Practise defining demand and markets, calculating market share and analysing orientation, segmentation and B2B or B2C choices before evaluating marketing's role in success.
Analyse two reasons why there should be a close link between the marketing objectives of a business and its corporate objectives.
Fizzy Drinks (FD)
FD is a private sector business that manufactures an international brand of carbonated drinks. Its slogan was 'A premium drink for premium customers'. The market for FD's drinks is very competitive, with 7 national and 12 international brands all competing in the same market. Recently FD lost the title of market leader to TR, one of its largest competitors. TR is a multinational public limited company.
Table 2.1 FD financial data 2023
Employee morale has dropped as a result of the negative feedback. Key employees have left to work for FD's competitors. The lack of experienced employees has led to a drop in the productivity of the production process.
Explain the term demand.
Custom motorcycles (CM)
CM is a private limited company. It was set up by Joyce, who identified a gap in the market for specialist motorcycle components. CM's engineers make the components using job production. The engineers are highly skilled, trained and motivated and very proud of their high-quality products which are sold using price skimming.
CM was featured in a popular motorcycle magazine in autumn 2022, which has increased CM's reputation for quality unique products. This led to an increase in CM's sales as shown in Fig. 2.1.
Fig. 2.1: CM's sales data 2022-2023
Lead times for CM's products have increased from 4 weeks to 10 weeks. This has put additional pressure onto CM's engineers, who are salaried employees. They often have to work evenings and weekends.
Harry, the Sales Manager, thinks demand is going to continue to increase. He wants CM to employ more skilled engineers and continue to use job production. However, Joyce wants CM to invest in new technology and change from using job production to batch production.
Explain the term demand.
Refer to Fig. 2.1. Calculate the total market growth between summer 2022 and summer 2023.
Custom motorcycles (CM)
CM is a private limited company. It was set up by Joyce, who identified a gap in the market for specialist motorcycle components. CM's engineers make the components using job production. The engineers are highly skilled, trained and motivated and very proud of their high-quality products which are sold using price skimming.
CM was featured in a popular motorcycle magazine in autumn 2022, which has increased CM's reputation for quality unique products. This led to an increase in CM's sales as shown in Fig. 2.1.
Fig. 2.1: CM's sales data 2022-2023
Lead times for CM's products have increased from 4 weeks to 10 weeks. This has put additional pressure onto CM's engineers, who are salaried employees. They often have to work evenings and weekends.
Harry, the Sales Manager, thinks demand is going to continue to increase. He wants CM to employ more skilled engineers and continue to use job production. However, Joyce wants CM to invest in new technology and change from using job production to batch production.
Refer to Fig. 2.1. Calculate the total market growth between summer 2022 and summer 2023.
Cobblestone Shoes (CS)
Yazeem is a highly skilled shoemaker. He opened CS in 1975, as a sole trader, to design and repair shoes. When Yazeem set up CS the main target market was professional people who wanted shoes to wear to work or to dress smartly. He produced the shoes using batch production and sold them in his own shop. Each design of shoe was made in a range of sizes and colours.
Abir has suggested that CS should adopt a just in time (JIT) approach to inventory management. By using JIT, she argues, CS would be able to increase its working capital and avoid having money tied up in inventory that might not be used or sold. CS currently has a large number of shoes on display in the shop. There is also a large amount of their main raw material, which is leather and must be kept in a climate-controlled storage area.
Recently there has a been an increase in low-priced shoes produced for the mass market, which has reduced Yazeem's sales of new shoes. It has also reduced the demand for shoe repairs.
Yazeem's daughter, Abir, is keen to take over the running of CS. She has been fully trained in making shoes and feels that it is time for Yazeem to retire.
Abir thinks that the business should be targeting niche markets. She would like to design and produce unique shoes and use price skimming to increase the profitability of the business.
Abir is also concerned about the contribution made on each batch of shoes. Table 2.1 shows some break-even data for a recent batch of shoes.
Table 2.1 Break-even data about a recent batch of shoes
Abir has already found a new local supplier which is happy to deliver inventory as required.
Explain the term mass market.
Bear Bears (BB)
BB is a business partnership owned by Sade and Chika. BB produces personalised teddy bears (toys) for children.
The toys are made using mass customisation targeted at specific market segments. Each toy has the same shape and size but it is customised with names and words provided by the customer. These are hand-stitched onto the toy and the employees are paid using piece rate. Customers receive their products within a week of ordering.
Each toy is sold for $ 50 and has a unit contribution of $ 6. Last month BB sold 4000 units with a margin of safety of 120 units.
BB currently holds a large amount of inventory in a temperature-controlled warehouse (see Table 2.1).
Table 2.1 BB's current inventory
Sade thinks that BB should adopt a just in time (JIT) approach to inventory management. However, Chika is concerned about the possible impact on BB.
The stitching department is managed by Chika. She has recently received a complaint from David who is the only male employee in the stitching department (see Fig. 2.1).
I feel that I am being discriminated against because I am a man. There are no washroom facilities for me on the ground floor but there are for the women. I have to go up two floors for a washroom which takes me a lot of time.
I am given all the tasks which require heavy lifting. I am often asked to fix problems with other people's stitching machines, and this slows my production. I earn less money than anyone else in the stitching department.
After some further investigation, Chika believes there needs to be increased equality in the stitching department.
Identify one method of market segmentation.