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Pathways to Management and Leadership Diploma in Management

Unit O44

Managing Marketing Activities


Pathways to Management and Leadership

Unit O44: Managing Marketing Activities

Copyright © CMI Enterprises Limited

First published 2006

Chartered Management Institute Management House Cottingham Road

Corby Northants NN17 1TT

Revision author: Corinne Leech

Series consultant: Merritt Associates

Consultants: Graham Hitchcock Sue Fisher Marion Millington

Project manager: Sid Verber

Editor: Lyn Ward

Page layout by: Decent Typesetting

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British Library Cataloguing-in-Publication Data

A CIP catalogue record for this publication is available from the British Library

ISBN 0-85946-393-1


Managing Marketing Activities


Contents

Series overview ...................................................... 7 The Diploma in Management ......................................................... 7 How to use the workbooks ............................................................ 8

About this workbook .................................................11 The unit ................................................................................. 11 The aims of this workbook ........................................................... 11 Syllabus coverage...................................................................... 12 Getting started ........................................................................ 13

Section 1 Marketing .................................................15 A marketing culture................................................................... 15 Who are the customers? .............................................................. 18 Who are the stakeholders? ........................................................... 19 Meeting customer expectations ..................................................... 20 Finding out customer expectations................................................. 21 Assessing service quality ............................................................. 26 Summary ................................................................................ 31

Section 2 Planning to meet stakeholder requirements — analysis ....................................................33

What is marketing planning?......................................................... 33 An overview of the analysis stage .................................................. 34 Collecting information — the external environment............................. 34 Collecting information — the internal environment ............................. 46 Analysing the information............................................................ 47 Summary ................................................................................ 51

Section 3 Planning to meet stakeholder requirements — developing the marketing plan .......................53

An overview of the process .......................................................... 53 Strategy development ................................................................ 53 Marketing objectives.................................................................. 56 Shaping the ‘Ps’ ....................................................................... 56


The marketing plan ................................................................... 71 Summary................................................................................ 73

Before you move on.................................................. 75 Preparing for assessment ............................................................ 75 Reflecting on progress ............................................................... 76 Planning next steps ................................................................... 76 The Management and Leadership Standards...................................... 77 How this workbook relates to the Standards ..................................... 77

Bibliography............................................................ 79

Appendix 1: The Data Protection Act ............................. 80


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Series overview

The Diploma in Management This workbook is one of ten that cover the core and optional units that make up the Chartered Management Institute Diploma in Management.

The workbooks in the Pathways series at Diploma level are:

Core units — five workbooks Relating to Diploma

Developing Your Management Style Unit C41

Managing Financial and Non-financial Resources Unit C42

Planning to Meet Customer and Quality Requirements Unit C43

Effective Communication and Information Management Unit C44

Managing Performance Unit C45

Optional units — five workbooks Relating to Diploma

Recruitment and Selection Unit O41

Developing Personnel and Personnel Performance Unit O42

Effective Financial Management Unit O43

Managing Marketing Activities Unit O44

Principles of Project Management Unit O45 You will find the workbooks useful if you have been promoted to, or are about to move in to, a middle manager role. They would also be useful if you would like to review the effectiveness of your current management skills as a middle manager.

If you are working towards the Institute Diploma in Management you will need to complete all five of the core units, and three of the optional units. This workbook series is intended to focus in particular on providing the underpinning knowledge needed for this Diploma, and to show how the knowledge can be applied to your particular workplace and job-role.

If you complete the workbooks, you will be well-equipped to undertake the assessment for the Diploma.


Series overview Managing Marketing Activities

8

How to use the workbooks The workbooks provide ideas from writers and thinkers in the management and leadership field. They offer opportunities for you to investigate and apply these ideas within your working environment and job-role.

Structure

Each workbook is divided into sections that, together, cover the knowledge and understanding required for that unit of the Diploma in Management. Each section starts with a clear set of objectives that identify the background knowledge to be covered, and the management skills in the workplace that enable you to demonstrate this knowledge. You do not have to complete the sections in the order they appear in the workbook, but you should try to cover them all to make sure that your work on the unit is complete. There are self-assessment questions at the end of each section that allow you to check your progress. You may want to discuss your answers to self-assessment questions with your line manager or a colleague.

Activities

Throughout the workbooks you will see that there are activities for you to complete. These activities are designed to help you to develop yourself as a manager. Space is provided within the activities for you to enter your own thoughts or findings. Feedback is then provided to confirm your input, or to offer more ideas for you to consider.

To get the best from the workbooks, you should try to complete each activity fully before moving on. However, if the answer is obvious to you because the issue is one you have encountered previously, then you might just note some bullet points that you can then compare quickly against the feedback. You may sometimes find it difficult to write your complete response to an activity in the space provided. Don’t worry about this — just keep a separate notebook handy, which you can use and refer to as needed.

Try not to look at the feedback section before completing an activity. If you find this difficult, you might like to try covering up the feedback with a postcard or piece of paper while you are working through an activity.

Timings

Timings are suggested for each section and activity, although it is important that you decide how much time to spend on an activity. Some activities may occupy only a few moments’ thought, while others may be of particular interest and so you might decide to spend half an hour or more exploring the issues. This is fine — the purpose of the activities is to help you reflect on what you are doing, and to help you identify ways of enhancing your effectiveness. It is always worth writing something though, however brief — the act of writing will


Managing Marketing Activities Series overview

9

reinforce your learning much more effectively than just referring to the feedback.

Scenarios

There are scenarios and examples throughout each workbook to illustrate key points in real workplace settings. The scenarios cover a wide range of employment sectors. As you work through, you might like to think of similar examples from your own experience.

Planning your work

The reading and reflection, scenarios and activities in each section of the workbooks are designed to take around two hours to complete (although some may take longer). This is a useful indicator of the minimum length of time that you should aim to set aside for a study session. Try to find a quiet place where you will not be interrupted and where you can keep your Diploma in Management workbooks, notes and papers reasonably tidy. You may also like to think about the time of day when you work best — are you a ‘morning person’ who likes to get things done at the start of the day, or do you work better in the evening when there may be fewer disturbances?

Preparing for assessment

Further information on assessment is available in the Student Guide produced as part of the Pathways to Management and Leadership series. If you have any further questions about assessment procedures, it is important that you resolve these with your tutor or centre co-ordinator as soon as possible.

Further reading

Suggestions for further reading and links to management information are available on the Student Resource Centre section of the Institute website at www.managers.org.uk/students. Alternatively, email [email protected] or telephone 01536 207400. You will also find titles for further reading in the Bibliography.

Bibliography

Bibliographic references and useful websites are collected together at the end of each workbook.


Series overview Managing Marketing Activities

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11

About this workbook

The unit The main purpose of this workbook is to support you as you study for the Chartered Management Institute Diploma in Management, so it specifically focuses on the content of the syllabus for Unit O44 Managing marketing activities.

This workbook provides underpinning knowledge and develops understanding to improve your skills as well as to prepare for future assessment. If you are studying for the Diploma, then you will be assessed by your approved centre on ‘your knowledge and understanding of’ the following Learning Outcomes.

1. Identify your organisation’s values and objectives and how they affect your planning.

2. Identify your organisation’s stakeholders and explain how their needs affect your role.

3. Explain the different ways organisations can be structured and operated for optimum efficiency.

4. Apply the principles of marketing to research, analyse and determine your customers’ expectations and needs.

5. Use a range of planning techniques to address the customer needs you have identified, demonstrate how your plans add value (for customers and the organisation) and guide others on how the objectives are to be achieved.

6. Monitor plans which have been implemented and adjust them as necessary to ensure that the required results are achieved.

The aims of this workbook This workbook aims to help you learn how to:

1. understand your role in relation to your organisation, clients, customers and stakeholders, and the wider environment in which your organisation operates

2. identify, predict and monitor the needs of customers/stakeholders

3. plan to meet stakeholder requirements.


About this workbook Managing Marketing Activities

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Syllabus coverage The table below shows which sections of the workbook address each ‘Understanding’ and ‘How to’ section of the qualification syllabus.

O44 syllabus coverage Addressed within section:

Marketing Understanding:

the theories and models of marketing and ecommerce

1, 2, 3

how organisations are structured and operate, and the differing needs of stakeholders

1

your organisation’s position in the sectors and markets in which it operates

1

How to:

manage and encourage the communication process with your customers and colleagues

1

identify your internal and external customers and the difference between them

1

research and predict your customers' needs, wants and expectations

1

monitor ongoing customer needs to guide planning

2

Planning to meet stakeholder requirements

Understanding:

the principles and models of organisational planning

2, 3

the types of information you need to inform the planning process

2, 3

the records you need to keep 2, 3

How to:

set planning objectives 3

plan to meet the identified needs, wants and expectations of your stakeholders taking account of your organisation's plan

3


Managing Marketing Activities About this workbook

13

balance internal and external customer needs with organisational objectives and how to proceed if there are conflicts

2, 3

communicate and gain support for plans 2

identify how alterations to plans may affect the organisation

3

record and review the process 2, 3

Getting started These days most organisations recognise that they won’t exist without satisfied customers. They have to shape their products and services to their customers’ needs. Customers are increasingly demanding and sophisticated. Your organisation is unlikely to be the only one offering the product or service your customers need. Suppliers compete heavily to attract customers: winning business is hard work and it takes so little to lose it. Unless you keep in touch with your customers, you may lose their business and never know why it happened.

Your aim and the aim of your organisation should be to give your customers what they want in the first place and, if that fails, to get them to tell you (not their friends) about it so that you can put it right. This is true of every interaction in business. Organisations not only have to say that they are working to meet customer needs, they have to demonstrate it. Being customer-driven requires an attitude and an approach to working that has to permeate the whole organisation. Attempting to take a ‘customer focus’ with the same old way of working is not enough. The whole process may need to change.

Organisations also recognise the cost-benefits of being able to retain existing customers through providing good customer service, rather than focusing solely on activities that will bring in new customers. As described by Christopher, Payne and Ballantyne (1996):

By placing too much focus on marketing activities directed at new customers, companies often experience the ‘leaking bucket’ effect, where customers are being lost because insufficient marketing activity generally and customer service specifically, is being directed to them.

This workbook explores how organisations put customers at the heart of their thinking and their organisational planning and procedures. As a manager, you need to understand the requirements of customers, the often conflicting demands of relevant stakeholders, and the environments in which the organisation is operating. Understanding the ‘bigger picture’ will enable you to make better decisions when planning the day-to-day operations of your part of the business.


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Section 1 Marketing

Time required: about 2 hours.

Objectives

By the end of this section you should be able to understand:

the theories and models of marketing



and describe:

how to manage and encourage the communication process with your customers and colleagues

how to identify your internal and external customers and the difference between them

how to research and predict your customers' needs, wants and expectations.

A marketing culture Marketing is defined by the Chartered Institute of Marketing (2003) as:

… the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

The American Marketing Association (2003) defines marketing as:

… the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange that satisfies individual and organisational objectives.

There is still a lot of confusion about the term ‘marketing’. Many people equate marketing with ‘selling’ or ‘promoting’. Put simply, marketing focuses on customers. An organisation that adopts a marketing culture puts the customer at the centre of all business decision-making and planning (not just marketing department decision-making and planning). An organisation with this culture is said to be ‘marketing-oriented’ or ‘customer-centred’.

Therefore, the philosophy of marketing is applicable to all sectors, irrespective of whether the customer has the purchasing power.


Section 1 Marketing Managing Marketing Activities

16

Private sector

Shareholder/owner

Company

Customers/clients

Public sector

Taxpayers

Public-sectororganisations

Service users

Not-for-profit

Funders (donors,public sector, grants)

Not-for-profitorganisations

Service users

£ £

Products and services

£

£ £

£(some/part)

Services £(some/part)

Services

Fig. 1.1 Customers in the three main sectors (adapted from Hudson, 1995, p. 35 and reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

In order to understand the meaning and implications of being marketing—orientated, we need to look at the distinctions between companies that are:

marketing-orientated

sales-orientated

production-orientated

and

product-oriented.

Activity Activity 1.1 (about 5 minutes)

Read the descriptions of the four companies below, and for each one identify which of the four possible orientations listed above best fits the organisation.

Company A

‘We believe that our products are the most innovative on the market. Our quality is second to none and we’ve gone all out to develop the best design team in the business.’

Orientation of company:

Company B

‘Our salespeople understand how to get the customer to sign on the dotted line. Most customers really want to purchase our product when they see it; they just need a little push to make up their mind.’


Managing Marketing Activities Section 1 Marketing

17


Company C

‘Customers can be very fickle sometimes. We’ve just had to change a specification because the customer wanted something else at the last minute. This also affected our production schedules and our delivery department, and everything had to be recosted. Still at least everyone pulled together on this one.’


Company D

‘The customer can have any colour, so long as it’s black.’


Feedback Company A is product-oriented; the attitude is that a good product will sell itself. The attitude in Company B is that aggressive hard selling is all that is required — it is sales-orientated. Company C is marketing—oriented; the attitude is that even though it is sometimes difficult, everyone in the company must try to satisfy the customer. Company D is production-oriented. The attitude is characterised by an almost exclusive focus on production efficiency and effectiveness.

You may have recognised Henry Ford, the founder of the Ford Motor Company, as the speaker featured in Company D. Ford was said to have uttered this much-quoted phrase about the world’s first mass-produced motorcar. In the 1920s, Ford’s major concern was with the problems of producing cars in sufficient volume and at a price the huge, latent, mass market could afford. The colour of his cars therefore mattered little to Ford, other than the fact that producing only one colour enabled output to be greater and prices to be lower. At that time, Ford’s focus on production rather than on the colour preferences of his customers was right. Customers were less interested in colour than in availability and affordability. So in this case, Ford’s approach was right.

This is an important lesson to learn. The need to be customer-centred (Company C in the example) is a function of the competitive conditions now faced by companies. The necessity for companies to have a marketing orientation is the result of a gradual process of evolution, as societies, manufacturing economies and customers have evolved.



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Difficulties in creating a marketing culture

Many organisations are striving to introduce a marketing culture, but it can be difficult. Lancaster and Withey (2003) highlight the difficulties in managing the introduction of a customer-orientated culture:

managers fail to realise or understand the true concept

the structure of the organisation may require changing and this can lead to other managers’ resistance and additional costs

people are frightened and reluctant to change

the power struggle between the different departments in an organisation can hinder the process

in some organisations the responsibilities for marketing strategy and implementation are separated, and this may cause many problems.

Who are the customers? The customers of the companies given as examples in Activity 1.1 were external customers. They were the ‘end users’ or ‘consumers’. However, companies also need to consider their internal customers. The concept of the internal customer has long been established as one of the principles that underpins quality management. An internal customer is anyone in an organisation who receives the products or services from another department or area in the organisation.

Both internal and external customers are of equal importance. The same principle of ensuring customer satisfaction by putting customers at the centre of all business decision-making and planning applies to both groups. Wherever you are in the organisation, your primary focus should be on the next group in the value chain — those who directly receive the products and services from you.


Who are your customers? List them below and note whether each is either external or internal.

Customers Internal External



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Feedback Embracing a marketing culture involves embedding both the internal and external customer expectations within all planning processes. However, this has to be done within the framework set by stakeholder expectations.

Who are the stakeholders? Stakeholders can be defined as ‘people who have a vested interest in an organisation and who place demands on it’. It includes: customers, employees, shareholders, taxpayers (in the public sector), regulators and external auditors. The kinds of shareholder that an organisation has depends on the nature and, in some instances, the location of the organisation. For example, local communities may be stakeholders if they place demands on an organisation in relation to environmental considerations (e.g. noise, pollution).


Consider the stakeholders who are relevant to your organisation. Is there a conflict of interest, or any tensions, between the demands placed on the organisation by the stakeholder groups and what the organisation delivers to its customers?

Feedback Any organisation has to meet the expectations of its external customers, or face decline. However, the planning process implemented to meet these expectations also has to recognise and, where appropriate, deal with other stakeholder issues. Here are some examples.

A school has to deliver services that meet parents’ expectations and also has to meet the regulatory demands of government placed on it.

A private company has to meet the expectations of the customers who buy its products and services, and also meet the requirements of shareholders for a return on their investment (i.e. it has to meet customer expectations and also make a profit).

The demands of stakeholders often set the parameters of the marketing planning process (i.e. the plans which result in customer expectations being met).



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Meeting customer expectations Customer expectations are shaped by a number of factors. In their book Services Marketing, Zeithaml and Bitner (2000) describe customer expectations as being a result of:

explicit service promises — this refers to what the promotional materials describe

implicit service promises — these are inferences customers make from factors they observe, e.g. that the higher the price the better quality the service

word of mouth, e.g. information from friends and family

past experience, e.g. good experiences in the past will heighten expectations

personal needs, e.g. any physical, social, psychological or functional needs.

If the service that the customer receives falls short of the expected service then a ‘customer gap’ is created, with the customer becoming dissatisfied (Fig. 1.2).

CUSTOMER GAP = dissatisfaction

Personal needs

Implicitand explicit servicepromises

Past experiencesWord-of-mouthcommunication

Experience ofservice

Expected service

Fig. 1.2 The customer dissatisfaction gap (Reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

Based on Zeithaml and Bitner’s work (2000), we can identify four main reasons for customer gaps occurring.

1. The organisation doesn’t know what the customer expects

If an organisation makes assumptions about what it believes the customer expects or wants, then it is unlikely that what it provides will actually meet customer expectations. The key people involved are those who have the authority and responsibility for shaping and prioritising what the organisation offers to its customers. Often, this is the marketing department, but in practice it involves everyone in the organisation continually finding out and feeding back information about customers and potential customers.

2. The organisation doesn’t select the right products and services to meet expectations



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Even when an organisation knows what its customers expect, it may still fail to shape its products and services accordingly. For example, it may believe the expectations are unrealistic or impossible to meet; there may be financial pressures that stop the development of services and products; or it may not set the necessary standards to meet the quality expectations of customers.

3. The staff in the organisation don’t deliver the products and services to meet customer expectations

Even though an organisation may plan to deliver products and services that meet customer expectations, it needs competent staff to ensure the delivery takes place.

4. Misleading promises

If an organisation sends out misleading messages about its products and services (e.g. in its promotional materials), then customers inevitably form inaccurate expectations that are unlikely to be met.

Any organisation has to deliver services and products that meet the expectations of its customers and ensure that a ‘customer gap’ doesn’t open. The first stage in that planning process is to find out what the expectations or requirements of customers are.

Finding out customer expectations The easiest and most cost-effective way to find out your customers’ expectations is to ensure open channels of communication so that customers’ views are heard. This involves listening to your customers by ensuring communication lines are clear and easy to use.


How easy is it for customers to make contact with you?

How many letters does your organisation or department receive from customers each month?

Do you answer every letter you receive?

Are your letters friendly and human in tone?

How many phone calls does the department or organisation receive?



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Can customers call direct?

How easy is it for customers to find out the organisation’s or department’s phone number if they do not have it already?

Do you always return calls within 24 hours?

Is your office ‘customer friendly’?

Is it clearly signposted?

Is there access for people with mobility difficulties?

Do you actively encourage customers to make contact with you in the way that suits them, rather than the way that is convenient for you?

Feedback If you have answered positively to all these questions, you are already open to your customers. Highlight in your responses any points for discussion and action.

Once an organisation has established open lines of communication, you are then in a position to listen to your customers’ comments. The most effective method of finding out what your customers think of you is the most obvious — by asking them. If you do talk to your customers regularly, the lines are already open. You can make a point of finding out informally what they thought of the product and the service at the end of each transaction. Everyone likes to be asked for their opinion — they will be pleased. Don’t forget to record their comments and act on them.

Formal customer feedback

The following list gives ideas for collecting customer feedback in a more formal way.

1. Set up a helpline. If you are going to have real people on the end of the line, be sure that you have the time, resources and people to handle the calls. If they are handled badly, it will have the opposite effect and customers will have more to complain about. How often do you hear of people left holding on the end of a helpline, or people infuriated by mechanical instructions to press another button or given yet another number to call?



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2. Set up a customer focus group. Invite a few regular customers in to discuss any issues they may have and to hear their views. Make it clear to them that you want to hear all their comments, both good and bad. You could make it into an event by inviting them formally and providing lunch, for example.

3. Send out a questionnaire. Devise a questionnaire for customers to complete, asking them to rate your products and your services. Send it out with the final invoice, for example, or ask them to complete it when they visit you. It also helps if you can follow it up with a phone call. Make them feel that their opinions matter. The following tips will help you to formulate it.

Make it clear and friendly.

Thank them for their time and their comments in a short introduction.

Tell them that you are trying to improve your service and ask them what you need to do to make your service better.

Keep it relevant — ask yourself what you want to know, and frame your questions accordingly.

Ask clear questions. It is no good asking questions that customers cannot answer easily, or that you will find difficult to process.

Use closed questions (those that require a yes or no answer) and that give you information you can use.

Give space at the end for customers’ comments or for any specific concerns, so that you can make the questionnaire and the service to them more open and personal.

Ask them for positive feedback as well as negative feedback — you need to know when you are getting it right.

Think hard about what you ask and say — don’t set yourself up to fail by promising too much, either overtly or by implication.

Mean what you say — this is not a cynical marketing exercise.

Don’t use formal language or make the piece of paper look like an official pro forma.

Limit it to one side of a piece of paper — longer may put people off.

Record the comments and keep the returned forms.

Solve the problems.

Act on the information you receive.



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If you can: maintain a dialogue with your customers; make it easy for them to contact you; acknowledge and address their problems and get it right next time — then your customers will return. If you are getting it right, the comments you receive will become more positive and constructive. It could be the start of a relationship built on co-operation and mutual assistance.

Listening to feedback gives you a wealth of information about customers and the opportunity to deal with specific issues. Various research projects undertaken both in the UK and the USA show that a satisfied customer will tell three to five other people about the experience; a dissatisfied customer will tell eight to ten people about it.

Welcoming complaints

Complaints should be seen as a second opportunity to please your customer, as well as being a valuable source of marketing information.

However, measuring the success of an organisation on the amount of complaints received — in effect, on its failure — is not ideal. Dealing with complaints rather than asking for feedback is a reactive rather than a proactive approach, and leaves all the work to the customers. Most dissatisfied customers vote with their feet. There needs to be another way of finding out how customers feel about your organisation, products and services.


Tick the statements below if you can answer ‘yes’ on behalf of your business or your department.

Are you listening?

The organisation has a complaints procedure.

It provides clear guidelines for everyone.

Everyone in the business knows what to do.

Complaints are dealt with quickly and well.

The organisation as a whole does not see complaining customers as awkward and difficult.

Complaints are always seen as a second opportunity to please customers.

Complaining customers are always delighted the second time round.

The cause of the complaint is always addressed internally afterwards.

Records are kept of all complaints.



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Feedback How many ticks did you have? More importantly, how many did you miss? Make a note of the areas you may need to work on. This could be the beginning of a discussion with a complaints procedure team.

Setting up a complaints procedure

The attitude of the organisation is all-important. A customer-focused business or department is geared to satisfying its customers, to listening to and understanding their needs. Seeing complaints positively follows naturally from that.

Nobody enjoys being on the receiving end of a complaint. However, if your organisation has a definite policy that is communicated effectively to everyone, and if all personnel, whoever they are in the organisational hierarchy, are trained to deal professionally with the situation, you have the tools to work with. The Chartered Management Institute’s checklist (Management checklists 066) for handling complaints states succinctly the advantages of having a complaints procedure.

A complaints procedure:

provides a clear approach when a complaint occurs

engenders understanding and confidence in terms of how to tackle complaints

helps to remove personal ‘guilt’ feelings when receiving a complaint

leads to a recognition of complaints as valuable feedback, not criticisms

can produce records for analysing possible service improvements.

The following checklist, adapted from Martin (1994), gives guidance on what should be considered when developing a complaints procedure.

Make sure all complaints and comments are recorded.

Make sure that some action is taken within a reasonable, specific amount of time (48 hours, for example).

Find all the appropriate data and research the facts.

Listen carefully, noting all relevant information.

Check facts put forward or disputed by the customer.

Identify what the customer wants or needs to happen as a result of the complaint.

Be courteous and avoid getting angry.

If the complaint is straightforward, suggest a solution.

If the complainant’s ideal solution is not possible, consider a compromise.



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If the complaint is more complicated, thank the customer for complaining, apologise for the inconvenience and explain that you need to investigate further.

Give the customer a time by which she or he will be contacted again — and stick to it.


Using the guidelines above, draw up an appropriate checklist for a complaints procedure for your organisation or for your department. You will need to consult with your internal customers (your own team, or your organisation’s complaints team). Then draw up the final checklist and distribute it for approval to other members of the team. Remember that ownership of the procedure plays a vital part in getting it accepted and implemented.

Feedback The most important factor to remember about a complaints procedure is that you are creating a communication route between your customers and your organisation: not putting up barriers. A procedure that is too mechanical will alienate rather than welcome customers’ views. For example, avoid having a so-called ‘hotline’ where customers have to listen to five options and are then told by a disembodied voice that they are held in a queue before they can even state their complaint. This ‘fortress’ approach will only aggravate your customers. They need to feel that you take their problems seriously and will deal with them appropriately. Employees of a business with this kind of complaints system are abdicating responsibility — feeling complacent behind the barrier of the procedure.

In Section 2, we look at marketing research in the context of the marketing planning process and explore the principles behind segmenting customers and recording information.

To build a foundation for understanding what customers want you need to understand the factors that contribute to how they perceive your organisation. This knowledge will help you to develop the products and services that will meet the expectations of your customers.

The remainder of this section gives you the opportunity to assess the quality of service you currently provide to customers.

Assessing service quality In order to assess the quality of service that customers receive, you need to develop a clear idea of what it is. The following ten-point framework, based on work by Parasuramann, Zeithaml and Berry (1985) gives a basis on which to assess the service you deliver to your customers:



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1. reliability

2. responsiveness

3. competence

4. access

5. courtesy

6. communication

7. credibility

8. security

9. understanding the customer

10. tangibles.


Use these indicators to assess the service quality in your organisation, department or team. Consider the questions under each of the service quality elements, below. Tick a box under the appropriate answer:

Y = Yes; O = Often; S = Sometimes; N = No; D = Don’t know

Y O S N D

Reliability

Is the overall performance consistent and dependable?

Do you perform the service right first time?

Do you meet deadlines?

Do you keep the promises you make to your external customers?

Do you keep the promises you make to your internal customers?

Is your accounting accurate?

Do you keep adequate records?

Responsiveness

Are transaction slips/contact reports/customer documentation posted immediately (if applicable)?

Are customers contacted promptly when they phone or email?

Are appointments set up quickly?



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Competence

Do staff in contact with customers (including receptionists, secretaries, etc.) have appropriate skills and knowledge of:

the business?

the customers?

Are the operational support staff competent and knowledgeable?

Does the organisation have appropriate research capability (i.e. product development, markets, customer feedback)?

Access

Is it easy for customers to make phone/email contact (i.e. fast answering, direct connection to the appropriate person, not put on hold)?

Do customers get speedy service?

Are opening/working hours convenient for customers?

Is the location convenient for customers?

Courtesy

Are staff (in contact with customers) friendly and polite?

Are staff clean, neat and appropriately dressed?

Are staff considerate of customers’ property/possessions?

Communication

Do staff listen to customers?

Do staff adapt their methods of communication to suit individual customers (i.e. no technical terms when inappropriate)?

Do staff explain the processes and service to customers?

Is pricing clearly indicated at every stage?



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Are customers continually kept informed of cost and progress?

Do staff reassure customers that their problems will be solved?

Credibility

Does your organisation demonstrate credibility, trustworthiness and honesty?

Does your organisation have a good reputation?

Do contact staff demonstrate integrity and trustworthiness?

Does the organisation avoid hard-sell techniques?

Security

Do customers feel physically safe when dealing with the organisation?

Do customers feel that their money is well spent/safe in your hands?

Do customers know that confidentiality will be maintained?

Understanding the customer

Do staff know and correctly interpret customers’ specific needs?

Do staff give customers individual attention?

Do staff recognise regular customers?

Tangibles

Are facilities and the environment user friendly?

Do staff look pleasant and friendly?

Are any tools or equipment properly maintained and looked after?



30

Feedback Look through the list and assess the areas of strength and weakness in service quality. The strong areas are the ones with the most ticks in the left-hand Y or O columns; the weaker ones have more ticks in the right-hand N and D columns. If you can’t distinguish between stronger and weaker elements, go through the checklist again and rethink your answers.

The service quality checklist enables you to review all aspects of service quality.


To what degree do you think your organisation is successful in the process of putting customers at the heart of its thinking?

Feedback The philosophy behind a marketing orientation is relevant to organisations in all sectors and to providers of services as well as products. Putting the customer at the heart of what is done applies equally to a hospital, provider of social housing or a charity providing any form of service or product, as it does to a commercial business.

The remainder of the workbook explores the practical steps that your organisation and you as a manager can take to ensure the quality of services and products offered to your customers.

Self-assessment questions

Use these questions to check whether you have understood the key issues in this section. If you are not sure, or really don’t know the answers, this suggests you need to work through parts of this section a second time.

1. What is meant by the term ‘marketing’?

2. Why does a marketing culture need to be embedded throughout an organisation?

3. What is a ‘stakeholder’? Why is it important to identify stakeholder interests when planning to meet customer requirements?

4. What factors shape customer expectations?

5. Which customer satisfaction gaps would comprehensive market research prevent?

6. Why is it important to develop open lines of communication with your customers?

7. What are the benefits of establishing a formal complaints procedure?

8. What criteria can be used as a basis for assessing the quality of service delivery?



31

Summary Now that you have reached the end of this section you should be able to understand:

the theories and models of marketing



and describe:

how to manage and encourage the communication process with your customers and colleagues

how to identify your internal and external customers and the difference between them

how to research and predict your customers’ needs, wants and expectations.

If you can do this, and if you could answer the self-assessment questions, then you are ready to move on.

In the next section, we look at the first stage of the marketing planning process — analysing the internal and external environments.


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Section 2 Planning to meet stakeholder requirements — analysis

Time required: about 2½ hours.

Objectives




the records you need to keep

and describe:

how to balance internal and external customer needs with organisational objectives and how to proceed if there are conflicts

how to communicate and gain support for plans

how to record and review the process.

What is marketing planning? The aim of the marketing planning process is to provide products and services that satisfy customers and also complement the requirements of all the other stakeholders. There are two main stages to marketing planning before actions can be implemented:

1. analysis of the environments

2. strategy development and planning. This involves identifying the exact shape of the offer to customers (often referred to as ‘the 7Ps of the marketing mix’). We look at this in Section 3.

The process can be used at any level of an organisation, from developing a strategic plan for a big organisation to an individual manager reviewing what is offered to customers. In some organisations, marketing planning will be left to the marketing departments. In others it will be an integral part of the responsibility of senior management. In this section we look at what’s involved in the ‘analysis’ stage.


Section 2 Planning to meet stakeholder requirements — analysis Managing Marketing Activities

34

An overview of the analysis stage The first step in any planning process is to understand the context in which you are working. This involves an information collection exercise. In the case of marketing planning it involves the following.

Collection of information about the external environment. This involves anything that the organisation has no control over, such as the requirements of customers and competitors, and opportunities and threats in the wider world.

Collection of information about the internal environment of the organisation. This includes information about the strengths and weaknesses of all aspects of the organisation.

Once the information is collected it can be analysed to select factors that will shape decisions around the products and services to be offered to customers.

Mission, values,objectives

Requirements ofcustomers

Internal strengths Analysis Competition

Internal weaknesses Opportunities and threats

Internal External

Fig. 2.1 Overview of the analysis stage (Reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

Collecting information — the external environment Collecting information about the external environment usually involves asking a number of departments across the organisation to contribute the information. For example, departments with direct experience of customers would contribute information about customer habits; the finance department would know about the external financial factors likely to have an impact on the organisation; sales teams may have valuable information about competitors, and so on.

Segmenting the market

To recap from Section 1, understanding the requirements of customers is crucial to shaping products and services. Organisations need channels for feeding back information about customers. The information needs to be collected and stored in a form that can be used to inform decisions.


Managing Marketing Activities Section 2 Planning to meet stakeholder requirements — analysis

35


The motivations behind people’s their buying decisions are affected by many factors. List the characteristics that you think would influence someone’s buying decisions (for example, gender).

Feedback You could have suggested:

lifestyle/culture

age

marital status/children

income

socio-economic group

occupation

location

peer group pressure

home ownership

personal financial management.

This is a list of factors that can be used to determine the ‘segment’ of the market that a person belongs to. Different segments of the market have different expectations of what they want from a product or service. You can use segmentation to:

find out what a particular segment expects

shape what you offer (i.e. products and/or services) accordingly.

Scenario Fitting a kitchen

Helen and Grace are department managers in the same large department store. Both are aged 31 and they live next door to each other in houses that they own. They have both decided to re-fit their kitchens.

With this amount of information — gender, age, occupation, income, location, home ownership — you might think that they would want a similar kitchen. However, when you find out that Helen has a husband and two children and that Grace is unmarried and lives on her own, the two ‘similar’ profiles start to draw apart. Then when you find out that Grace likes to keep fit, goes to aerobics, eats out and has a very full social life and



36

that Helen likes to cook, relaxes in front of the television and hardly ever goes out, you begin to realise that their buying decisions are influenced by other factors.


Make a list of what each of the two women might be looking for in a kitchen.

Helen Grace

You may have suggested some of the following. Feedback Helen

Plenty of storage space

Functional

Friendly

Well lit

Plenty of work surfaces

Reflecting a homely, family lifestyle

Grace

Smart

State-of-the-art equipment

Attractive flooring

‘Mood’ lighting

Reflecting a stylish, independent lifestyle

If Helen and Grace had both been targeted with promotional material for the same kind of kitchen on the grounds of gender and age the product would have ‘missed’ one of them — if not both. In practice, kitchen manufacturers do take lifestyle, aspirations and family circumstances into consideration when they are targeting customers in the real world, and are usually well aware of the fact that they are selling an image.

Types of market segmentation

There are as many needs and expectations as there are people, so market segmentation does not give a complete picture. However, it does narrow the field considerably and enables organisations to carry out research and develop their wares accordingly.



37

Different kinds of organisation use different and appropriate segmentation that best suits their core products and services, as in the following list.

Demographic segmentation

This is segmentation by age or sex. For example, a shampoo manufacturer may concentrate the marketing of one of its products towards attracting women who like natural products; while another of its marketing campaigns may focus on sporty men.

Geographical segmentation

Marketing efforts may be concentrated in regions or countries that have a high proportion of potential customers for a particular product — for example, speciality foods are marketed as gifts in tourist areas.

Ethnic group segmentation

Depending on the population of the area, it may be profitable to target different ethnic groups. For example, a driving school might decide to advertise in Urdu as well as in English in Yellow Pages.

Social group segmentation

Different social groups will often have different needs and requirements from a product or service. Range Rovers are targeted at the higher income market, for example.


Now look at your own organisation. What kind of approach does it adopt in terms of target markets and segmentation? Make notes on the kind of customer the organisation’s products or services are aimed at. If there is a marketing department you may find it helpful to discuss your response with them. If your business has more than one product or service, choose one of them and build a customer profile or profiles for that.



38

Feedback It’s essential that any organisation defines its market segments. Customers have varied needs and characteristics. By recognising the characteristics of each segment, it is possible to forecast demand and provide products and services that fit the characteristics at the right price.


Go back to your customer profile(s) and note down their requirements.

Think about the following elements:

products and/or services

price (if applicable)

promotional activity.

Now look at what actually happens. How close is the reality to your analysis? Where do you think the differences lie? Make a note of the areas that could be more customer-focused.

Feedback This activity has given you a customer-driven view of what your organisation needs to offer. Although shaping the offering to customers is more complex than simply finding out what customers want and delivering it to them, it has to be at the heart of what the organisation does.

Industrial or business customers have different buying criteria.

What influences industrial or business customers?

Customers in the industry and business sectors do not buy for themselves as a rule, but for their organisations. When thinking about the needs of business customers, you need to start with some basic information about the customer’s position in the purchasing organisation such as:

job title

department name

the customer’s status in the department

scope of their authority



39

who the product or service is for

who decides what to buy

who instructs them to buy

who pays for it

who will have to handle any after-sales problems

who enjoys the success or suffers the failure.

The nature, style or culture of your customer’s department and the organisation itself are important factors to consider when you are trying to understand their buying behaviour and expectations.


Think of a particular business customer as you ask yourself the following questions. For each question, try to anticipate the effect on your customer’s expectations of you, as supplier.

Customer’s name:

What is the management style of the department?

— How might this affect their expectations of you or your company?

— What more can you offer?

Does the customer have other internal customers to satisfy?

— How might this affect your customer’s expectations of you or your company?


Is the department buying for itself or for the whole organisation?

— How might this affect your customer’s expectations of you or your company?



40


Is their department a large or important part of the organisation?

— How might this affect your customer’s expectations of you?


Is the cost of your product or service a large or small one for the customer?

— How might this affect their expectations of you?


Feedback The questions in the activity can be used to record information about each of your customers. Include any personal information you think may also be useful (family, interests, etc.) and any quirks you have noted: for example, they may be particularly price conscious or may like to deal with only one person.

A customer pro forma or database may hold the following information:

job title

department name

the customer’s status in the department

scope of their authority

who the product or service is for

who decides what to buy

who instructs them to buy

who pays for it

who will have to handle any after-sales problems

who enjoys the success or suffers the failure



41

the management style of the department

whether the person has other internal customers to satisfy

whether the department is buying for itself or for the whole organisation

whether their department is a large or important part of the company

whether the cost of your product or service is a large or small one for the customer

any other relevant information (personal, professional).


How does your organisation find out what its customers and potential customers expect?

Feedback As well as collating information from various departments, many organisations put resources into consulting with customers and building relationships, by:

inviting comments and complaints

using front-line staff to feed back the perceptions of customers

asking customers to complete questionnaires

setting up focus groups.

Using databases for collating customer information

A database is a store of customer information that can be used to develop marketing strategies. The use of databases marked the beginning of the ecommerce revolution, as defined by Lancaster and Withey (2003):

Electronic commerce — The use of electronic technologies and systems, e.g. internet, intranets, databases, so as to facilitate and enhance transactions between different parts of the value chain.

Developments in information collection, storage and analysis are now making information one of the most important competitive assets a company can have.

A customer database can be built from a wide variety of sources, from both inside and outside the organisation. Information can come from customer orders, subscription lists, guarantee return forms, loyalty cards, company sales persons, customer complaints, customer enquiries, traditional market research and outside companies that specialise in providing customer information.



42

Coupled with the ability to store and manipulate large amounts of data, the plethora of customer data sources means that all too often it is possible to be overwhelmed by data. In order to avoid information overload, while at the same time ensuring that valuable information about customers is not overlooked or lost, database management needs careful planning. The essence of successful database management requires careful attention to the following:

specific objectives for the database, including types of information required, and why

effective systems for data capture, including strategies for this

appropriate systems for data storage, including effective database maintenance

effective systems of analysis and interpretation of data, based around providing information for marketing decision-making.

Without careful attention to the objectives and uses to which the database is to be put, it is all too easy to collect data just for the sake of it. Organisations need to determine precisely what data is required in the context of being useful for decision-making.

It is important to be aware that there is considerable legislation relating to the collection and use of data on customers. The most important legislation is enshrined in the Data Protection Act 1998, which covers manual and computer systems, and protects customers’ rights in several respects with regard to data about them that is stored. (The Data Protection Act is covered in the workbook for Unit C44 Effective communication and information management. In case you have not read that workbook, or do not have it to hand, a short extract covering the main principles of the Act is included in Appendix 1.)

It is particularly important in building a database that valuable sources of customer data are not ignored. Many organisations suffer from the fact that the different departments in the organisation each have their own databases, which are never used by the rest of the organisation. Increasingly, companies are using what is referred to as ‘data warehousing’ to deal with this problem. This is the process of collecting all the data on customers and centralising this into a single pool within an organisation.



43


How does your organisation collate information about customers? Does it use ‘data warehousing’ or is information scattered around the organisation?

Feedback Although the concept of data warehousing is logical, many organisations find it difficult to set up systems that capture up-to-date and accurate information about customers.

It is particularly important to ensure that the database is regularly maintained, or as it is sometimes referred to, ‘cleaned’. Obviously, customers and the information about them is changing all the time. If the database contains inaccurate information, organisations run the risk of making the wrong decisions. For example, many organisations waste money sending direct mail to customers who have long since moved on. Worse still, there are examples of organisations sending out marketing literature to customers on their database who are no longer living. Clearly, using inaccurate data at best wastes money, and at worst risks alienating customers or potential customers.

Competition

So far in this workbook, we have stressed that organisations must identify their customers’ needs. However, the reality is much more complicated. In the saturated markets of today it is rare to be able to identify a major customer need that is genuinely unsatisfied. The history of product and service innovation is strewn with examples of revolutionary inventions that never made it — nicotine-free cigarettes, for example.

Consequently, the most organisations can do is to introduce minor improvements into the marketplace in the hope that they will be sufficient to make the product or service more attractive than those of the competition. And, in most cases, this minor advantage will be short-lived. If it succeeds, competitors will copy or redefine it.



44

It should also be recognised that the identification of an unsatisfied need, even if that were possible, does not automatically result in a successful product or service. In the private sector, firms are competing for a finite amount of consumer spending power. Consequently, a customer’s decision to buy a new product or service often results in a decision to go without something else. In this case, the new product or service is known as a ‘displacement purchase’ — it needs to offer advantages that outweigh the loss of those offered by the item that has been displaced. For example, a Parker pen may be seen as being in competition with other brands of pen. However, a Parker pen is often bought as a present. Consequently, it is actually competing with any other product that might be seen as being attractive to the intended recipient: a lighter, a CD or a theatre ticket.


Who would you define as your organisation’s competitors? (Or if you work in the public or not-for-profit sector, other providers.)

How clearly are your products and services differentiated from those of your competitors/other providers?

Feedback Knowing what competitors are offering, as well as their strengths and weaknesses, is essential for organisations in the private sector. It is equally important to know what other providers in the public and not-for-profit sectors are offering.

Scanning the external environment

Knowing what’s happening outside the organisation is essential. Organisations need to identify:

opportunities (anything that can help an organisation towards its mission or long-term goal)

threats (anything that may prevent an organisation achieving its mission).

Some changes can dramatically affect the fortunes of an organisation. The more knowledge and advance warning an organisation has of these changes, the more likely it is to be able to evolve and adapt to them.



45

It is useful to do a PESTLE analysis: a systematic method for analysing the external environment. It examines the following factors in relation to how they may affect your organisation.

Political factors, such as a change in government and the ramifications of its policies.

Economic factors, such as the impact of the amount of disposable income and inflation.

Social factors, such as the ageing population, increase in one-parent families, changing values and beliefs.

Technological factors, such as the rapidly increasing numbers of the general public gaining access to the Internet at home

Legal factors, for example the impact of legislation such as the minimum wage and the Disability Discrimination Act.

Environmental factors, such as consumer preference for recyclable materials.

It’s relatively easy to find examples of how factors in the external environment might give rise to opportunities or threats. Here are some examples.

A downturn in disposable income due to a pension crisis may threaten the demand for luxury cruises.

A change in government policy may give rise to more environmentally friendly products.

Increasing access to the Internet may open up a channel for direct sales.


Identify three examples of external factors that would result in either an opportunity or a threat for your organisation.

1.

2.

3.

Feedback It’s important to understand the environment in which you are operating. This means that the organisation needs to carry out a systematic PESTLE analysis regularly, with the information continually flowing into databases that capture the information.



46

Collecting information — the internal environment The ‘internal environment’ includes anything that the organisation has control over. For example, it could be strengths or weaknesses related to its:

workforce

the products and services it offers

financial position

resources

management

culture.

Each of these aspects should be examined in detail. So, for example, an examination of management would include an assessment of experience, levels of skills and training, age and the effectiveness, or otherwise, of the organisation’s succession planning. It is important to recognise that conclusions drawn from an internal appraisal should be relative, not absolute. This means that all aspects of the internal operation should be assessed by comparison with two further factors:

1. relevance and suitability to the achievement of the organisation’s objectives

2. the performance of competing or other organisations offering similar products and services (i.e. benchmarking).

The benefits of making an internal appraisal relative should be obvious. While the question ‘Is our workforce motivated?’ may bring answers that require action, another question, ‘Does our workforce have the motivation to take on the challenges presented by next year’s objectives?’, is fundamental to the organisation’s likely success in achieving these objectives. Equally, the question, ‘Do our products offer good value for money?’ can be answered only by reference to the value for money offered by similar products from other organisations.



47


Consider either your organisation’s employees as a whole or your team members. Identify three strengths and three weaknesses.

Strengths Weaknesses

1.

2.

3.

Feedback Finding opportunities to build on strengths, and eliminate or reduce weaknesses, must happen at all levels in the organisation. In many organisations, plans to improve the effectiveness of staff is built into a human resources plan. However, each line manager has a responsibility to develop their own team members. Involving your team members in the identification of strengths and weaknesses and the implementation of remedial actions is a powerful motivator at team level.

(You may also like to look at the workbook for Unit O42 Developing personnel and personnel performance, which examines ways of improving the effectiveness of personnel.)

Analysing the information Once the information is collected it needs to be analysed to give direction to the products and services to be offered to customers.

One approach is to carry out an analysis of strengths and weaknesses, opportunities and threats — a SWOT analysis. this involves using a matrix to identify:

1. the strengths and weaknesses in the internal environment — these should be ranked in order of what is important to customers.

For example, your organisation may be able to give customers a very fast turnaround. If this has been identified as a priority for customers, then it’s an important strength. However, if accuracy is what customers say they want above all else, then your fast turnaround is not your most important strength and should be ranked accordingly.



48

2. the opportunities and threats in the external environment (i.e. using PESTLE factors and results of competitor analysis). Again, they should be ranked in order of definitely having most impact on the organisation.

A SWOT analysis is usually represented as a matrix:


1.

1.

2.

2. Internal environment

3.

3.

Opportunities Threats

1.

1.

2.

2. External environment

3.

3.

A SWOT analysis provides the information necessary to begin to develop a strategy. It identifies:

which strengths can be used to attract and keep customers

how strengths can be used to realise opportunities

how internal weaknesses that affect customers can be strengthened

actions that the organisation needs to take to avoid or lessen the effects of threats.



49


Without doing any detailed research, summarise the strengths, weaknesses, opportunities and threats of:

(a) your own organisation

(b) your team.

You may find it useful to carry out the exercise during a team meeting so you can involve all the members of your team.

When you carry out a SWOT analysis for your team or department, it’s often helpful to class factors outside your control and that of your team as being ‘external’, even though they are still within the organisation. Your organisation


1.

1.

2.


3.

3.


1.

1.

2.


3.

3.

Your team


1.


2.

2.



50

3.

3.


1.

1.

2.


3.

3.

Feedback Organisations have to work continually to gather current information to feed into the planning process. This involves bringing together knowledge from all the different areas of expertise within the organisation. If possible, talk to people in your organisation’s marketing department to find out their perceptions of the external and internal environments.



1. What are the key stages in the marketing planning process?

2. What factors are included in an analysis of the external environment?

3. What is market segmentation? Why is it important?

4. What is ecommerce?

5. Why are databases so effective in building a profile of customers?

6. What are the requirements of successful database management?

7. Why might the identification of unsatisfied customer need not always result in a successful product or service?

8. Why is it beneficial to involve team members in any SWOT analysis?



51





and describe:


how to communicate and gain support for plans



In the next section, we focus on using information to develop a marketing plan.


53

Section 3 Planning to meet stakeholder requirements — developing the marketing plan

Time required: about 2 hours.

Objectives





and describe:

how to set planning objectives

how to plan to meet the identified needs, wants and expectations of your stakeholders taking account of your organisation’s plan


how to identify how alterations to plans may affect the organisation


An overview of the process After analysis of the internal and external environments, work can begin to identify exactly what should be offered to customers. The process involves:

developing a strategy

setting objectives

identifying the exact shape of the offer to customers.

Finally, everything should be drawn together into a marketing plan against which progress can be monitored and evaluated.

Strategy development The marketing planning process involves using the results of the analysis stage to develop a customer-focused strategy. The strategy has to align with the rest of the organisation. It’s important that everything complements the organisation’s mission, values and overall corporate strategy. Everything has to be pulling in the same direction (Fig. 3.1).


Section 3 Planning to meet stakeholder requirements — developing the marketing plan Managing Marketing Activities

54

Marketing strategy and objectives ValuesCorporate strategy

Business plansOperational plans

Divisional plans Mission

Fig. 3.1 Strategy development (Reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

There are a number of marketing strategies an organisation can use. One of the most useful models to describe the main strategies for growth available to organisations is the Ansoff matrix.

Existing markets New markets

Existing services/ products

Market consolidation and penetration Market development

New services/ products Product development Unrelated

diversification

Fig. 3.2 The Ansoff matrix (Reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

There are four main strategies, based on what an organisation plans to do: whether it plans to use new products and services, or existing ones and target new, or existing markets. The main strategies are as follows.

1. Market consolidation and penetration. This is the least risky form of strategy, because the business is working with products, services and markets with which it is already familiar. It involves getting more of your existing customer types to use your products or services.

2. Market development. Alternatively, an organisation can take its existing products or services into new markets. These may be new geographical areas or new market segments.

3. Product development. Here, the organisation develops new products or services for existing markets.

4. Unrelated diversification. If it chooses this option, the organisation develops new products or services for new markets. There is more risk attached to this option than to any of the others, because the business is not using its familiarity with its old markets or its confidence in its existing products or services to help it.


Managing Marketing Activities Section 3 Planning to meet stakeholder requirements — developing the marketing plan

55


Which strategies have the following organisations used?

In 1951 the founder of IKEA made a decision to focus on low-priced furniture. The first showroom opened in Sweden in 1953. It now has 154 stores in 22 countries.

Virgin is a global brand name. Founded by Richard Branson in the 1970s, it started with a student magazine and small mail-order record company. It has businesses involved in air and rail travel, finance, soft drinks, mobile phones, holidays, publishing and bridal wear.

Feedback IKEA has focused mainly on market penetration. Staying in the furniture business it has developed into a global company by opening an ever-increasing number of stores in more and more countries.

Virgin is an example of unrelated diversification, with the brand name being the unifying factor in diverse products and markets.

Generally, Ansoff advised organisations to try to maintain a common thread through their activities, so that effort and resources in one area can support effort and resources in another. He also suggested that organisations should select a strategy that exploits their unique competitive advantage and avoids their weaknesses.

If an organisation decides to develop one side of its activities, it may have to settle for zero growth, or even retrenchment, in other directions. An organisation that wants to expand also has to decide whether it will do this by organic growth or by taking over other organisations.

It is important to generate a range of strategies for consideration. You may be able to draw on strategies that your organisation has used in the past, or strategies that other organisations have used in similar situations. The business press is a good source of information on what has worked for other organisations.

For larger organisations, often with separate divisions or operating units or companies, different parts of the organisation will need to develop their own marketing strategies. What’s



56

important is that all the marketing strategies complement the overall corporate strategy and contribute towards the mission.

Marketing objectives Marketing objectives are set to complement the strategies identified. They usually relate to:

market share

products or services to be offered

growth in usage of services.


Supposing a corporate objective was to increase profit by 3 per cent. How would the marketing objective related to growth of usage in services align with this corporate objective?

Feedback The marketing objectives would have to show an increase in sales that would enable an increase in profit of 3 per cent to be made. All objectives must allow the overall corporate objectives of an organisation to be achieved.

Objectives must meet the SMART criteria of being:

Specific — kept clear, simple and to the point; dealing only with one aspect.

Measurable — the only way you will know if an objective has been met is if it can be measured.

Achievable — an objective has to be achievable within all the relevant constraints.

Relevant — marketing objectives have to be compatible with the overall direction of the organisation.

Time-bound — there has to be a time constraint set that marks the time to evaluate whether or not the objective has been achieved.

Once objectives are set, the exact nature of the offering and how it will be delivered to customers needs to be identified.

Shaping the ‘Ps’ An organisation has to define exactly:

what is being offered to the customer (Product)

at what price (Price)

what distribution channels will be used (Place)

how the customer will get to know about it (Promotion)



57

what the customer sees when they make contact with the organisation (Physical evidence)

In order to make the offering to the customer the organisation has to consider the final two Ps:

have we got the right processes in place (Processes)

have we got the right staff to do the work (People)?

In the remainder of this section we focus on the first six of the 7Ps. Getting the right people in place and making sure they have the right skills is covered in other workbooks.

Product

What exactly is being offered to the customer? This is the product. It may be purely a physical product that is tangible (e.g. salt) or it may be a service that is intangible (e.g. teaching). Many products fall somewhere in between, on a continuum suggested by Shostack (1977).

Fast

-foo

d ou

tlet

s

Adve

rtis

ing

agen

cies

Airl

ines

Inve

stm

ent

man

agem

ent

Cons

ulti

ng

Teac

hingTangible dominant

Intangible dominantAuto

mob

iles

Cosm

etic

s

Fast

-foo

d ou

tlet

s

Salt

Soft

dri

nks

Det

erge

nts

Fig. 3.3 Tangibility spectrum (based on the G. Lyn Shostack, Breaking Free from Product Marketing, Journal of Marketing, 1977)


Which product on Shostack’s continuum has an equal element of physical product and service?

Feedback In Shostack’s continuum, a fast-food outlet is equally dependent on the quality of the food (physical product) and the quality of the service.



58

There are five levels of product to be considered and shaped, mainly as a result of customer requirements identified during the analysis stage.

Potential product

Augmented product

Expected product

Actual/basic product

Core product

Fig. 3.4 The five levels of the product (Reproduced with permission from Elsevier, Pergamon Flexible Learning, Creating a Customer Focus, 2004)

Level 1 — Core product

This level is the most fundamental and consists of the core benefit(s) that the product or service offers. So, in the case of a car, for example, the core benefit will be transport.

Level 2 — The actual or base product

This level of product comprises the features offered in a product. It could include, for example, the design of the product, its packaging, its quality levels, and so on.

Level 3 — The expected product

This level of product is a set of attributes that the buyers normally accept and agree to when they purchase the product. Clearly, when these attributes exceed customers’ expectations the result is satisfied customers; where they do not come up to the customers’ expectations the result is dissatisfied customers. So, for example, when a customer purchases a car he expects it to start, accelerate, steer, stop, etc. Less obvious, however, are the ‘psychological expectations’ of buyers, such as, for example, expectations with regard to the extent to which a product will confer status or credibility for the purchaser.

Level 4 — The augmented product

These are aspects or elements of a product that support the core and actual product features; for example, customer service, delivery and credit, and after-sales support. In many ways, this is where a product can meet and exceed the customers’ desires beyond their expectations (referred to in Level 3). Today’s competition mainly takes place at the augmented product level. Product augmentation requires the marketer to look at the buyers’ total consumption system. On the other hand, the marketer has to realise that the product augmentation strategy will inevitably cost money, and that the augmented benefits can soon become benefits expected by the customer.



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Scenario Dell computers

Dell supplies computer systems direct to customers. A key target market for Dell is small businesses, often operating from home. Dell has recognised that many of its target market customers are interested in a ‘full package of services’ involving much more than simply buying the hardware and software. Dell therefore offers customers an augmented product package of services including on-site delivery and installation, 24-hour helplines and trouble-shooting services; and packages of hardware and software designed specifically to meet the needs of individual customer requirements. Dell recognises that customers are purchasing ‘peace of mind’ and back-up expertise, as much as the computer itself. Level 5 — The potential product

The fifth level of the product is the potential product, which encompasses all the augmentations and transformations that the product might ultimately undergo in the future. This level is important because it raises the possibility of future product improvements in order to keep the product competitive. Some products have much more potential than others; such as products that embody developing technologies where constant improvements are being made (e.g. computers). However, all products have some further potential and the marketer must be creative in looking for and seeking to develop further potential for products and brands.


Consider a product or service offered by your organisation. Briefly describe it in terms of the five levels described above.

Feedback By dissecting what a product is offering to a customer, an organisation can ensure that all its attributes are considered and that the final package presented will meet customer expectations. You may find it useful to carry out this activity with your team to help them deepen their understanding of the products and services offered to your customers.



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Price

Porter (1985) highlighted three core competitive strategies.

1. Cost leadership. This is a strategy based on having the lowest cost. It requires an organisation to pursue ways of reducing costs, such as economies of scale and efficiencies in design and production.

2. Differentiation. This strategy is based on offering the market something distinct and different from competitors, e.g. highest quality, speediest delivery.

3. Focus. This is based on targeting specific segments of the market rather than adopting an industry-wide approach. This is an approach adopted by smaller organisations which do not have the capacity to become market leaders.

Porter saw each strategy as being set at the apex of a triangle. He argued that organisations should aim to position their products or services at the apex of the triangle, rather than being somewhere in between. In the saturated markets of today, it is rare to be able to identify a major customer need that is genuinely unsatisfied and could be satisfied profitably. Therefore in terms of differentiation, the best most organisations can do is to introduce minor improvements, in the hope that these will be sufficient to make the product or service more attractive than those of competitors.

Within the overall strategies there are a number of pricing formulae that an organisation may adopt. For example:

cost plus pricing — costs are identified and a profit margin is added

perceived value pricing — pricing related to the value a consumer perceives something has. This may bear no relation at all to its actual cost

market skimming pricing — high prices aimed at making high margins in the short term

market penetration pricing: low prices that aim to build market share

price/quality relationship pricing — based on customer perceptions of the quality benefits associated with the goods or service purchased; a higher price may actually encourage people to buy

competitive pricing — typically, a short-term strategy to gain market share or undermine a rival’s business.

All pricing decisions should be based on an understanding of the customers and their needs. Therefore, organisations must understand the consumer’s decision-making process and, in particular, some of the factors related to price that a customer might consider when deciding to make a purchase. Some of the more important of these factors are outlined below.



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Competitors’ prices. A consumer is likely to shop around for a product and will consider the competitors’ offerings and pricing structure.

Discounts offered. Discounts offered will often have an effect on the buying decision process — an extra 10 per cent off the price may induce trial.

Quality and image of the product. The consumer will consider the price in relation to the perceived quality and image of the product and packaging, and often the distribution outlet. For example, many consumers are happy to pay a higher price for food from Marks & Spencer as they believe that the quality of the product is guaranteed to be of a high standard.

Disposable income and lifestyle. Consumers will need to consider their disposable income and lifestyle when considering the price of a product and making purchases.

Personal objectives or utility. The consumer will have their own set of objectives for purchasing a product — it may be for a gift, a personal treat, a necessity, something to make them feel good, etc. These considerations will have some impact on the purchase decision related to the price. For example, a person may buy a more expensive bottle of red wine to take to a dinner party with friends and a cheaper one for a Friday night in front of the television.

Value for money. The perceived value of the product will often be a prime consideration, especially for essential items such as food products.

Personality and culture. Personality may have some bearing on the purchase decision related to price. A person may be thrifty, or generous, which will have some bearing on their perceptions of the pricing and purchasing of products. There may be cultural differences in the perception of prices and product; for example, in some countries, a very expensive gift of jewellery is given as a wedding dowry.

Perceived risk. A consumer may consider the purchase of a product in relation to perceived risk. So, for example, the consumer may well prefer a higher-priced security alarm for the car, considering this to be more effective than the lower-priced product.

Previous experience and loyalty. Experience of a product that a customer has purchased previously will inform their decision and loyalty towards that product.



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Which of the factors listed above do you feel influence the pricing decisions of your organisation?

Feedback We can see, therefore, that ‘getting inside the customer’s head’ with respect to their purchase decision-making process and the factors that affect it can be very useful in providing insights for effective pricing decisions.

Place

Put simply, the role of this element of the marketing mix is to ensure that products and services are available to target customers in the ‘right place’ and at the ‘right time’. However, there are other important aspects to the place element. For example, the organisation’s product and services also need to be available:

in the ‘right quantities’

in the ‘right condition’

with the ‘right degree’ of advice, installation and after-sales service (if applicable).

If place is badly planned, these requirements to be ‘right’ will not be fulfilled and, as a consequence, all the other (possibly perfectly planned) efforts of the organisation, such as an excellent product, a competitive price and an exciting advertising campaign, will be to no avail. Indeed, organisations have often gone out of business and new products failed because of problems with distribution and logistics.

Another way of illustrating the role and importance of place in marketing is to consider some of the things that can go wrong, and the implications for the marketer and the company. Here are just some examples.

‘Nobody could be persuaded to stock the product.’ Perhaps the marketing implications of this are obvious.

‘Most of the retailers who carry the product are out of stock.’ Customers will go elsewhere.



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‘At the moment our retailers are carrying too much stock, owing to our unwillingness to deliver in smaller quantities.’ Retailers will go elsewhere.

‘Ten per cent of our products are being damaged in transit.’ Customers and distributors (not to mention the organisation’s board of directors) will not be happy.

‘Our competitors now deliver direct to the customer’s home.’ We have lost 10 per cent market share.

‘The costs of our distribution are much too high, owing to ineffective warehousing and delivery.’ We have lost 10 per cent of our profits.

There are many other examples of the types of problem organisations can have with a badly planned place element. It is clear that ineffective management in this area has a major impact on levels of customer satisfaction and levels of company sales and profits. Effective management of marketing channels is now recognised as being a major factor in competitive marketing strategy and organisation success.

Marketing channels

A marketing channel includes all the individuals and organisations that together ensure the flow of products and services from producer to customers.

The use of the word channel is appropriate in that it indicates a flow. In fact, perhaps the easiest way to understand the notion of a marketing channel is to use a simple diagram (Fig. 3.5).

Manufacturer/marketer

Intermediary (retailer)

(Flows,e.g. goods/

services) Customer

(Flows,e.g. paymentsinformation)

Fig. 3.5 A simple channel of distribution

Not all channels look like the one shown above. Some are longer, with more intermediaries; some have different types of intermediary; some are shorter. The key decision areas in planning a channel of distribution are:

1. channel length, i.e. the number of intermediaries or ‘levels’ in the channel (in the figure above there is only one level; if there are no intermediaries it is known as a ‘zero-level channel’).

2. types of intermediary (if any) in the channel

3. channel/market coverage, i.e. the number of intermediaries at any one level.



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4. respective tasks, responsibilities and terms for various channel members.

Examples of markets where the various channel lengths tend to predominate include:

one-level channel — many fast moving consumer goods fall into this category, e.g. branded foodstuffs, clothing, DIY products, cars

two- (or more) level channels — many smaller companies tend to use these, as their size means that they have to deal through another body, e.g. wholesalers

Zero-level (direct marketing) — ecommerce, in the form of Internet sales, has caused a huge increase in the organisations using this form of channel.

The growth of direct marketing

In recent years there has been a trend towards shorter channels. In fact direct marketing, i.e. a zero-level channel, is increasingly being used. As the term implies in direct marketing, the marketer sells direct to the final customer.

To recap from Section 2, the advances in information technology have enabled organisations to develop and use sophisticated databases to identify their customers, their behaviour and characteristics and, as a result, to market to them directly without the need for intermediaries. There is no doubt that the database is central to successful direct marketing activities. Increasingly powerful and low-cost computer power has enabled companies to collect and store data on customers that can be used to, for example, determine appropriate segments and target markets, produce mailing lists, store information on customer responses to direct communications, and so on. Information may be stored regarding transactions with customers in the past, but can also be bought in from, say, list agencies for targeting direct mail and other forms of direct marketing contact. The databases can be used to track, analyse and develop relationships with customers. Many companies are now using their databases to develop these relationships as a key part of their overall marketing and promotional strategy.

Databases now include information on customers from very many sources, which can be layered and amalgamated to give a comprehensive profile of customers. Examples of sources of information for databases that facilitate direct marketing include: census data, postcode data, electoral role data, credit data, transactional data, vehicle ownership data and lifestyle databases.

There have been several major developments in the last few years with regard to the technology available for distribution, which have in turn facilitated further growth and potential for more direct channels of distribution. Of particular significance here of course is the Internet.

The growth of the Internet represents probably the most significant development in direct marketing. The customer can



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now shop on-line from home. Though initially restricted in many countries by the relatively low incidence of computer ownership and by concerns about security, the Internet and the direct marketing that goes with it have finally taken off and there is no doubt that they will continue to grow in importance.


Describe the distribution channels used by your organisation.

Feedback Generally speaking, the longer the channel — that is, the more levels the channel involves — the further the organisation is from the final customer, and therefore the less control it can exert. In addition, each level of the channel will normally wish to make a profit; hence either final prices to the customer are increased and/or profit margins at each level are decreased. This would seem to imply that the shorter the channel, the better.

Promotion

It is impossible to sell your products and services if nobody knows of their existence. Therefore, promotional activity is essential for any organisation. The promotional mix is defined by Lancaster and Withey (2003) as:

… that combination of individual promotional tools selected by an organisation in order to promote a particular product to a particular target audience.

The main promotional tools include:

advertising

personal selling

sales promotion

publicity and public relations

direct mail.



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Advertising

Advertising uses a mass-media channel to get a message across to potential customers (e.g. billboards, television, radio, magazines, newspapers). It can be used to promote:

products and services — Ford cars, McDonald’s restaurants

ideas and issues — Greenpeace, Oxfam

people — music stars, politicians.

It has several advantages as a promotional tool. For example:

it can potentially reach a large audience

it allows repetition of messages

it enables dramatisation of an organisation and its product

it can be used to build up a long-term image.

However, it can be very expensive and it is very difficult to evaluate its effectiveness.

Personal selling

This involves one-to-one contact with the customer (for example, telephone selling). It has a number of advantages. It gives two-way communication with potential customers. It also offers immediate feedback from the customer and means that the organisation can respond to individual needs immediately. However, the cost per customer contact is high and it depends very much on the competence of the people initiating the contact.

Sales promotion

This includes any intermittent and/or short-term incentive designed to encourage purchase or sale of a product or service. For example:

coupons

buy-back allowances

bargain packages

giveaways

discounts and cash allowances

multiple purchase promotions, e.g. three for two offers

loyalty cards

‘bogofs’ (buy one, get one free)

free samples.

Obviously, many factors affect the choice of the most effective promotional tools. For example, multiple purchase promotions, buy one product, get a different one free, and extra loyalty card points are known to be very effective in prompting purchases and particularly heavier purchases by customers. Free samples, however, are probably more likely to be effective where an organisation wishes to encourage brand switching or brand trial.



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In many markets, consumers have come to expect special promotional offers to accompany the brands they purchase and will not purchase or switch brands if these expected promotional offers are not made.

With so much competition in most markets, and with often huge spends on sales promotion activities by companies in order to support their brands and generate sales and market share, the planning and application of sales promotional campaigns is becoming increasingly sophisticated and innovative, as the example below illustrates.

Scenario Product relaunch

When Procter & Gamble (P&G) relaunched its Pantene hair care range in response to its competitor Unilever’s launch of its Dove hair care range in 2001, it included a fully coordinated range of sales promotion activities, involving products such as consumer samples, a new website for customer competitions, and a range of merchandising and trade deals and support. These activities were supported by a budget in the range of £10 million. Publicity and public relations

Publicity is any type of news story and information about an organisation and/or its products transmitted at no charge through a mass medium. Public relations are activities designed to create understanding and goodwill between an organisation and its potential customers.

There is a wide variety of different types of activity in publicity and PR. For example:

press releases

company open days

press conferences

third-party endorsements.

Direct mail

Direct mail uses personally addressed communication to potential customers through the postal system or the Internet. It is considered as one of the most effective methods of communication, especially when linked to an organisation’s database and loyalty scheme.

The impact of ecommerce on promotional activity

Perhaps, as you would expect, direct mail has been substantially affected by the advances in communication and information technology within the past ten years. Indeed, this has had a major impact for marketers planning the promotional mix for their products and services.



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Some of the key issues are as follows.

The growth of electronic communications, such as the Internet, email, fax, etc., has allowed information to become more rapid and global.

The explosion in wireless technologies has led to a massive increase in mobile communications and, as a result, the growth of mobile marketing and advertising.

The increasing power of the computer has allowed organisations to gather and analyse information about their customers more effectively. As we have seen, this is one of the major reasons for the increase in direct mail. It has also enabled companies to develop loyalty schemes to build individual relationships with customers.

Digital technology is growing rapidly, with interactive digital television allowing two-way communications. The growth of satellite, cable and digital television has allowed organisations to target very specific market segments with their television advertisements (such as pension plans for the over-50s advertised on the UK Gold TV channel). This also offers organisations the opportunity to evaluate advertisements more effectively.

The increased use of the internet, particularly websites, as a promotional tool for individuals and companies has resulted in more control and evaluation of communications. The internet is dynamic, often using powerful graphics, and is low-cost. Response rates can be measured through the number of ‘hits’. It also allows the customer to place an order immediately (zero-level channel) and two-way communication with the potential customer can be encouraged.


What promotional mix is used by your organisation?

Feedback The success of any promotional mix depends on how well an organisation knows its potential markets. The following scenario offers an example.



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Scenario Knowing your customers

It is sometimes suggested that older customers and particularly the so-called ‘grey’ market customers represented by the over-50s are more sceptical about the claims made for products and brands in advertising. Long experience, it is suggested, has inured them to the attractions of ‘exciting’ advertising. It is suggested, therefore, that more ‘practical’, down-to-earth promotional appeals and tools will work best with this target market, such as, for example, special price deals. Harley-Davidson, however, has shown that this target market is potentially just as strongly influenced through exciting advertising campaigns and its recent advertising has proved to be very effective in attracting the segment of the over-50s market that simply does not want to grow old.

Physical evidence

Physical evidence refers to the factors that can help shape a customer’s perception and image of an organisation. For example, you have probably noticed that many hotels these days provide writing paper, pens, entertainment, and so on, in their hotel bedrooms — thereby producing an image of caring and quality. Similarly, many of the fast-food outlets take great care over the design and layout of the outlets and how they are furnished.

Processes

A business process is any process (including all the activities and all associated inputs) that an organisation must carry out to deliver outputs to its customers. Whether yours is a profit-making or non-profit organisation, public or private sector, large or small, you will achieve your objectives through processes of one sort or another. For example, in a hospital, processes might include diagnosing medical problems, carrying out essential surgery, and treating disease; the output would be a healthy patient. A publisher’s processes might include commissioning, typesetting and printing a book (the eventual output).

Practitioners in business processes point out that there may be hundreds or even thousands of processes in an organisation. However, even in large multinational organisations there may be as few as 20 to 30 ‘macro’ processes. These are the major processes that operate the business and deliver outputs to customers. However, each step of a macro process may be a smaller process in its own right. The smaller process can be broken down into activities, and these activities into tasks, and so on. So processes may be ‘nested’ like Russian dolls, one inside another.

The processes that deliver actual goods and services directly to your external customers are the core processes. However, you may be unable to achieve these outputs without other processes within the organisation — for example, resourcing, to ensure you have the staff to carry out the activities; purchasing, to buy the



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materials, tools and equipment inputs; or accounting, to manage the money required to stay in business. This second type of process is a support process. Support processes usually deliver their outputs to an internal customer — someone else inside the organisation — who then uses these outputs in their own activity or process.

Why manage processes?

If processes exist to enable the organisation to achieve its objectives, and deliver outputs that customers want, then the better you do both these things, the greater your competitive advantage. The greater your competitive advantage, the more successful the organisation is likely to be. But there are a number of factors working against you here, and this is why processes require management. The goalposts are constantly moving. Hannagan (1995) highlights four factors exerting pressure on organisations today.

1. Turbulence. We live in turbulent times. The rate and scale of change in the marketplace, the economy, politics, society, legislation and the environment is relentless. What customers want and need is constantly changing. Even if your process was once world class, standing still while others around you adapt or anticipate means that you are losing competitive advantage.

2. Technology. Automation, miniaturisation, computerisation, electronic communication: advances in technology have radically reshaped the way we work. Some jobs are redundant; others are created. Things are moving so fast that some equipment is obsolete before it reaches the organisation.

3. Time. Time-spans for everything have shortened dramatically. It takes seconds to access information that used to require a lengthy search; electronic communication is practically instantaneous; product and service life cycles have shrunk to a fraction of what they were. Success depends not just on developing the right product or service, but on getting it to market quickly. It’s not just a question of dealing with change, it’s doing it now.

4. Interdependence. As the environment changes, as technology improves, and as timescales shorten, interdependence increases — across processes, functional specialisms, and even organisations. Just-in-time techniques, for example, mean that you are depending on your suppliers to get you what you need when you need it. Some tasks or roles are no longer viable in-house and must be outsourced — think of cleaning or catering in the health service, for example. So changes in any one element may have consequential ripples through the organisation and beyond.



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The marketing plan A marketing plan represents the outcome of strategy development, setting objectives and shaping the ‘Ps’. Although the structure and contents of plans vary according to the organisation and the particular situation, they are likely to consist of the following.

A management summary. This part of the plan summarises the main points of the plan, covering key objectives, major strategies and outline aspects of the ‘P’ mix.

Market situation. This part of the plan covers the analysis of the market for the product(s)/services; included here would be, for example, data on target market, market size, market trends and projections. This section will often include information on customer needs and buying behaviour, and information about competitors.

Strengths, weaknesses, opportunities and threats analysis (SWOT and PESTLE analysis).

Marketing objectives. This element of the plan details broad sets of objectives that the plan is intended to achieve. These objectives will stem not only from the analysis encompassed in the first sections of the plan but should also reflect corporate objectives. Objectives should be stated in SMART terms and should encompass financial, marketing and any other objectives (for example, pertaining to stakeholder and social responsibilities).

Marketing strategies. The marketing strategies element of the plan encompasses decisions regarding core target markets and decisions regarding product market expansion plans (the Ansoff matrix).

Action programme. The action programme part of the plan involves the preparation of detailed programmes for each of the marketing mix elements encompassing as a minimum the ‘Ps’ of the marketing mix. The action programme should contain plans for implementing these, including the allocation of tasks and responsibilities, and required marketing structures and systems.

Budgets/financial implications. This part of the plan should encompass a delineation of costs and required budgets for the various marketing activities as appropriate. It should also contain projected sales, which will enable preparation of projected profit and loss statements.

Controls and evaluation. This part of the plan contains information on expected standards of performance as the basis of control. It should also contain information on how results will be measured and the control mechanisms to be used.

Contingencies. The contingencies’ part of the plan details what actions will be taken should there be any problems. So, for example, if the marketing plan is based on a set of



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assumptions (for example, regarding levels of inflation/interest rates) and should these materially alter during the period of time that the plan is in operation, requiring changes in elements of the plan, then this contingency section is aimed at encompassing any potential changes in plans of action.

Appendices. The appendices part of the plan should contain most of the detailed background analyses carried out in the production of the marketing plan. The plan itself should be as brief and focused as possible. Appendices provide an opportunity to include the more detailed background analysis and information in a separate part of the plan for those who wish to examine it.


Make contact with your marketing department and ask to see a marketing plan for a particular product or service. Note similarities and differences to the outline headings given above.

Assess whether you think the action plan is based on a robust analysis of the external and internal environments.

Feedback Whether or not an organisation is putting customers at the heart of its thinking should be evident from a marketing plan. Knowledge of customers and potential markets should influence all decisions taken.



1. What are the three main stages of developing a marketing plan?

2. What are the four main strategies for growth highlighted in the Ansoff matrix?

3. What is the relationship between marketing objectives and an organisation’s corporate or business objectives?

4. What are the 7Ps of the marketing mix?



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5. What are the five levels of a product or service that need to be considered when defining the offering to the customer?

6. What are the three competitive strategies identified by Porter?

7. Identify four pricing strategies.

8. What factors might affect the pricing strategies used by an organisation?

9. What is a marketing channel? Why has there been an increase in zero-level marketing channels in recent years?

10. List five promotional tools.

11. What impact has ecommerce had on promotional activity?

12. Why must the effectiveness of processes constantly be monitored and improved?

13. What are the main sections of a marketing plan?





and describe:

how to set planning objectives

how to plan to meet the identified needs, wants and expectations of your stakeholders taking account of your organisation’s plan


how to identify how alterations to plans may affect the organisation




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Before you move on

Preparing for assessment You have now completed the workbook — Managing Marketing Activities — covering Unit O44. If you are studying for the Chartered Management Institute Diploma in Management and are preparing for assessment, you should now be confident of your knowledge and understanding of the required Learning Outcomes. The table below indicates which sections of the workbook addressed each of the Learning Outcomes.

O44 Learning Outcomes Addressed within section

Identify your organisation’s values and objectives and how they affect your planning. 3

Identify your organisation’s stakeholders and explain how their needs affect your role. 1, 2

Explain the different ways organisations can be structured and operated for optimum efficiency.

1

Apply the principles of marketing to research, analyse and determine your customers’ expectations and needs.

1, 2

Use a range of planning techniques to address the customer needs you have identified, demonstrate how your plans add value (for customers and the organisation) and guide others on how the objectives are to be achieved.

2, 3

Monitor plans which have been implemented and adjust them as necessary to ensure that the required results are achieved.

3

These learning outcomes will be assessed by your approved centre, usually through the use of an approved written assignment. Make sure that you know all the necessary information about assessment procedures by referring to the Student Guide for the Pathways series of workbooks, or through discussion with your centre.

If you wish, your Centre should be able to provide you with a Pathways practice case study based on this Unit, giving you further opportunities to apply the concepts and issues raised in the workbook to a case study scenario, and reflecting on the Learning Outcomes for your own work context.


Before you move on Managing Marketing Activities

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The Student Resource Centre section of the Institute website also contains suggestions for further reading and links to current management information. Visit www.managers.org.uk/students, email [email protected], or telephone 01536 207400.

The Bibliography at the end of this workbook lists the references to other texts used in this workbook, and can also be used as a source of further reading if required.

Reflecting on progress At this point it might be useful for you to stand back from your studies and reflect on your progress through this Unit. Ask yourself how you are doing in terms of:

1. improvements in management and leadership skills

Have I applied the workbook activities to my role in my workplace?

Have I identified the aspects of my role that I am not so good at, as well as those I am good at?

Have I identified further personal development needs that I will actually work on?

Have I been noting issues and questions to address in other units?

2. learning and study skills.

Have I achieved a balance between work, home and study activities?

Have I developed good time-management skills for my studies?

Have I used a range of necessary learning skills?

Have I used all the sources of help available to me?

Have I prepared for assessment as well as possible?

Don’t forget to prepare any action plans that arise from your answers to these questions.

Planning next steps In addition to preparing a personal action plan, you may like to consult your personal tutor or co-ordinator of your approved centre to help plan and address:

your next unit of study

any issues that arise from your job-role or workplace activities

any study skills support that you have identified

what you need to do to succeed with your personal action plan.


Managing Marketing Activities Before you move on

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The Management and Leadership Standards In addition to covering the core and optional units for the Diploma in Management from the Chartered Management Institute, this workbook also relates to the National Occupational Standards for Management and Leadership. These describe in detail the activities, behaviours and knowledge that define effectiveness in the management field. You can find full details about the Standards at www.management-standards.org.uk.

The National Occupational Standards for Management and Leadership do not correspond exactly with the Institute’s Diploma syllabus, as they provide competency statements that are not defined by level, but are focused towards the needs of organisations. Each workbook therefore draws on components from one area or more of the National Standards.

How this workbook relates to the Standards The material in this workbook relates to some extent to the National Occupational Standards units listed in the table below.

Management and Leadership National Occupational Standards

Unit Unit title

C2 Encourage innovation in your area of responsibility

F9 Build your organisation’s understanding of its market and customers

F11 Manage the achievement of customer satisfaction


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Bibliography

Ansoff, I. (1996) Corporate Strategy, McGraw-Hill

Chartered Management Institute (1999) ‘Handling complaints’ (Management Checklist 066). Checklists can be purchased from Lavis Marketing, Tel 01865 767575. (A discount is available for Institute members.)

Christopher M., Payne A., Ballantyne D. (1996) Relationship Marketing, Butterworth-Heinemann

Hannagan, T. (2002) Management Concepts and Practices, FT Prentice Hall

Hudson, M. (1995) Managing without Profit, Penguin

Lancaster, G. and Withey, F. (2003) Marketing Fundamentals, Butterworth—Heinemann

Martin, D.M. (1994) Dealing with Demanding Customers, Pitman Publishing

Parasuramann, A., Zeithaml, V. and Berry, L. (1985), A conceptual model of service quality and its implications for future research’, Journal of Marketing, Fall, 41—50

Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performances, Collier Macmillan

Shostack, L. ‘Breaking Free from Product Marketing’, Journal of Marketing, 41, April, pp 73—80

Wilson, D.C. and Rosenfield, R.H. (1990), Managing Organisations, Text, Readings and Cases, McGraw-Hill

Zeithaml, V. and Bitner, M. (2000) Services Marketing, McGraw-Hill


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Appendix 1: The Data Protection Act

If you store data that contains personal details of individuals, or information that is of a sensitive nature, you must make sure that it complies with the Data Protection Act 1998.

The Act lays down rules about the handling of personal information. This can include details such as names, addresses, customer history, and so on. Although called the Data Protection Act, it actually protects individuals, rather than data.

The Data Protection Act 1998 is based around the following eight principles:

1. Personal data shall be processed fairly and lawfully. Personal data processing may take place only if specific conditions have been met. These include the ‘data subject’ giving consent or the processing being necessary for the legitimate interests of the data controller.

Additional conditions apply for personal sensitive data such as ethnicity, religion and trades union membership.

2. Personal data shall be obtained only for one or more specified and lawful purposes.

3. Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed.

4. Personal data shall be accurate and, where necessary, kept up to date.

5. Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.

6. Personal data shall be processed in accordance with the rights of data subjects under this Act.

7. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.

8. Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

The Act applies to all personal information held in ‘any relevant filing system’ so this includes paper as well as databases, spreadsheets and word-processing folders.

ebook marketing.pdf

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Transcript of ebook marketing.pdf