Direct Marketing and Sales Promotion Examination Mark Scheme June 2012 CAM Diploma 122 Direct Marketing and Sales Promotion Academic Session June 2012 Examination Marking Scheme This marking scheme has been prepared by the Senior Examiner for the purpose of giving guidance to the CAM marking teams. It should be noted, however, that the marking scheme is just one element of guidance that is given to markers and therefore must not be treated as the definitive guide to how marks are allocated. This marking scheme is issued to TUTORS ONLY as additional support to assist with the delivery of CAM programmes and to enable tutors to enhance feedback and guidance they give to students. THIS MARKING SCHEME MUST NOT BE DISTRIBUTED AND THE CONTENTS MUST NOT BE DISCLOSED TO ANY PERSON OTHER THAN TUTORS FROM CAM ACCREDITED CENTRES. Please also note that the marking schemes for individual units will differ in style and format because as stated, these are guidance documents used by the unit examination team. CAM Foundation 2012
Direct Marketing and Sales Promotion Examination Mark Scheme June 2012 DIRECT MARKETING AND SALES PROMOTION PART A Compulsory Green & Black s Background Green & Black's is a UK-based chocolate company, owned by Kraft Foods. The company produces a range of chocolate bars, ice cream, biscuits and hot chocolate, with its principal manufacturing sites in Poland and Italy. Its products are organic and premiumpriced. Green & Black's was founded in 1991 by Craig Sams and his wife, Josephine Fairley, the magazine editor and widely published journalist. The name was derived not from any founders' surnames, but from a word-play Green standing for the environmental concerns of the founders, and Black for the high cocoa solids chocolate they wished to provide. In 1994, the company began purchasing Fairtrade cocoa from Maya farmers in Belize for the Maya Gold chocolate bar, and was awarded the 1994 Worldaware Business Award for good business practice, as well as the UK's first Fairtrade mark. Premium Chocolate Market Premium chocolate represents a fast-growing and dynamic market, with global sales increasing and set to continue. As the health benefits are publicised and concerns about the environment become more important to consumers, they are buying more organic, Fairtrade chocolate. Target Consumer The target consumer is the adult lover of chocolate, especially one who buys other premium brands such as Gű, Illy or Jo Malone. Green & Black s has a broad age appeal to people who are willing to pay more for high quality food, are interested in cooking and enjoy visiting farmers markets. They are interested in the environment but it is not their priority when buying food products. The Challenge Green & Black s is now at a stage where it wants to grow and expand through introducing new customers to the brand and also cross-selling from the other products in its brand portfolio. One of the key challenges that Green & Black s faces is getting people to try the brand, as some consumers have a perception that organic chocolate does not taste good. Historically, Green & Black s has found that once consumers taste the chocolate bars they are more likely to convert into loyal customers. Adapted from various websites: http://www.greenandblacks.com http://www.just-food.com/market-research/global-market-review-of-premium-chocolate-forecasts-to- 2011_id68887.aspx http://awards.ycnonline.com/briefs/view/green-blacks/
CAM Diploma PART A Compulsory It is recommended that you spend approximately ONE hour on Part A. Question One You have recently been appointed as a Marketing Executive for Green & Black s to assist with developing a new marketing strategy. It is intended to give new consumers a motivating reason to trade up to Green & Black s above the other premium chocolate brands in the market and encourage brand loyalty. Write a report that: a. explains FIVE benefits of introducing a loyalty scheme for Green & Black s b. recommends and justifies a suitable loyalty scheme for Green & Black s (15 marks) (15 marks) c. recommends THREE sales promotion techniques that could be used to attract new customers and explains how each of these techniques could be evaluated. (20 marks) (Total 50 marks)
Direct Marketing and Sales Promotion Examination June 2012 Question One Mark scheme Question One (a) Benefits of loyalty customer loyalty reduction in attrition rates improvements in lifetime value of customer more positive word-of-mouth recommendation advocates the ladder of loyalty increased revenue. Question One (b) Loyalty Scheme A suitable loyalty scheme should be recommended, eg simple paperbased tracking of purchases ten free products in the range to encourage trail of new products. Collect points and redeem against other products in the Green & Black s range. The loyalty scheme needs to be suitable, creative, meeting objectives of loyalty and retention, cost-effective to administer and have some reward element that is of value to the customer. A complex loyalty scheme such as Tesco s and Boots might not be appropriate as it would be too costly. Moreover, limited administration is required to implement the scheme swipe card system to monitor purchases which then could be used to target customers with offers and create Green & Black s Club where members are invited to special events such as new launches, charity supported events and used in promotional literature. Question One (c) Sales Promotion Sales promotions should centre on incentives to try Green & Black s and encourage repeat purchase. In-store tasting sessions with offers such as buy one product get other half price. Samples with other products target audience purchases. 5 x 3 marks Total 15 marks 3 marks report 10 marks scheme 2 marks context Total 15 marks 3 x 5 marks for SP Collect 5 vouchers and be entered into competition to win a year s supply of Green & Black s. Evaluation: increase in new customers and feedback and questionnaires in addition to assessment of most effective sales promotion; redemption codes, increase in sales. 5 marks for evaluation Total 20 marks
CAM Diploma PART B SALES PROMOTION It is recommended that you spend approximately HALF AN HOUR on Part B. Answer EITHER Question Two OR Question Three Question Two For a manufacturer of your choice, produce a report that: a. explains, using relevant examples, the differences between push and pull promotional strategies (10 marks) b. evaluates, with examples, THREE sales promotion techniques used by manufacturers to influence resellers. (15 marks) (Total 25 marks) Question Two Mark scheme Question Two (a) Push strategies involve promoting the product only in the next line down the distribution channel. This method has the advantage of being cheap and relatively straightforward as each member of the distribution chain is most familiar with the ways of marketing to the next member down the chain. Push strategy emphasises personal selling, sales promotion and advertising. Pull strategies involve focusing effort on the consumer, on the basis that an increase in consumer demand will pull products through the distribution channel. A pull strategy emphasises advertising, sales promotion and strong merchandising. Question Two (b) buying allowances count and recount allowances buy back allowances dealers contests dealer conventions product training. Relevant examples clearly explained. 5 marks 5 marks Total 10 marks 12 marks (3 x 4 marks) 3 marks Total 15 marks
Direct Marketing and Sales Promotion Examination June 2012 Question Three For One is a new range of Italian pasta sauces marketed under the name of the famous chef, Lloyd Grossman. You are the Brand Manager for the For One range and have been asked to write a report which addresses the following: a. explain how marketing research can assist in the development of appropriate sales promotions (13 marks) b. identify, with reasons, THREE significant conditions that need to be in place in order to ensure that prizes and competitions comply with the relevant codes of sales promotion. (12 marks) Question Three Mark scheme Question Three (a) Candidates to identify and explain how research can assist in sales promotion: concept testing of techniques proposed informing creative profiling audience identifying appropriate media identifying methods to be used focus groups, interviews, questionnaires other appropriate contributions should be awarded marks. (Total 25 marks) Question Three (b) Promotions should specify the conditions clearly before any purchase is made (before or at the time of entry/application, if no purchase is required). 13 marks Other significant conditions are: start date/end date restrictions how to participate prizes nature and number proof of purchase availability of promotional packs promoter s name and address. 12 marks
CAM Diploma PART C DIRECT MARKETING It is recommended that you spend approximately HALF AN HOUR on Part C. Answer EITHER Question Four OR Question Five Question Four The Mailing Preference Service (MPS), a UK-based organisation, claims to support your right to choose the mail you want and as such is said to be advantageous to the direct marketing industry. For an organisation of your choice, produce a briefing paper that: a. describes the role of the MPS and Telephone Preference Service (TPS) in the direct marketing industry b. explains, with examples, how the MPS and TPS can benefit the direct marketing industry c. evaluates the importance of MPS and TPS for your chosen organisation. (10 marks) (10 marks) (5 marks) (Total 25 marks)
Direct Marketing and Sales Promotion Examination June 2012 Question Four Mark scheme Question Four (a) Introduction of the MPS, free service set up by the industry to give consumers control over the mail they receive. Reduces pressure from mailings for elderly or vulnerable people, consumers feel in control as they can opt out. MPS consumer file is a list of names and addresses that wish to limit DM and this is a requirement of the CAP codes. Takes 4 months for service to have full effect. Has been established for 20 years and supported by Royal Mail. TPS is the official central free opt out register on which people can record their preference not to receive unsolicited sales or marketing calls. TPS is a legal requirement: Privacy & Electronic (EC Directive) Regulations 2003. Question Four (b) Benefits to the direct marketing industry: reduces paper wastage ethical improves the image of the industry increases success rate of campaigns economical. Question Four (c) Evaluation must relate to chosen organisation. The impact on corporate reputation that could have repercussions for profits, share price. Depending on the organisation eg a bank could be perceived as untrustworthy and ultimately very damaging, as banks are custodians of customers money and the relationship is based on trust, or if a charity is chosen, a decrease in donations. If companies persist in not complying with MPS and TPS, agencies may refuse to work with them. Legal implications such as fines for non-compliance. 10 marks 10 marks 5 marks
CAM Diploma Question Five You have been appointed as Direct Marketing Assistant by The Big Issue magazine and have been asked to produce a direct marketing plan to increase readership. The Big Issue is one of the UK s leading social businesses, and nineteen years since its inception continues to offer homeless and vulnerably housed people the opportunity to earn a legitimate income. The Big Issue magazine currently reaches a readership of 646,000* and also engages with a relatively small number of non-readers via events, donations and its online presence. This means that the organisation currently engages with roughly 0.01% of the UK s population. Produce a briefing paper that: a. describes the components of a direct marketing plan for The Big Issue magazine, including objectives, implementation, timing and indicative budget b. explains how the success of the direct marketing campaign will be evaluated. Question Five Mark scheme (15 marks) (10 marks) (Total 25 marks) Question Five (a) Each stage of a direct marketing plan should be explained but an actual DM plan is not required. Plan should be contextualised to the Big Issue. Objectives should be SMART. Implementation - suitable tactics such as emails, texts, DM. Timing. Indicative budget. Control increase in readership, website hits, sales. Question Five (b) Monitor and evaluation: sales readership focus groups website hits responses to emails redemption of offers. 10 marks knowledge 5 marks application Total 15 marks (2 marks x 5) Total 10 marks