[marketing knowledge] cim revision cards marketing(bookfi.org)

CIM REVISION CARDS

Marketing PlanningKaren Beamish of Marketing Knowledge

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TABLE OF CONTENTS

Preface .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv1. Introduction to marketing planning .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. The marketing audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133. Marketing planning, implementation and control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234. Promotional operations .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365. Product operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496. Price operations .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637. Place operations .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 718. Managing marketing relationships .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849. International marketing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9410. Industrial, business-to-business FMCG and services marketing.. . . . . . . . . . 10411. Not-for-profit, SMEs and virtual marketing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

PREFACEWelcome to the CIM Revision Cards from Elsevier/Butterworth-Heinemann. We hope you will find these usefulwhen coming to revise for your CIM exam. The cards are designed to be used in conjunction with the CIMCoursebooks from Elsevier/Butterworth-Heinemann, and have been written specifically with revision in mind.They also serve as invaluable reviews of the complete modules, perfect for those studying via the assignmentroute

n Learning outcomes at the start of each chapter identify the main points

n Key topics are summarized, helping you commit the information to memory quickly and easily

n Examination and revision tips are provided to give extra guidance when preparing for the exam

n Key diagrams are featured to aid the learning process

n The compact size ensures the cards are easily transportable, so you can revise any time, anywhere

To get the most of your revision cards, try to look over them as frequently as you can when taking your CIMcourse. When read alongside the Coursebook they serve as the ideal companion to the main text. Good luck –we wish you every success with your CIM qualification!

INTRODUCTION TOMARKETING PLANNINGLEARN ING OUTCOMES

� Explaining the synergistic planning process –analysis planning, implementation and control

� Listing the components of the marketing plan� Assessing the potential impact of wider

macroenvironmental forces relating to the roleof culture, ethical approach, socialresponsibility, legal frameworks andsustainability

Syllabus Reference: 1.1–1.5

KEY REV IS ION PO INTS

� The importance of marketing to thedevelopment of corporate strategy

� Understanding corporate planning� What is marketing strategy and the basics of a

good marketing strategy?� The role and components of the marketing plan

and barriers to marketing planning

Unit 1

MARKETING PLANNING 1

INTRODUCTION TO MARKETING PLANNING 2

Understanding Corporate Planning

Planning is the establishment of objectives andthe formulation, evaluation and selection ofpolicies, strategies, tactics and actions requiredto achieve them

n Corporate planning starts at the top of theorganization and impinges upon every aspect andevery division or department of the organization

n Corporate strategy and plans are clearly linked toachieve the mission and vision of the organization

n Each business unit has responsibility for thedevelopment of its own function plans


Understanding Corporate Planning

n The marketing department is often responsible forthe provision and collation of information providedto support and underpin the corporate planningprocess

n In order to succeed in strategy development, it isessential that all departments work together in anintegrative and innovative way

n Business units that plan in isolation tend to do soto the detriment of others!

REMEMBER! -

It is important for the purpose of theexamination to demonstrate an overallknowledge of the planning hierarchy and therole of corporate planning. You should beable to demonstrate how the role andfunction of marketing underpins thesuccessful development of corporatestrategy and planning!


What is marketing strategy?

Marketing strategy – a strategy indicating thespecific target markets and the types ofcompetitive advantages that are to be developedand exploited (Dibb, Simkin, Pride and Ferrell,2001)

n Providing superior competitive advantagen Making long-term investments in

organizational relationshipsn Aim for 100% customer satisfaction – based

upon capability and motivated staff

n Management and staff commitment and alearning culture, open to change and innovation– with a focus on developing long-lasting andsustainable customer relationships

n Build effective supply chains and ITinfrastructure to deliver superior operatingperformance


The basics of a good marketing strategy

As a strategy marketing seeks to develop effectiveresponses to changing marketing environments, bydefining market segments, developing andpositioning product offerings for those targetmarkets – Webster, 1997 (from Hooley, Saundersand Piercy,1998)

n Strategy development requires synergy across thewhole organization

n In order for the strategy to be successfullyimplemented, it is important that there islong-term commitment to developing long-termcompetitive advantage

n A marketing strategy should focus upon theexploitation of opportunities

n Marketing strategy requires synergy andconsistency by all stakeholders involved in itsimplementation


The Marketing Planning Process


Barriers to marketing

n Culture – The existing culture may not beamenable to marketing plans – culture neithercustomer or marketing oriented

n Power and Politics – Organizations are subjectto internal politics, which often result in thestrategic planning process becoming a boardroombattle

n Analysis not Action – Organizations waste a lotof time on collecting information, developingrationales for action, but fail to act!

n Resources – After years of downsizing, andincreased efficiency drives, many organizationsfind themselves short of the necessary resourcesfor implementing plans

n Skills – Skills are closely linked with resources –one of the key components of marketing successis highly skilled and creative individuals. Marketingpersonnel are often the casualty of downsizing andnow organizations struggle to achieve marketingeffectiveness

Adapted from Drummond, Ensor and Ashford(2003)


Corporate Social Responsibility (CSR) and

Ethics

Corporate Social Responsibility relates to actionswhich are above and beyond that required by law(McWilliams and Siegel, 2001)

The accepted wisdom on the value of CSRis to:

• Meet responsibilities

• Put something back

• Manage impacts upon society

• Improves reputation

• Meet Government expectations

Raising the profile of CSR with stakeholdersincludes:

Consultations, newsletters, annual reports, open days,AGMs, press releases, events, word- of- mouth

Marketing ethics – moral principles that defineright and wrong behaviour in marketing:

n Ethics relates to moral evaluations of decisionsand actions as right or wrong on the basis ofcommonly accepted principles

n Marketing ethics are moral principles that defineright and wrong behaviour in marketing

n If society judges an activity or activities of anorganization as wrong, or unethical, it is based ona sense of justice of right and wrong and basedupon conviction

n Not all unethical activities are illegal


Ethical Decision Making – 3 individual

factors

n Moral philosophies – principles or rules thatindividuals use to decide on what is right orwrong

n Utilitarianism – a moral philosophy con-cerned with maximizing the greatest good forthe greatest number of people

n Ethical Formalization – a rule-orientedphilosophy that focuses on the intentionsassociated with particular behaviour and on therights of the individual

Implications of Marketing Ethics for the

Marketing Mix

Product

n Meeting safety standardsn Removing dangerous components

Price

n Consideration of what is given for a fair pricen Prevention of monopolistic power

Promotion

n Ensuring advertising standards are upheld


Hints and Tips

n Read through Unit 1 of the Marketing PlanningCoursebook – Beamish and Ashford – theserevision tips relate closely to it

n The Marketing Planning examination is not justabout knowledge, i.e. how much do you know –but about being able to apply a range of conceptsand theories in the context of an organization

n You need to show the examiner that you can ‘domarketing’ – not just know about it!

n Introduce different theories to underpin youranswers

n Use as many process models as possible to helpyou remember key concepts

n Challenge theories where you think they may notbe appropriate or where you think they could bedisproven

n Use examples to support your answers whereappropriate – e.g. Egg, easyJet, Starbucks. . .

n Answer the question asked!

n Break down the different components of thequestions to ensure that you address all of theissues

n Have a go at as many past exam questions aspossible

n Go to www.cimvirtualinstitute.com andwww.marketingonline.co.uk for additional supportand guidance


THE MARKETING AUDIT

LEARN ING OUTCOMES

� Explain the constituents of themacroenvironmental and microenvironmentalmarketing audit

� Assess the external marketing environment foran organization through PESTEL

� Assess the internal marketing environment foran organization through an internal audit

� Critically appraise the process and techniquesused for auditing the marketing environment

� Explain the role of marketing information andresearch in conducting and analyzing themarketing audit


� How to undertake a macroaudit� The imperatives of the microaudit and how to

analyze it� The role of SWOT� The importance of marketing information to the

marketing audit process


Unit 2


Environmental Scanning

Environmental scanning is the process of actuallycollecting the information in order that theorganization can understand relevant information inrelation to external forces and drivers within themarket place

Step 1 – Scanning the Environment

Continually scan the environment so that earlychanges can be identified and acted upon

Step 2 – Monitoring

When change has been identified, the pace of changemust be monitored, so implications of the change areunderstood, opportunities and threats identified

Step 3 – Forecasting

Forecasting change is difficult, but the informationobtained as a result or monitoring should be used tomeasure the intensity of change

Step 4 – Assessment

Assess the impact of political change on meetingcustomer requirements and examine whatopportunities change could present

THE MARKETING AUDIT 14

Assessing the Marketing Environment

Marketing intelligence – Looking at change,potential, competitors and associated marketingactivities

Technical intelligence – This is vital given therapid evolution in today’s technologies

Political/economic intelligence – Looking atpolitical and economic shifts within the externalenvironment.

Mergers/acquisitions intelligence – In the era ofever-larger mergers and acquisitions betweenbanks, IT organizations and communicationnetworks, it is essential to assess the broaderimpact

Supply chain intelligence – Ascertaining theposition of the supply chain in terms of supplies,raw materials, available resources, etc.


PESTEL – Marketing Audit Model

Key issues for political analysis include:

n Increases in taxation, reducing disposable income

n Employment law/Health and safety and environ-mental protection

n Foreign trade agreements and stability of politicalsystems

Economic

Key issues for economic analysis include:

n Inflation and interest rates

n Income levels and resources

n GDP/GNP

n Employment levels

n Exchange rates and spending patterns

Social

Key issues for social analysis include:

n Demography, society and culture

Technology

Key issues for technological change:

n Technological drivers

n Innovation

Environmental

n Key issues for environmental analysis include:

n World trends on waste, emissions, CSR

Legal

Key issues for legal analysis include:

n Monopolies and mergers

n Competitive activities, unfair trading

n Consumer legislation/trade descriptions


Analysis of the Microenvironment

The key components of microenvironmentanalysis include:

n Marketing sharen Marketing proceduresn Profit marginsn Sales / marketing controlsn Marketing mixn Number of employeesn Financial resourcesn Physical resourcesn Production – capacity and variety

The analysis is categorized as follows:

n Businessn Competitorsn Suppliersn Customersn Stakeholders


The internal audit

A full audit of a broad range of internal factors shouldbe considered – try and remember at least threefactors under each of the following headings:

1. Managerial factors including:

Corporate image

Speed or response to changing conditions

Flexibility of the organization

Ability to attract highly creative personnel

Aggressive in meeting the competition

2. Competitive factors including:

Product strengths

Market share

Customer loyalty and satisfaction

High barriers to market entry

3. Financial factors including:

Access to capacity when required

Liquidity

Degree of financial leverage

Ability to compete on price

Stability of costs

4. Technical factors including:

Technical and manufacturing skills

Value added to the product

Economies of scale

Level of coordination and integration

�

Remember to grade these points on the basisof 1–5 — 1 being weak and 5 being strong.This helps to prioritize competitive attack andcontinuous improvement


Porters Five Forces – Competitive Analysis


SWOT Analysis


The role of marketing information in the

planning process

It is important to identify the type of information that isrequired by the marketing environment in order tounderstand the challenges it presents to thesuccessful implementation of the marketing plan

The Marketing Environment

PEST Factors

The Competition

Market share, pricing vs. cost, quality

The Product

Analysis of users, industrial vs. consumercustomer response, switching behaviour

Marketing Mix

Channels of distribution, relative pricing, logisticsand networks, promotional mix

Firm-specific historical data

Sales trends, contribution margins, marketing mixused and customer/market responses


Hints and Tips

n The marketing environment is an inherent part ofthe marketing planning process and will always beassessed in the marketing planning examination,often as part of the Part A, the mini-case study,and also in part B

n Ensure that you are comfortable with the keymodels used in the marketing audit at this level,including: PESTEL, SWOT, Porters Five Forces

n The marketing environment is all about collectingand analyzing information, therefore ensure thatyou are familiar with the types of informationcollected and the purpose of the MKIS system andthe role it plays in the storage and support of themarketing environment

n Ensure you are able to apply these areas. It is notknowledge regurgitation, it is about being able toexplain, undertake an assessment of asituation and critically appraise variousaspects of the marketing environment inorder to make effective marketing decisions

n Have a go at as many past exam questions aspossible



MARKETING PLANNING,IMPLEMENTATIONAND CONTROLLEARN ING OUTCOMES

� Evaluate the relationship between corporateobjectives, business objectives and marketing

� Explain the concept of the planning gap and itsimpact upon operational decisions

� Determine segmentation, targeting and positioningwithin the plan

� Determine and evaluate marketing budgets for mixdecisions included in the marketing plan

� Describe methods for evaluating and controlling themarketing plan

� Explain the role of strategy development in relation todeveloping marketing share and growth


� The relationship between corporate objectives,business objectives and marketing

� The planning gap and strategy development� The role of strategy development in relation to

developing market share and growth� Approaches to segmentation, targeting and

positioning and approaches to budgeting for mixdecisions

� Developing, evaluating and controlling the marketingplan

Syllabus Reference: 2.10

Unit 3


Distinguishing between corporate, business and marketing objectives

Corporate objectives

Generally expressed in financial terms, forexample ‘to increase profitability by 25% byJune 2005’

Business objectives

Business objectives are generally function andoperation and need to be defined for the survivalof the organization. For example ‘To increasehighly skilled elements of workforce by 10% byDecember 2005’

Marketing objectives

Marketing objectives are about products andmarketing only! For example ‘To increase sales ofexisting products into new markets by December2005’

MARKETING PLANNING, IMPLEMENTATION AND CONTROL 24

Gap Analysis

A gap analysis is used to assist the organization with its strategy development process and in simple terms isdesigned to illustrate ‘where we are now’ and ‘where do we want to be in the future’


Formulation of Marketing Strategy

Strategy or tactics?

Strategic Marketing

n Long-term time frame, i.e. 5 years

n Broad focus

n Defining marketing and competitive positioningis a key task

n Information and problems are unstructured,external speculative

n Market growth is an example of a strategicmarketing activity

Tactical Marketing

n Short-term time frame

n Narrow focus

n Daily marketing activity is the key task

n Information and problems are structured, internaland repetitive

n Advertising is an example of a tactical marketingactivity


Ansoff Matrix


Stages in marketing segmentation

process

n Identify the possible segments within themarket – this will consist of individuals ororganizations with similar needs or preferences

n Gather information on those market segmentsidentified – to do this the segments need to beaccessible

n Evaluate the attractiveness of differentsegments — they need to be large enough to beviable

n Ascertain the competitive position within eachof the target segments

n Develop variations on product/servicespecifications to meet the needs of individualsegments

n Design the appropriate communications mixto meet the target market demands

REMEMBER! -

1. Customers must need and want the products/services

2. Customers must assert their buying power,i.e. money, resources, etc.

3. Customers must be willing to use their moneyand resources to buy products

4. They must have authority to buy differentproducts or services!


Targeting as a marketing activity

Options for deciding on target marketing include:

n Organizations should concentrate on making oneproduct for one market and having one marketingplan – i.e. mass marketing

n The organization could concentrate its effortson one market but have a number of differentversions of each product – differentiatedmarketing

n Concentrating efforts on a small and carefullychosen segment – focus market

Six components of target marketing

1. Customer needs – wants and expectations2. Product market – size and structure3. Brand strength and market share4. Company capability5. Competitive rivalry6. Economies of scale – production and marketing


Positioning as a Marketing Activity

Steps in establishing a positioning plan

n Identify all segments within the marketn Decide which segments are most suitablen Ensure the organization understands customer

requirementsn Develop product or service that specifically

meets the target audience needsn Identify benefits, usage, user category,

competitive positioning

n Evaluate how the product or service ispositioned in the eyes of the target group

n Identify an image that matches therequirements of the customer

n Promote the product to the target audience,establish relationships and aim for customerloyalty

Remember positioning alternatives

n Distinctiven Fill the gapsn Repositioning


Developing the Marketing Plan

Key headings of the marketing plan:

n Executive Summary

Key issues, current position, potentialoverview of the outcome

n Corporate Strategy

Corporate mission/vision and corporategoals and objectives

n Macro/micro Analysis

Market assessment, market trends,competitor analysis and SWOT

n Marketing Objectives

Financial objectives

Marketing objectives

n Marketing Strategy

Segmentation, targeting and positioning

Marketing strategy, marketing programme

Marketing mix

n Implementation

Key tasks, resources, budgets, contingencyplans

n Monitoring and Control

Basis of the plan and assumptions made,key critical success factors, benchmarking/forecasts/costs/revenue


Key Ingredients for Successful Implementation of the Plan


Marketing Budgets

n Bottom-up budgeting – is where the budgetingprocess is fed and developed within theorganization and where the activities happen

n Negotiated budgeting – is where the process ofbudget allocation is by negotiation

n Objectives and task approach – is where thebudget is allocated specifically on the necessity toachieve output, i.e. achievable objectives

n Incremental budgeting – is where the budget isbased upon an incremental rise on budgetaryexpenditure per year, in line with predicted growthin the forthcoming year

n Percentage of sales method – is where thebudget is allocated based on a percentage of salesfrom the previous year

n Competitive parity – is where the budget is set,based on spending the same percentage ascompetitors within the same industry

n Judgemental methods – this is where budgetsare developed, based upon the judgement ofmanagers most directly involved in the future ofthe business

REMEMBER -

You must be able to describe a budgetaryprocess and evaluate it in context of a givenscenario!


The Control Process

Monitoring and control contains four key activities:

1. Development or adjustment of marketingobjectives in line with internal and external driversaffecting performance

2. Setting of performance standards, i.e. keymeasures such as quality, production, sales

3. Evaluating performance, i.e. identifyingperformance indicators and measures andanalyzing findings

4. Corrective action, i.e. revised forecasts or salestargets, increasing advertising, etc.

Methods for controlling the marketing plan:

1. Measuring income/expenditure budgets– performance

2. Performance appraisal evaluation – i.e. staff3. Variance analysis4. Budgetary control5. Benchmarking6. Marketing mix effectiveness7. Competitor performance


Hints and Tips

n Ensure you are clear on the differences betweencorporate, business and marketing objectives andstrategies

n You may be required to develop an outlinemarketing plan stating marketing objectives, out-line strategy statements and a detailed tacticalmarketing mix

n Remember marketing objectives must be SMART –this is essential

n You are expected to understand the importance ofsegmentation and the different segmentationoptions available to you, including linking them totargeting and positioning

n Part A of the exam paper, which is the mini-casestudy, tested different aspects of the marketingplanning process

n The senior examiner for the subject hassuggested that this will be an ongoing themethroughout all exam papers, therefore ensure youare comfortable with it

n When undertaking a tactical marketing plan,ensure you include the 7 Ps of the marketing mix,not just the 4 Ps

n Do not just describe budgeting, but be preparedto select an appropriate budgetary process fora given scenario. Be able to evaluate effectively



PROMOTIONAL OPERATIONS

LEARN ING OUTCOMES

� Explain how strategy formulation anddecisions, relating to the selection of markets,impact at an operational level on the planningand implementation of the co-ordinatedmarketing mix

� Explain the role of branding and its impact onthe marketing mix decisions

� Describe methods for maintaining andmanaging the brand

� Explain how the marketing communicationsmix is co-ordinated within the marketing plan

Syllabus Reference: 3.2–3.4, 3.10


� The Marketing Mix in the context of marketingplanning

� Push, pull and profile strategies� Aims and objectives of the promotional

communications process� Branding and brand strategies� The Promotional Mix

Unit 4

Push, Pull and Profiling Strategies

Push Strategy – this is where the manufacturertakes the decision to concentrate theircommunication efforts on members of thedistribution channel. The basis of this strategy isto promote directly to the suppliers, thereforepushing the products down the line to reach thecustomers throughout various channel members

Pull Strategy – this strategy operates in contrastto the push strategy and requires themanufacturer to create a demand for the productthrough direct communication with the customers.The aim is to create the demand and to directpromotions to the supply chain and pull theproduct upwards through the channels, throughcustomer demand

Profile Strategy – Profiling is the task of buildingup a fuller picture of the target segments and isachieved by taking a group of what is commonlyknown as descriptors, based around traditionalsegmentation criteria. The idea is that while thecustomer base might have matchingdemographics, their socioeconomic needs mightdiffer and result in differing customer needs


Branding

,

PROMOTIONAL OPERATIONS 38

Brand Values

A value is an enduring belief that a specific modelof conduct or end-state of existence is personallyor socially preferable to an opposite or conversemode of conduct or end-state existence

n Values are important from both the internal andexternal perspective and can be a source of‘added value’

n Values are what makes an organization differentand they align their values akin to customers corevalues

n Customers like brands that hold values compatibleto their own

n Values are formed as a result of a range ofinfluences in the lives of individuals and theorganizations

Core and Peripheral Values

Core Values

Values which the organization uphold regardlessof external pressures, e.g. quality, trust, honesty.Core values reflect the behaviour and ethos of theorganization

Peripheral Values

These are values that might be related to anactivity or service level that the organizationchanges in line with market drivers and focus


Brand Strategies

z


Creating a success brand

n Brand management is based around building aneffective brand that will ultimately support thecorporate goals and marketing objective

n To ensure that the brand is successful, there mustbe synergy between the branding strategy and themarketing and promotional mix

n The focus of any marketer’s role is based uponcreating an awareness of the brands and itsassociated values to the customer, monitoringconsumer reactions and meeting their needs

To create a successful brand a companymust:

n Make quality a priorityn Offer superior servicen Get there firstn Differentiate its brandn Develop a unique positioning conceptn Support the brandn Deliver consistency

Source: Dibb, Simkin, Pride and Ferrell, 2001


The Promotional Mix

Advertising – a paid form of non-formalcommunication that is transmitted through massmedia such as television, radio, newspapers,magazines, direct mail, public transport vehicles,outdoor displays and Internet

Advertising objectives

n Promoting products, organizations and services

n Stimulating demand for products

n Increasing sales growth

n Educating the market

n Increasing product/service usage

n Reminding/reinforcing

n Reducing demand fluctuations

Advertising and the marketing mix

As a marketing communications planner you will beinvolved in the following:

n Liaising with channel members

n Have an awareness of channel needs and theassociated communications support

n Provide consistency for all communications andensure that all members are empowered by themessage


Sales Promotions

Sales Promotions – A range of tacticalmarketing techniques, designed within a strategicmarketing framework, to add value to a productor service in order to achieve specific sales andmarketing objectives

Aims and objectives of sales promotions

n To increase brand and product awareness

n To increase trial and adoption of products

n To attract customers to certain brands

n To level our fluctuations in supply and demand

n To disseminate information

n To encourage trading up to next size

Sales promotions and the marketing mix

Responsibility for sales promotions will include:

n Selecting appropriate promotional techniques

n Trade promotions, retailer to consumerpromotions, manufacturer to consumer promotions

n Development of customer loyalty schemes


Public Relations

Public relations – is a planned and sustainedeffort to establish and maintain goodwill andmutual understanding between an organizationand its target public

Aims and objectives of public relations

n To create and maintain the corporate and brandimage and enhance the position and standing ofthe organization in the eyes of the public

n To communicate the organization’s ethos andphilosophy, and corporate values

n To undertake damage limitation to overcomepoor PR

n To raise the company profile and forge strongerrelationships

Responsibility for PR includes:

n Changing negative into positive, hostility intosympathy, prejudice into acceptance, apathy intointerest, ignorance into knowledge

n Defining techniques, such as press releases, pressconferences, publications, media relations, etc.

n Undertaking internal PR activities

n Selecting appropriate PR techniques based uponsuitability, feasibility and acceptability


Direct and Interactive Marketing

Directive and Interactive Marketing – Aninteractive system of marketing which uses oneor more advertising media to effect ameasureable response at any location

Aims and objectives of direct marketing

n To increase direct mail order levels from new andexisting customers

n To increase provision of information to aidinformation and adoption

n To increase the number of sales leads generated

n To increase the number of trial leads

Responsibilities of direct marketing

n To ensure an appropriate database that is effectivein reaching targets

n To define the appropriate techniques, e.g. directmail, Internet, e-mail marketing, tele-marketing,direct response advertising

n To be aware of Data Protection legislation and howit affects the activities of direct marketing


Sponsorship

Sponsorship – is the provision of financial ormaterial support by a company for someindependent activity. . . not usually directly linkedto the company’s normal business, but supportfrom which the sponsoring company would hopeto benefit

Sponsorship objectives

n To increase brand awareness

n To build and enhance corporate image

n To raise awareness of brands related to productsrestricted in advertising through variouslegislation, such as alcohol and cigarettes

n To select an appropriate form of sponsorship, i.e.programme sponsorship, arts/sports sponsorship,event sponsorship, individual or team sponsorship

n To ensure that appropriate sponsorshiparrangements are in place and the match betweenthe organization and the potential sponsoringorganization is right

n To develop the right mix, i.e. ensuring high-level ofspins offs in promotions, optimizing costeffectiveness, advertising, merchandising andpromotional incentives


Personal Selling

Personal Selling – An interpersonalcommunication tool which involves face-to-faceactivities undertaken by individuals, oftenrepresenting an organization, in order to inform,persuade or remind an individual or group to takeappropriate action, as required by the sponsor’srepresentative

Objectives of personal selling

n To increase sales turnover

n To reduce the number of clients with minimumviable orders

n To reduce the costs of sales

n To increase the number of distribution outlets

Responsibilities of the marketer in

supporting the sales team:

n Provision of market information and competitorintelligence

n Provision of potential leads

n Client history/database information

n Financial reports – Dunn and Bradstreet

n Provision of appropriate promotional materials

n Provision of sales aids, promotional plans andincentives


Hints and Tips

n Ensure that you can link the organizationperspective of the marketing mix with thecustomer perspective.

n Push, pull and profiling strategies arecommonplace and you should be prepared toinclude them in potential strategy developmentareas.

n Branding is a hot topic in marketing planning andit is critical that you ensure that you understandthe breadth of the subject, issues relating tobranding building, brand management, brandstrategies and the successful development of thebrand.

n As for the promotional mix, be familiar with eachaspect of the mix, its definition, the objectives the

mix can achieve, and understand the areas ofresponsibility that an operational manager shouldbe involved in planning and implementing for.

n Be aware of the need to coordinate thepromotional mix and ensure that you develop aneffective and creative message that will maximizethe potential impact of a fully coordinated mix.

n Ensure you are able to apply these areas, it is notknowledge regurgitation.

n Have a go at as many past exam questions. aspossible.

n Go to www.cimvirtualinstitute.com andwww.marketingonline.co.uk for additional supportand guidance.


PRODUCT OPERATIONS

LEARN ING OUTCOMES

� Explain how a product or service portfolio isdeveloped to achieve marketing objectives

� Explain the new product development process(including innovative, replacement, re-launchand imitative products) and the role ofinnovation

Syllabus Reference: 3.5, 3.6


� Understanding the different facets of theproduct and the various product classifications

� Creating a product range within a product lifecycle

� Managing the product life cycle� Using product portfolio planning tools� New product development options and process� The product adoption process

Unit 5


Product Classifications

The product has three classifications:

n Durable – products that are durable last for aperiod of time, e.g. car stereo systems, washingmachines

n Non-durable – products that can be consumed orused only once – i.e. food, paper, drinks, etc.

n Service products – services are intangible –there is nothing physical at the end of the serviceexperience, i.e. holidays, hairdressing, personalbanking/financial services.

Sub-classifications of Product

Classifications

n Convenience productsn Shopping goodsn Speciality goodsn Unsought goodsn Business productsn Process productsn Plant and equipmentn Supplies and services

PRODUCT OPERATIONS 50

Creating a Product Range

Components of the product range include the productmix and the product line

n The product mix is the total portfolio of productthat a company has to offer

n The product line is a group of closely relatedproducts

n Organizations must ensure that they establish thebreadth and depth of the product mix

n Organizations should ensure that products arecompatible with one another and that they meetthe needs of increasingly powerful customers

n The strategic planning process should enableorganizations to reflect on their existing productranges to ensure that the products fit with oneanother

n The product or service is at the very heart of theorganization’s existence, and a structured andanalytical approach must be taken whendeveloping a product range. This must includeanalysis of market forces, key drivers, factorsinfluencing change and an in-depth understandingof customers


The Product Life Cycle


Managing the Product Life Cycle

Marketing strategy for growth

n Introducing new and innovative products

n Undertaking high levels of advertising and salespromotions activity – offering incentives to switchbrands

n Targeting customers should be tightly defined

n Marketing mix should be well coordinated andeffective

Marketing strategy for maturity

n Modification of the product/services – quality,functional and style modifications

n Strategies for differentiation

n Aim for market development and marketpenetration to maximize profit potential

Marketing strategy for decline

n Consider the introduction of more innovative andup-to-date versions for the same product

n Replacement strategies should be defined

n Carefully manage the decline of the product

n Consider which approach is more appropriate –repositioning or obsolescence

n Consider the three approaches to obsolescence –phase it out, run it out, drop it


Product Portfolio Planning Tools


The General Electrical Matrix (GE Matrix)


The Shell Directional Policy Matrix


New Product Development


Different Types of New Product

Development

New World/Innovation

The focus of this model is upon technicaldevelopment, incurring high/risk return. Canrevolutionize or create markets

New product lines or additions

Such products can be (i) new to the provider or(ii) be additions to the product range

Product revisions/replacements

Replacements and upgrades of existing products.Change can be aimed at cost reductions

Reposition

Aim to diversify away from existing markets byuncovering new applications, uses or markets forcurrent products

Imitative products

Copycat products produced by others, but where thereis a market for many alternative and competingversions


The Product Adoption Process – the Consumer Decision-making Unit

The Initiator

The person who identifies the problem and theneed to buy

The Influencer

This is the person who is likely to influence theinitiator

The Decider

The person who makes the final purchasedecision – what to buy, where to buy, how muchto pay

The Buyer

The person who makes the purchase, theindividual who gets involved in the exchangeprocess


Commonly Used Adoption Models


Innovation and Diffusion Process


Hints and Tips

n Product operations is an area that is subject tocontinual questioning in the examinations and it isimportant to be familiar with it and to be able toapply it

n Ensure that you can talk competently about theimportance of product portfolio models whenassessing the current status of products within themarketing

n It is important to show that you understand theimportance of managing growth at each stage ofthe product life cycle and the methods and optionsfor doing so

n New product development and the options forachieving such development, have already beenthe subject of the first marketing planning exampaper and it is seen to be a new and importantarea

n Always aim to link other aspects of themarketing mix to the product life cycle and showhow each element of the marketing mix appliesand contributes to the successful implementationof product/service operations



PRICE OPERATIONS

LEARN ING OUTCOMES

� Explain pricing frameworks available to, andused by, organizations for decision-making

� Describe how pricing is developed as anintegrated part of the marketing mix


� Price perception of the customer and theorganization

� Influences on price� Corelating price with value� Determining price� Pricing objectives and strategies

Syllabus Reference: 3.6, 3.7

Unit 6


Internal and External Influences on Price

PRICE OPERATIONS 64

Strategic Pricing Determinants


Pricing Objectives

Pricing objectives include:

n To achieve return on investment – ensuringsufficient sales revenue to cover all associatedcost bases and pay back initial investment

n To maximize profits – setting prices forprofitability, i.e. low market share may mean highprice to maximize profit potential

n To maximize sales revenue – increase salesturnover – selling volume leading to increasedprofitability

n To achieve product quality leadership –Providing the best quality product in the market inorder to create differentiation against competitors

n To survive in the market place – settingobjectives that ensure survival in a highlycompetitive market is central to organizationalsuccess. However, organizations tend to aimhigher than survival. The aim is to work on abreak-even basis in order to stay in business

PRICE OPERATIONS 66

Strategic Pricing

Price Skimming

Charging high prices to gain early return oninvestment

Price skimming features include:

n Relatively high price per unitn Good strategy to apply to new products to

recoup costsn Easy to segment the marketn Profits can be made on a per unit basis

Price Penetration

Charging a low price to ensure marketpenetration

Price penetration features include:

n Offers a low price per unitn Is used when a large volume of market share is

involvedn Profit is made through volume of salesn Low price is aided by high promotions


Tactical Pricing

Characteristics of tactical pricing strategies include:

1. Marginal pricing

Offering a special price

Ensuring profit is still made

2. Quantity discounting

Economies of scale

Money is received quickly

Removing chances for the competition to penetratethe market, by offering bulk buys

3. Differential pricing

High fixed costs

The relevant application of season’s timings

Benefit both the producer and consumer

4. Cost-plus pricing

Covering the cost of overheads, plus percentageon top, to meet marketing/profit objectives

Often used for projects which are difficult to costout or take a long time to complete

PRICE OPERATIONS 68

Establishing a Price


Hints and Tips

n The price element of the marketing mix shouldfind marketing aiming to blend price, quality andperceived value

n Price is the only element of the mix that createsincome for the organization

n Demonstrate your understanding and show thatcustomers are fickle; they have considerablechoice and therefore have a significant influenceon supply and demand

n Prices will vary according to what people will payand also what they are prepared to pay

n Therefore pricing needs to be used with someflexibility to meet those requirements. You shouldbe able to show how you might achieve this levelof flexibility

n The critical success factors in relation to price areto maintain the organization’s objectives, whilst atthe same time remaining sensitive to customerneeds

n The key to price is to link the product quality witha clear indication of value for money. Pitchingthe price at the right level may be the differencebetween success and failure


PRICE OPERATIONS 70

PLACE OPERATIONS

LEARN ING OUTCOMES

� Determine the channels of distribution andlogistics to be used by an organization anddevelop a plan for channel support



� Influences on distribution� The role and benefits of intermediaries� The distribution channel and the customer� Selecting channels of distribution and

intermediaries� Vertical and horizontal channel integration,

and PDM� Push and pull strategies for distribution

channels� Evaluating channel effectiveness

Unit 7


Key Influences on Distribution

There is a wealth of influences, both internal andexternal, in relation to distribution or ‘place’ as a toolof the marketing mix. The list is extensive. Try toselect a number of influences that you may beconfident and comfortable in discussing

n Fuel prices

n Environmental legislation

n Taxation

n Transportation

n National/global transportation infrastructure

n Packaging

n Product life cycle

n Nature and characteristics of the product

n Changing life styles

n The emergence of ICT

n Customer wants and expectations

n Level of complexity in buying behaviour

n Competitive strategies

n Production targets

n Marketing mix components

n Customer services

n Technical support

PLACE OPERATIONS 72

Intermediaries and the Channel of Distribution

Why use intermediaries?


The Role of the Intermediary

Source – Adapted from Dibb, Simkin, Pride and Ferrel (2001)

PLACE OPERATIONS 74

Distribution Channels


Selecting the Channels of Distribution

Below is a list of key questions that marketers shouldask when aiming to select the most appropriatedistribution channels:

n What are the product characteristics and how dothey affect methods of distribution?

n Who are the customers and where are they?

n What are the customer requirements in relationto access and delivery of their products andservices?

n How, where and when do they want to buy theirproducts?

n What are their competitors doing by way ofdistribution?

n What is the cost of distribution?

n What are the legal and regulatory constraints ondistribution?

PLACE OPERATIONS 76

Intermediary Selection Criteria

Operational Criteria

Knowledge of local markets

Appropriate premises and equipments

Technological systems and processes

Customer convenience

Product knowledge and expertise

Payment facilities

Sales force structure, size and effectiveness

Efficient customer service infrastructure

Strategic Criteria

Plans for growth and expansion

Resource capacity and future development

Quality assurance processes

Management ability

Innovative

Willing partnership

Levels of loyalty and co-operation


Channel Strategies

Intensive Distribution

Maximum number of outlets

Target outlets in as many geographical regions aspossible

Consumer convenience products

High-purchase frequency

Impulsive purchase

Low price

Selective Distribution

Medium level of customers

Less intensive distribution outlet

Shopping-based products

Medium number of shoppers

Purchase is occasional

Purchase is more likely to be planned

Medium price

Exclusive Distribution

Relatively few customers

Limited retail outlets

Closer retailer/customer relationships

Speciality products

Infrequent purchase

High involvement and planned purchase

High price

PLACE OPERATIONS 78

Vertical, Horizontal and Physical

Distribution

Vertical Distribution

A distribution system where two or more channelmembers are connected by ownership or legalobligation

Or

A marketing channel in which a single channelmember will coordinate or manage channelactivities to achieve efficient, low-cost distribution,aimed at satisfying target market customers

Horizontal Distribution

The combination of institutions at the same levelof channel operation under one management

Physical Distribution Management (PDM)

This is the term used to describe the management ofevery part of the distribution process. This can becontracted out to a specialist or can be developed asa specialist function within the organization.

Things to consider:

n Costs involved

n Methods of transport

n Routes used

n Stock and storage

n Protection and delivery of stock

n Timing – a key element


Push and Pull Strategies in Distribution

Push Strategies

Key factors influencing push strategies mightinclude:

n Levels of economic and financial stability

n Need for economies of scale

n Nature of saturated markets

n Consumer credit restrictions

n Political instability

n Intense competition

n High operating costs

n Indications of low market growth

Pull Strategies

Key factors influencing pull strategies mightinclude:

n Levels of economic and financial stability

n Innovative culture

n Underdeveloped retail infrastructure for products

n High investment potential

n High levels of market growth

n Social stability

n Political stability

PLACE OPERATIONS 80

The Internet and Distribution

The benefits of the Internet at a strategic

level

Improves corporate image

Improves customer service

Increases visibility

Creates market growth opportunities

Lower overall business costs

Move towards online transactions

The benefits of the Internet at an operational

level

Speed of transaction improved

Management information improved

Increased service levels

Removal of time constraints

Removal of distance

Ability to complete transactions electronically

Access to full competitive arena

New revenue opportunities

Cost effectiveness


Evaluating Channel Effectiveness

Key performance and evaluation measures include:

n Regular reviews

n A forum for problem review and solution

n Monthly, quarterly and yearly sales data analysis

n Average stock levels

n Lead and delivery times

n Zero defects

n Customer service complaints

n Marketing support

n Annual performance audits

From an Internet perspective typical evaluationmethods include:

n Number of leads

n Increased sales

n Customer retention

n Increased market share

n Brand enhancement and loyalty

n Customer service

PLACE OPERATIONS 82

Hints and Tips

n There is an increasing emphasis on distribution.Ensure that the key concepts of intermediaries,channels, and channel selection criteria are clearin your mind

n Ensure that you are confident with the broadercomplexities of distribution, the challenges, costs,logistical arrangements and how they must bemanaged to meet different channel stakeholders

n Be confident in your ability to discuss newemerging alternatives to distribution, in particularvarious e-technologies that support and underpinthe distribution process

n Be prepared to make a decision on channeloptions, based upon clear justifications of choice

n There is increasing evidence of mergers andacquisitions closely related to distributioneconomies

n Channel management and channel selection is akey marketing activity and it is important to ensurethat you can find new and innovative ways ofmeeting customer needs and wants



MANAGING MARKETINGRELATIONSHIPSLEARN ING OUTCOMES

� Explain the importance of customerrelationships to the organization and howthey can be developed and supported by themarketing mix



� Transactional to relationship marketing� The scope of marketing relationships� Customer loyalty – The loyalty ladder� The basis of marketing relationships� Principles and profitability of customer

relationships� The marketing mix for customer retention

management� Managing internal marketing relationships� The relationship marketing plan

Unit 8

From Transactional to Relationship Marketing


The Scope of Marketing Relationships

MANAGING MARKETING RELATIONSHIPS 86

Customer Loyalty


The Basis of Marketing Relationships


Customer Retention

Basic principles of customer retention

includes:

n Providing technical support and technicalexpertise – this can be a USP and add value tothe proposition

n Provision or resource support – ensuring thata range of versatile resources are available tosupport the relationship. Cost efficiency andeffectiveness will be paramount

n Provision of service levels – these are importantin terms of highlighting time, delivery and product/service quality

n Reduction in risk – Giving as much insight intothe product as possible plus adding productguarantees

Six reasons why long-term customers are

profitable

n They place frequent and consistent orders andtherefore cost less to serve

n Long-established customers tend to buy more

n Satisfied customers make it difficult for thecompetition to enter a market or increase theirmarket share

n Satisfied customers may pay a premium price

n Satisfied customers often refer new customersat no extra cost

n The cost of acquiring new customers can besubstantial. A higher retention rates impliesfewer customers need to be acquired


The Marketing Mix for Customer Retention Management

Product Extras

Product and service augmentation and innovation

Customizing the offer – relationship building

Cross-selling other products in the portfolio

Relationship Pricing

Price incentive for increased customer spending

Price sensitivity – it is a relationship issue

Perceived value – the value proposition versusthe price

Specialized Distribution

Priority customer handling

Product previews

Exclusive or selective distributors

Multiple accessing options – i.e. Internet, outlets,direct marketing

Reinforcing Promotions

Sales-force responsiveness

Loyalty schemes – reward cards, membershipbenefits

Tailored/targeted direct marketing

Key account management selling


Internal Relationship Marketing Techniques


The Relationship Marketing Plan


Hints and Tips

n Relationship marketing is central to the marketingplanning process and is continually increasing inemphasis

n Always expect a relationship marketing questionand be prepared to answer it across a range ofsectors. In December 2003, the question wason relationship marketing related to not-for-profitorganizations

n Be prepared to develop a marketing mix that isrelationship focused as opposed to transactionalfocused – look at ways of using the mix forcustomer retention

n Understand the importance of customer retentionand the basis on which relationships areestablished, i.e. trust, co-operation andcommitment

n Be prepared to integrate the concept ofrelationship marketing into questions whererelevant, for example questions on services,pricing, distribution and intermediary management



INTERNATIONAL MARKETING

LEARN ING OUTCOMES

� Explain how marketing plans and activities varyin organizations that operate in an internationalcontext and develop an appropriate marketingmix



� Reasons for international marketing� Levels of international marketing� Domestic vs. international marketing� The international marketing environment� Understanding the external market place� Understanding consumer buyer behaviour

on an international basis� Developing an international MIS system� Market entry strategies and barriers to

international market entry� Consideration for the international marketing

mix

Unit 9

Reasons for International Marketing


Levels of International Marketing

Domestic/regional marketing – involves thecompany manipulating a series of controllablevariables, such as price, advertising, distributionand the product in a largely uncontrollableenvironment

International marketing – involves operatingacross a number of foreign country markets, whichvary from one another, including economic andinfrastructure variables

Global marketing – involves the company inagreeing synergy in the overall internationaloperations, taking advantage of areas such asexchange rates, labour rates, skills levels andmarket opportunities

Export marketing – is where the organization tradesin goods and services across all boundaries

Direct exporting – is where an organization servesdirectly to a host country. This means they will investmore resource, time and effort in establishinginternational links

Indirect exporting – is where an organization withlimited resources trades internationally through themost simple and low-cost method available

INTERNATIONAL MARKETING 96

Key Factors in Understanding the External Market

Key Economic Indicators

n Population size and growthn Population density and concentrationn Population age and distributionn Disposable income and income distributionn Economic activity – where is the concentration

of economic/financial generation?

Other Key Indicators include:

n Natural resourcesn Topographyn Climaten Energy and communicationn Urbanizationn Differential inflation levels


Understanding Consumer and Business

Buying Behaviour in International

Markets

The key principles of buyer behaviour is to understandthe following:

n The structure and composition of the DMU(decision-making unit)

n Level of organizational influence uponpurchasing

n The role of technology

n The business/industrial buyer process

n The personal characteristics of the buyer

Understanding Market and Buyer

Potential

Before a market entry strategy can be considered, it isimportant to link behaviour to the following awarenessof market potential:

n Market size

n Level of competition

n Resource

n Customer demands and the ability to purchase

n Accessibility

n Barriers to entry


Developing an International MIS System

International marketing decisions must be based on the sound collection and use of the followingtype of information:

Country – general country information

Choices – analysis of supply, competitorcharacteristics, import analysis, competitivestrengths and weaknesses

Concentration – structure of the market segmentsand geographic spread

Culture/consumer behaviour – characteristics of thecountry, diversity of cultural group, nature ofdecision-making and major influence on buyingbehaviour

Consumption – demand and end-use analysis ofeconomic sector

Capacity of pay – pricing, trends in pricing, cultureof pricing, conditions of payments, insurance terms

Currency – stability, restrictions and exchangecontrols

Channels – purchasing behaviour, capabilities ofintermediaries, coverage of distribution costs,physical distribution infrastructure

Commitment – access to market, trade incentivesand barriers, custom tariffs, government regulationsand market entry legislation

Communications – promotion, media infrastructureand availability, common selling practices, mediainformation

Contractual obligations – business practices,insurance and legal obligations

Caveats – factors to be aware of


Market Entry Strategies

Licensing – is based around a contract enablinga second party to licence products and services

Agents – overseas sales personnel, who operateon behalf of the organization

Franchising – think of McDonalds, KFC and theBody Shop

Company acquisition – gaining market entrythrough acquiring an overseas company

Wholly owned subsidiary – setting up afully-fledged international operation

Joint venture – an investment in an internationalcompany that provides access to an internationalmarketing organization. Shared costs and risk

Barriers to International Market Entry

n Too much red tapen Trade barriersn Transportation difficultiesn Lack of trained personneln Lack of export incentivesn Lack of coordinated assistancen Unfavorable conditions overseasn Slow payment by buyersn Lack of competitive productsn Payment defaultsn Language barriers


The International Marketing Mix

Product

Manufacturing requirements

Market research

Ability to produce the product

Customer needs and fit with the product portfolio

Technical/after-sales support

Technology

Standardization vs. adaptation

Price

Economic variables, currency exchange rates,international and local legislation.

Varying taxes, tariffs

Price sensitivity and cultural diversity

Place

Set-up costs of channel members

Level of investment required

Level of incentive required

Synergy with local/domestic channels

Management and control of the overall process

Promotional mix

Language, image, relationships

Corporate identity, company image

Methods of advertising/tolerance of advertising

Media, ethics, literacy, accessibility

Agencies


Standardization

A company wishing to globalize its business needsto consider standardization of the following:

n Market access

n Industry standards

n Technology

n Products/services

n Promotion

n Distribution

n Customer requirements

n Competition

n Communication

Adaptation

A company adapting products/services to marketneeds will consider the following options:

n Modifying the marketing mix to meetdifferent customer needs

n Adapting products to meet local needs andconditions

n Adapt promotional strategies for each of theirstrategic business units, (SBUs) or products/strategies

n Avoiding conflict in promotional protocol

n Being aware of price sensitivities, economicinstabilities, global pricing

n Avoiding prohibitive and costly distributionpractices whilst creating maximum access


Hints and Tips

n Whilst international marketing is a subject in itsown right, it may not always be separated for thepurpose of exam questions. For example, you maybe asked to answer a marketing planning questionin the context of an international business

n Try and select two countries that you have a goodgeneral knowledge of to use as examples ininternational marketing examinations

n Be prepared to adapt the marketing mix tointernational markets or discuss differencesin culture and practices

n Standardization vs. adaptation is a hot topic andmay well be subject to questioning

n Ensure that you can demonstrate anunderstanding of the importance of accurateinternational marketing information to supportmarketing decisions about international growthand expansion

n Be familiar with the 12 Cs – they are useful toolsin demonstrating a broad understanding ofinternational markets and information needs



INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG ANDSERVICES MARKETINGLEARN ING OUTCOMES

� Develop a marketing plan and select an appropriatemix for an organization operating in any such contextas business-to-business

� Describe how a plan is developed for the humanelement of the service encounter

� Explain how the physical evidence element of theintegrated marketing mix is developed

� Explain how a plan covering the process or systemsof delivery for a service is developed

� Determine an effective extended marketing mix inrelation to the design and delivery of serviceencounters (SERVQUAL)


� The different characteristics of B2B vs. B2Cmarketing

� Organizational segmentation, DMU and relationshipmarketing

� The organizational marketing mix� A marketing strategy for FMCGs� The marketing of services� People, place and process as elements of the

services marketing mix� SERVQUAL

Syllabus Reference: 3.12, 3.13, 3.14, 4.2, 4.4

Unit 10

The Implications of Organizational

Markets

Organizational marketing can be notoriouslychallenging for the following reasons:

1. Geographically diverse

2. Size of DMU

3. The issue of ‘preferred supplier status’

4. Size of purchase

5. Frequency of purchase

6. Negotation of contacts

7. Lead-time between order and delivery

Characteristics of Business/Industrial

Buying Behaviour

The following factors will distinguish organizationaldecision-making units in comparison to consumers.These characteristics include:

1. Organizational size

2. Nature of products purchased

3. Buyer behaviour – organizational and notindividual motivations

4. Customer relationships – closer and moresustainable

5. Power of buyers – the level of involvementis most likely high in organizational markets


Factors Affecting Organizational Buying

n The amount of money availablen Size and volume of the purchasen Level of risk involvedn The timeframe for decisionsn The buying situationn The purpose of the purchasen Competitive offers

n Credit terms and conditions of purchasen Packagingn Environmental factorsn Supply and demandn SLEPT factorsn Organizational objectives

INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING 106

Segmenting Organizational Markets

The segmentation criteria for organizational marketsincludes:

Industry type – looking to serve markets with similaror common characteristics

Size of company – segmenting by turnover, numberof employees, output or capital employed

Types of product or service required – segmentingon customer needs

Type of buyer – centralized or decentralizedorganizations – level of devolved authority

Geographic location – focusing on particulargeographic regions

Note: Use the following criteria to assist withsegmentation

Standard Industry Classification (SIC)

Census of the Population (2001)


The Decision Making Process


The Buying Centre – The DMU

Each member of the DMU integrates, interacts, influences and takes a combined, consultative approach to thepurchase decision


The Organizational Marketing Mix


The FMCG Marketing Mix

The organizational marketing mix


The Marketing of Services Service

Characteristics

n Intangibility – There is nothing to feel or touchwithin service delivery – just the deliveryexperience

n Inseparability – a service cannot be reused – it isa once only experience

n Perishability – services are consumed as theygo, they are perishable, and cannot be storedfor future use

n Heterogeneity – relates to the variability in theservice delivery, implying that the service deliveryor service experience could be different on everyoccasion

The Uncertainties of Service

n Physical state of body is variable

n Mental stage of mind changes based uponthe service delivery and the service situation

n State and complexity of the service

n Capacity to withstand the experience

n Amount and nature of information required


The Services Mix – Physical Environment,

People and Process

Process

Customer care and customerservices

Systems and process

Transactional ability

24/7 accesses

Telephone systems

Security systems

Service standards

Quality

Billing

Physical Environment

The place where the service isdelivered

Look for consistency and quality

Establishing the brand image

Wearing of uniforms

Consistent interior design anddecor

Human and physical contributionto the physical serviceexperience

People

Investing in staff and training

Empowerment of staff

Internal marketing

Decision making capacity ofstaff in relation to the servicedelivery

Commitment of staff

Sufficient people – i.e. sufficientresource


The Marketing Mix for Service Organizations


The Importance of Service Quality


Implementing a Quality Culture

Implementing a quality culture may meana focus on developing the following areas:

n Innovation

n Status

n Leadership

n Rewards

n Values

n Developments of a learning organization

n Empowerment in achieving goals

Measuring Quality and Service Success

n Set personal and quality goals

n Establish personal accountability

n Check customer satisfaction

n Regard the next link as a valued customer

n Avoid error

n Perform tasks effectively

n Utilize resources well

n Be committed

n Learn to finish what you have started

n Control stress

n Be ethical

n Demand quality


Hints and Tips

n Develop a thorough knowledge of the differenttypes of organizations and the variables of thedifferent marketing mixes for each of thedifferent marketing applications

n Demonstrate an ability to apply your marketingknowledge and understanding in a range ofdifferent settings and be able to show how toeffectively plan and develop different markets

n Understand the different characteristics of industryand demonstrate how the services, marketing mixof people, process and physical development arecentral to successful service delivery

n Consider the importance of services to the modernmarket economy and their importance

n Recognize the different characteristics of servicesand how they impact upon the overall serviceexperience



NOT-FOR-PROFIT, SMEsAND VIRTUAL MARKETINGLEARN ING OUTCOMES

� Develop a marketing plan and select anappropriate marketing mix for an organizationoperating in any context such as voluntary,not-for-profit and SMEs

� Explain how marketing plans and activities varyin organizations that operate in a virtual marketplace and develop an appropriate marketingmix



� Defining not-for-profit organizations� Marketing planning and segmentation for

charities� Managing the marketing mix for not-for-profit

and charities� Marketing planning and the marketing mix for

SMEs� The virtual marketing environment� The advantages and disadvantages of virtual

marketing� Product, price and promotion for the virtual

organization

Unit 11

Marketing Planning and Segmentation

for Charities

Setting objectives

Set measurable marketing objectives that reflectthe desire of the charity to improve and enhance thequality of life – for example ‘To service the needs andwants of the ‘‘users’’ of financial contributions, timeand support of the public donor’

Marketing Audit

The audit should focus upon:

n Competitive charities

n Research into ‘customer needs’

n Economic situations in other countries

n Taxable benefits for charitable giving

n Resources required

n Scale of user needs

n PR required and currently used

n Political influence

n Social responsiveness

Market Segmentation

Key targets include:

n Donors, volunteers and clients

Marketing Planning and Control

n Consistency and quality of service

n Customer satisfaction

n Ability to implement effectively

n Internal and external communications


Marketing Planning for Not-for-Profit

Organizations

Setting objectives

Set measurable marketing objectives that reflect thepurpose of the business – for example ‘to inform thepublic about the doctrine of the church and encouragechurch membership growth’

Marketing Audit

The audit should focus upon:

n Other churches

n Role of religion in society

n Different doctrines

n Economic funding for

n Taxable benefits for church going

n Resources required

n Political influence

Market Segmentation

Key targets include: Everyone – the church has a massmarket approach – the aim is to be all inclusive ofsociety

Marketing Planning and Control

n Accountability

n Customer attendance

n Ability to implement effectively

n Internal and external communications

NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING 120

Managing the Marketing Mix for Charity and

Not-for-Profit Organizations

Product

This is the benefit that the organization offers –i.e. donations, services, support, well-being, religion

Price

Price holds two interests:

The amount of money generated vs. the cost of theservice provided

Place

Service delivery – mass accessibility

Ability to collect funds – i.e. Internet, phone, post,face-to-face collections

Charitable shops – intensive distribution

PromotionSponsorship

Publicity

Direct marketing

(key cost effective promotional tools)

Some advertising

PeopleThe need for and use of unpaid support from voluntary

workers

People – interface matters to the public

Physical EvidencePersonal and physical presentation may encourage

greater donations. Physical evidence of how money is

used

ProcessThe process of income collection and distribution

of the cause or business outcome


Marketing planning for SMEs

The stages of the outline marketing plan forSMEs include:

1. Collect data and review the plan as a whole

2. Decide on the plan content

3. Plan and design the layout

4. Write it up clearly and simply

5. Assemble the finalized information for yourmarketing plan

6. Include competitor comparison tables

7. Prepare a SWOT analysis

8. Include SMART objectives

9. Include sales forecasts

10. State the marketing strategy

11. Provide the detailed plan of action

12. Include a time table for implementation

13. Put in key controls in order to monitor plan

14. Keep the plan to between 10 and 20 pages


The Marketing Mix for SMEs

Product

Product benefits

Pattern of demand

Portfolio of products for different life cycle stages

Product value

Price

To determine effective price – sales targets, pricestability, increasing market share, beating samelevel competition, maximizing profit

Avoid local price wars – set prices to maintainmargins

Place

Often reliant on channels for distribution rather thandirect to customer – due to lack of resources

Prefer to invest in production as opposed todistribution

Promotion

Sales promotions

PR

Publicity

Personal selling

Local or appropriate business advertising

Cost effective and affordable


Marketing Challenges for SMEs

Lack of resources

Lack of money

Poor cash flow

Lack of formal budgeting

Lack of experience

Short-term planning

Entrepreneurial but not contained

Growth unplanned and often unmanageable


Virtual Marketing – Business Benefits

n Market penetration – i.e. global communicationsmean global access

n Market development – the Internet can be usedto sell existing products into new markets atreduced costs – with low cost advertising

n Product development – the Internet is excellentfor supporting the development of new productsand services

n Diversification – new products and services aresold into new markets – IT equipment, mobilecommunications

Supporting Virtual Marketing Activities

n Sales – achieved through increased awarenessof brands and products, supporting decisions andenabling online purchases

n Marketing communications – the use of thewebsite for communication messages is verypowerful

n Customer service – supplementing telephoneoperators with on line information

n Public relations – the Internet can be used asa channel for PR and provide the opportunity tofrequently update information with hard copy printand postage costs

n Marketing research – datamining, databases areeffective MKIS tools


The Advantages and Disadvantages of

Internet Marketing

Advantages of Internet Marketing

n Cost reductionn Competitive advantagen Capabilityn Communication improvementsn Controln Customer service improvements

Disadvantages of Internet Marketing

n The Internet replaces peoplen The potential demise of the high streetn The loss of the personal touchn Security and privacyn Accessibilityn Technological defectsn Information overload


The Marketing Mix for Virtual Organizations

Product

Speed of development

Rapid product life cycles

Nature of packing

Warranties/guarantees

Price

Reduced costs, e.g. no middle men, lessorganizational costs

Customer expectations – i.e. lower costs

Transparent pricing structures

Place

The Internet is the point of distribution, but couriering,postage, logistics are all still factors of the Internet asa distribution channel

Web advertising

DRA advertising

Banner advertising

Pop-ups

Sales promotions


Hints and Tips

n These particular syllabus elements are aboutshowing that you understand that marketingis applied differently in a range of differentorganizations and sectors

n Always show that you understand the difference inobjectives, rationale for existence, marketingaudit, marketing mixes and marketing planningand control

n There will most likely be a question thatchallenges your understanding of marketing inanother sector. Always ensure you have somegood example to hand to support your answersand develop your thinking

n Ensure that you are familiar with the advantagesand disadvantages of virtual sectors vs. face-to-face business and be able to illustrate yourunderstanding of holistic business benefits

n Keep up to date with various technologies, trendsand activities in virtual markets

n Be sure to justify your planning and marketing mixideas in different sectors to demonstrate yourability to think things through and make wisemarketing decisions

