THE OUTCOMES THAT YOU SHOULD DEMONSTARTE THROUGH ANSWERING THE ASSIGNMENT QUESTION. THE ACTUAL ASSIGNMENT BEGINS AFTER THE CASE STUDY. BUT YOU ARE REQUIRED TO TACKLE THE BELOW IN YOUR ANSWERS, BUT ALWAYS RELATING IT TO THE CASE.
Outcome 1
Explain the role of marketing in different types of organisations.
Knowledge and/or skills
Have the criteria been met? S or x
Definitions of marketing
Marketing and customer satisfaction
Consumer behaviour
Marketing and other business concepts: production, product, selling
Marketing in different types of organisations: profit and nonprofit making, public and private sector
Marketing in different contexts: industrial and consumer marketing, the marketing of goods and services
Marketing’s links with other business functions: human resource, finance, operations
The four Ps of the marketing mix: product, price, promotion and place
The seven Ps of the services marketing mix: product, price, promotion, place, process, people and physical evidence
,
The marketing mix in the light of changing market conditions
Evidence requirements
To achieve this Outcome each candidate must provide evidence which demonstrates his/her knowledge and/or skills.
Each candidate must provide evidence to show that she/he can:
Define and explain the term marketing: • explain how marketing differs from advertising and selling • explain the benefits which can be derived from adopting a marketing approach • distinguish between the marketing approach and other business philosophies
Identify and explain the elements of the marketing mix
Explain product mix decisions: • explain product decisions in terms of product items and product lines • explain the importance of product positioning decisions • explain the stages of the product life cycle
Explain different distribution chains
Explain the factors which influence pricing decisions
Identify and explain different promotional methods
Explain the marketing mix in terms of different organisations
Explain marketing decisions in light of changing market conditions
Outcome 2
Explain the importance of different types of marketing research.
Knowledge and/or skills
Have the criteria been met? •S or x
Marketing research in the context of the marketing mix
Marketing research in the context of identifying an organisation’s potential markets
Marketing research in terms of meeting customer requirements and creating satisfied customers
Secondary data (nature, sources)
Different types of primary research: questionnaires, focus groups, observation
Qualitative and quantitative data
Internal and external sources of data
Uses of marketing data
Limitation of cost, time accuracy
Explain the importance of marketing research to organisations
Distinguish between different types of marketing research:
describe primary and secondary data
identify the strengths and weaknesses of different types
of marketing research
explain the uses of different types of marketing research
describe different types of primary research
Explain how different types of marketing research can be used in different business situations
BUSINESS CASE STUDY: The Virgin Group
Virgin is known all over the world and is seen by the public as fun, daring and successful. The first record shop was opened in 1971 and the record label launched in 1973, Virgin Atlantic airways began operating in 1984, quickly followed by Virgin Holidays. In 1905 the company entered a joint venture offering financial services. By 1997 it was an established global corporation with airline, retailing and travel operations. The original record business was launched shortly after the UK government had abolished retail price maintenance, a practice that had limited competition and kept prices high. Richard Branson saw the opportunity and began a mail order business offering popular records at prices about 15 per cent below those charged by shops.
The business prospered until there was a postal strike. Branson’s response was to open a retail outlet, which was an immediate success, and the start of Virgin Retail. These retail interests were later consolidated around the Megastore concept in a joint venture with a major retailer. In prestige locations in major cities Megastores began to sell home entertainment products – music, videos, and books — on a large scale. They replaced the string of small secondary retail outlets for which Virgin had become known. ‘I he success of the Megastore concept was exported to major cities throughout the world, frequently through joint ventures.
In 1973 Virgin released the hugely successful album Tubular Bells. The ensuing inflow of funds enabled the record business to expand but by 1990 the high annual growth was ending. This affected Virgin, which was still a relatively small player, so the record business was sold to EMI in 1992.
In the early 1980s Branson was approached by Randolph Fields, who was seeking additional finance for a cut-price airline he had founded. The airline business then was tightly regulated, with routes, landing rights, prices and service levels established and maintained by intergovernmental arrangements. Decisions on these and other regulations were mainly used to protect inefficient, often state-owned, national ‘flag-carriers’. This has kept most air fares high. After 3 months of intense activity Branson and Fields had gained permission to fly, arranged to lease an aircraft and recruited staff. The first flight was in June 1984. To grow, Branson needed more landing rights, and would need to persuade government ministers in order to get them (at both ends of each route). Those ministers would also be being lobbied by the established airlines, which could try to persuade them not to approve the low fares that Branson was proposing. Alternatively, they could undercut his fares and subsidise the losses from profits on other routes.
Virgin Atlantic grew successfully and by 1990, although still a relatively small player, it competed with the major carriers on the main routes from London, winning 51 wards for innovation and service, as well as plaudits from vital business travellers. The airline was now the focus of Branson’s interests and was becoming a serious threat to the established airlines, shown by an acrimonious relationship with British Airways (the UK’s national carrier). It now serves 29 destinations around the world. The company is also a leading player in the low-cost airline business through Virgin Express based in Brussels and
Virgin Blue in Australia. The latter was founded in 1999 with an investment of $8 million and in 2003 was valued at $2 billion, In 2004 the company announced that it would launch a ‘low-cost, high frills’ airline in the United States in 2005.
Research on the Virgin brand name demonstrated the impact over time of quirky advertising and publicity stunts. The brand was recognised by 96 per cent of UK consumers, and Richard Branson was correctly identified by 95 per cent as the company’s founder. The Virgin name was associated by respondents with words such as fun, innovative, success and trust, and identified with a range of businesses, confirming what Branson and others had believed: in principle there were no product or service boundaries limiting a brand name, provided it was associated with a quality offering.
Encouraged by the research, Virgin began entering new sectors outside its core activities of retail and travel. Virgin businesses as diverse as radio broadcasting, book publishing and computer games found a home in the same stable as well as hotels, railways, personal computers, cola drinks, cinemas and financial services. Branson continued to work at the centre, supported by a small business development group, a press office, and key senior advisors in the areas of strategy and finance. The early Virgin style of informality and openness remains. There is not the feel of a traditional corporate head office: ties are rarely worn, denim jeans are common, and everybody is on first name terms.
Having a centre did not mean a centralised operation. Each operating unit was expected to stand alone, having little interaction with either head office or other units. Unit managers networked informally (usually at parties or similar events), but were not obliged to follow prescriptive corporate policies; these were ‘understood’ rather than codified. For example, there was no common human resource policy. Managers knew that employees must be treated ‘fairly’ since ‘that is what Richard would want’, and they complied in their own way. Similarly there was no group information technology strategist or centra! purchasing function, because Branson believed that those roles could constitute interference and discourage managerial creativity. Nor was there any systematic seeking out of synergy, either at the centre or by unit managers.
In 1999 a chance remark from one of his senior executives made Branson rethink his approach. The executive mentioned that the head of a rival organisation had commented that if Virgin enterprises ever decided to collaborate they would be unstoppable. To test whether this was true Branson immediately – and for the first time – brought together all his managing directors (some 30 in all) for a retreat at his hotel in Mallorca, The agenda was open, but two themes dominated – e-commerce and a proposed unifying document, the Virgin Charter.
Participants realised that, more by chance than planning, Virgin was in businesses ‘that were ideally suited to e-commerce and in which growth is expected to occur — travel, financial services, publishing, music, entertainment’. To exploit this potential the participants decided to streamline their online services with a single Virgin web address: Virgin.com.
Branson believes that the Virgin name, known for its consumer-friendly image and good service, would translate well across a range of businesses – ‘Virgin isn’t a company, it’s a brand’, commented one senior manager in the company. This is attractive to partners who provide the expertise and capital for a joint venture in their area of business (such as insurance or share trading), while Virgin provides the brand image. By putting all Virgin’s business on one easily accessible site Branson hopes to cross-promote a wide range of” offerings – tickets, wine, enteitainment listings, financial services and many more.
Virgin is also using the web to streamline internal operations. The airline and stores now order inventory electronically as they need it, rather than keeping it in physical form. Airline mechanics can use the internet to source local suppliers of a required part and have it available in hours – an impossible task with earlier technologies. The Megastores only stock the most popular products. The rest are held as a fulfilment house – ready to send to customers who order them, enabling the stores to offer a wide range of products. Advertising staff in each company use the Internet to coordinate their iidvertising spending and strategy before booking the business with a central agency.
During the meeting in Mallorca the group also endorsed Branson’s proposed Virgin Chatter. Running to some 60 pages, the charter is an agreement between Virgin management ltd (in effect the holding company) and all the subsidiaries. It defines the role of the centre in relation to the subsidiaries in such matters as taxation, legal affairs, intellectual property and real estate. It also outlines closer links in areas previously left to individual units: IT, people, purchasing. Thus the Charter sets out ways for the many Virgin companies to tackle common activities with a common approach. Nearly all are private and owned entirely by the Virgin Group or Richard Branson’s family trusts. Business should be ‘shaped around people’, Branson believes, citing his experience of sub-dividing the record company as it grew. Each new record label was given to up-and -coming managers, creating in-house entrepreneurs who were ‘far more motivated to build a business’ with which they and their staff identified. A natural extension of this is the notion of building a business organically, rather than by acquisition.
He believes this approach to expansion by creating discrete legal entities gives people a sense of involvement with, and loyalty to, the small unit to which they belong. This is particularly the case if he trusts; the managers of subsidiaries with full authority and offers them minority share options. He is proud of the fact that Virgin has produced a considerable number of millionaires. He has said that he does not want his best people to leave the company to start a venture outs;de; he prefers to make millionaires within. He has created a structure of numerous small companies around the world operated quasi-independently. Both systems embody the maxims ‘small is beautiful’ and ‘people matter’.
In 2004 one area of difficulty was its UK rail operation, where it had not yet been able to extend the Cross Country franchise. Other parts of the company were, however, expanding rapidly with Virgin Atlantic announcing an order worth $5.5bn for 26 Airbus A340-360 aircraft, Virgin Blue flying to many new destinations in Australia, mid Virgin
USA scheduled to start flying in 2005. However Virgin Express lost money in 2003 because of fierce competition in the European low-fare market, including close competition with Ryanair. Virgin Mobile, launched in 1999, had secured almost 6 million customers in Britain, the USA and Australia and Branson was contemplating issuing shares in the British part of the company. The range of products in the Virgin Megustores was being extended to include clothes, mobile phones and consumer electronics aimed at teenagers. And in 2005 a film based on Branson’s best-selling autobiography (Losing My Virginity) was released.
Source: Based on material from INSEAD Case 400-002-!, The House that Branson Built: Virgin ‘.v entry into the new millennium, ‘Branson’s brash new gambit’, Business Week, 8 March 2004; and oilier published material. Case Study from ‘Business Management; An Introduction’by D. Boddy, Pearson Education Ltd, 2005.
Marketing Assessment QUESTIONS
Before answering the following questions you should read the accompanying case study very carefully above as you will be required to provide examples. You should make reference to the organization above in answering questions. You are always required to back up your answers with academic literature, however always relate and analyze everything according to the particular case study scenario and you must NOT merely regurgitate theories from textbooks. The objective of the assignment is to show that you know how to apply the theory to particular situations, not rewriting them.
1 Explain the purpose and importance of marketing research to organisations and in what ways has marketing research been important to Virgin?
(Expected minimum response: 400+ words)
When conducting marketing research, what is the difference between primary and secondary data and in which business situations might Virgin use either of these and why? Your answer should include the advantages and disadvantages of the different types of data.
(Expected minimum response: 400+ words)
3 Explain how the organisation in the case study might use different types of marketing research. Provide realistic and relevant examples of types of marketing research which the organisation could use to improve its current business situation and satisfy customer requirements. In answering this question you are also required to refer to other organisations with which you are familiar.
(Expected minimum response: 500+ word)
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