L2U1 Study Guide for ISMM - Fife College

Study Guide

QCF

Level 1

U103

Understanding

Marketing

Acknowledgements

The Institute of Sales and Marketing Management would like to thank Polly Robinson for writing the following study guide.

References to third party material made in this study guide are made in good faith. ISMM does not endorse, approve or accept responsibility for the content of materials, which may be subject to change, or any opinions expressed therein. (Material may include textbooks, journals, magazines and other publications and websites.) Authorised by Denise Edens Publication code: ISMMSTUDYU103 All the material in this publication is copyright © ISMM 2011

Contents

What will I find in the study guide? ........................................................................... 1

The unit ....................................................................................................................... 2

LO1 Understand the concepts of marketing and sales ........................................... 3

AC1.1 Define marketing ............................................................................................... 3

AC1.2 Define sales....................................................................................................... 3

AC1.3 Describe the differences between sales and marketing ..................................... 4

LO2 Know the elements of the marketing mix ......................................................... 7

AC 2.1 State the features and benefits of products and services .................................. 7

AC2.2 Describe approaches to pricing products and services ...................................... 8

AC2.3 Identify channels or routes to market from production to consumption............. 11

AC2.4 Describe the elements of the promotion mix .................................................... 12

AC2.5 List examples of physical evidence .................................................................. 14

AC2.6 Describe how people add value to the customer experience ........................... 15

AC2.7 State how organisation processes create the overall customer experience ..... 15

Check list .................................................................................................................. 16

Action plan................................................................................................................ 17

Glossary .................................................................................................................... 18

Recommended reading ............................................................................................ 19

List of references ..................................................................................................... 20

ISMMSTUDYU103- Version 1 - February 2011 1

The ISMM study guide has been written to help you understand the area of

sales and marketing that you are studying.

In the guide you will find the unit, this gives you the learning outcomes,

assessment criteria and unit aim.

Learning outcome (LO)

This is a statement of what you should ‘know, understand or be

able to do’ on completion of the unit you have studied

Assessment criteria (AC)

This is a description of the requirements you are expected to meet

to show that the learning outcome has been achieved

Unit aim

This is a short summary about the purpose of the unit

You will also find activities and key facts. These will come under the individual assessment criteria and will help you to put what you have learned into practice. There is a glossary at the back of the guide for words you might not be familiar with, a checklist to help you make sure that your learning and development meets the criteria, and an action plan for you to complete and revise as you continue with your course.

This icon is used where you have an activity to complete

This icon is used when we have given you important

information to think about.

What will I find in the study guide?

This icon is used when we have explained key terms.


Title: Understanding marketing

Level: 1

Credit value: 2

Learning outcomes

The learner will:

Assessment criteria

The learner can:

1. Understand the concepts of marketing and sales

1.1 Define marketing

1.2 Define sales

1.3 Describe the differences between sales and marketing

2. Know the elements of the marketing mix

2.1 State the features and benefits of products and services

2.2 Describe approaches to pricing products and services

2.3 Identify channels or routes to market from production to consumption

2.4 Describe the elements of the promotion mix

2.5 List examples of physical evidence

2.6 Describe how people add value to the customer experience

2.7 State how organisation processes create the overall customer experience

Unit aim(s) The aim of this unit is to develop knowledge and understanding of the elements of the marketing mix and the concepts of marketing and sales.

The unit


Overview

Marketing is about doing things to discover, create, and satisfy customer

needs. Customers are treated as groups of people who all have

something in common.

Selling is about personal communication and building a relationship with the customer. It is often about working with an ‘individual’ customer.

Marketing is about communicating with customers and making sure that their needs are met. Marketing carries out research to find the type of products that customers want. They also do research to find out which groups of customers want which products. With this information they are then able to advertise in the right places to ensure that the customers who might be interested in their products can find out about them.

Sales people also use this information to find out who are the best customers to contact that would be interested in their products.

Marketing is:

The right product, in the right place, at the right price and at the right time (Adcock, Halborg and Ross, 2001, p.1)

Marketers inform customers about products and services through, for example, leaflets, brochures, websites, emails, letters and other mailings. Other promotions include signs on buses, vans, lorries and cars, posters, banners from aeroplanes, signs on hot air balloons, and advertisements on TV and radio.

Marketing also involves making sure the product, place and price is right for the target audience; this is often achieved through marketing research.

Selling is communicating with individual customers or companies to find out their needs and wants and identify the right product to meet their requirements.

LO1 Understand the concepts of marketing and sales

AC1.1 Define marketing

AC1.2 Define sales

Marketing

The right product, in the

right place, at the right price and at

the right time

http://www.businessdictionary.com/definition/create.html


The sales person in any company is the single most important link with the customer.

Some companies spend a lot of money training their sales people. If the sales person is not good at his job then all the efforts of the marketing team may be wasted. There are many different types of

selling activity such as working in a shop and calling on other organisations face to face or on the phone.

They all involve communicating with customers to find out their needs and wants and explaining the benefits of your product or service that will meet those needs and wants.

List five ways in which marketers communicate with customers

Many people think that sales and marketing are the same – they are not.

Marketing staff are office based and in big organisations are usually based in the head office.

Sales people, unless they are in tele sales where they sell by telephoning customers, are usually field based, this means they are out meeting with customers usually at their premises.

Marketing concentrates on large groups of customers in a market and selling is about communicating with individuals.

AC1.3 Describe the differences between sales and marketing

Sales

Building relationships to

do profitable business


Marketing identifies groups through market research that are likely to need the company’s products. The sales people visit individuals within these groups and try to match their individual needs with the company’s products.

Marketing includes many activities.

Marketing includes:

Finding out what product, service customers need or want

Producing a product or service with the right features and benefits

Making sure the product or service is the right price

Spreading the word about your product or service to customers

Marketing activities happens before a sale is made eg producing marketing materials or eye-catching packaging.

Advertising is a good example of promoting products to groups, for example adverts for toys are on TV whilst children’s programmes are on.

Selling is supported by marketing as it attracts customers to the company’s products. Selling is about getting customers to pay for these products.

The sales person must have good product knowledge so that they can help the customer buy the product or service that is the best one for them.

They must also have excellent communication and customer service skills. They must know the right type of questions to ask the customer so that they can find out the information needed to ensure the customer gets the product or service that best meets their needs and wants.

For example for mobile phone companies, marketing develops phones to meet the needs and wants of customers. They will set the price and use different media to promote the products.

When a customer goes to a shop to buy a phone the sales person will ask questions to find out what her needs and wants are and offer her the package that will best suit her needs. The sales person will be able to explain the features of the different phones and the benefits of these and will be able to help the customer to make the right decision.

Example questions the sales person may ask to find out the needs and wants of the individual customer are:

Tell me about how you use your mobile phone?

Will you use your phone more for texts or making calls?

Will you need access to emails?

Is a good quality camera important to you?

Have you a preference for size and colour?

What’s your budget?

The sales person is then able to recommend the phone that meets the individual customer’s requirements.

Referral

Introduction from

an existing

customer to a new

customer


The customer is satisfied as the product meets their needs and the sale is made.

If the customer is asking for a particular feature not currently available the sales person can pass this information to marketing. Marketing can then do some research and if they find there is a need or want for this feature they can get it added to the company’s product.

While marketing and sales have different roles they need to work closely together to deliver the right product to the customer.

List the differences between sales and marketing

Sales is: Marketing is:


Overview

The diagram below shows the seven parts of the marketing mix.

As you can see, each part begins with a ‘P’, so the marketing mix is often known as ‘The Seven P’s’

We will explore each of the seven ‘P’s’ in the following assessment criteria (ACs).

We will look at each of the seven parts below.

Products

Customers don’t buy products and / or services just for their features; they buy them because of what they can do for them and to enjoy the benefits that ownership brings.

A feature tells you what it is and a benefit will tell you why it is important to you. For example in a car power steering is a feature. The benefit to the customer is it will be easy to turn and to park.

LO2 Know the elements of the marketing mix

AC 2.1 State the features and benefits of products and services

Target Market

Product

Price

Place

PromotionPeople

Process

Physical Environment

Elements

The parts or components that

make up the marketing mix


Another feature would be central locking. The benefit of this is security and peace of mind: you know if you lock your door all the other doors will also be locked.

The sales person must ensure that the customer needs or wants the benefit. For example a sales person selling patios for gardens. A benefit would be the owner would be able to have barbeques in the summer and have a party and invite all their friends around. An elderly couple may have no use for this benefit and a good sales person would only talk to them about the benefits that are really a benefit to them. The benefits to them may be ease of maintenance, a nice place to sit out in the summer with an umbrella for shade and less grass to mow.

A benefit is only a benefit if the customer wants or needs it. Many sales are lost because the sales person does not bother to find out what the customer requires and tells them about every feature of the product and the benefits they bring even though the customer has no interest in them.

List two products and two services and outline the features and benefits of each one.

Product/Service Features Benefits

Price

Making money is vital for an organisation’s survival and success, so setting the right price for a product or service is very important. If the price is set too high people may not buy the product and if it set too low the company may not make enough money to pay all its costs and make a profit.

In an organisation many people can be involved in setting the price of a product or service:

Marketers

Accountants

Salespeople

AC2.2 Describe approaches to pricing products and services


Pricing policies include:

Costs -plus pricing

A percentage mark is added to the total costs involved in getting the products to the customer. This ensures that the product is priced to make a profit.

Consumer – led pricing

Consumers develop a knowledge of a fair price for goods and if a company’s prices are too far above this they won’t buy. So a price is set which the company expects to be able to sell at.

Competitive pricing

Products are priced to be the same as or very near the competition i.e. other companies offering similar products. The company has then to focus on quality and service and not on the price to sell its products.

Skimming Setting a high price for new products or product upgrades, such as hi-tech equipment. This allows for development costs to be recovered. After a time the price is dropped so it attracts more customers.

Think of Amazon’s Kindle, when it was first introduced it cost hundreds of pounds; and now it is priced at £111.00.

Premium Pricing

Where there is something unique about the product or service eg designer clothes or designer watches, the customer is willing to pay a high price.

Economy Pricing

This is a no frills low price. The cost of marketing and manufacturing are kept at a minimum. They will have basic packaging. Supermarkets often have economy brands for soups, cereals, etc.

Some airlines operate a no frills pricing policy. They keep operating costs to a minimum for example Ryanair.

Consumer

The end-user of the product /

service


In pairs, one person interviews the other about the following questions and notes the answers.

Present the answers to the rest of the group for discussion.

1 Premium pricing

2 Competitive pricing

3 Economy pricing

4 Price skimmimg


Place

Channels or routes to market are how you get your product to the customer. Marketers refer to distribution as Place. It is how products and/or services are moved from the manufacturer / service provider to the customer.

Before choosing a route to market the company must consider which route will be best suited to their customers. Many companies use more than one route.

Here are some examples of different routes to market:

Wholesalers

Wholesalers buy large quantities of goods directly from the manufacturer. They then sell smaller quantities to shops for example and they in turn sell them to the customer. Wholesalers do not sell directly to the person who is going to use the product.

Most small grocery shops and newsagents buy their products from wholesalers and not directly from the manufacturer.

Own store

Some companies set up their own stores to sell their own products. Apple is a good example.

Direct sales

This is where the goods are sold directly to the customer. Companies that sell directly to the customer often employ sales people.

Small producers like farmers sometimes sell goods directly to the customer.

Online sales

Many companies now sell goods and services over the internet. They may have their own website or sell through an auction site such as Ebay.

Party Plans

Goods are sold in the homes of customers. The person running the party invites friends and family and sell products to them to earn commission. Avon cosmetics are a well known example of party plan selling.

Mail order

Companies send out catalogues or brochures direct to customers or use agents who are paid a commission to deliver catalogues or brochures with descriptions of their products. The customer fills out an order form and the goods are delivered to their home.

AC2.3 Identify channels or routes to market from production to consumption

Commission

A fee for services rendered based on a percentage of an amount received or collected or

agreed to be paid compensation


Promotion

The promotion mix is about communicating with the customer.

The marketer has a wide tool-kit with which to approach the market:

Advertising

Public relations

Sponsorship

Sales promotion

Personal selling

Direct mail

When a company is launching a new product the marketing department will develop a promotion campaign to let customers know about it and they may use a number of these methods.

Advertising

Types of advertising media include:

Internet

Printed media – newspapers (national and regional), magazines, trade press

Broadcast media – radio, TV

Outdoor – posters, public transport

Cinema

Discuss recent advertisements, what made them successful?

AC2.4 Describe the elements of the promotion mix

Promotion

Communicating what your

organisation / product / service can offer the end

user


Public Relations (PR)

Public relations are long term activities to build up a good reputation and positive attitude to the company and its products.

Examples of PR activities include:

Charitable donations

community projects

Corporate hospitality

Visits and open days

Companies tell customers about these activities through press releases which are used by the media.

Sponsorship

Sponsorship is when a company pays towards supporting events, arts and sports and in return get publicity for their company.

For example Barclays sponsors the Premier League football competition so they get their name known more widely and are seen to be helping football grow.

Sales Promotion

Sales promotion refers to special offers, discounts and money-off vouchers. Sales promotion encourages customers to buy using displays, shows, exhibitions, demonstrations and other selling efforts not in usual day-to-day sales activities.

The purpose of sales promotion is to get customers to buy more.

Personal selling

Personal selling is a promotional method where the sales person communicates with the customer and uses his skills and knowledge to identify and explain the benefits of his product to the customer.

Personal selling is a very expensive form of promotion.

Direct mail

Mail shots can be used for getting new customers, getting existing customers to buy more and for building relationships with customers.

Many organisations still use mail shots, but many now use email as either an enhancement or a substitute for mail shots.

Media

A means of communication

such as TV, press, radio, that is wide-

reaching and influential

Mailshots

Circulars, leaflets, or other advertising material sent by

post, or the posting of such material to a

large group of potential customers

at one time


Give some examples of direct mail you have received and the products/service they were promoting

Physical evidence

Physical evidence sometimes called physical environment makes aspects of your product offer more ‘real’, for the customer.

There are many examples of physical evidence, including the following:

Packaging

Paperwork (such as invoices, tickets and despatch notes)

Signage (such as those on aircraft and vehicles)

Business cards

Internet / web pages

Furnishings

Brochures

Uniforms

Buildings (such as prestigious offices or scenic headquarters)

A sporting event is packed full of physical evidence eg your tickets have your team's logos printed on them, and players are wearing uniforms with company logos on them.

AC2.5 List examples of physical evidence


People

The most important parts of any service or experience are the people involved. People buy from people they like, so the skills, attitude, and appearance of sales staff need to be first rate.

People add value to the customer experience by offering:

Customer service

Advice and sales support

Aftersales backup

Process

Marketing procedures and the flow of activities are all wrapped up in the word ‘Process’ when it is used as one of the 7Ps of marketing.

The word ‘Process’ as the seventh P is about the whole customer experience from the first contact with the organisation to after sales and ongoing customer service.

If a customer calling a company can’t get through or he has to deal with someone who does not seem to know what he is doing then that experience will not create a good first impression and he will probably go elsewhere.

Similarly if a customer needs to make a complaint, the process for handling complaints by the company will decide if the customer will stay with that company or take their business somewhere else.

Process is about the systems the company has in place to ensure that every contact with the company is a good experience for the customer and they get the service that is promised.

If you order food in a fast food outlet the company has processes in place to ensure you get your food quickly.

AC2.6 Describe how people add value to the customer experience

AC2.7 State how organisation processes create the overall customer experience


Learning outcomes. The learner will:

Tick to confirm you have learned this – or note what you still have to do on the Action Plan on the next page

Assessment criteria The learner can:

Tick to confirm you have learned this – or note what you still have to do on the Action Plan on the next page

1. Understand the concepts of marketing and sales

1.1 Define marketing

1.2 Define sales

1.3 Describe the differences between sales and marketing

2. Know the elements of the marketing mix

2.1 State the features and benefits of products and services

2.2 Describe approaches to pricing products and services

2.3 Identify channels or routes to market from production to consumption

2.4 Describe the elements of the promotion mix

2.5 List examples of physical evidence

2.6 Describe how people add value to the customer experience

2.7 State how organisation processes create the overall customer experience

Check list


Target for improvement What will I do to achieve the improvement?

How will I measure the improvement?

Outcome Date for reviewing progress

Action plan


Glossary

Business A trade, professional, industrial or commercial organisation

Buyer Customer or customer’s representative

Commercial Embraces purchase and sale of goods and services, engaged in commerce for profit

Closing In sales, this means the process used to bring your customer to a decision, whether it be yes or no

Commission A fee for services rendered based on a percentage of an amount received or collected or agreed to be paid – compensation

Concept Idea, notion, something formed in the mind or thought about

Consumer The end-user of the product / service

Domestic Household buyers or consumers / customers

Discuss Engage in oral, written, or any other appropriate form of presentation

Elements The parts or components that make up the marketing mix

Mailshots Circulars, leaflets, or other advertising material sent by post, or the posting of such material to a large group of potential customers at one time

Marketing The right product, in the right place, at the right price and at the right time

Media A means of communication such as TV, press, radio, that is wide-reaching and influential – the plural of medium

Objective A projected goal that a person or organisation intends or plans to achieve

Organisational May be in the private or the public sector, eg a wholesale or retail outlet, charity or local authority, or any significant operating unit, with a relative degree of autonomy, within a larger organisation. These could be B2B or B2C, profit making or not-for-profit organisations

Promotion Communicating what your organisation / product / service can offer the end user

Prospecting Finding new customers

Referrals Introductions to new customers from existing customers

Sales Building relationships to do profitable business

Trade A specified market in business eg plumbing trade, tailoring trade

Widget Something unspecified whose name is made up or not known, here we use it in place of a product or service to provide a useful example


Books

Cooper, S. (1997) Selling: Principles, Practice and Management London: Pitman

Journals

ISMM WinningEdge

Websites

www.businessballs.co.uk: Businessballs is a free ethical learning and development resource for people and organisations.

www.ismm.co.uk: The Institute of Sales & Marketing Management (ISMM) is the UK's only professional body for salespeople.

www.marketingteacher.com: Marketing Teacher is for marketing learners. The site uses plain language to describe the key marketing topics and has an international appeal to marketing learners, teachers and professionals.

www.tutor2u.net: tutor2u is the leading publisher of e-learning resources for Economics, Business, Politics, Enterprise, Law, Sociology, History, Religious Studies and related subjects.

Recommended reading

http://www.businessballs.co.uk/

http://www.ismm.co.uk/

http://www.marketingteacher.com/

http://www.tutor2u.net/


Adcock, D., Halborg, A. and Ross, C. (2001) Marketing: Principles and Practice 4th ed. London: FT Pearson Education

Cooper, S. (1997) Selling: Principles, Practice and Management London: Pitman

Palmer, A. (2004) Introduction to Marketing Oxford: Oxford University Press

List of references

Documents

L2U1 Study Guide for ISMM - Fife College