Core Management Concepts – Block 12 – Readings - Contemporary Marketing

University of London
B.Sc

Core Management Concepts

Block 12:
Contemporary Marketing
Reading

Lecturer: M.Nageb

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

Learning Objectives

• Discuss the four key elements of the marketing

framework (product, price, promotion, place)
considering their role in the widest range of
contemporary organisations

• Apply structured analytic tools to issues of pricing,

promotion, product and branding to deepen discussion
and understanding

• Provide reflection on current marketing and/or

recommendations to improve marketing efforts based
on application of theory to context

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2. What is Marketing?
1. 2.1 The need for marketing

The bottled water aisle in the supermarket is a perfect example of the power of
marketing. Water is, surely, just water? But if you were to look down the aisle
in your local supermarket, you would be likely to find an overwhelming array of
different brands of water. The picture below may help you to imagine a similar
aisle in your own supermarket.

Bottled water in a supermarket aisle

Image sourced from
https://commons.wikimedia.org/wiki/File:Bottled_water_in_supermarket.JPG

If water in bottles is more or less the same as water in taps, and if all brands
are more or less the same as one another, then how do you differentiate? How do
you encourage people to buy your water over others? Is it simply a case of being
the cheapest, or are there other methods at your disposal?

This is where marketing comes in. Choosing what to sell (product), how much to
charge for it (price), where to sell it (place) and how to promote it to potential
customers (promotion) are the key elements of marketing that enables companies
to engage with customers and create a market for their products or services.

And so, that is why a mineral water manufacturer such as Highland Spring goes
to such efforts to distinguish its product from competitors:

"Highland Spring is a supplier of one such brand of bottled water. It is intent on

bringing its brand to life to make it stand out from its competitors, and it is
doing so by injecting more personality into the brand. This is necessary because
of the difficulty in really distinguishing one brand of water from another in the
eyes of the consumer, and because the bottled-water market is growing at a
slower rate. According to Mintel (2009a), people are starting to adopt the

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attitude that bottled water is ‘a bit of a con’ and to believe that it is no

healthier than tap water." (Brassington, 2013: 2)

Whilst this quote is now nearly a decade old, it makes an important point that
still stands: where products or services are very similar to one another,
organisations routinely use marketing to help to differentiate their products and
services from one another. Even where products and services in an industry are
perceived to be quite different, marketing helps to establish a market and thus
find a customer base for a product or service. This might be water, an airline
flight, psychotherapy services, or swimming pool cleaning. It might be office
supplies, birthday cakes, or commercial refuse collection. Any service or product
can be marketed.

All managers will, in some way, be involved with marketing - whether it is a

direct involvement in terms of helping to decide on products, set prices, or
organise promotion, or whether it is a more indirect involvement, needing to
appreciate and work with the marketing decisions that have been made in the
organisation more widely.

As such, having a good understanding of what marketing is can be hugely

beneficial for the practising manager, and this is why we spend this unit
discussing it.

2. What is Marketing?
2. 2.2 Primary functions of marketing

"Marketing is the management process responsible for identifying, anticipating,

and satisfying customer requirements profitably." (CIM, 2015)

"Marketing is the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large." (AMA, 2017)

Above are two standard definitions of marketing, taken from the UK-based
Chartered Institute of Marketing, and the American-based American Marketing
Association. They are somewhat different in their construction, but have a
number of areas on which they both agree (Brassington, 2013):

• Marketing is a management process (and that is part of the reason why

we are interested in it within Core Management Concepts)
• Marketing identifies and anticipates customer requirements (this usually
happens through research)
• Marketing is about providing customers with what they want (which
becomes possible following market research)

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• Marketing provides value to customers (and the AMA definition goes

further to embrace a wider range of stakeholders)

Two of marketing's primary roles, as stated above, are to identify customer

needs, and then aim to meet them. This is partly about identifying first who the
customer is, and then anticipating what they are going to want from the product
or service you are looking to sell to them. Once the customers, and their needs
and wants, have been identified, companies can act on this information and look
to satisfy the needs and wants. They do this by establishing a marketing mix for
the product or service.

3. The Marketing Mix: Product & Price

1. 3.1 Contemporary marketing practice

Marketing has, since its humble origins, developed into an important business
function that is very aware of its own status. Marketing as a discipline is very
aware of its self-worth, as well as being widely seen as strategic. It represents
a way to organise business strategically around the united principles of
identifying and serving the needs and wants of customers.

The conventional way of teaching marketing practice for many years – both to
undergraduates and marketing practitioners – has been to start with focusing on
the 4Ps: product, price, promotion and place.

The basic theory of the 4Ps is that to market to your consumers, you need to
provide a product that they want at a price that meets their expectations of
that product, available to them in places they would expect to look and offered
to them in the right way at the right time (McCarthy, 1960).

INSERT PICTURE FROM VLE

(the above graphic is adapted from Chaffey and Ellis-Chadwick, 2019: Digital
Marketing, 7th edition. Harlow, UK: Pearson)

The 4Ps is still a relevant framework to use, even in the digital age. However, we
do need to update the way we think about each of the 4Ps to incorporate the
changes that digital developments have brought to our companies, their markets
and thus the arenas of marketing and marketing strategy. Therefore, in the
following description and discussion of the 4Ps, we will look at each ‘P’ in the
context of the digital age.

INSERT PICTURE FROM VLE

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Digital transformation has allowed the creation of new markets (e.g., online
streaming services), allowed companies to offer new services (e.g., online
shopping), and to interact with audiences in new ways (e.g., through social media
channels such as Instagram). It has also created a way for smaller, often more
niche companies to compete with larger businesses on a more level platform (e.g.,
a small furniture retailer being able to share the competitive space with an
enormous player like IKEA). Engaging consumers through a range of online
platforms is an ongoing challenge, but companies who successfully take advantage
of these opportunities reap the rewards. Many companies who started as small
internet players have become significant worldwide brands (ASOS, Amazon).
Marketers who, early on, were brave enough to take on the challenge of moving
marketing into the digital environment have had the opportunity to develop new
skills and to use these new tools to improve the standing and competitiveness of
the company. (Chaffey and Ellis-Chadwick, 2019). And now, it is a prerequisite to
have an online internet presence in order to prosper, or even perhaps to survive
at all.

We can see a range of different businesses and relationships to the digital

transformation, which means that as we look at the 4Ps, we need to think about
the range of different ways in which businesses – based on the type of business
they are – might engage with each of the Ps. Below are some example
businesses. You may wish to think about the way in which they are likely to use
the internet as part of their business model:

• Bricks and mortar commerce with no online presence (e.g., local

newsagents; building supply yards)
• Bricks and mortar commerce with an online presence but which do not sell
online (e.g., restaurants)
• Transactional e-commerce businesses that are selling products or services
online (e.g., travel, retail, financial services)
• Relationship-building businesses that do not transact online but which use
the online environment to promote themselves (e.g., laser eye treatment;
face-to-face personal training)
• Businesses that sell direct through an e-commerce site (e.g., clothing,
furniture, building supplies) or through an online marketplace (e.g., Amazon
or eBay)
• Companies that offer digital products (e.g., streaming services such as
Netflix; digital publishers)

We will now turn our attentions to each of the 4Ps in turn, looking at what they
are, and how our concept of them has been updated in line with the digital
transformation of businesses.

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3. The Marketing Mix: Product & Price

2. 3.2 Product

You have already been introduced to the marketing mix – the 4Ps of Product,
Price, Place and Promotion. This is where we will now turn our attentions.

Product
Product within the marketing mix refers to the characteristics of a product:
what it is, what it does, and how. The answers to these questions have
implications for the other ‘Ps’, as decisions made about the product will affect
price, place and promotion (this inter-relationship is true for all of the 4Ps, in
fact).

Product decisions will routinely be informed by market research where customers’

needs are assessed and the feedback is used to modify existing products or
develop new products. The advent of big data (as discussed in Management
Science) provides lots more opportunities to discover customer insights and
explore options for the product. For example, an online retailer can look at all
the searches on their website that return zero hits for potential consumers and
try to identify unfulfilled consumer wants. An online supermarket might discover
that its customers are regularly searching for ‘wheat gluten’ (a product used to
make vegan meat substitutes) and decide to stock it.

Product decisions can usefully be divided into decisions affecting the core product
and the extended product . The core product refers to the product purchased by
the consumer to fulfil their needs, while the extended or augmented product
refers to additional services and benefits that are built around the core of the
product. For example, if you were to buy a brand new car from a dealer, you
would be likely to get warranties, guarantees and some form of after sales
service.

Digital technology has significant implications for the product element of the
marketing mix. For example:

• Providing further elements to the augmented product: for example, a book

retailer could provide reviews from customers of the books, online book
groups, and personal digital shopping assistants that use algorithms to
recommend books based on buying habits.
• Providing variations to the core product: digital business provides ways to
vary the characteristics of the core product. This may be by providing a
digital altenrtaive, such as offering a digital book as well as a physical
one. Or it could be by combining manufacturing tech with digital tech to
offer mass customisation of goods, such as Nike’s trainer workshop.

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Bundling products is common online also, and is another way to sell

products or services. For example, Amazon suggests book bundles including
books that customers are currently looking at.
• Allowing companies to conduct further research online. Online focus
groups, social media listening and web analytics (including big data) all help
companies to assess customers’ preferences. This can also help with the
development of new products.
• New product diffusion. The internet allows ideas to gain traction and
spread raipldy. It is far from predictable which will ‘catch fire’ in this
way, but marketers are often working with this hope.

Firms should consider products in conjunction with one another, too. The firm’s
set of products may be seen as a portfolio and, like the financial portfolios we
discussed in the relevant unit, they will have revenue trends that are not
correlated. This lack of correlation is desirable, as products doing well can help
the company to protect itself from the impact of products that are
simultaneously doing less well. Many firms measure product revenues and
profitability by year of product launch in order to monitor the portfolio
performance more closely.

3. The Marketing Mix: Product & Price

2. 3.2 Product

2.1. Brand
A key element of product is brand. It originated in literally ‘branding’ items such
as sweets with a hot brand to stamp the name of the manufacturer on them, so
they could be asked for by ‘brand name’. It is as offline and online, enabling
consumers to differentiate products and services from different manufacturers.

For products, brand producers create a brand name and a brand image and then
enhance the product through additional features such as service, packaging and
delivery. Different brands will combine different features and customers can thus
choose the brand’s product that best suits their wants.

However, we now use the idea of brand to apply to all businesses. The American
Marketing Association yields the following broad definition of a brand:

“A brand is a customer experience represented by a collection of images and

ideas; often, it refers to a symbol such as a name, logo, slogan, and design
scheme. Brand recognition and other reactions are created by the accumulation
of experiences with the specific product or service, both directly relating to its
use, and through the influence of advertising, design, and media commentary. A
brand often includes an explicit logo, fonts, color schemes, symbols, sound which
may be developed to represent implicit values, ideas, and even personality.”

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Online presence is increasingly important in shaping how we perceive brands, with

websites, apps and social media presence all altering how we interact with and
thus experience brands.

A range of brand elements contribute to brand equity:

INSERT PICTURE FROM VLE

Brand Elements, adapted from Chaffey and Ellis-Chadwick, 2019: Digital
Marketing, 7th edition. Harlow, UK: Pearson

The above brand elements contribute to brand equity, which can be seen as the
brand assets or liabilities that are linked to the brand. Any attempts to measure
brand equity are in essence attempts to measure the value of the brand to the
firm. However, measuring brand equity is far from scientific. You are trying to
find the amount of your revenue that is attributable to the brand itself. A
simple way to think of this is by looking at market differences in revenue
between branded and unbranded products (for example, branded and generic
drugs). In the context of online marketing of a good or service, you could look at
the amount of revenue generated by selling your good/service as a non-branded
product, and as selling your good/service as a product under your brand. (With
this technique, you can see how it might be possible for a brand to be given a
negative value, if you sell more through the non-branded route to market
compared to the branded one).

Looking on Brand Finance’s brand directory, you will find an up to date list of the
10 highest valued brands: https://brandirectory.com/ At the time of writing, the
top three were:

Amazon $220,791m (compared to total enterprise value of $1,570,000m)

Google $159,772m (compared to total enterprise value of approximately

$1,077,000m)

Apple $140,524m (compared to total enterprise value of approximately

$2,020,000m)

[figures from www.brandirectory.com and www.finance.yahoo.com on 25/11/2020]

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3. The Marketing Mix: Product & Price

3. 3.3 Price

The price element of the marketing mix is focused on the price policies that a
company sets, which are in turn used to set prices for products and services.
These prices can be a fundamental element of brand differentiation.

Let us compare, for a moment, the difference between the way that marketers
and economists treat price. In economics, price is set by the balance between
supply and demand. However, marketing argues that price can play a role in
shaping demand, as it can alter perceptions of the product/service and brand, as
well as altering levels and types of engagement in different market segments. As
Ofir and Winer put it:

“Understanding price thresholds and willingness to pay is critical to marketing

managers’ being able to price appropriately and not succumb to extreme
pressure to drop prices” (2002; p. 278)

As such, rather than just trying to find the price point where supply meets
demand, price can be used to reflect quality, generate sales or aggressively push
the competition out of the market.

Companies have a range of options for setting price:

Cost-plus pricing: Generally marketing does not advocate pricing on cost because
it doesn’t take the consumer’s wants and needs into account and how much they
are prepared to pay for a product. Costs merely set the floor of the minimum
that the product could or should be sold for. Pricing on cost (i.e. as low as
possible) may be desirable as part of an entry strategy to gain market share, if
it is in the anticipation of future price rises away from this threshold. However,
the distinction between fixed and variable costs introduced above in Chapter 8 is
important. Where fixed costs are high and variable costs low, firms will discount
steeply at periods of low demand to spread the fixed costs over as much revenue
as possible; hotels and airlines are good examples, through their dynamic pricing
models which can be either automated through algorithms or applied by analysts
in real time.

Target-profit pricing: The company aims to achieve a particular profit on a

product over a period of time and can thus flex the sales price to achieve this.
Differential pricing can be used in B2B (business to business) contexts, where a
large number of units can bring down the per-unit production cost significantly
and thus create a breakeven point which is lower and can justify a lower sales
price. Discriminatory pricing can also be a useful strategy for a company using
target-profit pricing. Discriminatory pricing is targeting different market

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segments at different price levels; for example, restaurant chains differentiating

prices by residential district, or cinemas charging more to midd-aged customers
than to students or senior citizens. retailers having ‘online’ and ‘offline’ prices. It
is also possible to have discriminatory pricing by streaming customers online.
Airline companies (such as Ryanair) and Uber use dynamic pricing models to
generate maximum revenue and even-out supply and demand. However, in other
settings, it is becoming harder for companies to provide differentiated pricing as
it has been shown that it can reduce supplier confidence and trust. A travel
company received negative publicity for directing Mac users to more expensive
hotels (than other users) when they were booking holidays online. And an
insurance company purportedly charged higher premiums to those with a Hotmail
email account because they were seen to be ‘more risky’.

But if companies are keen to have price discrimination strategies, big data may
be able to help them. With a huge data set of thousands and thousands of
similar past purchases, sellers of, for example, travel insurance, or holidays, could
look through their records and find consumers who are very similar. They could
see what they were prepared to pay for the same product. And then they could
charge the relevant rate for the product. This is called a ‘doppelganger search’
– looking for people who share characteristics (Stephens-Davidowitz, 2017).
Again, whether this is ethical is another question, but it reminds us of the power
that Big Data can have for marketing.

Competition-based pricing: this approach is common online. Companies selling

consumer goods need to develop online pricing strategies that can hold up to
price comparison websites. If costs set the price floor, competition sets the price
ceiling. Here, we can refer back to Porter’s Five Forces. Where a given set of
buyers account for a significant portion of sales, and where they can also switch
to other producers, consumer power will translate quickly into price pressure. As
an example, consider the retail food market in the UK. The market is dominated
by a small number of large supermarket chains, two of which are in-person only;
one of which is online only; and the rest of which are hybrids (both online and in-
person). For the producers of branded foods, the supermarkets control access to
the consumer; they set prices and they control the ways in which brands are
presented in store and online. In addition, for many standard items the ‘own
brand’ offers consumers a low-price alternative. Their buyer power is
considerable. It may seem that, individually, end consumers have little power, but
they have almost no switching costs between supermarkets, which thus offer
‘price match’ promises in the face of collective buyer power. Interestingly, the
COVID-19 crisis increased demand for online supermarket deliveries and it
became harder to switch between suppliers as they closed registration. In this
market, the supermarkets’ power increased and over the longer term may have
reflected in higher prices. Where competition is severe, differentiation of the
product by adding or subtracting features or attributes may be a suitable

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response in order to establish differentiation between your brand and that of the
competition.

Market-orientated pricing: this approach looks at the likely reaction of

consumers to changes in price. There are two major strategies here:

• Penetration pricing, which refers to a market entry pricing strategy in

which low prices are offered to build market share rapidly; for example,
new newspapers or magazines are offered at an ‘introductory’ price, or
new online retailers offer discount codes for all purchases in their first
month of trading.
• Skimming pricing, also known as premium pricing, which attacks those
parts of a market where the highest prices may be charged; for example,
new smartphones are brought to the market by Samsung and Apple with a
high price and these prices subsequently fall as newer models are
released. As such, Samsung and Apple are continuously using skimming
pricing to target those who want a top-of-the-market phone, before
dropping prices to appeal to a wider market segment. They repeat this
process again and again.

4. Using Data Science to Research Product & Price

In the Unit on Management Science, you learnt that data science (big data and
algorithms) is having a big impact on our ability to analyse, plan and create in
line with what humans want.

Choose a product or service that you know well. How do you think data science
could help its company to improve its product offering and/or the price it is
offered at?

5. The Marketing Mix: Place & Promotion

1. 5.1 Promotion

The Promotion element of the marketing mix relates to the ways in which
marketing communications inform customers (and other, related stakeholders)
about firms, brands and products. Digital technology has altered how we
communicate with one another, and this is just as true for how we communicate
with businesses and how they communicate with us. In particular, the number of
touchpoints (points of contact or interaction) has increased dramatically. Thus,
through the change in the ways in which businesses can communicate with
customers, and the number of times they can do so in a given period, the internet
has transformed the way that promotion has done dramatically. The concept of

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promotion has thus changed dramatically since the advent of the internet.
Elements of the promotional mix and some examples of each could include:

• Advertising: traditional media, pay-per-click advertising, interactive display

ads
• Selling: face-to-face sales, AI chatbot sales, affiliate marketing
• Sales promotion: Online and offline coupons and rewards
• Public relations: blogs, newspaper/magazine story placement, links, viral
campaigns, influencer outreach
• Sponsorship: Sponsoring events and services – both online and offline
• Direct mail: Targeted email campaigns (GDPR-compliant), mail-outs
• Exhibitions: Virtual and face-to-face exhibitions, conferences, seminars,
webinars
• Word of mouth: Social marketing, viral marketing, affiliate marketing,
face-to-face word of mouth

If you think of a company that you know well, which of the advertising
strategies above are you aware of them using? Which others do you think they
might use despite you not knowing about it?

Improving the promotional blend

Metrics are critical in marketing, to assess the success of the approaches that
have been used and to allow adjustment where required. Having a sense of return
on promotional spend is critical for ensuring that a company’s resources are being
optimally deployed (that they’re using their time and money in the best way). In
particular, they will want to see to what degree each of their promotional
channels is effective (meets objectives by delivering required outputs and
outcomes), and efficient (minimises resources and time needed to achieve outputs
and outcomes). In large companies, considerable budget will be put aside for this
type of activity.

5. The Marketing Mix: Place & Promotion

2. 5.2 Place

The place element of the marketing mix relates to the way in which the product
is distributed to customers. Before the internet, place focused entirely on how to
distribute the product in order to it to meet the right customers, whilst
simultaneously driving down the costs of transportation and storage.

Now, in an online context, place becomes much more nebulous. For example, for a
cosmetics brand such as Clinique, it will need to think beyond its own website
sales to third-party websites, such as online pharmacies, beauty stores, as well
as to offline retail environments, such as department stores. In the online

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environment, success often happens for retailers who are able to maximise their
visibility on third-party websites that are used by their target markets. As
companies have the potential to reach the global marketplace online, it is a
challenge to adapt offerings for local markets, not least e-commerce sites and
the related texts and images which sit on them. But again, this may be another
important mechanism for increasing market share.

To dominate the online retail space, Evans and Wurster (1999) recommend
focusing on:

Reach – Reach is how many customers a firm can connect with and how many
products it can offer them. Increase reach by increasing the number of
platforms the firm is on, engaging with intermediaries. In the case of Clinique,
this would mean increasing the number of third party websites it is on whilst
bolstering its visibility in reviews.

Richness – This is the depth of detail collected about the customer and provided
to the customer. Increasing it allows better customer engagement which in turn
will drive sales.

Internet sales also provide options for companies looking for different routes to
market. The internet has created a shift for companies who used to sell only
through intermediaries towards selling directly to customers. A shoe
manufacturer such as Irregular Choice may at one time have been limited to
selling their products through shoe shops that they did not own. However, the
internet means that they can also reach their audience directly. However, this
can lead to channel conflicts, threatening distribution arrangements with current
partners.

There are four options available to companies in terms of whether and how to
use the internet as a channel:

• Companies communicate about their products but continue to sell them

offline
• A distribution channel through which companies sell their products to
intermediaries
• A distribution channel through which companies sell their products direct
to customers
• Any combination of the above three dimensions.

Brewdog is an example of a company that undertakes all three. A Scotland-based

brewery, Brewdog uses the internet to communicate with customers about its
products but continues to sell to those customers via its own, Brewdog-branded
pubs. It also uses the internet as a distribution channel through which it sells to
intermediaries such as supermarkets. For example, the M&S chain of
supermarkets stocks its beer. And finally, it uses the internet to sell directly to

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consumers, with a website which sells its beer alongside merchandise, beer-based
advent calendars, and even shares in the company.

6 Example: Amazon
1. 6.1 What Do You Already Know About Marketing at Amazon?

For many of us, Amazon plays a considerable role in our lives. Now is a good
moment for self-reflection/confession.

It's 2.30p.m. on the day I'm writing this. Today, I have already bought a board
game for my daughter as part of her Christmas present, used Alexa to play the
radio, a podcast and Liam Gallagher's latest song, as well as to set a timer. I've
visited Whole Foods to buy a moisturiser (they are also owned by Amazon),
received a package through the front door which I didn't order from Amazon but
has been delivered in Amazon packaging by an Amazon courier. I'm looking
forward to reading some of my new Robert Galbraith book on my Kindle later (at
900 pages it's too heavy to carry around in hardback). And at some point over
the weekend, I'm bound to watch a movie or a series on Amazon Prime. They're
everywhere.

Somehow, despite the fact that I'm really not keen on them, and I still try to
buy books from my local bookshop, they have inveigled their way into my life.

Let's make an assumption for a moment that Amazon's success comes about, at
least in part, because they are very good at the 4Ps - they get the right
products in the right places at the right price and the right time.

Can you think of three examples of ways in which Amazon 'get it right' in terms
of their marketing and which may account for their significant value and success?

6 Example: Amazon
2. 6.2 Background

You might not buy many books, but you’re bound to have heard of Amazon.

Background
Amazon, if you’re not already very much aware, is an American multinational
company. It is considered one of the ‘Big Five’ tech giants (alongside Facebook,
Apple, Microsoft and Google) and has gone from being an online marketplace for
books in 1994 to being a retail and tech behemoth. It straddles many industries,
selling electronics, software, apparel, furniture, clothing, food and toys, alongside

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plenty of other products. It sells a membership service, in the form of Prime, and
has brought smart-speakers, in the form of its Echo devices, into many homes.
Amazon regularly disrupts well-established industries through innovation and
being able to provide goods and services at scale. The book retail industry is just
one of many examples of an industry that Amazon has transformed, both through
its sales of books and its development of Kindle e-readers and the platform to
sell e-books for these devices.

It is perhaps not surprising, then, that over the last decade, no company has
created more jobs than Amazon. Amazon directly employs 840,000 workers
worldwide. Globally, we support nearly 4 million jobs in areas including
construction, logistic and professional services, and small and medium-sized
businesses selling on Amazon (Amazon Annual Report, 2019).

We are looking at Amazon in this case study because it’s a great example of a
company that uses the 4Ps in a very diverse range of ways, with a large tech
presence and approach, as well as selling tangible goods in tangible stores. We
can use it to demonstrate how the 4Ps need to be considered together, as well
as giving some clear and specific examples of the 4Ps in practice.

NB: Amazon receives mixed press coverage – it is both the hero of online retail,
but also according to many exposes and much investigative journalism – a very
challenging place to work (particularly in the packing and sorting warehouses)
and a behemoth that makes it hard for smaller companies to compete. We are
somewhat putting these debates to one side for this particular exercise, having
chosen Amazon precisely because they are so big that they are an exceedingly
useful case for demonstrating many elements and sub-elements of the marketing
mix.

1. 7.1 Product

Amazon may have started off as a bookstore, but as we established above, it

now sells (almost) everything (there’s a book about Amazon called The Everything
Store which is about exactly this: It’s not complimentary about Amazon all the
way through, and so there’s some irony that you can actually buy
on Amazon despite it being critical. (And apparently there is a one-star review
for it somewhere from his wife)

Some examples of Amazon’s products and services are shown below:

• Retail goods, selling goods directly

• Retail service, offering a retail platform to other vendors
• Amazon private label goods (eg Amazon echo, Amazon Ring, Amazon Kindle)
• Amazon Prime (membership subscription service with various benefits
including free express delivery, TV and music streaming service, and eBook
access

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• Amazon Web Services (on-demand cloud computing)

• AmazonFresh (online grocery store)
• Amazon Shipping Services (offering shipping to retailers not selling via
Amazon)

As you can see from above, the Amazon online product range has expanded
significantly and diversified from the initial focus on books. Additionally, the
company’s products now include not just online retail, but also a variety of other
products and services with a range of ways of reaching consumers.

7. Amazon Case Study: Product

2. 7.2 Question: Product (Open Response)

From Amazon’s initial market as a bookseller, it has expanded significantly. Using three
products as examples, how has Amazon used the skills and competences it built up in its
early days as just an online bookseller to drastically expand its product and service
offering?

7. Amazon Case Study: Product

3. 7.3 Feedback: Product

Feedback:
• Books were sold online, meaning that there was already an online platform
from which Amazon could use its brand name to sell a growing range of
non-perishable products.
• A logical development from books was eBooks, and then ereaders. Selling
eBooks provided a ready market for ereaders, and in particular for
developing their own Kindle e-reader. Amazon publishing, which creates
eBooks, created more Amazon-owned products.
• An express delivery service – whether paid for directly or via Prime
membership, allowed them to reach their market quickly. Prime
membership became another product offering.
• Excellence in logistics and high speed delivery opened up the possibility of
online grocery retail. Amazon Fresh could sell a range of perishable
products as a result.
• You may have come up with a range of other ways that Amazon were able
to use their initial product offering to build up expertise and skills which
allowed them to make an impact in other product and service markets,
too. The more diverse its products and services become, the better
insulated it is from failure in any one market, and the higher the amount
of money it has to use to expand into and dominate a wider range of
markets.

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Amazon plays this wide product-range to its advantage, as it becomes in people’s

minds ‘the Everything Store’ that the book claims it to be. Amazon encourages
this by offering Prime subscriptions which, once you have them, further
encourage you to use Amazon as you can have most goods devliered within one
working day. It has been well-publicised how Amazon’s wide range of products
and snese of them being a ‘one-stop shop’ whose products come with the
additional benefits of quick delivery, has increased their market dominance in a
wide range or markets during the COVID-19 pandemic.

7. Amazon Case Study: Product

4. 7.4 Reflection (Open Response)

Amazon started as a bookseller, but over the past decades has expanded its
reach into a much, much wider range of industries. More than any of the other
internet giants, they straddle industries realising that engaging with customers in
one way encourages them to increase their customer base in other industries,
particularly in the case of Amazon Prime (subscription) members. As Amazon CEO
Jeff Bezos said in 2016, "We get to monetize [our subscription video] in a very
unusual way," Bezos said. "When we win a Golden Globe, it helps us sell more
shoes." (Business Insider, 2016)

Create a list of industries - as broad as you can - of the industries you perceive
Amazon to be in.

5. 7.5 Reflection Feedback

There are a wide range of possible options here and answers are likely to link to
key products:

• Retail goods and services from third parties = online – enables 3rd parties
to sell to wider audience
• Amazon private label goods (eg Amazon echo) = bricks and mortar and
online may be combined – primarily online, but may also sell in their own
stores
• Amazon Prime = online - streaming service
• Amazon Web Services (AWS) = online = web based
• Amazon Publishing = online – wider access to publishing consumers and
digital content well suited to online channels
• AmazonFresh = online ordering for shopping delivery service (branded
goods and partnership with Morrisons) emphasis on speed of delivery – and
is free for Prime members
• Video Direct = online – streaming service

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• Amazon Go = bricks and mortar – technologically advanced

stores enabling customers to check out automatically without queuing

Industries include:

Retail: bricks and mortar and online

Entertainment: streaming services

Web and publishing services: online services

8. Amazon Case Study: Place/Distribution

Amazon’s business is primarily organised around getting traffic to its website
which then drives sales of goods and services. These will include their own goods
(such as Echo smart-speakers, Kindle e-readers and Ring doorbells), goods that
are sold from their warehouses (such as books, clothes, homewares and food), and
goods that are being sold by third-party retailers (such as second-hand books,
but also clothes and homewares). Amazon.com is a mainly online business
organization, but does also have a physical presence, through its bricks and
mortar bookstores and its Whole Foods Markets

The company has expanded its physical presence in recent years, utilising their
core competency in technology to streamline the purchasing experience. Amazon
are now able to sell this retail technology to other organisations too, as the
following article illustrates https://www.geekwire.com/2020/amazon-starts-
selling-amazon-go-technology-businesses/.

8. Amazon Case Study: Place/Distribution

Amazon’s business is primarily organised around getting traffic to its website
which then drives sales of goods and services. These will include their own goods
(such as Echo smart-speakers, Kindle e-readers and Ring doorbells), goods that
are sold from their warehouses (such as books, clothes, homewares and food), and
goods that are being sold by third-party retailers (such as second-hand books,
but also clothes and homewares). Amazon.com is a mainly online business
organization, but does also have a physical presence, through its bricks and
mortar bookstores and its Whole Foods Markets

The company has expanded its physical presence in recent years, utilising their
core competency in technology to streamline the purchasing experience. Amazon
are now able to sell this retail technology to other organisations too, as the
following article illustrates https://www.geekwire.com/2020/amazon-starts-
selling-amazon-go-technology-businesses/.

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9. Amazon Case Study: Promotion

1. 9.1 Promotion

Amazon uses the following promotion strategies to communicate with its target
market:

• Advertising (primary means of promotion) includes use of affiliate program

for website owners to earn revenues by displaying links to products sold on
Amazon.com, to widen the market reach. Amazon successfully use pay-
per-click, too (you can read more about this below).
• Sales promotions (eg: discounts; special offers: Amazon prime customers
get free Amazon Go delivery)
• Public relations (enhancing brand image to enhance consumer perception of
Amazon)
• Direct marketing (to sell Amazon’s online services – a Business-to-Business
(B2B) context)

Amazon uses Big Data to target customers in variety of ways. Read this
article to find out what they could be doing with your data. The expansion of
products and distribution channels increases access to customer data. In
addition, Amazon holds credit or bank card details for many customers, enabling
‘one click’ check outs.

Amazon has also built a business in providing a platform for advertisers, using
‘sponsored’ adverts to prioritise search results.

Do a product search on Amazon, and you’ll notice products with a little

“sponsored” label. These are “sponsored” products, or keyword-targeted adverts
(ads) that let advertisers promote certain products. Advertising is sold through a
cost-per-click, auction-based pricing model, the higher the bid, the more likely
the ad is to be displayed. Advertisers pay only when their ad is clicked, and
they set the maximum amount they’re willing to pay. These ads can show up
above, near or within search results, or even on product detail pages.

Other advertisers can use Amazon to for advertising, even if they’re selling
products that you can’t necessarily buy on Amazon, like insurance or a
car. Adverts can take the form of videos, images or product information.

Amazon are not only advertising, but gaining value from providing advertising
services. From a consumer perspective, a lot of the advertising doesn’t look like
advertising, it looks as if our search has found appropriate products.

The Amazon brand is strong, becoming the most valuable brand in 2019
(Marketing Week, 2019).

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(source https://www.cnbc.com/2019/07/17/how-amazon-advertising-works.html)

9. Amazon Case Study: Promotion

2. 9.2 Question (Open Response)

Explain the differences between Direct Marketing and Sales Promotions, in the
context of Amazon.

9. Amazon Case Study: Promotion

3. 9.3 Feedback

1. Direct marketing identifies a target customer and makes direct contact to

promote Amazon’s online services
2. Sales promotions offer short-term advantages or financial benefits to
stimulate demand and increase sales

10. Amazon Case Study: Promotion

1. 10.1 Price

Amazon uses low prices as a way of attracting customers to its e-commerce

website and product offerings. Nonetheless, given the variety of the company’s
products, the following pricing strategies are used:

• Market-oriented pricing strategy (primary strategy – comparison with

competitor pricing)
• Price discrimination strategy (different prices for the same product)
• Value-based pricing strategy (taking account of consumers’ perception of
value)

Despite a perception that Amazon uses low prices to attract customers, the use
of dynamic pricing strategy means they are not always the cheapest at all times
in all locations. In fact, Amazon change prices astonishingly frequently. Business
Insider (2018) notes that Amazon raises prices on uncommon products, and then
the most common products will appear cheaper (which you will have seen
referred to as an anchoring bias in the decision making unit), so people will start
to assume they have the best prices overall. Amazon are very successful at
applying consumer psychology and exploiting our cognitive biases.

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10. Amazon Case Study: Promotion

2. 10.2 Question 1: Price

How do Amazon use price as a tool to maximise their competitive advantage?

Consider at least two different strategies they employ.

10. Amazon Case Study: Promotion

3. 10.3 Feedback 1: Price

Within their sales platform, price is used in the full range of ways:

• As a signifier to reflect quality (for example charging more for one type
of kindle than another, or for a hardback over a softback, or one brand of
cereal over another.
• As a way to generate additional sales (e.g., through promotions, discounts
or bundling)
• To aggressively push the competition out of the market (e.g., showing how
they are selling below ‘retail price’ with the assumption being that they
can sell cheaper than the competition. This is called competition-based
pricing, but may incorporate cost plus approaches, which will set the floor
for how low they can go.

May also include cost+ approaches

10. Amazon Case Study: Promotion

4. 10.4 Question 2: Price
Evaluate the ethics of selling goods at different prices in different locations. If
you were charged $10 more than a friend in a neighbouring country for a product
that cost $34.99, would you consider this fair? What might the impact on
Amazon be if they are found to be doing this?

10. Amazon Case Study: Promotion

5. 10.5 Feedback 2: Price

You might think it is fair if it reflects payment of taxes or additional transport

costs

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You might think it is unfair if it is because it is a very popular product, and

searches show that the price has been increasing regularly to take advantage of
increased demand

The impact on Amazon is likely to be felt if customers decide to check prices

against other suppliers, no longer assuming them to provide the lowest cost
products, this could lead to loss of market share if Amazon prices are higher
than competitors for particular products.

Sources include: http://panmore.com/amazon-com-inc-marketing-mix-4ps-

analysis

Article

A1 e-Commerce

Video

V1 Marketing Mix

V2 Marketing Plan

Key Concepts

• Marketing helps to differentiate products/services

• Marketing Mix elements – 4Ps

• Marketing concept – satisfies needs and wants of customers

• Conventional Marketing vs Internet Marketing

• Digitalisation / Digital transformation

• Product – Core, Tangible and Augmented; Product Bundling; Brand, Brand Equity

• Price – methods of pricing; Doppelganger Search

• Promotion – conventional vs Digital technology

• Promotion – conventional vs Digital e.g websites including third party websites;

• Place - Reach and Richness to dominate retail space; channel support;

ubiquitous

• Amazon – Digital case study

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Concepts & Theories linked to References

Concepts / Theories References

a product is defined not as a physical item Kotler & Armstrong (2014)
but as the total package of attributes the
customer gets when she or he buys the
product

a product is not a simple downward sloping Shocker (2002)

demand curve but rather it can be positioned
and differentiated contributing to revenue and
profitability
Acceptance of the stages of the product life
cycle has implications for product
development, pricing and distribution
Although the cycle is an ideal type but it not Lambkin & Day (1989)
well verified
New products have to arrive to replace old
products before consumers switch to
competitor’s products
Product technology innovation creates a new Abernathy and Utterback (1982)
product cycle or rejuvenate a falling one
Understanding price thresholds and willingness Ofir & Winer (2002)
to pay is critical to marketing managers’ being
able to price appropriately and not succumb
to extreme pressure to drop price
Inflation makes consumer perception about Willman (1982)
prices hazy
Economists price setting is sticky and is Blinder et al (1998)
directly related to costs
Price-setting is an important and high-profile Piercy, Cravens & Lane (2010)
activity endogenous to the firm, in which
competitor prices are only one consideration.
Traditional channels are disrupted by Kotler & Armstrong (2014)
emarketing
External factors like Covid-19 also has
boosted the business of firms which offer
emarketing
US data shows that margins in distribution Stern & Weitz (1997)
channels account for on average over 30% of
the ultimate selling price; advertising by
comparison typically costs around 5%
Channels make the market. Channel functions Anderson & Coughlan (2002)
Three literature can used for channels – Willman ( 2014)
transactions costs, agency and game theories

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Tutorial Questions

2015 Mock

1. How has the internet affected the practice of marketing? Illustrate your
answer with an example from an Internet company.

Core Resources
Text; Theme 7
Course Guide; Chapters 19 and 20
The question requires a description of the practice of marketing prior to the
advent of the internet. It then requires an assessment of the main
technology-induced changes. The example of an internet company presented in
the course guide is Amazon.
Good answers will

. Describe the practice of marketing, ideally using the price, product,

promotion, place framework

. Products – including items such as brand

. Prices – including considerations of profitability and price discrimination

. Promotion – including considerations of advertising and promotional

discounts

. Place- this involves considerations of the target market and

distributional issues.

. Analyse the main impacts of the internet on all four elements, ideally
indicating the variance of internet impact.

. Use an example of a marketing activity which can be conducted via the

internet or not ( for example, retailing, where both are used )

. Present an example of an internet marketing approach

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing
Class Discussion
Introduction
• Advent of internet – 1980s
• Application of internet to business – 1990s
• First-Mover-Advantage – Jeff Bezos – Amazon.com
• internet marketing variant from conventional marketing
• Dave Chaffey – 6Is showed the difference between internet shopping and
conventional marketing
Marketing Plan Conventional Marketing
Mission / Vision • Mission – what the
organization is presently doing
• Vision – what organization
aspires to be – represents the
wishes of CEO
Marketing • Primary Data - interviews,
Research questionnaires, survey
• Secondary – public and private
sources – reports, newspaper,
journals
Segmentation • demography
• geography
• psychography
• product use
Positioning • quality and price
Marketing Mix
Product • Core product – satisfy need
• Tangible product – brand
• augmented product – services
offered with product e.g.
delivery
Price • cost – price floor
• competition – price ceiling
Internet Marketing
• Incorporate technology to
achieve mission/vision
• visitors to website provide
information – based on purchase
history – instantaneous – track
the history of purchases
• identify changes in consumer
behavior
• above is termed Data farming or
mining
• teenagers
• working couples
• aged
• convenient and price
• search product – inspection
flowers
• experience product – usage –
cars
• above can be overcome by
creating a trusting brand e.g.
Amazon.com
• mass cutomisation –
personalization – customer orders
what they want
• price transparency – facilitate
comparison
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• pressure on pricing – if buyers • overheads lower – so can lower

are few and big prices and be competitive with
brick and mortar stores
• suitable when demand of product
is elastic – to lower prices
Promotion • advertising • use technology
• sales promotion - emails – new launches, reminders
• sales force - text messages – new launches,
• public relations reminders
• Dorfman and Steiner – don’t - ‘burst’ – saves time and effort
elaborate on the equation • TV & Cinema – Push marketing
media
• Print media – Pull marketing
media
Internet advertising mixes both,
but the pull model has been
dominant
• Advertising Effectiveness
- breadth – no of pages visited
- depth – how long spent on
website

Place / • channels • Three elements

Distribution - short channel – industrial
product
- long channel – consumer
product
• channel support – firm must
support distribution channel -
ensure sales
• involves physical delivery
- web interface – site is both a
distribution channel for goods and
an advertising site for market
communication
- quality of purchase and
experience – website - user
friendly
- delivery and refund policy
• disintermediation – wholesalers,
resellers and retailers substituted
by direct marketing between
producer and consumer on the
web.
• hypermediation – intermediation
has changed not disappeared -
content providers, affiliates sites,
search engines, portals, internet
service provider

People • courteous • FAQs

• knowledgeable • call back facility
• community of practice ( forums )
Chat line

Processes • queue – waiting time for • website compatible to standard

payment search engines and mobile devices
• time taken to search for – prevent procrastination (delay)
products in purchase

Physical • location of store • Website

evidence • merchandising – arrangement - less clutter

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

of store layout - user friendly

- attractive – use animated icons
especially those of cats.

2018 Mock

Discuss the range of choices that firms can adopt in relation to the pricing
of products and services, using relevant examples.

Core Resources

Text; Kotler & Armstrong (2016) Chapter 10

Course Guide; Block 18

Answers will:

• Explain alternative strategic approaches to pricing (penetration, skimming,

discriminatory, predatory)

• If prices too high, demand will fall – link to cost, competition and consumer
power – aim to charge maximum the market will accept

• Make use of examples to illustrate points made

Good Answers will include more detailed aspects of the theory, for example:

• Outline assumptions of a perfectly competitive market (price taking (law of one

price), product homogeneity, perfect information, perfect mobility of source

• Explain neo-classical economic theory of link between price and demand

conditions

• Consider disciplinary approaches to pricing eg: influence of psychological

aspects of pricing related to consumer preferences and advertising; management
planning through demand analysis

• Note that Pricing is one of the 4Ps of marketing

• Discuss pricing approaches during the product life cycle

• Make good use of relevant examples to illustrate concepts

Excellent Answers will elaborate more complex aspects of pricing choices, for
example:

• Critically evaluate assumptions of a perfectly competitive market (eg: theory

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

that ‘one price’ suggests that price is not a strategic marketing tool; with
perfect information, no gains can be achieved through marketing)

• Utilise the other 3Ps to illustrate pricing approaches

• Consider the impact of changes in technology on ability to understand consumer

behaviour

• Link product life cycle to strategic decision making – need to keep flow of new
products to enable higher prices to be charged

• Provide clear explanations throughout

Sample 2018

Discuss three key marketing decisions that a children’s clothing manufacturer

will have to make with regard to deciding which products to develop and
sell. You should make use of relevant marketing theory to structure your
answer.
Reading for this question:

VLE Blocks 18 and 19 The following sections of Kotler and Armstrong: Chapter 2,
“Marketing strategy and the marketing mix” pp.74-79; Chapter 8, “What is a
product?” & “Product and service decisions” pp.256-268; Chapter 10, “What is
price?” & “Major pricing strategies” pp.324-333; Chapter 16, “Advertising”
pp.474-490

Learning outcomes being examined:

• Outline key marketing decisions that managers need to make with regard to
deciding which products to develop and sell

• Explain some choices that managers have to make with regard to setting the
price of their products

• Discuss the channel and distribution elements of the marketing mix with a
particular focus on management decision making

• Describe the nature and role of branding in the sales and development of
products and services

• Outline key advertising decisions that managers are likely to have to make

Approaching the question:

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

• Definition of marketing, e.g., ‘Marketing is the management process that

identifies, anticipates and supplies customer requirements efficiently and
profitably’ (UK Chartered Institute of Marketing, 2003). NB: There is no need to
memorise a definition; as long as a student’s definition contained this type of
sense, that would be fine.

• This is a very broad question, so students could pick on a large number of issues
from the marketing blocks in the handbook. Below, three possibilities are
identified and used to show how an answer would most likely to be structured. o
Product(s): The most important decision an organisation makes is what products
to offer and in which markets to offer them. The decision will commit the
children’s clothing manufacturer to particular customers (e.g., what level of
disposable income they have; where they live; do they like clothes that are
unisex or very ‘gendered’, do they target the children or their parents). It will
therefore also commit them to the use of particular technologies to make the
clothes (sewing cotton trousers will require different factory equipment to
manufacturing waterproof coats or hairbands or socks), and to engagement with
specific competitors (will they compete with, e.g., H&M, or Gucci, or Petit
Bateau?)

In marketing, a product is defined not as a physical item but as the total

package of attributes the customer gets when she or he buys the product
(Kotler and Armstrong, 2004). It may embrace things such as packaging, after-
sales service and perhaps ongoing availability. Here are some illustrations, so
these will also be critical decisions for the marketing of a product.

• Price: Marketing emphasises the strategic ‘setting’ of prices and price

structures by firms and the need to get prices correct for given market
segments.

• As such, rather than just trying to find the price point where supply meets
demand, price can be used to reflect quality (are these clothes that will last?
Are they particularly stylish or high performance?), generate sales (are these
prices good enough to attract new people?) or aggressively push the competition
out of the market (are we priced much lower than our direct competitors so we
can get rid of them and then put our prices up?) When the manufacturer sets its
prices to sell to the shops, etc., it will want to consider:

• Cost – they’ll set the floor of the lowest that they can charge to be able to
remain afloat.
• Competition – if cost sets the floor, competition sets the ceiling. You will need
to be very careful that your prices tally with competitors and that you’re only
charging more if it can be justified for some reason, e.g., better quality or more
favourable customer perception.

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

• Consumer power – this will be greater if they do not find your goods
particularly desirable or they do not serve a need that they feel cannot be
matched elsewhere. So, if you sell basics and your brand doesn’t particularly
differentiate you, consumer power will be high and you will need to price
accordingly.

• NB: students wouldn’t need this level of detail as time probably wouldn’t
permit, but they might consider a subset of the 3Cs above.

• Place (channels and distribution) – a manufacturer will want to think about

how to get its products to market. In the past, the main route available would
likely have been to sell to a shop. However, the internet has made direct sales
much more possible as no physical store is required. It is important to choose
channels carefully and retain control over them, because without this, they may
experience ‘intrabrand competition’, where different shops are selling their
clothes for very different prices and this could lead to foregone revenue and
damage to the brand.
o How to advertise their product – the clothing manufacturer will be looking for
the equilibrium point between spending on advertising and return from it. In
different industries and for different products, this equilibrium will be very
different. IF the children’s clothing manufacturer are in fierce competition with
other similar brands, or are trying to establish their brand as particularly
desirable, they may need to spend more on advertising. If they are selling on to
shops, they may not need to do any direct advertising themselves, as their
products may be rebranded for the shop and thus advertised by the shop.

• Conclusion: on some aspect on the question, possibly that there is a wide

variety of decisions to be made when marketing, that aren’t just about
advertising, and that will be heavily influenced by the precise nature of the
business you are in.

A satisfactory answer would:

• Define marketing/marketing decisions

• Make use of the children’s clothing manufacturer example for the majority of
the answer, using this to provide examples and to shape which themes they chose
to discuss.

• Use marketing theory and language, e.g., not just talking about where to sell
but using the terminology ‘place’ and/or ‘channels to market’.

• Cover three key marketing decisions.

• Conclude on some aspect of the question.

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

An excellent answer would:

• Define marketing/marketing decisions.

• Make use of the children’s clothing manufacturer example throughout the

answer, using this to provide a clear context for the question and to shape the
themes chosen for discussion.

• Use marketing theory and language throughout the question with the answer
being organised around key themes from the marketing sections of the handbook.
Terms such as ‘place’ ‘price’ and ‘promotion’ used alongside, e.g., the 3Cs of
pricing and different channel options.

• Cover three key marketing decisions in a good amount of detail, making sure
that they do not overlap too heavily.

• Avoiding the answer degenerating into a marketing plan.

• Concluding on some aspect of the question

Potential pitfalls of this question and how candidates could avoid them:

• Laying out a marketing plan with all 4Ps, as opposed to responding to the
request for three decisions (which didn’t need to be 3 of the 4 Ps, they could
have been other things) that marketers have to make.

• Choosing issues that are too vague/specific (i.e., the colour of packaging would
be too specific; the need to do good marketing would be too vague). Students
need to have an eye on having enough to discuss on each point and for it to be
meaningfully linked to marketing theory, but not choosing issues that are so big
that they run out of time or additional issues to bring in.

• Not using enough theory – you are clearly asked to use theory and there’s lots
in the handbook/readings, so this shouldn’t be too hard to do.

• Not making use of the example. If you’re given a context – in this case, a
children’s clothes manufacturer – you need to make sure that you use it.

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

July 2020 Online Examinations Q6

Discuss key decisions that the marketing manager of a mid-market rucksack

company will have to make with regard to deciding on its market segment.
Assess how the choice of market segment will impact the price, product and
distribution channels used.

Reading for this question

Block 18 and its essential readings; to a lesser extent, Blocks 17 and 19 and their
essential readings.

Approaching the question

This question asked for an analysis of the key choices that the marketing
manager will need to make to decide on market segment for a mid-market
rucksack, followed by an assessment of how the choice of segment would impact
the price of the product; the product itself; and the distribution channels.

In this question, there was a lot to achieve in 600 words. Sub-headings were
especially useful in this question, with many candidates successfully using them
to demarcate different parts of their answers and show a clear structure. Sub-
headings can be especially helpful in a question with this many parts to signal to
the examiner that all parts of the question have been answered.

The answer needed to be closely linked to the mid-market rucksack context.

Plenty of candidates lost marks by ignoring the context or treating it as little
more than an aside. If we give a context for candidates to use in the question,
this needs to form a central part of their answer, as being able to apply the
theory to a practical scenario is what we are in part testing in such a question.

Weaker answers: These became lost almost instantly in the tight word count
and went into far too much detail at an early stage, not leaving themselves
enough space to answer the question in full. One problem we saw several times
was launching into a full consideration of all 4Ps despite this not being asked for.
However, this was a less common problem than in previous marketing questions in
prior years, and so we hope that the feedback given as to what makes for a good
answer (not laying out everything that is known) is starting to resonate.

Satisfactory answers: These went about tackling the requirements

systematically – often but not always in the order stated in the question. A
good place to start was with a very brief explanation of what a market segment
is, and then an application of the concept to the mid-market rucksack company

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

mentioned in the question. Most candidates talked about four types of market
segment (e.g. geographic; demographic). However, it was not strictly necessary to
be equally detailed in all elements of this, and some candidates quickly homed in
on characteristics that might be desirable in the selected segment/s. This left
them more space to talk about the latter part of the question.

Excellent answers: These often mentioned that a problem with the

product/price/distribution channel may need to lead to a rethink of the target
segment. There was a recognition in these answers as to just how interlinked the
factors are and also the impact that wider factors, such as market factors, can
have on decisions – e.g the COVID – 19 context throwing an established
distribution channel (high street shops) into problem territory. We were
heartened to see quite a few candidates in this question (and others)
demonstrated good, independent thinking around the COVID-19 context and
considering how it might affect their answers.

2021 Sample New Examination Format

Section A

(g) Give a brief explanation of what is meant by a brand in the context of

marketing.

Key answer components: A brand refers to a collection of ideas and images, often
including recognisable symbolic elements, such as fonts, images and colour
palettes. The visual elements can be used to achieve brand recognition. As a
brand becomes well-known, it can be associated with particular implicit values
and ideas and are sometimes even said to have a personality. Protecting,
developing and extracting value from brands are key marketing considerations.
High brand loyalty can help companies to justify a higher asking price for
products or services. Companies will want to be careful not to undermine the
value of a strong brand by, for example, selling it through channels that conflict
with brand values.
Notes from the examiners: This question is relatively open to a variety of
answers. We would expect to see a clear definition of what a brand is, and a
clear link to other areas of the marketing units to explain its status in the
context of marketing. This is one of the more open styles of questions that
students are likely to see in Section A. They should be careful to limit their
answers to 200 words or less and to remain on topic, remembering that erroneous
or extraneous information may reduce their marks. There is no need to use all
200 words if they have already made five good points and have only used 150
words, for example.

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

2021 - Nageb Preliminary Examination Questions

Section A

h. What is marketing? How does it differ to promotion?

Marketing is defined as a social and managerial process by which individuals and

groups obtain what they need and want through creating and exchanging
products and value with others (Kotler, 2004). Marketing is a key factor in
business success. The marketing function not only deals with the production and
distribution of products and services, but it also is concerned with the ethical
and social responsibility functions found in the domestic and global environment.
Modern marketing calls for more than just developing a good product, pricing it
attractively, and making it available to target customers. Companies must also
communicate with their customers and there should be controlled direction to
those communications. Promotion provides the primary communication function. As
one of the four major elements of the marketing mix, promotion uses advertising,
personal selling, sales promotion, public relations, and direct marketing to achieve
the company’s communication objectives.
Companies must now blend promotional elements into an integrated marketing
communications mix that carefully coordinates all the elements of the promotion.
(5 marks)
(165 words)
May 2021 Online Examination Zone A & Zone B

Section A

(f) Promotion is one of the four Ps of marketing. Explain what promotion

means in this context, using an example to support your answer.

Reading for this question

Elements on Promotion in Contemporary Marketing unit, and associated readings.

Approaching the question

Promotion is one of the four Ps of marketing. Explain what promotion means in

this context, using an example to support your answer.
Promotion in this context means:
• It refers to the promotion of your business to stakeholders, and in particular
potential customers. It includes advertising, public relations, and promotional
efforts.

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Core Management Concepts – Block 12 – Readings - Contemporary Marketing

• The intention is to promote a product in such a way that consumers realise why
they need it and why it is ‘worth’ the price that the company is charging.
• It can also raise barriers to entry for the industry by making it harder to gain
a foothold.

An example to support your answer:

• An example might be an advertising campaign by Coke to explain to a market
why they would want to buy Coke. They are promoting their product in a way
that makes customers want to buy it.
• The promotional purpose of this may be to remind consumers of Coke’s
existence, to stimulate sales, and to make it harder for others to compete in the
market.

On the whole, this question was answered reasonably well, with a useful example
to illustrate the answer. However, we did see a high level of repetition in
examples, and remind candidates to make use of their own examples, rather than
those that they have seen in core readings, the course materials, or via their
teaching institution.

2022 May Examinations Zone B

Section A Q6

What is ‘cost-plus’ pricing? When might it be relevant for marketing

managers to use this approach to pricing?

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