Advanced Diploma in Purchasing and Supply Marketing for Purchasers L5-10 LEVEL 5 Senior Assessor s Report May 2007
INFORMATION FOR CANDIDATES The senior assessor s report is written in order to provide candidates with feedback relating to the examination. It is designed as a tool for candidates both those who have sat the examination and those who wish to use as part of their revision for future examinations. Candidates are advised to refer to the Examination Techniques Guide (see the following link http://www.cips.org/documents/examinationtechniquesguidefeb07.pdf) as well as this senior assessor s report. The senior assessor s report aims to provide the following information: An indication of how to approach the examination question An indication of the points the answer should include and how marks are allocated An indication of candidate performance for the examination question APPENDIX A syllabus matrix for the examination is included as an appendix. It highlights the learning objectives of the syllabus unit content that each question is testing. The unit content guides are available to download at the following link: http://www.cips.org/studyqualify/cipsqualifications/syllabuses/ ADDITIONAL SOURCES OF INFORMATION The Supply Management magazine is a useful source of information and candidates are advised to include it in their reading during their study. Please see the following link to the Supply Management website http://www.supplymanagement.com/ L5-10 May07/SA Report/FV 2
SECTION A Q1 (a) Outline the market segmentation variables that would be useful to LuxFly in differentiating its service offering from its competitors. (10 marks) This question sought an outline of the market segmentation variables that LuxFly could use. These variables would form the base of targeting specific market segments and LuxFly s positioning of its offer. LuxFly cannot effectively differentiate its service offering without a clear understanding of the customers it should target. Classic segmentation variables include geographic, demographic, psychographic and behaviour. The question was therefore seeking an outline of the application of these variables in the specific LuxFly context. Many candidates failed to identify relevant segmentation variables, the majority produced a list of typical variables but without any clear application to the case. Some answers missed the point of the question and discussed general differentiation of offer. Typically such answers repeated case study material. Q1 (b) Using the above variables, assess the key target markets that LuxFly should focus its attention on. (15 marks) Building on the previous answer, this question sought an assessment of which segments LuxFly should target. The case study had already provided a very clear steer as to what these generic markets were and the question was specifically asking for an assessment of this. The assessment should have used the previously identified segmentation variables to drill down the generic markets identified in the case study. The assessment should then have identified what is important for each of these segments and how easy (or difficult) it would be for LuxFly to offer such. For example, is a segment interested in something that LuxFly currently offer, if not, could LuxFly offer this in the short term or longer term? Many answers effectively repeated the case study material of the generic markets and hence failed to adequately assess the situation. Lack of assessment was compounded in L5-10 May07/SA Report/FV 3
some cases by a failure to identify the segmentation variables in the previous part of the question. Q2 Evaluate how LuxFly can use the marketing mix to develop customer loyalty. (25 marks) This question is firstly seeking a definition (or position) as to what loyalty is is it a behaviour or an attitude for example. The question is then simply asking for examples as to how specific elements of the marketing mix can be used to generate customer loyalty. There are various definitions of loyalty but fundamentally LuxFly is interested in generating business through repeat purchase (i.e. loyalty as a behaviour). There are many examples of how each element of the marketing mix can specifically contribute to this. For example, product the overall product and service experience. There is also a good opportunity for answers to incorporate relationship marketing elements through the marketing mix. Most candidates were able to identify the four Ps. Better candidates referred also to the additional three Ps identifying that LuxFly are a service provider. Weaker candidates tended to just gave a description of each element of the mix without relating their answer to customer loyalty. Some answers were very brief and there was often a lack of attention paid to the loyalty element answers instead often gave a basic description of the marketing mix. SECTION B Q3 Identify and discuss selection criteria a company might use to determine appropriate intermediaries within its distribution channel. (25 marks) A range of selection criteria exist and include such things as access to market, familiarity and expertise with the product, additional service or promotional support and such like. As the question is seeking a discussion around appropriateness there is an expectation that examples will be used. L5-10 May07/SA Report/FV 4
A range of selection criteria exist and these are largely dependent upon the objectives of the supplier and the types of product being considered. A market penetration strategy, for example, will have different distribution objectives than that of exclusive distribution. On the whole this question was reasonably well answered with most candidates producing a wide range of factors. However, weaker answers tended to be too brief, written in bullet point format, so lacking in detail. Also, some candidates actually didn t answer the question, instead focusing on describing the different types of intermediary (agent, wholesaler etc.) and when each should be used rather than focusing on selection criteria. Most answers would have benefited from outlining distribution objectives and types of product at the outset. Q4 (a) Discuss the non-financial factors that affect the price of a product. (10 marks) Pricing decision are arrived in a number of ways taking account of financial considerations (e.g. cost) and non-financial considerations (e.g. the competition). This question sought a discussion of the non-financial factors that would affect the pricing of products. There are a large range of non-financial factors that affect pricing decisions such as organisational objectives, customers, brand image, stage in the PLC, PEST factors, other elements of the marketing mix, positioning. Answers should discuss a range of these factors. This question was generally well answered with a broad range of factors discussed. Weaker answers focused on a narrow range of factors, or just PEST. And some answers were very brief/bullet points. Q4 (b) Explain the advantages and disadvantages of TWO of the established approaches to pricing. (15 marks) There are four basic approaches to pricing cost, market, competitor, and demand. The question sought the advantages and disadvantages associated with two of these approaches. L5-10 May07/SA Report/FV 5
A range of advantages and disadvantages is apparent for each of these approaches. For example if lowering prices to be competitive in comparison to the competition, is the company actually generating any profit? Generally well answered, though there did seem to be confusion in some answers between approaches to pricing and pricing strategies. Such answers therefore did not address the question as the answers discussed (usually described) price skimming and penetration. Q5 Using a fast moving consumer good (FMCG) of your choice, identify and assess the most appropriate applications of the promotional mix. (25 marks) Firstly a FMCG example needs to be identified. Then, based on this, an assessment of the promotional mix needs to be undertaken identifying which are the most appropriate elements for the chosen example. Mass communication is appropriate for FMCG, personal selling is not. However, answers could have taken a supply chain perspective and argued that personal selling, for example, is very important within the distribution chain though not useful at all for the final consumers. Some answers failed to identify a FMCG which was not a good start as there was no defined context. Most could identify the elements of the promotional mix, although again there was some confusion between the marketing mix and the promotional mix. Answers did tend to describe the elements of the promotional mix rather than evaluate their usefulness in a particular context. Q6 (a) Outline the key differences between services and physical products. (10 marks) What are the differences between physical and service products? L5-10 May07/SA Report/FV 6
Quite straight forward in terms as establishing tangibility, inseparability, inconsistency, perishability, variability and lack of ownership. Most candidates were able to identify most of the main differences between product and services. Answers did typically tend to be rather brief. Q6 (b) Using examples assess how the service elements of the extended marketing mix (the THREE additional Ps) can be used to ensure customer satisfaction. (15 marks) Identify the three service Ps and establish, with examples, how they can be used to ensure customer satisfaction. Physical evidence, process and people should all be identified and their contribution to ensuring customer satisfaction established. Virtually all answers identified the addition 3Ps, although descriptions of some, especially process and physical evidence were sketchy. However, some answers did not relate this to customer satisfaction. APPENDIX: Syllabus matrix indicating the learning objectives of the syllabus unit content that each question is testing L5-10 May07/SA Report/FV 7
L5-10 Paper Ref MARKETING FOR PURCHASERS LuxFly SECTION A SECTION B Question No. 1 2 3 4 5 6 a b c a b c a b c a b c a b c a b c 1 Marketing and the environment 1.1 1.2 1.3 1.4 1.5 x 2 Understanding the market 2.1 2.2 x 2.3 x 2.4 x x 3 Marketing mix strategy 3.1 x 3.2 3.3 x 3.4 x x x 3.5 x 3.6 x 3.7 x 3.8 3.9 x 4 International marketing 4.1 4.2 4.3 4.4 5 Marketing planning and control 5.1 5.2 x 5.3 x L5-10 May07/SA Report/FV 8