Cambridge International Diploma in Business at Advanced Level Marketing
Marketing Advanced Version Select Knowledge wishes to thank Nigel Proctor who compiled this module from Select Knowledge learning materials Copy Editor: Jane Read Proof Reader: Jane Read Typesetter: Mark Tamblyn Production Project Manager: Mark Tamblyn This module has been created in partnership with The University of Cambridge International Examinations and endorsed by University of Cambridge International Examinations for use with the Cambridge International Diplomas in Business. Select Knowledge website: www.selectknowledge.com The University of Cambridge International Examinations website: www.cie.org.uk All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publishers. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publisher 2008 Select Knowledge
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Contents Introduction v 1 A marketing orientation 3 Organisation of the marketing sub-functions 5 Negotiating with external agencies and suppliers 12 Summary 13 Customer-led organisations 14 The marketing mix an overview 20 Who are the customers and why do they buy? 23 Customers 24 Managing the customer 29 2 Researching the market 43 Where do you start? 46 Desk research 47 Field research 47 Market size 53 Summary 53 Sources of data 54 Profiling 55 Budgetry controls 58 Sources of suppliers 60 Summary 64 Planning research 65 Summary 70 3 Customer behaviour 73 Dividing markets up into customer groups 81 Customers, consumers and end-users 85 What influences buying behaviour? 89 A spotlight on customers 91 Different customer groups seek different benefits 92 The future of marketing 93 Strategic challenges 100 Summary 102 Contents Page iii
4 Planning and organising marketing activities 105 How to approach planning 106 Preparing a marketing plan 108 The planning cycle 114 Factors influencing the successful outcome of a plan 116 Implementing and monitoring the plan 120 Summary 122 Markets and market segmentation 123 Branding 126 Branding strategy 133 Ansoff s matrix 135 Porter s five forces model 137 5 The marketing mix 143 Simplicity or complexity? 144 Blending the ingredients 147 Focusing on the total offer 148 The extended marketing mix 149 Product (or service) 150 Differencies between product and service benefits 156 Product portfolio decisions 160 The new product development (NPD) process 164 Price 169 Pricing strategy 170 Pricing structures 175 Promotion 176 Promotion strategy 178 Advertising strategy 185 Direct marketing 191 Place 195 Distribution strategy 196 Supply chain management 198 International distribution channels 199 Strategy in services markets 200 Summary 203 The product life cycle (PLC) 204 The product life cycle (PLC) and new product development (NPD) 208 References 213 Page iv Contents
Introduction The aim of this workbook is to take the student step by step through the assessment objectives and competence criteria for this particular module. The sections correspond to each of the objectives wherever possible; however, in some situations a number of competence criteria are dealt with in a logical manner linking topics together to provide a broader understanding. The result of this is that some criteria are not in the strict order provided by the syllabus. This may create the impression that some of the competence criteria have been neglected. This is not the case and working through the entire workbook will ensure that the entire range of competence criteria is covered. Students should work through the workbook in the order laid out attempting all of the tasks provided to test their understanding and knowledge. This workbook, whilst covering the competence criteria, should not be seen as the only source of study for this module or the perfect text for this work. It provides a good source of information which provides the opportunity to develop the skills and knowledge of the individual in order to better attempt the assessment that follows at the end of the course. Introduction Page v
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Section 1 Marketing Page 1
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A marketing orientation The marketing concept implies that all the activities of the company should be customerled. In other words, each department within an organisation should be aware of customer needs, and should base its activities around meeting those needs at a profit. In practice, though, many organisations carry out the marketing function through a distinct department. This relegates marketing to a tactical function only, rather than defining it as the engine which drives the company strategy. The organisation's mission and value statement defines what business the company is in and the overall direction it aims to take. From this statement the corporate aims and objectives are set and the business plan developed. The organisation has set out where it wants to go and how it will get there. In a truly customer-orientated company, the business will be defined in terms of the benefits customers obtain: for example, a bus company would define itself as being in the transportation business rather than in the bus business, since transportation is what the customers are buying. Marketing's tactical aims and objectives are developed from the corporate aims and objectives, as are those of the other functions within the organisation. Each is setting off in the same direction. Each will scan the internal and external environment, gathering information from within the organisation and outside. At this point the sharing of information is essential in order that all internal plans are aligned and coordinated. However, it is not as easy in practice to coordinate the activities of all functions because they may have different priorities cost versus volume, for example. Production departments will prefer the economies of scale they can get when producing standardised products in high volume, whereas the salespeople may prefer a wide range of products, each produced in small batches, so that specific customer needs can be met. Research and Development may not be developing products fast enough or feel able to produce them when Marketing believes the time is right for the launch. The table below outlines some of the broad areas that may cause conflict between marketing and other functions within the organisation. The conflicts will be resolved through discussion and referral back to the overall corporate aims and objectives. Marketing Page 3
Examples of lack of coordination between the major organisational functions Marketing priority Function Function priority Individual customer Finance/Accounts Standard terms and discounts and pricing conditions to reduce administration costs Customer satisfaction/ Sales Making sales may be building loyalty looking short-term rather than long-term Customised orders to Production Standardisation and long runs satisfy specific needs to minimise changeover time and maintenance Broad product portfolio, Finance/Purchasing Standardisation non-standard products and parts Flexibility in pricing, Finance/Accounts Fixed pricing cost ability to offer discounts plus to ensure margins and budgets can move are maintained money from advertising to promotions if campaign is not working ACTIVITY 1.1 Have you experienced such lack of coordination in your organisation? Make brief notes below that outline the problem, and give your opinion of what caused this lack of coordination. Discuss this with your colleagues to get more information if you feel you do not know enough about it. Page 4 Marketing