Subject Module Information Subject: Module Title: Timing of Module: Business Studies Marketing and Advertising Year 10, Summer


Content This module will show how the business develops and sells the products or services which it provides. It will look at the development of the product or service from its inception to the final point of sale. The module will look at: • • • • • • • • • • the research and development of the product finding the market the marketing mix product life cycles pricing the product branding and packaging advertising and publicity selling distribution consumer protection

Homework/Student Independent Work Students will be expected to complete the homework assignments set by the teacher. In total, homework should average at least 1 hour per week. At the end of the module, there will be a test covering all the work. Extension work will be available for students who complete all of the above. Performance in Module Students will be assessed by means of the homework, and by a test to be held at the end of the module.


Marketing is what companies do to discover products (or services) which the customer will like, and will make them lots of money. The market itself can be described as the potential buyers for any named product. Every year, thousands of new products are launched all over the world. Companies who do this must have a successful product. This is because they will spend a lot of money, researching and developing the product. The only way to get this money back is to sell the new product in large quantities! Companies must continue to do this because the customer usually has a wide range of each product to choose from e.g. the toys and games market. Where there is a very wide range of products, this is known as a buyers’ market, where businesses are in competition with each other. Where customers have very little choice, this is known as a sellers’ market. Launching a completely new product can be very expensive. Waddingtons, the toy and game company recently decided to adapt an existing product; the jigsaw puzzle, and make 3-D designs. The product was tried out by a sample of people to see if they liked it. Then, after being advertised widely, the product went on sale and became successful. There are four main areas of marketing and these are known as the 4 Ps. Product Price Promotion Place the product must be designed to meet customers’ needs and wants the customer must be able to afford the price, but the business must also be able to make a profit making sure the customers know about the product the product must be in the right place so that the customer is able to buy it

Assignment 1 1. Why would a product like Waddingtons’ 3-D puzzles need marketing? 2. Why did Waddingtons choose to produce the 3-D puzzle shown above? 3. Would you buy the product featured on this page? Give reasons for your answer. 4. Think up a new type of 3-D puzzle for Waddingtons to make. Why do you think it would be successful?


Market Segments A market segment is a part of the market which contains customers who have certain characteristics. These can generally be split into the following groups. Age Gender Income Area Ethnic Group Occupation people from different age groups will tend to buy different products male and female people will tend to buy different products people will buy products, making allowances for how much they can actually spend people living in different areas of the country may have different tastes people from different ethnic groups may have preferences according to their culture people involved in different lines of work may have different tastes

Other ways of segmenting the market include: Repeat Buyer One-time Buyer Impulse Buyer Planned Buyer someone who buys the same product over and over again someone who buys a product just once someone who buys a product on sight without thinking about it someone who only buys what they plan to

Assignment 2 Give an example for each of the ways of Market Segmentation shown above. Remember that it is very important in Business Studies to give examples of what you are talking about. It shows that you understand the ideas! Your business idea has been to grow Bonsai trees. A friend of yours is an expert on these miniature trees and knows all about growing them. It is Autumn and you have decided to sell your product (priced at £40) in two ways. You have run off leaflets and given them to friends to take home. Secondly, in November, there is a Christmas Bazaar at the local church, which is always popular. You have been allowed to set up a stall at this Bazaar. Please answer the following questions. Assignment 3 1. Describe the product you are selling. 2. Who are your customers likely to be? Are they men, women, old or young, people with a high or low income? 3. Which method is most likely to result from sales to your targeted customers – the leaflets or the Bazaar? Give reasons for your answer. 4. Write a report to the Marketing Director, explaining how you would adapt the Bonsai Tree to appeal to a different market segment.


Social Grades We can now look at the area of occupations, as mentioned above, in more detail. Occupations can be split up into different Social Grades which gives an indication of the spending power of each household. Socio Economic Groups
35 30 25 20 % 15 10 5 0

Series1 A B C1 C2 Groups D E

Assignment 4 Copy the following table into your exercise books. Grade A B C1 C2 D E Total Description Higher managerial, administrative and professional Intermediate managerial, administrative and professional Supervisory or clerical and junior managerial, administrative and professional Skilled manual Semiskilled and unskilled manual Casual labourers, state pensioners and unemployed % Population



Fill in the above table with the percentages from the graph (as close as you can!). Assuming the population of the UK is 55 million people, calculate the population figures within each Social Grade, using the % figures as a guide. Your teacher will help you here. Assignment 5 1. Why is it important for a business to know at which segment of the market to aim its products? 2. Explain what type of person (age, gender, income) is likely to want the following: clothes from Miss Selfridges, a pint of beer in a pub, a copy of the Financial Times, a Lego set, a month’s holiday in Spain in February, a Porsche car. 3. Social Grade E is not normally a sales target for business. Why not? 4. A person in Group B might go touring in France for a holiday. A person from C or D might go to Benidorm on a package tour. Why is there a difference in the destination of the two people?


Stages of Market Research The diagram shows the process of market research. This market research must find the answers to questions a business might have about its market.
What is the question to which the business wants to find an answer?

What information is needed to answer this question?

What method of market research will be used?

Analyse the data, draw conclusions and make recommendations

Collect the data

Assignment 6 Pick any product you like and write down how the stages of market research would apply to that product. It would be best to choose a product you are interested in, which will make it easier! Types Of Research Desk Research This involves the use of data which is already available. This can come from inside the business, e.g. information on sales, costs and other trends. It can also come from outside the business, e.g. information from other companies’ research, trade journals or government statistics. This data is known as secondary data. This type of information is useful, as someone else has already collected it, but it may not be in the correct format for a particular business’ needs. The data may have to be looked at and presented in other ways in order for it to make sense.

Field Research This is information which has not been collected before by anyone, and is done by a business specifically for its own purposes. This data is known as primary data. The advantage of this type of research is that the business can carry out the research in any way it likes. However, it can also be an expensive process, as the business has to do everything itself, or use companies who specialise in research.


Field Research can take various forms. Observation where someone watches the behaviour of potential customers e.g. people watching traffic flows, looking at why certain aisles in supermarkets are popular asking questions of people to find out what they think about products


There are many different forms of surveys. The main types are: Telephone surveys Postal surveys Newspaper surveys Consumer panels telephoning people at home sending questionnaires through the post asking people to fill in and return questionnaires in the press groups of people who review products, or who get observed themselves in group situations

Assignment 7 Discuss each of these types of survey in class and see if you can come up with advantages and disadvantages of each of these types of sampling. Questionnaires You must be careful when using questionnaires if your results are going to mean anything. The main areas of concern are the people whom you ask and the questions you ask. You cannot possibly ask everyone in the country (or the world!) your questions, so you have to select certain people. These people should be representative of all consumers and this is known as a sample. There are different types of sampling which can be used: Random sample Systematic sample Quota sample where everyone potential customer has a chance of response where every 100th person is chosen from a list of people e.g. if 50% of people drank milk, you would ask 50% of your sample, questions about milk

There are two types of questions – open and closed questions. Closed questions are those to which the answer can only be “Yes”, “No” or another one word answer. These can be useful for basic information, such as finding out peoples’ gender, or where they live, but they have a limited use when trying to find out detailed opinions. Open questions are better for this, where the answers are not restricted, e.g. “Why do you like a particular product?”.


Assignment 8 Conduct a survey on crisps. There are several things you will need to consider. 1. Your questionnaire needs to cover items such as: • How many packets people eat • What are their favourite flavours and brands • From where do they buy crisps • What influences their choice of crisps

2. You need to decide what type of sample to use (age, gender). 3. Analyse your findings. You could use graphs to help you here. 4. Write a short report. This need to include: • Outline of the questionnaire • What influenced your choice of sample • Were there any problems with the survey • Present main findings from the survey • What would your survey suggest if a new company wanted to break into the market?


Product Range & Product Mix A company’s product range is the different varieties of one product that the company sells. For example, Golden Wonder produces a range of crisps.

However, Golden Wonder also produce other products, so that the crisps are only a small part of the product mix.

Golden Wonder produce a wide variety of products in order that they can maximise their share of the snack food market. The company is more likely to have more consumers for its products if it produces such a variety, rather than just one product. Product Differentiation Each of the products Golden Wonder produces are different. The crisps are sold in a variety of flavours, there are special large catering packs sold to pubs and there are children’s snacks made into different shapes. This is important because different products satisfy different customer needs. There are a number of ways in which a company can differentiate its products. Design/Formulation where different ingredients are used e.g. for Golden Wonder, they have different flavours as well as low fat products. Name different products have different names e.g. Golden Wonder have “Lights” and “Peparami” which give the potential customer essential information. The name must at least get the customer to look at the product. important for promotion (colours) and information, but also for ease and safety of handling.



Assignment 9 1. How are these newspapers differentiated from each other? 2. Which consumer needs does each product satisfy? 3. A publisher is thinking of producing a quality newspaper completely devoted to sport. Explain whether or not you think this newspaper will sell well.

Branding A branded product is one which is seen by customers to be different from other similar products. For example, Coca Cola is regarded as being different from other brands of cola drink. Coca Cola is a very strong brand due to it’s popularity and because of this, the company can charge a premium price for the product. The consumer is willing to pay extra for this product because: • the product is usually thought of as being of better quality • the product tends to be more heavily advertised than other brands However, many of these brand names are now faced with strong competition from own brand products. These are products carrying the brand labels of well-known retailers, such as Sainsbury, Tesco, Asda or Dixons. They are often cheaper than the regular branded products, but they are getting a better reputation for quality. Generic Product The opposite of a branded product is a generic product. These are products which are not regarded as being different from other products on the market. Examples of these include milk, bread, bananas and sugar – you don’t tend to ask for these products using a company name. Assignment 10 Product Canned Fruit Chewing Gum Soft Drinks Soup Toothpaste Leader Del Monte Wrigley’s Coca Cola Campbells Colgate
1. Why do you think they are still popular products? 2. How have their manufacturers kept them so popular? 3. What do you think is the brand leader for each of the following products in Britain today? Trainers, crisps, children’s shoes, digestive biscuits, cat food. 4. Do you buy these brands and why?

The table above shows brand leaders in certain products from the 1920s up until the present.


The Product Life Cycle is a model that shows the stages through which a product passes in time.

Development This stage would actually appear before the introduction of the product. Here, there are no actual sales as the product is not yet ready. A firm will spend lots of money in this stage on researching and designing how the product will look. Introduction This is where the product appears on the market, backed by a huge advertising campaign and other types of promotion. Growth Here, sales and profits will (hopefully!) be rising steeply and the production of the product will be in full flow. Maturity At this point, the sales of the product will have slowed down and stopped. Firms will try and keep this stage going as long as possible, by employing extension strategies, which may include: • changing the product slightly • bringing out special editions • bringing out new versions of the product Just after the peak, as sales begin to fall, is known as the saturation point, where the market just cannot buy any more of the product. Think of yourself at the end of a large meal! Decline This is the stage when there is nothing further that can be done with the product and the number of sales drops sharply.


Assignment 11 Each new Lego kit takes between 2 and 3 years to develop before it can be introduced on to the market.

1. Think of a new product which you think Lego could successfully produce. Describe its product life cycle, using the stages shown on the previous page, and say what happens at each stage. 2. Why does Lego change its kits every 2-3 years?


In deciding how to price its products, a business must consider: • what prices are charged by competitors? • can price be used to increase the sales of the product? • will the price charged to customers cover the costs of production? Competition Based Pricing An example of this would be when firms producing chocolate bars bring out a new product and considers its rivals before deciding on a price. If they charge much lower than their competition, then the new bar may sell well because people are attracted by the low price. However, the product may also be seen as inferior, which may put potential customers off! If the firm charges much more than the competition, then the product may appear superior to the rivals, but the increased price may put buyers off! The firm must find the correct balance between the two. Market Orientated Pricing This is where firms analyse the characteristics of the market before deciding on a price for the product. There are different strategies within this form of pricing. Discounts and Sales Special offers eg ‘three for the price of two’ and sales of goods at reduced prices to get rid of excess stock are usually popular with customers. Price Discrimination Where the same product can be sold to different segments of the market for different prices. If consumers in Canada were willing to pay a higher price for a particular chocolate bar, then the manufacturing company would put up the price. Penetration Pricing A new entrant to a market may charge a lower price in order to get noticed by consumers. Once the product is more well known, then the price can then be raised to be more in line with the competition. Creaming/Skimming This is the opposite to Penetration Pricing. The product price is set high to begin with, making it appear as a ‘top of the range’ model. People who want the product badly enough will be prepared to pay the price. Later in the product’s life, the price will be lowered to be within the reach of a larger part of the market. This happened with products such as hi-fi equipment and video recorders. Loss Leader This is the name given to a product which is sold for a price less than its cost. For example, a can of beans may cost a manufacturer 10p to make, but the selling price to the customer may only be 6p. Although the manufacturer makes a loss on the product, it encourages more customers to come into the shop who are then likely to buy other (full-priced) products. The loss made on the original product should then be more than covered by these other sales.


Assignment 12 Travel Agents Cut Prices By 11% Dateline: December The two largest travel agency chains recently signalled the start of a post-Christmas price battle. They announced holiday discounts averaging 11%.

The price cutting campaign is not likely to last more than a few weeks. This is because the discounts mean that the chains will be giving away virtually all of their profit. The aim of the companies is to win market share from one another. They also want to encourage holidaymakers to book earlier in the year, so improving the companies’ cash flow. A third aim is to sell all their holidays by the summer. They don’t want to be left with holidays which they then have to sell at a large discount one or two weeks before the holiday takes place. 1. A holiday for four was £1,000 at the full price in November. How much was it likely to have cost with the discount announced in December? 2. Thomas Cook first offered the discount. Within 24 hours, other large travel agency chains matched Thomas Cook’s offer. (a) Why did Thomas Cook decide to offer the discount? (b) Why do you think the other chains followed with their offers? 3. Why is it better for a travel company to sell a summer holiday at a 10% discount at Christmas rather than at a 10% discount in August when it remains unsold? Cost Based Pricing Some companies base their selling prices on the amount of money it cost to make the product. They may use the formula: PRICE = PROFIT MARGIN + COST cost = amount of money it cost to make the product profit Margin = amount of profit the company wants to make on each product price = the price charged to the customer For example, it costs a company £8 to make a sweatshirt. The company wants to make £6 profit on each sweatshirt it makes, so it charges £14 (£8 + £6) to the customer.


Assignment 13 The Delicious Cake Company The Delicious Cake Company is a mini enterprise company. The board of directors has decided that its business will make cakes and gateaux and offer a free delivery service to the door of the customer. The board is now meeting to decide what price the company should charge for its cakes. The first cake on their list is a gateau with icing on top. Ingredients for one gateau cost £1.36. The box to put it in will cost 15p. The school is charging the company a flat £20 fee for the use of rooms etc, whilst the company is operating. Parents have agreed to lend baking tins and other equipment free. Parents have also agreed not to charge for the use of ovens to bake the cakes. It is estimated that a cake would take an hour to make. They haven’t quite worked out how they will arrange the door step delivery. 1. What price do you think the delicious cake company should charge for its gateau? Explain your reasons carefully. 2. The company sends out a price list for its cakes to parents. It also advertises in local shops. It finds that its cakes aren’t selling well, but it is making a substantial profit on each cake. Do you think that the company should reduce its prices? Consider as many arguments for and against as possible.


Promotion can be defined as the process of businesses communicating with their customers in order to: • make customers aware that their product is available • explain to customers what the product is • explain to customers why they need the product • persuading the customers to buy the product for the first time, or a repeat purchase Businesses do this through the use of media, which can take many different forms. The type of media chosen depends upon it’s cost and the type and size of target audience the business wants to reach. Generally, if a business wants to aim at a wider, national audience, then this will be more expensive than looking at a more local market. The different types of media include: Television This is known as a mass medium, because it reaches huge numbers of potential customers all over the country. It is, however, very expensive, as it costs thousands of pounds to make and screen an advertisement on any of the ITV channels. During what is known as peak-time viewing e.g. Coronation Street, the cost of screening alone is upwards of £30,000. Radio This can also reach wide audiences, but would not cost as much as television. Independent Local Radio stations can be used to reach smaller audiences in a particular area. Newspapers Advertising in national newspapers is very expensive and is usually only done by the bigger firms. However, local newspapers are a relatively cheap way of reaching smaller target audiences. Specialist newspapers and trade journals covering certain types of business are also a good way of reaching your target market. Directories Telephone directories can be used to advertise your business as well as allowing people to find the telephone number! Have a look in the Yellow Pages or Thomsons to see examples of the types of advertisements available. Posters and transport Have you noticed bill board posters at the side of the road, or advertising on the sides of buses or lorries? If you have then that indicates how successful these are! Firms must be careful to use the correct type of media advertising for their product. By its nature, advertising is an expensive business. An advertising manager who spent a lot of money on a campaign which resulted in no sales because the wrong market segment was targeted would not last long.


Displays Within shops, there may be displays of other products where you are paying for goods. This is known as Point Of Sale advertising. This encourages impulse buying, for example, in newsagents, you often see sweets next to the cash till where you are paying for your goods. Advertising can be described as informative or persuasive. Informative advertising gives clear and unbiased information about the product. Persuasive advertising informs the customer that the product is available, but also uses subtle (or, sometimes, not so subtle) techniques to persuade the customer to buy. Hidden persuaders may be used to achieve this and these include: • • • Ambition – it is implied that the user of a product will be successful as a result. E.g. aftershave advertisements. Romance – the advertisement claims that the user of the product will find romance, excitement or adventure! Personality appeal – famous people are used to promote the product to make it more acceptable to the user. E.g. Michael Owen and Walker’s Crisps.

Assignment 14 The following companies want to advertise their products. Explain which of the advertising media shown in the photographs (billboard, television, newspaper) would be suitable, taking into consideration: • the cost of advertising • the target audience • the impact of the advertisement on the potential customer 1. A brewery wishing to launch a new brand of beer 2. A discount store trying to sell hi-fi equipment 3. A local person who fixes washing machines


Some businesses use outside help with their advertising. ADVERTISING AGENCIES These are companies which specialise in organising the advertising of other businesses (their customers). With their specialist knowledge, they can: • organise market research and collect data • devise the advertisements • buy suitable “slots” within advertising media through which to promote the product Advertising agencies are useful in that they have all this specialist knowledge. However, their services do not come cheap, so the decision to use one must be taken very carefully.

Companies may use other ways of promoting their product. Direct Mail Promotional information such as leaflets and brochures can be sent directly to your home. Companies can target you from electoral registers, telephone directories or they can share information with other companies. Packaging The appearance of a product can make it easy to recognise. Examples are the red and white of Coca Cola, or the distinctive pattern of Tango. We will look at company logos later. The packaging should reflect the image of the product, but it must also now provide information on the ingredients or materials used. Personal Selling Door to door salespeople are a popular way of promoting a product, double glazing and building work are examples. Public Relations The department which deals with this is responsible for getting good news about the company into the media. This will keep the company, or one of its products, in the public’s eyes. They will also deal with customer letters, which may be complaints. Customers must be dealt with carefully and quickly, so that they feel satisfied after dealing with the company. There are various types of sales promotion on products which companies can offer to boost sales. Money Off This would include the “buy one get one free” or “three for the price of two” offers which you may see while shopping.


Discount Vouchers A product may have a voucher attached, which allows you to make your next purchase of the same product cheaper. It may also allow you to purchase another product from the same manufacturer at a reduced price. Free Gifts This is often seen at petrol stations which reward you with points each time you buy petrol. These points can then be exchanged for store vouchers or gifts. In recent times, supermarkets have also offered this type of promotion in order to reward their loyal customers. Competitions Competition entries may be attached to products, which give you the chance of winning a prize. This encourages the customer to buy, as this is the only way to have a chance of winning the competition. These are all ways in which companies try to persuade customers to buy their products! LOGOS AND SLOGANS Logos are symbols and designs used by a company so that its adverts and products are instantly recognisable. Law protects both logos and trademarks once a company has registered them. No one else can use or reproduce them without the company’s permission. Slogans are often employed because they are memorable. The benefit of a short, punchy slogan is that it is easily remembered. Slogans become associated with the product (or company) and can be used on billboards and posters, with good effects. Assignment 15 Can you identify these logos?


Assignment 16 Can you identify the companies behind the following slogans? Where good food costs less The ultimate driving machine The best a man can get Your flexible friend Why have cotton when you can have silk? SPONSORSHIP This is another way in which a company can raise public awareness about its name. Commercial sponsorship is concentrated mainly in two areas – sports and the arts. Roughly £2million per year is spent by large companies on sports sponsorship alone (although there are larger deals – e.g. Vodafone UK are paying Manchester United £30million over 4 years to become their new principal sponsor).

Events being sponsored get money from promoters. Some sponsorship has been made illegal e.g. from cigarette companies. Formula 1 Racing can still, however, advertise cigarettes in certain countries up until the year 2006, although this might change – watch this space! Assignment 17 Can you name the companies which sponsor the following: The Grand National The World Professional Snooker Championship Rushden & Diamonds FC Liverpool FC County Cricket Championship The new ITV dramas


Even the most successfully marketed product in the world is not going to sell if the customers are unable to buy the thing. Essentially the product is going to have to be in the right place at the right time. Either the customer must be able to travel easily to get the product/service or the product/service has to be taken to the customer. The way in which the product reaches the customer is known as a CHANNEL OF DISTRIBUTION and there are many different types of these. Manufacturer Retailer Customer This is where the product is made and then travels to a retailer which can hold the stock in large warehouses. The customer visits these warehouses and then buys the product. Examples of this would be the large DIY chains e.g. Great Mills, or large furniture warehouses e.g. Courts. Manufacturer Wholesaler Retailer Customer This is where the retailer does not have very much storage space. The goods have to go to a wholesaler, who acts as a ‘breaker of bulk’. This means that the large quantities of goods are broken down into smaller quantities. The retailer can then visit the wholesaler to carry a smaller load to the shop, which can be stored more conveniently. Examples of this would be your local newsagent. Manufacturer Agent Customer There are two main examples of this type of chain. The first is when a company is selling goods abroad and requires the specialist knowledge of an agent with experience of that country. This agent will then make sure that the product is given the best possible chance of selling well. The second example is when a company uses agents to visit customers at home. The agent can then engage on a one to one basis with the customer, to build up a good working relationship. Some small household goods companies use this method, as well as insurance and double glazing firms. Manufacturer



More and more manufacturing companies are opening shops on site. Customers can then visit these factory shops and buy goods cheaper. Because there are no further handling costs to the manufacturer, they can sell goods at a discount. Examples of this are shoe manufacturers (Griggs who make the Doctor Marten range), Gallones Ice Cream in Northampton and Triumph (women’s underwear) in Swindon.


Assignment 18 Book Distribution How do your school textbooks get to you? Publishers use two main channels of distribution. One method is through bookshops. Schools and colleges place orders for textbooks with bookshops, who then order the books from the publisher. Some bookshops give a discount to schools and colleges on orders for textbooks to encourage them to buy from them. Bookshops may also choose to have a few copies of the most successful books on their shelves. Customers will come into the shop to buy a single copy. Alternatively, schools and colleges may place orders directly with the publisher. This cuts out the bookshop. Publishers sometimes give a discount on books ordered directly from them. 1. What channels of distribution are used by publishers? 2. A book publisher could sell a single copy of a book either to a bookshop, a school or a college directly. Why do you think it prefers to sell class sets of books? 3. Supermarkets sell some books and magazines. Write a report to a book publisher, explaining the advantages and disadvantages of using supermarkets to distribute books. Your conclusion at the end should state whether or not you think it is a good idea. How to choose the channel of distribution If the product is likely to go off quickly e.g. foodstuffs, then it must get to the consumer as soon as possible. A fast channel must therefore be chosen. If the product is a complicated one e.g. double glazing, then it is often sold direct to the consumer. The manufacturer would want to deal directly with the consumer in this case. Products which are costly to transport e.g. steel also tend to go straight to the consumer. The manufacturer does not want to spend too much money on transporting their goods for long distances. A product which is low-priced but sells in large quantities would not be delivered directly to consumers – this would be too expensive. Retailers such as supermarkets are the best channel to use in this case.


Assignment 19 Bank Loans Banks sell loans to customers directly. However, within this, they have a number of different distribution channels: • when customers visit branches of the bank • direct mail advertising – customers are posted the information through the use of leaflets • advertisements in newspapers and magazines

1. What are the advantages and disadvantages of each of these methods? Banks are now selling loans through shops such as clothes shops and supermarkets. Shops sell loans to their customers and in return are paid a commission. 2. Do you think this is a good business idea? Consider whether or not the banks benefit and whether shops find it worthwhile to take part.


Businesses have to be careful about how they market their product. • The product may be dangerous to the customer or to the environment • Claims made about the product may be untrue • The product may not meet the description which has been made Businesses must be sure that they are not causing offence to the general public who see their advertisements. Main areas, which can give offence, include: • violence • images which degrade or exploit women • nudity or sexual images • material which may give offence to people’s race or religion • material which uses current issues in an offensive way e.g. animal testing, famine Assignment 20 The Holiday From Hell A Gloucestershire couple who endured a fortnight’s holiday hell in Morocco have been awarded £750 by a court. John and Erica Frome now call tour operators First Rate a second rate company, and claim they caught food poisoning in a hotel complex that they say “had everything wrong with it”. They arrived at the resort last July to discover that there were more than double the number of apartments promised in the brochure. The supposedly quiet location was actually extremely noisy said the couple. “We caught food poisoning because the hotel was so dirty. We weren’t the only ones – the holiday rep actually ran out of complaint forms”. A judge at the Gloucester Small Claims Court awarded them a total of £750 compensation for the two week holiday which cost them £1,100, after First Rate admitted failing to indicate adequate information about the hotel. Earlier this year, a Wiltshire family won £1,000 compensation after experiencing trouble at the same hotel. 1. What complaints did the Fromes make against the holiday company? 2. The company was sued under the Supply Of Goods And Services Act. How does this Act protect customers? 3. Why did the couple win their case? 4. Think of a genuine situation where you felt you were badly treated by a company. Write a letter of complaint, explaining why you should be eligible for compensation.



CONSUMER PROTECTION Businesses would claim that if their promotion were to give offence, then the general public would not purchase the product in that promotion. This would lead to the business having a poor reputation with potential customers. However, this could still lead to some businesses getting money from lots of customers, admitting the product was faulty, declaring themselves bankrupt and the customers then losing out, or worse still, becoming injured through use of the product. To help protect customers, laws have been passed to try and make sure businesses do not take advantage of such situations. The main ones are: The Consumer Credit Act 1974 Customers must be given full information on the credit sale. If a customer signs a credit agreement at home, they have 15 days in which to change their mind and cancel the agreement. This avoids people being ‘pressurised’ by door to door salesmen. This does not apply to credit agreements signed on the trade premises. If a mortgage offer is not taken up within six months, then the broker can only charge £1 for their services. The Trade Descriptions Act 1968 Traders must give an accurate description of their goods and services. For example, beefburgers described as ‘100% beef’ must not contain anything else. Services should be completed to a reasonable quality within a reasonable period of time. The Weights & Measures Acts All products sold must be in the correct weight or quantity as described on the packaging. You may see on boxes of washing powder or cereals the statement “contents may settle during transit”. This helps companies to comply with these Acts. The Food & Drugs Act 1968 Food contents must be up to the standard described on the packaging and conform to the hygiene regulations imposed by the food industry. This Act makes it illegal to offer for sale, food which is ‘unfit for human consumption. Sale Of Goods Act 1979/Supply of Goods & Services Act 1982 The sale of a good or service from one person to another is a contract between those people. These acts give the buyer extra rights by stating that a good must be fit for the purpose which it has been sold. Any defects should be pointed out at the time the good is sold. This also applies to goods bought at sales at reduced prices. Goods must match the description they have been given. You may also take note that a trader cannot remove the buyer’s rights by displaying notices such as “No Refunds Given”. There are official bodies which have been set up to help you, the consumer, if you have a problem with any kind of promotion


The Advertising Standards Authority The ASA supervises all advertisements, except those on television and radio, and gives detailed guidance about what should and should not be said in the advertisements. It monitors adverts by regularly checking samples to see if they comply with the rules of the British Code of Advertising Practice. The Independent Broadcasting Authority The IBA is responsible for vetting advertisements on television and radio. All advertisements on television and radio should comply with the rules in the IBA code. . Assignment 21 Consumer Protection In each of the four scenarios below, you have to decide who is correct – the business or the customer and why. A. You buy a jacket in a sale, but find that it has a rip in one of the sleeves. When you take it back, the shop assistant refuses to give you your money back and points to a notice on the wall which says “No refunds on sales goods”. B. You order some fresh broccoli in a restaurant as part of a meal, but you are sure that it is frozen. The waiter denies this and says that it was freshly cooked that evening. C. A woman signs an agreement at home to buy some double glazing at a cost of £8,000. Three weeks later she goes back to the shop and says she’s changed her mind. The firm refuses to cancel the order and insists she has to pay. D. A man asks a broker to get him a mortgage and pays a deposit of £100. Eventually, he gets a mortgage on better terms somewhere else.. Six months later, he asks for the broker for his money back, but she refuses to give it to him.


Your project is to organise a marketing campaign for a music artist of your choice. You may find it easier to split the project into tasks.

1. Choose a music artist (individual or group). You will find it more helpful to choose someone you are interested in. 2. Find out as much information about the singer as you can. 3. Carry out some market research to find out what other people think. You must decide on the sample of people you want to ask. Questions you may want to consider: • • • • • • • Have they heard of the artist Where/how they first heard of them Do they like/dislike the artist and why Do they buy the artist’s music Where do they buy the music Would they go to a concert How much would they pay for a ticket

4. Display the information you have found graphically. You should now be able to decide on the market segment you want to target. 5. Draw up a plan for your marketing campaign; how are you going to appeal to the chosen market segment; which media you are going to use. 6. Produce an advertisement for the music artist, based on the information you have found.


HOMEWORK 1 – ANALYSING THE MARKET Supermarket Loyalty Cards In February 1995, Tesco launched Clubcard, a loyalty card for shoppers at Tesco. For every £1 that customers spend, they get 1p back on the card. The cards were highly successful and soon all the large supermarket chains had launched cards. Their main purpose was to encourage customers to shop with only one supermarket and to spend more money. However, they can serve another purpose. The supermarkets can now get information about the spending habits of every individual loyalty card shopper if they want. If you buy two bottles of wine every week, or three frozen pizzas, then the supermarket will know because your itemised bill is recorded on its computer system along with the information of your loyalty card. It can know where you shopped and whether you paid by cash or card. The supermarkets are faced with information overload at the moment. How do they make best use of all this information which is available to them? Tesco, for instance, has experimented with identifying different types of shopper. Big spending customers in some stores who regularly shop for wine have been invited to wine and cheese evenings. It has also sent mailshots targeting vegetarians, diabetics, students, pensioners and others identified from the Clubcard data. In future, supermarkets may pinpoint customers who are irregular shoppers with them. They might be targeted with money off vouchers to bring them more regularly into the store. Or they may target pensioner customers who are shopping at times of the week when the store is very crowded. They may be offered a reduction on their shopping bill if they shop at times when the store is less crowded. KEY TERMS Spending habits Itemised Loyalty Mailshot Irregular Targeted Voucher Reduction

1. What is a supermarket loyalty card? 2. How can supermarkets know whether or not you bought a packet of cornflakes this week if you have a loyalty card? 3. Loyalty cards can be used to provide information about different segments of the market e.g. average age of shoppers. Give four examples of other information which loyalty cards can give. 4. For each example, explain how a supermarket could target these shoppers to persuade them to spend more money. 5. A supermarket offers to give extra points to shoppers who always shop in off peak hours. What would be the advantages and disadvantages of telling all shoppers about this offer?


HOMEWORK 2 - PRODUCT Sellotape Before the mid-1990s, Sellotape Ltd had a problem. In the UK, Sellotape is not just a brand name for a single sided, sticky clear tape produced by Sellotape Ltd. It is the name consumers tend to give to any clear, sticky tape produced by any company. For your brand name to become the name of the product in general should be a dream come true. But in this case, too many consumers were buying ‘Sellotape’ which was not made by Sellotape Ltd. Also, the company was finding it difficult to get consumers to buy other products made by the company and sold under the Sellotape name. Consumers tended to think that anything with Sellotape on the packet would contain sticky, clear, tape. To get around these problems, the company has adopted a number of strategies. It has changed the name from Sellotape Ltd to The Sellotape Company. This aims to show that it makes more than just clear, sticky tape. Different coloured packaging is to be used for non-Sellotape products, with much bolder lettering to emphasise the product. The ‘Sellotape’ company logo on packaging is to given less emphasis except on Sellotape packets. This was done on ‘Elephant Tape’, a grey cloth tape aimed at the DIY market. It was the company’s fastest selling new product in 1995. Sellotape Company products sold in the DIY market will have a completely different design of packaging from office stationery products. A range of sub-branded products for children called ‘Stick It!’ has also been produced. KEY TERMS Brand Ingredients Product Differentiation Product Range Generic Product Premium Price Product Mix Packaging

1. Why did Sellotape Ltd have a problem differentiating its products? 2. How might (a) repackaging, (b) renaming and (c) new designs help to differentiate Sellotape’s products? 3. Would total sales increase for the company if the name ‘Sellotape’ were removed from all products other than Sellotape itself? Give reasons for you answer. CONTINUED…


Biscuit Wars Have you ever bought a Puffin biscuit from Asda? It is Asda’s own brand of the much more famous branded Penguin biscuit. In 1997, United Biscuits, the makers of Penguin, won a court case against Asda which declared that the packaging of Puffin was too similar to that of Penguin. This could cause confusion amongst customers. Someone could pick up a Puffin when they thought they were picking up a Penguin! United Biscuits also wanted to ban Asda from using the Puffin name. But the court decided that Puffin did not violate the Penguin trade mark and so Asda could continue to use it. The Puffin case highlights the problems of lookalikes. Supermarket chains have increasingly been putting their own label products into packaging which looks like that of a well known brand. Names are often very similar.

1. What is the difference between a brand and an own brand? 2. Choose three supermarket own label products which you think look similar to a branded product. Describe the similarities. 3. Explain why (a) supermarkets produce lookalike own label products and (b) why manufacturers object to this.


HOMEWORK 3 – PRODUCT LIFE CYCLE Product Life Cycle – Computer Games In the first half of the 1990s, the world’s number one games machine was the Nintendo Super Famicon. It used 8-bit technology. By 1994, the product had reached saturation point and was vulnerable to attack. It seemed that the battle might be won by Sega, long rivals of Nintendo. They launched a superior 32 bit machine in 1994. The Sega Saturn was capable of playing faster and better games than Nintendo’s 8 bit technology.

But one month after the Saturn was launched, Sony launched its Playstation. Like the Saturn, it used 32 bit technology. Sony, though, was able to take a clear market lead. Much of this was due to a superiority in the games being offered. Most games are produced by independent manufacturers who licence the technology of a games machine. Sony offered much better terms than Nintendo or Sega with the result that many independents started making games for the Playstation rather than the two more established producers. When Nintendo leapfrogged Sony and Sega by offering a 64 bit machine, it found that lack of software was a crucial factor in its failure to regain market leadership from Sony. KEY TERMS Decline Extension Strategy Launch Maturity Development Growth Market Leader Segment

1. Describe, using a diagram, the likely product life cycle of the Sony Playstation. 2. Explain why a product like the Nintendo Super Famicon becomes vulnerable when it reaches saturation point in the market. 3. Launching new software games can be seen as an extension strategy for the Playstation. Explain why. 4. How might Nintendo regain market leadership of the game market in the future? CONTINUED…


HOMEWORK 3 – CONTINUED Beni’s Sandwich Bar Beni’s Sandwich Bar specialises in producing sandwiches with exotic fillings. Beni the owner is always experimenting with new combinations of flavours and ingredients. Each month he puts a new sandwich or flavour onto his menu. Preparation for the new sandwich starts the week before it goes on sale. Beni tries out a number of new ideas before finalising the recipe. One month it was Chinese Special. He combined beef with soya sauce, beansprouts, chinese leaves and a few other special ingredients to fill a white baguette roll. The new sandwich always sells well in its first month as people try it out. The Chinese Special carried on selling well for the next five months but then sales tailed off. Eventually it was the least popular sandwich on the menu. It was then replaced by the new special – the Tandoori Chicken Sandwich. 1. Draw a diagram showing the product life cycle of the Chinese Special. Label on it the various stages through which the sandwich passed in the cycle. 2. Why do you think that offering a new sandwich each month helped total sales at the sandwich bar? 3. Beni decides to organise a competition. He will pay £50 for the best new sandwich recipe that any of his customers hands in. He will also put that recipe on the menu. Why would this help the sales at the sandwich bar?


HOMEWORK 4 – PRICING The Car Insurance Revolution Car insurance used to be a fairly sleepy business. Loyal motorists tended to renew their insurance year after year without checking there were cheaper alternatives. Peter Wood changed all that. He founded Direct Line. It revolutionised the insurance industry in two ways. First, it competed on price, aiming to give the best deals to the safest motorists. Second, it sold its insurance direct to the motorist over the telephone. Before, insurance companies tended to use brokers – businesses in the middle between customers and insurers, which usually had branches in the high street.

Direct Line could offer lower prices. It wouldn’t insure high risk motorists. It didn’t have to pay a commission to brokers to sell its insurance to motorists. Its own organisational costs were very low. With low costs, it could afford to charge a mark up which allowed it to become highly profitable. Its competitors were forced to change, cutting their costs and setting up their own direct selling organisations. KEY TERMS Competition Based Pricing Creaming Mark Up Price Discrimination Cost Plus Pricing Market Oriented Pricing Penetration Pricing Profit Margin

1. What is the product that Direct Line sells? 2. Direct Line adopts a full cost pricing policy. What does this mean? 3. Other insurance companies have been forced to cut their premiums (prices) to motorists. Explain what type of pricing policy they have adopted. 4. A very bad winter increases the number of accident claims by 30%. What premiums should Direct Line now set? Explain your answer. HOMEWORK 4 – CONTINUED A magazine publisher is bringing out a 60 part series on the history of popular music. It will be published in monthly instalments and sold through newsagents. Each issue will include a free cassette of music in that issue of the magazine. Binders will also be available. The readers can place each edition in the ring binder, so that the magazine can be built up into a comprehensive guide to popular music. 1. What pricing strategies might the publisher use when fixing a price for the magazine and why? 2. How should the binders be priced?

HOMEWORK 5 - PROMOTION HOOVER Some years ago, Hoover, the makers of vacuum cleaners, washing machines and other electrical appliances, ran a promotion. It offered two free return tickets first to various destinations in Europe and later to America. To qualify, the customer had to buy products worth at least £100. The promotion was enormously successful. A number of customers went out and bought Hoover products when they didn’t really want them, just to qualify for the free offer. After all, two return trips to America cost at least £400 at that time. What customers did not realise was that the small print of the offer meant that only a fraction of customers ever boarded a plane to their dream destination. Customers could express a preference for when they went but Hoover rarely offered flights then. Instead, they said that flights were unavailable at that time and offered flights at times which usually proved impossible for the customers. Customers could also only get tickets if they had proof of purchase of accommodation at their destination. The Hoover travel agents offered accommodation. The problem was that usually the cost of the accommodation was more than an all-in package tour from an ordinary travel agent. Customers were furious once they realised what was going on. Hoover was taken to small claims courts. One angry customer attacked a Hoover service van. Newspapers, radio and television carried many stories from angry customers who felt deceived. Questions 1. How did Hoover promote the sale of its products? 2. Why did customers find the deal so attractive? 3. Was the offer good for public relations at Hoover? 4. Three top managers at Hoover were sacked once complaints started to pour in. You have been appointed to sort out the problem. What will you do? In your answer, think about the costs and benefits to Hoover of any of the solutions you put forward CONTINUED…


HOMEWORK 5 – CONTINUED KEY TERMS Advertising Agency Discount Packaging Point of Sale Direct Mail Media Persuasive Advertising Public Relations

You need to collect information about any promotions which are currently on offer. You can do this by: • • • • looking through local newspapers (including free ones) noting down any promotions offered on television or radio commercials checking through food, particularly tins and packets, which you have at home visiting local shops, such as your nearest supermarket, and noting down products and promotions on offer

1. Give EIGHT examples (at least ONE from each of the above) of different promotions that you have found. You can include cutting and pasting them from newspapers, if you wish. 2. For each promotion, explain why you think it could increase sales of the product on offer. 3. Which ones are the most effective in your opinion and why? LOGOS AND SLOGANS Find out and draw (as best as you can!) the logos for each of the following: Audi cars British Telecom London Weekend Television Legal and General (insurance) Visa National Westminster Bank Boots Jacob’s (cream crackers)


HOMEWORK 6 – PLACE Oysters Stephen Mallan loves oysters, but in London they have traditionally been very expensive compared to France. He became determined to sell oysters to the public at French prices. He researched the market and came across the phrase ‘transit retailing’. It means selling to customers in train terminals and airports. The idea appealed and he approached his local railway company. They negotiated with him to buy a market barrow and site it at Fenchurch Street Station in London. This is a very busy station and is used by many workers who have high powered jobs in the City of London. The barrow started trading in December. Sales have been good, with the weather being the main factor in determining how many oysters are being sold each day. Stephen plans to expand the idea by taking a mobile barrow and setting up in other busy locations such as sports grounds and other railway stations. KEY TERMS Agent Channel Of Distribution Retailer Warehouse Break Of Bulk Point Outlet Transport Wholesaler

1. What is a ‘market barrow’? 2. Stephen gets his oysters from an oyster fishery near Belfast in Northern Ireland. Describe the channel of distribution for the oysters. 3. Why do you think he decided to locate his barrow at Fenchurch Street Station in London? 4. Suggest why the weather has an effect on sales of oysters. 5. Do you think that Stephen will be successful in expanding his business to other locations? Explain your answer carefully. Bank Loans Banks sell loans to customers directly. However, they have a number of different distribution channels within this route: • When customers visit the bank for another purpose • Through direct mail advertising • Through advertisements in newspapers and magazines 1. What do you think might be the advantages and disadvantages to a bank of selling loans in these ways? 2. There has been a suggestion that your bank should sell loans through shops and supermarkets. Do you think this is a good idea? Give reasons for your answer.


HOMEWORK 7 - CONSTRAINTS The Great Film Company The Great Film Company is run by Abnash, Steve, Gary and Suk Lin at their school. They got 100 people to their first Thursday lunchtime showing in a run-down lecture theatre. But they had problems! Gary was supposed to bring in his parents’ Nicam video recorder, an amplifier and some hi-fi speakers, but he didn’t ask his parents whether he could borrow them till the night before. They refused, saying that they were afraid that it might get stolen or damaged. Suk Lin was supposed to have asked the teacher in charge of audio-visual equipment if they could borrow the large screen television, but she forgot. In the end, they had to show the film on a small screen school TV and a school video recorder with mono sound. Steve was in charge of buying the chocolate bars. He bought 30, so 70 people didn’t get one. Abnash, who was in charge of hiring the copyright film, didn’t book the film in advance. When she got to the video shop on Thursday, someone had already borrowed Death Squads 3. Instead she borrowed Death Squads 2 (an 18 certificate). The forgot that afternoon registration for the school was at 2pm and the film lasted 90 minutes. So they said they would show the rest of the film on the next day. Abnash suddenly realised that they would have to pay for two days’ rental, so she shouted out as everybody was leaving, that there would be an extra 20p charge to see the rest of the film. The good thing was that after they had paid 20p each for the chocolate bars and £4 to rent the film, they had made a profit. 50 people came back (amazingly!) to see the rest of the film on Friday. KEY TERMS 18 Certificate Constraints Degrading Pressure Group Bankrupt Copyright Hygiene Regulations Reputation

1. Calculate how much profit The Great Film Company made on the showing of the film. 2. Explain FIVE ways in which you think the company acted in an unfair way. 3. Suggest TWO ways in which the company actually broke the law. 4. Abnash is very excited by the profit made in the first week. She wants to book the film ‘Horror City ‘ for next Thursday. What do you think might be the customer response if the showing went ahead and why? 5. The Great Film Company has had organisational, legal and ethical problems in its first week. What do you think the company should do now? In your answer, discuss whether or not the company can get around these problems.


EXTENSION WORK 1 Coca Cola launches £4m UK campaign Coca Cola has embarked on a £4m television campaign – one of the biggest ever seen in Britain – in what will be seen as a direct attack on supermarket copycat brands. The six week campaign, which opened recently, is part of an attempt to boost the size of the £6 billion per year UK soft drinks market. Fierce competition from brands such as Sainsbury’s Classic Cola and Virgin Cola has dented sales at certain sales outlets. The drinks giant denies the new advertisements are a response to the recent ‘cola wars’ that have raged in supermarkets, but admits to localised damage. George Bradt, consumer marketing director for Coca Cola in the UK and Ireland, said: “We have a 108 year old brand that is doing very nicely thank you but needs to do better. Our mission is to grow our business.” Mr Bradt is one of 30 executives recruited to key posts around the world as part of a drive by Coca Cola to focus on regions.

The company claims sales are up 21% on last year. Sales did fall sharply when Sainbury’s Classic Cola was launched. Coca Cola is not the only drinks giant to embark on an expensive marketing drive. Moet et Chandon, the world’s best selling champagne label, is launching a campaign, it’s first, at a cost rumoured to be around £1m. 1. 2. 3. 4. Why is Coca Cola launching a £4m advertising campaign? What is meant by the term “cola wars”? How is the new advertising campaign different from previous campaigns? What strategies might Coca Cola use in promoting its product against the competition? 5. Why have Moet et Chandon launched their £1m advertising campaign?


EXTENSION 2 The White Goods Sector An electronics company is considering entering the white goods sector of the market (deep freezers, washing machines, dishwashers, etc.). Percentage of Households with white goods A B C D Deep Freezers 89 92 86 88 Washing Machines 95 96 91 93 Tumble Driers 65 67 53 54 Microwaves 68 69 57 63 Dishwashers 36 33 14 10 Socio-Economic Groups Key A. Professional B. Employers and Managers A. Other non-manual C. Skilled and semi-skilled manual D. Unskilled manual E. Economically inactive E 79 88 44 50 4 F 70 77 28 29 4

1. The table above shows that 93% of skilled manual workers own a washing machine. Give THREE other facts that the table shows. 2. The design of the product and its advertising have been aimed at professional people, employers and managers. Do you think this is a good strategy? Give arguments for and against, using evidence from the table. 3. One manager has suggested that the company should target unskilled manual workers and households where the head of the household is unemployed. Why do you think this has been suggested? 4. Explain whether or not you think this idea (above) is a good one.


EXTENSION 3 The Price Of Petrol Recently, a full blown petrol price war was set to erupt following calls from motorway service companies such as Granada and Forte for lower prices. The companies feared that much lower prices at supermarkets have encouraged motorists to fill up before joining motorways. This means that motorists are less likely to spend on sales of food and other items provided at motorway service stations. The gap between motorway and supermarket prices had reached as much as 10p per litre before a recent price cut of 4p a litre by the oil companies. The price is still about 2p a litre more than is charged by supermarkets. In the last few years, supermarket giants like Tesco and Sainsbury’s have built up a 22% share of the UK petrol market from a zero start. Pricing is increasingly used as the main tool in a highly competitive market. Esso have launched an aggressive price promotion called ‘Price Watch’. This promotion led to immediate reactions by Shell and Mobil, who also cut their prices. UK Petrol - % Share of Market
Esso 7% 22% 20% Shell BP Texaco 18% 11% 13% Mobil Superm arkets Other


Esso’s strategy study managers have established that customers are prepared to drive further and further in search of cheaper petrol. Small petrol stations are closing at the rate of 1,000 a year as the larger groups with larger sites cut prices. 1. 2. 3. 4. Why is the price of petrol so important to the motorway service owners? What does the report suggest is happening to the price of petrol generally? Why are price cuts the major way of competing in the battle to sell petrol? What effect is this having on the market for petrol?


EXTENSION 4 Hollywood Marketing For every $3 that it costs to make a film, a Hollywood studio expects to have to spend $2 promoting its release. Films have very short lives. Most of the revenue to cover these costs will be earned in the first six months of release. Box office receipts are important. But royalties on product licences can be even more important for big blockbuster films. For instance, Disney received $135m from other businesses on its 1996 version of 101 Dalmatians. McDonalds alone paid $35m for the right to advertise the film on television with its name attached. It then promoted the film in its restaurants. Dreamworks, makers of Jurassic Park spent two years signing up licensees before the sequel, The Lost World, was launched. 800 businesses paid royalties to sell food, t-shirts, toys and burgers associated with the film.

1. Why does a film like 101 Dalmatians or Jurassic Park need marketing? 2. How does McDonalds use films as part of its marketing? 3. Why is McDonalds willing to pay film studios for the right to use films in promoting its food? 4. A toy manufacturer has won the right to sell toys featuring in the film Antz. Discuss, using the 4 Ps, how it might market its range of products.


EXTENSION 5 Royal Dutch Shell Royal Dutch Shell is one of the world’s biggest oil companies. Motorists are very happy to put Shell petrol in their tanks. Businesses see no problem with buying Shell to burn in their boilers to use as lubricants in their machines. However, motorists and company directors might also belong to Greenpeace, the environmental organisation. When they are not driving around or running a company, they may be actively campaigning to have the use of all fossil fuels, including oil, reduced or phased out. This is partly because oil is a non-renewable resource. Once all the world’s reserves of oil have been used up, they cannot be replaced.

We should use up as little oil as possible today, so that our future generations will be able to use oil too. Burning oil also results in increases in emissions of greenhouse gases. This, so some scientists argue, is leading to global warming. Climate changes could lead to huge costs for agriculture and the flooding of low lying areas of the world as the icecaps melt. In 1997, Shell responded to these concerns by announcing a £300m investment programme in research and development in renewable energies spread over five years. It will focus mainly on solar power and biomass, generating electricity from burning plants and trees. It will also spend some money on wind power. Critics point out that £300m spread over five years is only a fraction of what Shell will continue to spend on finding and developing new oil fields. 1. Why do environmental groups want to see less oil being burnt? 2. Why do you think Shell don’t want to stop oil production? 3. Suggest TWO reasons which the oil companies might give as to why abandoning oil as a fuel would be bad for businesses. 4. Suggest TWO reasons why Shell is investing £300m in alternative energy research.


Marketing Word Search 1 - Product

Find the words below which are all connected with PRODUCT in the square


Marketing Word Search 2 - Promotion

Find the words below which are all connected with PROMOTION in the square


18 CERTIFICATE – a rating given to a movie, video, etc which has a nature suitable for adults only, because of scenes of sex or violence. ADVERTISING AGENCY – a firm which produces advertisements for other firms or organisations. There are over 300 advertising agencies with annual turnovers of more than £1m. AGENT – a person who specialises in a certain field, or country, who helps a company to sell its product. BANKRUPT – to be unable to pay your debts eg a business will be this if it is unable to pay all its bills from the money it has. BRAND – a registered name for a product, which can be used only by the manufacturer, retailer or wholesaler. BREAK OF BULK POINT – the repacking of goods which have been bought in bulk, or very large quantities, into smaller packages for re-sale to small retailers. Cash and Carry warehouses often do this. CHANNEL OF DISTRIBUTION – the method by which products are distributed from the producer to the consumer. CLASSIFIED ADVERTISEMENT – an advertisement in small type which is charged according to the number of lines. COMMISSION – a payment based on a percentage of the value of goods sold eg an estate agent who sold a £100,000 house for a 2% commission, would make £2,000. COMPETITION-BASED PRICING – where the price of a product is determined by close examination of what other businesses in the same industry are charging. CONSTRAINTS – an advertisement must not claim that a product can do something which it cannot, or to give offence against someone. These are examples of constraints placed upon these advertisements. CONSUMER CREDIT ACT – this introduced licences for businesses which give credit or hire facilities to consumers. The Act made it compulsory to give full details of the charges for credit and regulated advertisements, contracts and doorstep selling. CONSUMER PROTECTION LAWS – these laws protect customers in their dealings with businesses and include: The Supply of Goods & Services Act, The Trades Descriptions Act and The Weights & Measures Act. COPYRIGHT – this is a law which prevents other companies from copying an idea, an image or a logo from one company.


COST PLUS PRICING – where the selling price of a product is arrived at by finding the cost of a product and then adding the required profit margin eg a sweatshirt costs £8 to make, you want to make £5 profit on each one, so you would sell it for £13. CREAMING – charging a high price for a new product while it remains unique. DECLINE – during the product life cycle, a product will eventually drop in sales as less people want to buy it. This is known as decline. DEGRADING – if an advertisement shows a person or group of people in a bad light eg Scottish people classed as being mean, then this is degrading to that group of people. DEVELOPMENT – during the product life cycle, a product is tested to see if it works. At this stage, there are no sales. This is known as the development stage. DIFFERENTIATION – the ways in which a business makes its products differ from similar products. Branding and packaging are important methods of doing this. DIRECT MARKETING – selling direct to consumers on an individual basis through the post, or other means. DISCOUNT – where the consumer is given money off a product/service eg a “Buy one, get one free” offer. DISPLAY ADVERTISEMENT – a larger advertisement which is ruled off from others, and charged according to the number of single column cm, or by the proportion of a page it takes up. ELECTRONIC DATA INTERCHANGE – a means of transmitting orders and invoices between computers. ELECTRONIC POINT OF SALE – a system of recording sales electronically by scanning the barcode on goods. Computers can then analyse sales patterns and order new stock. EXTENSION STRATEGY – where eg a product is changed to meet different consumer needs, or a special edition is brought out. A way of making the product life cycle last longer. FOUR PS – product, price, promotion and place, which go together to make up the marketing mix. GENERIC PRODUCT – a product which is often bought without reference to a manufacturers name eg bread, milk, potatoes. GROWTH – the part of the product life cycle when the product is new on the market and is enjoying a period where sales are still rising.


HANDLING CHARGE – the cost of loading and unloading goods on vehicles. HYGIENE REGULATIONS – a firm must comply with these standards of cleanliness, especially when dealing with food products. INGREDIENTS – by law now, all goods must contain a list of everything which goes to make it up. Especially in foodstuffs (eg people with nut allergies need to know if a product contains nuts), but also health and beauty products. INVENTORY – the stock of either raw materials or finished goods held by a firm. IRREGULAR – the buying pattern of a consumer who does not always display the same shopping habits every time eg does not visit the same supermarket every week. ITEMISED – most supermarkets now provide you with a computerised itemised bill, which lets you know everything you’ve bought. It also records this for the shop too (see Electronic Point of Sale). LAUNCH – the part of a product life cycle where the product is first put on to the market. Sales may be slow until the public get to hear of the product. LOSS LEADER – a product which is sold at, or below, cost price (making a loss) in order to attract customers inside. Once inside, the customers may buy other items. LOYALTY – where a consumer always visits the same shops, or regularly buys the same branded product. MAILSHOT – an advertisement sent directly to customers informing them about a product (see Direct Marketing). MARK UP – the amount of profit required on a product, analysed during the pricing process (see Cost Plus Pricing). MARKET LEADER – a product which is the best known, or the biggest in its particular field eg Coca Cola in the soft drinks market. MARKET-ORIENTED PRICING – where market research is carried out to find out what consumers want before starting production. A product is then made and priced to suit the market. MARKET RESEARCH – getting information about consumers by studying statistics and reports and gathering new data by surveys of individuals or groups. MARKET SEGMENTS – groups of consumers within a market who have similar wants or desires in terms of buying goods/services. MARKETING MIX – mixing the four Ps (see earlier) in the correct amounts in order that the product appeals to consumers in the chosen market segment.


MARKETING PLAN – the plan by which a firm hopes to sell its product/service to the chosen market segment. MATURITY – in the product life cycle, this is where the quantity of sales of a product first begin to slow down, after most of the potential customers have bought it. MEDIA – companies use different forms of media to get their message across to consumers eg television, radio, posters. MULTIDROP – delivering goods to a number of shops by one vehicle. OMBUDSMAN – an official appointed to investigate complaints by the public. PACKAGING – the physical container or wrapping of a product which is also used for promotion and selling appeal. PENETRATION PRICE – a price which is set low enough to allow a firm to enter a new market. POINT OF SALE MATERIAL – physical objects designed to draw consumer’s attention to a product or firm, displayed at the physical position where goods are sold. PREMIUM PRICE – a high price which can be set for a top quality product. Consumers are willing to pay the higher price in order to receive a quality product. PRESSURE GROUP – a collection of people who get together and challenge decisions made by companies e.g. people who object to building work spoiling the landscape. PRICE DISCRIMINATION – where the same product/service is available to different consumers for a different price. Bus fares for the same journey are different for OAPs, children and the ordinary customers for example. PRICE PLATEAU – the level of price that consumers expect to pay for a particular product. PRIMARY DATA – first-hand information from market research surveys of the consumers. PRODUCT EVALUATION – judging whether a new product or process will be practical, marketable and within the company’s budget. PRODUCT LIFE CYCLE – the phases a product passes through from its development; its introduction when the product is launched; through its growth, as sales build up; through maturity, as sales reach their peak; saturation, when rival products come on the market or consumers lose interest; to its final decline. PRODUCT MIX – different types of product made by a business, such as suits, raincoats and sports bags.


PRODUCT ORIENTED – when the product and its price are the most important concerns. A manufacturer decides on a product, makes it, prices it and tries to sell it without first investigating to see if a market exists for the product. PRODUCT RANGE – similar products made by a business e.g. various kinds of suit, different flavours of crisps. PROFIT MARGIN – the amount of money made on a product sale, after all the costs have been subtracted. PUBLIC RELATIONS (PR) – distributing information about a firm or organisation with the aim of improving its public image. QUOTA SAMPLE SURVEY – interviewees are chosen by group e.g. age, sex or social grade, in the same proportion as the number found in the total population. RANDOM SAMPLE SURVEY – surveys where those being interviewed are picked by taking names from a printed list, such as a telephone directory, at fixed gaps of say, 50 to 100 names. REDUCTION – where the price of a product comes down e.g. if it is damaged, or getting close to its sell by date. REGIONAL DISTRIBUTION CENTRE – a large warehouse with the latest computers and automated handling equipment, which distributes goods to all the branches of a retail chain in one region. REPUTATION – if a company is regarded by many as having a good quality product, or a good quality after-sales service, then it can be said to have a good reputation. RESEARCH & DEVELOPMENT – scientific research into present and future products, materials and production processes, which is then followed by their practical application and development. Development usually takes longer, and costs more, than the research. RETAILER – seller of goods to the consumer, usually the last link in the chain of distribution. SALES PROMOTION – schemes which offer customers a special bargain in the hope of increasing sales. SECONDARY DATA (desk research) – information which already exists due to other people’s research. SKIMMING – charging a high price for a new product while it remains unique. SPENDING HABITS – how consumers buy products e.g. how often do they shop, how much do they spend, where do they shop.


SUB DEPOT – a small warehouse used to store goods for local delivery in country areas. SUPPLY OF GOODS AND SERVICES ACT – law which specifies that goods and services must serve their intended purpose. TRADE DESCRIPTION ACT – law which stops traders giving a false or misleading description of goods or services. TRADING STANDARDS OFFICER – employed by local councils to investigate complaints from customers and generally keep watch on business activities. VOLUNTARY CODE – standards of business behaviour which are established freely by trade associations for all their members to follow. WHOLESALER – the link between a producer and a retailer.


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