10.1 Main role of sales and marketing

Question 1

Marketing is defined by the Chartered Institute of Marketing (CIM) as

Answer 1

• the management process that identifies, anticipates and supplies customer needs efficiently and profitably
• therefore key emphasis of sales and marketing function is on customer needs
  
  • to understand and anticipate customer needs
  • and to make sure product benefits and features meet their needs

Question 2

The market planning process:

Answer 2

• A marketing action plan will be needed to ensure an effective sales and marketing process
  1. Situation analysis
  2. Review mission and objectives
  3. Set marketing objectives
  4. Devise an appropriate marketing strategy
  5. Implementation
  6. Review

Question 3

Step 1- Situation analysis

Answer 3

• A number of techniques can be used, including:
  
  • SWOT analysis - the org needs to understand it’s own strengths and weaknesses as well as the opportunities and threats in the environment it operates in
  • PESTEL analysis - the org should review the external environment for opportunities that may allow it to better meet customers needs

Question 4

Step 2 - Review mission and objectives

Answer 4

• The marketing objectives will be based on the org existing mission statement and objectives

Question 5

Step 3 - Set marketing objectives

Answer 5

• Marketing objectives should be consistent with org overall mission and objectives
• Marketing objectives should be SMART
  
  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time bound

Question 6

Step 4 - Devise an appropriate marketing strategy

Answer 6

The following techniques can be used to close the gap between the current performance and the performance required as set out in marketing objectives:
- Market research - required to understand the org activities and provide a basis for effective marketing decisions
- Segmentation - the market should be segmented and the needs of each segment should be determined using market research
- Targeting - the most attractive segments in terms of profitability and growth should be targeted using an appropriate marketing mix
- Positioning - an appropriate positioning strategy should be chosen for each market segment
- Marketing mix - org should use the marketing mix to determine the correct marketing strategy

Question 7

Step 5 - Implementation

Answer 7

The marketing action plan should then be implemented and appropriate KPIs established

Question 8

Step 6 - Review

Answer 8

The plan should be monitored to determine it’s success and identify any necessary changes required to achieve the marketing objectives

Question 9

The marketing environment:

Answer 9

• is the content in which the org exists
• the environment can have a considerable impact on the org
• the macro environment includes all factors influence an org but are outside of their control
• org will need flexible marketing practices to respond to this dynamic environment
• PESTEL analysis can be used to analyse macro environment

Question 10

PESTEL

Answer 10

• Political - factors can have a direct effect on the way org operates (decisions made by government)
• Economic - national and global factors affect all bus
• Social - forces within society such as family, friends and media, affects our attitudes, interests and opinions which in turn will affect our purchases
• Technological - changes takes place rapidly and the org needs to be constantly aware of what is going on
• Environmental / Ecological - have become increasingly important and they influence a marketing orientated org in a number of ways
• Legal - laws and regulations governing businesses including health and safety, information disclosure, dismissal of employees, vehicle emissions, use of pesticides, etc

Question 11

The marketing mix is the

Answer 11

• set of controllable variables that a firm blends to produce desired results from it’s chosen target market

Question 12

The traditional marketing mix (4Ps):

Answer 12

• Product - features, durability, design, brand name, packaging, etc
• Place - distribution channels and intermediaries, transportation and storage
• Promotion - advertising, personal selling, public relations, sales promotions, direct marketing, etc
• Price - price level, discounts, credit policy, payment methods

Question 13

Additional (3Ps) marketing mix for service industry:

Answer 13

• People - role of employee is particularly important, staff must be selected, trained and motivated to meet customers needs
• Processes - systems through which service is delivered
• Physical evidence - required to make the intangible service more tangible

Question 14

Product - two main issues to consider:

Answer 14

• Product definition - main issue is to define exactly what the product should be. This can be done on three levels:
  
  • Core / generic product (need being fulfilled)
  • Actual product (tangible product)
  • Augmented / extended product (installation / after sales service)
• Product positioning - how does product compare to those of competitors, is it better and if yes in what way

Question 15

Pricing - four key considerations when deciding price (4 C’s)

Answer 15

• Cost - price must be high enough to make a profit
• Customers - how much are they willing to pay?
• Competition - is price higher than competitors?
• Corporate objectives - ie. setting price low to gain market share

Question 16

The four pricing considerations can be blended to give a range of pricing tactics:

Answer 16

• Cost plus pricing - cost per unit is calculated and then a mark up is added
• Penetration pricing - a low price is set to gain market share
• Perceived quality pricing - a high price is set to reflect an image of high quality
• Price discrimination - different prices set for same product in different markets (eg: peak / off peak)
• Going rate pricing - prices set to match competitors
• Dynamic pricing - prices altered in line with demand
• Price skimming - high prices are set when new product is launched to skim customers willing to pay more and then later dropped to increase demand
• Loss leaders - one product may be sold at a loss in expectation that customers will buy more profitable products as well
• Captive product pricing - used where customers must buy two products, the first cheap to attract, the second more expensive once they are captive

Question 17

Promotion is essentially about

Answer 17

• market communication
• primary aim is to encourage customers to buy products by moving them along the AIDA sequence:
  
  • Awareness
  • Interest
  • Desire
  • Action

Question 18

Org will use a combination of different promotional techniques as part of their promotional mix, including:

Answer 18

• Advertising - internet, TV, newspapers, billboards, etc
• Sales promotion techniques - buy one get one free
• Personal selling - telesales
• Public relations (PR) - building good relationships and a good corporate image (sponsoring)

Question 19

Advantages / disadvantages of advertising

Answer 19

• Reach a large number of potential customers
• Low cost for each potential customers
• Total cost can be very high
• Difficult to evaluate effectiveness

Question 20

Advantages / disadvantages of sales promotion:

Answer 20

• can help gain new users
• counteract competition
• clear out surplus stock
• can be costly
• may not win customer loyalty

Question 21

Advantages / disadvantages of personal selling:

Answer 21

• can focus on needs of individual customers
• a talented salesperson can be very persuasive
• can be seen as pushy
• high cost per potential customer

Question 22

Advantages / disadvantages of public relations:

Answer 22

• low or no cost
• can be targeted
• unbiased opinion
• negative review may damage reputation

Question 23

Some new forms of marketing communication include:

Answer 23

• Viral - encourages individuals to pass on marketing message to others
• Guerilla - well thought out, highly focused, often unconventional attacks on key targets
• Experiential - an interactive marketing experience aimed at stimulating all the senses
• Digital - promotion via one or more forms of electronic media
• Search engine marketing - promoting website by increasing visibility in search engine results
• Social media marketing - gaining traffic or attention through social media sites
• Postmodern marketing - focuses on giving customer an experience that is customised to them and in a form they prefer

Question 24

Place - a key decision is between:

Answer 24

• Selling direct - manufacturer sells direct to consumer without itermediaries
• Selling indirect - here there is a longer supply chain which could comprise a mixture of retailers, distributors, wholesalers and shipping agents

Question 25

The main marketing techniques are:

Answer 25

• Market research
• Market segmentation
• Market targeting
• Market positioning

Question 26

Market research is the

Answer 26

• systematic gathering, recording and analysing of info about problems relating to marketing of goods and services
• these problems will all relate to what customers want, need and care about

Question 27

Data gathering techniques:

Answer 27

Primary research (field)
- collection of new (primary) info direct from respondents.
- it is expensive and only used if secondary can’t answer the question
- the chosen sample must be representative of the population in question
- Eg: questionnaires, interviews, focus groups, trial testing

Secondary research (desk)
- data that is already available
- quicker and cheaper than primary
- however may not be accurate or meet exact needs of org
- Eg: Internal (org database) / external (internet)

Question 28

The data gathering techniques will be used to gather two main types of data:

Answer 28

Quantitative (numerical) data - such as total market size, market share percentage, segment info

Qualitative (non-numerical data) - values and beliefs of customers, trends in preferences, growth opportunities

Question 29

Market segmentation is the

Answer 29

sub division of the market into homogenous groups to whom a separate marketing mix can be focused

Question 30

The reasons for segmenting the market:

Answer 30

• The key objective is to say that people in a particular segment are more likely to buy the product
• The org will choose a particular segment to target. The total marketing budget can be split based on the likely return from each segment
• It will give org a better understanding of customers needs in each segment which they can use to try and dominate a segment or identify new market opportunities

Question 31

Kotler’s three market segment criteria:

Answer 31

Measurable
- it must be possible to identify the number of buyers in each market segment
- so that they can assess the potential profitability

Accessible
- it must be possible to reach the potential customers via the org promotion and distribution channels

Substantial
- small market segments may prove unprofitable to target

Question 32

Bases for segmentation:

Answer 32

Demographic - Age, gender, geographical, family life cycle, geo-demographic

Socio-economic - occupation, income

Psychological - lifestyle, attitudes, values

Situational / behavioral - occasion of use, frequency of purchase

Question 33

Targeting

Answer 33

• is the process of selecting the most lucrative market segments for marketing the product
• org can choose a different approach for each target segment

Question 34

Market approaches used for targeting:

Answer 34

Concentrated marketing (target marketing) - specialises in one of the identified markets, where org knows it can compete successfully

Differentiated marketing (segmented marketing) - the org makes several products each aimed at a separate target segment

Undifferentiated marketing (mass marketing) - is the delivery of a single product to the entire market, with hope that as many customers as possible will buy product

Question 35

Positioning involves the

Answer 35

• formulation of a definitive marketing strategy around which the product would be marketed to the target audience
• marketers will want to position their products in relation to competitors for that segment

Question 36

Porter identified four positioning strategies (pg303):

Answer 36

Cost leadership (low cost / broad target)
- org aims to be the lowest cost producer in industry

Cost focus (low cost / narrow target)
- a cost leadership strategy focused on one particular segment

Differentiation (high cost / broad target)
- org produces products which are different and appeal to customers on the grounds of ie quality / design

Differentiation focus (high cost / narrow target)
- a differentiation strategy but focused on only one particular segment