recommend and justify an appropriate marketing mix for a given situation
3.3.6 Marketing Strategy – Recommend and Justify an Appropriate Marketing Mix
Learning Objective
Students must be able to recommend a suitable marketing mix (the 4 Ps) for a given situation and justify each choice by linking it to the target market’s needs and the business’s objectives.
1 Understanding Business Activity
1.1 Business Purpose & Classification
- Purpose: Produce goods or services that satisfy wants and needs.
- Sectors: Primary (extraction), Secondary (manufacturing), Tertiary (services).
1.2 Business Objectives (six common aims)
- Survive
- Make a profit
- Grow
- Increase market share
- Improve quality
- Achieve a good reputation
1.3 Forms of Business Organisation
| Form | Ownership | Liability | Decision‑making | Typical Size |
|---|---|---|---|---|
| Sole trader | One person | Unlimited (personal assets) | Owner only | Micro |
| Partnership | 2‑20 partners | Unlimited (unless limited partnership) | Partners jointly | Micro‑small |
| Private limited company (Ltd) | Shareholders | Limited to share capital | Board of directors | Small‑large |
| Public limited company (PLC) | Shareholders (public) | Limited to share capital | Board + shareholders | Large |
| Franchise | Franchisor & franchisee | Limited (franchisee) | Franchisee runs day‑to‑day | Varies |
| Joint venture | Two or more businesses | Limited to contribution | Shared governance | Medium‑large |
1.4 Measuring Business Size
- Number of employees
- Turnover / revenue
- Capital invested
- Market share (relative size)
- Limitations – may not reflect profitability or efficiency.
1.5 Private vs. Public Sector Objectives
- Private sector: profit maximisation, market share, growth, efficiency.
- Public sector: service provision, equity, social welfare, accountability to taxpayers.
1.6 Stakeholders
- Owners / shareholders
- Employees
- Customers
- Suppliers
- Government
- Community / NGOs
- Lenders / investors
2 People in Business
2.1 Motivation Theories
- Maslow’s hierarchy of needs: physiological → safety → love/belonging → esteem → self‑actualisation.
- Herzberg’s two‑factor theory: hygiene factors (salary, conditions) prevent dissatisfaction; motivators (achievement, recognition) create satisfaction.
2.2 Leadership & Management
- Leadership styles: autocratic, democratic, laissez‑faire.
- Management functions (POLC): Planning, Organising, Leading, Controlling.
2.3 Recruitment, Training & Redundancy
- Recruitment process – plan → attract → select → appoint.
- Training methods – on‑the‑job, apprenticeships, e‑learning, classroom.
- Redundancy: lawful when role no longer required; requires consultation, fair selection, statutory notice.
2.4 Communication
- Formal – letters, reports, memos.
- Informal – emails, meetings, intranet, social media.
- Barriers – language, cultural, technological, hierarchical.
2.5 Trade Unions & Legal Controls
- Trade unions negotiate pay, conditions, dispute resolution.
- Key employment legislation (UK): Employment Rights Act, Equality Act, Health & Safety at Work Act, Working Time Regulations.
3 Marketing
3.1 Role of Marketing
- Identify customer wants and needs.
- Create value that satisfies those needs.
- Build lasting relationships.
- Generate sales and profit for the business.
3.2 Market Changes
- Technological advances (e‑commerce, AI, mobile apps).
- Changing lifestyles (health‑conscious, sustainability).
- Global competition and market integration.
- Environmental and ethical concerns.
3.3 Niche vs. Mass Marketing
| Aspect | Niche Marketing | Mass Marketing |
|---|---|---|
| Target market | Small, well‑defined segment | Large, broad market |
| Product range | Specialised, often customised | Standardised, wide appeal |
| Pricing | Premium or value‑based on uniqueness | Competitive, low‑margin |
| Promotion | Focused channels (specialist magazines, niche influencers) | Wide‑reach media (TV, radio, national press) |
3.4 Segmentation – Choosing Criteria
For a full answer, select at least two of the following:
- Demographic: age, gender, income, education, occupation.
- Geographic: region, urban/rural, climate.
- Psychographic: lifestyle, values, personality.
- Behavioural: usage rate, loyalty, benefits sought, occasion.
3.5 Market Research
- Primary research: surveys, interviews, focus groups, observation.
- Secondary research: published statistics, trade magazines, company reports, internet sources.
- Key steps: define objective → choose method → collect data → analyse → present findings.
3.6 The 4 Ps (Marketing Mix)
- Product – features, quality, branding, packaging, services, warranty.
- Price – list price, discounts, credit terms, price‑setting strategies (penetration, skimming, psychological).
- Place – distribution channels, coverage, location, inventory, logistics.
- Promotion – advertising, sales promotion, public relations, direct marketing, personal selling, digital/social media.
3.7 Marketing Strategy – Step‑by‑Step Process
- Situation analysis: SWOT (strengths, weaknesses, opportunities, threats).
- Identify target market: segment, select, profile (needs, wants, buying behaviour).
- Generate options for each of the 4 Ps: use market research and competitor analysis.
- Select the most appropriate option for each P.
- Justify each choice: link to target‑market characteristics, business objectives, and research evidence.
- Implementation plan: timetable, resources, responsibilities.
- Monitoring & review: set KPIs, collect data, evaluate performance, adjust as necessary.
3.8 Example Situation – ActiveEdge Eco‑Friendly Running Shoes
A new sports‑wear brand, ActiveEdge, wants to launch a line of eco‑friendly running shoes aimed at 18‑25‑year‑old university students in the UK.
| Marketing Mix Element | Recommendation | Justification (linked to target market & objectives) |
|---|---|---|
| Product | Lightweight, biodegradable running shoes with modern design; optional custom colour panels. | Eco‑friendly materials align with students’ environmental values; customisation satisfies desire for personal style and social‑media “share‑ability”. Supports objective to build brand awareness and differentiate from generic sports brands. |
| Price | £85‑£95 per pair (mid‑range pricing). | Affordable for limited student budgets yet signals quality; positioned between low‑cost generic shoes and premium sports brands to maximise market‑share objective. |
| Place | Online store with free UK university delivery; pop‑up stalls at campus sports events and student fairs. | Students shop online frequently; pop‑ups provide tactile experience, boost brand awareness and allow immediate feedback. Supports objective of rapid market penetration. |
| Promotion |
|
Digital platforms are primary media for 18‑25‑year‑olds; ambassadors create peer‑to‑peer credibility; discount reduces purchase risk and encourages trial, aiding the objective of building a loyal customer base. |
3.9 How to Justify the Mix – Exam Marking Points (AO3/AO4)
- Link each P to at least two characteristics of the target market (e.g., age, lifestyle, values, purchasing power).
- Show how the mix supports the business’s stated objectives (e.g., brand awareness, market penetration, profit‑maximisation).
- Reference specific research evidence – survey percentages, competitor price ranges, focus‑group feedback.
- Consider feasibility – budget, resources, distribution capability, legal constraints.
- Identify any risks (e.g., reliance on online sales, seasonal demand) and suggest mitigation.
3.10 Legal Controls on Marketing (UK)
- Misleading advertising: must be accurate, not exaggerate, comply with CAP Code.
- Product safety: Consumer Protection Act – products must be safe for intended use.
- Data protection: GDPR – lawful collection, storage, and use of personal data.
- Pricing regulations: price‑labelling, consumer rights to clear information.
3.11 Foreign Market Entry (if required)
| Entry Mode | Control | Risk | Typical Use |
|---|---|---|---|
| Exporting | Low | Medium (exchange‑rate, transport) | Testing overseas demand. |
| Licensing | Medium | Medium (quality control) | Fast entry, low investment. |
| Joint venture | High | High (partner conflict) | Sharing resources & local knowledge. |
| Direct investment (subsidiary) | Very high | Very high (capital) | Full control, long‑term commitment. |
4 Operations Management
4.1 Production Methods
| Method | Characteristics | Typical Use |
|---|---|---|
| Job | One‑off, high variety, skilled labour | Custom furniture, bespoke clothing |
| Batch | Medium volume, set‑up between batches | Bakery, printed T‑shirts |
| Flow (mass) | High volume, low variety, automated | Soft drinks, smartphones |
4.2 Costs & Break‑Even Analysis
- Fixed costs: do not vary with output (rent, salaries, depreciation).
- Variable costs: vary directly with output (materials, hourly wages, electricity per unit).
- Break‑even point (units):
Fixed Costs ÷ (Selling price per unit – Variable cost per unit) - Margin of safety (%):
(Actual sales – Break‑even sales) ÷ Actual sales × 100 %
4.3 Quality Management
- Quality Control (QC): checking finished products against standards.
- Quality Assurance (QA): processes designed to prevent defects.
- Techniques – ISO 9001, Six Sigma, Total Quality Management, customer feedback loops.
4.4 Location Decisions
- Transport costs & logistics
- Proximity to market or raw materials
- Labour availability & cost
- Government incentives, taxes, infrastructure
- Example: A retailer locates a distribution centre near major motorways to minimise delivery times and fuel costs.
5 Financial Information and Decisions
5.1 Sources of Finance
| Source | Term | Typical Use |
|---|---|---|
| Bank overdraft | Short‑term | Cash‑flow gaps |
| Trade credit | Short‑term | Purchasing stock |
| Bank loan | Long‑term | Plant & equipment |
| Share issue | Long‑term | Business expansion |
| Leasing | Long‑term | Machinery without large upfront cost |
5.2 Cash‑Flow Forecast (Simple Template)
Month: Jan Feb Mar … Opening balance £X Cash in: Sales £A Loans/Invest. £B Cash out: Purchases £C Wages £D Rent/Utilities £E Closing balance = Opening + In – Out
5.3 Income Statement (Profit & Loss)
Revenue – Cost of goods sold = Gross profit – Operating expenses (wages, rent, marketing) = Operating profit ± Other income/expenses – Interest = Profit before tax – Tax = Net profit
5.4 Balance Sheet (Snapshot)
Assets Liabilities & Equity
Current assets £X Current liabilities £Y
Non‑current assets £Z Non‑current liabilities £W
Owner’s equity £V
Total assets = Total liabilities + equity
5.5 Key Ratios (Interpretation)
- Gross profit margin: (Gross profit ÷ Revenue) × 100 % – efficiency of production.
- Current ratio: Current assets ÷ Current liabilities – short‑term liquidity.
- Return on capital employed (ROCE): Profit before interest & tax ÷ Capital employed – how well capital is used.
6 External Influences
6.1 Economic Cycle
- Expansion: rising demand, businesses increase output and hire.
- Peak: demand stabilises, inflation risk.
- Recession: falling demand, cost‑cutting, possible price reductions.
- Recovery: gradual rise in consumer confidence and spending.
6.2 Government Policy
- Taxation – e.g., VAT increase may lead to higher selling prices or cost reductions.
- Regulation – health & safety, minimum wage, environmental standards.
- Subsidies & grants – encourage investment in green technology or research.
6.3 Environmental & Ethical Issues
- Sustainability – recycled materials, carbon‑footprint reduction.
- Ethical sourcing – avoiding child labour, fair‑trade certification.
- Corporate Social Responsibility (CSR) – community projects, charitable donations.
6.4 Globalisation & Multinational Corporations (MNCs)
- Opportunities – larger markets, economies of scale, access to new technology.
- Challenges – cultural differences, exchange‑rate fluctuations, strong competition from MNCs.
6.5 Exchange Rates
- Appreciating domestic currency: imports cheaper, exports more expensive.
- Depreciating domestic currency: exports become more competitive, import costs rise.
Exam Technique & Assessment Objectives
Linking Content to AO1‑AO4
- AO1 – Knowledge: Define the 4 Ps, explain SWOT, list business objectives, name forms of organisation.
- AO2 – Application: Apply concepts to the given situation (e.g., identify the target market for ActiveEdge).
- AO3 – Analysis: Analyse why a particular price point, distribution channel or promotional method is suitable.
- AO4 – Evaluation: Evaluate risks, limitations and alternatives (e.g., reliance on online sales, potential price wars) and suggest improvements.
Marking Checklist for a Marketing‑Mix Question
- State the target market clearly (segment, size, needs).
- Present a complete 4 P table – each element has a specific recommendation.
- Justify each P with at least two links to target‑market characteristics and one link to a business objective.
- Include evidence from market research (e.g., % of students who prefer sustainable products).
- Discuss feasibility (budget, resources, legal constraints).
- Conclude with a brief evaluation of the overall mix (strengths, weaknesses, possible improvements).
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