Tuesday 24 April 2012

Revision Diary 6 - Evaluating the use of the Marketing Mix

Starter - Developing Exam Skill - Evaluation - It depends on how you use "it depends"
“It depends on”. Three little words that allow students to reach higher levels of evaluation. However, the extent to which the use of these 3 words allows a student to achieve higher levels of evaluation really depends on how they use it.

Students who simply say, well, it would depend on shareholders expectations would (in my opinion) not receive much (if any) credit for this. Why? Well, they have failed to explain why it depends on shareholders expectations.

A far better response would be:
‘It depends on shareholders expecations. For example, shareholders who are interested in a quick return may be disappointed about the fact that the dividend yield is still below the industry average. However, shareholders who take a more long term view’..
Here, we can see that they use of ‘it depends on’ is followed by an explanation of why. It is this why which attracts the marks, not simply the use of those 3 little words.
When using it depends on, think about why it depends on this…..

Understanding how the marketing mix can
contribute to the growth of a business like Apple who sold 35m iphones last month?

as you know from paper one the marketing mix is made up of four components.  This combination might need to changes as a business grows.  Each element of 'the mix' is important in its own right like paint on a palette but more so when combined with the others. They include the PRODUCT which can either be a _ _ _ _ _ OR _ _ _ _ _ _ _ THE place, where the good or service is available or methods in which a business can get to the customers, the PRICE which must be competitive (within a customers range for such a product) and PROMOTION, an appropriate opportunity to tell people about the PRODUCT

Balance it is this that is more important than any of the individual elements.  Without PRODUCTS to sell there is no point in setting a PRICE.  A COMPETITIVE PRICE is one that the customers will consider is worth buying is necessary to attract customers. PROMOTION is necessary to tell customers of the EXISTENCE of products and to persuade them to buy. PLACE includes both where the products are SOLD (everywhere from online to market stalls and vending machines) and how the products are distributed to consumers.  Distribution and LOCATION are important to create somewhere where buyers and sellers can come together to  complete the sale i.e. a place where customers can come to buy or the business must be prepared to distribute to an appropriate place.

The marketing mix is not fixed.  It is fluid and needs to change as circumstances change.  By adapting the MIX they can improve their PERFORMANCE. This may be in response to competitors actions or a response to changes in the market.

The importance of market research. Changes in a market can only be identified by market research. No business should attempt to grow without evidence to back up the growth plan.  It should suggest that customers will continue to buy a product and more will be attracted in the future.  They will need to consider how markets are divided and the different segments each market 

What do we mean by growth?
The size of the business can be measured in several ways:
  • number of employees
  • value of assets
  • stock market valuation
  • size of sales revenue 
  • share of the market    
For a business to grow they need to change their MIX and gain the benefits from these changes, a new product line, a price reduction, a successful promotion,  a new distribution strategy e.g. opening up internet sales.  Businesses can also grow by moving into new markets  linked to the ones they currently operate or sometimes into completely new directions

Internal growth - is often as a result of a change to the marketing mix e.g. an increase in sales from the introduction of new technology in its production process

External growth is when a business grows from joining up with other businesses or when two businesses merge or when one takes over another

Staying small - a business may focus on its survival in the first years of trading and may be happy to provide a local service or supply specialists products to a small market.  In some cases there may be little opportunity for it to expand.  Local services like window cleaning or gardening are likely to stay 'local' rather than seek to establish national chains.

Quick Quiz 6 - Marketing mix for growth

  1. What is the marketing mix?
  2. is each element independent or combined with the others?
  3. Which element is the most important?
  4. Why should the marketing mix be balanced?
  5.  Why is market research so important to a growth plan?
  6. How can we measure the size of a company?
  7. What does the term 'organic or internal growth' mean?
  8. What does the term 'external growth' mean?
  9. What type of business may wish to stay small?

9 mark question

Wow Films
The Wow film company has just finished filming its new action movie packed with big name stars.  The business wants to promote the film to make sure it is a huge success.  The managers of Wow realise the importance of the promotional mix as part of the overall marketing mix.
  •         What is meant by the ‘marketing mix’                                                              (2 marks)
  •       Outline TWO possible elements of the ‘promotional mix’                              (5 marks)
  •         Discuss the best ways of promoting Wow’s new film.                                   (9 marks)
  •        How much do you think the success of the new film will depend on the promotional activities of the Wow film company? Explain your answer.                         (9 marks)
  • How will Apple's iphone sales continue to grow if they continue to effectively use the marketing mix  (9 marks)
     Exam Technique Top Tip in answering and getting all the marks in the nine mark question click here


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