Mbamuk SB 5 2011

2010/11
D I S T A N C E L E A R N I N G M B A
Marketing
STUDY BOOK
Study Book: Marketing
Copyright © University of Bradford 2005, 2007, 2009, 2010, 2011
First published 2005

Second edition 2007
Third edition 2009
Fourth edition 2010
Fifth edition 2011
MBAMUK_SB_5_2011
University of Bradford
Richmond Road
Bradford
BD7 1DP
BRADFORD UNIVERSITY SCHOOL OF MANAGEMENT
Director of Studies
Jonathan Muir
Senior Administrator
Linda Moore
Module Development Team

Sally Burrows, Monique Cuthbert, Kyoko Fukukawa
Keith Hanning, David Jobber
Julian Rawel, Christine Swales
Module Leader
Keith Hanning
Bradford University School of Management

Emm Lane
Bradford BD9 4JL
Tel: 01274 234374

Fax: 01274 232311
Email: m.j.hayes2@bradford.ac.uk
Website: http://www.bradford.ac.uk/management
This Study Book may not be sold, hired out or reproduced in part or in
whole in any form or by any means whatsoever without the University’s
prior consent in writing.
2 Bradford MBA
Contents
Introduction to the Module 7

Your module leader 7
Module aims and objectives 7
Learning and study approach 7
Assessment 11
Assignment 11
Unit 1: Introduction to Marketing 15
Introduction 15
Objectives 16
The buyer–seller relationship 16
Marketing as an attitude of mind 18
Marketing creates customer value 20
Marketing approaches 21
The marketing mix 21
Summary 24
Powerpoint and lecture audio 25
Additional reading and resources 26
References/bibliography 26
Unit 2: Marketing Planning 27
Introduction 27
Objectives 27
Planning or strategy 28
Marketing audit and strategic focus 31
Marketing objective 31
Implementing the marketing plan 32
Marketing organisation 34
Marketing control 34
Summary 35
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Unit 3: Marketing Environment and Auditing 39

Introduction 39
Objectives 40
The marketing audit 40
The marketing environment 40
Internal analysis 43
Bringing it all together – SWOT analysis 44
Summary 45
Unit 4: Understanding the Market 49
Introduction 49
Objectives 50
Understanding the customer 50
How do consumers make decisions? 50
How do organisations buy? 54
Market segmentation 56
Segmentation process 60
Target marketing 64
Positioning 64
Summary 65
Unit 5: Marketing Research 69
Introduction 69
Objectives 69
Marketing reseach 70
Type of marketing research 71
The reseach process 72
Data collection 73
Applying research 74
Summary 75
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Contents
Unit 6: Product/Service and Branding 79

Introduction 79
Objectives 79
Product 80
Service 81
Product analysis 85
Branding 87
Brand extension and stretching 88
Three product/service marketing strategy models 90
New product development 92
Summary 93
Unit 7: Pricing and Distribution 97
Introduction 97
Objectives 98
Price 98
Pricing methods 100
Pricing strategy 102
Place: type of distribution 105
Who uses distributors? 106
Summary 109
Unit 8: Marketing Communications 113
Introduction 113
Objectives 114
Development of marketing communications 114
Defining marketing communications 115
The communication process 117
Communications planning 120
Marketing communications as part of marketing strategy 120
Message development 125
Evaluating effectiveness 129
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Summary 130
Unit 9: Revision 135
Introduction 135
Objectives 135
Marketing plan 136
Business mission 137
External marketing audit 137
Internal marketing audit 138
SWOT analysis 139
Marketing objectives 140
Core strategy 140
Marketing mix decisions 141
Budget 142
Organisation and implementaiton 142
Control 143
Summary 144
Appendix Model Answers to Activities 145
Unit 1 145
Unit 2 147
Unit 3 148
Unit 4 154
Unit 5 156
Unit 6 157
Unit 7 158
Unit 8 160
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Introduction to the Module
YOUR MODULE LEADER
Keith Hanning
Before he joined the School of Management, Keith held marketing, sales

and general management positions in the manufacturing industry, most
recently with Masco Corp (USA). He also taught at Huddersfield University
and Bradford College and on a number of professional and management
development courses including those of the Chartered Institute of
Marketing. Keith is Director of Studies for the undergraduate collaborative
programme for the School of Management delivered in the Institute for
Integrated Learning in Management (IILM) in India (New Delhi and
Gurgaon). He is also Director of Studies for the School's executive
education programme with Accent Group.
MODULE AIMS AND OBJECTIVES
The module is to provide you with a comprehensive introduction to

contemporary marketing theory and practice. In particular, this module is
designed to enable you to:
 build knowledge and understanding of the key concepts and principles
of marketing;
 develop the ability to apply these concepts and principles to practical
marketing situations; and
 refine analytical, problem-solving and creative skills.
LEARNING AND STUDY APPROACH
Approach to studying the Marketing module
As a distance learning/part time student you will be studying this module at

a time and place that fits around your other commitments... however...
It is strongly advised that you progress through the module studying

1 unit per week.
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If you do this, you will find that the issues addressed on your tutor group
discussion board, during the on-line lectures (if available) and the live on-
line tutorials will correspond closely to your own studies.
With this in mind you should aim to start your studies the week
commencing 17th of January 2011. This is when the Blackboard materials
for this module will be made available. If you follow the study pattern
suggested (completing 1 unit per week) you will finish the final unit of this
module on (or around) 28th March 2011.
By following this study regime you will leave yourself plenty of time to
recuperate and prepare for the assessment.
Textbook
You should have received a copy of the module textbook:
Principles and Practice of Marketing (2010), 6th edition, David Jobber,

McGraw-Hill.
This textbook forms an essential and central part of your study. You must
read the chapters or the page references as specified at the beginning of
each unit, noting particularly the key issues. At various points in the units,
you will be directed to read specific pages, or to look at cases or figures
featured in the textbook. You should also make the effort to read the
various cases and vignettes interspersed throughout the textbook. You
may also find the review sections at the end of each chapter useful in
checking your knowledge and understanding of the chapter content.
Module Study Book
This Study Book will provide you with an insight into the subject of
Marketing. In order to develop your understanding of Marketing you will be
prompted to complete a number of exercises and consult a variety of
information sources (e.g. audio of on-site lectures, academic and non-
academic papers). It is strongly advised that you follow the prompts
provided and engage with all the materials. The materials include:
Study Book activities and case studies
As you progress through the Study Book you will be asked to complete a
series of short activities. Completion of these activities is absolutely
essential if you are to develop a good understanding of Marketing. Simply
reading the textbook and the Study Book will not be sufficient. As such if
the Study Book advises you to consult additional materials (e.g. a case
study or an academic paper) and note down some key points/issues then
you are strongly advised to do so. Model answers to all the activities
are provided in the Appendix.
8 Bradford MBA
Lecture materials
Audio from the Marketing lectures provided to full-time on-site students

and the corresponding power point slides are available to distance
learning/part time students (see the Marketing Blackboard site and click on
the menu item entitled: ‘Power Point & Lecture Audio’).
Throughout the Study Book you will be advised to listen to the audio and
consult the power point slides at key moments. I would strongly advise
that you follow this instruction.
Del.icio.us
The Del.icio.us materials available via the Marketing Blackboard site

provide you with a collection of highly contemporary writings on key
marketing issues. I strongly advise that you use this resource in order to
develop your understanding of contemporary marketing issues. The
Del.icio.us resources can be found under ‘External Links’ in Blackboard.
The Discussion Board
The Discussion Board is a tool in Blackboard which allows you to engage

in a discussion on a particular issue(s) regardless of your location. Each
week a different issue (and the related tasks) will be introduced in the
Study Book. You will be required to answer the corresponding questions
on the Discussion Board for you and your tutorial group to consider. It is
vital that you engage with these discussions and post your ideas, thoughts
and comments on the Discussion Board. By engaging in the discussions
you will start to learn from other students and gain alternative perspectives
on the issues being addressed.
The discussions will take place weekly and each discussion will last for 5
days. Your tutor will closely monitor the discussions and provide feedback
throughout. At the end of the discussion, your module tutor will summarise
the comments/issues raised, provide model answers (if appropriate) and
close the discussion.
Elluminate live tutorial
Throughout the duration of the module you will be required to attend four
live on-line Marketing tutorials conducted by your module tutor.
These on-line tutorials will allow you to experience something close to a

real on-site tutorial with each tutorial session providing you with an
opportunity to engage in detailed, real-time discussions on key issues and
concepts with other students and academics.
The subject and materials for each live on-line tutorial are outlined in the
appropriate unit of the Study Book. However, please note that your
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module tutor will provide exact details of the on-line tutorial sessions (e.g.
time/date) once the module has commenced.
For more information on how to access and become involved in the on-line
tutorials go to the ‘How To’ guidelines available on Blackboard
Formative Assessment
On-site students receive feedback all the time on their progress and
understanding. Often this occurs within tutorials where students can
answer questions and can gain feedback on their understanding of a
particular idea/concept. As a distance learning student you will be
provided with an opportunity to submit two pieces of work that your
module tutor will assess and give you detailed feedback. The two
opportunities for formative feedback relate to issues discussed in Units 4
and 7 (see relevant units in the Study Book for further details).
Please note: none of your answers to these formative tasks will

count toward the final grade – they are optional exercises that allow
you to test (and receive feedback on) your understanding of key
concepts/theories and ideas.
You will also have access to a comprehensive bank of multiple choice

questions in Blackboard allowing you to monitor your understanding and
get instant feedback on your understanding and progress.
The Atrium
The Atrium is an on-line social space which allows you to discuss general
issues to do with your studies (e.g. where you can find a relevant article on
a particular subject) as well as more personal issues (e.g. comments on
world events, photographs you wish to share with other students). Each
week your module leader will visit the Atrium and add to the discussion by
posting relevant materials and/or comments.
For more information on how to access and become involved in the Atrium
go to the ‘How To’ guidelines available on Blackboard
Internet resources
The world wide web provides a very useful resource for you. As such you
may be directed towards certain web-based resources as you read
through the Study Book.
Further to this, particular websites will prove useful when you want to
analyse business organisations or when you wish to read informed opinion
regarding marketing issues. Sites well worth checking out include:
http://www.cim.co.uk (The Chartered Institute of Marketing)
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http://www.marketingpower.com (American Marketing Association)
http://www.msi.org/ (Marketing Science Institute)
For further information on additional resources see the sections in

Blackboard entitled ‘Additional Learning Materials’ and ‘External Links’.
ASSESSMENT
The module is assessed by 100% individual assignment.
ASSIGNMENT
The assignment should be submitted in the form of a report and should be

typed or word-processed, Time New Roman, font size 12, 1.5 spacing; it
should comprise no more than 3,500 words, not including front cover,
table of contents, diagrams, tables, footnotes, references and appendices.
Please note the appendices must not exceed 15 pages. Tables and
figures are only an aid to the proceeding discussions. Thus, for example,
presenting a SWOT analysis in a table without adequate discussions will
not be credit worthy.
Once your assignment has been marked, you will receive written feedback
from your tutor.
Assignment aim
The aim of the assignment is to demonstrate your understanding of a

number of marketing concepts covered in the module and your ability to
apply the concepts to current practices of organisations in a meaningful,
insightful and balanced way; and to critically reflect the process you have
gone through during the development of your assignment.
Assignment task
The assignment consists of the following two tasks.
1. Marketing Plan (approximately 3,000 words) – to prepare a marketing

plan for an organisation of your choice. The organisation you choose can
be where you are currently working, have worked in the past, or perhaps
would like to work in the future; or you can choose any organisation that
particularly interests you.
The marketing plan should include the audit (e.g. your view of the
company’s current marketing activity / use of the marketing mix) and
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marketing recommendations (e.g., STP and design of the marketing mix)

that you propose are appropriate in the future.
A template for a marketing plan and detailed notes of what should be

included in each section can be found in Unit 9 of the Study Book. Unit 9 –
Revision, includes key issues and questions need to be addressed in the
assignment report.
You are advised to focus on a division of a company, or a specific territory

rather than on one major global corporation. If any doubts regarding the
suitability of your choice, you should contact your tutor to discuss the issue
further.
2. Reflexive account (approximately 500 words) – to write a reflexive

account of your experiences and learning during the preparation of the
above marketing plan.
The reflexive account provides you with an opportunity to reflect on the

project you have undertaken. The reflective account is specifically aimed
to draw links between textbook accounts of preparing a marketing plan
and your own practical experiences of doing this in the current module.
Your reflexive account should provide a good balance between
practical/process issues involved with the development of your marketing
plan and the theoretical perspectives contained within the textbook and
other module materials. The reflexive account should include elements on:
 An assessment of what aspects of marketing plan development process
worked well and what was problematic;
 Reflections on yourself as a marketer (whose inclination is to put their
attention to the needs of the customer);
 What you have learnt from the assignment in relation to the role of
marketers in an organisation and in a society.
As a way of approaching this part of the coursework, we encourage each

person to keep a personal diary while completing the coursework. These
diary entries are not assessed – it is for your own personal use in
developing your reflexive account. Such a diary has several functions:
 to record activities undertaken;
 to reflect on activities and thoughts (for example – “Today I did … this
led me to think about my assumptions … and the way I have …).
To do the above, you may ask a number of questions reflecting on your

own experiences and learning; in order to address the following issues in
your reflexive account:
 What happened?
 What were your reactions and feelings?
12 Bradford MBA
 What was good/bad about the experience? What were the

positive/negative aspects?
 What general conclusions can you come to from this e.g. about the role
of marketing in an organisation and in society?
 What specific conclusions can you come to from this e.g. about you as
a marketer, your style of working and approach to learning?
 What will you do differently in this type of situation in the future?
You are encouraged to begin writing your research diaries as soon as you
start your assignment.
Submitting the assignment
All assignments must be submitted as a single file.
All assignments will be submitted electronically via the module Blackboard

site, go to ‘Assessment’ → ‘Assignment Submission’.
You should then see a link entitled: ‘View/Complete’. Click on this link. You
will then be taken to a submission page. The First and Last name boxes
are automatically filled. Check that your details are correct. In the
submission title box provide the title for your submission. This should be
the module title and your UB number e.g. ‘Marketing 10001234’. Do not
include your name in the title.
Click the Browse button to upload your file. Navigate to your file and click
Open.
Click Upload. Wait while your file is uploaded to the server. The next page
gives you the opportunity to review your submission. At this point you
have not submitted and can return to the submission page to start again if
you so wish. If you are happy with that this is the correct paper and want
to continue to submit, scroll to the bottom of the page and click Submit.
You will then be emailed a receipt to your university email address

which will include your assignment identification reference.
For further information on how to submit your assignments using Turnitin

go to the ‘How To’ section of Blackboard (Under ‘My Organizations’) and
review the materials: ‘How to Submit an Assignment Electronically’.
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Unit 1:
Introduction to Marketing
Key reading:
1. Jobber, Chapter 1
Key audio/video:
1. ‘Introducing the Module: Professor David Jobber – Activity 1.1 (see
‘Video Resources, Unit 1 – Professor Jobber’s Introduction’ in
Blackboard)
2. ‘Philip Kotler on Marketing Strategy’ – Activity 1.2 (see ‘Video
Resources, Unit 1 – An Introduction to Marketing’ in Blackboard)
Other:
1. Unit 1 Multiple Choice Questions – Activity 1.6 (see ‘Formative
Exercises, Marketing Multiple Choice Questions, Unit 1 – An
Introduction to Marketing’ in Blackboard)
2. Unit 1 Discussion Board – Activity 1.7 (see Case 2 in Jobber, pages
33–36, ‘H&M Gets Hotter’)
3. Unit 1 PowerPoint and Lecture Audio (see ‘PowerPoint and Lecture
Audio, Unit 1 – An Introduction to Marketing’ in Blackboard)
INTRODUCTION
Reading: Jobber, Chapter 1
The concept and practice of marketing is concerned with putting the

customer first. The working definition of marketing that we use expresses
this idea neatly:
‘The achievement of corporate goals through meeting and exceeding

customer needs better than the competition.’
We can think of marketing as a philosophy that underpins and drives the

activities of an organisation. We can also regard it as a business
function and process concerned with the set of activities necessary to
obtain and service demand for an organisation’s products. We examine
this in detail in later units. All elements of marketing serve to determine the
approach of organisations and ultimately their business performance.
In this first unit, we provide an overview of marketing by looking at the

complexity of delivering an ever-changing set of products and services
Bradford MBA 15
within a business context that is broad, subject to economic fluctuations

and has to deal with volatile consumer tastes and demands. More
specifically, we look at the philosophy of marketing and marketing
orientation and the role of marketing within modern organisations.
ACTIVITY 1.1 – WATCH AND LEARN
Go to the Marketing Blackboard page. On the left hand side you will see a
row of menu items you can click on. Click on the menu item entitled ‘Video
Resources’. You should then see a folder named ‘Unit 1 – An Introduction
to Marketing’. Click on this and you will see a video entitled: ’Introducing
the Module: Professor David Jobber’. By watching this video you will gain
an initial understanding of the Marketing discipline and the requirements of
the module you are about to study.
OBJECTIVES
By the end of this unit, you should be able to:

 define the marketing concept
 define marketing as a business orientation and as a business activity
 distinguish between different business orientations
 recognise the management issues involved in creating an integrated
marketing driven organisation
 define what is meant by the Marketing Mix and understand how the
elements of the mix from an overall marketing management process
THE BUYER–SELLER RELATIONSHIP
In describing what happens between the production and acquisition by a

customer of a product, good or service, marketing has developed from the
idea of a simple exchange process, characterised by direct contact
between sellers and buyers. This process is now a highly differentiated
and complex function within the organisation, which manages the
relationship between the organisation and the customer.
Up to the late 18th century, Europe was primarily an agrarian economy

with a widespread population living in small towns and villages. Few large
cities existed – even London in 1780 only had a population of 300,000
people. Production of goods and services was on a small scale for local
use and directed at a stable, little changing community whose needs were
easy to measure, meet and satisfy. Goods were typically sold or bartered
for within the locality in which they were made. Much of the actual selling
was mediated by direct contact between seller and buyer.
16 Bradford MBA
Unit 1: Introduction to Marketing
It is easy to forget that this simple exchange form of ‘marketing’ still exists
today, for example in small agricultural market communities that hold
livestock and produce markets. Even bartering is widely carried out in
developing countries.
From the late 18th century, in most of mainland Europe, with the exception
of pre-Republican France that began industrialisation in the early 19th
century, the mechanisation of production began to bring a reliable,
standard and quickly produced diversity of goods. Having satisfied local
needs, goods could be marketed to a wide range of national and
international customers. In the mid-1800s, encouraged by the co-operative
movement, groceries started to sell basic products such as soaps,
medicines and foodstuffs to working people. Retailers set up branches all
over the UK as the idea took hold, and towns grew. With increased
disposable income, consumers became more sophisticated and
manufacturers competed to provide a greater choice than staples for basic
needs.
Allied to this growth was the birth of large manufacturing companies such
as Ford and Lever Brothers. These organisations engaged in mass
production for home and overseas markets. Development of mass
production techniques demanded stimulation of mass consumption. In the
context of these beginnings of a truly international market, the buyer–seller
relationship became more distanced. Manufacturers needed to find ways
to differentiate their product from that of their competitors. Companies
such as Fry and Pears packaged their products to protect and preserve
the goods, but this also gave them an important opportunity to establish
quality and value in the minds of the customer by use of a brand.
Advertising was used as a means of making the customer aware of
product availability and the benefits on offer. Many brand leaders
established during this period are still market leaders today. For example,
Kellogg’s Cornflakes celebrated its centenary (100 years) in 1998.
Today, in the so-called ‘developed’ world, choice, in many cases,

outweighs our ability to discriminate purely on price and quality. Many of
us have far more consumables and goods than we can possibly need, so
marketers have to devise more and more sophisticated mechanisms to
differentiate the ‘value’ of their offerings from those of their competitors.
Increased competition and fast-changing political, social, technological
and economic environments have forced managers in all sectors of
business activity to consider the broader factors which shape their markets
and influence consumer choice.
In this context, marketing has developed as a management discipline in its

own right. In recent years, practical marketing techniques initially
developed for consumer goods such as soap and foodstuffs have
subsequently been applied and adapted for industrial goods and services
in the private and public sector in response to competitive pressures. No
doubt, marketing as a discipline will continue to evolve in order to provide
Bradford MBA 17
practical frameworks to help managers make appropriate decisions in a

complex environment.
MARKETING AS AN ATTITUDE OF MIND
The marketing concept suggests that organisations need to focus their

attention on the needs of the customer. Not all organisations are the
same, of course. Some are market driven and some are focused more on
the production of goods for a diverse and widely dispersed customer base
– a base that need not necessarily include the general public.
Look at Figures 1.2 and 1.3 on page 5 of the textbook. The production-
orientated model in Figure 1.2 shows, in the simplest form, the way that
many industries have thought of ‘marketing’. The concentration on
production capability and costs (how much can we make and how will we
sell it?) gives rise to an inward-looking business philosophy. The customer
is relegated to last place – as someone to be overcome with aggressive
sales methods. Marketing in this type of organisation is largely confined to
a support function concerned with promoting and selling the product on
offer.
Contrast this basic model with that of the marketing-orientated model in

Figure 1.3; the key difference here is the level of responsiveness to the
customer and their needs. The customer is the starting point for business
activity, not merely the recipient. Organisations which are truly marketing
oriented are outward-looking, actively seeking to understand the
customers and their needs before making decisions about which markets
and which groups of customers to serve. Having identified potential market
opportunities, the organisation creates product or service solutions that
serve and satisfy the needs of current and potential customers better than
the competition.
If customer needs change, then an organisation that is marketing

orientated will be aware, through its research function, of that imminent or
actual change. This can provide a significant competitive advantage over
other suppliers who are not geared up to take immediate advantage of the
situation. Consider the situation with cameras: In the 1990s, Kodak
launched its APS system to meet the demands for simple, easy-to-load
cameras which provide a range of formats but it was a full year before
Canon and other camera manufacturers could respond. Contrast this to
Canon’s development of the digital camera and Kodak’s tardy response.
18 Bradford MBA
Focus of effort
There is also the issue of management focus in the two types of

organisation. In the first type of organisation, production-orientated
management becomes focussed on unit cost of an often quite limited
range of product or service in order to achieve organisational objectives.
By contrast, the philosophy of a customer-driven organisation, which

adopts a marketing-orientated stance in the world market, drives it to
exploit latent and undeveloped opportunities. The organisation goes where
customers’ needs are detected and seeks to fulfil those needs by being
responsive to the customers.
Of equal importance, all personnel in an organisation understand where

their company is going and how they might help it to get there regardless
of whether their function is or is not customer facing.
Resources’. You should then see a folder named ‘Unit 1 – Introduction to
Marketing’. Click on this and you will see a video entitled: ‘Philip Kotler on
Marketing Strategy’, featuring Philip Kotler from Northwestern University
discussing marketing strategy at the London Business Forum. By watching
the video you will gain an understanding of current issues surrounding
marketing strategy.
ACTIVITY 1.3 – STOP AND THINK
Consider your own organisation or an organisation with which you are

familiar. In your view, which of the two business philosophies –
‘production-oriented’ or ‘customer driven’ – prevails?
The checklist in Table 1.1 in Jobber (page 8) may help you decide – Is
business philosophy as clear cut as this? Describe the function of
marketing in your chosen organisation. What is the business purpose of
that marketing function? Consider the organisation in terms of the
efficiency/effectiveness quadrant in Figure 1.4 on page 9 of the textbook
when assessing the success of a particular business philosophy.
Bradford MBA 19
Activity 1.3 – Stop and Think Answer:
MARKETING CREATES CUSTOMER VALUE
Having introduced the idea of matching what we can produce to customer

need, let us now return to the idea of a marketing philosophy driven by a
customer-focused marketing orientation. The idea we touched on above of
a ‘successful’ company and that of ‘profit’, links directly with the idea of
customer ‘value’ and organisational ‘values’.
The difficult problem of how we define customer ‘value’ (or more correctly,
how the customer defines value!) is one we will return to in Unit 3.
However, the key ideas of perceived benefit and perceived sacrifice are
important to explore now, since once we can understand what drives
customers to buy, we can begin to look at issues in the wider marketing
environment. We can then begin to comprehend how organisational
strategies built on evaluating and responding to the wider environment can
ensure company survival, growth and ‘success’. How do we define
customer value?
Customer value = Perceived benefits – perceived sacrifice
Or we can put this another way: the gain (acquisition of the product or
service) must outweigh the pain of acquisition (cost, difficulty of obtaining
the item, service, uncertainty about making the right choice, cost of
making the wrong decision).
We can identify a number of value parameters:

 meet and exceed customer expectation – not just on price
 in a service sector industry – provide a quality environment in which
customers feel valued and comfortable
 in a manufacturing sector setting – provide a customer service which
exceeds that of the competition.
20 Bradford MBA
As a company, you need to match your customers’ values and beliefs and
reflect them in your product range and in the advertising and promotion
that surrounds it.
ACTIVITY 1.4 – READ AND LEARN
Read the example of McDonald’s outlined in Jobber, page 13.
Make sure that you understand the key concepts of ‘perceived benefit’ and
‘perceived sacrifice’. There is no doubt that McDonald’s is a globally
‘successful’ company. From your own experience of entering a
McDonald’s restaurant, how do you personally rate McDonalds in terms of
value?
MARKETING APPROACHES
Now we look at how the organisation sees and promulgates its marketing
strategy through its marketing activities and approach. In a study of 1,700
senior marketing executives, Hooley and Lynch (1985) teased out the
marketing characteristics of high and low performing companies (based on
reported profits). The way marketing executives in the study perceived and
articulated the marketing function through their marketing activities can be
seen in their model of marketing approaches. High performing companies
are (among other factors) more committed to marketing research and tend
to emphasise market share as a way of evaluating marketing
performance.
THE MARKETING MIX
Based on an understanding of its customers, a company develops its

Marketing Mix containing four main elements:
 product
 price
 promotion
 place.
They form the backbone of marketing activity. Let us examine each one in
turn:
Product (or service)
The product or service decision is fairly self-evident; marketers must

conduct research into the products that customers actually want or need.
Bradford MBA 21
The skill of the marketer is in commissioning the right kind of research and
being able to analyse the often-conflicting ‘evidence’ which comes out of
that research. Consider, for example, the Renault Espace people carrier
launched in 1989 in the UK. Social research showed that people weren’t
having bigger families, but that those smallish families had more leisure
time. In the late 1980s in Britain, there was a rise of 17% in the growth of
small businesses. The price of oil had remained stable for the past 8
years.
Disparate information perhaps, but to a skilled marketing department at

Renault, this meant that the function and place of the car in society was
changing (or indeed had changed). More leisure meant people were
travelling for social reasons; small business people were using their
vehicles for business purposes. Relative stability in petrol prices meant
that buyers weren’t necessarily seduced by ‘economy’. Renault got it right;
they developed a large, boxy car designed almost as an extension of a
social living and business space and set the scene for the proliferation of
people carriers.
We look in detail at product and service management in Unit 6.
Price
Price decisions can affect the perceived value of a product or service and
is a key determinant in the value equation we read about earlier – benefit
of acquisition versus the sacrifice required by the customer.
Pricing and price setting is a sensitive area for marketers where price
levels are in part determined by the manufacturing and distribution costs
over which they do not necessarily have complete control. The marketing
environment in terms of prices offered by the competition is a key factor
which marketers setting prices must take into account.
Supermarkets with traditionally narrow profit margins over a large range of

goods are particularly sensitive to pricing both in terms of what they
charge for a product and how much they pay their suppliers. Suppliers, for
example, Procter and Gamble, often offer preferential rates to their large
supermarket customers over those offered to small corner shops.
Supermarkets in turn can offer ‘loss leader’ items to shoppers to entice
them into buying other non-discounted goods.
We look in detail at price in Unit 7.
Promotion
Promotion is often perceived by the general public as being synonymous

with ‘marketing’. However, promotion is only one part of marketing and
covers a range of marketing communications from advertising to public
22 Bradford MBA
relations. How should goods and services be brought to the attention of

the customer? How will the target audience be made aware of the product
or service’s features and benefits? Should they be advertised using mass
media or should there be an element of personal selling? Will publicity
alone help sales? Will customers convert their interest into purchase?
We examine these issues in detail in Unit 8.
Place
You develop a great product or a superb service, offer it at precisely the

right price and promote it in a sensitive and well-defined way. However, it
can all be wasted effort if the goods are not in the right place for the
customer to make the purchase. This is where the importance of the final
part of the Marketing Mix becomes clear. In many cases, for example, the
success of a new product launch depends on the manufacturer’s ability to
negotiate and secure shelf space in the outlets of increasingly powerful
retailers. The choice of distribution outlets for goods and services can also
affect the image of the brand.
Sometimes, however, limited availability can prove to be an advantage.

Consider, for example, the launch of Tellytubbies dolls in the UK in
Christmas 1997. Note the seasonal introduction of this product. We could
argue that the fact that demand outstripped supply was a marketing
planning decision to increase long-term customer demand. In terms of
promotional advantage over the competition, the Tellytubbies campaign
scored highly. News of shortages was broadcast on all major UK television
channels with pictures of queuing at major stores. Demand soared and
Tellytubbies dolls became one of the highest selling Christmas toys of
1997. Physical shelf space is however, becoming less important as virtual
shelf space via the internet takes a more prominent distribution position.
We look at distribution in detail in Unit 7. Three other elements of the

Marketing Mix – People, Process and Physical Evidence – sometimes
known as the ‘Services Marketing Mix’ should also be taken into account.
We discuss these in Unit 6.
Generally, for the Marketing Mix to be successful it should be well blended

to create competitive advantage. Overall, it needs to deliver the benefits
which customers seek and to satisfy their underlying needs and wants.
Consider the value of the Marketing Mix to your understanding of your own
organisation’s marketing activities. If you are working in the voluntary and
not-for-profit sector, consider the relevance of the Marketing Mix to this
Bradford MBA 23
sector. How can a model so dependent on the profit motive have

relevance to organisations set up with different organisational objectives?
SUMMARY
Reading: Summary/Review in Jobber, pages 25–27
From our overview, we can see that the marketing function has a central
role in the success and survival of any organisation whether it is in the
service, non-profit or profit-motivated sector of the economy. Marketing
ensures that the right product or service is developed and made
accessible to the right customers at a price they are willing to pay.
Marketers have many tools to draw on in that delivery process including
research techniques which we will look at in the next unit, various methods
of reaching audiences and key inputs to make in the design of the
marketing plan.
You should note the following key points:

 Marketing historically is a human activity concerned with exchange
 Marketing ideas have developed, especially in the last 50 years, to
reflect what is now a highly complex and differentiated organisational
activity
 Contemporary marketing is about relationship management
 Marketing is customer-focussed
 Marketing is a business philosophy, function and a process
 Marketing planning is linked with organisational objectives and
structures
 Marketing is a key business activity tied to organisational effectiveness
and efficiency
24 Bradford MBA
 Good marketing gives good value to customers

 The Marketing Mix (4Ps) should be blended to match corporate
resources and customer needs and to create competitive advantage
POWERPOINT AND LECTURE AUDIO
row of buttons you can click on. Click on the button entitled ‘PowerPoint
and Lecture Audio’. You should see a folder named ‘Unit 1 – Introduction
to Marketing’. Click on this and you will see an audio entitled: ‘Unit 1
Lecture Audio’. In the same folder, you also click on ‘Unit 1 Lecture
Powerpoint Slides’. Listen to the audio and consult the lecture slides at the
same time.
The Audio and Powerpoint slides cover the main topics in this unit.
However, since the materials are specially designed for the on-site MBA
programme at Bradford, there may be discrepancies between some of the
issues addressed in this unit and the lecture. Please focus on the areas
that are applicable to/have been discussed in this unit of the DL MBA
Marketing module.
ACTIVITY 1.6 – MULTIPLE CHOICE QUESTIONS
Now that you have finished this unit of the Marketing module you should
test your knowledge and understanding of the key concepts and ideas
discussed throughout the unit. In order to do so go to the Marketing
Blackboard page. On the left hand side you will see a row of menu items
you can click on. Click on the menu item entitled ‘Formative Exercise’. You
should then see a heading entitled ‘Marketing Multiple Choice Questions’.
Click on this and then click on ‘Unit 1 – An Introduction to Marketing –
MCQs’ and work through the questions provided.
ACTIVITY 1.7 – DISCUSSION BOARD
Complete Case 2 ‘H&M gets Hotter’ (Jobber, pages 33–36) and post your
answers to the following questions on your tutor group Discussion Board
(your tutor group can be found under ‘Groups’ in Blackboard).
Question 1: To what extent is H&M marketing oriented?
Question 2: What is the basis of the customer value H&M provides for its
customers?
Question 3: Do you consider the marketing of disposal clothes contrary to

societal welfare?
Bradford MBA 25
ADDITIONAL READING AND RESOURCES
If you wish to learn more about the issues covered in Unit 1 then go to the
Marketing Blackboard page. On the left hand side you will see a row of
menu items you can click on. Click on the menu item entitled ‘Additional
Learning Materials’. You should then click on ‘Additional Reading’ see a
folder entitled ‘Unit 1 An Introduction to Marketing’. Click on this and you
will see two academic papers by Gebhardt, Carpenter and Sherry (2006)
and Verhoef and Leeflang (2009).
Gebhardt, Carpenter and Sherry (2006) paper presents a conceptual

model to explain how firms create a market orientation.
Verhoef and Leeflang (2009) paper provide a fresh look at the

antecedents and consequences of the marketing department’s influence
within the firm, relating it to market orientation and firm performance.
REFERENCES/BIBLIOGRAPHY
Hooley G J and Lynch J E (1985) ‘Marketing lessons from UK’s high-flying

companies’, Journal of Marketing Management, 1(1), 65–74.
26 Bradford MBA
Unit 2:
Marketing Planning
Key reading:
1. Jobber, Chapters 2 and 21
Key audio/video:
1. ‘Strategic Marketing Planning’ – Activity 2.4 (See ‘Video Resources,
Unit 2 – Marketing Planning’ in Blackboard)
Other:
Exercises, Marketing Multiple Choice Questions, Unit 2 – Marketing
Planning’ in Blackboard)
2. Unit 2 Discussion Board – Activity 2.6 ‘Marketing Metrics’
3. Unit 2 On-Line Live Tutorial – Activity 2.7 (see Jobber pages 30–32,
Coca-Cola vs Pepsi case study) (See ‘Groups, Live on-Line Tutorial’ in
Blackboard)
Audio, Unit 2 – Marketing Planning’ in Blackboard)
INTRODUCTION
In this unit, we concentrate on strategy and planning. We explore how the

ideas we are going to learn in this module can be brought together into a
unified whole, implemented and controlled in a way to ensure that
organisational business objectives can be met. In the first part of the unit,
we clarify these terms. Then we concentrate on marketing strategy and
some useful tools for devising, delivering and evaluating the success of
strategy. Where appropriate, you will need to link to other units.
OBJECTIVES

 detail the specific steps in developing a marketing plan, and list the key
topic headings in a marketing plan
 identify the elements of a marketing audit, and apply them in given
settings
 identify a range of marketing objectives
Bradford MBA 27
 detail the role of portfolio models and the Ansoff matrix as frameworks
for identifying and evaluating strategic options
 distinguish between strategy and tactics
 define appropriate measures of marketing control in given settings.
PLANNING OR STRATEGY
Before we look at marketing planning issues in detail it is important to

recognise and discriminate between some key terms we use in our
discussion of strategy and planning. You may be already familiar with
some of the following ideas, others may be new, however, make sure that
you can distinguish between the following terms:
 business mission
 business objectives
 organisational objectives
 strategic objectives
 strategic thrust
 core strategy
They are interdependent ideas but differ in the role they play in the
organisation and what they do to help the organisation meet the business
goals. You can think of these ideas in linear terms (Figure 2.1).
Figure 2.1: The objectives tree
company mission
|
organisational objectives
|
business objectives/business strategy
|
marketing objectives
|
marketing strategy
|
operational objectives
Compare Figure 2.1 with that found in the textbook Figure 2.1, page 40,
the marketing planning process, to see how the marketing planning
process fits into broader organisational strategy.
28 Bradford MBA
Unit 2: Marketing Planning
Marketing planning serves the objectives of the marketing strategy

which in turn serves the objectives of the strategic plan, while strategic
management ensures that all parts of the business, including marketing,
deliver business objectives in line with the stated mission.
The aim is that organisations have correlating business and

organisational objectives that are mutually supportive. For example,
Company X may have the business objective of growing by 20% this year
and an organisational objective which supports that, for example, to
cascade a cultural climate through the company, which empowers staff
and helps support the business objectives.
When we distinguish between marketing planning and strategic planning,

the important factor to recognise is that marketing planning is part of
broader strategic planning. The role of strategic planning is to ensure
that a plan is designed which will enable the organisation to meet
business and organisational objectives (see Jobber, pages 38-39).
Consider your own organisation or one that you are familiar with. What are
the organisation's business, marketing and organisational objectives?
What is the level of inter-relatedness of these three top level objectives?
Does it have a stated mission? If it does, try and compare this with its
business objectives.
Activity 2.1 – Stop and Think Answers:
Marketing management is crucial to strategy because it is marketing

which moderates and manages the interface between the company and its
environment. Marketing planning is important to ensure that the
Marketing Mix for the product or service matches customer need as well
as looking for opportunities to market other products to new markets.
Bradford MBA 29
There are inevitably some marketing management decisions to be made

to decide the direction and scope of the marketing plan and to keep it on
target and a marketing strategy is often devised to include marketing
planning ideas, marketing management activities and the wider
organisational strategic plan.
It is also the role of marketing to inform the wider strategic plan of any
need to change focus, based on what marketing research finds about
changes in the wider environment. This is an example of how marketing
must market itself internally within the organisation to ensure that its
messages are understood and hopefully acted upon. It can be a source of
conflict in organisations, which have a strong marketing team, but where
the strategic focus is drawn from another department, such as finance, for
example.
Conflict is also potentially present between marketing and sales

departments who may share the same objectives but can interpret the
path to those objectives quite differently. We look at this in more detail
when we investigate marketing implementation and application.
You may want to look back at Unit 1 and remind yourself about the
differences between a production-orientated organisation and a marketing-
orientated organisation (Jobber, pages 4–6). In their internal structure,
many organisations exhibit elements of both typologies – it is rare to find
an organisation in which all departments conform to one form of
orientation.
In a marketing manager’s ideal world, companies would be easy places to

run. They would market one product only, have a forward-thinking
marketing team who would devise a successful marketing strategy which
would translate directly into a workable and achievable marketing plan.
Marketing would be responsible for setting, implementing and controlling
the mission statement, business objectives, organisational objectives and
overall strategy. The organisation naturally would be run along lines of a
successful marketing-orientated business; every department would
recognise, own and support the objectives set for them by the marketing-
led Board of Directors, Senior Management team, Chief Executive Officer
or Management Committee (depending on the form of constitution taken
by the organisation).
In real life, however things are seldom so simple; even in organisations

which overtly declare themselves to be customer driven, there can be
disagreements or gaps between various levels of the strategic and
operational planning process and this may affect the success of the
marketing plan.
30 Bradford MBA
MARKETING AUDIT AND STRATEGIC FOCUS
In Unit 3 we introduce the concept of analysing the marketing environment

and internal strengths and weaknesses of an organisation – the start of
the marketing planning process. This whole planning process is predicated
on some key planning questions:
 Where are we now?
 How did we get there?
 Where are we heading?
 Where would we like to be?
 How do we get there?
 Are we on course?
The first three questions form the backbone of the marketing audit.
Before we can decide where we would like to be, we need to know where
we already are. In itself the audit is only of benefit if we use the information
to make informed choices about our next move. You can see here the link
between the ideas we discuss in Unit 5 about marketing research. The
need for accurate and complete, up-to-date information is critical to the
relevance and usefulness of the finished audit.
Jobber (2010, page 42) defines a marketing audit as: “A systematic

examination of a business’s marketing environment, objectives, strategies
and activities with a view to identifying key strategic issues, problem areas
and opportunities.”
MARKETING OBJECTIVE
Before we focus on the two areas of objective setting for marketing, let us
see how they fit into the wider marketing planning process. Note Figure
2.1, page 40 in the textbook the marketing planning process. As you can
see from the diagram, it is the objectives which inform core strategy.
Competitive advantage cannot be won without clear objectives or strategic
thrust.
Marketing planning at the business level ends with marketing objectives –

after that, planning issues centre around the marketing management
areas of mix decisions (the 4 or 7 Ps), implementation and methods of
control. It is clear that marketing teams need strategic thinkers to come up
with the core strategy and organisers to process and deliver that strategy.
Read from the heading ‘Marketing Objectives’ in Jobber, pages 48–55,

‘The Rewards of Marketing Planning’.
Bradford MBA 31
IMPLEMENTING THE MARKETING PLAN
The implementation of anything new involves organisational change and

more specifically change management strategies are required to
overcome resistance and deliver performance. We also look at issues
concerning control and organisation of the implementation process and
how, judiciously exercised in line with organisational concerns like culture
and process these can help meet planning objectives.
“Change is not made without inconvenience, even from worse to better.”

This is not a quote by Drucker as you might think, but by Richard Hooker
writing in about 1580 and as quoted by Dr Johnson in the Preface to the
English dictionary.
Jobber, page 775, invites you to differentiate between aspects of strategy

and implementation.
“Marketing strategy concerns the issues of what should happen and why it
should happen. Implementation focuses on actions: who is responsible for
various activities, how the strategy should be carried out, where things will
happen and when action will take place.”
Implementing marketing strategy involves the key management skills of

resource, people and operational management.
Read Jobber, pages 775–780 noting the relationship between strategy

and implementation shown in Figure 21.1. Check out the four ways of
combining strategies and implementation shown in Figure 21.2.
You may find it interesting to look at the transition curve in Figure 21.3
on page 780 to see how people deal psychologically with change.
Think about your own organisation or one with which you are familiar. Are
you aware of any barriers or forms of resistance to the implementation of
marketing ideas or solutions?
Look at Figure 21.5 and read the explanatory text on pages 781–785 to
help you identify possible change slowing and halting strategies.
32 Bradford MBA
Read Jobber, Vignette 21.2, page 795.
All worthwhile plans and strategies necessitate substantial human and

organisational change inside companies. Marketing managers need
something practical to help think through strategies to drive change. One
key tool in a marketing manager’s kit is the idea of the internal market and
a way to drive change is to develop marketing responses to internal
organisational challenges. Internal marketing comes from services
marketing – where staff are trained and motivated within the organisation
and channels of communication are opened to allow dialogue about key
organisational issues.
If you are a member of a large organisation you may have an internal

newsletter or e-letter or even (like IBM) various glossy journals informing
you about the business of the company and inviting your response. IBM
see their staff as internal customers – and their support, commitment and
participation in change and business objectives are essential for the
growth of a company that is dedicated to delivering a quick response to
changing market conditions.
Read Jobber, pages 785–795, Developing implementation strategies.
This reading covers all the key aspects of internal marketing. While you
are reading, reflect on your own organisation’s internal marketing strategy.
Does it work? How could it be developed? Does your organisation have a
change master? If it does, then you may find it useful to identify the
activities such a person undertakes which effect change. If you don’t have
an internal marketing strategy what would be the benefits of devising one?
How would you decide on the focus of a strategy?
Bradford MBA 33
MARKETING ORGANISATION
Let us now look at the marketing organisation and consider how

companies organise their marketing function. Check Figure 21.9, page
796 in Jobber. Does this look familiar to you? Many organisations are
structured along similar functional lines.
Read the description on pages 795–798 of this type of organisation. Turn

to Table 21.1, ‘Potential conflict between marketing and sales’, on page
797.
This kind of conflict is very common in an organisation that is organised

along functional lines. Responsibilities are clear but as product ranges
grow and the markets served increase, the whole structure is put under
stress. No one has full responsibility for a particular product or market.
Other forms of marketing structures are possible which take more account
of marketing objectives and customer requirements. Note the particular
features of the product-based organisation and the market-centred
organisation. Take particular note of the characteristics of the market-
centred organisation and the matrix organisation.
IBM follows a kind of matrix organisation. Check its website,

www.IBM.com, to learn more about how it organises its sales and
marketing.
MARKETING CONTROL
Marketing control is the final part of the marketing planning process. We

have explored ideas of strategic objectives, marketing objectives and
operational and marketing planning options in some depth. In order to
answer the final question of the six that we posed at the beginning of this
unit – ‘Are we on course?’ – we need to have some control and evaluation
mechanisms written into our plan.
Read Jobber, pages 801–810
Make sure that you understand the differences between strategic control
and operational control. Return to the model of the marketing planning
process, Figure 2.1, page 40, Jobber, and Figure 2.1, The Objectives Tree
(above), to see the relationship between strategic objectives and
operational management. When considering the issues of strategic
control, you will see the relationship between the first three questions we
posed earlier and the marketing audit. This audit forms the starting point
for the control process. When you consider operational control you need to
be clear about the three main ways.
34 Bradford MBA
Explain what is meant by:
Profitability analysis; sales analysis; market share analysis; and customer

satisfaction measurement (this may be carried out within your own
organisation).
Resource’. You should then see a folder named ‘Unit 2 – Marketing
Planning’. Click on this and you will see a video entitled: ‘Strategic
Marketing Planning’. The video provides some insights of how a process
of developing a marketing plan can be managed.
SUMMARY
We can summarise this unit by noting the following main issues:

 Marketing planning is part of overall organisational or business
planning.
 Marketing strategies are a sub set of overall business strategies.
 The Marketing Audit helps us to understand “where we are”.
 SWOT help us to plan “where we are going”.
 We need to understand the human/organisational issues surrounding
good or poor marketing strategy implementation.
 Marketing control measures help us to understand the effectiveness of
our marketing activity.
Bradford MBA 35
and Lecture Audio’. You should see a folder named ‘Unit 2 – Marketing
Planning’. Click on this and you will see an audio entitled: ‘Unit 2 Lecture
Audio’. In the same folder, you also click on ‘Unit 2 Lecture Powerpoint
Slides’. Listen to the audio and consult the lecture slides at the same time.
Marketing module.
Click on this and then click on ‘Unit 2 – Marketing Planning – MCQs’ work
through the questions provided.
Read Jobber, page 803–810 (‘Operational Control and the Use of

Marketing Metrics). Discuss the marketing metric used in your
organisation. What are the strengths and weakness of these metrics?
ACTIVITY 2.7 – ON-LINE LIVE TUTORIAL
Jot down your answers to questions 1, 2 and 3 outlined below and be

ready to discuss these issues during the on-line live tutorial (your module
tutor will have posted details of when this tutorial will take place).
If you are unsure about how to access the on-line tutorial using the
Elluminate software go to the ‘How To’ guidelines in Blackboard for further
instruction.
Read Case 1 Coca-Cola vs Pepsi (Jobber, pages 30–32)
36 Bradford MBA
Question 1: Assess both Coca-Cola and PepsiCo in terms of their level of

marketing orientation?
Question 2: What advantages, if any, does PepsiCo’s greater

diversification give the company over Coca-Cola?
Question 3: Assess Coca-Cola’s part-ownership of innocent drinks from

the point of view of both companies.
folder entitled ‘Unit 2 Marketing Planning’. Click on this and you will see:
Shaw, Shaw and Enke (2004) ‘Relationships between engineers and

marketers within new product development: An Angle-German
comparison’, European Journal of Marketing, 38, 5/6, 694-719) – The
paper discusses potential conflicts between R&D personnel and Marketers
and its cross cultural comparison during the process of new product
development. This will provide an idea about what sort of issues marketers
incline to emphasise in comparison to their counterparts.
There is also a podcast available. Click on the menu item entitled

‘Additional Learning Materials’. You should then click on ‘Additional Audio’
see a folder entitled ‘Unit 2 Marketing Planning’. Click on this and you will
see a podcast entitled ‘How to Work with IT’ by Marketing News, American
Marketing Association. This provides some insights of how marketers work
with members of IT department to implement marketing activities.
Bradford MBA 37
Unit 3:
Marketing Environment and
Auditing
Key reading:
1. Jobber, Chapter 2 (pages 42–48), Chapter 3, and Chapter 19 (pages
705–713)
Other:
Environment and Auditing’ in Blackboard)
2. Unit 3 Discussion Board – Activity 3.5 ‘Marketing in an Economic
Crisis’ (see ‘Reading, Unit 3 Marketing Environment and Auditing’ ,
Dealing with a Recession’ and ‘Ethical Brands in a Recession’ in
Blackboard)
Audio, Unit 3 Marketing Environment and Auditing’ in Blackboard)
INTRODUCTION
No company operates in a vacuum. All companies have to work according

to external influences which affect them. A marketing-oriented
organisation looks outwards to the environment in which it operates,
adapting its strengths and weaknesses to develop strategies and tactics to
take advantage of new opportunities and to limit the risk from potential
threats created by the environment.
In this unit we look at the two principal elements of the Marketing Audit.
Firstly we study the key influences from the external marketing
environment – the macro and the micro. Most companies find it difficult to
influence the former but easier to influence at least some of the latter. We
then take a look internally at the organisation, in order to understand its
key marketing strengths and weaknesses.
Finally we develop a SWOT analysis which matches the external

opportunities and threats of the marketing environment to the internal
strengths and weaknesses of the marketing organisation. From this
position, we can start to develop effective marketing strategies.
Bradford MBA 39
OBJECTIVES

 understand the marketing environment
 identify the key macro elements of political, economical, social,
environmental, legal and technological factors
 develop an understanding of the key competitive micro forces
 understand the basics of the internal audit
 develop the SWOT analysis.
THE MARKETING AUDIT
The marketing audit is a means of identifying key issues facing

organisations and how prepared/competent they are to deal with these
issues. It starts externally (the environment), proceeds internally and
finishes with a summary SWOT analysis.
THE MARKETING ENVIRONMENT
Read Jobber, Chapter 3 and Chapter 19 (pages 705–713)
The marketing environment describes the areas in which the organisation

operates and the context within which the organisation makes its
marketing plan. There are many reasons why marketers need to have an
understanding of this. For example, an organisation needs to:
 be in position to take up opportunities to develop its market
 be ready to defend itself against competition
 be able to forecast changes in the environment which may affect its
future
 keep up with technological change.
The environment in which any organisation operates is made up of two

interdependent elements – the macro element and the micro element.
The challenge for the organisation is to be able to identify and measure
the strength of each element and make decisions which directly provide
solutions or responses to changes perceived in that environment. Let us
look at each of the two elements in turn. We start by looking at Figure 3.1
on page 78 in Jobber.
40 Bradford MBA
Unit 3: Marketing Environment and Auditing
The macro-environment
This is also called the wider or far environment. SLEPT is an acronym

given to this far environment – it is made up of elements in the larger world
which are subject to change and which are outside the direct control of the
organisation. Note political lobbying is one example of how a company can
try to indirectly control government policy, one part of the far
environment.
The SLEPT factors concern the:

 Social factors – lifestyle patterns, population distribution, social values,
social trends
 Legal/Political situation – government attitude to business, business
controls, the influence of pressure groups, legislation to control or
support business activity
 Economic state of the wider market – national GDP, income levels,
sector growth rates, worldwide currency fluctuations
 Physical environment – environmental factors play an increasingly
important part in influencing consumer choice and shaping government
regulation. For this reason, the physical environment has been added
as an additional factor to consider when developing the marketing plan.
Marketers must be aware of the environmental opinion of governments,
political movements, the media and the public in general and the impact
it may have on their activities.
 Technological aspects – new technology in business affecting
communications, production processes and administration of the
organisation, new materials for use in products.
The effective organisation is one that can take account of and quickly
adapt its internal processes and marketing activity to cues from events in
the macro-environment.
The micro-environment
Let us look now at the micro-environment of an organisation. Whereas the

macro-environment is made up of influences to which companies need to
adapt, the micro-environment includes influences over which most
companies can exert some type of control.
The micro-environment is best described through what Porter, with his

Five Forces Model, calls the ‘structural determinants of the intensity of
competition’ (Porter 1980; Jobber, pages 705–708). These are the
challenges in the micro-environment that an organisation has to meet to
be competitive in the market:
 rivalry amongst the current competitors in the industry
Bradford MBA 41
 bargaining power of customers

 bargaining power of suppliers and distributors
 threat of new entrants into the industry
 threat of substitute products or services
Assess the macro environment (SLEPT) for one of the following products
(tobacco, soft drink, mobile phones, cosmetic, housing) or one you choose
in the UK or your own country.
Activity 3.1– Stop and Think Answers:
Drawing on the discussion in Jobber (pages 705–708) construct a five

forces model of the industry in which your company operates.
How strong is your company and where does it exhibit competitive

strengths and weaknesses?
42 Bradford MBA
INTERNAL ANALYSIS
Read Jobber, Chapter 2, pages 42–48
Understanding the external environment is one thing. Matching this to

internal competencies is another. Listed below are some key elements of
an internal marketing audit that need to be understood and acted upon:
Strategic issues
Firstly, how appropriate are our marketing strategies? What are the
objectives of the organisation? What is its competitive advantage? What
customer groups does it target and how clear is its proposition and
position? How does it apply its core competences to the marketing
environment and subsequent application of the Marketing Mix?
Marketing systems
Information helps us to understand external and internal influences and

performance. The quality of marketing information and the marketing
research that feeds that information may well dictate the quality of the
application of the Marketing Mix.
Marketing structures
We discussed integrated marketing orientation in Unit 1. What is the role

and organisation of marketing within a company? How important is
marketing seen to be? How closely aligned to the Marketing Mix is the
marketing department? How marketing orientated is the organisation?
Bradford MBA 43
Operating results
Operating results include profits and margins, sales by product, customer

or region and costs. They form the basic assessment of business.
Marketing Mix effectiveness
To our understanding of our results we need to add an evaluation of how

well (or not) we are applying our Marketing Mix. So, the impact of our
product, price, promotion and distribution strategy needs to be matched to
our operating results.
BRINGING IT ALL TOGETHER – SWOT ANALYSIS
Read Jobber, Chapter 2, pages 42–48
SWOT analysis is a useful tool for helping us to bring together the key
elements of our environmental and internal analysis. SWOT analysis
stands for Strengths, Weaknesses, Opportunities and Threats. The
principal means of applying our analysis to the SWOT is as follows:
 allocate as appropriate the results of the internal analysis to the
strengths and weaknesses boxes of the SWOT
 allocate as appropriate the macro- and micro-environmental influences
to the opportunities and threats boxes of the SWOT.
The rule is always to look at the strengths and weaknesses from an

internal perspective and opportunities and threats from an external
perspective.
From a marketing point of view we need to understand how we can match

the strengths within our organisation with the opportunities presented to us
in the environment. Concurrently, we need to ensure that our weaknesses
do not become vulnerable to the external environmental threats. Typically
we will match Strengths to Opportunities to develop competitive advantage
whilst ensuring that Threats combined with Weaknesses do not result in
competitive disadvantage. Creatively, we might also try and convert our
weaknesses to strengths or our threats to opportunities.
44 Bradford MBA
Create a SWOT analysis of Sony based on the information provided in

Case 5 (Sony Shockwave, Jobber, pages 101–106).
SUMMARY
Knowledge and understanding of the marketing environment in which the

organisation operates and the context within which the organisation makes
its marketing plan are essential if an organisation is to gain competitive
advantage.
You should note the following key points:

 The marketing environment should be scanned continuously for
opportunities and threats.
 We need to gain a detailed understanding as to how competent we are
internally to meet the pressures of the marketing environment.
 SWOT analysis is a useful tool for bringing the key marketing audit
information together.
Bradford MBA 45
Environment and Auditing’. Click on this and you will see an audio entitled:
‘Unit 3 Lecture Audio’. In the same folder, you also click on ‘Unit 3 Lecture
same time.
Marketing module.
Click on this and then click on ‘Unit 3 – Marketing Environment and
Auditing – MCQs’ work through the questions provided.
row of menu items you can click on. Click on the measure item entitled
‘Reading’. You should then see a folder named ‘Unit 3 – Marketing
Environment and Auditing’. Click on this and you will see two papers
entitled: ‘Dealing with a Recession’ and ‘Ethical Brands in a Recession’.
Read the papers and post your response to the following questions on
your group Discussion Board (your tutor group can be found under
‘Groups’ in Blackboard).
Question 1: During economic crises many organisations respond by

reducing their emphasis on marketing. Is this a sensible thing to do?
Question 2: What are the opportunities, if any, organisations may exploit

during the current economic crisis.
46 Bradford MBA
Learning Materials’. You should then click on ‘Additional Audio’ see a
folder entitled ‘Unit 3 Marketing Environment and Auditing’.
Click on this and you will see a podcast entitled ‘The Distribution Trap’ by
American Marketing Association. This is an interview with one of authors
of The Distribution Trap: Keeping Your Innovations from Becoming
Commodities who argue ‘mega-distributors to dilute the value of their
products and services, imposing costs and changes in strategic direction
and operational control’ (from AMA podcast website,
www.marketingpower.com).
Porter M E (1980) Competitive Strategy: Techniques for Analysing

Industries and Competitors, New York: Free Press.
Bradford MBA 47
Unit 4:
Understanding the Market
Key reading:
1. Jobber, Chapters 4, 5 and 8
Key audio/video:
1. ‘Repositioning: Marketing in an Era of Competition, Change and Crisis’
– Activity 4.6 (see Video Resources, Unit 4 – Understanding the
Marketing’ in Blackboard)
2. ‘The Story of Stuff (2007) – Chapter 5: Consumption’ – Activity 4.7 (see
‘Video Resources, Unit 4 – Understanding the Market’ in Blackboard).
Other:
Exercises, Marketing Multiple Choice Questions, Unit 4 –
Understanding the Market’ in Blackboard)
2. Unit 4 Discussion Board – Activity 4.8 (see ‘Video Resources, The
Story of Stuff’)
3. Unit 4 On-Line Live Tutorial – Activity 4.9 (see Jobber pages 141–143
Case 7 Cappuccino Wars) (‘Groups, Live On-Line Tutorial’ in
Blackboard)
4. Unit 4 Marked Formative Assessment – Activity 4.10 (see Jobber
pages 297–299, ‘McDonalds Repositioning of the Golden Arches’)
Audio, Unit 4 Understanding the Market’ in Blackboard)
INTRODUCTION
In this unit, we look at buyer behaviour and market segmentation. We

review the importance of understanding the market as the first step in
delivering the organisation’s marketing objectives. The unit will cover one
of the most important marketing tools, market segmentation. Through
understanding buying behaviour, market segmentation (the current unit)
and marketing research (Unit 5), an organisation can improve
effectiveness of the marketers’ task of matching the supplier’s offerings to
the customer’s needs. These three areas make the buying and selling
process truly ‘win-win’.
Bradford MBA 49
OBJECTIVES

 describe different types of consumers and the various roles they
perform
 explain the decision making process for both household and
organisational consumers
 identify and discuss a range of situational, personal and social
influences on consumer behaviour.
 list the main variables used in segmenting consumer and industrial
markets
 select different targeting strategies for selected situations
 using segmentation and positioning as the basis of marketing planning.
UNDERSTANDING THE CUSTOMER
Consumer buying behaviour has been defined as ‘the decision process

and acts of individuals involved in buying and using products and services’
(Dibb, 2001). We need to understand the behaviour of our buyers and why
they make the purchasing decisions they do because:
 Customers’ reactions to the organisation’s marketing strategy, in terms
of their purchasing decisions, impact on organisational success; and
 Customers’ needs can be satisfied only if marketers get the Marketing
Mix right.
HOW DO CONSUMERS MAKE DECISIONS?
Read Jobber, pages 109–120
Figure 4.2 on page 119 of Jobber shows a simple linear process, which
leads to a consumer purchase. Can you see any weaknesses in this
model of buying behaviour?
We will look at two different kinds of customers – consumers and

organisational customers. In general terms, they both follow the same
sorts of buyer behaviour and a supplier would follow the same general
principles. We look first at some of the general principles and use
examples of consumer and organisational buying behaviour to illustrate
them.
50 Bradford MBA
Unit 4: Understanding the Market
Think of a major purchase you have made recently – a holiday, a car, a

house, a suit. Now, answer these questions about the process you
followed in making this purchase:
Need recognition – How did you decide that you needed to buy this item?
Did other people help you to decide that you needed it? If so, what did
they do, and how did you respond? Would you characterise this decision
as a ‘rational’ one, based on analysis of facts, or was it more ‘emotional’?
For example, the need to move house may have been triggered by the
arrival of a new baby; a decision to buy a suit might have been triggered
by an advertisement or a job interview.
Information search – Were there alternative suppliers? How did you find
out information about the alternatives? Did you do paper based research
for example consumer research articles, newspaper advertisements, etc
or use the Internet? Did you do research by ‘walking around’ – visiting
neighbourhoods where you might like to live, test driving a car, and so on?
Did you ask the opinions of people who already live there, or already own
one of these items?
Evaluation of alternatives – What process did you go through when you

were weighing up the different alternatives? Did you evaluate them in a
systematic way? Did you use checklists or a table? Did you do this
evaluation with others or on your own? Did you work out the evaluation
criteria in advance or as you went along? Did you ‘short list’, or was the
decision obvious? Was it hard to decide? What was the deciding factor?
Purchase – Now, be honest, how rational do you think the basis for your
decision was? How much did emotions – desire, impatience, lack of
interest, impulse – figure in your decision? Interestingly, when we make a
decision on a major purchase, emotions can play a far larger part in the
decision than we would assume. Many purchases are made by the heart,
not the mind – ‘I just fell in love with the feel of the car.’ ‘The house
seemed just right.’ ‘Well, I didn’t really need that new suit, but it looked
great.’
Post-purchase – Did you make the right decision?
Bradford MBA 51
Jobber lists a number of ‘choice’ criteria used when evaluating

alternatives. Note Table 4.1 on page 118. Which criteria would you
characterise as objective and factual; and which do you feel are more
subjective? Is the distinction blurred?
Also, the existence of a need may not activate the decision-making

process at all because of need inhibitors. Lack of resources is a keen
inhibitor of need. But importantly, the psychological wish to purchase may
exist and marketers can tap into this at a later date.
If all purchases were based on an ideal customer who knows exactly what
he or she requires, then the objective of companies would be to supply
these ideal customers with goods and services, which meet their clearly
expressed needs and wants. If this were the case, then the competitive
context would be reduced to ‘just-in-time’ exchanges and marketing would
become a very different discipline focusing on logistics and distribution.
We have looked at a major purchase. Now, let’s look at a more modest

buying decision.
52 Bradford MBA
Think about a recent visit to a supermarket, and a purchase of soap

powder, tinned food, tea or coffee – where you had a choice to make.
What informed your choice? Put a tick by any of the following that applied:
 Brand name
 Special offer
 Unit price
 Package size
 Habit – it’s the kind you always buy
 Location on the shelf
 Ingredient information (cleaning agents, nutritional content)
 Past experience (taste, cleaning efficiency)
 Your children asked for it
 Other criteria.
Did you find it hard to identify the factors that influenced your choice? If
you chose the product because it is the one you always buy, consider
what factors would cause or encourage you to change to a new supplier or
package size.
For many of the goods we buy, the reality is that we rarely go through the
process of carefully identifying our needs, assembling the alternatives,
consciously assessing each option and taking the best. We take shortcuts
because the purchase simply is not that important to us or carries low risk.
Bradford MBA 53
These are low-involvement purchases. Note Table 4.2 (page 122 of

Jobber) on the consumer decision-making process and level of purchase
involvement.
With a low-involvement purchase, the choice may come down to impulse.

Many supermarket purchases are totally unplanned, with over 60% of
purchasing decisions made in store.
When purchases are repeated, consumers settle into buying habits and
buy without much reflection or consideration of alternatives. Brand loyalty
and store loyalty are both habits. The kind of packaging used on a
product, the brand name and advertising are all important extrinsic cues to
remind the consumer to purchase. Buyers do not have time to do much
information processing in say the supermarket setting, so they look for
cues to inform them about the product. People develop confidence in the
reliability of certain cues and learn to base their choices with the help of
extrinsic cues.
Marketers try to understand these influences on buyers and manipulate

what they know about consumers to increase the standing of their
products or services. Many supermarkets’ own-labels mimic the shapes,
colours and designs of the brand leaders. The familiar appearance of
these look-alikes cues the buying response at the expense of the branded
product.
Read Jobber, pages 122–134. Note Vignette 4.1 on page 120 about
experiences and consumer behaviour. This points out how emotions and
feelings influence our purchase behaviour
Look at Engel, Blackwell and Miniard's five roles of people in the buying
process on pages 110–111 in Jobber.
The model by Engel, Blackwell and Miniard (see Figure 4.1 in Jobber,
page 110) takes account of the fact that not only might the user not be the
buyer, but that the buyer may not be the decider who makes the choice
about what to buy. Look at your own buying group, perhaps it includes a
partner or children or a parent, and consider the five-role model. Explore
buying decisions for a major purchase within your own buying centre. Note
on page 68 the roles adopted within families to achieve decision making.
Our discussion here leads onto other buying centres – those in
organisations.
HOW DO ORGANISATIONS BUY?
Organisational buying behaviour follows many of the same general

principles as consumer buying behaviour – including a significant
emotional content in many organisational buying decisions. Where the two
54 Bradford MBA
behaviours differ, perhaps, is in the more overt use of a rational model in

organisational buying decisions. This can give the process more
consistent structure than would be found in many consumer buying
decisions, even of the high involvement type.
Look at Figure 5.1 Jobber, page 149 and compare it to the simpler but
similar model (Figure 4.2) in Chapter 4 on page 112. What do you think
are some of the reasons for the more detailed process on page 149?
One reason may be that the buying centre in an organisational buying

decision is more professionalised and has more clearly defined authorities
and responsibilities than a typical consumer buying centre.
Often, the organisational buying decision will involve much higher value
decisions than a consumer buying decision. Compare a personal decision
to buy a car with an oil exploration company deciding on a contractor to
build a drilling platform – or a decision by a large retailing chain about a
supplier of men’s shirts to a personal decision to buy a suit. The important
point here is that it is likely to be a buying centre of more than one person,
each with very clearly defined responsibilities.
That does not mean that an organisational buying decision is purely

objective with no emotional content. The establishment of strong personal
ties is a key factor in many successful long-term buyer–seller
relationships. Furthermore, it is not unusual for a supplier whose
representative has made a bad impression on the potential customer to be
excluded from consideration.
Read Case 10 Jobber, pages 177–179
Identify the different roles in the Decision Making Units of their own
organisations and their criteria for selection of their suppliers.
Bradford MBA 55
Now read Chapter 5 on Organisational Buying Behaviour.
As you read, look for the following key concepts, which are the main ideas
you should examine in this chapter. These are the ideas that you should
highlight or take notes on:
 characteristics of organisational buying
 roles in the decision making unit
 influences on purchasing behaviour
 strategic partners
 ‘national account’ management.
Suppliers invest considerable sums in the teams that manage the

relationship with a key customer. They recognise that there is an
emotional component in organisational buying decisions. Successful
teams never forget that one of their prime objectives is to ensure that the
customer perceives that the cost of change – changing to an alternative
supplier – is higher than the cost of remaining with the incumbent supplier.
That is why the kinds of customer services discussed at the end of
Chapter 4 are so important.
In the following, we will step back inside the selling organisation and look
at another marketing tool that puts our understanding of buyer behaviour
to good use.
MARKET SEGMENTATION
Marketers operate with limited resources – production capacity, staff and

money. As competition gets keener, the time available to capitalise on new
opportunities and react to threats reduces. From your study of buyer
behaviour you know that customers are different; they have different
needs and wants and make their purchases in different ways. One single
Marketing Mix is unlikely to suit everyone, but few organisations can afford
to undertake custom manufacture, especially in consumer markets. So
marketers are constantly seeking to find ways to maximise the efficiency
and effectiveness of the resources they deploy. One way of making their
marketing more efficient and effective is by segmentation.
What is segmentation? It is the process of identifying groups of individuals

(or organisations) with some common characteristics that can be used to
explain or predict buyer behaviour in response to a set of Marketing Mix
stimuli. Finding and understanding these clusters of buyers and the
characteristics that set them apart from each other have significant
implications on the success or failure of a marketing strategy.
56 Bradford MBA
The key strength of market segmentation is that it allows organisations to

identify and concentrate on the most promising opportunities relative to
their own strengths and weaknesses and the position of their competitors.
It determines:
 direction of marketing strategies
 selection of markets to target
 development of the Marketing Mix
 realistic marketing and sales objectives
 decisions about the cost effectiveness of communications strategies.
From the customer’s point of view, segmentation makes it more likely that
firms will produce goods or services that fit closely with what the customer
wants and is made aware of through appropriate advertising.
Perhaps it is easier to illustrate the concept with an example. Do you

remember the lifestyle categories in Chapter 4?
Read Jobber, page 129 and look at the category ‘The reformers’.
This is a broad market segment – its members share certain

characteristics, for example, ‘self-confident and involved’, ‘have broad
interests’, ‘issues oriented’. If a marketing organisation can develop
products that this segment is interested in and can promote them
effectively, the marketing strategy is more likely to be successful than if
the company just launches random products in random ways.
For example, this segment could be interested in an organic and local

produce because the segment enjoy natural food and is concerned about
ecology. The product could be introduced in publications that the segment
is known to read or during a television programme that the segment is
known to watch. As the segment is known to be interested in health and
education, a public relations action could be to sponsor local events
promoting healthy diet for local school dinner programmes and hospitals.
From product development to promotional campaigns, marketing attention
is focused on selecting the appropriate segment and meeting the needs
and wants of this segment – this is called targeting.
Marketers segment organisational markets too, but they do this slightly

differently. Organisational markets can be macro-segmented, most notably
by industry or size. The offshore oil industry is a good example of a macro-
segment. The work is high risk, capital intensive, with a long-term
payback. Projects are complicated, and a delay in one activity can result in
very large financial penalties. Thus, a sub-contractor’s speed of response
and flexibility are crucial differentiators. Sub-contractors who can develop
services that meet the segment’s needs are more likely to be successful
than those who are not so responsive.
Bradford MBA 57
The other main type of organisational segmentation is micro-segmentation

that looks at the particular characteristics of the different members of the
organisational buying centre.
Look back at the organisational decision-making roles described on page

148.
Now read Jobber, Chapter 8 on Market Segmentation and Positioning.
you should investigate in this chapter. You should highlight or take notes
on these topics:
 market segmentation definition
 benefits of segmentation
 consumer segmentation methods
 macro-segmentation
 micro-segmentation
 target marketing
 differentiated marketing and focused marketing
 key tasks in positioning
 keys to successful positioning.
You have seen that there are many more ways to describe groups of
consumers than the familiar UK social classes.
Read page 272 of Jobber about the ACORN and MOSAIC segmentation
systems .
Where would you place yourself?
If you were designing a promotional campaign to sell new kitchens, which

five ACORN classifications would you see as your highest priority
segments (below is a list of the ACORN targeting classification)? Which
ones would you not choose to target? Why not?
58 Bradford MBA
Table 4.1: ACORN targeting classification

Category Group Type
01 - Affluent mature professionals, large houses

02 - Affluent working families with mortgages
Wealthy Executives
03 - Villages with wealthy commuters
04 - Well-off managers, larger houses
05 - Older affluent professionals
Wealthy 06 - Farming communities
Affluent Greys
Achievers 07 - Old people, detached houses
08 - Mature couples, smaller detached houses
09 - Larger families, prosperous suburbs
10 - Well-off working families with mortgages
Flourishing Families 11 - Well-off managers, detached houses
12 - Large families & houses in rural areas
Prosperous 13 - Well-off professionals, larger houses and converted flats
Professionals 14 - Older Professionals in detached houses and apartments
15 - Affluent urban professionals, flats
16 - Prosperous young professionals, flats
Educated Urbanites 17 - Young educated workers, flats
Urban
18 - Multi-ethnic young, converted flats
Prosperity
19 - Suburban privately renting professionals
20 - Student flats and cosmopolitan sharers
21 - Singles & sharers, multi-ethnic areas
Aspiring Singles
22 - Low income singles, small rented flats
23 - Student Terraces
Bradford MBA 59

Starting Out 24 - Young couples, flats and terraces
25 - White collar singles/sharers, terraces
26 - Younger white-collar couples with mortgages
27 - Middle income, home owning areas
28 - Working families with mortgages
Secure Families
29 - Mature families in suburban semis
Comfortably Off 30 - Established home owning workers
31 - Home owning Asian family areas
32 - Retired home owners
Settled Suburbia 33 - Middle income, older couples
34 - Lower income people, semis
35 - Elderly singles, purpose built flats
Prudent Pensioners
36 - Older people, flats
37 - Crowded Asian terraces
Asian Communities
38 - Low income Asian families
Post Industrial 39 - Skilled older family terraces
Moderate Families 40 - Young family workers
Means
41 - Skilled workers, semis and terraces
Blue Collar Roots 42 - Home owning, terraces
43 - Older rented terraces
44 - Low income larger families, semis
45 - Older people, low income, small semis
46 - Low income, routine jobs, unemployment
Struggling Families
47 - Low rise terraced estates of poorly-off workers
48 - Low incomes, high unemployment, single parents
49 - Large families, many children, poorly educated
Hard Pressed 50 - Council flats, single elderly people
Burdened Singles 51 - Council terraces, unemployment, many singles
52 - Council flats, single parents, unemployment
53 - Old people in high rise flats
High Rise Hardship
54 - Singles & single parents, high rise estates
55 - Multi-ethnic purpose built estates
Inner City Adversity
56 - Multi-ethnic, crowded flats
SEGMENTATION PROCESS
There are many ways of segmenting a market or splitting it up into clusters

of customers with similar characteristics. In fact, marketing research
agencies spend a lot of time seeking new ways to split markets and some
of their terminology has entered our general vocabulary – yuppies (young,
urban professionals), puppies (Punjabi urban professionals), dinkies (dual
income, no kids) and grey panthers (active, affluent, retired). But for the
marketer, the trick is to find the right one! A viable segment has:
 identity (or uniqueness) – it distinguishes between clusters of
customers
 relevance – it is related to the producer’s core competences or
Marketing Mix
60 Bradford MBA
 accessibility – it allows clusters to be specifically reached by some

combination of marketing communications
 size – it is big enough to be economically viable.
 stability – it is likely to continue for some time
 measurable – its very characteristics mean that its size, potential and
performance can be measured
 profitable – unless there are particular reasons to the contrary, a
segment should result in a profitable result for the producer.
An example illustrates what we mean. Imagine that you are researching

the market for scissors for the purposes of segmentation. All kinds of
people use scissors – children, hairdressers, tailors, gift-buyers, surgeons
– all for different purposes. You can choose any way to segment this
market.
You could decide to split your market for scissors into accountants and
non-accountants – but this is not a great deal of use to you unless it
explains some differences in purchasing behaviour, and accountancy and
the use of scissors would appear to be unrelated. This segmentation,
therefore, lacks relevance.
However, there may be a cluster of surgeons who are left-handed. Unless

they are prepared to pay a high price, this segment is probably not
economically viable due to its size. What about people who are setting up
their own business? There are many of them, and they will be buying
basic office equipment – but unless you can identify them, you will not be
able to target your marketing efforts at the group with a particular identity.
Unless you can locate a specialist magazine for new businesses, a direct
mail database or something similar, they are not readily accessible either.
As you can see segmentation is not a matter of good luck but good
marketing research. The marketer must understand the buyers and know
their characteristics in order to pull out the common threads that correlate
to differences in buying behaviours.
Bradford MBA 61
Figure 4.1: Market segmentation, target marketing and market positioning
Market segmentation Target marketing Market

positioning
1. Identify bases for 3. develop measures of 5. develop positioning

segmentation segment attractiveness for each target
2. develop profiles for 4. select target markets 6. develop Marketing

Mix for those segments (one or more segments) for each target market
In practice, you can start with customer needs or with the benefits sought:
the bases in Figure 4.1 above. An examination of the toothpaste market
might reveal that one cluster primarily seeks fresh breath, another wants
to combat gum disease and a third wants something designed for
sensitive teeth, for example.
Whilst this is useful data, it is not a great deal of use on its own to a
marketer who wants to develop a Marketing Mix for each target market.
You need to identify exactly the people who are seeking the specific
benefit, for example, fresh breath – and you cannot identify them by this
need alone. You also need to build a picture (profile) of the typical
segment buyer so that if the segment is viable, you can assemble a
Marketing Mix that will target and attract the buyers in that segment.
Look at Figure 4.2 which shows a map of the UK savoury snack foods
market. It is not important if you have never heard of some of these
products, much less tried them! The important point is that younger eaters
appear to prefer less ‘crunchy’ savoury snacks than older eaters.
Research has shown that the single most important criterion for purchase
is texture. Or put another way, the benefit sought from the product is the
degree of crunch.
If you wanted to develop a product that would appeal to potential savoury

snack eaters in the 15 to 20-year-old age range, what kind of texture do
you think the product should have? Why? If you were the brand manager
for Tubaloops, and you wanted to increase your sales, which age group
would you target?
62 Bradford MBA
Figure 4.2: UK savoury snack market

Texture
hard
O Wheat
O Roysters
crunchies
O Phileas
O Tubaloops ffogg
O Hula
O Discos
hoops
O Niknaks
O
Nibbis
O Skips O Golden
Age lights
Years
5 10 15 20 25
O French
O Space fries
raiders
O Quavers
O Monster
O Brand position
munch
‘Ideal’ position
O Wotsits
O Quarter
backs
O Ringos
Soft
Bradford MBA 63
TARGET MARKETING
As Jobber makes clear, the whole point of segmentation is to enable

effective target marketing. Look at the discussion at the beginning of
Chapter 8, note the way the author uses phrases like ‘similar requirements
so that they can be served effectively’, ‘supplied efficiently’, and
‘commercially viable’. Correctly chosen targets increase the likelihood that
the product or service will be successful – and thus it is more efficient and
ultimately more effective. Having identified segments in the market place,
the organisation must choose which ones to serve.
There are four strategies of target marketing:
Undifferentiated marketing – with no regard for customer requirements.
Differentiated marketing – exploits the differences between marketing

segments by designing a specific Marketing Mix for each segment.
Focused or niche marketing – is the targeting of one segment of the

market. It allows companies to direct their efforts at meeting the needs of
one set of customers and marketing activities can be devoted to
understanding and catering for those needs. Jobber gives the examples of
Saga and Bang and Olufsen. (page 284).
Customised marketing – is a specialised area where companies produce

high value items and work closely with customers to produce goods to
individual customer specification.
POSITIONING
Look at Figures 8.9 and 8.10 on page 285 of Jobber.
Having chosen one or more segments, the task for the marketer is to
assemble a Marketing Mix that will deliver the benefits sought by the
customers in those segments. Successful positioning provides a platform
on which to develop an effective Marketing Mix for the segments to be
targeted.
Market segmentation is all about how producers identify groups of

customers. Positioning is all about how customers perceive alternative
offerings from producers. Positioning has been defined thus:
“Positioning starts with a product, a piece of merchandise, a service, a

company, an institution or even a person. But positioning is not what you
do to the product. Positioning is what you do to the mind of the prospect”
(Ries/Trout)
64 Bradford MBA
Fundamental to the success of any positioning strategy is adherence to

the 4 Cs principles of competitive positioning (see Jobber, pages 285–
286):
 Clarity – the customer can clearly understand the proposition of the
producer
 Consistency – the message and actions of the producer are
consistent, leading to a clear understanding as to the nature (and
hopefully quality) of the offered product/service
 Credibility – due to the above, the proposition delivered to the
customer is believable
 Competitiveness – the producer always develops a position based on
its credible competitive advantage.
‘Audio Resources’. You should then see a folder named ‘Unit 4 –
Understanding the Market’. Click on this and you will see a podcast
entitled ‘Repositioning: Marketing in an Era of Competition, Change and
Crisis’. This is an interview with Jack Trout who is author of the above
titled book and he talks about how brands should be repositioned to react
to the financial crisis.
SUMMARY
On Consumer Behaviour: we have looked at buying decisions from the

perspective of the buyer – whether a consumer or an organisational
buying centre. The marketer needs to understand:
 how customers buy
 what ‘choice’ criteria are used
 who is involved in the decision
 when and where purchases are made.
Marketing is not an exact science or a straightforward business discipline.

It can be difficult to target marketing effort and to understand buyer
behaviour for a number of reasons that include:
 buying is a human activity
 customers don’t always have well-focused requirements
 customers may be interested in making a purchase, but are not in a
position to do so
Bradford MBA 65
 many purchases are made by the heart, not the mind

 many purchases are made through impulse or habit
 many purchases are made by those who are not the end user.
On segmentation: the main issues discussed are:

 segmentation allows organisations to focus on their efforts and make
efficient use of resources; and
 effective positioning benefits the customer and the supplier.
and Lecture Audio’. You should see a folder named ‘Unit 4 –
Understanding the Market’. Click on this and you will see an audio entitled:
‘Unit 4 Lecture Audio’. In the same folder, you also click on ‘Unit 4 Lecture
same time.
that are applicable to/have been discussed in this unit of the MBA
Marketing module.
Click on this and then click on ‘Unit 4 – Understanding the Market –
MCQs’ work through the questions provided.
66 Bradford MBA
Go the Marketing Blackboard page. On the left hand side you will see a
‘Video Resources’. You should then see a folder named ‘Unit 4 –
Understanding the Market’. Click on this and you will see a video entitled:
‘The Story of Stuff (2007) – Chapter 5: Consumption’. Watch the video and
post your response to the following questions on your group Discussion
Board (your tutor group can be found under ‘Groups’ in Blackboard).
Question 1: What are the challenges and opportunities marketers face

near future?
Question 2: Do you agree with the precept ‘A Customer is Always Right?’

– Would consumer needs and want drive a principle of what companies
ought to provide in the market? Why?
Jot down your answers to questions 1, 2, 3 and 4 outlined below and be

instruction.
Read Case 7 Cappuccino Wars (Jobber, pages 141–143)
Question 1: Why have coffee bars been so popular with consumers in the
UK?
Question 2: You are considering visiting a coffee bar for the first time.
What would influence your decision to visit a coffee bar? Is this likely to be
a high- or low-involvement decision?
Question 3: Assess the coffee chains’ moves to expand the offerings they
provide for their customers.
Question 4: Coffee bars are mainly located in the centres of towns and
cities. Are there other locations where they could satisfy customer needs?
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ACTIVITY 4.10 – MARKED FORMATIVE ASSESSMENT
Go to the textbook and read the case on pages 297–299 ‘McDonalds

Repositioning of the Golden Arches’. After you have read the case write
up your responses to the 4 questions listed concerning the issue of
positioning (max words 1,000). Email your reply to your module tutor who
will provide you with formative feedback on your answer.
Learning Materials’. You should then click on ‘Additional Video’ see a
folder entitled ‘Unit 4 Understanding the Market’. Click on this and you will
see a video entitled:
Joseph Pine @ TED: The author of Mass Customization, Joseph Pine

talks about what consumers want – authentic experiences – and how to
give them to customers, rather than products or services.
Dibb S (2001) Marketing: Concepts and Strategies, fourth edition, Boston,

MA: Boston, MA: Houghton Mifflin.
68 Bradford MBA
Unit 5:
Marketing Research
Key reading:
1. Jobber, Chapter 7
Key audio/video:
1. ‘Market Research Techniques: Focus Groups’ and ‘Understanding the
P-value’ – Activity 5.2 (See ‘Video Resources, Unit 5 – Marketing
Research’ in Blackboard)
Other:
Research’ in Blackboard)
2. Unit 5 Discussion Board – Activity 5.5 ‘Mind Reading’ (see see ‘Video
Resources, Unit 5 – Marketing Research’ in Blackboard)
Audio, Unit 5 – Marketing Research’ in Blackboard)
INTRODUCTION
In this unit we study marketing research. People often refer to this as

market research rather than marketing research. Market research
researches the market whilst marketing research researches both the
market and the marketing activity undertaken by a producer looking to sell
its products or services in that market. This is an important difference. We
need to understand both the market and our performance within it.
In Unit 3 we discussed how no company can exist in a vacuum. In Unit 4

we looked at the motivations of buyer behaviour and the market. We need
information to help us understand the market and the motivations of
prospective consumers within it. No company can exist without the
information needed to understand what is needed to effectively compete.
OBJECTIVES

 understand the importance of and relationship between research and
information system in marketing decision making
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 distinguish between research and intuition in solving marketing

problems
 learn the difference between primary and secondary research
 gain a sense of the relative advantages and disadvantages of marketing
research tools
 understand the overall marketing research process and the importance
of positive use of marketing research.
MARKETING RESEACH
So far, we have talked about the necessity of understanding buyer

behaviour – both personal and organisational – and about the benefits that
understanding can have for a marketing organisation. Now we look at just
how you learn about the behaviour of buyers, potential buyers and
competitors, a prerequisite of marketing planning. This enables you to
identify market opportunities, determine your competitive advantage and
segment your market and position your product or service. Having made
decisions based on research, the marketer can then use marketing
research to track the effect of that decision.
What do the words ‘marketing research’ mean to you? A person standing

in the street with a clipboard and a questionnaire? ‘Nine out of 10 dentists
use Colgate’? Well, yes, but marketing research is far more. Managers
cannot make objective decisions without reliable information and, although
risk-taking is part of management, the chances of making a good decision
or calculating a risk are improved by having the right information at the
right time. Kotler describes marketing research as the ‘systematic problem
analysis, model-building and fact-finding for the purposes of improved
decision-making and control in the marketing of goods and services’
(Kotler 2004).
Three other definitions of marketing research are also worth examining.
“A cost effective way of finding out what people believe, think, want, need
or do” (Market Research Society www.mrs.org.uk). The importance of this
definition is the qualitative nature of finding out what our customers really
think and the cost effective possibilities of doing so. Marketing research
should never be considered as a hugely expensive exercise. Yes, large
organisations will employ large market research agencies. SMEs,
however, can feel comfortable with a much more hands-on DIY approach.
“The disciplined collection and evaluation of specific data to help

understand customers” (Chisnall, 2000). The importance of this definition
is the word “disciplined”. Disciplined means following a process,
organising research in a methodical manner and ensuring that research
objectives are clearly stated.
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Unit 5: Marketing Research
“The systematic and objective process of generating information to aid

making marketing decisions”. (Zikmund, 2003). There are two important
elements here. Firstly “systematic”: this refers to the timeliness of market
research. Successful research depends on using comparative data.
Comparative data can only be developed over a period of time.
Accordingly, marketers need to understand that research needs to be
undertaken on a regular basis. This could be every month, every six
months, even every 12 months. The importance is to do it at regular
intervals. Secondly, “objective”: the research process needs to be
unbiased and produce results which are objective, no matter how
unpalatable that might be for the company in question.
TYPE OF MARKETING RESEARCH
Using the Marketing Mix as a guideline, there are a number of core types
of, or reasons for, marketing research:
 product or service research – the design, development, production
and styling of products and services to match consumer expectations
and market trends
 customer research – buyers and their behaviour in the wider social,
economic and cultural context
 pricing research – effects of pricing changes or tactics. Impact of
elasticity
 distribution research – relative attractiveness to customers of
distribution channels
 promotion research – evaluation of how well a company’s products
and services are promoted, for example, through exhibitions, PR
campaigns, advertising and merchandising.
Marketing research is one part of the wider marketing information system

(MkIS) companies develop to support their marketing strategies and
business objectives (see Figure 7.1, page 218 in Jobber).
The process of marketing research is a dynamic one and must be

continuous if it is to reliably inform marketing decision making and
ultimately influence sales and profits. This process of decision making is,
in itself increasingly complex due to the rapidly increasing range of goods
and services on offer in the world market place and close competition
across country boundaries. For example, on average during the last two
decades, one new consumer brand has been launched every day.
The challenge for researchers is to keep abreast of these highly dynamic

markets and to be able to predict future trends. Technical advances in a
number of disciplines such as data warehousing, decision-support
systems and data mining techniques now allow marketers to handle huge
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volumes of data and integrate sources of customer information to provide

help in new ways of segmenting markets.
The cost of failure to understand the market and the customer is high. An
estimated one in two new product launches fails. In 1994 in the UK,
Unilever launched Persil Power, a new detergent containing an ingredient
that unexpectedly rotted clothes. It was withdrawn from sale after a few
months as the problem came to light, but the mistake is estimated to have
cost the company £57 million (Source: Marketing Business, May 1998).
Wider scale pre-launch testing might have revealed the fault. This
emphasises the fact that managers need sound information on which to
base their decisions and reduce the uncertainty in the planning process.
All this has resulted in a fundamental shift in the importance attached to

marketing research.
Find out what marketing research is carried out for your own company or
one you are familiar with, and identify its type of their research. What does
this tell you about its approach to their marketing research?
THE RESEACH PROCESS
We have discussed the fact that research should be an ongoing process

which a company undertakes to obtain information about their customers
and competitors, how their products are perceived by customers, the
effectiveness of their promotional campaigns and the effectiveness of their
selling strategies. There are three ways to carry out marketing research:
 in house – by individuals, perhaps from the marketing department, or
by an actual marketing research department
 in-house/agency – objectives/interpretation done in-house with an
agency commissioned to do fieldwork
72 Bradford MBA
 use the full services of a marketing research agency – this includes

research design, data collection, interpretative data and issue
presentation.
Once the means of conducting research have been decided, then a typical
research process will be adopted:
 research planning – develop the research brief and objectives
 exploratory research – source available secondary data. Develop
complementary primary qualitative research
 quantitative research – descriptive or experimental research to further
understand how consumers think or act
 data analysis and interpretation – evaluation of the data collected
and its impact on the research objectives
 presentation and action – presentation of key findings to
commissioning personnel. Resulting actions to be taken.
DATA COLLECTION
The key generic research categories as outlined in the Research Process

section above, are primary and secondary research. Secondary
research (also known as desk research) is normally the first form of data
collection due to the fact that its very existence makes it quicker and
cheaper to obtain. Secondary data can be sourced internally (sales
reports, customer records, customer enquiries, etc) and externally
(company and government statistics, research reports, trade journals, etc).
An issue might be completely researched through the use of secondary
data, perhaps to examine basic market trends or develop greater
understanding of sales performance. In other cases, secondary data might
provide the platform on which to build additional research. For example,
an organisation wishing to launch a new product might use secondary
research to understand the dynamics and growth trends of the market, but
will then need additional research to understand whether the proposed
new product will be of interest to that market.
This additional research is known as primary (or field) research. Primary

research is frequently split into qualitative primary research and
quantitative primary research. Qualitative research is used to find out
how people feel, think and behave and is very much focused on the end
customer. Typical methods of primary qualitative research are through
face-to-face discussions, in-depth telephone interviews, creative focus
groups and now, on-line chat rooms and observation. Qualitative research
can only reach a small proportion of the potential market and is expensive
to develop. Accordingly, researchers will seek to prove the accuracy of the
qualitative research through the use of quantitative research. This will
often be undertaken by smaller and more specific surveys – on-line, by
Bradford MBA 73
mail, in the street or over the telephone. The data will be gathered from a
larger, representative sample of the potential market and will either prove
or disprove that found in the qualitative research.
Now read Jobber, pages 227–242 for more detailed discussion on the
types of primary research that can be used, their strengths and
weaknesses.
Resources’. You should then see a folder named ‘Unit 5 – Marketing
Research’. Click on this and you will see two videos entitled: ‘Market
Research Techniques: Focus Groups’ and ‘Understanding the P-Value’.
The first video is an example of how a focus group is being carried out to
find out whether a particular design feature of product (i.e., a flip top of a
salad dressing bottle) would attract more consumers. The second video is
an example of how a quantitative analysis can be used to estimate
whether there is any faulty in the production process of chocolate bars.
APPLYING RESEARCH
Marketing research is of no use unless it can be used for the positive

development of the organisation. Frequently this can be compromised by
a lack of setting of clear and precise research objectives. Companies need
to focus on the outputs they expect from the research so as to match the
inputs. If a decision cannot be made as a result of market research, we
must question, why do it in the first place?
Chapter 7 contains a lot of practical guidance on developing a marketing

research project. Now we investigate a case study to see how well you
can apply the guidance.
Read the following scenario, do the necessary research and complete the
following tasks:
1. Briefly describe the business problem;
2. Write a clear set of research objectives;
3. Suggest what research methodology or methodologies may be relevant

to answer these objectives.
74 Bradford MBA
Scenario:
You are a Research Executive for a full service Research Agency. You
have been contacted by the Regional Manager for a chain of hotels aimed
mainly at the business market. This Manager has six hotels under their
jurisdiction and it is their job to ensure consistent and high levels of service
are achieved. Four out of the six hotels seem to be able to achieve this but
in two of the hotels there has been a recent rise in customer complaints
and a fall in bookings.
The Regional Manager has been given a small but adequate budget by
Head Office to spend on research. What initial measures would you
suggest?
SUMMARY

 Marketing research embraces objective and systematic gathering,
recording and analysis of data concerning the marketing of goods and
services from producer to consumer or user.
 There are four kinds of research: product, customer, promotions and
sales.
 Research methodologies can be quantitative or qualitative. Good
research gives insight into market sectors and helps inform the planning
process.
 Research data can be original (primary) or secondary (desk research –
published information).
A useful way to end this unit is to quote from Chisnall (2000):
“Without valid and reliable information, management decision making

would soon degenerate into some crazy game of chance”.
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Research’. Click on this and you will see an audio entitled: ‘Unit 5 Lecture
Audio’. In the same folder, you also click on ‘Unit 5 Lecture Powerpoint
Slides’. Listen to the audio and consult the lecture slides at the same time.
Marketing module.
Click on this and then click on ‘Unit 5 – Marketing Research – MCQs’ work
through the questions provided.
Research’. Click on this and you will see the video entitled: ‘Mind
Reading’. Watch the video and post your response to the following
questions on your group Discussion Board (your tutor group can be found
under ‘Groups’ in Blackboard).
Question 1: What are possible benefits of the application of neuroscience

technology to marketing research?
Question 2: What are ethical implications of the application of

neuroscience technology to marketing research?
Question 3: Should there be a clear code of ethics to regulate the

application of neuroscience technology to marketing research? If so,
76 Bradford MBA
should the code be applicable in the global context or bearing cultural

uniqueness of the country in question?
Learning Materials’ and then click on ‘Additional Audio’. You will see a
folder entitled ‘Unit 5 Marketing Research’. Click on this and you will see a
podcasts entitled ‘Building Effective Online Communities for Market
Research’ by American Marketing Association. This is an interview with
Andrew Moffat, Vice President, Strategic Alliances for SSI.
He argues the importance of online communities as marketing research

tools to create the flow of ongoing feedback on their products from their
consumers. He comments on how online communities differ from panels,
which types of research they best support, how you can successfully
recruit members, and what you should do to ensure they deliver maximum
value.
Chisnall P M (2000) Marketing Research, New York, NY: McGraw-Hill.
Dibb S (2001) Marketing: Concepts and Strategies, fourth edition, Boston,

MA: Boston, MA: Houghton Mifflin.
Kotler P (2004) Marketing Management Analysis, Planning and Control,

eleventh edition, Englewood Cliffs, NJ: Prentice Hall.
Zikmund W (2003) Exploring Market Research, eighth edition, London:

Thomson South Western
Bradford MBA 77
Unit 6:
Product/Service and
Branding
Key reading:
1. Jobber, Chapters 9, 10, 11 (pages 383–387; pages 391–398) and 22
Other:
Exercises, Marketing Multiple Choice Questions, Unit 6 – Product /
Service and Branding’ in Blackboard)
2. Unit 6 Discussion Board – Activity 6.6 (see ‘Video Resources, Unit 6 –
Product/Service and Branding, Creating a Corporate Identity: Virgin’s
Branding Strategy’ in Blackboard)
3. Unit 6 On-Line Live Tutorial – Activity 6.7 (See Jobber pages 377–379,
Case 19 Unilever’s Quest) (see ‘Group, Live-Online Tutorial’ in
Blackboard)
Audio, Unit 6 Product/Service and Branding’ in Blackboard)
INTRODUCTION
To ensure that the objectives set out in the marketing plan are met, it is
essential that the Marketing Mix is developed and successfully targeted in
the market place. A key element of the Marketing Mix is the product or the
service a firm offers. We start this unit on product and services
management by defining a product and a service, and identifying some
similarities and differences.
OBJECTIVES

 explain what products and services are
 identify product and service characteristics
 explain what brands are and their benefits
 explain the process and issues in product management
Bradford MBA 79
 describe and discuss strategic options in product and brand

management
PRODUCT
Kotler (2005) defines a product:
“A product is anything that can be offered to a market for

attention, acquisition, use or consumption that might satisfy a
want or need. It includes physical objects, services, persons,
places, organisation and ideas.”
Services can be defined more specifically as:
“An intangible product involving a deed, performance or effort

that cannot be stored or physically possessed.” (Dibb 2001)
We can define a product as anything that is capable of satisfying customer

needs. There are physical products and service products but they are
all designed to satisfy customer needs. Products and services differ
largely in their tangibility, although as you will soon see, even tangible
products can have quite intangible benefits. You need to be clear about
the differences between a product and a service.
We can describe products in terms of features and benefits:
Features – these characteristics are discernible and help describe the

product’s purpose. They include the technical specification, the price and
any special offers, colour, packaging and availability.
Benefits – people buy products and services for the benefits they offer,
rather than the features themselves. The marketer needs to understand
the benefits that customers are seeking to satisfy their needs, and then to
put together a Marketing Mix which delivers the right bundle of benefits.
Charles Revson made a famous comment about Revlon, which sums this
up nicely: “In the factory, we make cosmetics. In the store, we sell hope”.
Benefits could include:
 good value for money
 prestige
 good design
 ease of use
 safety
 economy in use.
80 Bradford MBA
Unit 6: Product/Service and Branding
This idea of features and benefits has implications for the focus of
marketing communications as we see in Unit 8.
Think about your own company’s product or one with which you are
familiar, and consider their features and benefits (as above).
SERVICE
Services are the biggest growth sector in the EU. Jobber tells us that ‘the
percentage share of gross domestic product attributable to the service
sector rose from 38 per cent in 1970 to almost 50 per cent by 1990’ (page
792). Services differ from products in some fundamental ways, which we
will explore later, but first try the next activity.
Study Figure 22.1, the physical goods-service continuum (Jobber, page

823), and identify six more products and services which can be placed in
the continuum.
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CLOTHING
CARPETS
MACHINERY
PURE PURE
GOOD SERVICE
SOFTWARE
DESIGN
MARKETING
RESEARCH
PSYCHOTHERAPY
Adapted from Jobber (2010, page 823, Figure 22.1)
There are four characteristics of services: intangibility, inseparability,

variability and perishability.
Intangibility – A service product is made up of intangible attributes, which

concern deed, performance or effort. You cannot experience a service
until you take part in it – it is impossible to judge before you have done so.
Service providers may use ‘tangible’ features to help consumers evaluate
services. An advertising agency may have expensive, stylish offices to
indicate their success and care for good design. A private school may
produce a glossy brochure and offer parent visits to meet the staff and
open days to get a flavour of the service offered. Also unlike a product, the
customer does not own the service, for example, a play in a theatre; they
experience it.
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Consider the case of the Ford Motor Company. Ford has developed the
company into being both a service and product supplier. Cars can be sold
to customers or leased. Prior to the mid-1990s, leasing was mainly
available to businesses as a way to finance a fleet of cars. Ford retains
ownership of the vehicles and a company pays a certain amount per
month for their use.
This leasing arrangement has recently been extended (but it is not called
leasing) to private buyers as a way of cutting down the cost of ‘ownership’.
Customers effectively lease the car for 2 years then have the option of
returning the vehicle to Ford or paying a prearranged price to affect true
ownership. The success of this among private buyers has moved the
focus of the company towards service provision from a previously strong
product sales orientation in the private buyer market.
Inseparability – A product is produced in a location away from the

customer and then distributed to the market. But the production and
consumption of a service happens together. The service producer is all-
important in the transaction and interaction with the customer. The
immediacy and therefore inseparability of the service product is a key
characteristic.
Variability – A service varies with the provider of it. Quality levels are
difficult to check compared with a tangible product and tend to be
subjective compared with a product. For example, a faulty component of a
product can be seen and the degree of fault measured using quantitative
measuring methods.
Service levels are subject to human, subjective judgements. Individual

service providers vary in the quality of their service delivery on a day-to-
day basis, simply because they are human and are subject to tiredness,
for example. Service recipients likewise vary in their perception of ‘good’
service delivery. Depending on what kind of day you are having, you may
score your waiter as ‘excellent’ or ‘average’ perhaps in contrast to the
waiter’s own view of the service or their manager’s view.
Given this variability and the attendant difficulties of standardisation of

services the use of reliable equipment to replace or supplement human
providers is sometimes used to ensure the control of standards. For
example, drinks machines (if reliable!) deliver in the same way to all
customers.
The words ‘right first time’ describe the marketer’s response to

inseparability and variability. Services cannot be repeated, or even
returned. The service must always work effectively.
Perishability – Services cannot be manufactured and stored in the same

ways that products can. This brings up key issues for service providers
concerning supply and demand. At peak times, are there enough staff to
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provide the service? The results of a marketing survey of customer

satisfaction levels carried out by National Westminster Bank in the UK in
1994 found that the largest dissatisfier was the amount of time spent
queuing in bank foyers at lunch-time waiting for a cashier to be free.
Demand for service outstripped supply. National Westminster have since
re-distributed staffing levels to cope with peak demand and introduced
more ATMs (automatic teller machines) to reduce waiting and ensure
cashier service to customers within 10 minutes.
The opposite of the demand versus supply paradigm is when supply

outstrips demand. In the hotel industry, demand for rooms tends to be less
at weekends. Hotel managers need to find more customers to even out
the supply–demand equation. Price cutting over weekday rates is one
strategy commonly used. Interestingly, this strategy was also traditionally
used by airlines. The new breed of low cost airlines has changed this.
Instead of reducing prices the closer to departure, in order to sell late
seats, these airlines increase prices as departure looms, thus encouraging
customers to book early to secure the best deals.
Figure 22.2, page 823, summarises our ideas of service characteristics.
Read Jobber, Chapter 22, pages 822–825 and 841–847.
Here are some characteristics of what organisations may look for in an

‘ideal’ product or service (note that not all the characteristics apply to all
products and services):
 cheap and easy to produce and distribute
 uniquely satisfies a real need or want in the customer
 outsells the competition in its core market segment and encroaches into
other segments
 gives an excellent rate of return on investment
 always in demand – not liable to vagaries of the market place
 demand grows year after year
 is immediately identifiable as a brand by the customer
 is reliable, easy to use, well designed, exhibits high quality standards
 crosses cultural boundaries and sells just as well in its home country as
the rest of the world.
Choose one product or service from your own organisation or one you
have worked for and one from a direct competitor. Carry out two
84 Bradford MBA
rudimentary product audits using the typography of the ideal product

above. How well did your product/service do versus that of the competitor?
PRODUCT ANALYSIS
Many ‘products’ have aspects of ‘service’ in their make up. For example,
the purchase of a carpet may involve fitting (service) as well as carpet
(product). The purchase of a plant, equipment or machinery will require
service in terms of installation; this is often carried out by the providers of
the machinery.
Product analysis helps us to define ideas about features and benefits. It

shows how products frequently need complementary services to add
value. The model we consider shows three levels of product, with the
customer and the benefits sought at the centre. Here you will see a link
with the ideas we explored in Unit 1 on the successfulness of the
marketing-orientated organisation over that of the product-orientated firm.
Because this model puts the customer in the centre, an organisation,

which uses this customer-driven model as part of its organisational
strategy, is more likely to be successful in the areas of:
 product planning
 product development
 product strategy.
Research is directed at gaining a full understanding of what satisfies the

customer in terms of the benefits gained from a product or service. The
difficulty, of course, lies in understanding what customers perceive as the
benefits of the product. Very often customers cannot articulate this, since
many beliefs about benefits have an emotional base, and many people are
unable to articulate complicated feelings about objects.
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Figure 6.1: Three-level product analysis.
Augmented product
Core features
Core benefits
Consider a car and let us analyse it in terms of Figure 6.1 above. The core
benefits (also called ‘core product’) is transport, getting from one place to
another. Except for the most basic model, this is unlikely to be a major
selling point, but it provides a start.
The core features (also called ‘expected product’) refers to the

characteristics and capabilities which make the car different. These might
include speed, durability, safety, colour choice. A driver purchasing a
Volvo family car will have different needs from a driver purchasing a
Porsche sports car. This is the level of product with which you may be
most familiar from brochures or advertising information.
The augmented product is anything that can be offered as a supplement

to the basic product to add value. Physically, style and design might be
included here. Services such as warranties, after-sales service, special
promotional offers such as free insurance, freephone customer care line
and a brand magazine are also included.
As we can see from this three-level product analysis, a car is a complex

mixture of the tangible and intangible. In order to protect or enhance
market share, it is vital that products not only have sought-after
characteristics, but that they offer a unique selling proposition (USP). The
USP describes the features and benefits, which differentiate your product
from that of your competition. In the case of a Porsche, perhaps its USP is
that it confers a ‘young and successful’ image on the driver. In the case of
the Volvo, ‘safe, secure and responsible’ are perhaps more pertinent
features.
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BRANDING
It is becoming clear that brands have a key part to play in the idea of
products and services. Brands have a special place in the market place;
strong brand values show through into strong returns on investment.
Branding is the process by which companies distinguish their product
offerings from the competition. By developing a strong design, logo,
product or service range, image and identity, and above all a reputation for
trust and quality, a brand can grow.
Read Jobber, Chapter 9. You will find key terms and issues about
branding.
Make sure that you can differentiate between:

 product line and product mix
 product width and product depth
 product category (product field) brand and variants.
You should also be sure that you understand the difference between own-
label brand, manufacturer brand and fighter brand.
Let’s look at branding in more detail. Why is branding so important?

Margaret Crimp (1990) says: “A brand is a product or service which has
been given an identity: it has a brand name and the added value of a
brand image”. Note the following definitions:
 Brand name is strictly the groups of words or the letters of the name
which can be spoken
 Brand identity is the name and visuals – the typography, for example,
Coca Cola, Kellogg’s; the colour of the pack design or logo and any
trademarked slogan, for example, ‘mild green Fairy Liquid’
 Brand image distinguishes the product from others in the mind of the
consumer – the brand personality of the product or product line.
A brand must reflect the attributes and positioning of the product or

service. Brand marketing encourages these attributes to be associated by
the consumer. We can see here that the branding concept links well with
the three-level product analysis outlined above. However, we normally add
a fourth category to the model – potential/intangible product. Once a
product or service is firmly established, it can develop a brand, rather than
brand name status. It is the brand that is often bought rather than the
product or service, since customers have learned that brands can be
relied on to provide quality. This brand loyalty gives manufacturers more
control over marketing and choice of distribution channels.
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A key advantage of branding is that it helps the customer to differentiate

between a number of similar products or services. Branding also helps
producers to create separate identities that appeal to different sectors and
segments. However, to maximise the effectiveness of branding the
product identity needs to be clearly established and repeated through
marketing communications. This identity can become so well known that it
can be simply communicated by association – without the customer being
told the brand name.
BRAND EXTENSION AND STRETCHING
There are two other terms with which you should become familiar. Brand
extension is the term used to describe the transferring of brands across
closely related products; brand stretching concerns completely new
product categories. Examples are:
 Dunhill luggage (stretching)
 Armani belts, handbags and accessories (extension)
 Calvin Klein perfume (stretching)
 Mars ice-cream bar (extension)
 Virgin Atlantic (stretching)
 Virgin Rail (extension)
All these products flow from the base concept. This way cognitive
dissonance is minimised – the customer can perceive the field of products
as having a basic coherence and family likeness. How does this
coherence develop? What do we mean by base concept? To answer this
we need to go back to our discussion of product analysis.
Customers’ perceptions of the product, its benefits and their orientation to

and belief in the brand, must be reflected in the whole product field.
Consider Calvin Klein. Is perfume a ‘natural extension’ of the clothing
brand? The answer is ‘probably’. CK’s target group includes young people
who are interested in lifestyle, looking good, and who align self-image with
CK’s brand image of sport and health. Products have a symbolic value for
consumers – they say something that matches the individual’s aspirational
self-image. Products can help support or enhance this self-image.
However, it is worth noting the disadvantage of branding from the

marketer’s point of view. Think of sticky tape ... yes, Sellotape. The use of
the name is so ubiquitous that is almost used as a noun, not a trademark
in the public’s mind. This reduces the value of the brand to the marketer.
For example, in the UK, customers who shop for a ‘Hoover’ could be
looking to purchase any vacuum cleaner; the brand name of Hoover is
given generic status.
88 Bradford MBA
Many brand names as you are aware, do maintain their uniqueness and
have a high value in the market place – especially when the name is
legally protected by a trademark.
Under attack from cheaper rivals, Heinz Baked Beans maintained its
market position despite wholesale price cutting and competition from own-
brands. This example demonstrates exactly what is rapidly becoming a
fact of life – that brands are so important to the market that they are seen
as having an asset value on the financial accounts of companies. On this
basis, brands can and are sold.
You may be familiar with the case of Nestlé. In 1988, Nestlé took over
Rowntrees, an established UK chocolate and confectionery manufacturer.
They paid £2 billion more than the estimated net asset value (plant and
buildings) in order to own the key brands of Kit Kat, Black Magic,
Smarties, etc.
However, when mistakes are made, brands have much to lose. Consider
the following example of how brand value was eroded. Just before
Christmas in 1995 in the UK, Gerald Ratner very publicly denounced his
Ratner jewellery product range as rubbish and singled out his cheapest
pair of earrings as ‘costing less than a Marks and Spencer prawn
sandwich and worth less’. This gaffe allegedly cost the business £50
million and Ratner, his place on the board.
There are some problems associated with branding:

 Piracy – Levi jeans, Cartier watches and many other products have all
been copied and original manufacturers spend large sums of money to
protect their brands
 Brand name – must be accessible (where appropriate) in all countries
and be meaningful in conveying the same product features and benefits
as in the producing country
 Trust – global brands such as Nike, Coca-Cola and Microsoft have
been under attack for reasons including labour, monopoly and
environmental exploitation. The power of the brand can have a negative
effect if its strength is taken for granted.
We have talked a lot about the idea of branding; now we look at one
aspect of the physical reality of the brand – the packaging. Quality is one
of our key characteristics of a good brand; packaging is the first physical
contact a customer has with a product or brand. They experience this
even before they have used the product itself. Good packaging is
therefore an important feature of sustaining brand perception. It should:
 show the brand name clearly
 be the correct size for handling and for customer use of the product
 give easy-to-read information about the product
Bradford MBA 89
 keep the product in good condition throughout its shelf-life.
What people perceive as good packaging is an intrinsic cue propelling a

customer towards purchase. However, it is an irrelevant cue, since
packaging in effect is not the actual product and does not itself have the
features of the product. We could argue that packaging is an important
part of the customer’s perceived benefit of a product. Cosmetics often
have very attractive boxes – sometimes the production costs of a product
are outweighed or counterbalanced by the cost of package production.
A problem for marketing managers is to ensure that the packaging reflects

the qualities, attributes and features of a product that they know the
customers seek. Liaising with and making clear these ideas to creative
and design staff responsible for package design is a key management
task for the marketing manager.
THREE PRODUCT/SERVICE MARKETING STRATEGY

MODELS
Three models help us to further understand the position of, and potential
marketing strategies for, specific products and services. These are:
 Product Life Cycle
 Boston Consulting Group Matrix
 Ansoff Matrix
We now look at these models in detail
The Product Life Cycle demonstrates how products begin their life,
mature and die. It is about the diffusion of innovation within the market –
how new products are adopted and how demand for them grows. In the
Introduction phase, the Innovators first pick up and start to use the
product. Others get to hear about it and Early Adopters purchase the
product and act as opinion-leaders to the Early Majority. By the Mature
phase of the Product Life Cycle, the cautious Late Majority is drawn in. By
the time the Laggards buy, the Innovators and Early Adopters have
probably moved on and the Decline phase has set in.
The Product Life Cycle can also take account of the economics of the
supply of products to the market. With cumulative production, experience
effects and economies of scale take effect and unit production costs
decline. The innovating company who is first to market, might gain these
benefits ahead of the competition. On the other hand, the following
company might learn from the mistakes made by the innovating one!
The PLC is not an exact scientific model, rather an indicative one. A key
use of the model is not simply to plot the current PLC position of a product
90 Bradford MBA
or service but to develop different Marketing Mix applications according to

the appropriate stage.
Read Jobber, pages 355–362 and bottom of page 402–409.
Read Vignette 10.1 (Mobile Marketing in a Mature Market, Jobber, page

359) and consider the product life of the mobile phone.
The Boston Consulting Group Matrix is a useful addition to the Product

Life Cycle in that it encourages marketers to develop a balanced portfolio
of products and services. For example, a product or service reaching the
Decline stage of the PLC might need to be replaced by one in the
Introduction or Growth phases. DVDs replacing videos is one such
example.
The BCG represents this by referring to specific products or services as

‘Cash Cows’, ‘Stars’, ‘Question Marks’ or ‘Dogs’. Typically a Cash Cow
might provide funds to support the development of a Star or Question
Mark which might in turn replace a Dog.
Some writers have criticised the BCG growth share box as being too
simplistic, too static a representation of the live market and being too
focused on market share. Can you think of any situations for which the
‘box’ does not account or does not help us manage product strategy
choices?
Read Jobber, pages 362–370 noting particularly the BCG matrix in Figure
10.2.
The Ansoff Matrix provides a useful framework for matching product and
service choices, as we discussed in this unit, to market choices as we
discussed in Unit 3.
Bradford MBA 91
Sometimes referred to as Strategic Thrust, the matrix provides four

marketing strategy choices. These can all relate to the findings of PLC and
BCG Matrix analysis.
The four options are:

 market penetration – selling more of an existing product to an existing
market
 market development – selling an existing product or service to a new
market
 product development – selling a new product to an existing market
 diversification – selling new products to new markets.
In terms of risk, market penetration is the least risky and diversification the
most risky. Matched to the PLC, a product moving to the Maturity stage in
one market might be potentially introduced (market development) in
another market. Or, a product moving to Decline stage might need to be
replaced by something completely different (diversification).
Read Jobber, pages 370–373.
NEW PRODUCT DEVELOPMENT
Whilst in this module, we are not specifically concerned with the

development of new products, we can see that life cycle and portfolio
strategies can ultimately result in the need for the introduction of new
products.
In the final part of this unit, we consider marketing issues concerning the
development of new products. We have already seen why new products
are necessary in today’s market. They replace ageing products; they meet
changing needs in the market place. Most new products are in fact product
replacements or new lines. There is higher degree of risk (and reward)
with brand new products.
New products can only be successful if both the company and the product
meet the requirements for success at each stage of the product
development process. A forward-looking marketing-orientated corporate
culture is an important ingredient in creating products that reflect trends in
customer needs and help build a strong competitive position.
You should try to become familiar with the following concepts:

 definition of new product
 new product development process
 testing – matching marketing research to new product development
92 Bradford MBA
Read Jobber, Chapter 11, pages 387–388 and 391–402.
SUMMARY

 Decisions about products are decisions about the Marketing Mix.
 Products and services are complex entities made up of tangibles and
intangibles.
 Brands create individual identities which add value.
 Three-level product analysis shows us that the product is a mix of
features and benefits. Properly managed, the three levels can help
extend the Product Life Cycle and help with product development.
 Product analysis helps marketers find out what makes a product
successful.
 The product mix is about the width, depth and breadth of products.
 Products have life cycles which can be used to enable a continuity of
products within a brand.
 Portfolio models allow marketers to balance net cash users and
generators, but they have limitations.
 The Ansoff Matrix helps us to make broad strategic choices based on
the level of risk associated with decisions about a product strategy
choice; it can assist in the product planning process.
 Branding is a powerful method of positioning a product and of growing
customer loyalty.
 Brand names can add value to a product or product line.
 Service marketing consists of ensuring the quality of tangibles,
reliability, responsiveness, competence, credibility, empathy, good
communication and courtesy.
 New products are developed to replace existing products or serve new
markets.
 Reasons for new product development include: consumer tastes
change; competition increases; technology allows for enhanced product
production.
and Lecture Audio’. You should see a folder named ‘Unit 6 –
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Product/Service and Branding’. Click on this and you will see an audio
entitled: ‘Unit 6 Lecture Audio’. In the same folder, you also click on ‘Unit 6
Lecture Powerpoint Slides’. Listen to the audio and consult the lecture
slides at the same time.
Marketing module.
Click on this and then click on ‘Unit 6 – Product/Service and Branding –
Resources’. Click on this and you should then see a folder named ‘Unit 6 –
Product/Service and Branding’. Click on this and you will see a video
entitled: ‘Creating a Corporate Identity: Virgin’s Branding Strategy’. Watch
the video and note any other brands that have successfully used brand
extension and stretching. Consider how the organisations you chose were
able to ensure that the brand extension/stretching was a success. Post
your comments on your tutor group specific Discussion Board.

instruction.
94 Bradford MBA
Read Case 19 Unilever’s Quest (Jobber, pages 377–379)
Question 1: What were the advantages to Unilever of reducing the size of

its brand portfolio? What were the risks?
Question 2: To what extent does it appear that Unilever followed (i) the
BCG Growth-Share Matrix, and (ii) the General Electric Market
Attractiveness – Competitive Position model approaches to portfolio
planning during the FitzGerald era?
Question 3: What are the attractions to small companies of buying

marginal Unilever brands? What are the dangers of doing so?
Learning Materials’. You should then click on ‘Additional Audio’ and see a
folder entitled ‘Unit 6 Product/Service and Branding’. Click on this and you
will see a podcast entitled ‘Branding, Shmanding....Why Should Nonprofits
Care?’ by American Marketing Association. This discusses the importance
of branding to non-profit organisations.
Crimp M (1990) The Marketing Research Process, Hemel Hempstead:

Prentice Hall.
Dibb S (2001) Marketing, Concepts and Strategies, Boston: Houghton

Mifflin.
Kotler P (2005) Principles of Marketing, Upper Saddle River: Pearson.
Bradford MBA 95
Unit 7:
Pricing and Distribution
Key reading:
1. Jobber, Chapters 12 and 17
Key audio/video:
1. ‘Future Supply Chain 2016’ – Activity 7.4 (see ‘Video Resources, Unit 7
– Pricing and Distribution’ in Blackboard).
Other:
Exercises, Marketing Multiple Choice Questions, Unit 7 – Pricing and
Distribution’ in Blackboard)
2. Unit 7 Discussion Board – Activity 7.6 (see ‘Video Resources, Unit 7 –
Pricing and Distribution, ‘Free! Why $0.00 is the Future of Business’
and ‘Pricing the Economist’ in Blackboard)
3. Unit 7 Marked Formative Assessment – Activity 7.7 (see Jobber pages
659–663, ‘I-Tune Face the Threat of Nokia’ )
Audio, Unit 7 Pricing and Distribution’ in Blackboard)
INTRODUCTION
In this unit, we look at the price and place elements of the Marketing Mix in
turn. Price has an important role to play in influencing the nature of an
organisation’s exchanges with its environment. All parts of the production
and distribution and consumer chain are interested in price – it is the
means by which exchange is effected between supplier and user. It helps
to differentiate goods and services in different segments and is a
competitive tool which can help exploit market opportunities. Place (or
Distribution) concerns itself with making the product or service available
and accessible to buyers. More recently, it has been seen as the element
which also focuses on after-sales, or relationship building. Place is unique
in the mix, as it is the element where producers and consumers actually
meet – in person, on the printed page or on-line.
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OBJECTIVES

 differentiate between key approaches to pricing products, and evaluate
their strengths and weaknesses in given situations
 distinguish between strategic and tactical pricing situations
 explain the strategic and tactical importance of distribution management
 identify key changes in the distribution environment
 select appropriate distribution channels for given products and services.
PRICE
As one of the 4 Ps, price is one of the controllable variables which

marketers use to influence demand, but it is essentially different from the
other components of the Marketing Mix in two ways:
Price is the only variable that generates revenue against recovery of

costs and contribution to profit – the others all add to costs. Any
organisation wishing to maximise its profits will want to charge as high a
price as possible, but will be limited by what the customer is prepared to
pay. Even in the non-profit sector, there is a positive incentive to raise
additional funds to provide some contribution to fixed costs and so
maximise the proportion of funding directed at the organisation’s primary
goals.
Price is the only variable that does not add value. Rather, it is the
benchmark used by customers to assess the value offered by the rest of
the Marketing Mix. Businesses which deliver better value for money than
their competitors are up to 200% more profitable than those which do not,
according to research conducted by PIMS (Marketing Business, June
1998).
PRODUCT
PLACE
PRICE PROMOTION
VALUE
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Unit 7: Pricing and Distribution
The price paid shows how much the buyer values the product – but it can
also be an essential component of the image of the product. ‘Good value’,
‘value for money’, ‘valuable’, ‘low value’ are all descriptions we could
assign to familiar brands of products and services – although not everyone
would assign the same description to a given brand. Consider some
products you might label as ‘good value’ and ‘value for money’; they will
not necessarily be the lowest priced, but nevertheless you regard them as
a fair exchange.
Read Jobber, Chapter 12.
In organisations where there is no direct price to the client or end-user, as

in many public services where services are free at the point of delivery and
publicly funded from taxation, pricing may not seem to have any obvious
role for the marketer. However, there are two issues to consider. Firstly,
the bodies who fund the service – for example government run health or
education services – have to make decisions on which services offer best
value as they are ultimately paid for by local tax payers.
Secondly, although the service may be free to the user, there may be
significant non-monetary costs to bear. These costs add to ‘perceived
sacrifice’ and may include waiting times for public sector provision, a low
customer orientation at the point of service delivery and costs associated
with the poor image of the public sector.
You may like to return to Jobber Figure 1.5 on page 14 to remind yourself
about creating customer value.
It is hard for a marketer to get price right. It must reflect the costs to the
producer of producing products or services and the benefits to the buyer
of consuming them. There are many external variables – competition,
exchange rates, costs of raw materials, ability of the market to pay – that
make setting the right price difficult. Note the term, the right price. The
price that a marketer sets for a product or service needs to be not too high
and not too low, but right!
All of us are familiar with promotional sales – when a seller reduces prices
in an effort to stimulate demand. The idea is that, if the price is lowered,
demand for that product will be increased. Of course, this works for some
products but not so well with others. For example, people can only buy so
much sugar. If all suppliers of sugar lower the price, overall demand is
unlikely to go up. However, if only one sugar supplier lowers the price,
short-term demand for their particular sugar may go up, but not the long-
term demand.
Bradford MBA 99
Consider how your purchasing would change with price reductions and
price rises for the following products: books, petrol, coffee, electricity and
car insurance.
 How much more would you buy when the price went down?
 How much less would you buy when the price goes up?
 Why? Describe the nature of demand of these products in relation to
pricing.
PRICING METHODS
Marketers would rather not lower prices to stimulate demand, because

achieving revenue is the only way to make profit. Even if you had zero
costs, you could not make a profit unless you sold something. So, they try
to affect demand in various other ways, by manipulating the other
components of the Marketing Mix, for example:
 differentiate the product by adding value and developing the augmented
product
 increase customer loyalty – or at least ensure that it is more trouble for
customers to change to an alternative than it is to stay ‘loyal’
 promote the benefits and the product’s desirable qualities.
Pricing decisions are very complex. The marketer has to take three broad
areas into consideration when setting the price:
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 Organisational factors corporate and marketing objectives

stages in the product life cycle
costs
positioning and image
 Market characteristics geography
custom and practice
competition
 Customer characteristics price sensitivity
perceived value
financial availability
Often, however, the theoretical models are difficult to put into practice.
Jobber discusses Shapiro and Jackson’s three methods of pricing
(Shapiro and Jackson 1978). We will look at each of these in turn.
The three methods of pricing – cost-oriented, competitor-oriented and

marketing-oriented – are actually linked to ideas we have encountered
before. Think back to Unit 1 when we looked at differing approaches and
orientations to the way that organisations try to achieve competitive
advantage. You should recall that there are broadly two orientations
businesses can take – a production orientation and a marketing
orientation.
Cost-orientated pricing is the way production-orientated organisations

approach pricing. This pricing method starts by asking the question ‘How
much did the product cost us to produce?’. Many companies establish the
price by starting with their own costs. Winkler (1983) found that 80% of
companies took little account of market factors and used cost-plus (full
cost) pricing. This way they sold at a price that at least covered their own
costs. Cost-plus is the simplest way to determine price by adding a mark-
up (a predetermined percentage) to the firm’s costs. It is popular with
many retailers who buy in finished goods. For example, a retailer may buy
in trousers for £16 and add a 50% mark-up giving a retail price of £24.
Often the percentage chosen is an industry norm. Common industry

norms in the UK include mark-ups of:
 5–8% on cigarettes
 25% on newspapers
 30% on fabrics
 50–100% on furniture or books.
Producers will often publish recommended retail prices (RRP) that will
effectively set the upper and lower limits that retailers can charge.
Recently in the UK, however, there have been a number of instances
where multiple retailers increasingly want to sell at a discount or a price
lower than the RRP, similar to in the USA.
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So, even with a standard mark-up percentage, the seller needs to ensure
that costs will be covered. The simplest way to do this is by break-even
analysis. If, for example, you are a retailer and you sell goods that have a
RRP, you can use this to establish how many you need to sell to break-
even (cover your costs). Look at the example below:
The cost structure for modems is:

Sales price per unit (based on RRP) £100
Variable costs per unit £50
Contribution (sales-variable) per unit £50
Fixed costs £40,000
At what level of unit sales, does the company break-even? This is the
point where an activity produces no profit (a surplus) and no loss (a deficit)
and is where sales revenue exactly equals the sum of fixed and variable
costs.
We can calculate it using the following formula:
Total fixed costs/contribution per unit = Number of units to break-even
In this example:
Total fixed costs/contribution per unit = 40,000/50 = 800 modems to break-

even
PRICING STRATEGY
Now read Jobber, pages 422–427.
Competitor-orientated pricing focuses on competitors rather than costs

to set prices. For example, we need to ask the questions: What is the
competition charging? What is the going rate? How is that rate set? The
going rate seems like a good idea if you want perfect competition but not
for a marketer who wants to use price as a way to help differentiate the
product from the rest of the market to create differential advantage.
The marketer wants the product to be viewed by the customer as the best
and constant choice of all market offerings, without a price war! There is
some room for discretion in the price when there is a going rate but to
build differential advantage the customer has to see the value of the
different price. Augmenting the product can help to justify an increased
price.
Competitive bidding can be through a sealed bid – the view is that the
cheapest tender is going to be the best ‘value’. This idea has recently
come to the UK public sector with the advent of compulsory competitive
102 Bradford MBA

tendering; however, this may have poor results. Lowest bidders may not
give the best service, their workforce may be under-trained or under-
skilled, de-motivated by low wages, and lack of job security. The quality of
their subsequent product offering may be inferior to the previous standard
and not provide the best value.
It is not generally considered a good idea to rely completely on either of

these methods when a marketer is setting a product’s price. Cost-oriented
pricing focuses too much on the economics of the supplier, although it is
the customer, not the supplier, who is going to pay for the product.
Competitor-orientated pricing does look outside the supplier’s own
organisation, but a ‘just bid whatever it takes to get the business’ mentality
can blind the supplier to his own economics. The latter attitude can be
particularly harmful in an organisation that pushes sales targets down the
organisation and away from an understanding of the overall costs.
Although it is much more complex, and it requires astute marketers,

marketing-orientated pricing is more likely in the long term to achieve a
pricing structure that matches the customer’s willingness to pay and thus
optimises profit. Marketing-orientated pricing looks at a number of related
variables, rather than one or two specific ones. These variables include
value to customer, competitive reaction, effects on quality of
product/service and relationship to overall marketing strategy as well as
the more traditional pricing variables discussed earlier in this unit.
Accordingly, an organisation has to supply what the customer wants
(market-orientation), at a higher price than it costs to supply (cost-
orientation), generally in the face of competition (competitive-orientation).
So, the astute marketer needs to take all three bases of pricing into
account.
Now read the rest of Chapter 12 on Pricing Strategy.
An additional key notion to grasp about the marketing-orientated approach

to pricing (see Figure 12.3, page 427 of Jobber) is that the pricing decision
is dependent on other earlier decisions in the marketing planning process.
Think again about the products you considered in Activity 7.1 (books,
coffee, electricity, and car insurance).
Which of these products would you, as a consumer, believe it appropriate

for the suppliers to set the prices based on a cost-oriented, competition-
oriented or market oriented basis? Explain why.
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The customer wants value for money and quality in line with the price they
have paid. The perception of ‘good value’ is one which marketers need to
know if they are to set the correct price. In Unit 5, we looked at buyer
behaviour related to product/service PLC position; we saw that Innovators
are happy to pay a high price for the value of being among the first to own
a particular product.
Look at Figure 12.4 on page 428 on the sales and time taken for market
segments to adopt new products.
Price drops as more segments are drawn in and volume increases but
marketers need to understand the difference between low price and
perceived value. If the price is too low, it might undervalue the product
itself.
Look at Table 12.4: Conditions for charging low prices, on page 431 of
Jobber. Note 4: the ‘make money later’ aspect.
To help you with the next activity, here is short review of some definitions
you have met in your textbook reading during this section.
 Price skimming – setting the price high to recover development costs
and make high profits in the short run
 Marginal cost pricing – setting price at a level which covers variable
costs and makes a contribution to fixed costs and profits
 Mark-up – the amount added to the cost price to allow for an element of
profit
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 Product line pricing – prices calculated so that they are equal across
a range of goods even though there may be cost differences between
products in the range
 Loss leader – price set at cost or less to attract customers
 Penetration pricing – a strategy of setting prices at a low level to win
market share
 Price discrimination – charging different prices to different market
segments.
PLACE: TYPE OF DISTRIBUTION
Distribution can take place through a simple or complex distribution chain.

At its simplest, it will be a two-participant model where a producer sells
directly to a consumer. The last five years have seen massive growth in
this model as companies increasingly embrace the internet. Next is the
three-participant model. Here a producer sells via a retailer who then sells
on to the consumer. Finally, we have the four-participant model, frequently
used by small producers or distributors where the producer sells to the
wholesaler who in turn sells to the retailer who then sells to the consumer.
Consider examples of distribution channels that have two participants,

three participants and more participants. Think about advantages and
disadvantages for each of these channels.
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WHO USES DISTRIBUTORS?
PIMS data on over 1,800 businesses (PIMS 1998) suggests that about
50% of industrial businesses involve distributors for some portion of their
market, whilst distributors are the norm for consumer markets. We can
summarise the characteristics of those who use distributors in the
following chart:
Characteristic Use distributors Sell direct

Market type Consumer Business
Product Life Cycle Mature Introduction/Growth/
Decline
Product and service Generic Customised
type
Technological Moderate change Rapid change
environment
Customer base Above 1000 Below 100
Unit price Low High
Importance of purchase Low, moderate High
Buying centre Professional advisors Buyer specifies
specify
Whilst these findings show general patterns, there are a number of

questions that individual businesses need to answer before deciding on
their own distribution strategy. These include:
 Should we sell direct to the customer, or channel our goods via channel
intermediaries?
 What benefits are there to us as producers in using intermediaries?
 How would the use of such intermediaries affect the relationship with
our customers?
 What does the use of intermediaries mean for the organisation? Could it
mean a reduction in direct sales force? Or an extra burden of
administrating supply channels? Or a gain of economies of scale?
You will see the advantages and disadvantages of using distributors

discussed in some detail when you read Chapter 17. In general, we can
summarise these as:
Control – An advantage of a channel with two participants is that the

producer retains control over the marketing process and each aspect of
the Marketing Mix. With intermediaries, in return for efficient distribution,
the original manufacturer loses some degree of control, particularly if the
intermediary is powerful. Legal title for the good is passed along the
106 Bradford MBA

channel of distribution. Once a middleman holds stocks, decisions about

merchandising, pricing, promotion and service levels are made, at best, in
consultation. The producer may be required to cut prices but the benefits
are not necessarily passed on to the customer, for example. The
producer’s control is limited to their skills as an influencer and the
negotiating power they have over the distributor. In the UK, small food
manufacturers including farmers, have called on the Office of Fair Trading
to regulate supermarkets to stop their abuse of buying power.
Cost – An advantage of a channel with at least one intermediary is that

the producer can push the costs of selling, debt recovery and the
investment in finished goods out to the intermediaries. There are fewer
lines of contact for the manufacturer, so this leads to lower administration
costs too. The role of the distributor is not simply to store and deliver
products, they also offer specialist functions such as breaking bulk,
offering consumer credit, installation and after-sales and repair services.
Reach – An advantage of a channel with intermediaries is that they ought

to be able to reach more of the market and have useful local knowledge.
Display of the product at the local level is often a function of the local
distributor. By using specialist middlemen, manufacturers can reach niche
markets, which might otherwise be too difficult or expensive to service.
Image – Distribution decisions reflect directly on the image of the product

and the producer. Distributors, particularly retailers, segment their own
markets and have clear positions within them – their image will rub off on
the manufacturer’s products to good or bad effect. The marketer has to
decide whether the choice of distributor fits the image the producer wants
to portray.
The different forms of distribution channel can have advantages and

disadvantages for the customer as well. As you read this story, think about
how you would cope if you were Patsy.
Case study
Patsy Klein is the IT manager of a medium-sized company in
Scotland with 20 professional staff. She is about to buy a new PC for
every professional in the company and is doing a preliminary
investigation of suppliers. This is what she has found out so far:
She can buy from one producer online
Producer A Patsy, the customer
She cannot buy from another producer B who has a direct sales
force, because her company is not big enough to interest them.
However, she can buy from an acquaintance, Barry, who is an agent
for that producer. Barry’s small company is supplied by one of the
producer’s ‘business partners’, who holds stocks of the producer’s
Bradford MBA 107

PCs. (Barry also sells Producer C’s and Producer D’s PCs – but not
Producer A’s PCs, which are only sold online)
Producer B ‘business partner’ Barry, the agent
Patsy, the customer
She can buy from a local PC store (who stock Producer B’s and
Producer D’s PCs, but not Producer C’s PCs).
Producer B PC store Patsy, the customer
She can buy from an online retailer (who stocks B, C and D PCs).
Producer B Online Retailer Patsy, the
customer
She can also buy the PCs from her friend Colin who works for a
software house that supplies a ‘turnkey’ (hardware and software)
system that is suitable for her company.
Producer B Colin, the agent Patsy, the customer
So far there is no problem for Patsy. All she has to do is specify what
she needs and request a quotation from Producer A, Barry, the PC
store, the Online Retailer and Colin. But wait…
Producer A will service the PCs only if they are returned to the
service point in Ireland. Producer B will not service the PCs, but
Patsy can contract with the PC store or with Barry the agent to
service them. The PC store and Barry will also service Producer C’s
PCs. Producer D will not let Barry service their PCs, as he is not a
‘full service dealer partner’ as he does not represent them
exclusively. Colin’s company does not service the PCs, but because
they have an agreement with the producer, Producer B’s staff service
them.
Patsy, being a very experienced IT manager, is aware that her core
need is ‘absence of hassle’, so she does not want anyone’s PC out
of action for any appreciable time. So, her specification is going to
have to be much more complex than she originally thought, and the
differentiator is going to be about service response time and service
quality.
No distribution system can simultaneously maximise customer service and

minimise distribution cost, so choices need to be made. Maximum service
implies large inventories, in close proximity to customers, with flexible
transportation. Minimum cost implies slow, cheap transportation, low
stocks and few distribution points. Marketers need therefore to set clear
objectives covering the level of service before determining distribution
policy. To do this, some basic questions must be answered by marketing
research to discover the relative importance of customer services to the
target segment, and to discover what the competitors are offering and
achieving.
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Now read Jobber, Chapter 17 on Distribution.
that you should highlight or take notes on:
 Channel intermediary functions
 Services channels
 Channel selection factors
 Distribution intensity
 Franchising benefits
 Corporate vertical marketing systems
 Channel management tasks
 Sources of channel conflict
 Physical distribution system components
 Using physical distribution to improve customer service
 Economic order quantity.
Place is often the most difficult element of the Marketing Mix for marketers
to get right. You’ve read about all the different issues the marketer must
keep in mind and all the opportunities for it to go wrong. It is no wonder
that companies are constantly changing (or at least tinkering with)
distribution channels.
Resources’. You should then see a folder named ‘Unit 7 – Pricing and
Distribution’. Click on this and you will see a video entitled: ‘Future Supply
Chain 2016’. The video describes challenges of supply chain for consumer
products and retail companies.
SUMMARY
Price is:
 The odd one out of the 4 Ps – it creates revenue.
 All the other elements cost money.
 Price is linked to value for money and fair exchange.
 Pricing is an aspect of positioning.
Bradford MBA 109

 There are three main pricing strategies:

– Cost based – what it costs to make + profit = cost to consumer
– Competition based – price is placed within competition band
– Marketing based – find out about the customers, what will they pay?
 Pricing is linked to the demand for a product or service.
 Price is seen to be an indicator of quality – quality linked to value.
Brands hold up well against lower price own-brands.
Place is:
 Concerned with making products and services available and accessible
to the customer.
 There are many possible channels of distribution – the right choice
depends on an understanding of the customer, the channels chosen by
competitors, available intermediaries, characteristics of the organisation
and its products and service level policies.
 Channel strategies involve the choice of the most effective distribution
channel, the most appropriate level of distribution intensity and the
degree of channel integration.
 Channel management includes selection, training, motivation and
evaluation and managing the conflict that may occur.
and Lecture Audio’. You should see a folder named ‘Unit 7 – Pricing and
Distribution’. Click on this and you will see an audio entitled: ‘Unit 7
same time.
Marketing module
110 Bradford MBA


Click on this and then click on ‘Unit 7 – Pricing and Distribution – MCQs’
work through the questions provided.
Resources’. You should then see a folder named ‘Unit 7 – Pricing and
Distribution’. Click on this and you will see videos entitled: ‘Free! Why
$0.00 is the Future of Business’ and ‘Pricing the Economist’. Watch the
videos and post your response to the following questions on your tutor
group Discussion Board (your tutor group can be found ‘Groups’ in
Blackboard).
Question 1: Recent years we have seen many businesses offering their

products for nothing (e.g., internet communication, games etc.). How can
companies do this?
Question 2: What is the effect of ZERO pricing on consumer behaviour?
ACTIVITY 7.7 – MARKED FORMATIVE ASSESSMENT
Go to the textbook and read the case on pages 659–663‘i-Tune facing the
threat of Nokia’ After you have read the case write up your responses to
the 3 questions listed concerning the issue of positioning (max words
1,000).
Email your reply to your module tutor who will provide you with formative
feedback on your answer.
folder entitled ‘Unit 7 Pricing and Distribution’. Click on this and you will
see an academic paper by Shampanier, Mazar and Ariely (2007).
This paper discusses the experiments to examine the effect of Zero

Pricing by Ariely who appears in the video clip for the Discussion Board in
Bradford MBA 111

this Unit (Activity 7.6) and his colleagues. The experiments in the paper
found that ‘in contrast with a standard cost–benefit perspective, in the
zero-price condition, dramatically more participants choose the cheaper
option (i.e., low quality chocolate priced as Zero cent, chosen by),
whereas dramatically fewer participants choose the more expensive
option. Thus, people appear to act as if zero pricing of a good not only
decreases its cost, but also adds to its benefits’ (Shampanier, Mazar and
Ariely, 2007: 742).
PIMS (1998) PIMS letter 51, PIMS Europe Ltd.
Shapiro B P and Jackson B B (1978) ‘Industrial pricing to meet customer

needs’, Harvard Business Review, Nov–Dec, 119–27.
Tyndall G, Gopal C, Partsch W and Kamauff J (1998) Supercharging

Supply Chains, New York: John Wiley & Sons.
Winkler J (1983) Pricing for Results, London: Heinemann.
112 Bradford MBA

Unit 8:
Marketing Communications
Key reading:
1. Jobber, Chapters 13, 14, 15 and 16
Key audio/video:
1. ‘Honda The Power of Dreams’ and ‘Nestlé’ – Activity 8.2 (see ‘Video
Resources, Unit 8 Marketing Communications’ in Blackboard).
2. ‘Avon SpectraColor Lipstick’, ‘Specsaver Mr Men Offers’, ‘Does HIV
Look Like Me?’ and ‘Inspirational NIKE’ – Activity 8.3 (see ‘Video
Resources, Unit 8 Marketing Communications’ in Blackboard).
Other:
Communications’ in Blackboard)
2. Unit 8 Discussion Board – Activity 8.5 (See ‘Video Resources, Unit 8 –
Marketing Communications, Dove Real Beauty’ in Blackboard)
3. Unit 8 On-line Live Tutorial – Activity 8.6 (see Jobber, pages 583–585,
Case 30 CRM at Tesco) ( see ‘Groups, Live On-line Tutorial’ in
Blackboard)
Audio, Unit 8 Marketing Communications’ in Blackboard)
INTRODUCTION
In this unit, we look at marketing communications or the promotion

element of the Marketing Mix. We use the term marketing
communications to avoid confusion between promotion (one of the 4 Ps
of the Marketing Mix) and sales promotion (a short-term tactical tool which
is an element of marketing communications).
Most marketers are faced with difficult choices when developing marketing
communications strategy, not just in terms of determining appropriate
objectives which integrate with the overall marketing plan, but in
developing messages, which will appeal to their target audiences,
choosing the most effective mechanisms to reach them and measuring the
results.
Here we examine the nature of the communications process and analyse

the requirements of an effective marketing communications plan.
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The six major components of the marketing communications mix are

advertising, personal selling, direct marketing, sales promotion, publicity
and the Internet. During your study of this unit, collect examples of
marketing communications, good and bad, from each of these categories.
If possible, collect a selection from consumer as well as business-to-
business and non-profit communications. As you read through this unit,
you will have the opportunity to compare them with examples of good
practice and to analyse them using the frameworks from the module.
OBJECTIVES

 define the key elements of the marketing communications mix and
detail the characteristics of different marketing communications tools
 use the key stages in planning a marketing communications campaign
 evaluate the effectiveness of marketing communications in given
situations
 describe the communications process and two alternative modes of
how advertising works.
 develop appropriate marketing communications plans for given
situations.
DEVELOPMENT OF MARKETING COMMUNICATIONS
Marketing communications is not a new phenomenon. The oldest

surviving printed advertisement in the UK was produced by Caxton to
promote his publication The Pyes of Salisbury in 1477, although it is likely
that advertising was used centuries before this. There is evidence that
even the ancient Greeks used advertising for commercial purposes.
Advertising really took off in the nineteenth century during the Industrial
Revolution. Development of mass production techniques demanded
stimulation of mass consumption, so manufacturers had to develop new
ways of reaching their customers. By the 1890s, advertising was
appearing everywhere – in newspapers and magazines, on buildings,
railway engines and billboards, even on books of matches, and it quickly
became established as a major element of commercial life. In 1899 even,
Eastman Kodak spent US$750,000 on advertising.
Other methods of reaching the customer were in widespread use too. For
example, Bovril (a blend of meat extract, caramel and spices used as a
spread or hot drink) was launched by offering free tastings at the Colonial
and Continental Exhibition in London. This was backed up by advertising
and even a vigorous personal selling campaign in bars and pubs!
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Unit 8: Marketing Communications
New technologies have always been quickly exploited for their potential as
an advertising medium and many such as hot air balloons, trams and
buses are still in use as media today. The introduction of the cinema after
the First World War, opened up new ways of communicating with the
customer as a captive audience. However, it was the unique power of
television to broadcast sound and pictures directly into people’s homes
that led to a sharp increase in advertising spend in the 1950s.
There is an enormous choice of communications media for the marketer,

but the cost is high. In 2009, it was estimated over $421 billion spent
worldwide on advertising (PricewaterhouseCoopers, June 2009).
In the UK, Advertising Association statistics estimated total advertising

spending (excluding TV sponsorship and Radio Branded content) at £14.5
billion in 2009. 24.2% is via internet that indicates developments in IT have
led to the rapid growth of direct marketing via electronic media as well as
traditional media (e.g., TV - 26.2%). The spending in 2010 is forecasted to
increase by 5.4% and then expected to fall for 2011. Yet, advertising
spending is sizeable and accounts over 1% of GDP.
This does not include sales promotion (e.g., £25.6bn on UK retail sales
promotion, The Institute of Sales Promotion Ltd.), exhibitions and
conferences, and the costs of publicity and personal sales forces.
Marketing Communications represents a very expensive element of the
Marketing Mix and so sound planning is essential.
Read Jobber, Chapter 13, pages 462–468.
DEFINING MARKETING COMMUNICATIONS
In its narrowest sense, we can define marketing communications as

promotion – one of the 4 Ps of the Marketing Mix – and describe it in
terms of the six major components of the promotional mix:
 advertising
 sales promotion
 direct marketing
 publicity
 personal selling
 internet and online marketing.
However, a wider view adopted by the Chartered Institute of Marketing is

that marketing communications is ‘all forms of communication between an
organisation and its customers, and potential customers’. This broad
definition recognises an important point: promotion cannot be developed in
Bradford MBA 115

isolation from the overall marketing strategy – each element of the

Marketing Mix conveys the message to the target customer, not just
promotion.
The task for the marketer must be to ensure that the Marketing Mix is
integrated to convey a clear and consistent message to the customer. If
this does not happen, then at best the customer will be confused, and at
worst they will disbelieve the messages and perhaps refuse to buy the
product.
Another point to note about this definition is the two-way nature of the
communications process. The organisation must really get to know its
customers and what influences their buying behaviour if it is to formulate
effective marketing communications strategies.
Explore the message conveyed to consumers by each one of the 4Ps in

the examples of product sold in the UK or your own country (for example,
Haagen-Dazs ice cream; Skoda cars; Calvin Klein jeans). Use the table
below to record your answers. To what extent are the messages
consistent?
Haagen-Dazs Skoda cars Calvin Klein jeans

ice cream
Product High quality
message Fresh ingredient
Natural
flavouring
Price message Premium price
reflecting high
quality and
luxury image
Place Mildly
message discriminated
channel, e.g.,
major
supermarkets &
restaurants
(rather than
newsagents &
take-away
restaurants)
Promotion Pleasure for
message adults (rather
than an
everyday
economy brand)
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THE COMMUNICATION PROCESS
The simple communication model is shown in Figure 13.2 on page 466 of

Jobber. The supplier (source) strives to develop a clear communication in
words, sounds and visuals (encoded message) which is communicated
(transmission) direct to the buyer. This could be a brand image and
invitation to buy. Language, experience and cultural differences may mean
that the messages are interpreted (decoded) quite differently from that
intended by the sender. Also, distractions such as competing messages or
interruptions (noise) can affect our understanding. However, if decoded
correctly and the message is believed, it may stimulate a change in the
receiver, such as a shift in perception, attitudes or behaviour, such as trial
or purchase or preventing unwanted behaviour. These are feedback
responses, which can be measured by the sender and used to refine
future messages and their transmission.
Communications’. Click on this and you will see a video entitled: ‘Honda
The Power of Dreams’ and ‘Nestlé’.
Watch the videos and answer the following questions:
Question 1: Who is the intended audience (receiver)?
Question 2: What kind of communication tools are used to transmit the

message?
Question 3: What is the message? Is there only one theme or are there
several?
Question 4: How do you think the audience will interpret the message and
what action are they expected to take?
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Activity 8.2 – Watch and Learn Answer:
Managing the communications process is a difficult task for marketers and

there are several points where the communication can fail. The
accelerating pace of change has an important impact on the ways that
organisations communicate with their customers and this adds to
complexity.
There is an increasingly active relationship between the buyer and the

supplier of goods and services. Communicators need to understand their
audiences in order to produce compelling messages. Marketers are
making much more extensive use of marketing research to inform
decisions and monitor feedback and are shifting to media that facilitate the
recording and measurement of individual responses. To quote Sir Michael
Perry, chairman of Unilever, back in 1996, but still valid today:
“The world belongs to the consumer – whether she (or he) happens to
be going under the title of citizen, customer or voter. That consumer is
becoming more and more self-aware and self-confident (as well as
more and more sceptical). Between all of us – and with considerable
help from the media – we have educated the consumer. They know
how things work and that knowledge is something you couldn’t now
take away from them, even if you wanted to. And business will
depend more and more on its understanding of what is happening in
that consumer’s heart and mind and how changes in society are
affecting it. Not only is there no way back but the way forward will
accentuate that need.”
(part of an address to UK Department of Trade and Industry,
1996)
There are many new channels of communication. Messages are

transmitted via a blend of media or promotion mix. The sheer range of
118 Bradford MBA

choice and the differences in availability of media coverage between

countries make media decisions highly complex. Added to this, the cost of
media is the single biggest drain on communications budgets, so mistakes
are costly.
The receiver, however, is becoming increasingly selective in the screening

of messages. Each year the average householder watches more than a
thousand hours of television, is exposed to over 1,600 posters, receives
135 pieces of direct mail and is assaulted countless times by pop ups and
banners every time he/she opens up the “in-box”. In addition, for example,
over 60% of the UK population read a regional paper at least once a week
and 50% read weekly or monthly magazines.
The sheer number of these marketing communications makes it

impossible for individual consumers to take it all in. This contributes to the
general level of noise. Consumers may not notice the messages or screen
them out. Some may entertain and others irritate, but only a minority will
lead to a buying process.
The legislative framework, which regulates marketing communications,

limits the choice of messages and media. For example, current EU policy
is to ban all cigarette outdoor, press and magazine advertising and
sponsorship.
To sum up, there are many potential ways to develop and change the
ways that organisations communicate with their customers, but increasing
complexity at every stage of the communications process makes
promotion management more difficult. The costs involved mean that
marketing communications cannot be a hit-and-miss affair. Managers
need to be able to analyse market communications requirements and plan
effective campaigns, which are cost-effective, meet their communications
objectives, reach the target audience with compelling and appropriate
messages and carefully control and evaluate their implementation.
Getting the process right can be very successful. Supermarket promotions

can lift sales by several hundred per cent for example. As a result,
manufacturers are prepared to pay retailers to secure shelf space at
important positions on the end of aisles.
Effective communications help to build long-lasting brand value too. More

than 20 years after General Electric stopped making food blenders,
consumers were still rating them. Proctor and Gamble estimate that the
difference between the value of its assets (£8 billion) and its market value
(£37 billion) is mostly accounted for by the value of its home-grown
brands. As one of the largest advertisers in the world, much of this
success comes from well planned, effective communications.
By now you should be fairly clear about what the communication process
is and some of the tools available to the marketer. It is important now to
Bradford MBA 119

understand how we plan the process, so we look at communications

planning.
COMMUNICATIONS PLANNING
We have already emphasised that communications strategy has to be

viewed within the context of the overall marketing plan. Marketing
communications plans must be made within a framework of decisions
regarding segmentation and targeting, product, pricing and distribution
policy. See Figure 13.4 on page 469 of Jobber for the relationship
between Marketing Strategy and Communication Strategy.
To understand more about this process read Jobber, pages 469–490.
MARKETING COMMUNICATIONS AS PART OF

MARKETING STRATEGY
As one of the 4 Ps, marketing communication is only one aspect of the

broader Marketing Mix and it is important that it is not developed in
isolation to avoid conflicting messages (as we saw in Activity 7.3).
Marketing communications strategy must be integrated with all other
aspects of the marketing strategy, and with the overall strategy of the
business. The direction developed in the marketing plan, such as the
segmentation, the positioning to aim for, the resources required and
product strengths, should all feed in to the start of the marketing
communications planning process.
Target audience
Segment analysis and target market choices in the marketing plan provide
direction on where to channel resources for communication. In the
process, it also builds a clear picture of the consumer (and those who
influence them) that the communications must reach, for example, their
attitudes, buying behaviour and awareness. All this information helps us to
define the tasks of marketing communications:
 who to reach (target audience)
 what to say (message decisions)
 when, where, and how often to say it (communications mix).
These issues are formally set out in the communications plan. It is

important to recognise that the consumer may not be the only relevant
target audience. Other groups in the task environment may require
communications too, such as the dealer network, suppliers, external
publics – shareholders, media, government, internal publics – staff,
120 Bradford MBA

salespersons. Each group may require different messages and perhaps a

different communications mix.
Communications objectives
Read about the theories of how advertising works now (pages 467–468 of
Jobber) and bear these in mind when reading the sections on
communications objectives (pages 469– 473). You may also like to read
about salesforce and direct marketing objectives too (pages 521–522 and
558–559).
Without good objectives, it is impossible for the manager to guide decision

making or to control the implementation of a communications plan. A clear
statement of objectives operates as an essential communication and co-
ordination device between the organisation and outside agencies that may
be involved in working on aspects of the communications programme. An
advertising agency will use the objectives to brief their creative team and
co-ordinate the efforts of copywriters, media buyers and research
departments. Alternative campaigns can be evaluated against these
objectives and appropriate choices made. Objectives also serve as a
reference point to evaluate the results of a campaign.
There are some circumstances where increased sales may not be

appropriate as an objective. Many public service communications are
aimed at raising awareness or changing behaviour rather than generating
sales, for example, increasing the number of blood donors; or promoting
racial equality. Political parties may advertise to generate votes, gain
membership, financial support or reduce the credibility of the opposition.
Even in commercial organisations, setting sales as a communications

objective can be problematic. Many factors influence sales, and if targets
are not reached it may not be the fault of the communications campaign.
As Reeves (1990) pointed out: “The product may be wrong. Price may be
at fault. Distribution may be poor. The sales force may not be adequate.
Budget may be too low. A better product may be sweeping the market. A
competitor may be outwitting you with strong deals. There are many
variables.”
Russell Colley, in 1961, argued that sales objectives offer little practical
guidance for decision making. Firstly, it is difficult to isolate the contribution
of advertising and secondly, today’s communications may pay off in the
long term, long after feedback from measures are needed to inform
decision making. For example, direct mail about an emergency repair
service may convince the householder and be kept for reference but it will
not be used until repairs are necessary. Advertising in certain types of
media may take a long time to reach its full audience too. The research
agency, Milward Brown, estimates that it takes up to 32 months for
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readership to reach its full potential in magazines such as Vogue and

Cosmopolitan; this is too long to wait to measure performance.
One further argument against sales increase as a communications

objective is that in mature markets, the main concern of marketers is
defending and retaining market share. If maintenance is the goal, it is
difficult to set measures for the success of marketing communications,
unless you estimate the amount sales might have fallen without it.
Colley believed that marketers should analyse the interim steps of the
communications and decision-making processes to identify specific
communications response objectives. Relevant advertising objectives
would be, for example, to create or widen awareness, to convey a
particular message, or to change attitudes to the brand, but increased
sales would be a wider, marketing objective.
You might have questioned whether intermediate measures such as

awareness are of any practical value in themselves in assessing the
success of a campaign. There is an implicit assumption that by changing
attitudes or awareness, we therefore affect the behaviour we want to see
(for example, purchase). However, it is easy to find examples where this
simple stepwise process does not hold true:
 sometimes changed behaviour leads to changed attitudes – trying a
free sample on impulse and forming an opinion as a result
 sometimes attitudes change but behaviour does not – “I would like to
buy but cannot”
 sometimes behaviour changes but attitudes do not – “I would like to
remain loyal but I am overruled for some reason”.
In practice, marketers need to adopt a range of objectives, including sales

objectives if goods and services are ultimately purchased, and any
intermediate measures from our understanding of the customer-buying
process which help us to monitor and control the implementation of an
effective communications programme.
Go the Marketing Blackboard page. On the left hand side you will see a
Communications’. Click on this and you will see videos entitled: ‘Avon
SpectraColor Lipstick’, ‘Specsaver Mr Men Offers’, ‘Does HIV Look Like
Me?’ and ‘Inspirational NIKE’.
Consider and note down which of the adverts is set to achieve any of the
following objectives:
122 Bradford MBA

 create awareness
 stimulate trial
 position products in consumers’ minds
 correct misconceptions
 remind and reinforce
 provide support for the salesforce
Activity 8.3 – Watch and Learn Answer:
Setting the budget
Different industries place a very different emphasis on communications

spend as an element of the Marketing Mix. This can range from 1% to
more than 25% of sales value. Even within a particular sector, there is
wide variation in expenditure, so it appears that there are few general
guidelines for setting the communications budget.
In an ideal world, companies might conduct a marginal analysis by

keeping adding to the advertising budget as long as the marginal revenue
exceeds the incremental costs. But this assumes that it is appropriate to
consider sales as a function of advertising expenditure. Even if this is
reasonable, the shape and parameters of function are not so easy to
determine. Firstly, there is no guarantee that the relationship established
from past sales will continue into the future – a new situation might
produce a change in the response function.
Secondly, as discussed above, sales are not determined by spend alone.

It also depends on quality of communications, the message and media
selected as well as the effect of other Marketing Mix elements.
Bradford MBA 123

In practice, a number of methods are used. Fill (2009) discusses various

ratios including advertising sales, executive judgement, objective and task,
share of voice and percentage of sales. Each method has its own
advantages and disadvantages.
Read about the four common budgeting methods, pages 473–474 of

Jobber
Which method is the best? It seems that there is no single criterion by

which to set budget, and therefore no single way to do it. The Institute of
Practitioners in Advertising agrees that there is no easy answer to setting
budgets. They suggest that an attempt should be made to take account of
all factors that influence budget decisions, including:
 past sales
 forecast sales and profit
 marketing environment (competitors, economic situation, etc.)
 product performance – actual and perceived
 sales force quality
 distribution strength
 seasonal and regional factors
 availability and cost of the media and the rest of the communications
mix.
Broadbent (1984) makes an important point that budget setting cannot be

separated from the rest of the process of marketing planning. Objectives
must be set before the means of achieving them can be worked out and
the budget decision is linked directly to what the brand is intended to
achieve. Broadbent (1984) describes budget setting as a process of fine-
tuning through a cycle of theory, experimentation and feedback.
He recommends the total method to reduce the uncertainty. This is more

of a procedure than a single method. Essentially, the marketer uses as
many methods as possible, such as executive judgement, expert advice
from the advertising agency, objectives and task and modelling to provide
several recommendations for expenditure. The high and low figures
provide a range for consideration when setting the budget. This can then
be used to check what the budget will buy in media exposure terms and,
by adding on the production costs, the total budget is calculated. Next,
check to see if this is feasible given the forecast environment, the
resources availability and the internal political processes. In shaping the
budget decision, four parties are typically involved in this way: senior
management (approving), marketing managers (proposing), the
advertising agency (advising) and the media (determining cost levels).
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MESSAGE DEVELOPMENT
To be effective, marketing communications must get attention and be

relevant to the audience. If they are designed to promote a product or
service, they must also convey the brand clearly and have consistency
with the rest of the 4 Ps. Above all, they must answer the customer
question ‘What’s in it for me?’
This stage in the development of marketing communications can be the

most exciting. It certainly demands creativity to produce ideas and images,
which have not been used before, and capture the audience’s imagination
within a few seconds. It will also require considerable skills in production to
turn the ideas on paper into an effective communication and to remain
within the budget.
Sadly, there is little good literature on subject. Often it is left out of

marketing texts altogether and those which do cover the topic may only
have little of real substance to offer. Examples of advice include:
 “the page should look and smell like the product” (Krone 1989)
 Ogilvy’s eleven tenets of good advertising messages includes “avoid
superlatives, generalisations and platitudes”.
 Ogilvy and Mather recommend a “single-minded proposition” – the
single most motivating thing you can say about the product.
Does the organisation pass the task of message development onto an

external agency as a matter of course? Even if the task is passed onto an
external agent there is a need for managers to understand what is
involved.
The process of creating the communication message starts with a

thorough understanding of buyers, influencers and users and the impact of
their characteristics and environment (culture, economics, etc.) on buying
behaviour. The principal characteristics of the product or service on offer
are of particular value too. Once these issues (i.e. knowledge of buyers,
influencers, users, the environment and product characteristics) are
addressed, a positioning statement is created in the marketing plan in
order to provide guidance in relation to the target audience and future
decisions about the communications objectives. The positioning statement
also provides a focus for the advertising platform or basic selling
proposition from which any marketing copy and visuals must be built and it
also influences media choice.
We discussed positioning in Unit 3. Now read Jobber, pages 284–289 for

more information on positioning and repositioning.
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With this information, the marketer or the appointed agency can begin the
task of formulating appropriate messages worded in language understood
and used by the customer. There are two basic elements to consider:
 content
 format
Message content
The content should convey the basic reason why the audience should take
action – in other words, it needs a customer focus. One way to do this is
to express the product or service in terms of its benefits rather than its
features so that the value to the customer is clearly stated.
The message content should also take into account what type of appeal is
appropriate. A rational appeal might suggest that purchase and use will
yield functional benefits for the customer such as fewer problems, value
for money or convenience. This might be conveyed by demonstration of
the product or service, a comparison with competitor offerings or
testimonials from users.
Moral appeals emphasise the right and proper characteristics of the

product or service. In the UK, the advertising of the Co-operative Bank’s
ethical investments and the Body Shop’s buying policy are two good
examples. Emotional appeals attempt to generate positive or negative
emotions to stimulate interest, action and purchase. Generating negative
emotion such as fear can backfire. The advertisements for the UK car
rescue service, Automobile Association (AA), as a priority breakdown
service for women which showed women stranded in the dark on a lonely
road or confronted by an aggressive male generated over 100 complaints
to the Advertising Standards Authority in the UK. Other appeals and some
examples include guilt, shame, love, pride, joy, humour, shock and
fantasy. The choice of appeal needs to take account of the characteristics
of the target audience and the influence of cultural factors.
Images are powerful means of generating attention and holding it and

they are widely used to reinforce written or spoken appeals and build
brand personality. They may amplify a headline and in certain
circumstances form the key elements of the message. Images can
express ideas or feelings that are very difficult to express in words but,
once again, this can provide difficulties when crossing country and cultural
borders where different regulations, body language, symbolism and
taboos can present a challenge to the outsider. The Esso ‘tiger in your
tank’ campaign was successfully used in many countries but needed
modification in Thailand where the tiger is not seen as a symbol of
strength.
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International marketers need to be especially aware of cultural and

regulatory differences to avoid causing offence and costly mistakes. For
example, did you know that in many countries, men and women are not
shown together, or that a shake of the head can mean ‘no’ in many
countries but ‘yes’ in others?
You can find more examples in Vignette 23.1 on page 875 of Jobber.
Language
It is important that the customer not only understands the message but
interprets it in the way intended by the supplier. In international markets,
the language of the communications message obviously needs translating
and there are plenty of anecdotes about brands which have experienced
problems when launched in a new country – especially with brand naming.
Even in domestic markets, it can be surprisingly difficult to design

communications that speak the target customer language. Organisations,
which supply goods and services to the youth market, for example, may
need to conduct detailed marketing research to keep abreast of rapidly
changing fashions in language to ensure that their messages are not
rapidly outdated.
MESSAGE FORMAT AND COMMUNICATIONS MIX

DECISIONS
The marketer must determine the most effective format to give the
message content impact and memorability, but the blend of words,
appeals and images is influenced by the choice of media. For example:
 Print media – Typically, the format includes the key elements of a
headline, body copy, illustrations and perhaps colour – each one can
serve to enhance or ruin the message. Jobber (pages 475–476)
highlights the importance of the headline and sets out Ogilvy’s
guidelines on print advertisements.
 Radio – Words, music and sound effects all play a part in the message.
Without the benefit of pictures, the appeal in a radio advertisement is
conveyed by the quality and tone of the voice, speech rate, rhythm and
pitch, and articulation. Even the vocalisation of pauses, sighs, yawns,
music and sound effects need to be carefully considered and scripted.
 TV – Words, tone of voice and body language can all be scripted and
utilised to create a strong message. This is essential since the high cost
of this medium means that most advertisements are under 30 seconds
in length and must work hard to command attention, sustain interest
and be memorable.
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 Direct mail – calls to action including actually opening a mailshot are

vital. Thereafter, marketers need to ensure that there is sufficient
message to elicit the all important response.
 Internet – pop ups and banners need to be sufficiently interesting, yet
unobtrusive whilst web sites themselves must keep the user interested
right through the communications/sales process.
 Personal selling – The format of a typical sales call includes opening,
need and problem identification, presentation and demonstration,
counter objections, and closing. Here the salesperson can make use of
a vital opportunity to interact with the customer and get feedback on
how well the message is received. The individual can make use of both
verbal and non-verbal messages, use support print or other materials or
perhaps even demonstrate the product. In international markets, the
salesperson must be aware of cultural differences that influence both
selling style and the cues from the prospective buyer.
Suppose that you have just been appointed to launch the new range of
clothing from the multi-faceted UK group, Virgin, headed by the influential
Richard Branson. Your task is to determine how best to spend your
communications budget:
 Do you advertise in the world famous luxury fashion magazine Vogue?
 If you advertise in Vogue will you use a 2-page, 1-page or 1/2 -page
advertisement?
 Will you use terrestrial or satellite TV advertisements? If so, at what
times of the day?
 Would direct mail be a good option?
 What promotions would you need to directly encourage sales (e.g.
introductory discount price?)?
 Will public relations play a role in the launch of the new magazine?
 How can personal selling be used?
 How can the internet contribute to the communications mix (a magazine
website, social networking sites, twitter)?
These issues need to be identified and addressed as part of the

communications planning process.
In straight cash terms, the media planning and buying process is the most
important element of many campaigns. This is where most of the budget is
spent. For example, Nicorette (nicotine patches and gum to stop smoking)
spent £25 million on advertising in the UK alone in 1998. A 10% saving on
a budget of that size is very worthwhile, and it is not impossible with skilful
planning and negotiation.
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Without an efficient choice and use of the communications mix (e.g.

getting the right balance between tools such as advertising, personal
selling, PR), even the most innovative sales promotion, the most brilliant
copy and the most original artwork, will be largely wasted if the
communication is unseen by the target audience. The PIMS study into
3,500 real businesses in industrial and consumer sectors over several
years indicates that there is little correlation between total
communications budget and profitability. However, the difference between
getting the communications mix right and getting it wrong for a brand can
be as great as 30% in return on capital employed (Source: Quantifying
Marketing’s Impact on Profitability, PIMS Europe Ltd).
Read the remainder of Jobber, Chapters 13, 14, 15 and 16, being
selective in your choice of material.
EVALUATING EFFECTIVENESS
Whatever the budget, an attempt should be made to evaluate the

effectiveness of the communications strategy. Unfortunately, since so
many variables have an impact on the customer, it is virtually impossible
to isolate the specific impact of a single element of the communications
strategy. Our discussion of communications objectives explored some of
these difficulties. Despite this, several methods have been developed and
measures are continually being improved.
 Pre-testing – This allows the marketing communications plan and the
intended effect to be tested prior to implementation (and prior to
expenditure of the main part of the budget). This pre-testing might take
the form of a focus group that is questioned about its attitudes and
opinions after exposure to the marketing communications. Often,
communications are pilot tested in one region before being presented
nationally. This is a form of live testing that provides feedback on the
impact of a campaign without committing the entire budget.
 Post-testing – involves conducting research among the target
audience to determine whether the communications objectives have
been achieved. Post-tests usually attempt to measure whether there
has been:
– a change in awareness levels
– perception and attitudinal change toward the brand or the
organisation
– behavioural change including enquiries, store visits, coupon
redemption, and sales.
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SUMMARY
In this unit, you have covered a lot of ground in terms of the promotion
element of the Marketing Mix. Our key idea is that while advertising may
dominate many communications plans it is not the only way to get over the
benefits of your product or service to the target audience. In the non-profit
sector, advertising is just too expensive for many voluntary organisations,
so they heavily bias their communications mix towards publicity. You have
also been introduced to some key aspects of direct selling and the
management of sales teams, since personal selling is a high profile part of
many industry sectors.
You have learnt a lot about the language of advertising, the effect of
images on buyers and the need to set budgets which reflect the objectives
of your communications plan. The need for evaluation – if only not to
repeat the mistakes of last time again – is an element which needs to be
built into all plans, as does control.
We can summarise the key issues in this unit as:

 Marketing communications plans are the promotion part of the 4Ps
 Planning process includes – defining communications objectives,
budget setting, making message and mix decisions and evaluating the
effectiveness of communications plans
 Key elements of the mix are: advertising, sales promotions, direct
marketing, publicity, personal selling
 The target audience needs defining for direction of the most appropriate
message
 Appropriate messages must have the right content and format and
delivered via the best fit medium/media
 Message development process begins with the positioning statement
 Performance measurement is needed to check effectiveness of any
advertising campaign or sales drive.
A useful way to end this unit is through a quick comparison of the

elements of the marketing communications mix and their position on the
AIDA framework which you will have studied when reading the textbook
(Jobber, pages 467-468).
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STAGE ADVANTAGES DISADVANTAGES
ADVERTISING Awareness Builds awareness Expensive
Interest Repetitious Impersonal
Desire Good reach Difficult to close sale
Action?
DIRECT Interest Personal targeting Junk mail
MARKETING Desire Can build relationships Poor reputation
Action Can be measured Variable response
SALES Desire Quick sales/launch boost Short term
PROMOTION Action Visible Cannibalisation
Competitive Brand dilution
PUBLIC Interest Third party endorsement No control
RELATIONS Cost effective/ Cynicism
higher readership
PERSONAL Desire Interactive Costly
SELLING Action Personal Small reach
Can close sale Can be risky
INTERNET Interest Convenience Encourages comparison
Desire Customisation Weak sites = poor
Action Information perception
Communications’. Click on this and you will see an audio entitled: ‘Unit 8
same time.
Marketing module
Click on this and then click on ‘Unit 8 – Marketing Communications –
Bradford MBA 131

Communications’. Click on this and you will see a video entitled: ‘Dove
Real Beauty’. Watch the video and post your responses to the following
questions on your tutor group Discussion Board (your tutor group can be
found under ‘Groups’ in Blackboard).
Marketing communication is not only used to promote a product but also to

communicate the value that an organisation appears to believe in. Bearing
this in mind:
Question 1: Can you match up the types of emotional appeal to the

advert?
Question 2: Why do you think it is important for organisations to engage

in such communication with their consumers?

instruction.
Read Case 30 CRM at Tesco (Jobber, pages 583–585)
Question 1: Evaluate the strategy pursued by Tesco and, in doing this,

show how the company has redefined the markets in which it operates
and patterns of marketing thinking across the retail sector.
Question 2: The majority of CRM programmes fail to deliver what is

promised or expected when they are introduced. Why has the Tesco
scheme been so successful when so many others have failed?
Question 3: Identify the lessons that emerge from Tesco Clubcard and
CRM strategy, the nature of any problems that others might experience in
pursuing a similar approach.
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Learning Materials’. You should then click on ‘Additional Video and see a
folder entitled ‘Unit 8 Marketing Communication’. Click on this and you will
see a video entitled: ‘Seth Godin @ TED’. This is Seth’s newest set of
perspectives, based on his book Tribes, the evolution of marketing from
mass media to hero culture of sorts that led to a change in the way we
communicate and spread ideas in the digital age.
Broadbent S (1984) Leo Burnett Book of Advertising, New York, NY:

Business Books.
Colley R (1961) Defining Advertising Goals for Measured Advertising

Results, Association of National Advertisers
Fill C (2009) Marketing Communications, Harlow: FT/Prentice Hall
Krone H (1989) Wall Street Journal, ‘Creative Leaders 1977–1987, A

composite of a campaign’.
Majaro S (1982) International Marketing: A Strategic Approach to World

Markets, London: George Allen and Unwin.
Ogilvy D (1983) Ogilvy on Advertising, London: Pan.
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Unit 9:
Revision
Key audio/video:
Concluding the Module – Activity 9.1 (see ‘Video Resources, Unit 9 –

Revision, Module Leader Conclusions’ in Blackboard).
INTRODUCTION
In this unit, we revise key issues related to developing a marketing plan

presenting a typical format of a marketing plan report. This is ultimately a
template for you to write up a marketing plan report. The subsequent
sections will discuss the key issues and relevant key questions to be
addressed in the plan (and in your assessed report).
OBJECTIVES

 review the steps in developing a marketing plan, and list the key topic
headings in a marketing plan
ACTIVITY 9.1– WATCH AND LEARN
Resources’. You should then see a folder named ‘Unit 9 – Revision’. Click
on this and you will see a video entitled: ‘Module Leader Conclusions’.
Watch the video to gain a concluding overview of the module.
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MARKETING PLAN
The following presents a typical structure of a marketing plan report. This

provides useful headings for you to write up a report in order to present a
marketing plan.
1. Terms of Reference
2. Executive Summary
3. Business Mission
4. External Marketing Audit
Macroenvironment
The Market
Competition
5. Internal Marketing Audit
Operating Results
Strategic Issues Analysis
Marketing Mix Effectiveness
Marketing Structures and Systems
6. SWOT Analysis
7. Marketing Objectives
Strategic Thrust
Strategic Objectives
8. Core Strategy
Target Market(s)
Competitor Targets
Competitive Advantage
9. Marketing Mix Decisions
Product
Promotion
Price
Place
10. Budget
11. Organisation and Implementation
12. Control
In order to present a marketing plan, the terms of reference are useful to

state the objectives of the marketing planning exercise and its coverage.
The terms of reference refers to the company or brand on which a
marketing plan is being developed and the market in which that plan is
undertaken. The term ‘Market’ can mean a market segment, a
geographical area, an industry sector. But it is important to have complete
focus before commencing with the work of planning.
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Unit 9: Revision
Executive summary describes the report’s major findings and

recommendations. It is designed to provide a busy reader with the major
issues contained in the report and therefore should not last more than one
page. The executive summary should highlight key audit findings and key
recommendations. Bullet-points can be used to present the key points in
the executive summary.
The following sections revise the key issues and questions to conduct
audit and analysis as well as developing a plan.
BUSINESS MISSION
The business mission is a broadly defined, enduring statement of purpose

that distinguishes a business from others of its type. It should state “what
business is the company in?” and “what business does it want to be in?” It
may include the markets being served, the customer needs being
satisfied, and the technology used. A mission statement can dramatically
affect the range of a firm’s marketing activities by narrowing or broadening
the competitive playing field.
It may not be possible to find the company’s business mission. Many

companies produce their missions but they do not always necessarily refer
to specific products or brands. In this case, it is necessary to identify what
it is believed to be the mission of the product and brand under the
planning. Areas that can be looked at include innovation, customer
service, market and market position.
EXTERNAL MARKETING AUDIT
A marketing audit is a systematic examination of a business marketing

environment, objectives, strategies and activities, with a view to identifying
key strategic issues, problem areas, and opportunities. It provides the
basis upon which a plan of action to improve marketing performance can
be built.
The external marketing audit focuses on the macro environment and the
micro environment.
Macro environment: consists of broad environmental issues that impinge

on the business. A PEST or PESTL analysis can be used for the analysis.
Not every element has to be used. What is important here is that the
analysis is appropriate and relevant to the product or brand under the
investigation. So for example, students frequently cite political stability
under the influence “political”. This is only any importance if political
stability (or instability) has any particular effect on the chosen product or
Bradford MBA 137

brand. Try and ensure that your identified PEST factors focus on
customers and competitors and by inference, company capabilities.
Micro environment includes:

 The market: analyses of market size (growth rates and trends);
customer analysis (who they are, what choice criteria they use, how
they rate competitive offerings and how the market is segmented);
distribution analysis (significant movements in power bases, channel
attractiveness analyses, physical distribution analyses and analysis of
the role and interests of decision-makers and influences with distributor
organisations).
 Competition: analysis of who are the competitors to the company
(actual and potential); what are their objectives and strategies,
strengths and weaknesses, market shares, size and profitability; and
any entry barriers that make market entry from new competitors difficult.
For the micro environment, use a simple Porters Five Forces model. But
again, really focus on issues such as customers and competitors. New
entrants and substitutes are only of importance if it is believed that they
present a tangible threat during the period of the plan. As for suppliers,
they are only of importance if they present a strategic threat or the
company’s relationship with them presents a marketing opportunity.
INTERNAL MARKETING AUDIT
The internal marketing audit focuses on the activities and performance of

the company in the light of the external marketing environment. It should
cover an evaluation of the following four sections.
Operating Results
This covers operating results (by product, customer, and geographic

region) for sales, market share, profit margins and costs.
Strategic Issues Analysis
Strategic issues analysis will answer the following questions:

 What are the company’s current marketing objectives?
 How does the company currently segment the market?
 What is the company’s competitive advantage (if any)?
 What are their core competencies?
 How are the company’s products positioned in the marketplace?
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Unit 9: Revision
 How are their products placed in terms of market attractiveness and

company strength (portfolio analysis)?
Each answer will be evaluated to produce strengths and weaknesses.
Marketing Mix Effectiveness
Each element of the marketing mix (product, promotion, price and place)
will be evaluated in the light of the external marketing environmental
analysis. This is an important section. You need to identify the current 4 or
7Ps, describe each and evaluate each. This is a marketing plan and
ultimately, it succeeds or otherwise on the strength of the marketing mix. It
can then be matched with the mix to strategic issues such as market
segment identification, core competences, competitive advantage and
competitive positioning. Try using perceptual or positioning maps that are
described both in your Study Book (Activity 4.5) and in your textbook (e.g.,
Jobber, page 287, Fig. 8.11; page 288, Fig. 8.12).
Marketing Structures and Systems
The marketing structures and systems of the company will be evaluated to

identify what exists and its effectiveness. Marketing structures include
marketing organisation, marketing training, and intra and
interdepartmental communication. Marketing systems include marketing
information systems, the marketing planning system and the marketing
control systems. The most important thing in this section is to give some
information and comment upon effectiveness.
SWOT ANALYSIS
A SWOT analysis is a structured approach to evaluating the strategic

position of a business by identifying its strengths, weaknesses,
opportunities and threats. It provides a simple method of synthesizing the
results of the marketing audit by summarising the company’s strengths
and weaknesses as they relate to external opportunities and threats.
Strengths and weaknesses will derive from the internal marketing audit
analysis (i.e. refer to the company). Opportunities and threats will derive
from the external marketing audit analysis (i.e. refer to the environment).
Highlight ones that are appropriate and relevant. Importantly, your SWOT
must only include information that is relevant to the preceding
marketing audit. Any element of the SWOT, which has not been
discussed in the macro, micro or internal audit, is likely to be invalid. That
is because there is no audit information that would justify such analysis.
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MARKETING OBJECTIVES
As a result of the marketing audit and SWOT analysis, relevant marketing

objectives will be set. Two types of objectives need to be considered:
strategic thrust and strategic objectives.
Strategic Thrust
Strategic thrust defines which products to sell in which markets. Strategic

thrust is best represented by the Ansoff Matrix, details of which you have
seen in the study book (Unit 6) and the text book (Jobber, pages 370–
373). The Ansoff Matrix offers four options: existing products in existing
markets (market penetration or expansion), new/related products for
existing markets (product development), existing products in new/related
markets (market development) and new/related products for new/related
markets (entry into new markets). You might well decide to approach your
recommendations on the basis of two or even three Ansoff Matrix areas. If
however, you feel that for example, market penetration is all that is
needed, then that is fine.
Strategic Objectives
Strategic objectives for products need to be set. The options are build
sales and market share, hold, harvest (improve profit margins) and divest
(drop or sell product).
CORE STRATEGY
Core marketing strategy involves the achievement of marketing objectives

through the determination of target markets, the setting of competitor
targets and the creation of a competitive advantage (see the next three
sections).
Target Markets
A choice of target market(s) has to be made. A target market is a group of

consumers/organizations (segment) that the company wishes to aim its
offering and communications at. It defines where the company wishes to
compete.
Competitor Targets
Besides targeting consumers/organizations, the company will choose

competitor targets. Weak competitors may be viewed as easy prey and
resources channelled to attack them. The choice of target market may
define competitor targets and be influenced by them: market segments
with weak competitors may be attractive targets.
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Unit 9: Revision
Competitor Advantage
A competitive advantage is a clear performance differential over

competitors on factors that are important to target
consumers/organizations. This provides the basis of how the company
competes. Major success is dependent on the company creating a
competitive advantage by being better (e.g. superior quality or service),
being faster at anticipating or responding to customer needs than
competitors, or being closer by establishing close long-term relationships
with customers.
MARKETING MIX DECISIONS
By defining a target market and understanding the needs of their

consumers/organizations, a marketing mix can be created to meet those
needs better than the competition. Decisions have to be made regarding
product, promotion, price and place (4P’s) and physical evidence, process
and people (7P’s). Do not over generalise. It is necessary to ensure that a
marketing mix is robust and well thought out. This is a chance to be
creative. Whatever you do, do not simply repeat what the company is
currently doing! Develop your own marketing mix, but support your
recommendations. You do not need to do a full 7Ps analysis if some of the
elements are not appropriate. But you must ensure a minimum of 4 Ps.
Product
Product decisions involve choices regarding brand names, features (that

create customer benefits), quality and design, packaging, warranties, and
the services that will accompany the product offering.
Promotion
Promotion decisions involve choices regarding advertising, personal

selling, direct and Internet marketing, sales and promotions and public
relations.
Price
Pricing decisions involve choices regarding list price, discounts, credit

terms and payment periods.
Place
Place decisions involve choices regarding the distribution channels to be

used and their management, the location of outlets, methods of
transportation and inventory levels to be held.
Bradford MBA 141

Physical Evidence
Physical evidence decisions involve choices for service organizations

where production and consumption take place simultaneously. These
include layout, décor, efficiency, staff dress.
Process
Process decisions involve the ease of purchase/after sales for customers

and efficiencies in the supply chain. These can form a natural sub set of
Place.
People
People decisions involve recruitment, training, motivation and monitoring

of people (staff) so that they can implement the other 6 “Ps” of the
Marketing Mix.
BUDGET
Every plan needs a budget which must be set according to the objectives
of the plan, the resources of the organization and the level of ROI
required.
Yet, for the purposes of the assignment within the current module, you
don’t need to provide a full detailed marketing budget. Some of the figures
might be difficult for you to find. If you can get detailed financial
information, then that’s good. Otherwise, think about dividing your budget
into percentages. So your overall budget represents 100%. Then you can
divide that 100% over the marketing mix and elements within the
marketing mix. So, if your marketing communications part of the marketing
mix accounts for 50% of your budget, you might then wish to divide that
50% up amongst the different elements of the marketing communications
mix. Remember however, that the marketing budget is for the marketing
mix, not simply the marketing communications mix.
ORGANISATION AND IMPLEMENTAITON
A marketing plan needs a marketing organisation to implement it.

Reorganisation may mean the establishment of new marketing structures
(e.g. brand management) or the creation of a marketing department for the
first time.
Consideration should also be given to implementation issues. These focus

on who is responsible for various activities, how the strategy should be
carried out, where things will happen, and when action will take place.
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Unit 9: Revision
CONTROL
The aim of control systems is to evaluate the results of the marketing plan
so that corrective action can be taken if performance does not match
objectives. Demonstrate some simple measures so that you are able to
understand whether what is being achieved is related to what is being
recommended.
Below is the questionnaire to bring your attentions to key points in

developing your marketing plan (adapted from MacDonald, 2002, xix).
Consider the plan you are currently working on for your assignment and
identify the areas that you may be able to improve further.
Market structure and segmentation Scope out of 10

Is there a clear and unambiguous definition of the
market you are interested in serving?
Is it clearly mapped, showing product/service
flows, volumes/values in total, and its shares for
the organisation?
Are the segments clearly described and
quantified? These must be groups of customers
with the same or similar needs.
Are the real needs of these segments properly
quantified, with the relative importance of these
needs clearly identified?
Differentiation
Is there a clear and quantified analysis of how well
your company satisfies these needs compared to
competitors?
Are the opportunities and threats clearly identified
by segment?
Scope
Are all the segments classified according to their
relative potential for growth in profits over the next
three years and according to your company’s
relative competitive position in each?
Are the objectives consistent with their position in
the portfolio (volume, value, marketing share,
profit)?
Are the strategies (including products, price, place
Bradford MBA 143

and service) consistent with these objectives?

Are the key issues for action for all departments
clearly spelled out as key issues to be addressed?
Value capture
Do the objectives and strategies add up to the
profit goals required by your company?
Does the budget follow on logically from all the
above (or is it merely an add on)?
SUMMARY
This unit revised the issues that need to be addressed when developing a
marketing plan. The template of a marketing plan report was presented to
help write up a marketing plan report. Each of the subsequent sections
discussed the key issues and relevant key questions to be addressed in
the plan.
McDonald, M (2002) Marketing Plans, Butterworth Heinemann, Oxford.
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Appendix
Model Answers to Activities
Unit 1
ACTIVITY 1.3
We can use Bradford University School of Management as an example for

this activity. The customers, or MBA students, are able to choose from a
range of flexible routes and study formats (including the Distance Learning
programme you have chosen) to suit their personal circumstances. This
flexible package has been developed in response to customer needs – in
other words, driven by the market and the opportunities it provides.
Compare this with the approach of a UK business school which stuck
rigidly to a two-year full-time approach taking the view that anything else
was not an MBA – ‘We have a fairly purist view of what an MBA is. It is a
general management programme that takes two years, full time.’
Independent on Sunday, 11 October 1998.
You may have decided that your organisation falls somewhere between
the two extremes offered in the textbook. Perhaps the production
orientation and the marketing orientation could be regarded as opposing
ends of a continuum.
You will, of course, have to decide for yourself what constitutes ‘success’.
Profit may in itself not be an appropriate parameter. Voluntary and not-for-
profit organisations are also involved in marketing activities in order to win
resources and support. Consider for example, The International Red
Cross and the Red Crescent Movement – a truly global organisation,
highly ‘customer’-driven with a turnover of millions of dollars but entirely
non-profit driven.
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ACTIVITY 1.4
You may have concluded that ‘value’ is a rather nebulous term, hard to
measure and define in marketing terms, but that it is a crucial notion if we
are to understand and address customer need. Different customer sets
may seek quite different benefits as we see in Unit 3. Time and energy
costs may assume greater importance as perceived sacrifices for
customers when assessing the value of goods and services where no
direct monetary price is charged – for example, in many internal, public
and voluntary services.
ACTIVITY 1.5
The answer lies perhaps only in terminology. Where price is a main

determinant in the classical Marketing Mix model, value for money
may perhaps better define this area in the not-for-profit sector where
this criteria is used by funders and users (key customers of many of
these organisations) as a primary effectiveness measure.
146 Bradford MBA

Appendix: Model Answers to Activities
Unit 2
ACTIVITY 2.3
Jobber, pages 803–810, describes these forms of control in detail.

Bradford MBA 147

Unit 3
ACTIVITY 3.1
As you can imagine there are many issues in each category we could
choose to discuss in this response. If you are studying in a country other
than the UK you will have probably quite different examples. We have tried
to choose typical, neutral examples with which we hope you can identify
and apply to your country and organisation:
Social factors
Social factors are both tangible and intangible. Tangible factors include
education and demographics. In the developed world one of the key
demographic changes is that of a movement towards an older population
and one where the traditional nuclear family is less important. This results
in significant changes in buying and living habits. For example, there are
far more small properties being built to serve an ever increasing single
household population. Intangible elements include lifestyle, values and
expectations and attitudes. These in many cases are the result of people’s
education (tangible) or culture (intangible). In some countries the impact of
religious culture is becoming more important, in others less.
Legal/political factors
As a global issue, government stability is a fundamental political influence.

Again, in the developed world political stability is now almost taken for
granted. Will there be a great difference if Democrats replace Republicans
in the USA or Labour replace the Conservatives in the UK? Probably not.
In other parts of the world, however, a change in government can have a
significant influence on a country’s attitude to business, investment and a
whole host of marketing decisions. So, the more stable the environment,
the more organisations that can plan their operations with some degree of
certainty. From politics comes legislation. Every government will introduce
its own legislative programme. This can impact on taxation, disposal
income, attitudes to competition and protection and attitudes to the
environment. Each will have its own impact on a marketing organisation
and needs to be carefully understood.
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Economic factors
Economic factors have both production and consumption influences. From

production we need to understand costs that businesses face including
raw materials, labour, taxation and interest rates. The increasing
globalisation of the world economy means that many companies are now
sourcing their products from cheaper, lower cost countries. In terms of
market acceptance, these then have an impact on quality, patriotism and
the general wealth and welfare of the local population. From a
consumption angle, we need to understand the influences of income,
taxation, inflation and confidence. Countries such as Germany which are
exhibiting a great movement of production to lower cost economies, find
that as a result consumer confidence is declining. When consumer
confidence declines, so purchasing declines which of course has its own
impact on the social and political environments.
Physical factors
These are becoming ever more important as we address the issues of

global warming and climate change. Environmental influences can be both
government and consumer led. Companies that exhibit or sell increasingly
wasteful products will themselves become penalised or unfashionable as
the societies in which they operate develop greater environmental
understanding.
Technological factors
The influence of technology is all encompassing and ever more rapid and
changing. Over a decade ago, the personal computer revolutionised the
way that organisations were able to manage their internal processes. Half
a decade later the introduction to mass consumption of the Internet
changed the way in which companies and individuals communicated with
their own external environments. Information equates to productivity and
marketers need to understand how important it is to predict and keep up
with the rapid changes in the technological environment.
ACTIVITY 3.2
You will need to take an objective step back and identify the key forces
facing and shaping your industry. A useful example of the application of 5
Forces is that of the mobile phone network supplier in the developed
world:
Bradford MBA 149

Rivalry amongst the current competitors in the industry
This will be strong as providers such as Vodafone, Orange and 02 battle

for the ever more elusive market share.
Bargaining power of customers
This will be strong because of the competitive rivalry within the industry
and the perceived lack of differentiation in the eyes of the consumer. Price
deals are synonymous with customer acquisition.
Bargaining power of suppliers and distributors
Many networks own their own distribution. For suppliers, especially of

mobile phones, the market has become something of a commodity as free
phones are constantly offered as a sign-up incentive. Power of suppliers is
therefore weak.
Threat of new entrants into the industry
This will be weak as investment in networks, licenses and marketing is

considerable.
Threat of substitute products or services
This will be medium. Broadband could make inroads into general

telecommunications but the actual size and portability of the mobile phone
will guarantee its survival for many years to come.
ACTIVITY 3.3
SWOT analysis on Sony
Strengths
 Global Size and Market Share – Their size and market share still
provides Sony with a good foundation.
 Presence in numerous markets – Not over reliant on one particular
market.
 Solid image of producing innovative high quality products- Much of
Sony’s reputation has been based on producing popular products.
 Creates market-defining products – Products such as the Walkman,
and the Playstation that have become a phenomenon.
 Experience and strength of brand – Sony has over 60 years of
experience.
150 Bradford MBA

 Level of vertical integration – Many of Sony’s products are made from

Sony made components, which are exclusive to Sony, and this helps
drive profits.
 Strength of ‘Playstation’ Brand – Playstation in the past has brought in
over two-thirds on Sony’s profit in the past. The much-anticipated
launch of the latest Playstation 3 should help buffer profits for the
business.
 Japanese Strength in Electronic Engineering Design – Sony possesses
strong country of origin effects, most notably for high technology
products.
 Alliances with other manufacturers – Sony has aligned itself with the
large electronics manufacturer in the world. Sony’s alliances with
companies such as Ericsson in mobile phones.
 Exposure to global markets – Sony sells its products in numerous
markets around the world, this may reduce Sony’s reliance on any one
particular market and take advantage of economic upturns in particular
countries.
 New leadership – Giving renewed strategic focus and vision.
Weaknesses
 Overcapacity – The company still has too much manufacturing capacity
like many of its competitors. It must rationalise their manufacturing
resources. The company has undertaken a rationalisation programme.
 Too broad a product range – Unlike other companies Sony’s sells
hundreds of different products, which some analysts suggest leads to a
loss of strategic focus. As a result of this they have reduced the number
of products they offer.
 Low profit margins – Sony has profit margins around 2.5% whilst rivals
like Samsung enjoy margins of 14%. Needs to reduce its cost base.
 Collapse of Cathode-Ray Television (CRT) market – The market has
moved towards flat screen televisions. It once dominated the television
market. Sony was left badly exposed as it viewed flat screen technology
as inferior. Now it has aggressively tried to rectify the initial mistake by
launching its flat screen Bravia range of televisions. The traditional CRT
televisions are on the decline, but still profitable in developing markets.
 Bureaucratic culture – Stifling organisational structure, which has made
the turnaround strategy very difficult to implement. This bureaucratic
culture led the firm to be too slow in adapting to the changing needs of
the market.
 Having a large presence in the entertainment industries has stifled
Sony’s development of new technology in an effort to protect its
interests – For example, Sony was slow to establish online music store
and develop MP3 products, in fear that it may jeopardise sales of its
Bradford MBA 151

traditional music products. Sony became more concerned about

protecting its entertainment interests than developing hit tech products.
A potentially fatal flaw.
 Failing to focus on its core operations – Years of diversification has led
to Sony not focusing enough on its core business, electronics.
 Slow to market products – Playstation 3 has been beset with numerous
production delays, a full year behind schedule, which allows
competitors enhanced opportunities.
 Over reliance on Playstation brand for profits and huge gamble on Blu-
Ray technology in new format wars with rival competitors – If one of
these products or technologies flops, it could prove devastating for the
Sony brand.
Opportunities
 Expansion of global presence – Needs a greater presence in high
population countries, which are experiencing economic growth, and
where there is an increasing appetite for technology products (e.g. India
& China).
 Taking advantage of producing in low cost economies – Sony needs to
produce more of its product offering in low cost economies such as
China.
 Emergence of cornerstone technology that could become an industry
standard – It is hoped that Blu-Ray discs will become the industry
standard.
 New technologies encouraging consumers to buy and upgrade to newer
versions – For example, consumers buying flat screen technology and
demanding high definition televisions. These new technologies create
new markets.
 New technologies leading to new product opportunities – For example
high definition camcorders, 3G mobile telephones etc.
 Model count reduction and investment in manufacturing capabilities to
improve efficiencies.
 Sony divesting non-strategic assets – The company should focus on
three central operations Electronics, Entertainment, and Games.
 Utilize electronic platforms to distribute products - This must take place
using an integrated channel management strategy, so as not to cause
channel conflict with existing channel partners.
 Further integration and synergy of Software and Hardware aspects of
business- The firm needs to find ways to exploit its dominance in the
entertainment business, with its electronics business. Sony’s
independent divisions for too long have operated as “silos”. The
business needs greater integration, so as to leverage its core assets.
The company needs greater collaboration between its assets. For
152 Bradford MBA

example, there are numerous marketing cross over opportunities

between its film and games division.
 Creating interoperability – Making Sony products a compelling product
offering (e.g. television, camcorder, games & portable devices).
 Develop crossover products – For example, Sony’s Walkman Phone
Threats
 Increased foreign competition – Reduced trade restrictions has led to
intensive foreign competition from low cost countries. Chinese
technology brands are making huge inroads in markets, through a
combination of low prices and a solid product range (e.g. Haier &
Lenovo).
 Increased commoditization of products with no discernable differences
apart from prices – Products are becoming increasingly hard to
distinguish in terms of quality due to manufacturing improvements,
making price the key battleground. Sony has to continually innovate and
differentiate, or face the risk of being obliterated through price
competition.
 Technologically Leapfrogged – Reduced levels of R&D investment may
have led to competitors having superior products on the market and
benefiting from cheaper manufacturing efficiencies.
 Changing technology that has changed the competitive landscape -
New technologies may lead to some products becoming obsolete.
 Boardroom clashes with partners such as BMG and Ericsson – Joint
ventures do give rise to ongoing tensions between partners if managed
ineffectively.
 Heavily reliant on Japanese market – Sony is heavily reliant on the
Japanese market.
 Reliant on fickle entertainment industry, where success is never
guaranteed – Also huge changes taking place within sector, where
traditional business models have been altered due to technology, and
growing concerns about copyright theft.
 Failure to establish Blu-Ray as a proprietary standard – Blu-Ray disc
technology is a big gamble, and the firm could lose billons if it fails in
becoming the next standard format for the next generation of discs.
R&D investment could be lost if not successful, and customers could
become disgruntled if their recently acquired technology fails to become
the industry standard, akin to the Sony Betamax fiasco.
 Failure to successful implement turnaround strategy, designed by new
CEO Howard Stringer – The turnaround strategy may prove divisive, as
Stringer is the company’s first non-Japanese leader. Changing the
company’s culture may take quite some time, which the company can ill
afford.
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Unit 4
ACTIVITY 4.3
In most organisations there is a Purchasing or Buying Department. Certain

members of this department will have formal responsibility and authority
for signing contacts for purchases (i.e.‘buyers’). An individual or a group of
individuals with authority to select among the purchase alternatives are
called ‘deciders’. In this case example, Lauren Belles at Greenvales and
Bradley Jons at DBW hold the roles of a buyer and a decider for CIC’s
new product PLANT-ALL . As the purchasing managers, both Lauren

Belles and Bradley Jons are interested in the right price to achieve target
profit margin. Lauren Belles as a retailer is interested in promotional
support and reliable, cost-effective supply chain. Whereas, Bradley Jons
as a wholesaler is interested in minimising inventory levels and unsold
inventory.
The organisational decision-making process in this example case was not

initiated by anyone as this was a proactive attempt by a supplier CIC to
sell the new product. Anne Sheffield plays the role gatekeeper in DBW’s
decision-making unit (DMU) and controls the follow of the information into
the DMU.
Fred Elliott, Greenvale’s commercial manager and Margaret Francis store

manager at Greevale are influencers. Described in this case example,
Fred Elliott seems favourably disposed to the new product proposition,
which could well have influenced Lauren Belle’s decision to stock PLANT-
ALL . By contrast, and particularly in the absence of Fred’s positive

comments, Margaret Francis’ observations about CIC’s less than reliable

delivery record might have been negatively influenced Lauren Belle. Fred
Elliott is interested in achieving sales and target profit margin for garden
centre group overall. Margaret Francis is interested in product sales and
customers satisfaction at her store. In addition, where buying is
undertaken centrally, the users could be the employees who work in the
stores that are re-selling the product. Margaret Francis is one such
person.
ACTIVITY 4.5
It seems that there is a sector of the market aged 15 to 20 that is not

being targeted by any of the current savoury snack manufacturers. A
competitor could launch an above-average hard-textured snack and
target this age group. Tubaloops already has the texture they seek –
154 Bradford MBA

perhaps it could reposition its brand to be more attractive to this age

group.
Bradford MBA 155

Unit 5
ACTIVITY 5.3
Objectives would be centred round giving guidance to the regional

manager and measuring levels of service. The key here is to understand
levels in the performing hotels as well as in the non performing for
benchmarking and learning by best example.
So objectives here could centre round the following:

 To provide guidance for improving service levels
 To measure service delivery levels
 To diagnose the problem
Methods could be:

 Self-completion questionnaires in room, at point of departure or sent by
post
 Mystery shopping techniques
 Analysis of customer complaints (secondary)
 Staff interviews – they often know what makes the customer
happy/unhappy
 Interviews, either qualitative or quantitative, with lapsed users if a
current database allows
All these methods represent primary research except for the analysis of
complaints. The research could be longitudinal to provide ongoing
feedback.
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Unit 6
ACTIVITY 6.4
The mobile phone market is a fascinating one, especially in the UK, where
it has moved rapidly from Growth to Maturity. The competitive pressures of
this sector are so great that producers are finding it increasingly difficult to
differentiate their products. Rapid take-up has pushed the product through
the life cycle but fewer users are prepared to invest in 3G or other new
technology to keep it in the Growth phase. Continuous innovation is critical
to sustain in this market. For example, as described in Case 34 iTune –
Facing the Threat of Nokia (Jobber, pages 659–663), the Finish mobile
phone company launched its digital music distribution service ‘Comes with
Music’ through its handsets to challenge Apple’s iTune monopoly status in
the digital music market. The product line for mobile phones is not going
to move to Decline. However, many high tech products including games
and audio/visual systems end their product lives – sometimes in as little as
five years.
On the other hand, many more classic products (e.g., Coca-Cola, Kit Kat)
have been in the Mature stage for decades and show no sign of moving
anywhere! Perhaps this can be put down to the fact that there are no
superior alternatives?
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Unit 7
ACTIVITY 7.1
You may buy more items such as books when the price goes down. The
book market is highly competitive, comprising many suppliers. Advanced
technology to date led to the low cost production. Consumers do not
expect the price of books to go up. And the demand for books is likely to
be driven by price movement (and of course, consumers’ preference).
You may buy more of items such as coffee when the price goes down.
Coffee is something many of us regularly consume and it can be
preserved for a certain period of time. You may also actually buy less
coffee when the price goes down. Consumers can use their preserves of
coffee up or stop consuming it for a while.
Car insurance is essential to car drivers by law. Even price sensitive

consumers have to purchase car insurance to be on the road. Consumers
can do a few things to seek better deals for their insurance policies.
However, they do not have any choice but to purchase it. Thus, the
demand for car insurance is not necessarily affected by the movement of
price as much as books and coffee. The demand for electricity is another
example that is less likely to be affected by price movement.
Generally, demand for products is likely to be influenced by the level of

consumers’ preference and willingness to pay (which is related to their
income). Consumers’ preference and willingness to pay are influenced by
a number of factors including product quality, product availability and the
level of competition. It is expected that the price will be reflect the optimal
point between demand and supply for products. However, there are many
cases that demand is also driven by factors such as whether products are
essential to consumers’ lives and/or whether the market is monopolistic.
ACTIVITY 7.2
The marketing-orientated approach to pricing focuses on you, the

consumer, and your ideas of value so it is the best approach from the
consumer’s perspective. See Jobber, pages 427–443 for full discussions
on marketing-oriented pricing.
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ACTIVITY 7.3
You might have thought of:
2 Participants Computer - Computer

Dell buyer
3 Participants Insurance – Insurance Policy
Scottish Widow brokers holder
4 Participants Pharmaceuticals Doctor Pharmacist Patient
-
GlaxoSmithKline
These chains of distribution need not be mutually exclusive; a computer

manufacturer may sell to local dealerships; or sell directly to high-street
shops; or sell direct to the consumer. For the advantages and
disadvantages of different types of distribution channel, read Jobber,
pages 627–632.
Bradford MBA 159

Unit 8
ACTIVITY 8.1
Your responses may be somewhat different according to whether you are

the intended receiver of the messages, whether you are a user of these
goods and how you decode the messages from the manufacturer. Also
you may not have these products in your country.
Skoda has done much to improve its image in recent years. Product
quality has improved (and it is consistently voted top in customer
satisfaction league tables). Promotion has relied heavily on links to
Volkswagen, which has a reputation for quality, although Skoda cars are
generally sold through different dealerships. The brand name still carries a
negative image for many and perhaps the low price reinforces this.
Calvin-Klein jeans are promoted as a designer-exclusive good with a

premium price to match. The product can be found in major department
stores. The product is being promoted in terms of lifestyle and retailer
image.
ACTIVITY 8.2
Question 1: Both adverts are intended primarily for the consumer who
may be greatly concerned with environment and social issues. But it also
bears a wider audience in the public – those who are generally concerned
with corporate responsibility for sustainability.
Question 2: Both companies used television as a communication tool to

transmit their messages because of its ability to reach a wider audience.
Question 3: ‘Honda The Power of Dreams’, created by Wieden &

Kennedy, attempts to communicate environmental issues through the
Honda brand in a bid to encourage consumers to form an attachment to
green issues. It highlights the company’s green history and their
commitment to educate and inspire, that anyone can help reduce impact
on the environment. The ad does succeed in addressing the Honda’s
green credentials. Their competitor, Toyota via its Prius model, has
nurtured one of the strongest images for environmental friendliness. For
Honda, the simplicity of the little red car and the use of toys in the
animation is effective. Honda made what is a complicated message easy
to grasp. For a company with a reputation built largely upon quality and
160 Bradford MBA

good fuel economy, the ad does reinforce the message to consumers that
the environment is one of the company’s concerns.
Nestlé’s advert addresses environmental concerns of their consumers and

highlights the popularity of wholegrain cereals, as consumers increasingly
demand breakfast cereals that offer the added benefits of a healthier
lifestyle and low fat diet rather than simply great taste. The advert draws
attention to the fact that all Nestlé’s cereals contain wholegrain (other
environmental concerns such as reduced packaging and recycling could
be possible avenues for Nestlé to pursue).
Question 4: Honda says good things come from ‘doers’, people who do
‘things to move us forward, to make stuff better’. As part of this, Honda
offers tips on how drivers can make simple, small changes to their
behaviour to make a difference to the world around them. Similarly, Nestlé
promotes the benefit of a healthier lifestyle. If the communication is
successful, consumers may interpret that these companies are providers
of socially and environmentally desirable products. The consumers may
consider these products as their alternatives if/when they are to exercise
their socially and environmentally minded practices in consumption.
ACTIVITY 8.3
Objectives of these adverts are:

 ‘Avon SpectraColor Lipstick’ – to provide support for the salesforce.
 ‘Specsaver Mr Men Offers’ – to create awareness.
 ‘Does HIV Look Like Me?’ – to correct misconceptions.
 ‘Inspirational NIKE’ – to remind and reinforce.
Bradford MBA 161

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Copyright © University of Bradford 2005, 2007, 2009, 2010, 2011

First published 2005

BRADFORD UNIVERSITY SCHOOL OF MANAGEMENT

Module Development Team

Bradford University School of Management

Tel: 01274 234374

Introduction to the Module 7

Unit 3: Marketing Environment and Auditing 39

Unit 6: Product/Service and Branding 79

YOUR MODULE LEADER

Before he joined the School of Management, Keith held marketing, sales

MODULE AIMS AND OBJECTIVES

The module is to provide you with a comprehensive introduction to

LEARNING AND STUDY APPROACH

Approach to studying the Marketing module

As a distance learning/part time student you will be studying this module at

It is strongly advised that you progress through the module studying

You should have received a copy of the module textbook:

Principles and Practice of Marketing (2010), 6th edition, David Jobber,

Module Study Book

Study Book activities and case studies

Audio from the Marketing lectures provided to full-time on-site students

The Del.icio.us materials available via the Marketing Blackboard site

The Discussion Board

The Discussion Board is a tool in Blackboard which allows you to engage

Elluminate live tutorial

These on-line tutorials will allow you to experience something close to a

Please note: none of your answers to these formative tasks will

You will also have access to a comprehensive bank of multiple choice

http://www.cim.co.uk (The Chartered Institute of Marketing)

http://www.marketingpower.com (American Marketing Association)

http://www.msi.org/ (Marketing Science Institute)

For further information on additional resources see the sections in

The module is assessed by 100% individual assignment.

The assignment should be submitted in the form of a report and should be

The aim of the assignment is to demonstrate your understanding of a

The assignment consists of the following two tasks.

1. Marketing Plan (approximately 3,000 words) – to prepare a marketing

marketing recommendations (e.g., STP and design of the marketing mix)

A template for a marketing plan and detailed notes of what should be

You are advised to focus on a division of a company, or a specific territory

2. Reflexive account (approximately 500 words) – to write a reflexive

The reflexive account provides you with an opportunity to reflect on the

As a way of approaching this part of the coursework, we encourage each

To do the above, you may ask a number of questions reflecting on your

 What was good/bad about the experience? What were the

Submitting the assignment

All assignments must be submitted as a single file.

All assignments will be submitted electronically via the module Blackboard

You will then be emailed a receipt to your university email address

For further information on how to submit your assignments using Turnitin

Reading: Jobber, Chapter 1

The concept and practice of marketing is concerned with putting the

‘The achievement of corporate goals through meeting and exceeding

We can think of marketing as a philosophy that underpins and drives the

In this first unit, we provide an overview of marketing by looking at the

within a business context that is broad, subject to economic fluctuations

ACTIVITY 1.1 – WATCH AND LEARN

By the end of this unit, you should be able to:

THE BUYER–SELLER RELATIONSHIP

In describing what happens between the production and acquisition by a

Up to the late 18th century, Europe was primarily an agrarian economy