CIM revision cards marketing in practice by john williams of marketing knowledge

CIM REVISION CARDS Marketing in Practice John Williams of Marketing Knowledge AMSTERDAM l BOSTON PARIS l SAN DIEGO l HEIDELBERG SAN FRANCISCO l l l LONDON l SINGAPORE l NEW YORK SYDNEY l l 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: 978-0-7506-6773-9 ISBN-10: 0-7506-6773-7 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 10 Working together to grow libraries in developing countries www.elsevier.com | www.bookaid.com | www.sabre.com TABLE OF CONTENTS 10 Preface iv The marketing function Context of marketing 26 Integrated marketing mix: product 44 The marketing mix: price 58 The marketing mix: place 64 The marketing mix: promotion 70 The integrated marketing mix – service extension (people, physical evidence and process) 91 The management of marketing information 95 Skills for the marketer 106 Bringing it all together: the marketing plan 112 PREFACE Welcome to the CIM Revision Cards from Elsevier/Butterworth–Heinemann We hope you will find these useful 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 to 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! THE MARKETING FUNCTION Unit Syllabus Reference: 2.1, 2.2, 2.8, 2.9 n Explain the structure of marketing departments in both small and large organizations n Discuss the different roles and responsibilities of marketing personnel n Understand how the marketing function needs to interact with other organizational departments and external agencies n Appreciate how to work effectively with others, including your manager n Understand what is meant by effective e-relationships MARKETING IN PRACTICE THE MARKETING FUNCTION KEY DEFINITIONS n Decision-making unit: The group of people who may be involved in the purchase of an item; the buyer may well not be the decider n Gap analysis: A model for evaluating strategies for moving a company from where it is with its existing strategies to where it desires to be n Macroenvironment: The general external environment of a company that is explored by a model such as STEEPLE n Marketing Information System: ‘A Marketing Information System (MkIS) is a structure of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute information for use by marketing decision-makers n Microenvironment: The environment immediately surrounding the organization, including the competition n PESTLE: The analysis of the political, economic, social, technical and legal environment within which the company operates n Porter Value Chain: A model for the internal examination of the organization and how it interacts with its environment n Porter forces of competition: A method for the analysis of competitive forces on a company n Segmentation: The division of a large, heterogeneous market area into homogeneous sections to allow more effective marketing The Competitive Environment n Techniques for analyzing the competitive environment are Porter’s Five Forces (Customer Power, Supplier Power, Barriers to Entry, Substitute Products and Competitive Intensity) and PEST Factors analysis (political, economic, social and technological) PEST looks at the big changes driving society, whilst Five Forces looks at industry specific factors n Porter also devised Value Chain Analysis, which can be done from an internal or external perspective VCA considers how value is added at each stage in a supply chain and seeks to find ways of removing steps that add cost faster than value n The value chain categorizes the generic value-adding activities of an organization The main activities are: outbound logistics, production, inbound logistics, sales and marketing, maintenance These activities are supported by: administrative infrastructure management, human resources management, R&D, and procurement The costs and value drivers are identified for each value activity The value chain framework quickly made its way to the forefront of management as a powerful analysis tool for strategic planning Its ultimate goal is to maximize value creation while minimizing costs The concept has been extended beyond individual organizations It can be applied to whole supply chains and distribution networks MARKETING IN PRACTICE THE MARKETING FUNCTION Marketing Function n The structure of the marketing function varies according to the size of the organization In small organizations individuals will be responsible for a number of roles, whereas large organizations will have people in role-specific jobs n Marketers interact with a large number of people, internal and external to their organization, so need to develop skills that will help them build effective working relationships with others, including their manager n In effective organizations the marketing function communicates with other functions to ensure consistent and coherent implementation of business objectives and company policies and procedures n When selecting external agencies, determine selection criteria that include screening, shortlisting and sampling to make the right decision n The use of E-mail and other electronic forms of communication have increased the speed and availability of information and contact, but reduced personal contact which may have a negative impact on the development of close working relationships Dibb, Simkin, Pride and Ferrell: Marketing – Concepts and Strategies (4th Edition) Marketplace n The marketplace consists of the buyers and users of the organization’s products and services and the immediate microenvironment in which the purchase and use takes place n The behavior of the market place is influenced by the microenvironment; in particular, the competition and their competitive marketing mix offerings In turn, the microenvironment is influenced by the macroenvironment n The organization responds to the environment by continually adapting its internal environment Porter’s Value Chain and the McKinsey 7s model provide a framework for evaluating the internal environment of the organization n The data from the internal environment, the microenvironment and the macroenvironment is collected and analyzed, using tools such as a SWOT analysis n The management team defines the broad mission, aims and objectives and decides the strategic stance to be adopted (e.g to be a market leader or a market follower) n When broad initiatives are decided the detailed issues of the marketing mix need to be developed n The financial implications of marketing plans are critical Plans need to be integrated with all the other business plans, e.g logistics, financial management and organizational development MARKETING IN PRACTICE Hints and Tips n As always relate the theory to your own marketing experience Do not go into deciding what research you will until you have considered what the information is required for Without a sense of direction it is easy to waste effort on researching factors that will have little impact on the organization It is also easy to miss key aspects Good research starts by knowing what are the right questions Typical questions for the CIM exams are: What information is required? How might the information be obtained? How can the information be used to develop marketing plans? n The question will be presented in the context of a specific case study and for good marks the answer should not be a list but should discuss the issues with context specific development Such questions have appeared in the 2002 and 2003 CIM papers Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance MARKETING IN PRACTICE 105 SKILLS FOR THE MARKETER Unit Syllabus Reference: 1.2, 1.3, 1.5, 2.2, 2.3, 2.7, 2.9, 3.1, 3.4, 5.2 n Select an appropriate way to communicate numerical information n Formulate copy for written communications and understand housekeeping conventions for business processes n Write a press release copy that is appropriate for journalists and understand how to support the copy with images, etc n Appraise the value of an exhibition within a communications plan and appreciate the key issues in planning and running an exhibition stand n Appreciate from a management perspective the key issues of database management n Understand the basis of person-to-person communication, the building block of networks, the heart of relationship marketing n Prepare presentations that appear professional and achieve their objectives n Understand some of the key basic rules of project management n Appreciate the way to formulate an effective brief and select a company for contract work Design Elements of good design: l Appropriate and suitable l Consistent l Considers balance or tension l Creates unity l Creates continuity l Makes good use of white space MARKETING IN PRACTICE 107 SKILLS FOR THE MARKETER 108 Drawing up a Brief Often, as part of a project, you will involve outside contractors such as an advertising agency A framework for a simple brief: n Current situation: a focused overview of the current marketing situation and context, so the agency can see how their input will ‘plug in’ to the overall integrated marketing mix n Some cover of the competition issues should be included n Promotional objectives: what are the objectives (SMART) for the activity? n Definition of the target markets, audiences and other key stakeholders n Budget issues n Time scales: schedule of deadlines for the project such as day for submission for the brief response, etc n Deliverables: What will need to be provided on completion of the brief? Remember good housekeeping; tie up loose ends such as who owns the copyright for artwork, etc n Contacts: Who should be contacted to answer questions? This can be more than one person for complicated assignments, with several diverse skills involved n Framework for de-briefs and reviews after completion: Remember, even if you not select the organization this time, you may want to work with them some time in the future Selecting an Agency On receipt of the brief submission, and with other background, the desired contractor can be selected Key issues include: n Does the company fully understand the needs of the brief? n Is the company imaginative and creative and able to make an original contribution? n Are the people professional and business like? The best creative work is of no value if it is delivered weeks after the deadline n Is the team balanced and able to cover all aspects of the brief? n Is what you see what you get? Sometimes the experts make the pitch and then leave the actual work to trainees Make certain you get the level of skills you are paying for n If relevant, can the organization support the project on an international basis? n Is the company fully competent in new areas such as e-commerce? MARKETING IN PRACTICE 109 SKILLS FOR THE MARKETER 110 n Has the organization got a sound attitude to costs? The best artwork is of no value if the project comes in way over the planned budget n How important will the work be to them? If the company is too small they may not have the capabilities A very large company will not provide real resources to a modest bit of business and you might be left with some creative crumbs rather than the ‘A’ team n Possibly the most important one of all, can you work with them over the time period of the project? These people will become part of the extended part-time team and need to fit into the team or conflict could possibly arise Hints and Tips n In particular, this unit requires you to move from reading to developing skills You this, in part by practising yourself, but also by observing how others work; learn from best practice n A significant number of the CIM exam papers pose questions for you, to either demonstrate that you understand these skills issues (e.g in December 2003 ‘What are your key contacts in your new role, and how can you build effective working relationships with them?’), or to use them (e.g ‘Write a letter to the Advertising and Promotions Manager of a local newspaper company suggesting ways you can work together and run joint promotions.’ June 2003) Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance MARKETING IN PRACTICE 111 BRINGING IT ALL TOGETHER: THE MARKETING PLAN Unit 10 Syllabus Reference: 2.6, 3.2–3.4, 4.1, 4.2, 4.6–4.8, 5.3, 5.5, 5.6 n Appreciate that plans are developed from basic outlines with continual refinement Further research provides the required information to fill in the gaps and working assumptions n Understand that organizations not have just one grand plan, but a whole family of interlocking plans, which increase in detail the closer they get to the implementation of all the various objectives and development of the various operations n Appreciate the difference between missions, aims and objectives and the role they play in shaping marketing plans n Understand the process of evaluating the marketing environment and situation analysis: where is the organization? n Understand that segmentation variables and strategies need to be continually reappraised n Appreciate the need for formulating strategic alternatives and the selection of appropriate options n Appreciate that, after formulating the overall SMART objectives, it is necessary to formulate more detailed operational objectives, e.g for all the individual elements of the marketing mix n Understand that, to formulate outline plans, working assumptions need to be made These highlight to the marketer the information gaps that need to be researched n Appreciate the need for control and feedback systems for the management of marketing plans n Understand the need for some contingency reserve and strategies to be built into plans that will have to operate in an uncertain trading environment MARKETING IN PRACTICE 113 BRINGING IT ALL TOGETHER: THE MARKETING PLAN Stages in the Marketing Plan 114 The Planning Process MARKETING IN PRACTICE 115 BRINGING IT ALL TOGETHER: THE MARKETING PLAN 116 Ansoff Matrix Contd Nine Cell Matrix With the use of the Ansoff matrix, there will almost always be more opportunities than the organization can pursue So a selection process is required MARKETING IN PRACTICE 117 BRINGING IT ALL TOGETHER: THE MARKETING PLAN 118 The figure above shows the adapted version of the GE nine-cell matrix Having profiled the sectors, each product group to sector match is a potential business The GE approach is flexible It is essential to have an understanding of what is attractive to the organization and have a framework to rate it If market attraction is measured as market growth and competitive advantage as market share, the GE matrix gives us the same type of results as the Boston matrix The Boston version tends to work best with FMCG branded products and not so well with B2B products, where competitive advantage may come from such elements of the mix as field service and technological superiority Porter Within a segment, an organization may pursue a number of potential strategies Porter suggested three important alternatives: Cost leadership strategies (everyday low prices – sustained by having the lowest cost base in the sector) Differentiation strategies (a distinctive differentiated offering) Focus strategies (niche-type marketing with a specialist targeted offering) MARKETING IN PRACTICE 119 ... marketing of services and products n Appreciate the value of internal marketing in the successful implementation of marketing plans n Understand the additional complexity of marketing in an international,... examiners’ time without gaining additional credit Go to www.cimvirtualinstitute.com and www.marketingonline.co.uk for additional support and guidance MARKETING IN PRACTICE 25 CONTEXT OF MARKETING. .. significant differences can be maintained vs competitor(s) MARKETING IN PRACTICE 11 THE MARKETING FUNCTION 12 Marketing Function n CIM s definition of marketing is ‘The management process which