CIM revision cards Marketing Planning 05 06 (Official CIM Revision Cards) 0750667745, 9780750667746, 9780080501376

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CIM REVISION CARDS Marketing Planning Karen Beamish of Marketing Knowledge

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NEW YORK SYDNEY

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OXFORD TOKYO

Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP 30 Corporate Drive, Suite 400, Burlington, MA 01803 First published 2006 Copyright ß 2006, Elsevier Ltd. All rights reserved No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP. Applications for the copyright holders written permission to reproduce any part of this publication should be addressed to the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: (+44) (0) 1865 843830; fax: (+44) (0) 1865 853333, e-mail: permissions @ elsevier.co.uk. You may also complete your request on-line via the Elseiver homepage (http://www.elsevier.com), by selecting ‘Customer Support’ and then ‘Obtaining Permissions’ British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN-13: 978-0-7506-6774-6 ISBN-10: 0-7506-6774-5 For information on all Elsevier Butterworth-Heinemann publications visit our website at http://books.elsevier.com Printed and bound in Great Britain 05 06 07 08 09 10

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TABLE OF CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Preface ........................................................................... iv Introduction to marketing planning ........................................... 1 The marketing audit ............................................................ 13 Marketing planning, implementation and control............................ 23 Promotional operations ......................................................... 36 Product operations .............................................................. 49 Price operations ................................................................. 63 Place operations ................................................................ 71 Managing marketing relationships ............................................ 84 International marketing ......................................................... 94 Industrial, business-to-business FMCG and services marketing........... 104 Not-for-profit, SMEs and virtual marketing .................................. 118

PREFACE Welcome to the CIM Revision Cards from Elsevier/Butterworth-Heinemann. We hope you will find these useful when coming to revise for your CIM exam. The cards are designed to be used in conjunction with the CIM Coursebooks 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 assignment route 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 CIM course. 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 TO MARKETING PLANNING

Unit 1

LEARNING OUTCOMES

KEY REVISION POINTS

å Explaining the synergistic planning process – analysis planning, implementation and control å Listing the components of the marketing plan å Assessing the potential impact of wider macroenvironmental forces relating to the role of culture, ethical approach, social responsibility, legal frameworks and sustainability

å The importance of marketing to the development of corporate strategy å Understanding corporate planning å What is marketing strategy and the basics of a good marketing strategy? å The role and components of the marketing plan and barriers to marketing planning

Syllabus Reference: 1.1–1.5

MARKETING PLANNING

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INTRODUCTION TO MARKETING PLANNING

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Understanding Corporate Planning Planning is the establishment of objectives and the formulation, evaluation and selection of policies, strategies, tactics and actions required to achieve them

n Corporate planning starts at the top of the organization and impinges upon every aspect and every division or department of the organization n Corporate strategy and plans are clearly linked to achieve the mission and vision of the organization n Each business unit has responsibility for the development of its own function plans

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INTRODUCTION TO MARKETING PLANNING

Understanding Corporate Planning n The marketing department is often responsible for the provision and collation of information provided to support and underpin the corporate planning process n In order to succeed in strategy development, it is essential that all departments work together in an integrative and innovative way n Business units that plan in isolation tend to do so to the detriment of others!

REMEMBER!

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It is important for the purpose of the examination to demonstrate an overall knowledge of the planning hierarchy and the role of corporate planning. You should be able to demonstrate how the role and function of marketing underpins the successful development of corporate strategy and planning!

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What is marketing strategy? Marketing strategy – a strategy indicating the specific target markets and the types of competitive advantages that are to be developed and exploited (Dibb, Simkin, Pride and Ferrell, 2001)

n Management and staff commitment and a learning culture, open to change and innovation – with a focus on developing long-lasting and sustainable customer relationships n Build effective supply chains and IT infrastructure to deliver superior operating performance

n Providing superior competitive advantage n Making long-term investments in organizational relationships n Aim for 100% customer satisfaction – based upon capability and motivated staff

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INTRODUCTION TO MARKETING PLANNING

The basics of a good marketing strategy

n A marketing strategy should focus upon the exploitation of opportunities

As a strategy marketing seeks to develop effective responses to changing marketing environments, by defining market segments, developing and positioning product offerings for those target markets – Webster, 1997 (from Hooley, Saunders and Piercy,1998)

n Marketing strategy requires synergy and consistency by all stakeholders involved in its implementation

n Strategy development requires synergy across the whole organization n In order for the strategy to be successfully implemented, it is important that there is long-term commitment to developing long-term competitive advantage

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MARKETING PLANNING

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INTRODUCTION TO MARKETING PLANNING

The Marketing Planning Process

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Barriers to marketing n Culture – The existing culture may not be amenable to marketing plans – culture neither customer or marketing oriented n Power and Politics – Organizations are subject to internal politics, which often result in the strategic planning process becoming a boardroom battle n Analysis not Action – Organizations waste a lot of time on collecting information, developing rationales for action, but fail to act!

n Resources – After years of downsizing, and increased efficiency drives, many organizations find themselves short of the necessary resources for implementing plans n Skills – Skills are closely linked with resources – one of the key components of marketing success is highly skilled and creative individuals. Marketing personnel are often the casualty of downsizing and now organizations struggle to achieve marketing effectiveness Adapted from Drummond, Ensor and Ashford (2003)

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INTRODUCTION TO MARKETING PLANNING

Corporate Social Responsibility (CSR) and Ethics Corporate Social Responsibility relates to actions which are above and beyond that required by law (McWilliams and Siegel, 2001)

The accepted wisdom on the value of CSR is to: • Meet responsibilities • Put something back • Manage impacts upon society • Improves reputation • Meet Government expectations

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Raising the profile of CSR with stakeholders includes: Consultations, newsletters, annual reports, open days, AGMs, press releases, events, word- of- mouth Marketing ethics – moral principles that define right and wrong behaviour in marketing: n Ethics relates to moral evaluations of decisions and actions as right or wrong on the basis of commonly accepted principles n Marketing ethics are moral principles that define right and wrong behaviour in marketing n If society judges an activity or activities of an organization as wrong, or unethical, it is based on a sense of justice of right and wrong and based upon conviction n Not all unethical activities are illegal

Ethical Decision Making – 3 individual factors n Moral philosophies – principles or rules that individuals use to decide on what is right or wrong n Utilitarianism – a moral philosophy concerned with maximizing the greatest good for the greatest number of people n Ethical Formalization – a rule-oriented philosophy that focuses on the intentions associated with particular behaviour and on the rights of the individual

Implications of Marketing Ethics for the Marketing Mix Product n Meeting safety standards n Removing dangerous components

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

Promotion n Ensuring advertising standards are upheld

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INTRODUCTION TO MARKETING PLANNING

Hints and Tips n Read through Unit 1 of the Marketing Planning Coursebook – Beamish and Ashford – these revision tips relate closely to it n The Marketing Planning examination is not just about knowledge, i.e. how much do you know – but about being able to apply a range of concepts and theories in the context of an organization n You need to show the examiner that you can ‘do marketing’ – not just know about it! n Introduce different theories to underpin your answers n Use as many process models as possible to help you remember key concepts

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n Challenge theories where you think they may not be appropriate or where you think they could be disproven n Use examples to support your answers where appropriate – e.g. Egg, easyJet, Starbucks. . . n Answer the question asked! n Break down the different components of the questions to ensure that you address all of the issues n Have a go at as many past exam questions as possible n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

THE MARKETING AUDIT

Unit 2

LEARNING OUTCOMES

KEY REVISION POINTS

å Explain the constituents of the macroenvironmental and microenvironmental marketing audit å Assess the external marketing environment for an organization through PESTEL å Assess the internal marketing environment for an organization through an internal audit å Critically appraise the process and techniques used for auditing the marketing environment å Explain the role of marketing information and research in conducting and analyzing the marketing audit

å How to undertake a macroaudit å The imperatives of the microaudit and how to analyze it å The role of SWOT å The importance of marketing information to the marketing audit process Syllabus Reference: 2.1–2.5

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THE MARKETING AUDIT

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Environmental Scanning

Step 3 – Forecasting

Environmental scanning is the process of actually collecting the information in order that the organization can understand relevant information in relation to external forces and drivers within the market place

Forecasting change is difficult, but the information obtained as a result or monitoring should be used to measure the intensity of change

Step 1 – Scanning the Environment Continually scan the environment so that early changes can be identified and acted upon

Step 2 – Monitoring When change has been identified, the pace of change must be monitored, so implications of the change are understood, opportunities and threats identified

Step 4 – Assessment Assess the impact of political change on meeting customer requirements and examine what opportunities change could present

Assessing the Marketing Environment

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

Mergers/acquisitions intelligence – In the era of ever-larger mergers and acquisitions between banks, IT organizations and communication networks, it is essential to assess the broader impact

Political/economic intelligence – Looking at political and economic shifts within the external environment.

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

Marketing intelligence – Looking at change, potential, competitors and associated marketing activities

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THE MARKETING AUDIT

PESTEL – Marketing Audit Model

Social

Key issues for political analysis include:

Key issues for social analysis include:

n Increases in taxation, reducing disposable income n Employment law/Health and safety and environmental protection

n Demography, society and culture

Technology Key issues for technological change:

n Foreign trade agreements and stability of political systems

n Technological drivers

Economic

Environmental

Key issues for economic analysis include:

n Key issues for environmental analysis include:

n Inflation and interest rates

n Innovation

n World trends on waste, emissions, CSR

n Income levels and resources

Legal

n GDP/GNP

Key issues for legal analysis include:

n Employment levels

n Monopolies and mergers

n Exchange rates and spending patterns

n Competitive activities, unfair trading

n Consumer legislation/trade descriptions

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Analysis of the Microenvironment The key components of microenvironment analysis include: n n n n n n n n n

Marketing share Marketing procedures Profit margins Sales / marketing controls Marketing mix Number of employees Financial resources Physical resources Production – capacity and variety

The analysis is categorized as follows: n n n n n

Business Competitors Suppliers Customers Stakeholders

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THE MARKETING AUDIT

The internal audit

3. Financial factors including:

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

Access to capacity when required

1. Managerial factors including:

Ability to compete on price

Liquidity Degree of financial leverage

Corporate image Speed or response to changing conditions

Stability of costs 4. Technical factors including:

Flexibility of the organization

Technical and manufacturing skills

Ability to attract highly creative personnel

Value added to the product

Aggressive in meeting the competition

Economies of scale

2. Competitive factors including: Market share Customer loyalty and satisfaction High barriers to market entry

Level of coordination and integration š

Product strengths

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

Porters Five Forces – Competitive Analysis

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THE MARKETING AUDIT

SWOT Analysis

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The role of marketing information in the planning process It is important to identify the type of information that is required by the marketing environment in order to understand the challenges it presents to the successful implementation of the marketing plan The Marketing Environment

The Product Analysis of users, industrial vs. consumer customer response, switching behaviour Marketing Mix Channels of distribution, relative pricing, logistics and networks, promotional mix

PEST Factors Firm-specific historical data The Competition Market share, pricing vs. cost, quality

Sales trends, contribution margins, marketing mix used and customer/market responses

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THE MARKETING AUDIT

Hints and Tips n The marketing environment is an inherent part of the marketing planning process and will always be assessed 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 key models used in the marketing audit at this level, including: PESTEL, SWOT, Porters Five Forces n The marketing environment is all about collecting and analyzing information, therefore ensure that you are familiar with the types of information collected and the purpose of the MKIS system and the role it plays in the storage and support of the marketing environment

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n Ensure you are able to apply these areas. It is not knowledge regurgitation, it is about being able to explain, undertake an assessment of a situation and critically appraise various aspects of the marketing environment in order to make effective marketing decisions n Have a go at as many past exam questions as possible n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

MARKETING PLANNING, IMPLEMENTATION AND CONTROL

Unit 3

LEARNING OUTCOMES

KEY REVISION POINTS

å Evaluate the relationship between corporate objectives, business objectives and marketing å Explain the concept of the planning gap and its impact upon operational decisions å Determine segmentation, targeting and positioning within the plan å Determine and evaluate marketing budgets for mix decisions included in the marketing plan å Describe methods for evaluating and controlling the marketing plan å Explain the role of strategy development in relation to developing marketing share and growth

å The relationship between corporate objectives, business objectives and marketing å The planning gap and strategy development å The role of strategy development in relation to developing market share and growth å Approaches to segmentation, targeting and positioning and approaches to budgeting for mix decisions å Developing, evaluating and controlling the marketing plan

Syllabus Reference: 2.10 MARKETING PLANNING

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

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Distinguishing between corporate, business and marketing objectives Corporate objectives

Marketing objectives

Generally expressed in financial terms, for example ‘to increase profitability by 25% by June 2005’

Marketing objectives are about products and marketing only! For example ‘To increase sales of existing products into new markets by December 2005’

Business objectives Business objectives are generally function and operation and need to be defined for the survival of the organization. For example ‘To increase highly skilled elements of workforce by 10% by December 2005’

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

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

Formulation of Marketing Strategy

Tactical Marketing

Strategy or tactics?

n Short-term time frame

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

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n Narrow focus n Daily marketing activity is the key task

n Broad focus

n Information and problems are structured, internal and repetitive

n Defining marketing and competitive positioning is a key task

n Advertising is an example of a tactical marketing activity

n Information and problems are unstructured, external speculative n Market growth is an example of a strategic marketing activity

Ansoff Matrix

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

Stages in marketing segmentation process n Identify the possible segments within the market – this will consist of individuals or organizations with similar needs or preferences n Gather information on those market segments identified – to do this the segments need to be accessible n Evaluate the attractiveness of different segments — they need to be large enough to be viable n Ascertain the competitive position within each of the target segments n Develop variations on product/service specifications to meet the needs of individual segments

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n Design the appropriate communications mix to meet the target market demands

REMEMBER!

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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 money and resources to buy products 4. They must have authority to buy different products or services!

Targeting as a marketing activity Options for deciding on target marketing include: n Organizations should concentrate on making one product for one market and having one marketing plan – i.e. mass marketing n The organization could concentrate its efforts on one market but have a number of different versions of each product – differentiated marketing

Six components of target marketing 1. 2. 3. 4. 5. 6.

Customer needs – wants and expectations Product market – size and structure Brand strength and market share Company capability Competitive rivalry Economies of scale – production and marketing

n Concentrating efforts on a small and carefully chosen segment – focus market

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

Positioning as a Marketing Activity Steps in establishing a positioning plan n Identify all segments within the market n Decide which segments are most suitable n Ensure the organization understands customer requirements n Develop product or service that specifically meets the target audience needs n Identify benefits, usage, user category, competitive positioning

n Evaluate how the product or service is positioned in the eyes of the target group n Identify an image that matches the requirements of the customer n Promote the product to the target audience, establish relationships and aim for customer loyalty

Remember positioning alternatives n Distinctive n Fill the gaps n Repositioning

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Developing the Marketing Plan

n Marketing Strategy

Key headings of the marketing plan:

Segmentation, targeting and positioning

n Executive Summary

Marketing strategy, marketing programme

Key issues, current position, potential overview of the outcome n Corporate Strategy Corporate mission/vision and corporate goals and objectives n Macro/micro Analysis Market assessment, market trends, competitor analysis and SWOT

Marketing mix n Implementation Key tasks, resources, budgets, contingency plans n Monitoring and Control Basis of the plan and assumptions made, key critical success factors, benchmarking/ forecasts/costs/revenue

n Marketing Objectives Financial objectives Marketing objectives

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

Key Ingredients for Successful Implementation of the Plan

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Marketing Budgets n Bottom-up budgeting – is where the budgeting process is fed and developed within the organization and where the activities happen n Negotiated budgeting – is where the process of budget allocation is by negotiation n Objectives and task approach – is where the budget is allocated specifically on the necessity to achieve output, i.e. achievable objectives n Incremental budgeting – is where the budget is based upon an incremental rise on budgetary expenditure per year, in line with predicted growth in the forthcoming year

n Competitive parity – is where the budget is set, based on spending the same percentage as competitors within the same industry n Judgemental methods – this is where budgets are developed, based upon the judgement of managers most directly involved in the future of the business

REMEMBER

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You must be able to describe a budgetary process and evaluate it in context of a given scenario!

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

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MARKETING PLANNING, IMPLEMENTATION AND CONTROL

The Control Process Monitoring and control contains four key activities: 1. Development or adjustment of marketing objectives in line with internal and external drivers affecting performance 2. Setting of performance standards, i.e. key measures such as quality, production, sales 3. Evaluating performance, i.e. identifying performance indicators and measures and analyzing findings 4. Corrective action, i.e. revised forecasts or sales targets, increasing advertising, etc.

Methods for controlling the marketing plan: 1. Measuring income/expenditure budgets – performance 2. Performance appraisal evaluation – i.e. staff 3. Variance analysis 4. Budgetary control 5. Benchmarking 6. Marketing mix effectiveness 7. Competitor performance

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Hints and Tips n Ensure you are clear on the differences between corporate, business and marketing objectives and strategies n You may be required to develop an outline marketing plan stating marketing objectives, outline strategy statements and a detailed tactical marketing mix n Remember marketing objectives must be SMART – this is essential n You are expected to understand the importance of segmentation and the different segmentation options available to you, including linking them to targeting and positioning

n Part A of the exam paper, which is the mini-case study, tested different aspects of the marketing planning process n The senior examiner for the subject has suggested that this will be an ongoing theme throughout all exam papers, therefore ensure you are 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 prepared to select an appropriate budgetary process for a given scenario. Be able to evaluate effectively n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

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PROMOTIONAL OPERATIONS

Unit 4

LEARNING OUTCOMES

KEY REVISION POINTS

å Explain how strategy formulation and decisions, relating to the selection of markets, impact at an operational level on the planning and implementation of the co-ordinated marketing mix å Explain the role of branding and its impact on the marketing mix decisions å Describe methods for maintaining and managing the brand å Explain how the marketing communications mix is co-ordinated within the marketing plan

å The Marketing Mix in the context of marketing planning å Push, pull and profile strategies å Aims and objectives of the promotional communications process å Branding and brand strategies å The Promotional Mix

Syllabus Reference: 3.2–3.4, 3.10

Push, Pull and Profiling Strategies Push Strategy – this is where the manufacturer takes the decision to concentrate their communication efforts on members of the distribution channel. The basis of this strategy is to promote directly to the suppliers, therefore pushing the products down the line to reach the customers throughout various channel members

Profile Strategy – Profiling is the task of building up a fuller picture of the target segments and is achieved by taking a group of what is commonly known as descriptors, based around traditional segmentation criteria. The idea is that while the customer base might have matching demographics, their socioeconomic needs might differ and result in differing customer needs

Pull Strategy – this strategy operates in contrast to the push strategy and requires the manufacturer to create a demand for the product through direct communication with the customers. The aim is to create the demand and to direct promotions to the supply chain and pull the product upwards through the channels, through customer demand

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PROMOTIONAL OPERATIONS

Branding

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Brand Values A value is an enduring belief that a specific model of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state existence n Values are important from both the internal and external perspective and can be a source of ‘added value’ n Values are what makes an organization different and they align their values akin to customers core values n Customers like brands that hold values compatible to their own

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

Peripheral Values These are values that might be related to an activity or service level that the organization changes in line with market drivers and focus

n Values are formed as a result of a range of influences in the lives of individuals and the organizations

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PROMOTIONAL OPERATIONS

Brand Strategies

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Creating a success brand n Brand management is based around building an effective brand that will ultimately support the corporate goals and marketing objective n To ensure that the brand is successful, there must be synergy between the branding strategy and the marketing and promotional mix n The focus of any marketer’s role is based upon creating an awareness of the brands and its associated values to the customer, monitoring consumer reactions and meeting their needs

To create a successful brand a company must: n n n n n n n

Make quality a priority Offer superior service Get there first Differentiate its brand Develop a unique positioning concept Support the brand Deliver consistency

Source: Dibb, Simkin, Pride and Ferrell, 2001

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PROMOTIONAL OPERATIONS

The Promotional Mix Advertising – a paid form of non-formal communication that is transmitted through mass media 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

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Advertising and the marketing mix As a marketing communications planner you will be involved in the following: n Liaising with channel members n Have an awareness of channel needs and the associated communications support n Provide consistency for all communications and ensure that all members are empowered by the message

Sales Promotions Sales Promotions – A range of tactical marketing techniques, designed within a strategic marketing framework, to add value to a product or service in order to achieve specific sales and marketing objectives

Sales promotions and the marketing mix Responsibility for sales promotions will include: n Selecting appropriate promotional techniques n Trade promotions, retailer to consumer promotions, manufacturer to consumer promotions n Development of customer loyalty schemes

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

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PROMOTIONAL OPERATIONS

Public Relations Public relations – is a planned and sustained effort to establish and maintain goodwill and mutual understanding between an organization and its target public

Aims and objectives of public relations n To create and maintain the corporate and brand image and enhance the position and standing of the organization in the eyes of the public n To communicate the organization’s ethos and philosophy, and corporate values n To undertake damage limitation to overcome poor PR n To raise the company profile and forge stronger relationships

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Responsibility for PR includes: n Changing negative into positive, hostility into sympathy, prejudice into acceptance, apathy into interest, ignorance into knowledge n Defining techniques, such as press releases, press conferences, publications, media relations, etc. n Undertaking internal PR activities n Selecting appropriate PR techniques based upon suitability, feasibility and acceptability

Direct and Interactive Marketing Directive and Interactive Marketing – An interactive system of marketing which uses one or more advertising media to effect a measureable response at any location

Aims and objectives of direct marketing

Responsibilities of direct marketing n To ensure an appropriate database that is effective in reaching targets n To define the appropriate techniques, e.g. direct mail, Internet, e-mail marketing, tele-marketing, direct response advertising n To be aware of Data Protection legislation and how it affects the activities of direct marketing

n To increase direct mail order levels from new and existing customers n To increase provision of information to aid information and adoption n To increase the number of sales leads generated n To increase the number of trial leads

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PROMOTIONAL OPERATIONS

Sponsorship Sponsorship – is the provision of financial or material support by a company for some independent activity. . . not usually directly linked to the company’s normal business, but support from which the sponsoring company would hope to benefit

Sponsorship objectives n To increase brand awareness n To build and enhance corporate image n To raise awareness of brands related to products restricted in advertising through various legislation, such as alcohol and cigarettes

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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 sponsorship arrangements are in place and the match between the organization and the potential sponsoring organization is right n To develop the right mix, i.e. ensuring high-level of spins offs in promotions, optimizing cost effectiveness, advertising, merchandising and promotional incentives

Personal Selling Personal Selling – An interpersonal communication tool which involves face-to-face activities undertaken by individuals, often representing an organization, in order to inform, persuade or remind an individual or group to take appropriate action, as required by the sponsor’s representative

Responsibilities of the marketer in supporting the sales team: n Provision of market information and competitor intelligence n Provision of potential leads n Client history/database information n Financial reports – Dunn and Bradstreet n Provision of appropriate promotional materials

Objectives of personal selling

n Provision of sales aids, promotional plans and incentives

n To increase sales turnover n To reduce the number of clients with minimum viable orders n To reduce the costs of sales n To increase the number of distribution outlets

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PROMOTIONAL OPERATIONS

Hints and Tips n Ensure that you can link the organization perspective of the marketing mix with the customer perspective. n Push, pull and profiling strategies are commonplace and you should be prepared to include them in potential strategy development areas. n Branding is a hot topic in marketing planning and it is critical that you ensure that you understand the breadth of the subject, issues relating to branding building, brand management, brand strategies and the successful development of the brand. n As for the promotional mix, be familiar with each aspect of the mix, its definition, the objectives the

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mix can achieve, and understand the areas of responsibility that an operational manager should be involved in planning and implementing for. n Be aware of the need to coordinate the promotional mix and ensure that you develop an effective and creative message that will maximize the potential impact of a fully coordinated mix. n Ensure you are able to apply these areas, it is not knowledge regurgitation. n Have a go at as many past exam questions. as possible. n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance.

PRODUCT OPERATIONS

Unit 5

LEARNING OUTCOMES

KEY REVISION POINTS

å Explain how a product or service portfolio is developed to achieve marketing objectives å Explain the new product development process (including innovative, replacement, re-launch and imitative products) and the role of innovation

å Understanding the different facets of the product and the various product classifications å Creating a product range within a product life cycle å Managing the product life cycle å Using product portfolio planning tools å New product development options and process å The product adoption process

Syllabus Reference: 3.5, 3.6

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PRODUCT OPERATIONS

Product Classifications The product has three classifications: n Durable – products that are durable last for a period of time, e.g. car stereo systems, washing machines n Non-durable – products that can be consumed or used only once – i.e. food, paper, drinks, etc. n Service products – services are intangible – there is nothing physical at the end of the service experience, i.e. holidays, hairdressing, personal banking/financial services.

Sub-classifications of Product Classifications n n n n n n n n

Convenience products Shopping goods Speciality goods Unsought goods Business products Process products Plant and equipment Supplies and services

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Creating a Product Range Components of the product range include the product mix and the product line n The product mix is the total portfolio of product that a company has to offer n The product line is a group of closely related products n Organizations must ensure that they establish the breadth and depth of the product mix n Organizations should ensure that products are compatible with one another and that they meet the needs of increasingly powerful customers

n The strategic planning process should enable organizations to reflect on their existing product ranges to ensure that the products fit with one another n The product or service is at the very heart of the organization’s existence, and a structured and analytical approach must be taken when developing a product range. This must include analysis of market forces, key drivers, factors influencing change and an in-depth understanding of customers

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PRODUCT OPERATIONS

The Product Life Cycle

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Managing the Product Life Cycle

Marketing strategy for decline

Marketing strategy for growth

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

n Introducing new and innovative products n Undertaking high levels of advertising and sales promotions activity – offering incentives to switch brands n Targeting customers should be tightly defined n Marketing mix should be well coordinated and effective

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

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 market penetration to maximize profit potential MARKETING PLANNING

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PRODUCT OPERATIONS

Product Portfolio Planning Tools

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The General Electrical Matrix (GE Matrix)

MARKETING PLANNING

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PRODUCT OPERATIONS

The Shell Directional Policy Matrix

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New Product Development

MARKETING PLANNING

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PRODUCT OPERATIONS

Different Types of New Product Development New World/Innovation The focus of this model is upon technical development, incurring high/risk return. Can revolutionize 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

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Product revisions/replacements Replacements and upgrades of existing products. Change can be aimed at cost reductions

Reposition Aim to diversify away from existing markets by uncovering new applications, uses or markets for current products

Imitative products Copycat products produced by others, but where there is a market for many alternative and competing versions

The Product Adoption Process – the Consumer Decision-making Unit The Initiator

The Decider

The person who identifies the problem and the need to buy

The person who makes the final purchase decision – what to buy, where to buy, how much to pay

The Influencer This is the person who is likely to influence the initiator

The Buyer The person who makes the purchase, the individual who gets involved in the exchange process

MARKETING PLANNING

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PRODUCT OPERATIONS

Commonly Used Adoption Models

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Innovation and Diffusion Process

MARKETING PLANNING

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PRODUCT OPERATIONS

Hints and Tips n Product operations is an area that is subject to continual questioning in the examinations and it is important to be familiar with it and to be able to apply it n Ensure that you can talk competently about the importance of product portfolio models when assessing the current status of products within the marketing n It is important to show that you understand the importance of managing growth at each stage of the product life cycle and the methods and options for doing so

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n New product development and the options for achieving such development, have already been the subject of the first marketing planning exam paper and it is seen to be a new and important area n Always aim to link other aspects of the marketing mix to the product life cycle and show how each element of the marketing mix applies and contributes to the successful implementation of product/service operations n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

PRICE OPERATIONS

Unit 6

LEARNING OUTCOMES

KEY REVISION POINTS

å Explain pricing frameworks available to, and used by, organizations for decision-making å Describe how pricing is developed as an integrated part of the marketing mix

å Price perception of the customer and the organization å Influences on price å Corelating price with value å Determining price å Pricing objectives and strategies Syllabus Reference: 3.6, 3.7

MARKETING PLANNING

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PRICE OPERATIONS

Internal and External Influences on Price

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Strategic Pricing Determinants

MARKETING PLANNING

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PRICE OPERATIONS

Pricing Objectives Pricing objectives include: n To achieve return on investment – ensuring sufficient sales revenue to cover all associated cost bases and pay back initial investment n To maximize profits – setting prices for profitability, i.e. low market share may mean high price to maximize profit potential n To maximize sales revenue – increase sales turnover – selling volume leading to increased profitability

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n To achieve product quality leadership – Providing the best quality product in the market in order to create differentiation against competitors n To survive in the market place – setting objectives that ensure survival in a highly competitive market is central to organizational success. However, organizations tend to aim higher than survival. The aim is to work on a break-even basis in order to stay in business

Strategic Pricing Price Skimming

Price Penetration

Charging high prices to gain early return on investment

Charging a low price to ensure market penetration

Price skimming features include:

Price penetration features include:

n Relatively high price per unit n Good strategy to apply to new products to recoup costs n Easy to segment the market n Profits can be made on a per unit basis

n Offers a low price per unit n Is used when a large volume of market share is involved n Profit is made through volume of sales n Low price is aided by high promotions

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PRICE OPERATIONS

Tactical Pricing

3. Differential pricing

Characteristics of tactical pricing strategies include:

High fixed costs

1. Marginal pricing

The relevant application of season’s timings

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 penetrate the market, by offering bulk buys

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Benefit both the producer and consumer 4. Cost-plus pricing Covering the cost of overheads, plus percentage on top, to meet marketing/profit objectives Often used for projects which are difficult to cost out or take a long time to complete

Establishing a Price

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PRICE OPERATIONS

Hints and Tips n The price element of the marketing mix should find marketing aiming to blend price, quality and perceived value n Price is the only element of the mix that creates income for the organization n Demonstrate your understanding and show that customers are fickle; they have considerable choice and therefore have a significant influence on supply and demand n Prices will vary according to what people will pay and also what they are prepared to pay n Therefore pricing needs to be used with some flexibility to meet those requirements. You should be able to show how you might achieve this level of flexibility

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n The critical success factors in relation to price are to maintain the organization’s objectives, whilst at the same time remaining sensitive to customer needs n The key to price is to link the product quality with a clear indication of value for money. Pitching the price at the right level may be the difference between success and failure n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

PLACE OPERATIONS

Unit 7

LEARNING OUTCOMES

KEY REVISION POINTS

å Determine the channels of distribution and logistics to be used by an organization and develop a plan for channel support

å å å å

Syllabus Reference: 3.9

Influences on distribution The role and benefits of intermediaries The distribution channel and the customer Selecting channels of distribution and intermediaries å Vertical and horizontal channel integration, and PDM å Push and pull strategies for distribution channels å Evaluating channel effectiveness

MARKETING PLANNING

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PLACE OPERATIONS

Key Influences on Distribution

n Product life cycle

There is a wealth of influences, both internal and external, in relation to distribution or ‘place’ as a tool of the marketing mix. The list is extensive. Try to select a number of influences that you may be confident and comfortable in discussing

n Nature and characteristics of the product

n Fuel prices

n Level of complexity in buying behaviour

n Environmental legislation

n Competitive strategies

n Taxation

n Production targets

n Transportation

n Marketing mix components

n National/global transportation infrastructure

n Customer services

n Packaging

n Technical support

n Changing life styles n The emergence of ICT n Customer wants and expectations

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Intermediaries and the Channel of Distribution Why use intermediaries?

MARKETING PLANNING

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PLACE OPERATIONS

The Role of the Intermediary Source – Adapted from Dibb, Simkin, Pride and Ferrel (2001)

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Distribution Channels

MARKETING PLANNING

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PLACE OPERATIONS

Selecting the Channels of Distribution Below is a list of key questions that marketers should ask when aiming to select the most appropriate distribution channels: n What are the product characteristics and how do they affect methods of distribution? n Who are the customers and where are they? n What are the customer requirements in relation to access and delivery of their products and services?

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n How, where and when do they want to buy their products? n What are their competitors doing by way of distribution? n What is the cost of distribution? n What are the legal and regulatory constraints on distribution?

Intermediary Selection Criteria Operational Criteria

Strategic Criteria

Knowledge of local markets

Plans for growth and expansion

Appropriate premises and equipments

Resource capacity and future development

Technological systems and processes

Quality assurance processes

Customer convenience

Management ability

Product knowledge and expertise

Innovative

Payment facilities

Willing partnership

Sales force structure, size and effectiveness

Levels of loyalty and co-operation

Efficient customer service infrastructure

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PLACE OPERATIONS

Channel Strategies

Intensive Distribution Maximum number of outlets Target outlets in as many geographical regions as possible 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

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Vertical, Horizontal and Physical Distribution Vertical Distribution A distribution system where two or more channel members are connected by ownership or legal obligation

Or

Physical Distribution Management (PDM) This is the term used to describe the management of every part of the distribution process. This can be contracted out to a specialist or can be developed as a specialist function within the organization. Things to consider: n Costs involved n Methods of transport

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

n Routes used

Horizontal Distribution

n Timing – a key element

n Stock and storage n Protection and delivery of stock

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

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PLACE OPERATIONS

Push and Pull Strategies in Distribution

Pull Strategies

Push Strategies

Key factors influencing pull strategies might include:

Key factors influencing push strategies might include:

n Levels of economic and financial stability

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

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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

The Internet and Distribution The benefits of the Internet at a strategic level

The benefits of the Internet at an operational level

Improves corporate image

Speed of transaction improved

Improves customer service

Management information improved

Increases visibility

Increased service levels

Creates market growth opportunities

Removal of time constraints

Lower overall business costs

Removal of distance

Move towards online transactions

Ability to complete transactions electronically Access to full competitive arena New revenue opportunities Cost effectiveness

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PLACE OPERATIONS

Evaluating Channel Effectiveness n Regular reviews

From an Internet perspective typical evaluation methods include:

n A forum for problem review and solution

n Number of leads

n Monthly, quarterly and yearly sales data analysis

n Increased sales

n Average stock levels

n Customer retention

n Lead and delivery times

n Increased market share

n Zero defects

n Brand enhancement and loyalty

n Customer service complaints

n Customer service

Key performance and evaluation measures include:

n Marketing support n Annual performance audits

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

n Be prepared to make a decision on channel options, based upon clear justifications of choice n There is increasing evidence of mergers and acquisitions closely related to distribution economies

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

n Channel management and channel selection is a key marketing activity and it is important to ensure that you can find new and innovative ways of meeting customer needs and wants

n Be confident in your ability to discuss new emerging alternatives to distribution, in particular various e-technologies that support and underpin the distribution process

n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

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MANAGING MARKETING RELATIONSHIPS LEARNING OUTCOMES

KEY REVISION POINTS

å Explain the importance of customer relationships to the organization and how they can be developed and supported by the marketing mix

å å å å å

Syllabus Reference: 3.11

Unit 8

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 å The marketing mix for customer retention management å Managing internal marketing relationships å The relationship marketing plan

From Transactional to Relationship Marketing

MARKETING PLANNING

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MANAGING MARKETING RELATIONSHIPS

The Scope of Marketing Relationships

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Customer Loyalty

MARKETING PLANNING

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MANAGING MARKETING RELATIONSHIPS

The Basis of Marketing Relationships

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Customer Retention Basic principles of customer retention includes:

Six reasons why long-term customers are profitable

n Providing technical support and technical expertise – this can be a USP and add value to the proposition

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

n Provision or resource support – ensuring that a range of versatile resources are available to support the relationship. Cost efficiency and effectiveness will be paramount

n Satisfied customers make it difficult for the competition to enter a market or increase their market share

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

n Satisfied customers often refer new customers at no extra cost

n Reduction in risk – Giving as much insight into the product as possible plus adding product guarantees

n Long-established customers tend to buy more

n Satisfied customers may pay a premium price

n The cost of acquiring new customers can be substantial. A higher retention rates implies fewer customers need to be acquired

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MANAGING MARKETING RELATIONSHIPS

The Marketing Mix for Customer Retention Management Product Extras

Specialized Distribution

Product and service augmentation and innovation

Priority customer handling

Customizing the offer – relationship building

Product previews

Cross-selling other products in the portfolio

Exclusive or selective distributors

Relationship Pricing Price incentive for increased customer spending Price sensitivity – it is a relationship issue Perceived value – the value proposition versus the price

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

Reinforcing Promotions Sales-force responsiveness Loyalty schemes – reward cards, membership benefits Tailored/targeted direct marketing Key account management selling

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Internal Relationship Marketing Techniques

MARKETING PLANNING

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MANAGING MARKETING RELATIONSHIPS

The Relationship Marketing Plan

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Hints and Tips n Relationship marketing is central to the marketing planning process and is continually increasing in emphasis n Always expect a relationship marketing question and be prepared to answer it across a range of sectors. In December 2003, the question was on relationship marketing related to not-for-profit organizations n Be prepared to develop a marketing mix that is relationship focused as opposed to transactional focused – look at ways of using the mix for customer retention

n Understand the importance of customer retention and the basis on which relationships are established, i.e. trust, co-operation and commitment n Be prepared to integrate the concept of relationship marketing into questions where relevant, for example questions on services, pricing, distribution and intermediary management n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

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INTERNATIONAL MARKETING LEARNING OUTCOMES

KEY REVISION POINTS

å Explain how marketing plans and activities vary in organizations that operate in an international context and develop an appropriate marketing mix

å å å å å å

Syllabus Reference: 4.1

Unit 9

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 å Developing an international MIS system å Market entry strategies and barriers to international market entry å Consideration for the international marketing mix

Reasons for International Marketing

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INTERNATIONAL MARKETING

Levels of International Marketing Domestic/regional marketing – involves the company manipulating a series of controllable variables, such as price, advertising, distribution and the product in a largely uncontrollable environment International marketing – involves operating across a number of foreign country markets, which vary from one another, including economic and infrastructure variables Global marketing – involves the company in agreeing synergy in the overall international operations, taking advantage of areas such as exchange rates, labour rates, skills levels and market opportunities

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Export marketing – is where the organization trades in goods and services across all boundaries Direct exporting – is where an organization serves directly to a host country. This means they will invest more resource, time and effort in establishing international links Indirect exporting – is where an organization with limited resources trades internationally through the most simple and low-cost method available

Key Factors in Understanding the External Market Key Economic Indicators n n n n n

Population size and growth Population density and concentration Population age and distribution Disposable income and income distribution Economic activity – where is the concentration of economic/financial generation?

Other Key Indicators include: n n n n n n

Natural resources Topography Climate Energy and communication Urbanization Differential inflation levels

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INTERNATIONAL MARKETING

Understanding Consumer and Business Buying Behaviour in International Markets The key principles of buyer behaviour is to understand the following: n The structure and composition of the DMU (decision-making unit)

Understanding Market and Buyer Potential Before a market entry strategy can be considered, it is important to link behaviour to the following awareness of market potential: n Market size n Level of competition

n Level of organizational influence upon purchasing

n Resource

n The role of technology

n Accessibility

n The business/industrial buyer process

n Barriers to entry

n The personal characteristics of the buyer

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n Customer demands and the ability to purchase

Developing an International MIS System International marketing decisions must be based on the sound collection and use of the following type of information: Country – general country information Choices – analysis of supply, competitor characteristics, import analysis, competitive strengths and weaknesses Concentration – structure of the market segments and geographic spread Culture/consumer behaviour – characteristics of the country, diversity of cultural group, nature of decision-making and major influence on buying behaviour Consumption – demand and end-use analysis of economic sector Capacity of pay – pricing, trends in pricing, culture of pricing, conditions of payments, insurance terms

Currency – stability, restrictions and exchange controls Channels – purchasing behaviour, capabilities of intermediaries, coverage of distribution costs, physical distribution infrastructure Commitment – access to market, trade incentives and barriers, custom tariffs, government regulations and market entry legislation Communications – promotion, media infrastructure and availability, common selling practices, media information Contractual obligations – business practices, insurance and legal obligations Caveats – factors to be aware of

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INTERNATIONAL MARKETING

Market Entry Strategies Licensing – is based around a contract enabling a second party to licence products and services Agents – overseas sales personnel, who operate on behalf of the organization Franchising – think of McDonalds, KFC and the Body Shop Company acquisition – gaining market entry through acquiring an overseas company Wholly owned subsidiary – setting up a fully-fledged international operation Joint venture – an investment in an international company that provides access to an international marketing organization. Shared costs and risk

Barriers to International Market Entry n n n n n n n n n n n

Too much red tape Trade barriers Transportation difficulties Lack of trained personnel Lack of export incentives Lack of coordinated assistance Unfavorable conditions overseas Slow payment by buyers Lack of competitive products Payment defaults Language barriers

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The International Marketing Mix Product Manufacturing requirements Market research Ability to produce the product Customer needs and fit with the product portfolio

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

Technical/after-sales support

Promotional mix

Technology

Language, image, relationships

Standardization vs. adaptation

Corporate identity, company image

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

Methods of advertising/tolerance of advertising Media, ethics, literacy, accessibility Agencies

Varying taxes, tariffs Price sensitivity and cultural diversity MARKETING PLANNING

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INTERNATIONAL MARKETING

Standardization

Adaptation

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

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

n Market access

n Modifying the marketing mix to meet different customer needs

n Industry standards n Technology n Products/services

n Adapting products to meet local needs and conditions

n Distribution

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

n Customer requirements

n Avoiding conflict in promotional protocol

n Competition

n Being aware of price sensitivities, economic instabilities, global pricing

n Promotion

n Communication

n Avoiding prohibitive and costly distribution practices whilst creating maximum access

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Hints and Tips n Whilst international marketing is a subject in its own right, it may not always be separated for the purpose of exam questions. For example, you may be asked to answer a marketing planning question in the context of an international business n Try and select two countries that you have a good general knowledge of to use as examples in international marketing examinations n Be prepared to adapt the marketing mix to international markets or discuss differences in culture and practices

n Standardization vs. adaptation is a hot topic and may well be subject to questioning n Ensure that you can demonstrate an understanding of the importance of accurate international marketing information to support marketing decisions about international growth and expansion n Be familiar with the 12 Cs – they are useful tools in demonstrating a broad understanding of international markets and information needs n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

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INDUSTRIAL, BUSINESSTO-BUSINESS FMCG AND SERVICES MARKETING

Unit 10

LEARNING OUTCOMES

KEY REVISION POINTS

å Develop a marketing plan and select an appropriate mix for an organization operating in any such context as business-to-business å Describe how a plan is developed for the human element of the service encounter å Explain how the physical evidence element of the integrated marketing mix is developed å Explain how a plan covering the process or systems of delivery for a service is developed å Determine an effective extended marketing mix in relation to the design and delivery of service encounters (SERVQUAL)

å The different characteristics of B2B vs. B2C marketing å Organizational segmentation, DMU and relationship marketing å The organizational marketing mix å A marketing strategy for FMCGs å The marketing of services å People, place and process as elements of the services marketing mix å SERVQUAL

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

The Implications of Organizational Markets

Characteristics of Business/Industrial Buying Behaviour

Organizational marketing can be notoriously challenging for the following reasons:

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

1. Geographically diverse 2. Size of DMU

1. Organizational size

3. The issue of ‘preferred supplier status’

2. Nature of products purchased

4. Size of purchase

3. Buyer behaviour – organizational and not individual motivations

5. Frequency of purchase 6. Negotation of contacts 7. Lead-time between order and delivery

4. Customer relationships – closer and more sustainable 5. Power of buyers – the level of involvement is most likely high in organizational markets

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

Factors Affecting Organizational Buying n n n n n n n

The amount of money available Size and volume of the purchase Level of risk involved The timeframe for decisions The buying situation The purpose of the purchase Competitive offers

n n n n n n

Credit terms and conditions of purchase Packaging Environmental factors Supply and demand SLEPT factors Organizational objectives

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Segmenting Organizational Markets The segmentation criteria for organizational markets includes: Industry type – looking to serve markets with similar or common characteristics Size of company – segmenting by turnover, number of employees, output or capital employed Types of product or service required – segmenting on customer needs

Type of buyer – centralized or decentralized organizations – level of devolved authority Geographic location – focusing on particular geographic regions Note: Use the following criteria to assist with segmentation Standard Industry Classification (SIC) Census of the Population (2001)

MARKETING PLANNING

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

The Decision Making Process

108

The Buying Centre – The DMU Each member of the DMU integrates, interacts, influences and takes a combined, consultative approach to the purchase decision

MARKETING PLANNING

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

The Organizational Marketing Mix

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The FMCG Marketing Mix The organizational marketing mix

MARKETING PLANNING

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

The Marketing of Services Service Characteristics

The Uncertainties of Service

n Intangibility – There is nothing to feel or touch within service delivery – just the delivery experience

n Physical state of body is variable

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

n State and complexity of the service

n Perishability – services are consumed as they go, they are perishable, and cannot be stored for future use n Heterogeneity – relates to the variability in the service delivery, implying that the service delivery or service experience could be different on every occasion

n Mental stage of mind changes based upon the service delivery and the service situation n Capacity to withstand the experience n Amount and nature of information required

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The Services Mix – Physical Environment, People and Process Physical Environment

People

Process

The place where the service is delivered Look for consistency and quality Establishing the brand image Wearing of uniforms Consistent interior design and de´cor Human and physical contribution to the physical service experience

Investing in staff and training Empowerment of staff Internal marketing Decision making capacity of staff in relation to the service delivery Commitment of staff Sufficient people – i.e. sufficient resource

Customer care and customer services Systems and process Transactional ability 24/7 accesses Telephone systems Security systems Service standards Quality Billing

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

The Marketing Mix for Service Organizations

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The Importance of Service Quality

MARKETING PLANNING

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INDUSTRIAL, BUSINESS-TO-BUSINESS FMCG AND SERVICES MARKETING

Implementing a Quality Culture

Measuring Quality and Service Success

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

n Set personal and quality goals

n Innovation

n Check customer satisfaction

n Status

n Regard the next link as a valued customer

n Leadership

n Avoid error

n Rewards

n Perform tasks effectively

n Values

n Utilize resources well

n Developments of a learning organization

n Be committed

n Empowerment in achieving goals

n Learn to finish what you have started

n Establish personal accountability

n Control stress n Be ethical n Demand quality

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Hints and Tips n Develop a thorough knowledge of the different types of organizations and the variables of the different marketing mixes for each of the different marketing applications n Demonstrate an ability to apply your marketing knowledge and understanding in a range of different settings and be able to show how to effectively plan and develop different markets

n Consider the importance of services to the modern market economy and their importance n Recognize the different characteristics of services and how they impact upon the overall service experience n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance

n Understand the different characteristics of industry and demonstrate how the services, marketing mix of people, process and physical development are central to successful service delivery

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

Unit 11

LEARNING OUTCOMES

KEY REVISION POINTS

å Develop a marketing plan and select an appropriate marketing mix for an organization operating in any context such as voluntary, not-for-profit and SMEs å Explain how marketing plans and activities vary in organizations that operate in a virtual market place and develop an appropriate marketing mix

å Defining not-for-profit organizations å Marketing planning and segmentation for charities å Managing the marketing mix for not-for-profit and charities å Marketing planning and the marketing mix for SMEs å The virtual marketing environment å The advantages and disadvantages of virtual marketing å Product, price and promotion for the virtual organization

Syllabus Reference: 4.2–4.3

Marketing Planning and Segmentation for Charities

n Resources required

Setting objectives

n Political influence

Set measurable marketing objectives that reflect the desire of the charity to improve and enhance the quality of life – for example ‘To service the needs and wants of the ‘‘users’’ of financial contributions, time and support of the public donor’

n Social responsiveness

Marketing Audit The audit should focus upon: n Competitive charities n Research into ‘customer needs’ n Economic situations in other countries

n Scale of user needs n PR required and currently used

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

n Taxable benefits for charitable giving MARKETING PLANNING

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

120

Marketing Planning for Not-for-Profit Organizations

n Resources required

Setting objectives

Market Segmentation

Set measurable marketing objectives that reflect the purpose of the business – for example ‘to inform the public about the doctrine of the church and encourage church membership growth’

Key targets include: Everyone – the church has a mass market approach – the aim is to be all inclusive of society

n Political influence

Marketing Planning and Control

Marketing Audit

n Accountability

The audit should focus upon:

n Customer attendance

n Other churches

n Ability to implement effectively

n Role of religion in society

n Internal and external communications

n Different doctrines n Economic funding for n Taxable benefits for church going

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 the service provided

Promotion Sponsorship Publicity Direct marketing (key cost effective promotional tools) Some advertising

People The need for and use of unpaid support from voluntary workers People – interface matters to the public

Place

Physical Evidence

Service delivery – mass accessibility

Personal and physical presentation may encourage greater donations. Physical evidence of how money is used

Ability to collect funds – i.e. Internet, phone, post, face-to-face collections Charitable shops – intensive distribution

Process The process of income collection and distribution of the cause or business outcome

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

Marketing planning for SMEs The stages of the outline marketing plan for SMEs 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 your marketing plan

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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

Place Often reliant on channels for distribution rather than direct to customer – due to lack of resources Prefer to invest in production as opposed to distribution

Promotion Sales promotions

Price

PR

To determine effective price – sales targets, price stability, increasing market share, beating same level competition, maximizing profit

Publicity

Avoid local price wars – set prices to maintain margins

Cost effective and affordable

Personal selling Local or appropriate business advertising

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

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

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Virtual Marketing – Business Benefits

Supporting Virtual Marketing Activities

n Market penetration – i.e. global communications mean global access

n Sales – achieved through increased awareness of brands and products, supporting decisions and enabling online purchases

n Market development – the Internet can be used to sell existing products into new markets at reduced costs – with low cost advertising n Product development – the Internet is excellent for supporting the development of new products and services n Diversification – new products and services are sold into new markets – IT equipment, mobile communications

n Marketing communications – the use of the website for communication messages is very powerful n Customer service – supplementing telephone operators with on line information n Public relations – the Internet can be used as a channel for PR and provide the opportunity to frequently update information with hard copy print and postage costs n Marketing research – datamining, databases are effective MKIS tools

MARKETING PLANNING

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

The Advantages and Disadvantages of Internet Marketing Advantages of Internet Marketing n n n n n n

Cost reduction Competitive advantage Capability Communication improvements Control Customer service improvements

Disadvantages of Internet Marketing n n n n n n n

The Internet replaces people The potential demise of the high street The loss of the personal touch Security and privacy Accessibility Technological defects Information overload

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The Marketing Mix for Virtual Organizations Product Speed of development Rapid product life cycles Nature of packing Warranties/guarantees

Price

Place The Internet is the point of distribution, but couriering, postage, logistics are all still factors of the Internet as a distribution channel Web advertising DRA advertising Banner advertising Pop-ups Sales promotions

Reduced costs, e.g. no middle men, less organizational costs Customer expectations – i.e. lower costs Transparent pricing structures

MARKETING PLANNING

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NOT-FOR-PROFIT, SMEs AND VIRTUAL MARKETING

Hints and Tips n These particular syllabus elements are about showing that you understand that marketing is applied differently in a range of different organizations and sectors n Always show that you understand the difference in objectives, rationale for existence, marketing audit, marketing mixes and marketing planning and control n There will most likely be a question that challenges your understanding of marketing in another sector. Always ensure you have some good example to hand to support your answers and develop your thinking

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n Ensure that you are familiar with the advantages and disadvantages of virtual sectors vs. face-toface business and be able to illustrate your understanding of holistic business benefits n Keep up to date with various technologies, trends and activities in virtual markets n Be sure to justify your planning and marketing mix ideas in different sectors to demonstrate your ability to think things through and make wise marketing decisions n Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance