working people. Increased competition and fast-changing political. in many cases. standard and quickly produced diversity of goods. No doubt. These organisations engaged in mass production for home and overseas markets. Development of mass production techniques demanded stimulation of mass consumption. From the late 18th century. with the exception of pre-Republican France that began industrialisation in the early 19th century. 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. choice. 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. for example in small agricultural market communities that hold livestock and produce markets. In the context of these beginnings of a truly international market. For example. Today. but this also gave them an important opportunity to establish quality and value in the minds of the customer by use of a brand. marketing as a discipline will continue to evolve in order to provide
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. encouraged by the co-operative movement. Retailers set up branches all over the UK as the idea took hold. Kellogg’s Cornflakes celebrated its centenary (100 years) in 1998. marketing has developed as a management discipline in its own right. Having satisfied local needs. Allied to this growth was the birth of large manufacturing companies such as Ford and Lever Brothers. in most of mainland Europe. With increased disposable income. the buyer–seller relationship became more distanced. Manufacturers needed to find ways to differentiate their product from that of their competitors. in the so-called ‘developed’ world. Many of us have far more consumables and goods than we can possibly need. Many brand leaders established during this period are still market leaders today. so marketers have to devise more and more sophisticated mechanisms to differentiate the ‘value’ of their offerings from those of their competitors. In this context. social. the mechanisation of production began to bring a reliable. groceries started to sell basic products such as soaps. and towns grew. goods could be marketed to a wide range of national and international customers. consumers became more sophisticated and manufacturers competed to provide a greater choice than staples for basic needs. In the mid-1800s. Even bartering is widely carried out in developing countries. In recent years. Companies such as Fry and Pears packaged their products to protect and preserve the goods.Unit 1: Introduction to Marketing
It is easy to forget that this simple exchange form of ‘marketing’ still exists today.
MARKETING AS AN ATTITUDE OF MIND
The marketing concept suggests that organisations need to focus their attention on the needs of the customer. If customer needs change. actively seeking to understand the customers and their needs before making decisions about which markets and which groups of customers to serve. in the simplest form. Not all organisations are the same. the key difference here is the level of responsiveness to the customer and their needs. This can provide a significant competitive advantage over other suppliers who are not geared up to take immediate advantage of the situation. 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. Consider the situation with cameras: In the 1990s. of that imminent or actual change. Organisations which are truly marketing oriented are outward-looking. Look at Figures 1. not merely the recipient. Marketing in this type of organisation is largely confined to a support function concerned with promoting and selling the product on offer. 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.2 shows. easy-to-load cameras which provide a range of formats but it was a full year before Canon and other camera manufacturers could respond. the way that many industries have thought of ‘marketing’. Having identified potential market opportunities. Contrast this basic model with that of the marketing-orientated model in Figure 1. then an organisation that is marketing orientated will be aware.3.
.Study Book: Marketing
practical frameworks to help managers make appropriate decisions in a complex environment. The customer is relegated to last place – as someone to be overcome with aggressive sales methods. Contrast this to Canon’s development of the digital camera and Kodak’s tardy response. through its research function. Kodak launched its APS system to meet the demands for simple. the organisation creates product or service solutions that serve and satisfy the needs of current and potential customers better than the competition. The customer is the starting point for business activity.3 on page 5 of the textbook.2 and 1. The productionorientated model in Figure 1. of course.
featuring Philip Kotler from Northwestern University discussing marketing strategy at the London Business Forum. production-orientated management becomes focussed on unit cost of an often quite limited range of product or service in order to achieve organisational objectives.2 – WATCH AND LEARN
Go to the Marketing Blackboard page. Click on the menu item entitled ‘Video Resources’. On the left hand side you will see a row of menu items you can click on. Of equal importance. the philosophy of a customer-driven organisation.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. In your view. By watching the video you will gain an understanding of current issues surrounding marketing strategy. Click on this and you will see a video entitled: ‘Philip Kotler on Marketing Strategy’. which adopts a marketing-orientated stance in the world market. In the first type of organisation.4 on page 9 of the textbook when assessing the success of a particular business philosophy. The organisation goes where customers’ needs are detected and seeks to fulfil those needs by being responsive to the customers.Unit 1: Introduction to Marketing
Focus of effort There is also the issue of management focus in the two types of organisation. You should then see a folder named ‘Unit 1 – Introduction to Marketing’.
.3 – STOP AND THINK
Consider your own organisation or an organisation with which you are familiar. What is the business purpose of that marketing function? Consider the organisation in terms of the efficiency/effectiveness quadrant in Figure 1. By contrast. which of the two business philosophies – ‘production-oriented’ or ‘customer driven’ – prevails? The checklist in Table 1.
ACTIVITY 1. 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. drives it to exploit latent and undeveloped opportunities.
We can then begin to comprehend how organisational strategies built on evaluating and responding to the wider environment can ensure company survival. links directly with the idea of customer ‘value’ and organisational ‘values’. difficulty of obtaining the item. The idea we touched on above of a ‘successful’ company and that of ‘profit’. we can begin to look at issues in the wider marketing environment. since once we can understand what drives customers to buy. let us now return to the idea of a marketing philosophy driven by a customer-focused marketing orientation. how the customer defines value!) is one we will return to in Unit 3.3 – 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. cost of making the wrong decision). 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 key ideas of perceived benefit and perceived sacrifice are important to explore now. The difficult problem of how we define customer ‘value’ (or more correctly. growth and ‘success’. However. 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. service. uncertainty about making the right choice.
Let us examine each one in turn: Product (or service) The product or service decision is fairly self-evident.
They form the backbone of marketing activity. In a study of 1.700 senior marketing executives. page 13. Make sure that you understand the key concepts of ‘perceived benefit’ and ‘perceived sacrifice’. 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.4 – READ AND LEARN
Read the example of McDonald’s outlined in Jobber.
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. From your own experience of entering a McDonald’s restaurant. marketers must conduct research into the products that customers actually want or need. a company develops its Marketing Mix containing four main elements:
product price promotion place. There is no doubt that McDonald’s is a globally ‘successful’ company.
THE MARKETING MIX
Based on an understanding of its customers. 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.Unit 1: Introduction to Marketing
As a company. Hooley and Lynch (1985) teased out the marketing characteristics of high and low performing companies (based on reported profits). how do you personally rate McDonalds in terms of value?
Now we look at how the organisation sees and promulgates its marketing strategy through its marketing activities and approach. 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.
promotion is only one part of marketing and covers a range of marketing communications from advertising to public
. Suppliers. Supermarkets in turn can offer ‘loss leader’ items to shoppers to entice them into buying other non-discounted goods. We look in detail at product and service management in Unit 6. 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. Renault got it right. for example. Consider. 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. Disparate information perhaps. but that those smallish families had more leisure time. there was a rise of 17% in the growth of small businesses. boxy car designed almost as an extension of a social living and business space and set the scene for the proliferation of people carriers. Procter and Gamble. 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. In the late 1980s in Britain. Relative stability in petrol prices meant that buyers weren’t necessarily seduced by ‘economy’. the Renault Espace people carrier launched in 1989 in the UK.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. Promotion Promotion is often perceived by the general public as being synonymous with ‘marketing’. The marketing environment in terms of prices offered by the competition is a key factor which marketers setting prices must take into account. small business people were using their vehicles for business purposes. often offer preferential rates to their large supermarket customers over those offered to small corner shops. We look in detail at price in Unit 7. More leisure meant people were travelling for social reasons. this meant that the function and place of the car in society was changing (or indeed had changed). but to a skilled marketing department at Renault. The price of oil had remained stable for the past 8 years. they developed a large. Social research showed that people weren’t having bigger families. for example. However.
for the Marketing Mix to be successful it should be well blended to create competitive advantage. for example. it can all be wasted effort if the goods are not in the right place for the customer to make the purchase.5 – STOP AND THINK
Consider the value of the Marketing Mix to your understanding of your own organisation’s marketing activities. The choice of distribution outlets for goods and services can also affect the image of the brand. If you are working in the voluntary and not-for-profit sector. Demand soared and Tellytubbies dolls became one of the highest selling Christmas toys of 1997. limited availability can prove to be an advantage. Process and Physical Evidence – sometimes known as the ‘Services Marketing Mix’ should also be taken into account. consider the relevance of the Marketing Mix to this
. Place You develop a great product or a superb service. for example. Note the seasonal introduction of this product. becoming less important as virtual shelf space via the internet takes a more prominent distribution position. Sometimes. it needs to deliver the benefits which customers seek and to satisfy their underlying needs and wants. Three other elements of the Marketing Mix – People. the launch of Tellytubbies dolls in the UK in Christmas 1997. offer it at precisely the right price and promote it in a sensitive and well-defined way. 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. the Tellytubbies campaign scored highly. Generally.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. This is where the importance of the final part of the Marketing Mix becomes clear. In terms of promotional advantage over the competition. however. We discuss these in Unit 6. Overall. News of shortages was broadcast on all major UK television channels with pictures of queuing at major stores. We could argue that the fact that demand outstripped supply was a marketing planning decision to increase long-term customer demand. In many cases. However. Physical shelf space is however. We look at distribution in detail in Unit 7. Consider.
How can a model so dependent on the profit motive have relevance to organisations set up with different organisational objectives? Activity 1. 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. 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
. 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. 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. especially in the last 50 years. You should note the following key points:
Marketing historically is a human activity concerned with exchange Marketing ideas have developed. 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. various methods of reaching audiences and key inputs to make in the design of the marketing plan.5 – Stop and Think Answer:
Reading: Summary/Review in Jobber. non-profit or profit-motivated sector of the economy.Study Book: Marketing
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. You should see a folder named ‘Unit 1 – Introduction to Marketing’. However.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. The Audio and Powerpoint slides cover the main topics in this unit.
ACTIVITY 1. Listen to the audio and consult the lecture slides at the same time. since the materials are specially designed for the on-site MBA programme at Bradford. Click on the button entitled ‘PowerPoint and Lecture Audio’.7 – DISCUSSION BOARD
Complete Case 2 ‘H&M gets Hotter’ (Jobber. Please focus on the areas that are applicable to/have been discussed in this unit of the DL MBA Marketing module. In order to do so go to the Marketing Blackboard page. Click on this and then click on ‘Unit 1 – An Introduction to Marketing – MCQs’ and work through the questions provided. 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’. 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). Click on this and you will see an audio entitled: ‘Unit 1 Lecture Audio’. Click on the menu item entitled ‘Formative Exercise’. 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?
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. 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. In the same folder.
Journal of Marketing Management.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. Verhoef and Leeflang (2009) paper provide a fresh look at the antecedents and consequences of the marketing department’s influence within the firm. Gebhardt.
Hooley G J and Lynch J E (1985) ‘Marketing lessons from UK’s high-flying companies’.
. Click on this and you will see two academic papers by Gebhardt. Carpenter and Sherry (2006) and Verhoef and Leeflang (2009). On the left hand side you will see a row of menu items you can click on. relating it to market orientation and firm performance. You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 1 An Introduction to Marketing’. Carpenter and Sherry (2006) paper presents a conceptual model to explain how firms create a market orientation. 65–74. Click on the menu item entitled ‘Additional Learning Materials’. 1(1).
6 ‘Marketing Metrics’ 3. Unit 2 Discussion Board – Activity 2. In the first part of the unit. We explore how the ideas we are going to learn in this module can be brought together into a unified whole. Then we concentrate on marketing strategy and some useful tools for devising.Unit 2: Marketing Planning
Key reading: 1. Chapters 2 and 21 Key audio/video: 1. and list the key topic headings in a marketing plan identify the elements of a marketing audit. Unit 2 – Marketing Planning’ in Blackboard) 2.5 (see ‘Formative Exercises. Unit 2 – Marketing Planning’ in Blackboard)
In this unit. Unit 2 – Marketing Planning’ in Blackboard) Other: 1. we concentrate on strategy and planning. ‘Strategic Marketing Planning’ – Activity 2.4 (See ‘Video Resources. Coca-Cola vs Pepsi case study) (See ‘Groups. Marketing Multiple Choice Questions. Unit 2 Multiple Choice Questions – Activity 2. we clarify these terms. and apply them in given settings identify a range of marketing objectives
By the end of this unit. Unit 2 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Where appropriate.7 (see Jobber pages 30–32. Live on-Line Tutorial’ in Blackboard) 4. you will need to link to other units. you should be able to:
detail the specific steps in developing a marketing plan. Jobber. implemented and controlled in a way to ensure that organisational business objectives can be met. delivering and evaluating the success of strategy. Unit 2 On-Line Live Tutorial – Activity 2.
to see how the marketing planning process fits into broader organisational strategy.1).1 with that found in the textbook Figure 2. however. page 40. You can think of these ideas in linear terms (Figure 2.
.1: The objectives tree company mission | organisational objectives | business objectives/business strategy | marketing objectives | marketing strategy | operational objectives Compare Figure 2.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. others may be new. 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. the marketing planning process.1. You may be already familiar with some of the following ideas. Figure 2.
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.
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.
Bradford MBA 29
. deliver business objectives in line with the stated mission. try and compare this with its business objectives. 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. What are the organisation's business. 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. the important factor to recognise is that marketing planning is part of broader strategic planning.1 – STOP AND THINK
Consider your own organisation or one that you are familiar with. The aim is that organisations have correlating business and organisational objectives that are mutually supportive. 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. which empowers staff and helps support the business objectives. including marketing. pages 38-39). while strategic management ensures that all parts of the business.Unit 2: Marketing Planning
Marketing planning serves the objectives of the marketing strategy which in turn serves the objectives of the strategic plan.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. Activity 2. When we distinguish between marketing planning and strategic planning. for example.
pages 4–6). It is also the role of marketing to inform the wider strategic plan of any need to change focus. based on what marketing research finds about changes in the wider environment. have a forward-thinking marketing team who would devise a successful marketing strategy which would translate directly into a workable and achievable marketing plan. implementing and controlling the mission statement. Marketing would be responsible for setting. They would market one product only.
. We look at this in more detail when we investigate marketing implementation and application. companies would be easy places to run. In their internal structure. It can be a source of conflict in organisations. 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. however things are seldom so simple. Senior Management team. 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. many organisations exhibit elements of both typologies – it is rare to find an organisation in which all departments conform to one form of orientation. business objectives. The organisation naturally would be run along lines of a successful marketing-orientated business. every department would recognise. which have a strong marketing team. but where the strategic focus is drawn from another department.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 a marketing manager’s ideal world. for example. own and support the objectives set for them by the marketingled Board of Directors. Chief Executive Officer or Management Committee (depending on the form of constitution taken by the organisation). In real life. marketing management activities and the wider organisational strategic plan. organisational objectives and overall strategy. such as finance. even in organisations which overtly declare themselves to be customer driven. 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. 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.
let us see how they fit into the wider marketing planning process.1. 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.
. Read from the heading ‘Marketing Objectives’ in Jobber. pages 48–55. we need to know where we already are. page 40 in the textbook the marketing planning process. Jobber (2010. page 42) defines a marketing audit as: “A systematic examination of a business’s marketing environment.”
Before we focus on the two areas of objective setting for marketing. it is the objectives which inform core strategy. strategies and activities with a view to identifying key strategic issues. Competitive advantage cannot be won without clear objectives or strategic thrust. objectives. 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. The need for accurate and complete. It is clear that marketing teams need strategic thinkers to come up with the core strategy and organisers to process and deliver that strategy. Note Figure 2. You can see here the link between the ideas we discuss in Unit 5 about marketing research. implementation and methods of control. As you can see from the diagram. up-to-date information is critical to the relevance and usefulness of the finished audit. ‘The Rewards of Marketing Planning’. In itself the audit is only of benefit if we use the information to make informed choices about our next move. Marketing planning at the business level ends with marketing objectives – after that. planning issues centre around the marketing management areas of mix decisions (the 4 or 7 Ps).
judiciously exercised in line with organisational concerns like culture and process these can help meet planning objectives.
ACTIVITY 2.” This is not a quote by Drucker as you might think.” Implementing marketing strategy involves the key management skills of resource. page 775. You may find it interesting to look at the transition curve in Figure 21. people and operational management. even from worse to better. Implementation focuses on actions: who is responsible for various activities. Are you aware of any barriers or forms of resistance to the implementation of marketing ideas or solutions? Look at Figure 21.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. how the strategy should be carried out. Check out the four ways of combining strategies and implementation shown in Figure 21.3 on page 780 to see how people deal psychologically with change. “Change is not made without inconvenience. pages 775–780 noting the relationship between strategy and implementation shown in Figure 21.1. but by Richard Hooker writing in about 1580 and as quoted by Dr Johnson in the Preface to the English dictionary. where things will happen and when action will take place. Read Jobber. Jobber. invites you to differentiate between aspects of strategy and implementation.5 and read the explanatory text on pages 781–785 to help you identify possible change slowing and halting strategies.
. We also look at issues concerning control and organisation of the implementation process and how.2 – STOP AND THINK
Think about your own organisation or one with which you are familiar.2. “Marketing strategy concerns the issues of what should happen and why it should happen.
IBM see their staff as internal customers – and their support.2 – Stop and Think Answers:
Read Jobber. page 795. Does it work? How could it be developed? Does your organisation have a change master? If it does. Marketing managers need something practical to help think through strategies to drive change. 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. This reading covers all the key aspects of internal marketing. Vignette 21. 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. Read Jobber. then you may find it useful to identify the activities such a person undertakes which effect change.2. pages 785–795. 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?
. While you are reading. reflect on your own organisation’s internal marketing strategy. All worthwhile plans and strategies necessitate substantial human and organisational change inside companies. 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.Unit 2: Marketing Planning
Activity 2. 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. Developing implementation strategies.
Take particular note of the characteristics of the marketcentred organisation and the matrix organisation. We have explored ideas of strategic objectives. Read the description on pages 795–798 of this type of organisation.IBM. page 796 in Jobber. IBM follows a kind of matrix organisation.1. 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.1. to learn more about how it organises its sales and marketing. you will see the relationship between the first three questions we posed earlier and the marketing audit. on page 797. Check Figure 21. When you consider operational control you need to be clear about the three main ways. Read Jobber. Note the particular features of the product-based organisation and the market-centred organisation. Other forms of marketing structures are possible which take more account of marketing objectives and customer requirements.
. When considering the issues of strategic control. to see the relationship between strategic objectives and operational management. Figure 2.
Marketing control is the final part of the marketing planning process. www. and Figure 2. the whole structure is put under stress. Return to the model of the marketing planning process. This audit forms the starting point for the control process. page 40. No one has full responsibility for a particular product or market.9. Check its website.Study Book: Marketing
Let us now look at the marketing organisation and consider how companies organise their marketing function. Responsibilities are clear but as product ranges grow and the markets served increase. Does this look familiar to you? Many organisations are structured along similar functional lines.com. Turn to Table 21. Jobber.1. pages 801–810 Make sure that you understand the differences between strategic control and operational control. ‘Potential conflict between marketing and sales’. This kind of conflict is very common in an organisation that is organised along functional lines. The Objectives Tree (above).
and customer satisfaction measurement (this may be carried out within your own organisation). SWOT help us to plan “where we are going”.4 – WATCH AND LEARN
Go to the Marketing Blackboard page. 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’. The video provides some insights of how a process of developing a marketing plan can be managed. On the left hand side you will see a row of menu items you can click on.
. Marketing strategies are a sub set of overall business strategies. Click on the menu item entitled ‘Video Resource’. market share analysis.3 – STOP AND THINK
Explain what is meant by: Profitability analysis. sales analysis.3 – Stop and Think Answers:
ACTIVITY 2. Activity 2.
We can summarise this unit by noting the following main issues:
Marketing planning is part of overall organisational or business planning. You should then see a folder named ‘Unit 2 – Marketing Planning’. The Marketing Audit helps us to understand “where we are”.Unit 2: Marketing Planning
ACTIVITY 2. Marketing control measures help us to understand the effectiveness of our marketing activity.
However. Click on the button entitled ‘PowerPoint and Lecture Audio’. Click on this and you will see an audio entitled: ‘Unit 2 Lecture Audio’. Listen to the audio and consult the lecture slides at the same time. You should then see a heading entitled ‘Marketing Multiple Choice Questions’.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.6 – DISCUSSION BOARD
Read Jobber. 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. What are the strengths and weakness of these metrics?
ACTIVITY 2. pages 30–32)
. you also click on ‘Unit 2 Lecture Powerpoint Slides’.Study Book: Marketing
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page. Discuss the marketing metric used in your organisation. Click on the menu item entitled ‘Formative Exercise’. page 803–810 (‘Operational Control and the Use of Marketing Metrics).7 – ON-LINE LIVE TUTORIAL
Jot down your answers to questions 1. Click on this and then click on ‘Unit 2 – Marketing Planning – MCQs’ work through the questions provided.
ACTIVITY 2. there may be discrepancies between some of the issues addressed in this unit and the lecture. Read Case 1 Coca-Cola vs Pepsi (Jobber. 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. 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 order to do so go to the Marketing Blackboard page. Please focus on the areas that are applicable to/have been discussed in this unit of the DL MBA Marketing module. In the same folder. since the materials are specially designed for the on-site MBA programme at Bradford.
ACTIVITY 2. The Audio and Powerpoint slides cover the main topics in this unit. You should see a folder named ‘Unit 2 – Marketing Planning’.
You should then click on ‘Additional Audio’ see a folder entitled ‘Unit 2 Marketing Planning’. 38. This will provide an idea about what sort of issues marketers incline to emphasise in comparison to their counterparts. 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. You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 2 Marketing Planning’. Click on this and you will see a podcast entitled ‘How to Work with IT’ by Marketing News.
ADDITIONAL READING AND RESOURCES
If you wish to learn more about the issues covered in Unit 2 then go to the Marketing Blackboard page.Unit 2: Marketing Planning
Question 1: Assess both Coca-Cola and PepsiCo in terms of their level of marketing orientation? Question 2: What advantages. 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. Click on the menu item entitled ‘Additional Learning Materials’. American Marketing Association. Click on the menu item entitled ‘Additional Learning Materials’. European Journal of Marketing. On the left hand side you will see a row of menu items you can click on. There is also a podcast available. Shaw and Enke (2004) ‘Relationships between engineers and marketers within new product development: An Angle-German comparison’. This provides some insights of how marketers work with members of IT department to implement marketing activities.
. Click on this and you will see: Shaw. if any. 5/6.
All companies have to work according to external influences which affect them. Unit 3 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Chapter 3.4 (see ‘Formative Exercises.Unit 3: Marketing Environment and Auditing
Key reading: 1. Marketing Multiple Choice Questions.
. Chapter 2 (pages 42–48). Dealing with a Recession’ and ‘Ethical Brands in a Recession’ in Blackboard) 3.5 ‘Marketing in an Economic Crisis’ (see ‘Reading. 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. Firstly we study the key influences from the external marketing environment – the macro and the micro. Unit 3 – Marketing Environment and Auditing’ in Blackboard) 2. Unit 3 Discussion Board – Activity 3. Most companies find it difficult to influence the former but easier to influence at least some of the latter. A marketing-oriented organisation looks outwards to the environment in which it operates. Jobber. Unit 3 Marketing Environment and Auditing’ . From this position. Unit 3 Multiple Choice Questions – Activity 3. Unit 3 Marketing Environment and Auditing’ in Blackboard)
No company operates in a vacuum. and Chapter 19 (pages 705–713) Other: 1. In this unit we look at the two principal elements of the Marketing Audit. 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 then take a look internally at the organisation. in order to understand its key marketing strengths and weaknesses. we can start to develop effective marketing strategies.
. 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. economical.1 on page 78 in Jobber. It starts externally (the environment). We start by looking at Figure 3. legal and technological factors develop an understanding of the key competitive micro forces understand the basics of the internal audit develop the SWOT analysis. Let us look at each of the two elements in turn.
THE MARKETING ENVIRONMENT
Read Jobber. social. 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.Study Book: Marketing
By the end of this unit. There are many reasons why marketers need to have an understanding of this.
The environment in which any organisation operates is made up of two interdependent elements – the macro element and the micro element. environmental. you should be able to:
understand the marketing environment identify the key macro elements of political. proceeds internally and finishes with a summary SWOT analysis.
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. For example. 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.
Marketers must be aware of the environmental opinion of governments. social values. Note political lobbying is one example of how a company can try to indirectly control government policy. sector growth rates. with his Five Forces Model. pages 705–708). The micro-environment is best described through what Porter. 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
. Whereas the macro-environment is made up of influences to which companies need to adapt. the media and the public in general and the impact it may have on their activities. calls the ‘structural determinants of the intensity of competition’ (Porter 1980. Technological aspects – new technology in business affecting communications. the influence of pressure groups. population distribution.Unit 3: Marketing Environment and Auditing
The macro-environment This is also called the wider or far environment. the micro-environment includes influences over which most companies can exert some type of control. 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. one part of the far environment. production processes and administration of the organisation. new materials for use in products. For this reason. worldwide currency fluctuations Physical environment – environmental factors play an increasingly important part in influencing consumer choice and shaping government regulation. Jobber.
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. social trends Legal/Political situation – government attitude to business. The SLEPT factors concern the:
Social factors – lifestyle patterns. political movements. income levels. 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. business controls. legislation to control or support business activity Economic state of the wider market – national GDP.
How strong is your company and where does it exhibit competitive strengths and weaknesses?
. cosmetic. mobile phones. Activity 3.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. housing) or one you choose in the UK or your own country. soft drink.1 – STOP AND THINK
Assess the macro environment (SLEPT) for one of the following products (tobacco.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.1– Stop and Think Answers:
Matching this to internal competencies is another. pages 42–48 Understanding the external environment is one thing.Unit 3: Marketing Environment and Auditing
Activity 3. Chapter 2. 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. Listed below are some key elements of an internal marketing audit that need to be understood and acted upon: Strategic issues Firstly. 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?
. Marketing structures We discussed integrated marketing orientation in Unit 1.2 – Stop and Think Answers:
Read Jobber. 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.
So. Concurrently.and micro-environmental influences to the opportunities and threats boxes of the SWOT. They form the basic assessment of business. pages 42–48 SWOT analysis is a useful tool for helping us to bring together the key elements of our environmental and internal analysis.
BRINGING IT ALL TOGETHER – SWOT ANALYSIS
Read Jobber. price. promotion and distribution strategy needs to be matched to our operating results. 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. customer or region and costs. Chapter 2.Study Book: Marketing
Operating results Operating results include profits and margins. sales by product.
. Typically we will match Strengths to Opportunities to develop competitive advantage whilst ensuring that Threats combined with Weaknesses do not result in competitive disadvantage. the impact of our product. Creatively. Weaknesses. 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. Opportunities and Threats. we might also try and convert our weaknesses to strengths or our threats to opportunities. 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. 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. SWOT analysis stands for Strengths.
We need to gain a detailed understanding as to how competent we are internally to meet the pressures of the marketing environment. You should note the following key points:
The marketing environment should be scanned continuously for opportunities and threats. Jobber. Activity 3. pages 101–106).Unit 3: Marketing Environment and Auditing
. SWOT analysis is a useful tool for bringing the key marketing audit information together.3 – Stop and Think Answers:
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.
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. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. You should see a folder named ‘Unit 3 – Marketing Environment and Auditing’. In the same folder. Is this a sensible thing to do? Question 2: What are the opportunities. In order to do so go to the Marketing Blackboard page. 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 DL MBA Marketing module.5 – DISCUSSION BOARD
Go to the Marketing Blackboard page. Click on this and then click on ‘Unit 3 – Marketing Environment and Auditing – MCQs’ work through the questions provided. 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). there may be discrepancies between some of the issues addressed in this unit and the lecture. However. Click on the button entitled ‘PowerPoint and Lecture Audio’. On the left hand side you will see a row of buttons you can click on. Click on this and you will see two papers entitled: ‘Dealing with a Recession’ and ‘Ethical Brands in a Recession’. Click on the measure item entitled ‘Reading’.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. if any.Study Book: Marketing
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page. organisations may exploit during the current economic crisis. Click on this and you will see an audio entitled: ‘Unit 3 Lecture Audio’. On the left hand side you will see a row of menu items you can click on. you also click on ‘Unit 3 Lecture Powerpoint Slides’. You should then see a folder named ‘Unit 3 – Marketing Environment and Auditing’.
ACTIVITY 3. Click on the menu item entitled ‘Formative Exercise’. since the materials are specially designed for the on-site MBA programme at Bradford.
Click on this and you will see a podcast entitled ‘The Distribution Trap’ by American Marketing Association. imposing costs and changes in strategic direction and operational control’ (from AMA podcast website. 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. Click on the menu item entitled ‘Additional Learning Materials’.marketingpower.com). You should then click on ‘Additional Audio’ see a folder entitled ‘Unit 3 Marketing Environment and Auditing’.
Porter M E (1980) Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press.
. www.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. On the left hand side you will see a row of menu items you can click on.
7 (see ‘Video Resources. Unit 4 – Understanding the Market’ in Blackboard). an organisation can improve effectiveness of the marketers’ task of matching the supplier’s offerings to the customer’s needs. These three areas make the buying and selling process truly ‘win-win’.9 (see Jobber pages 141–143 Case 7 Cappuccino Wars) (‘Groups. Unit 4 Multiple Choice Questions – Activity 4. Marketing Multiple Choice Questions.7 (see ‘Formative Exercises. we look at buyer behaviour and market segmentation. The Story of Stuff’) 3. ‘McDonalds Repositioning of the Golden Arches’) 5. We review the importance of understanding the market as the first step in delivering the organisation’s marketing objectives. Chapters 4. Unit 4 – Understanding the Marketing’ in Blackboard) 2.8 (see ‘Video Resources. Change and Crisis’ – Activity 4. Unit 4 – Understanding the Market’ in Blackboard) 2.Unit 4: Understanding the Market
Key reading: 1. The unit will cover one of the most important marketing tools.10 (see Jobber pages 297–299. ‘The Story of Stuff (2007) – Chapter 5: Consumption’ – Activity 4. ‘Repositioning: Marketing in an Era of Competition. market segmentation. Other: 1. Jobber.
. market segmentation (the current unit) and marketing research (Unit 5).6 (see Video Resources. Live On-Line Tutorial’ in Blackboard) 4. Unit 4 Discussion Board – Activity 4. Unit 4 Understanding the Market’ in Blackboard)
In this unit. Unit 4 On-Line Live Tutorial – Activity 4. Through understanding buying behaviour. Unit 4 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Unit 4 Marked Formative Assessment – Activity 4. 5 and 8 Key audio/video: 1.
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. 2001).
. In general terms. which leads to a consumer purchase. 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. impact on organisational success. personal and social influences on consumer behaviour. in terms of their purchasing decisions.
HOW DO CONSUMERS MAKE DECISIONS?
Read Jobber. they both follow the same sorts of buyer behaviour and a supplier would follow the same general principles. Can you see any weaknesses in this model of buying behaviour? We will look at two different kinds of customers – consumers and organisational customers. pages 109–120 Figure 4.
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. 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.2 on page 119 of Jobber shows a simple linear process. We look first at some of the general principles and use examples of consumer and organisational buying behaviour to illustrate them.Study Book: Marketing
By the end of this unit. and Customers’ needs can be satisfied only if marketers get the Marketing Mix right.
the need to move house may have been triggered by the arrival of a new baby. Now. test driving a car. I didn’t really need that new suit.’ ‘The house seemed just right.’ Post-purchase – Did you make the right decision?
. be honest. impulse – figure in your decision? Interestingly. a car. not the mind – ‘I just fell in love with the feel of the car. based on analysis of facts. but it looked great. how rational do you think the basis for your decision was? How much did emotions – desire. a suit. impatience. and so on? Did you ask the opinions of people who already live there. etc or use the Internet? Did you do research by ‘walking around’ – visiting neighbourhoods where you might like to live. a decision to buy a suit might have been triggered by an advertisement or a job interview. 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. and how did you respond? Would you characterise this decision as a ‘rational’ one. or was it more ‘emotional’? For example. Many purchases are made by the heart. lack of interest. what did they do. newspaper advertisements. 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.1 – STOP AND THINK
Think of a major purchase you have made recently – a holiday. when we make a decision on a major purchase. 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’. emotions can play a far larger part in the decision than we would assume. or was the decision obvious? Was it hard to decide? What was the deciding factor? Purchase – Now.’ ‘Well.Unit 4: Understanding the Market
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.Study Book: Marketing
Activity 4.1 – Stop and Think Answers:
Jobber lists a number of ‘choice’ criteria used when evaluating alternatives. Note Table 4. the existence of a need may not activate the decision-making process at all because of need inhibitors. We have looked at a major purchase. Which criteria would you characterise as objective and factual. 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.
. If this were the case. Now. the psychological wish to purchase may exist and marketers can tap into this at a later date. which meet their clearly expressed needs and wants. Lack of resources is a keen inhibitor of need. But importantly.1 on page 118. then the objective of companies would be to supply these ideal customers with goods and services. let’s look at a more modest buying decision.
consider what factors would cause or encourage you to change to a new supplier or package size. and a purchase of soap powder. 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.Unit 4: Understanding the Market
ACTIVITY 4.2 – STOP AND THINK
Think about a recent visit to a supermarket. tinned food. nutritional content) Past experience (taste. assembling the alternatives.2 – Stop and Think Answers:
For many of the goods we buy. the reality is that we rarely go through the process of carefully identifying our needs. tea or coffee – where you had a choice to make. We take shortcuts because the purchase simply is not that important to us or carries low risk.
Bradford MBA 53
. Activity 4. cleaning efficiency) Your children asked for it Other criteria.
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. consciously assessing each option and taking the best.
People develop confidence in the reliability of certain cues and learn to base their choices with the help of extrinsic cues. The kind of packaging used on a product. Note Table 4. consumers settle into buying habits and buy without much reflection or consideration of alternatives. When purchases are repeated. Marketers try to understand these influences on buyers and manipulate what they know about consumers to increase the standing of their products or services. With a low-involvement purchase. but that the buyer may not be the decider who makes the choice about what to buy. Many supermarket purchases are totally unplanned. Many supermarkets’ own-labels mimic the shapes. Read Jobber. page 110) takes account of the fact that not only might the user not be the buyer. with over 60% of purchasing decisions made in store. Note on page 68 the roles adopted within families to achieve decision making. Note Vignette 4. so they look for cues to inform them about the product. Blackwell and Miniard (see Figure 4.Study Book: Marketing
These are low-involvement purchases. Where the two
. Look at your own buying group. The familiar appearance of these look-alikes cues the buying response at the expense of the branded product. colours and designs of the brand leaders. Blackwell and Miniard's five roles of people in the buying process on pages 110–111 in Jobber. the choice may come down to impulse. Buyers do not have time to do much information processing in say the supermarket setting.
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. Explore buying decisions for a major purchase within your own buying centre. Our discussion here leads onto other buying centres – those in organisations. pages 122–134.1 in Jobber. perhaps it includes a partner or children or a parent. The model by Engel. the brand name and advertising are all important extrinsic cues to remind the consumer to purchase. Brand loyalty and store loyalty are both habits. This points out how emotions and feelings influence our purchase behaviour Look at Engel.1 on page 120 about experiences and consumer behaviour. and consider the five-role model.2 (page 122 of Jobber) on the consumer decision-making process and level of purchase involvement.
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:
Study Book: Marketing
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.
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.
Unit 4: Understanding the Market
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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ACTIVITY 4. 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. which are the main ideas you should investigate in this chapter. Chapter 8 on Market Segmentation and Positioning. Now read Jobber.4 – STOP AND THINK
You have seen that there are many more ways to describe groups of consumers than the familiar UK social classes. As you read. 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?
. Look back at the organisational decision-making roles described on page 148. Where would you place yourself? If you were designing a promotional campaign to sell new kitchens. Read page 272 of Jobber about the ACORN and MOSAIC segmentation systems .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. look for the following key concepts.
Multi-ethnic young.Low income singles. flats 17 . prosperous suburbs 10 .Affluent working families with mortgages 03 .Well-off managers. small rented flats 23 .Affluent urban professionals. detached houses 12 .Larger families. larger houses 05 .Well-off managers.Old people.Farming communities 07 . converted flats 19 . larger houses and converted flats 14 . multi-ethnic areas 22 .Large families & houses in rural areas 13 . flats 16 .1: ACORN targeting classification
Category Group Type
Flourishing Families Prosperous Professionals
01 .Well-off professionals.Young educated workers.Student Terraces
.Older Professionals in detached houses and apartments 15 .Affluent mature professionals.Suburban privately renting professionals 20 .Unit 4: Understanding the Market
Activity 4. detached houses 08 .Prosperous young professionals.Singles & sharers. smaller detached houses 09 .4 – Stop and Think Answers:
Table 4.Well-off working families with mortgages 11 .Mature couples.Student flats and cosmopolitan sharers 21 .Villages with wealthy commuters 04 . flats 18 . large houses 02 .Older affluent professionals 06 .
Older people. semis 35 .Low income.Elderly singles. terraces 43 .Young family workers 41 . older couples 34 .Working families with mortgages 29 . terraces 26 .Council flats. In fact. poorly educated 50 . low income.Multi-ethnic purpose built estates 56 . 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
. semis 45 .Low rise terraced estates of poorly-off workers 48 .Study Book: Marketing
Starting Out 24 .Home owning Asian family areas 32 .Older people.Singles & single parents.Council flats. crowded flats
Secure Families Comfortably Off
Settled Suburbia Prudent Pensioners Asian Communities Moderate Means Post Industrial Families Blue Collar Roots
Hard Pressed Burdened Singles High Rise Hardship Inner City Adversity
There are many ways of segmenting a market or splitting it up into clusters of customers with similar characteristics.Skilled workers.Young couples. flats and terraces 25 .Home owning. many children. single parents. no kids) and grey panthers (active.Council terraces.Old people in high rise flats 54 .Low income Asian families 39 .Lower income people.Middle income. unemployment 47 . semis and terraces 42 .Mature families in suburban semis 30 . high unemployment. dinkies (dual income. urban professionals).Crowded Asian terraces 38 . high rise estates 55 . puppies (Punjabi urban professionals).Multi-ethnic. flats 37 . routine jobs.Middle income.Established home owning workers 31 .Skilled older family terraces 40 . single parents 49 . many singles 52 .Older rented terraces 44 .Retired home owners 33 . affluent.Large families. purpose built flats 36 . home owning areas 28 .White collar singles/sharers.Younger white-collar couples with mortgages 27 . But for the marketer. small semis 46 .Low income larger families. 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.Low incomes. unemployment. retired). single elderly people 51 . unemployment 53 .
they are not readily accessible either. gift-buyers. there may be a cluster of surgeons who are left-handed. potential and performance can be measured profitable – unless there are particular reasons to the contrary. As you can see segmentation is not a matter of good luck but good marketing research. All kinds of people use scissors – children. tailors. However.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. stability – it is likely to continue for some time measurable – its very characteristics mean that its size.
. lacks relevance. and accountancy and the use of scissors would appear to be unrelated. 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. hairdressers. Unless they are prepared to pay a high price. Imagine that you are researching the market for scissors for the purposes of segmentation. 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. a segment should result in a profitable result for the producer. surgeons – all for different purposes. you will not be able to target your marketing efforts at the group with a particular identity.
An example illustrates what we mean. This segmentation. You can choose any way to segment this market. Unless you can locate a specialist magazine for new businesses. What about people who are setting up their own business? There are many of them. a direct mail database or something similar. this segment is probably not economically viable due to its size. and they will be buying basic office equipment – but unless you can identify them. therefore.
develop positioning for each target 6. the benefit sought from the product is the degree of crunch. An examination of the toothpaste market might reveal that one cluster primarily seeks fresh breath. 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. which age group would you target?
. you can assemble a Marketing Mix that will target and attract the buyers in that segment. You need to identify exactly the people who are seeking the specific benefit. you can start with customer needs or with the benefits sought: the bases in Figure 4. Or put another way. for example.1: Market segmentation. and you wanted to increase your sales.1 above. Identify bases for segmentation 2. If you wanted to develop a product that would appeal to potential savoury snack eaters in the 15 to 20-year-old age range. develop profiles for Mix for those segments
3. what kind of texture do you think the product should have? Why? If you were the brand manager for Tubaloops. develop measures of segment attractiveness 4. It is not important if you have never heard of some of these products. much less tried them! The important point is that younger eaters appear to prefer less ‘crunchy’ savoury snacks than older eaters. select target markets (one or more segments)
5. Research has shown that the single most important criterion for purchase is texture.
ACTIVITY 4. develop Marketing for each target market
In practice. You also need to build a picture (profile) of the typical segment buyer so that if the segment is viable. another wants to combat gum disease and a third wants something designed for sensitive teeth. target marketing and market positioning Market segmentation positioning
1.Study Book: Marketing
Figure 4.2 which shows a map of the UK savoury snack foods market.5 – STOP AND THINK
Look at Figure 4. fresh breath – and you cannot identify them by this need alone. Whilst this is useful data.
5 – Stop and Think Answers:
.Unit 4: Understanding the Market
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
5 Space raiders
But positioning is not what you do to the product. Having identified segments in the market place. Having chosen one or more segments. Market segmentation is all about how producers identify groups of customers.9 and 8. Look at the discussion at the beginning of Chapter 8. Successful positioning provides a platform on which to develop an effective Marketing Mix for the segments to be targeted. the task for the marketer is to assemble a Marketing Mix that will deliver the benefits sought by the customers in those segments. the whole point of segmentation is to enable effective target marketing.
Look at Figures 8. Customised marketing – is a specialised area where companies produce high value items and work closely with customers to produce goods to individual customer specification. and ‘commercially viable’. Differentiated marketing – exploits the differences between marketing segments by designing a specific Marketing Mix for each segment. 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. a piece of merchandise. note the way the author uses phrases like ‘similar requirements so that they can be served effectively’. the organisation must choose which ones to serve. ‘supplied efficiently’. Positioning has been defined thus: “Positioning starts with a product. Correctly chosen targets increase the likelihood that the product or service will be successful – and thus it is more efficient and ultimately more effective. an institution or even a person.10 on page 285 of Jobber.Study Book: Marketing
As Jobber makes clear. Positioning is all about how customers perceive alternative offerings from producers. a company. Jobber gives the examples of Saga and Bang and Olufsen. a service. Positioning is what you do to the mind of the prospect” (Ries/Trout)
. (page 284). There are four strategies of target marketing: Undifferentiated marketing – with no regard for customer requirements. Focused or niche marketing – is the targeting of one segment of the market.
but are not in a position to do so
. 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.6 – WATCH AND LEARN
Go to the Marketing Blackboard page. pages 285– 286):
Clarity – the customer can clearly understand the proposition of the producer Consistency – the message and actions of the producer are consistent. Click on this and you will see a podcast entitled ‘Repositioning: Marketing in an Era of Competition. leading to a clear understanding as to the nature (and hopefully quality) of the offered product/service Credibility – due to the above.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. Change and Crisis’.
Marketing is not an exact science or a straightforward business discipline.
On Consumer Behaviour: we have looked at buying decisions from the perspective of the buyer – whether a consumer or an organisational buying centre. the proposition delivered to the customer is believable Competitiveness – the producer always develops a position based on its credible competitive advantage. 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. 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. 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.
ACTIVITY 4. You should then see a folder named ‘Unit 4 – Understanding the Market’.
Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. since the materials are specially designed for the on-site MBA programme at Bradford. Click on the button entitled ‘PowerPoint and Lecture Audio’. In order to do so go to the Marketing Blackboard page. Click on this and then click on ‘Unit 4 – Understanding the Market – MCQs’ work through the questions provided. Click on the menu item entitled ‘Formative Exercise’.
On segmentation: the main issues discussed are:
segmentation allows organisations to focus on their efforts and make efficient use of resources. Click on this and you will see an audio entitled: ‘Unit 4 Lecture Audio’. However.
ACTIVITY 4. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. You should see a folder named ‘Unit 4 – Understanding the Market’.
. In the same folder.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. On the left hand side you will see a row of menu items you can click on.
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page.Study Book: Marketing
many purchases are made by the heart. there may be discrepancies between some of the issues addressed in this unit and the lecture. and effective positioning benefits the customer and the supplier. 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. Listen to the audio and consult the lecture slides at the same time. you also click on ‘Unit 4 Lecture Powerpoint Slides’. The Audio and Powerpoint slides cover the main topics in this unit.
Are there other locations where they could satisfy customer needs?
. On the left hand side you will see a row of menu items you can click on.Unit 4: Understanding the Market
ACTIVITY 4. Read Case 7 Cappuccino Wars (Jobber. What would influence your decision to visit a coffee bar? Is this likely to be a high. 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.9 – ON-LINE LIVE TUTORIAL
Jot down your answers to questions 1. You should then see a folder named ‘Unit 4 – Understanding the Market’.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). 2. 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.or low-involvement decision? Question 3: Assess the coffee chains’ moves to expand the offerings they provide for their customers. Click on the measure item entitled ‘Video Resources’. Question 4: Coffee bars are mainly located in the centres of towns and cities. 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. 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).
Click on the menu item entitled ‘Additional Learning Materials’. After you have read the case write up your responses to the 4 questions listed concerning the issue of positioning (max words 1. Joseph Pine talks about what consumers want – authentic experiences – and how to give them to customers. Click on this and you will see a video entitled: Joseph Pine @ TED: The author of Mass Customization.
ADDITIONAL READING AND RESOURCES
If you wish to learn more about the issues covered in Unit 4 then go to the Marketing Blackboard page. Email your reply to your module tutor who will provide you with formative feedback on your answer. On the left hand side you will see a row of menu items you can click on.Study Book: Marketing
ACTIVITY 4. fourth edition.
. MA: Boston. rather than products or services.
Dibb S (2001) Marketing: Concepts and Strategies.000). You should then click on ‘Additional Video’ see a folder entitled ‘Unit 4 Understanding the Market’.10 – MARKED FORMATIVE ASSESSMENT
Go to the textbook and read the case on pages 297–299 ‘McDonalds Repositioning of the Golden Arches’. Boston. MA: Houghton Mifflin.
Unit 5 – Marketing Research’ in Blackboard)
In this unit we study marketing research. We need information to help us understand the market and the motivations of prospective consumers within it.Unit 5: Marketing Research
Key reading: 1. Unit 5 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio.5 ‘Mind Reading’ (see see ‘Video Resources. Unit 5 – Marketing Research’ in Blackboard) Other: 1. Unit 5 – Marketing Research’ in Blackboard) 2. you should be able to:
understand the importance of and relationship between research and information system in marketing decision making
. No company can exist without the information needed to understand what is needed to effectively compete. Unit 5 Discussion Board – Activity 5. Unit 5 – Marketing Research’ in Blackboard) 3. Jobber.2 (See ‘Video Resources. ‘Market Research Techniques: Focus Groups’ and ‘Understanding the P-value’ – Activity 5. People often refer to this as market research rather than marketing research. Chapter 7 Key audio/video: 1. We need to understand both the market and our performance within it. In Unit 4 we looked at the motivations of buyer behaviour and the market.4 (see ‘Formative Exercises. Unit 5 Multiple Choice Questions – Activity 5. Marketing Multiple Choice Questions. This is an important difference. In Unit 3 we discussed how no company can exist in a vacuum. 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.
By the end of this unit.
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. but marketing research is far more. can feel comfortable with a much more hands-on DIY approach. need or do” (Market Research Society www. however. Disciplined means following a process.
. 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. Now we look at just how you learn about the behaviour of buyers. a prerequisite of marketing planning.mrs. 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. model-building and fact-finding for the purposes of improved decision-making and control in the marketing of goods and services’ (Kotler 2004). “A cost effective way of finding out what people believe.
So far. “The disciplined collection and evaluation of specific data to help understand customers” (Chisnall. determine your competitive advantage and segment your market and position your product or service. want. This enables you to identify market opportunities. the marketer can then use marketing research to track the effect of that decision. although risk-taking is part of management. the chances of making a good decision or calculating a risk are improved by having the right information at the right time. Managers cannot make objective decisions without reliable information and. 2000). SMEs. Having made decisions based on research. Three other definitions of marketing research are also worth examining. think.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. The importance of this definition is the word “disciplined”. potential buyers and competitors. organising research in a methodical manner and ensuring that research objectives are clearly stated. Kotler describes marketing research as the ‘systematic problem analysis. large organisations will employ large market research agencies. Yes.uk). yes.org. Marketing research should never be considered as a hugely expensive exercise.
or reasons for. page 218 in Jobber). every six months. 2003). The challenge for researchers is to keep abreast of these highly dynamic markets and to be able to predict future trends. on average during the last two decades. The importance is to do it at regular intervals. there are a number of core types of. Firstly “systematic”: this refers to the timeliness of market research. Accordingly. marketing research:
product or service research – the design. for example. This process of decision making is. This could be every month. one new consumer brand has been launched every day. no matter how unpalatable that might be for the company in question.1.Unit 5: Marketing Research
“The systematic and objective process of generating information to aid making marketing decisions”. (Zikmund. economic and cultural context pricing research – effects of pricing changes or tactics. There are two important elements here. advertising and merchandising. Secondly. Comparative data can only be developed over a period of time. For example. “objective”: the research process needs to be unbiased and produce results which are objective. Successful research depends on using comparative data. decision-support systems and data mining techniques now allow marketers to handle huge
Bradford MBA 71
. even every 12 months.
TYPE OF MARKETING RESEARCH
Using the Marketing Mix as a guideline. 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. marketers need to understand that research needs to be undertaken on a regular basis. through exhibitions. PR campaigns. 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. development.
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. Technical advances in a number of disciplines such as data warehousing. production and styling of products and services to match consumer expectations and market trends customer research – buyers and their behaviour in the wider social. 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.
but the mistake is estimated to have cost the company £57 million (Source: Marketing Business. Wider scale pre-launch testing might have revealed the fault. There are three ways to carry out marketing research:
in house – by individuals. Unilever launched Persil Power. All this has resulted in a fundamental shift in the importance attached to marketing research. 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. An estimated one in two new product launches fails. a new detergent containing an ingredient that unexpectedly rotted clothes. the effectiveness of their promotional campaigns and the effectiveness of their selling strategies.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.
ACTIVITY 5. What does this tell you about its approach to their marketing research? Activity 5. 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. May 1998).Study Book: Marketing
volumes of data and integrate sources of customer information to provide help in new ways of segmenting markets. and identify its type of their research. perhaps from the marketing department. or by an actual marketing research department in-house/agency – objectives/interpretation done in-house with an agency commissioned to do fieldwork
on-line chat rooms and observation. then a typical research process will be adopted:
research planning – develop the research brief and objectives exploratory research – source available secondary data. but will then need additional research to understand whether the proposed new product will be of interest to that market.
The key generic research categories as outlined in the Research Process section above. In other cases. customer enquiries.Unit 5: Marketing Research
use the full services of a marketing research agency – this includes research design. An issue might be completely researched through the use of secondary data. Secondary data can be sourced internally (sales reports. Qualitative research can only reach a small proportion of the potential market and is expensive to develop. secondary data might provide the platform on which to build additional research. perhaps to examine basic market trends or develop greater understanding of sales performance. Typical methods of primary qualitative research are through face-to-face discussions.
Once the means of conducting research have been decided. etc). creative focus groups and now. customer records. trade journals. think and behave and is very much focused on the end customer. data collection. by
Bradford MBA 73
. an organisation wishing to launch a new product might use secondary research to understand the dynamics and growth trends of the market. in-depth telephone interviews. 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. Accordingly. are primary and secondary research. Qualitative research is used to find out how people feel. Primary research is frequently split into qualitative primary research and quantitative primary research. researchers will seek to prove the accuracy of the qualitative research through the use of quantitative research. interpretative data and issue presentation. This additional research is known as primary (or field) research. For example. Resulting actions to be taken. etc) and externally (company and government statistics. research reports. 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. This will often be undertaken by smaller and more specific surveys – on-line.
Companies need to focus on the outputs they expect from the research so as to match the inputs. in the street or over the telephone.
ACTIVITY 5. 2. Suggest what research methodology or methodologies may be relevant to answer these objectives. a flip top of a salad dressing bottle) would attract more consumers. Now we investigate a case study to see how well you can apply the guidance. we must question. The data will be gathered from a larger. Frequently this can be compromised by a lack of setting of clear and precise research objectives. pages 227–242 for more detailed discussion on the types of primary research that can be used. why do it in the first place? Chapter 7 contains a lot of practical guidance on developing a marketing research project.
. Click on this and you will see two videos entitled: ‘Market Research Techniques: Focus Groups’ and ‘Understanding the P-Value’. 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’. On the left hand side you will see a row of menu items you can click on.Study Book: Marketing
mail. 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. 3. representative sample of the potential market and will either prove or disprove that found in the qualitative research.. do the necessary research and complete the following tasks: 1.e.2 – WATCH AND LEARN
Go to the Marketing Blackboard page. Write a clear set of research objectives. Now read Jobber.
ACTIVITY 5.3 – STOP AND THINK
Read the following scenario.
Marketing research is of no use unless it can be used for the positive development of the organisation. You should then see a folder named ‘Unit 5 – Marketing Research’. If a decision cannot be made as a result of market research. their strengths and weaknesses. Briefly describe the business problem.
There are four kinds of research: product. You have been contacted by the Regional Manager for a chain of hotels aimed mainly at the business market. The Regional Manager has been given a small but adequate budget by Head Office to spend on research. Research methodologies can be quantitative or qualitative. Research data can be original (primary) or secondary (desk research – published information).Unit 5: Marketing Research
Scenario: You are a Research Executive for a full service Research Agency. promotions and sales.
. Good research gives insight into market sectors and helps inform the planning process. This Manager has six hotels under their jurisdiction and it is their job to ensure consistent and high levels of service are achieved. recording and analysis of data concerning the marketing of goods and services from producer to consumer or user. What initial measures would you suggest? Activity 5. management decision making would soon degenerate into some crazy game of chance”. 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.
A useful way to end this unit is to quote from Chisnall (2000): “Without valid and reliable information. customer.3 – Stop and Think Answer:
We can summarise this unit by noting the following main issues:
Marketing research embraces objective and systematic gathering.
5 – DISCUSSION BOARD
Go to the Marketing Blackboard page. Click on this and you will see an audio entitled: ‘Unit 5 Lecture Audio’. You should see a folder named ‘Unit 5 – Marketing Research’.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.
. Click on the menu item entitled ‘Video Resources’.Study Book: Marketing
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page. 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). You should then see a heading entitled ‘Marketing Multiple Choice Questions’. 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. Click on the menu item entitled ‘Formative Exercise’. Click on this and you will see the video entitled: ‘Mind Reading’. However. Click on this and then click on ‘Unit 5 – Marketing Research – MCQs’ work through the questions provided. you also click on ‘Unit 5 Lecture Powerpoint Slides’. Click on the button entitled ‘PowerPoint and Lecture Audio’. Listen to the audio and consult the lecture slides at the same time.
ACTIVITY 5. since the materials are specially designed for the on-site MBA programme at Bradford. You should then see a folder named ‘Unit 5 – Marketing Research’. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. 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 menu items you can click on. In order to do so go to the Marketing Blackboard page. 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. In the same folder.
ACTIVITY 5. On the left hand side you will see a row of buttons you can click on.
On the left hand side you will see a row of menu items you can click on. Englewood Cliffs.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. how you can successfully recruit members. London: Thomson South Western
. Dibb S (2001) Marketing: Concepts and Strategies. NY: McGraw-Hill. Click on the menu item entitled ‘Additional Learning Materials’ and then click on ‘Additional Audio’. Kotler P (2004) Marketing Management Analysis. and what you should do to ensure they deliver maximum value. MA: Houghton Mifflin. New York. You will see a folder entitled ‘Unit 5 Marketing Research’. Boston.
Chisnall P M (2000) Marketing Research. NJ: Prentice Hall. He comments on how online communities differ from panels. Click on this and you will see a podcasts entitled ‘Building Effective Online Communities for Market Research’ by American Marketing Association. Planning and Control. which types of research they best support. He argues the importance of online communities as marketing research tools to create the flow of ongoing feedback on their products from their consumers. Strategic Alliances for SSI. eighth edition. fourth edition. This is an interview with Andrew Moffat. Vice President. eleventh edition. MA: Boston. Zikmund W (2003) Exploring Market Research.
Marketing Multiple Choice Questions. Case 19 Unilever’s Quest) (see ‘Group.Unit 6: Product/Service and Branding
Key reading: 1. Unit 6 Product/Service and Branding’ in Blackboard)
To ensure that the objectives set out in the marketing plan are met.7 (See Jobber pages 377–379. Unit 6 Discussion Board – Activity 6.
By the end of this unit. pages 391–398) and 22 Other: 1. Unit 6 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio.5 (see ‘Formative Exercises. Unit 6 On-Line Live Tutorial – Activity 6.6 (see ‘Video Resources. it is essential that the Marketing Mix is developed and successfully targeted in the market place. and identifying some similarities and differences. Unit 6 – Product/Service and Branding. 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. 11 (pages 383–387. 10. Unit 6 Multiple Choice Questions – Activity 6. Creating a Corporate Identity: Virgin’s Branding Strategy’ in Blackboard) 3. 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
. We start this unit on product and services management by defining a product and a service. Jobber. Chapters 9. Live-Online Tutorial’ in Blackboard) 4.
rather than the features themselves. You need to be clear about the differences between a product and a service. Benefits could include:
good value for money prestige good design ease of use safety economy in use. we make cosmetics. services. colour. The marketer needs to understand the benefits that customers are seeking to satisfy their needs. we sell hope”. Benefits – people buy products and services for the benefits they offer. persons. We can describe products in terms of features and benefits: Features – these characteristics are discernible and help describe the product’s purpose. organisation and ideas. and then to put together a Marketing Mix which delivers the right bundle of benefits. although as you will soon see. Charles Revson made a famous comment about Revlon. acquisition. use or consumption that might satisfy a want or need. It includes physical objects. They include the technical specification.” Services can be defined more specifically as: “An intangible product involving a deed. packaging and availability. even tangible products can have quite intangible benefits. In the store.” (Dibb 2001) We can define a product as anything that is capable of satisfying customer needs.
. There are physical products and service products but they are all designed to satisfy customer needs. which sums this up nicely: “In the factory. performance or effort that cannot be stored or physically possessed. the price and any special offers. places. Products and services differ largely in their tangibility.Study Book: Marketing
describe and discuss strategic options in product and brand management
Kotler (2005) defines a product: “A product is anything that can be offered to a market for attention.
ACTIVITY 6. and identify six more products and services which can be placed in the continuum. Services differ from products in some fundamental ways. and consider their features and benefits (as above). 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).1 – STOP AND THINK
Think about your own company’s product or one with which you are familiar. Activity 6.2 – STOP AND THINK
Study Figure 22.
ACTIVITY 6.1.1 – Stop and Think Answer:
Services are the biggest growth sector in the EU.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.
. page 823). but first try the next activity. the physical goods-service continuum (Jobber. which we will explore later.
Study Book: Marketing
CLOTHING CARPETS MACHINERY
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.
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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Study Book: Marketing
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
of course.Unit 6: Product/Service and Branding
rudimentary product audits using the typography of the ideal product above. the purchase of a carpet may involve fitting (service) as well as carpet (product). The difficulty. which uses this customer-driven model as part of its organisational strategy. Very often customers cannot articulate this. this is often carried out by the providers of the machinery. with the customer and the benefits sought at the centre.3 – Stop and Think Answer:
Many ‘products’ have aspects of ‘service’ in their make up. 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. since many beliefs about benefits have an emotional base. and many people are unable to articulate complicated feelings about objects. For example.
. The purchase of a plant. Product analysis helps us to define ideas about features and benefits. Because this model puts the customer in the centre. equipment or machinery will require service in terms of installation. is more likely to be successful in the areas of:
product planning product development product strategy. It shows how products frequently need complementary services to add value.
Research is directed at gaining a full understanding of what satisfies the customer in terms of the benefits gained from a product or service. How well did your product/service do versus that of the competitor? Activity 6. lies in understanding what customers perceive as the benefits of the product. an organisation. The model we consider shows three levels of product.
style and design might be included here.1 above. special promotional offers such as free insurance. This is the level of product with which you may be most familiar from brochures or advertising information. but that they offer a unique selling proposition (USP). The core benefits (also called ‘core product’) is transport. colour choice. Physically. In the case of the Volvo. secure and responsible’ are perhaps more pertinent features. A driver purchasing a Volvo family car will have different needs from a driver purchasing a Porsche sports car. Except for the most basic model. durability. which differentiate your product from that of your competition. a car is a complex mixture of the tangible and intangible. Services such as warranties.Study Book: Marketing
Figure 6. In order to protect or enhance market share. The core features (also called ‘expected product’) refers to the characteristics and capabilities which make the car different.1: Three-level product analysis. These might include speed. this is unlikely to be a major selling point. perhaps its USP is that it confers a ‘young and successful’ image on the driver. In the case of a Porsche. but it provides a start. getting from one place to another. ‘safe. The USP describes the features and benefits. it is vital that products not only have sought-after characteristics. after-sales service. As we can see from this three-level product analysis. safety.
Consider a car and let us analyse it in terms of Figure 6. The augmented product is anything that can be offered as a supplement to the basic product to add value. freephone customer care line and a brand magazine are also included.
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. Kellogg’s. logo.Unit 6: Product/Service and Branding
It is becoming clear that brands have a key part to play in the idea of products and services. the colour of the pack design or logo and any trademarked slogan.
. a brand can grow. it can develop a brand. Make sure that you can differentiate between:
product line and product mix product width and product depth product category (product field) brand and variants.
A brand must reflect the attributes and positioning of the product or service. and above all a reputation for trust and quality. Branding is the process by which companies distinguish their product offerings from the competition. rather than brand name status. This brand loyalty gives manufacturers more control over marketing and choice of distribution channels. for example. Let’s look at branding in more detail. It is the brand that is often bought rather than the product or service. we normally add a fourth category to the model – potential/intangible product. strong brand values show through into strong returns on investment. Brand marketing encourages these attributes to be associated by the consumer. since customers have learned that brands can be relied on to provide quality. image and identity. Once a product or service is firmly established. manufacturer brand and fighter brand. Brands have a special place in the market place. You will find key terms and issues about branding. We can see here that the branding concept links well with the three-level product analysis outlined above. ‘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. However. By developing a strong design. 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”. product or service range. Chapter 9. Read Jobber. for example. Coca Cola.
You should also be sure that you understand the difference between ownlabel brand.
This identity can become so well known that it can be simply communicated by association – without the customer being told the brand name. Examples are:
Dunhill luggage (stretching) Armani belts. in the UK.. Products have a symbolic value for consumers – they say something that matches the individual’s aspirational self-image.. Consider Calvin Klein. For example. customers who shop for a ‘Hoover’ could be looking to purchase any vacuum cleaner.
BRAND EXTENSION AND STRETCHING
There are two other terms with which you should become familiar.
. Sellotape. 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. yes. Products can help support or enhance this self-image. Branding also helps producers to create separate identities that appeal to different sectors and segments. the brand name of Hoover is given generic status. Think of sticky tape . looking good. Brand extension is the term used to describe the transferring of brands across closely related products. must be reflected in the whole product field. its benefits and their orientation to and belief in the brand.Study Book: Marketing
A key advantage of branding is that it helps the customer to differentiate between a number of similar products or services. This reduces the value of the brand to the marketer. This way cognitive dissonance is minimised – the customer can perceive the field of products as having a basic coherence and family likeness. Is perfume a ‘natural extension’ of the clothing brand? The answer is ‘probably’. The use of the name is so ubiquitous that is almost used as a noun. Customers’ perceptions of the product. CK’s target group includes young people who are interested in lifestyle. to maximise the effectiveness of branding the product identity needs to be clearly established and repeated through marketing communications. it is worth noting the disadvantage of branding from the marketer’s point of view. 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. brand stretching concerns completely new product categories. However. However. not a trademark in the public’s mind. and who align self-image with CK’s brand image of sport and health.
his place on the board.
We have talked a lot about the idea of branding. Nestlé took over Rowntrees. Consider the following example of how brand value was eroded. Black Magic. Just before Christmas in 1995 in the UK. However. an established UK chocolate and confectionery manufacturer. now we look at one aspect of the physical reality of the brand – the packaging. 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’. Under attack from cheaper rivals. Quality is one of our key characteristics of a good brand. brands can and are sold. Smarties. monopoly and environmental exploitation. In 1988. You may be familiar with the case of Nestlé. Heinz Baked Beans maintained its market position despite wholesale price cutting and competition from ownbrands. packaging is the first physical contact a customer has with a product or brand.Unit 6: Product/Service and Branding
Many brand names as you are aware. Good packaging is therefore an important feature of sustaining brand perception. 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. They experience this even before they have used the product itself. Coca-Cola and Microsoft have been under attack for reasons including labour. They paid £2 billion more than the estimated net asset value (plant and buildings) in order to own the key brands of Kit Kat. This gaffe allegedly cost the business £50 million and Ratner. when mistakes are made. brands have much to lose. etc. There are some problems associated with branding:
Piracy – Levi jeans. On this basis. do maintain their uniqueness and have a high value in the market place – especially when the name is legally protected by a trademark. 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
. 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. The power of the brand can have a negative effect if its strength is taken for granted.
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 following company might learn from the mistakes made by the innovating one! The PLC is not an exact scientific model. By the Mature phase of the Product Life Cycle. it is an irrelevant cue. It is about the diffusion of innovation within the market – how new products are adopted and how demand for them grows. A problem for marketing managers is to ensure that the packaging reflects the qualities. Cosmetics often have very attractive boxes – sometimes the production costs of a product are outweighed or counterbalanced by the cost of package production. On the other hand. The Product Life Cycle can also take account of the economics of the supply of products to the market. Others get to hear about it and Early Adopters purchase the product and act as opinion-leaders to the Early Majority.
THREE PRODUCT/SERVICE MARKETING STRATEGY MODELS
Three models help us to further understand the position of. We could argue that packaging is an important part of the customer’s perceived benefit of a product. experience effects and economies of scale take effect and unit production costs decline. and potential marketing strategies for. attributes and features of a product that they know the customers seek. rather an indicative one. The innovating company who is first to market. mature and die. the cautious Late Majority is drawn in. With cumulative production. In the Introduction phase. By the time the Laggards buy. However. the Innovators and Early Adopters have probably moved on and the Decline phase has set in. since packaging in effect is not the actual product and does not itself have the features of the product. might gain these benefits ahead of the competition. 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.
What people perceive as good packaging is an intrinsic cue propelling a customer towards purchase. specific products and services.Study Book: Marketing
keep the product in good condition throughout its shelf-life. A key use of the model is not simply to plot the current PLC position of a product
. the Innovators first pick up and start to use the product.
Some writers have criticised the BCG growth share box as being too simplistic.1 (Mobile Marketing in a Mature Market.Unit 6: Product/Service and Branding
or service but to develop different Marketing Mix applications according to the appropriate stage. Jobber. to market choices as we discussed in Unit 3. ‘Question Marks’ or ‘Dogs’. For example. Read Jobber.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. as we discussed in this unit. DVDs replacing videos is one such example. too static a representation of the live market and being too focused on market share.4 – STOP AND THINK
Read Vignette 10. pages 362–370 noting particularly the BCG matrix in Figure 10. Activity 6. The Ansoff Matrix provides a useful framework for matching product and service choices.
ACTIVITY 6.2. Can you think of any situations for which the ‘box’ does not account or does not help us manage product strategy choices? Read Jobber. pages 355–362 and bottom of page 402–409. The BCG represents this by referring to specific products or services as ‘Cash Cows’.
. Typically a Cash Cow might provide funds to support the development of a Star or Question Mark which might in turn replace a Dog. ‘Stars’. a product or service reaching the Decline stage of the PLC might need to be replaced by one in the Introduction or Growth phases. page 359) and consider the product life of the mobile phone.
a product moving to Decline stage might need to be replaced by something completely different (diversification). Or. the matrix provides four marketing strategy choices. There is higher degree of risk (and reward) with brand new products. a product moving to the Maturity stage in one market might be potentially introduced (market development) in another market. Read Jobber. We have already seen why new products are necessary in today’s market. Matched to the PLC. Most new products are in fact product replacements or new lines. In the final part of this unit. These can all relate to the findings of PLC and BCG Matrix analysis.Study Book: Marketing
Sometimes referred to as Strategic Thrust. They replace ageing products.
NEW PRODUCT DEVELOPMENT
Whilst in this module. 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
. we can see that life cycle and portfolio strategies can ultimately result in the need for the introduction of new products. 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 are not specifically concerned with the development of new products. 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. they meet changing needs in the market place. 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. we consider marketing issues concerning the development of new products.
In terms of risk.
competition increases. Brand names can add value to a product or product line. Reasons for new product development include: consumer tastes change. responsiveness.Unit 6: Product/Service and Branding
We can summarise this unit by noting the following main issues:
Decisions about products are decisions about the Marketing Mix. empathy. The product mix is about the width. Click on the button entitled ‘PowerPoint and Lecture Audio’. pages 387–388 and 391–402. Three-level product analysis shows us that the product is a mix of features and benefits. Portfolio models allow marketers to balance net cash users and generators. depth and breadth of products. Branding is a powerful method of positioning a product and of growing customer loyalty. You should see a folder named ‘Unit 6 –
. Brands create individual identities which add value. New products are developed to replace existing products or serve new markets. good communication and courtesy. Products have life cycles which can be used to enable a continuity of products within a brand. Product analysis helps marketers find out what makes a product successful. Service marketing consists of ensuring the quality of tangibles. Properly managed. Products and services are complex entities made up of tangibles and intangibles. technology allows for enhanced product production. reliability. On the left hand side you will see a row of buttons you can click on.
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page. competence. The Ansoff Matrix helps us to make broad strategic choices based on the level of risk associated with decisions about a product strategy choice. Chapter 11. it can assist in the product planning process. the three levels can help extend the Product Life Cycle and help with product development. credibility. but they have limitations.
However. Consider how the organisations you chose were able to ensure that the brand extension/stretching was a success.
ACTIVITY 6. 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. Click on this and you should then see a folder named ‘Unit 6 – Product/Service and Branding’. Click on this and you will see an audio entitled: ‘Unit 6 Lecture Audio’.6 – DISCUSSION BOARD
Go to the Marketing Blackboard page. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module. On the left hand side you will see a row of menu items you can click on. Watch the video and note any other brands that have successfully used brand extension and stretching.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. Post your comments on your tutor group specific Discussion Board.Study Book: Marketing
Product/Service and Branding’. Click on this and you will see a video entitled: ‘Creating a Corporate Identity: Virgin’s Branding Strategy’. you also click on ‘Unit 6 Lecture Powerpoint Slides’. In the same folder.
ACTIVITY 6. Listen to the audio and consult the lecture slides at the same time. In order to do so go to the Marketing Blackboard page. Click on the menu item entitled ‘Video Resources’.7 – ON-LINE LIVE TUTORIAL
Jot down your answers to questions 1.
. 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. 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. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. there may be discrepancies between some of the issues addressed in this unit and the lecture. Click on this and then click on ‘Unit 6 – Product/Service and Branding – MCQs’ work through the questions provided.
ACTIVITY 6. since the materials are specially designed for the on-site MBA programme at Bradford.
Click on this and you will see a podcast entitled ‘Branding.Why Should Nonprofits Care?’ by American Marketing Association. Concepts and Strategies. Click on the menu item entitled ‘Additional Learning Materials’. You should then click on ‘Additional Audio’ and see a folder entitled ‘Unit 6 Product/Service and 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. Kotler P (2005) Principles of Marketing... Dibb S (2001) Marketing.
. Boston: Houghton Mifflin. Hemel Hempstead: Prentice Hall.Unit 6: Product/Service and Branding
Read Case 19 Unilever’s Quest (Jobber. Upper Saddle River: Pearson..
Crimp M (1990) The Marketing Research Process. This discusses the importance of branding to non-profit organisations. 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. On the left hand side you will see a row of menu items you can click on. Shmanding.
Chapters 12 and 17 Key audio/video: 1.7 (see Jobber pages 659–663. Price has an important role to play in influencing the nature of an organisation’s exchanges with its environment. Unit 7 – Pricing and Distribution. Unit 7 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Other: 1. Marketing Multiple Choice Questions. as it is the element where producers and consumers actually meet – in person. ‘I-Tune Face the Threat of Nokia’ ) 4.
.Unit 7: Pricing and Distribution
Key reading: 1. Jobber. Unit 7 Pricing and Distribution’ in Blackboard)
In this unit. on the printed page or on-line. Unit 7 Multiple Choice Questions – Activity 7. Unit 7 – Pricing and Distribution’ in Blackboard) 2. Unit 7 – Pricing and Distribution’ in Blackboard). Place is unique in the mix. Unit 7 Discussion Board – Activity 7. it has been seen as the element which also focuses on after-sales.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. It helps to differentiate goods and services in different segments and is a competitive tool which can help exploit market opportunities.5 (see ‘Formative Exercises. 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. More recently.4 (see ‘Video Resources.6 (see ‘Video Resources. ‘Future Supply Chain 2016’ – Activity 7. ‘Free! Why $0. Unit 7 Marked Formative Assessment – Activity 7. or relationship building.
but will be limited by what the customer is prepared to pay. 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.
PRODUCT PLACE PROMOTION
.Study Book: Marketing
By the end of this unit. Businesses which deliver better value for money than their competitors are up to 200% more profitable than those which do not. 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. Any organisation wishing to maximise its profits will want to charge as high a price as possible. it is the benchmark used by customers to assess the value offered by the rest of the Marketing Mix. 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. Even in the non-profit sector. according to research conducted by PIMS (Marketing Business. Price is the only variable that does not add value. price is one of the controllable variables which marketers use to influence demand.
As one of the 4 Ps. you should be able to:
differentiate between key approaches to pricing products. June 1998). Rather.
. if the price is lowered. but right! All of us are familiar with promotional sales – when a seller reduces prices in an effort to stimulate demand. this works for some products but not so well with others. short-term demand for their particular sugar may go up. pricing may not seem to have any obvious role for the marketer. ‘valuable’. In organisations where there is no direct price to the client or end-user. It must reflect the costs to the producer of producing products or services and the benefits to the buyer of consuming them. You may like to return to Jobber Figure 1. the right price. ‘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. However. Secondly. demand for that product will be increased. if only one sugar supplier lowers the price. It is hard for a marketer to get price right.5 on page 14 to remind yourself about creating customer value. but not the longterm demand. exchange rates. For example.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. Chapter 12. Note the term. overall demand is unlikely to go up. The price that a marketer sets for a product or service needs to be not too high and not too low. Of course. Consider some products you might label as ‘good value’ and ‘value for money’. These costs add to ‘perceived sacrifice’ and may include waiting times for public sector provision. as in many public services where services are free at the point of delivery and publicly funded from taxation. The idea is that. ‘Good value’. a low customer orientation at the point of service delivery and costs associated with the poor image of the public sector. they will not necessarily be the lowest priced. there may be significant non-monetary costs to bear. ‘value for money’. people can only buy so much sugar. Read Jobber. If all suppliers of sugar lower the price. 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. but nevertheless you regard them as a fair exchange. However. there are two issues to consider. There are many external variables – competition. Firstly. although the service may be free to the user. costs of raw materials. ability of the market to pay – that make setting the right price difficult.
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. 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. by manipulating the other components of the Marketing Mix. they try to affect demand in various other ways. you could not make a profit unless you sold something. The marketer has to take three broad areas into consideration when setting the price:
. So.1 – Stop and Think Answer:
Marketers would rather not lower prices to stimulate demand. petrol.1 – STOP AND THINK
Consider how your purchasing would change with price reductions and price rises for the following products: books. coffee. because achieving revenue is the only way to make profit.Study Book: Marketing
ACTIVITY 7. Even if you had zero costs. electricity and car insurance.
Pricing decisions are very complex.
The three methods of pricing – cost-oriented. For example. This way they sold at a price that at least covered their own costs. there have been a number of instances where multiple retailers increasingly want to sell at a discount or a price lower than the RRP. competitor-oriented and marketing-oriented – are actually linked to ideas we have encountered before. Many companies establish the price by starting with their own costs. You should recall that there are broadly two orientations businesses can take – a production orientation and a marketing orientation. Cost-plus is the simplest way to determine price by adding a markup (a predetermined percentage) to the firm’s costs. Winkler (1983) found that 80% of companies took little account of market factors and used cost-plus (full cost) pricing.
Bradford MBA 101
. It is popular with many retailers who buy in finished goods. however. the theoretical models are difficult to put into practice. Think back to Unit 1 when we looked at differing approaches and orientations to the way that organisations try to achieve competitive advantage. This pricing method starts by asking the question ‘How much did the product cost us to produce?’. Recently in the UK. Often the percentage chosen is an industry norm. a retailer may buy in trousers for £16 and add a 50% mark-up giving a retail price of £24. similar to in the USA.Unit 7: Pricing and Distribution
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
Producers will often publish recommended retail prices (RRP) that will effectively set the upper and lower limits that retailers can charge. Cost-orientated pricing is the way production-orientated organisations approach pricing. 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. however. Jobber discusses Shapiro and Jackson’s three methods of pricing (Shapiro and Jackson 1978). We will look at each of these in turn.
the seller needs to ensure that costs will be covered. Augmenting the product can help to justify an increased price. you can use this to establish how many you need to sell to breakeven (cover your costs). Competitor-orientated pricing focuses on competitors rather than costs to set prices. you are a retailer and you sell goods that have a RRP. If.Study Book: Marketing
So. for example. 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. 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. For example. even with a standard mark-up percentage. The marketer wants the product to be viewed by the customer as the best and constant choice of all market offerings. Competitive bidding can be through a sealed bid – the view is that the cheapest tender is going to be the best ‘value’. 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. 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 = 40.000/50 = 800 modems to breakeven
Now read Jobber. This idea has recently come to the UK public sector with the advent of compulsory competitive
At what level of unit sales. pages 422–427. The simplest way to do this is by break-even analysis. 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.
and lack of job security. de-motivated by low wages. These variables include value to customer.
ACTIVITY 7. Accordingly. Marketing-orientated pricing looks at a number of related variables. page 427 of Jobber) is that the pricing decision is dependent on other earlier decisions in the marketing planning process. 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.Unit 7: Pricing and Distribution
tendering. who is going to pay for the product. this may have poor results.3. but a ‘just bid whatever it takes to get the business’ mentality can blind the supplier to his own economics. So. Which of these products would you. An additional key notion to grasp about the marketing-orientated approach to pricing (see Figure 12.1 (books. electricity. the astute marketer needs to take all three bases of pricing into account. competitionoriented or market oriented basis? Explain why. Competitor-orientated pricing does look outside the supplier’s own organisation. an organisation has to supply what the customer wants (market-orientation). rather than one or two specific ones.
. 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. at a higher price than it costs to supply (costorientation). The quality of their subsequent product offering may be inferior to the previous standard and not provide the best value. 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. their workforce may be under-trained or underskilled. however. Now read the rest of Chapter 12 on Pricing Strategy. believe it appropriate for the suppliers to set the prices based on a cost-oriented. coffee. Lowest bidders may not give the best service. generally in the face of competition (competitive-orientation). as a consumer. 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. competitive reaction. and car insurance). although it is the customer. Cost-oriented pricing focuses too much on the economics of the supplier. not the supplier. Although it is much more complex. and it requires astute marketers.2 – STOP AND THINK
Think again about the products you considered in Activity 7.
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
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.
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:
Study Book: Marketing
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?
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
Image – Distribution decisions reflect directly on the image of the product and the producer. Once a middleman holds stocks. 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. the customer She cannot buy from another producer B who has a direct sales force. promotion and service levels are made. offering consumer credit. who is an agent for that producer. small food manufacturers including farmers. She is about to buy a new PC for every professional in the company and is doing a preliminary investigation of suppliers. However. manufacturers can reach niche markets. debt recovery and the investment in finished goods out to the intermediaries. decisions about merchandising. because her company is not big enough to interest them. The different forms of distribution channel can have advantages and disadvantages for the customer as well. pricing.Unit 7: Pricing and Distribution
channel of distribution. installation and after-sales and repair services. Cost – An advantage of a channel with at least one intermediary is that the producer can push the costs of selling. Display of the product at the local level is often a function of the local distributor. This is what she has found out so far: She can buy from one producer online Producer A Patsy. particularly retailers. Distributors. she can buy from an acquaintance. As you read this story. think about how you would cope if you were Patsy. Case study Patsy Klein is the IT manager of a medium-sized company in Scotland with 20 professional staff. for example. in consultation. so this leads to lower administration costs too. have called on the Office of Fair Trading to regulate supermarkets to stop their abuse of buying power. In the UK. Barry. The marketer has to decide whether the choice of distributor fits the image the producer wants to portray. By using specialist middlemen. 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’s control is limited to their skills as an influencer and the negotiating power they have over the distributor. Barry’s small company is supplied by one of the producer’s ‘business partners’. There are fewer lines of contact for the manufacturer. at best. The producer may be required to cut prices but the benefits are not necessarily passed on to the customer. which might otherwise be too difficult or expensive to service. they also offer specialist functions such as breaking bulk. who holds stocks of the producer’s
. The role of the distributor is not simply to store and deliver products.
her specification is going to have to be much more complex than she originally thought. The PC store and Barry will also service Producer C’s PCs. Barry. Producer B Producer B customer PC store Patsy. the agent
She can buy from a local PC store (who stock Producer B’s and Producer D’s PCs. so she does not want anyone’s PC out of action for any appreciable time. Marketers need therefore to set clear objectives covering the level of service before determining distribution policy. 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. the customer Patsy. Producer B will not service the PCs. Patsy. Producer B’s staff service them. so choices need to be made. and the differentiator is going to be about service response time and service quality. some basic questions must be answered by marketing research to discover the relative importance of customer services to the target segment. in close proximity to customers. Maximum service implies large inventories. being a very experienced IT manager. the She can buy from an online retailer (who stocks B. is aware that her core need is ‘absence of hassle’. the Online Retailer and Colin. C and D PCs). Colin’s company does not service the PCs. No distribution system can simultaneously maximise customer service and minimise distribution cost. the PC store. as he is not a ‘full service dealer partner’ as he does not represent them exclusively. and to discover what the competitors are offering and achieving.
. with flexible transportation. but not Producer C’s PCs). cheap transportation. But wait… Producer A will service the PCs only if they are returned to the service point in Ireland. low stocks and few distribution points. Producer D will not let Barry service their PCs. To do this. the customer So far there is no problem for Patsy. So.Study Book: Marketing
PCs. All she has to do is specify what she needs and request a quotation from Producer A. but Patsy can contract with the PC store or with Barry the agent to service them. the agent Patsy. the customer Barry. Minimum cost implies slow. which are only sold online) Producer B ‘business partner’ Patsy. Producer B Colin. (Barry also sells Producer C’s and Producer D’s PCs – but not Producer A’s PCs. but because they have an agreement with the producer.
It is no wonder that companies are constantly changing (or at least tinkering with) distribution channels. As you read.
The odd one out of the 4 Ps – it creates revenue. The video describes challenges of supply chain for consumer products and retail companies. You’ve read about all the different issues the marketer must keep in mind and all the opportunities for it to go wrong. All the other elements cost money. You should then see a folder named ‘Unit 7 – Pricing and Distribution’. 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 the menu item entitled ‘Video Resources’.
Place is often the most difficult element of the Marketing Mix for marketers to get right. Pricing is an aspect of positioning.
.4 – WATCH AND LEARN
Go to the Marketing Blackboard page. Click on this and you will see a video entitled: ‘Future Supply Chain 2016’. Price is linked to value for money and fair exchange. look for the following key concepts.Unit 7: Pricing and Distribution
Now read Jobber. Chapter 17 on Distribution.
characteristics of the organisation and its products and service level policies.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
. Channel management includes selection. you also click on ‘Unit 7 Lecture Powerpoint Slides’. motivation and evaluation and managing the conflict that may occur. Please focus on the areas that are applicable to/have been discussed in this unit of the MBA Marketing module
ACTIVITY 7. the channels chosen by competitors. However. You should see a folder named ‘Unit 7 – Pricing and Distribution’. Click on the button entitled ‘PowerPoint and Lecture Audio’. On the left hand side you will see a row of buttons you can click on. the most appropriate level of distribution intensity and the degree of channel integration. available intermediaries. Brands hold up well against lower price own-brands. training. what will they pay? Pricing is linked to the demand for a product or service. Click on this and you will see an audio entitled: ‘Unit 7 Lecture Audio’. there may be discrepancies between some of the issues addressed in this unit and the lecture.
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page.
Concerned with making products and services available and accessible to the customer. In the same folder. since the materials are specially designed for the on-site MBA programme at Bradford. Price is seen to be an indicator of quality – quality linked to value. Channel strategies involve the choice of the most effective distribution channel.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. Listen to the audio and consult the lecture slides at the same time. The Audio and Powerpoint slides cover the main topics in this unit. There are many possible channels of distribution – the right choice depends on an understanding of the customer.
In order to do so go to the Marketing Blackboard page. 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
ACTIVITY 7. Click on the menu item entitled ‘Additional Learning Materials’. You should then see a heading entitled ‘Marketing Multiple Choice Questions’. Click on this and you will see an academic paper by Shampanier. On the left hand side you will see a row of menu items you can click on. Email your reply to your module tutor who will provide you with formative feedback on your answer.00 is the Future of Business’ and ‘Pricing the Economist’.000). Click on this and then click on ‘Unit 7 – Pricing and Distribution – MCQs’ work through the questions provided. internet communication. Mazar and Ariely (2007). Question 1: Recent years we have seen many businesses offering their products for nothing (e. Click on the menu item entitled ‘Video Resources’.Unit 7: Pricing and Distribution
discussed throughout the unit. How can companies do this? Question 2: What is the effect of ZERO pricing on consumer behaviour?
ACTIVITY 7.7 – 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. Click on this and you will see videos entitled: ‘Free! Why $0. 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 7 – Pricing and Distribution’.
ADDITIONAL READING AND RESOURCES
If you wish to learn more about the issues covered in Unit 7 then go to the Marketing Blackboard page.). You should then click on ‘Additional Reading’ see a folder entitled ‘Unit 7 Pricing and Distribution’.g. games etc. 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). 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.6 – DISCUSSION BOARD
Go to the Marketing Blackboard page..
Mazar and Ariely. Thus.
. Gopal C. PIMS Europe Ltd. 119–27. people appear to act as if zero pricing of a good not only decreases its cost. chosen by). New York: John Wiley & Sons. Partsch W and Kamauff J (1998) Supercharging Supply Chains.
PIMS (1998) PIMS letter 51. whereas dramatically fewer participants choose the more expensive option. Tyndall G. but also adds to its benefits’ (Shampanier. low quality chocolate priced as Zero cent.. in the zero-price condition. Shapiro B P and Jackson B B (1978) ‘Industrial pricing to meet customer needs’. dramatically more participants choose the cheaper option (i. London: Heinemann. 2007: 742). The experiments in the paper found that ‘in contrast with a standard cost–benefit perspective.6) and his colleagues. Harvard Business Review.Study Book: Marketing
this Unit (Activity 7. Nov–Dec. Winkler J (1983) Pricing for Results.e.
15 and 16 Key audio/video: 1. 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). choosing the most effective mechanisms to reach them and measuring the results. Dove Real Beauty’ in Blackboard) 3. Unit 8 Marketing Communications’ in Blackboard). not just in terms of determining appropriate objectives which integrate with the overall marketing plan. ‘Honda The Power of Dreams’ and ‘Nestlé’ – Activity 8. Other: 1.3 (see ‘Video Resources.2 (see ‘Video Resources. Unit 8 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture Audio. Marketing Multiple Choice Questions. Unit 8 Marketing Communications’ in Blackboard).4 (see ‘Formative Exercises. Unit 8 – Marketing Communications’ in Blackboard) 2. Case 30 CRM at Tesco) ( see ‘Groups. Unit 8 Marketing Communications’ in Blackboard)
In this unit.
Bradford MBA 113
. Unit 8 – Marketing Communications. ‘Avon SpectraColor Lipstick’. Most marketers are faced with difficult choices when developing marketing communications strategy. we look at marketing communications or the promotion element of the Marketing Mix. Chapters 13. but in developing messages. Jobber. pages 583–585. 2.6 (see Jobber. Here we examine the nature of the communications process and analyse the requirements of an effective marketing communications plan. ‘Specsaver Mr Men Offers’. 14. Unit 8 On-line Live Tutorial – Activity 8. Unit 8 Discussion Board – Activity 8. Live On-line Tutorial’ in Blackboard) 4. ‘Does HIV Look Like Me?’ and ‘Inspirational NIKE’ – Activity 8.Unit 8: Marketing Communications
Key reading: 1. Unit 8 Multiple Choice Questions – Activity 8.5 (See ‘Video Resources. which will appeal to their target audiences.
personal selling. collect a selection from consumer as well as business-tobusiness and non-profit communications. There is evidence that even the ancient Greeks used advertising for commercial purposes. direct marketing. 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. Bovril (a blend of meat extract. Advertising really took off in the nineteenth century during the Industrial Revolution. even on books of matches. although it is likely that advertising was used centuries before this. good and bad. develop appropriate marketing communications plans for given situations. so manufacturers had to develop new ways of reaching their customers.
By the end of this unit. For example. railway engines and billboards. collect examples of marketing communications. you will have the opportunity to compare them with examples of good practice and to analyse them using the frameworks from the module.Study Book: Marketing
The six major components of the marketing communications mix are advertising. During your study of this unit. If possible. In 1899 even. sales promotion. on buildings. caramel and spices used as a spread or hot drink) was launched by offering free tastings at the Colonial and Continental Exhibition in London. Eastman Kodak spent US$750. The oldest surviving printed advertisement in the UK was produced by Caxton to promote his publication The Pyes of Salisbury in 1477. Other methods of reaching the customer were in widespread use too. As you read through this unit. By the 1890s. This was backed up by advertising and even a vigorous personal selling campaign in bars and pubs!
. Development of mass production techniques demanded stimulation of mass consumption. publicity and the Internet. and it quickly became established as a major element of commercial life. from each of these categories. advertising was appearing everywhere – in newspapers and magazines.000 on advertising.
DEVELOPMENT OF MARKETING COMMUNICATIONS
Marketing communications is not a new phenomenon.
The Institute of Sales Promotion Ltd. exhibitions and conferences. This broad definition recognises an important point: promotion cannot be developed in
. trams and buses are still in use as media today. Advertising Association statistics estimated total advertising spending (excluding TV sponsorship and Radio Branded content) at £14.2%). However. Read Jobber. Chapter 13.6bn on UK retail sales promotion. There is an enormous choice of communications media for the marketer. £25. In the UK. advertising spending is sizeable and accounts over 1% of GDP. This does not include sales promotion (e. In 2009.2% 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. The introduction of the cinema after the First World War.4% and then expected to fall for 2011.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.). The spending in 2010 is forecasted to increase by 5.. but the cost is high. 24. it was estimated over $421 billion spent worldwide on advertising (PricewaterhouseCoopers. and potential customers’.g. Yet. 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.
DEFINING MARKETING COMMUNICATIONS
In its narrowest sense. Marketing Communications represents a very expensive element of the Marketing Mix and so sound planning is essential.
However. and the costs of publicity and personal sales forces.5 billion in 2009. TV . 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. 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. opened up new ways of communicating with the customer as a captive audience. pages 462–468.. June 2009).g.26.
If this does not happen. The organisation must really get to know its customers and what influences their buying behaviour if it is to formulate effective marketing communications strategies. e. Skoda cars. and at worst they will disbelieve the messages and perhaps refuse to buy the product.g. major supermarkets & restaurants (rather than newsagents & take-away restaurants) Pleasure for adults (rather than an everyday economy brand) Skoda cars Calvin Klein jeans
. Calvin Klein jeans). Use the table below to record your answers. not just promotion.
ACTIVITY 8..Study Book: Marketing
isolation from the overall marketing strategy – each element of the Marketing Mix conveys the message to the target customer. then at best the customer will be confused. 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. 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. Haagen-Dazs ice cream. 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.
Click on the menu item entitled ‘Video Resources’.2 on page 466 of Jobber. Also.Unit 8: Marketing Communications
THE COMMUNICATION PROCESS
The simple communication model is shown in Figure 13. distractions such as competing messages or interruptions (noise) can affect our understanding. if decoded correctly and the message is believed. attitudes or behaviour. These are feedback responses. Language. sounds and visuals (encoded message) which is communicated (transmission) direct to the buyer. 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?
. experience and cultural differences may mean that the messages are interpreted (decoded) quite differently from that intended by the sender.2 – WATCH AND LEARN
Go to the Marketing Blackboard page. it may stimulate a change in the receiver. On the left hand side you will see a row of menu items you can click on. This could be a brand image and invitation to buy. which can be measured by the sender and used to refine future messages and their transmission. The supplier (source) strives to develop a clear communication in words. such as a shift in perception. However. You should then see a folder named ‘Unit 8 – Marketing Communications’.
ACTIVITY 8. such as trial or purchase or preventing unwanted behaviour. Click on this and you will see a video entitled: ‘Honda The Power of Dreams’ and ‘Nestlé’.
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. Not only is there no way back but the way forward will accentuate that need. 1996) There are many new channels of communication. Between all of us – and with considerable help from the media – we have educated the consumer. customer or voter. even if you wanted to.” (part of an address to UK Department of Trade and Industry. They know how things work and that knowledge is something you couldn’t now take away from them. back in 1996. 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. There is an increasingly active relationship between the buyer and the supplier of goods and services. chairman of Unilever. but still valid today: “The world belongs to the consumer – whether she (or he) happens to be going under the title of citizen. Messages are transmitted via a blend of media or promotion mix.Study Book: Marketing
Activity 8. That consumer is becoming more and more self-aware and self-confident (as well as more and more sceptical). The sheer range of
. Communicators need to understand their audiences in order to produce compelling messages. 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. The accelerating pace of change has an important impact on the ways that organisations communicate with their customers and this adds to complexity. To quote Sir Michael Perry.
As a result. By now you should be fairly clear about what the communication process is and some of the tools available to the marketer. reach the target audience with compelling and appropriate messages and carefully control and evaluate their implementation. Consumers may not notice the messages or screen them out. 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”. The receiver. meet their communications objectives. so mistakes are costly. 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. The costs involved mean that marketing communications cannot be a hit-and-miss affair. but only a minority will lead to a buying process. press and magazine advertising and sponsorship. which are cost-effective. for example. As one of the largest advertisers in the world.Unit 8: Marketing Communications
choice and the differences in availability of media coverage between countries make media decisions highly complex. Supermarket promotions can lift sales by several hundred per cent for example. consumers were still rating them. which regulates marketing communications. It is important now to
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. The sheer number of these marketing communications makes it impossible for individual consumers to take it all in. over 60% of the UK population read a regional paper at least once a week and 50% read weekly or monthly magazines. In addition. much of this success comes from well planned. manufacturers are prepared to pay retailers to secure shelf space at important positions on the end of aisles. This contributes to the general level of noise. but increasing complexity at every stage of the communications process makes promotion management more difficult. Managers need to be able to analyse market communications requirements and plan effective campaigns. For example. Each year the average householder watches more than a thousand hours of television. the cost of media is the single biggest drain on communications budgets. effective communications.600 posters. Getting the process right can be very successful. Effective communications help to build long-lasting brand value too. Added to this. however. is exposed to over 1. limits the choice of messages and media. More than 20 years after General Electric stopped making food blenders. current EU policy is to ban all cigarette outdoor. there are many potential ways to develop and change the ways that organisations communicate with their customers. is becoming increasingly selective in the screening of messages. Some may entertain and others irritate. To sum up. The legislative framework.
Marketing communications strategy must be integrated with all other aspects of the marketing strategy. the positioning to aim for. the resources required and product strengths. media. it also builds a clear picture of the consumer (and those who influence them) that the communications must reach.
. so we look at communications planning.
We have already emphasised that communications strategy has to be viewed within the context of the overall marketing plan. should all feed in to the start of the marketing communications planning process. Other groups in the task environment may require communications too. Target audience Segment analysis and target market choices in the marketing plan provide direction on where to channel resources for communication. such as the segmentation. and with the overall strategy of the business. pages 469–490. external publics – shareholders. All this information helps us to define the tasks of marketing communications:
who to reach (target audience) what to say (message decisions) when. product. their attitudes. Marketing communications plans must be made within a framework of decisions regarding segmentation and targeting. To understand more about this process read Jobber.
MARKETING COMMUNICATIONS AS PART OF MARKETING STRATEGY
As one of the 4 Ps. In the process. and how often to say it (communications mix). suppliers. It is important to recognise that the consumer may not be the only relevant target audience. where. See Figure 13.Study Book: Marketing
understand how we plan the process. The direction developed in the marketing plan. 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. for example. pricing and distribution policy. internal publics – staff.3). buying behaviour and awareness.
These issues are formally set out in the communications plan. such as the dealer network.4 on page 469 of Jobber for the relationship between Marketing Strategy and Communication Strategy. government.
Objectives also serve as a reference point to evaluate the results of a campaign. 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). in 1961. it is difficult to isolate the contribution of advertising and secondly. The research agency. setting sales as a communications objective can be problematic. Milward Brown.Unit 8: Marketing Communications
salespersons. media buyers and research departments. As Reeves (1990) pointed out: “The product may be wrong. Budget may be too low. 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. Without good objectives. Each group may require different messages and perhaps a different communications mix. The sales force may not be adequate. For example. argued that sales objectives offer little practical guidance for decision making. Firstly. or promoting racial equality. You may also like to read about salesforce and direct marketing objectives too (pages 521–522 and 558–559). today’s communications may pay off in the long term. An advertising agency will use the objectives to brief their creative team and co-ordinate the efforts of copywriters. There are some circumstances where increased sales may not be appropriate as an objective. increasing the number of blood donors. Many factors influence sales. A competitor may be outwitting you with strong deals. Distribution may be poor. There are many variables. Political parties may advertise to generate votes. long after feedback from measures are needed to inform decision making. 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. it is impossible for the manager to guide decision making or to control the implementation of a communications plan. financial support or reduce the credibility of the opposition. gain membership. for example.” Russell Colley. and if targets are not reached it may not be the fault of the communications campaign. Price may be at fault. Even in commercial organisations. Many public service communications are aimed at raising awareness or changing behaviour rather than generating sales. estimates that it takes up to 32 months for
. Alternative campaigns can be evaluated against these objectives and appropriate choices made. Advertising in certain types of media may take a long time to reach its full audience too. A better product may be sweeping the market.
for example. marketing objective. If maintenance is the goal. purchase). or to change attitudes to the brand. Colley believed that marketers should analyse the interim steps of the communications and decision-making processes to identify specific communications response objectives. marketers need to adopt a range of objectives. You should then see a folder named ‘Unit 8 – Marketing Communications’.
In practice. this is too long to wait to measure performance. but increased sales would be a wider. ‘Does HIV Look Like Me?’ and ‘Inspirational NIKE’. Consider and note down which of the adverts is set to achieve any of the following objectives:
. However. One further argument against sales increase as a communications objective is that in mature markets. to create or widen awareness. On the left hand side you will see a row of menu items you can click on. it is difficult to set measures for the success of marketing communications. Click on this and you will see videos entitled: ‘Avon SpectraColor Lipstick’. 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”. Relevant advertising objectives would be. the main concern of marketers is defending and retaining market share.3 – WATCH AND LEARN
Go the Marketing Blackboard page. to convey a particular message.
ACTIVITY 8. we therefore affect the behaviour we want to see (for example. unless you estimate the amount sales might have fallen without it.Study Book: Marketing
readership to reach its full potential in magazines such as Vogue and Cosmopolitan. ‘Specsaver Mr Men Offers’. 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. Click on the menu item entitled ‘Video Resources’. including sales objectives if goods and services are ultimately purchased. You might have questioned whether intermediate measures such as awareness are of any practical value in themselves in assessing the success of a campaign. There is an implicit assumption that by changing attitudes or awareness.
Secondly. Firstly. In an ideal world. the shape and parameters of function are not so easy to determine.
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. Even if this is reasonable. sales are not determined by spend alone. 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. This can range from 1% to more than 25% of sales value. companies might conduct a marginal analysis by keeping adding to the advertising budget as long as the marginal revenue exceeds the incremental costs. Even within a particular sector. the message and media selected as well as the effect of other Marketing Mix elements. It also depends on quality of communications. so it appears that there are few general guidelines for setting the communications budget.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 wide variation in expenditure.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. But this assumes that it is appropriate to consider sales as a function of advertising expenditure. as discussed above.
by adding on the production costs. economic situation. Each method has its own advantages and disadvantages. Broadbent (1984) describes budget setting as a process of finetuning through a cycle of theory. Read about the four common budgeting methods. check to see if this is feasible given the forecast environment. such as executive judgement. 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. and therefore no single way to do it. the resources availability and the internal political processes. objective and task. He recommends the total method to reduce the uncertainty. expert advice from the advertising agency. This is more of a procedure than a single method. including:
past sales forecast sales and profit marketing environment (competitors. The Institute of Practitioners in Advertising agrees that there is no easy answer to setting budgets. Essentially. executive judgement. objectives and task and modelling to provide several recommendations for expenditure. share of voice and percentage of sales. four parties are typically involved in this way: senior management (approving).Study Book: Marketing
In practice. pages 473–474 of Jobber Which method is the best? It seems that there is no single criterion by which to set budget.
.) 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. a number of methods are used. etc. In shaping the budget decision. the total budget is calculated. Fill (2009) discusses various ratios including advertising sales. The high and low figures provide a range for consideration when setting the budget. the marketer uses as many methods as possible. experimentation and feedback. the advertising agency (advising) and the media (determining cost levels). marketing managers (proposing). Next. They suggest that an attempt should be made to take account of all factors that influence budget decisions. This can then be used to check what the budget will buy in media exposure terms and.
Broadbent (1984) makes an important point that budget setting cannot be separated from the rest of the process of marketing planning.
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. Ogilvy and Mather recommend a “single-minded proposition” – the single most motivating thing you can say about the product. generalisations and platitudes”. Sadly. users. The principal characteristics of the product or service on offer are of particular value too. and capture the audience’s imagination within a few seconds. marketing communications must get attention and be relevant to the audience.e. It will also require considerable skills in production to turn the ideas on paper into an effective communication and to remain within the budget. the environment and product characteristics) are addressed.
. It certainly demands creativity to produce ideas and images. economics. influencers.
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. 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. Once these issues (i. Now read Jobber.Unit 8: Marketing Communications
To be effective. We discussed positioning in Unit 3. 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. The process of creating the communication message starts with a thorough understanding of buyers. 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. pages 284–289 for more information on positioning and repositioning. Above all. 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. there is little good literature on subject.) on buying behaviour. etc. influencers and users and the impact of their characteristics and environment (culture. they must also convey the brand clearly and have consistency with the rest of the 4 Ps. If they are designed to promote a product or service. knowledge of buyers. which have not been used before.
Emotional appeals attempt to generate positive or negative emotions to stimulate interest. the marketer or the appointed agency can begin the task of formulating appropriate messages worded in language understood and used by the customer. Moral appeals emphasise the right and proper characteristics of the product or service.
. The choice of appeal needs to take account of the characteristics of the target audience and the influence of cultural factors.Study Book: Marketing
With this information. it needs a customer focus. shock and fantasy. joy. love. Images can express ideas or feelings that are very difficult to express in words but. This might be conveyed by demonstration of the product or service. action and purchase. They may amplify a headline and in certain circumstances form the key elements of the message. The message content should also take into account what type of appeal is appropriate. this can provide difficulties when crossing country and cultural borders where different regulations. the advertising of the Co-operative Bank’s ethical investments and the Body Shop’s buying policy are two good examples. Automobile Association (AA). a comparison with competitor offerings or testimonials from users. A rational appeal might suggest that purchase and use will yield functional benefits for the customer such as fewer problems. shame. 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. body language. pride. Other appeals and some examples include guilt. symbolism and taboos can present a challenge to the outsider. humour. value for money or convenience. In the UK. once again. The advertisements for the UK car rescue service. 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. 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. Generating negative emotion such as fear can backfire. 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. There are two basic elements to consider:
Message content The content should convey the basic reason why the audience should take action – in other words.
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. 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. music and sound effects need to be carefully considered and scripted. 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. but the blend of words. body copy.
MESSAGE FORMAT AND COMMUNICATIONS MIX DECISIONS
The marketer must determine the most effective format to give the message content impact and memorability. Organisations. yawns. Even in domestic markets.Unit 8: Marketing Communications
International marketers need to be especially aware of cultural and regulatory differences to avoid causing offence and costly mistakes. sustain interest and be memorable. which supply goods and services to the youth market. speech rate. For example. and articulation. 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. Language It is important that the customer not only understands the message but interprets it in the way intended by the supplier. men and women are not shown together.1 on page 875 of Jobber. music and sound effects all play a part in the message. the appeal in a radio advertisement is conveyed by the quality and tone of the voice. In international markets. did you know that in many countries. Even the vocalisation of pauses. sighs. For example:
Print media – Typically. tone of voice and body language can all be scripted and utilised to create a strong message. Without the benefit of pictures. the format includes the key elements of a headline. it can be surprisingly difficult to design communications that speak the target customer language. rhythm and pitch. Jobber (pages 475–476) highlights the importance of the headline and sets out Ogilvy’s guidelines on print advertisements. illustrations and perhaps colour – each one can serve to enhance or ruin the message. appeals and images is influenced by the choice of media. for example. TV – Words.
Thereafter. Nicorette (nicotine patches and gum to stop smoking) spent £25 million on advertising in the UK alone in 1998.g.
Suppose that you have just been appointed to launch the new range of clothing from the multi-faceted UK group. This is where most of the budget is spent. A 10% saving on a budget of that size is very worthwhile. The individual can make use of both verbal and non-verbal messages. yet unobtrusive whilst web sites themselves must keep the user interested right through the communications/sales process. For example. marketers need to ensure that there is sufficient message to elicit the all important response. 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. and it is not impossible with skilful planning and negotiation. and closing. In straight cash terms. social networking sites.Study Book: Marketing
Direct mail – calls to action including actually opening a mailshot are vital. 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. Internet – pop ups and banners need to be sufficiently interesting. 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. presentation and demonstration. the salesperson must be aware of cultural differences that influence both selling style and the cues from the prospective buyer. Personal selling – The format of a typical sales call includes opening. the media planning and buying process is the most important element of many campaigns. use support print or other materials or perhaps even demonstrate the product. headed by the influential Richard Branson. In international markets. counter objections. Virgin. twitter)?
These issues need to be identified and addressed as part of the communications planning process. at what times of the day? Would direct mail be a good option? What promotions would you need to directly encourage sales (e. need and problem identification. 1-page or 1/2 -page advertisement? Will you use terrestrial or satellite TV advertisements? If so.
being selective in your choice of material. 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. PR).
. 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.
Whatever the budget. coupon redemption. This is a form of live testing that provides feedback on the impact of a campaign without committing the entire budget. Often. However. an attempt should be made to evaluate the effectiveness of the communications strategy. even the most innovative sales promotion. 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. Read the remainder of Jobber. since so many variables have an impact on the customer.Unit 8: Marketing Communications
Without an efficient choice and use of the communications mix (e.500 real businesses in industrial and consumer sectors over several years indicates that there is little correlation between total communications budget and profitability.
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). it is virtually impossible to isolate the specific impact of a single element of the communications strategy. Unfortunately. will be largely wasted if the communication is unseen by the target audience. getting the right balance between tools such as advertising. Our discussion of communications objectives explored some of these difficulties. communications are pilot tested in one region before being presented nationally. 15 and 16. 14. The PIMS study into 3. Post-testing – involves conducting research among the target audience to determine whether the communications objectives have been achieved. the most brilliant copy and the most original artwork. personal selling. Despite this. several methods have been developed and measures are continually being improved. and sales. PIMS Europe Ltd). Chapters 13.g. store visits.
You have also been introduced to some key aspects of direct selling and the management of sales teams. publicity.Study Book: Marketing
In this unit. budget setting.
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. so they heavily bias their communications mix towards publicity. sales promotions. 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. You have learnt a lot about the language of advertising. you have covered a lot of ground in terms of the promotion element of the Marketing Mix. as does control. advertising is just too expensive for many voluntary organisations. direct marketing. In the non-profit sector. 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. the effect of images on buyers and the need to set budgets which reflect the objectives of your communications plan. since personal selling is a high profile part of many industry sectors. making message and mix decisions and evaluating the effectiveness of communications plans Key elements of the mix are: advertising. 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.
. 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. pages 467-468).
Click on this and then click on ‘Unit 8 – Marketing Communications – MCQs’ work through the questions provided. Listen to the audio and consult the lecture slides at the same time. In order to do so go to the Marketing Blackboard page. You should see a folder named ‘Unit 8 – Marketing Communications’. You should then see a heading entitled ‘Marketing Multiple Choice Questions’.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. In the same folder. you also click on ‘Unit 8 Lecture Powerpoint Slides’. Click on the button entitled ‘PowerPoint and Lecture Audio’. The Audio and Powerpoint slides cover the main topics in this unit. 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. 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 8 Lecture Audio’.
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. However. since the materials are specially designed for the on-site MBA programme at Bradford. On the left hand side you will see a row of buttons you can click on. Click on the menu item entitled ‘Formative Exercise’.Unit 8: Marketing Communications
ADVERTISING STAGE Awareness
Action Interest ADVANTAGES Builds
Information DISADVANTAGES Expensive
DIRECT MARKETING SALES PROMOTION PUBLIC RELATIONS PERSONAL SELLING INTERNET
POWERPOINT AND LECTURE AUDIO
Go to the Marketing Blackboard page.
Click on this and you will see a video entitled: ‘Dove Real Beauty’. 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. On the left hand side you will see a row of menu items you can click on.6 – ON-LINE LIVE TUTORIAL
Jot down your answers to questions 1.
. You should then see a folder named ‘Unit 8 – Marketing Communications’. Marketing communication is not only used to promote a product but also to communicate the value that an organisation appears to believe in.5 – DISCUSSION BOARD
Go to the Marketing Blackboard page. show how the company has redefined the markets in which it operates and patterns of marketing thinking across the retail sector. 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). 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. 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.Study Book: Marketing
ACTIVITY 8. 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). Read Case 30 CRM at Tesco (Jobber. in doing this. Question 2: The majority of CRM programmes fail to deliver what is promised or expected when they are introduced. Click on the menu item entitled ‘Video Resources’. the nature of any problems that others might experience in pursuing a similar approach. pages 583–585) Question 1: Evaluate the strategy pursued by Tesco and.
Click on the menu item entitled ‘Additional Learning Materials’. You should then click on ‘Additional Video and see a folder entitled ‘Unit 8 Marketing Communication’. NY: Business Books. London: Pan. based on his book Tribes. ‘Creative Leaders 1977–1987. 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’. Colley R (1961) Defining Advertising Goals for Measured Advertising Results. London: George Allen and Unwin. Harlow: FT/Prentice Hall Krone H (1989) Wall Street Journal. Association of National Advertisers Fill C (2009) Marketing Communications. A composite of a campaign’. Ogilvy D (1983) Ogilvy on Advertising. This is Seth’s newest set of perspectives. Majaro S (1982) International Marketing: A Strategic Approach to World Markets. On the left hand side you will see a row of menu items you can click on.
Broadbent S (1984) Leo Burnett Book of Advertising.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.
. New York.
1 (see ‘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). and list the key topic headings in a marketing plan
ACTIVITY 9. Module Leader Conclusions’ in Blackboard). On the left hand side you will see a row of menu items you can click on.
.1– WATCH AND LEARN
Go to the Marketing Blackboard page. Click on the menu item entitled ‘Video Resources’. Unit 9 – Revision.
In this unit.
By the end of this unit. This is ultimately a template for you to write up a marketing plan report. you should be able to:
review the steps in developing a marketing plan. Watch the video to gain a concluding overview of the module.Unit 9: Revision
Key audio/video: Concluding the Module – Activity 9. Click on this and you will see a video entitled: ‘Module Leader Conclusions’. we revise key issues related to developing a marketing plan presenting a typical format of a marketing plan report. You should then see a folder named ‘Unit 9 – Revision’.
Marketing Mix Decisions Product Promotion Price Place 10. Budget Organisation and Implementation Control
In order to present a marketing plan. 12. Core Strategy Target Market(s) Competitor Targets Competitive Advantage 9. 1.Study Book: Marketing
The following presents a typical structure of a marketing plan report. The term ‘Market’ can mean a market segment. Executive Summary 3. 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. External Marketing Audit Macroenvironment The Market Competition 5. Terms of Reference 2. Internal Marketing Audit Operating Results Strategic Issues Analysis Marketing Mix Effectiveness Marketing Structures and Systems 6. an industry sector. Marketing Objectives Strategic Thrust Strategic Objectives 8. Business Mission 4. the terms of reference are useful to state the objectives of the marketing planning exercise and its coverage. This provides useful headings for you to write up a report in order to present a marketing plan. 11. a geographical area.
. SWOT Analysis 7. But it is important to have complete focus before commencing with the work of planning.
What is important here is that the analysis is appropriate and relevant to the product or brand under the investigation. A mission statement can dramatically affect the range of a firm’s marketing activities by narrowing or broadening the competitive playing field. the customer needs being satisfied.
EXTERNAL MARKETING AUDIT
A marketing audit is a systematic examination of a business marketing environment. Bullet-points can be used to present the key points in the executive summary. problem areas. students frequently cite political stability under the influence “political”. In this case. 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. This is only any importance if political stability (or instability) has any particular effect on the chosen product or
. with a view to identifying key strategic issues. enduring statement of purpose that distinguishes a business from others of its type. and the technology used. Not every element has to be used. customer service.
The business mission is a broadly defined. it is necessary to identify what it is believed to be the mission of the product and brand under the planning. A PEST or PESTL analysis can be used for the analysis. It may not be possible to find the company’s business mission. So for example. and opportunities. Many companies produce their missions but they do not always necessarily refer to specific products or brands. strategies and activities. 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.Unit 9: Revision
Executive summary describes the report’s major findings and recommendations. market and market position. Macro environment: consists of broad environmental issues that impinge on the business. objectives. Areas that can be looked at include innovation. It provides the basis upon which a plan of action to improve marketing performance can be built. The following sections revise the key issues and questions to conduct audit and analysis as well as developing a plan. The external marketing audit focuses on the macro environment and the micro environment. The executive summary should highlight key audit findings and key recommendations.
As for suppliers. what are their objectives and strategies. what choice criteria they use. Micro environment includes:
The market: analyses of market size (growth rates and trends). But again. Operating Results This covers operating results (by product. market share. and any entry barriers that make market entry from new competitors difficult.
For the micro environment. use a simple Porters Five Forces model. profit margins and costs. channel attractiveness analyses. size and profitability. physical distribution analyses and analysis of the role and interests of decision-makers and influences with distributor organisations). strengths and weaknesses. they are only of importance if they present a strategic threat or the company’s relationship with them presents a marketing opportunity. customer. how they rate competitive offerings and how the market is segmented). really focus on issues such as customers and competitors. It should cover an evaluation of the following four sections. company capabilities. New entrants and substitutes are only of importance if it is believed that they present a tangible threat during the period of the plan. Competition: analysis of who are the competitors to the company (actual and potential). and geographic region) for sales. Try and ensure that your identified PEST factors focus on customers and competitors and by inference.
INTERNAL MARKETING AUDIT
The internal marketing audit focuses on the activities and performance of the company in the light of the external marketing environment.Study Book: Marketing
brand. customer analysis (who they are. 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?
. market shares. distribution analysis (significant movements in power bases.
it succeeds or otherwise on the strength of the marketing mix. weaknesses. price and place) will be evaluated in the light of the external marketing environmental analysis. This is an important section. Jobber.e. refer to the company). competitive advantage and competitive positioning.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.
A SWOT analysis is a structured approach to evaluating the strategic position of a business by identifying its strengths. core competences.g. page 288. refer to the environment).11. micro or internal audit. That is because there is no audit information that would justify such analysis. Any element of the SWOT. Marketing Structures and Systems The marketing structures and systems of the company will be evaluated to identify what exists and its effectiveness. which has not been discussed in the macro. and intra and interdepartmental communication. 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.. Fig. Marketing structures include marketing organisation. The most important thing in this section is to give some information and comment upon effectiveness. It can then be matched with the mix to strategic issues such as market segment identification. Highlight ones that are appropriate and relevant. describe each and evaluate each. is likely to be invalid. Opportunities and threats will derive from the external marketing audit analysis (i. promotion. 8.12).
. You need to identify the current 4 or 7Ps. marketing training. page 287.e. Marketing systems include marketing information systems. This is a marketing plan and ultimately. Fig.5) and in your textbook (e. your SWOT must only include information that is relevant to the preceding marketing audit. Strengths and weaknesses will derive from the internal marketing audit analysis (i. the marketing planning system and the marketing control systems. Marketing Mix Effectiveness Each element of the marketing mix (product. Importantly. opportunities and threats. Try using perceptual or positioning maps that are described both in your Study Book (Activity 4. 8.
Study Book: Marketing
As a result of the marketing audit and SWOT analysis. A target market is a group of consumers/organizations (segment) that the company wishes to aim its offering and communications at. hold. the setting of competitor targets and the creation of a competitive advantage (see the next three sections). you feel that for example. new/related products for existing markets (product development). Two types of objectives need to be considered: strategic thrust and strategic objectives. Strategic Objectives Strategic objectives for products need to be set. market penetration is all that is needed. relevant marketing objectives will be set. Competitor Targets Besides targeting consumers/organizations. The choice of target market may define competitor targets and be influenced by them: market segments with weak competitors may be attractive targets. You might well decide to approach your recommendations on the basis of two or even three Ansoff Matrix areas. The options are build sales and market share.
Core marketing strategy involves the achievement of marketing objectives through the determination of target markets. existing products in new/related markets (market development) and new/related products for new/related markets (entry into new markets). then that is fine. Strategic Thrust Strategic thrust defines which products to sell in which markets. pages 370– 373). It defines where the company wishes to compete. If however. the company will choose competitor targets. Weak competitors may be viewed as easy prey and resources channelled to attack them. harvest (improve profit margins) and divest (drop or sell product). Target Markets A choice of target market(s) has to be made. The Ansoff Matrix offers four options: existing products in existing markets (market penetration or expansion).
. details of which you have seen in the study book (Unit 6) and the text book (Jobber. Strategic thrust is best represented by the Ansoff Matrix.
but support your recommendations. It is necessary to ensure that a marketing mix is robust and well thought out. quality and design.g. Whatever you do. or being closer by establishing close long-term relationships with customers. This provides the basis of how the company competes. price and place (4P’s) and physical evidence. This is a chance to be creative. Price Pricing decisions involve choices regarding list price. being faster at anticipating or responding to customer needs than competitors. a marketing mix can be created to meet those needs better than the competition. superior quality or service).
. Place Place decisions involve choices regarding the distribution channels to be used and their management. discounts. You do not need to do a full 7Ps analysis if some of the elements are not appropriate. process and people (7P’s). personal selling. Do not over generalise. packaging. Decisions have to be made regarding product. and the services that will accompany the product offering. Major success is dependent on the company creating a competitive advantage by being better (e. the location of outlets. features (that create customer benefits). sales and promotions and public relations. direct and Internet marketing. Promotion Promotion decisions involve choices regarding advertising. But you must ensure a minimum of 4 Ps.Unit 9: Revision
Competitor Advantage A competitive advantage is a clear performance differential over competitors on factors that are important to target consumers/organizations. methods of transportation and inventory levels to be held. do not simply repeat what the company is currently doing! Develop your own marketing mix. promotion. warranties. credit terms and payment periods.
MARKETING MIX DECISIONS
By defining a target market and understanding the needs of their consumers/organizations. Product Product decisions involve choices regarding brand names.
. think about dividing your budget into percentages. Then you can divide that 100% over the marketing mix and elements within the marketing mix. motivation and monitoring of people (staff) so that they can implement the other 6 “Ps” of the Marketing Mix. efficiency. Some of the figures might be difficult for you to find. you don’t need to provide a full detailed marketing budget. not simply the marketing communications mix. Reorganisation may mean the establishment of new marketing structures (e. Yet. These focus on who is responsible for various activities.g. These can form a natural sub set of Place. These include layout. the resources of the organization and the level of ROI required. If you can get detailed financial information. and when action will take place. then that’s good. how the strategy should be carried out. Otherwise. if your marketing communications part of the marketing mix accounts for 50% of your budget. that the marketing budget is for the marketing mix. where things will happen. brand management) or the creation of a marketing department for the first time. Consideration should also be given to implementation issues. décor. People People decisions involve recruitment. So. you might then wish to divide that 50% up amongst the different elements of the marketing communications mix.
ORGANISATION AND IMPLEMENTAITON
A marketing plan needs a marketing organisation to implement it. for the purposes of the assignment within the current module. Process Process decisions involve the ease of purchase/after sales for customers and efficiencies in the supply chain.Study Book: Marketing
Physical Evidence Physical evidence decisions involve choices for service organizations where production and consumption take place simultaneously.
Every plan needs a budget which must be set according to the objectives of the plan. Remember however. training. So your overall budget represents 100%.
Unit 9: Revision
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
Scope out of 10
Study Book: Marketing
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)?
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.
McDonald, M (2002) Marketing Plans, Butterworth Heinemann, Oxford.
Appendix Model Answers to Activities Unit 1
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.
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. in many internal.4
You may have concluded that ‘value’ is a rather nebulous term. but that it is a crucial notion if we are to understand and address customer need. public and voluntary services.
The answer lies perhaps only in terminology. Different customer sets may seek quite different benefits as we see in Unit 3. Where price is a main determinant in the classical Marketing Mix model.
ACTIVITY 1. 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. hard to measure and define in marketing terms.Study Book: Marketing
pages 803–810. describes these forms of control in detail.Appendix: Model Answers to Activities
Study Book: Marketing
ACTIVITY 3. the more stable the environment. So. Will there be a great difference if Democrats replace Republicans in the USA or Labour replace the Conservatives in the UK? Probably not. In other parts of the world. Again. however. From politics comes legislation. We have tried to choose typical.1
As you can imagine there are many issues in each category we could choose to discuss in this response. there are far more small properties being built to serve an ever increasing single household population. Legal/political factors As a global issue. government stability is a fundamental political influence. If you are studying in a country other than the UK you will have probably quite different examples. Intangible elements include lifestyle. 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. Tangible factors include education and demographics. the more organisations that can plan their operations with some degree of certainty. These in many cases are the result of people’s education (tangible) or culture (intangible). For example. Each will have its own impact on a marketing organisation and needs to be carefully understood. 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. This can impact on taxation. in others less. Every government will introduce its own legislative programme. in the developed world political stability is now almost taken for granted. attitudes to competition and protection and attitudes to the environment. In some countries the impact of religious culture is becoming more important. investment and a whole host of marketing decisions. a change in government can have a significant influence on a country’s attitude to business.
. disposal income. This results in significant changes in buying and living habits. values and expectations and attitudes.
taxation and interest rates. A useful example of the application of 5 Forces is that of the mobile phone network supplier in the developed world:
. 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. inflation and confidence. 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. find that as a result consumer confidence is declining. Technological factors The influence of technology is all encompassing and ever more rapid and changing.
ACTIVITY 3. these then have an impact on quality. 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. taxation. The increasing globalisation of the world economy means that many companies are now sourcing their products from cheaper. Over a decade ago. we need to understand the influences of income. From a consumption angle. patriotism and the general wealth and welfare of the local population. lower cost countries. From production we need to understand costs that businesses face including raw materials. so purchasing declines which of course has its own impact on the social and political environments. Environmental influences can be both government and consumer led. In terms of market acceptance. labour.Appendix: Model Answers to Activities
Economic factors Economic factors have both production and consumption influences.2
You will need to take an objective step back and identify the key forces facing and shaping your industry. When consumer confidence declines. Physical factors These are becoming ever more important as we address the issues of global warming and climate change. Countries such as Germany which are exhibiting a great movement of production to lower cost economies.
Presence in numerous markets – Not over reliant on one particular market. Power of suppliers is therefore weak. Threat of new entrants into the industry This will be weak as investment in networks. 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. 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. Experience and strength of brand – Sony has over 60 years of experience. the market has become something of a commodity as free phones are constantly offered as a sign-up incentive.
. For suppliers.3
SWOT analysis on Sony Strengths
Global Size and Market Share – Their size and market share still provides Sony with a good foundation. and the Playstation that have become a phenomenon. Threat of substitute products or services This will be medium.Much of Sony’s reputation has been based on producing popular products.Study Book: Marketing
Rivalry amongst the current competitors in the industry This will be strong as providers such as Vodafone.
ACTIVITY 3. Solid image of producing innovative high quality products. licenses and marketing is considerable. Price deals are synonymous with customer acquisition. Bargaining power of suppliers and distributors Many networks own their own distribution. Orange and 02 battle for the ever more elusive market share. Creates market-defining products – Products such as the Walkman.
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. Japanese Strength in Electronic Engineering Design – Sony possesses strong country of origin effects.Appendix: Model Answers to Activities
Level of vertical integration – Many of Sony’s products are made from Sony made components. most notably for high technology products. Exposure to global markets – Sony sells its products in numerous markets around the world. This bureaucratic culture led the firm to be too slow in adapting to the changing needs of the market. but still profitable in developing markets.
Overcapacity – The company still has too much manufacturing capacity like many of its competitors. which are exclusive to Sony. Collapse of Cathode-Ray Television (CRT) market – The market has moved towards flat screen televisions. The company has undertaken a rationalisation programme. this may reduce Sony’s reliance on any one particular market and take advantage of economic upturns in particular countries. Needs to reduce its cost base. in fear that it may jeopardise sales of its
. Strength of ‘Playstation’ Brand – Playstation in the past has brought in over two-thirds on Sony’s profit in the past. Bureaucratic culture – Stifling organisational structure. Alliances with other manufacturers – Sony has aligned itself with the large electronics manufacturer in the world. Sony was slow to establish online music store and develop MP3 products. Now it has aggressively tried to rectify the initial mistake by launching its flat screen Bravia range of televisions. Sony was left badly exposed as it viewed flat screen technology as inferior. It must rationalise their manufacturing resources. New leadership – Giving renewed strategic focus and vision. and this helps drive profits. Low profit margins – Sony has profit margins around 2. 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. The traditional CRT televisions are on the decline.5% whilst rivals like Samsung enjoy margins of 14%. Sony’s alliances with companies such as Ericsson in mobile phones. which has made the turnaround strategy very difficult to implement. The much-anticipated launch of the latest Playstation 3 should help buffer profits for the business. It once dominated the television market. As a result of this they have reduced the number of products they offer.
a full year behind schedule. Entertainment.
Failing to focus on its core operations – Years of diversification has led to Sony not focusing enough on its core business. Sony’s independent divisions for too long have operated as “silos”. Model count reduction and investment in manufacturing capabilities to improve efficiencies. 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. it could prove devastating for the Sony brand. which are experiencing economic growth.Study Book: Marketing
traditional music products. Sony became more concerned about protecting its entertainment interests than developing hit tech products. with its electronics business. A potentially fatal flaw. Slow to market products – Playstation 3 has been beset with numerous production delays. and where there is an increasing appetite for technology products (e. The company needs greater collaboration between its assets. electronics. These new technologies create new markets. and Games. so as to leverage its core assets. which allows competitors enhanced opportunities.g. The business needs greater integration. Taking advantage of producing in low cost economies – Sony needs to produce more of its product offering in low cost economies such as China. Sony divesting non-strategic assets – The company should focus on three central operations Electronics. Emergence of cornerstone technology that could become an industry standard – It is hoped that Blu-Ray discs will become the industry standard. New technologies encouraging consumers to buy and upgrade to newer versions – For example.
Expansion of global presence – Needs a greater presence in high population countries. Utilize electronic platforms to distribute products . Further integration and synergy of Software and Hardware aspects of business. New technologies leading to new product opportunities – For example high definition camcorders. 3G mobile telephones etc. For
.This must take place using an integrated channel management strategy.The firm needs to find ways to exploit its dominance in the entertainment business. so as not to cause channel conflict with existing channel partners. consumers buying flat screen technology and demanding high definition televisions.
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. through a combination of low prices and a solid product range (e. R&D investment could be lost if not successful. Chinese technology brands are making huge inroads in markets. games & portable devices).g. Changing the company’s culture may take quite some time. which the company can ill afford. akin to the Sony Betamax fiasco. where traditional business models have been altered due to technology. Sony’s Walkman Phone
Increased foreign competition – Reduced trade restrictions has led to intensive foreign competition from low cost countries. Reliant on fickle entertainment industry. or face the risk of being obliterated through price competition. Boardroom clashes with partners such as BMG and Ericsson – Joint ventures do give rise to ongoing tensions between partners if managed ineffectively. camcorder.Appendix: Model Answers to Activities
example. Sony has to continually innovate and differentiate. there are numerous marketing cross over opportunities between its film and games division. designed by new CEO Howard Stringer – The turnaround strategy may prove divisive. Heavily reliant on Japanese market – Sony is heavily reliant on the Japanese market. 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. making price the key battleground.
Creating interoperability – Making Sony products a compelling product offering (e. Failure to successful implement turnaround strategy. and customers could become disgruntled if their recently acquired technology fails to become the industry standard. as Stringer is the company’s first non-Japanese leader. Develop crossover products – For example. television. and the firm could lose billons if it fails in becoming the next standard format for the next generation of discs.g. and growing concerns about copyright theft. where success is never guaranteed – Also huge changes taking place within sector. Changing technology that has changed the competitive landscape New technologies may lead to some products becoming obsolete. Haier & Lenovo).
. Failure to establish Blu-Ray as a proprietary standard – Blu-Ray disc technology is a big gamble.
As the purchasing managers. Bradley Jons as a wholesaler is interested in minimising inventory levels and unsold inventory.
ACTIVITY 4. Fred Elliott seems favourably disposed to the new product proposition.‘buyers’).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. Described in this case example. Fred Elliott. both Lauren Belles and Bradley Jons are interested in the right price to achieve target profit margin. By contrast. Margaret Francis is one such person. Lauren Belles as a retailer is interested in promotional support and reliable. In addition. which could well have influenced Lauren Belle’s decision to stock PLANTALL . 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 . where buying is undertaken centrally. A competitor could launch an above-average hard-textured snack and target this age group. cost-effective supply chain.3
In most organisations there is a Purchasing or Buying Department. Tubaloops already has the texture they seek –
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. Greenvale’s commercial manager and Margaret Francis store manager at Greevale are influencers.e. and particularly in the absence of Fred’s positive comments. In this case example. Fred Elliott is interested in achieving sales and target profit margin for garden centre group overall. Certain members of this department will have formal responsibility and authority for signing contacts for purchases (i. Whereas. Margaret Francis is interested in product sales and customers satisfaction at her store. An individual or a group of individuals with authority to select among the purchase alternatives are called ‘deciders’. Anne Sheffield plays the role gatekeeper in DBW’s decision-making unit (DMU) and controls the follow of the information into the DMU.Study Book: Marketing
ACTIVITY 4. Margaret Francis’ observations about CIC’s less than reliable delivery record might have been negatively influenced Lauren Belle.
Appendix: Model Answers to Activities
perhaps it could reposition its brand to be more attractive to this age group.
The research could be longitudinal to provide ongoing feedback.
Objectives would be centred round giving guidance to the regional manager and measuring levels of service. with lapsed users if a current database allows
All these methods represent primary research except for the analysis of complaints. either qualitative or quantitative. 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. 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. 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.Study Book: Marketing
On the other hand. The product line for mobile phones is not going to move to Decline. Coca-Cola.4
The mobile phone market is a fascinating one. 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?
. many high tech products including games and audio/visual systems end their product lives – sometimes in as little as five years. especially in the UK..Appendix: Model Answers to Activities
ACTIVITY 6. The competitive pressures of this sector are so great that producers are finding it increasingly difficult to differentiate their products. 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. as described in Case 34 iTune – Facing the Threat of Nokia (Jobber. For example. However. many more classic products (e. Continuous innovation is critical to sustain in this market.g. where it has moved rapidly from Growth to Maturity. pages 659–663). 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.
You may also actually buy less coffee when the price goes down. demand for products is likely to be influenced by the level of consumers’ preference and willingness to pay (which is related to their income). they do not have any choice but to purchase it. Car insurance is essential to car drivers by law. It is expected that the price will be reflect the optimal point between demand and supply for products. Coffee is something many of us regularly consume and it can be preserved for a certain period of time. Advanced technology to date led to the low cost production. Consumers do not expect the price of books to go up. and your ideas of value so it is the best approach from the consumer’s perspective. However. The demand for electricity is another example that is less likely to be affected by price movement. 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. See Jobber. product availability and the level of competition. consumers’ preference). The book market is highly competitive. However. Consumers can do a few things to seek better deals for their insurance policies.
You may buy more items such as books when the price goes down. Consumers’ preference and willingness to pay are influenced by a number of factors including product quality. Even price sensitive consumers have to purchase car insurance to be on the road.2
The marketing-orientated approach to pricing focuses on you. the consumer. Thus.Study Book: Marketing
ACTIVITY 7. comprising many suppliers. the demand for car insurance is not necessarily affected by the movement of price as much as books and coffee. Consumers can use their preserves of coffee up or stop consuming it for a while. Generally. pages 427–443 for full discussions on marketing-oriented pricing. You may buy more of items such as coffee when the price goes down. And the demand for books is likely to be driven by price movement (and of course.
Appendix: Model Answers to Activities
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.
. read Jobber. or sell directly to high-street shops. For the advantages and disadvantages of different types of distribution channel. a computer manufacturer may sell to local dealerships. or sell direct to the consumer. pages 627–632.
Study Book: Marketing
ACTIVITY 8. has nurtured one of the strongest images for environmental friendliness. Promotion has relied heavily on links to Volkswagen. Skoda has done much to improve its image in recent years. But it also bears a wider audience in the public – those who are generally concerned with corporate responsibility for sustainability. Calvin-Klein jeans are promoted as a designer-exclusive good with a premium price to match.2
Question 1: Both adverts are intended primarily for the consumer who may be greatly concerned with environment and social issues. Their competitor. that anyone can help reduce impact on the environment. the simplicity of the little red car and the use of toys in the animation is effective. The ad does succeed in addressing the Honda’s green credentials. Question 2: Both companies used television as a communication tool to transmit their messages because of its ability to reach a wider audience. Question 3: ‘Honda The Power of Dreams’. The product is being promoted in terms of lifestyle and retailer image. It highlights the company’s green history and their commitment to educate and inspire. although Skoda cars are generally sold through different dealerships. For Honda. attempts to communicate environmental issues through the Honda brand in a bid to encourage consumers to form an attachment to green issues. created by Wieden & Kennedy. Toyota via its Prius model. whether you are a user of these goods and how you decode the messages from the manufacturer.
ACTIVITY 8. which has a reputation for quality. The product can be found in major department stores. The brand name still carries a negative image for many and perhaps the low price reinforces this. Also you may not have these products in your country. Product quality has improved (and it is consistently voted top in customer satisfaction league tables). For a company with a reputation built largely upon quality and
Your responses may be somewhat different according to whether you are the intended receiver of the messages. Honda made what is a complicated message easy to grasp.
as consumers increasingly demand breakfast cereals that offer the added benefits of a healthier lifestyle and low fat diet rather than simply great taste. ‘Does HIV Look Like Me?’ – to correct misconceptions. Nestlé’s advert addresses environmental concerns of their consumers and highlights the popularity of wholegrain cereals. ‘Inspirational NIKE’ – to remind and reinforce.3
Objectives of these adverts are:
‘Avon SpectraColor Lipstick’ – to provide support for the salesforce. the ad does reinforce the message to consumers that the environment is one of the company’s concerns. The consumers may consider these products as their alternatives if/when they are to exercise their socially and environmentally minded practices in consumption. Nestlé promotes the benefit of a healthier lifestyle. Question 4: Honda says good things come from ‘doers’. ‘Specsaver Mr Men Offers’ – to create awareness. consumers may interpret that these companies are providers of socially and environmentally desirable products. If the communication is successful. Honda offers tips on how drivers can make simple. Similarly. 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. to make stuff better’. people who do ‘things to move us forward.Appendix: Model Answers to Activities
good fuel economy. small changes to their behaviour to make a difference to the world around them.