Market Revision A2 Level Business Studies: Part 1

So it is near the time for students to prepare for the upcoming exam going to be held this May and June 2017.   Do you know what you should study for Unit 3 to prepare yourself for the A2 exam (i.e. Business Studies Paper 3)? Following are the topics I would recommend students to focus on based on my analysis of the past year exam papers from 2012 to 2016?

INTERNATIONAL MARKETING

Students need to read on and understand the advantages and disadvantages of standardisation versus localisation approach for a business enterprise to enter into the foreign markets.

Standardisation - when evaluating the use of standardisation approach, you as the student must mentioned about the benefits of economies of scale that can be gained and cost efficiency; however, students should write as part of their evaluation the risk of the marketing mix failing to address the specific conditions of the foreign market environment especially with regards to (a) taste and preference of the target consumers, (b) cultural differences affecting motivation, purchasing decision, and buying behaviour, and (c) opportunities and restriction to the use of the relevant promotion media which can be influenced by the technological infrastructure available in the target foreign market.

Localisation - here students can discuss about the imperative of customising/adapting the marketing mix to suit the local environment of the foreign market in order to make the products they are selling more appealing; consideration on the change on product design and even packaging can be made; use of language and also local models and celebrities may be required to make the brands and products easily relatable to the target audience of the foreign market 

Foreign modes of market entry - students may be asked to evaluate the different choices which a business can choose to engage the foreign market such as through export, joint venture, or using own capital to establish its own retail or manufacturing facilities (see Le Blanc Kitchen Equipment) .  If such questions come about, students need to consider (a) the level of risk involved especially when certain mode demand high level of capital investment (b) the amount of control a business will have which correlate to the amount of capital invested i.e. high cost, more control but low cost, low control, (c) opportunity to find the right partner to work with, (d) risk of conflict of objective which can result in joint venture, (e) level of commitment given by the agents and business partner to push your product to the market as they may have other brands which they manage, (f) intermediary cost which is a relevant discussion when talking about the use of external distributors which covers third party retailers and wholesalers that may reduce the margin of your business and increase the price of the products sold to the end consumers, and (g) level of knowledge a business have with regards to the target market audience in the foreign country and also the distribution network - the less knowledge, the more a business will need to use intermediary or collaborate with a business partner.

Influence of foreign exchange rate - it is important for students to recognise that the fluctuation of currency will affect pricing and the attractiveness of selling the product into the overseas market

INTERNET MARKETING

There will be occasions that the exam questions will test students on what are the factors they can contribute to the effectiveness of a business in engaging the Internet as an additional channel of marketing. Students need to be aware that the term 'channel of marketing' does not necessary confine itself to the scope of Place.  Internet as a channel can be used as a channel for communication where businesses merely use it to provide its target audience with information about their products, location, phone, email, and operation hours (for example this website of Levain Boungerie Patisserie Malaysia) but does not necessary means there are available option for making purchases.  Some websites will function a channel of commerce where customers can buy the product directly online.  For some products sold can be delivered directly to the customers via the Internet.  These are often digital products which can be downloaded on the customers' electronic devices or be streamed directly like many of the music, movies and television entertainment programmes.  As such, the internet will be acting as a channel of delivery.

However, students must be aware that despite having establishing an Internet channel to do marketing, it is highly essential for businesses to do some promotion in order to create awareness that such channel exists to give the customers option to find information and make purchases.

A good question on this for students to work on will be Leo Fantastic Flower Q5 (9707/33/O/N/12).

MOBILE MARKETING

Although not very stressed in the syllabus, it would be impressive if students do make recommendation on using mobile technology to market a product in addition to the use of Internet.  As such, the business can engage an additional channel to reach out to its customers.  Furthermore, students can justify the use of mobile marketing in their answer by stating how nowadays, many individuals are having smartphone and these people have adopted behaviour to make purchases through their mobile devices as it is more convenient since their mobile phone can be easily carried around and utilised as compared to gaining access to a desktop or even to carry a laptop.

The important issues when considering the use of mobile technology for marketing is to determine which platform to us as the apps (e.g. Apple OS, Android and Windows) must be developed to the specific technological mobile platform. Which platform to develop the app on will be highly determined to which platform that are commonly used by the target market.  

Another issue to discuss will be the cost of developing the app.  However, most of the time, such cost is minimal when compared with the potential return it can gain if the app can give more added value to customers to encourage them to buy your business products.

SOCIAL MEDIA MARKETING

Another consideration that students can make when making recommendation on how to market a product is the use of social media.  Students can focus on discussing about using Facebook but must realize that Facebook can act not only as a channel to provide information but also as a platform to promote customer engagement and build customer relationship.

Students can state that many people in today's population are using social media to connect to and converse with other people and even organisation.  As such, from this technologically influenced behaviour, many social media users have started to look for information about a company, its brand, and its products through social media particularly Facebook.  As such, it become highly essential for business to build a Facebook presence.

Moreover, in Facebook, there are review and rating feature where customers can provide comments about their experience in using the products or in visiting the physical retail facilities.  These additional information can easily help user to make their decision and customers will be more likely to visit a retail place or buy certain products where more information are provided.

Nevertheless, students must also recognise the potential pitfalls of using Facebook.  One of them is that the business will not have control over the negative comments in which the Facebook user will be posting up.  Deleting those derogatory remarks is not a good practice to build positive relationship with the customers and to salvage the company reputation as this can leads to greater increase the grievances felt by the customers as the problems are not purposely ignore and removed from the Facebook platform.  Worst is where users create a separate Facebook page or online platform to complain about the company.  As such companies must be wary in deleting posts as it can escalate matters and further jeopardize the reputation of the firm.

Another consideration if Facebook is used is the possible requirement to assign a dedicated personnel or team of people attending to the message who can respond to them promptly and with tact.  If message is replied after 2 days is often considered to be significantly slow and can affect the service satisfaction of the customers when making inquiry or posting a complaint.  Giving tactful response is also very important and require a person who would have some significant level of emotional intelligence to be have self-control and empathy.   If not, an undesirable outcomes can occur as exhibited in this case of Les Deux Garcons Social Media Failure.  More examples on social media failure, do click here "Worst Social Media Disasters in Malaysia 2012-213".

INFLUENCE OF EXTERNAL ENVIRONMENT ON THE MARKETING DECISION

There are few instances where students were presented with a table (or tables) containing data on the economic, social, and competitive environment of specific country (often given some generic labels) and are asked to give recommendations of marketing strategy or make a marketing decision whether to enter or not.  

To some extent, those data will show the challenges or opportunities which exist in the competitive environment of a specific region or country indicated in the case which may required students to make reference to Porter 5 Forces.

Furthermore, it must be noted that in some cases, the rate of unemployment can affect  marketing decision on whether a business should enter into another country.  If the business plans to establish a manufacturing facilities to produce its products for its target foreign market, high unemployment can be desirable in terms of the business having greater bargaining position in employing workers by offering them lower wages and thus save on labour costs.  However, in terms of sales, it may not be a favorable condition as when more people are unemployed means more people will have less income to spend.  Nevertheless, to properly write an answer students must identify and understand what kind of products are in question and the marketing positioning the business is operating in.

Examples of questions with such nature are:

• LeBlanc Kitchen Equipment (9707/31/O/N/13, Q5) - consider the average family of a country population will affect the product design and packaging of kitchen equipment product, how the number of retailers that exist will influence the strategic choice to enter into the market using agents or through joint venture, and level of pricing to suit the level of income of the target consumer groups.
• Cloud Catering (9707/31/M/J/13, Q3)
• Xiang Mobile (9609/33/M/J/16, Q4)
• Kaldi and Akbar (9609/31/O/N/16, Q5)

ANSOFF'S MATRIX

This particular topic is covered in Unit 6 but is considered to be a marketing topic nonetheless.  Students need to recognise the different set of marketing approaches for the each of the specific strategy identified in the matrix.

Market Penetration (Existing Product; Existing Market) - objective is often to increase market share; reduce price to encourage more sales (getting more customers from the existing market to buy) but this may lower profit margin per sale; provide discount and rebates; engage in promotion using contest and competition; launch a creative marketing campaign to engage the customers from the existing market; establish additional channel for commercial transaction to allow the existing customers the convenience to order the product and make purchases especially through the use of Internet and mobile technology

Market Development (Existing Product; New Market) - expand the market by selling existing products to new market segments; going into the market of foreign country; find new uses to an existing product to it can be targeted at a new segment; for current physical retailers - engage the Internet channel by establishing an online stores to sell the products to segment of consumers who how no and inconvenient access to the physical retail outlets.

New Product Development (New Product, Existing Market) - It is sometimes difficult to determine when is a product considered to be new.  If a business simply includes some incremental improvement to a current product it is producing, will it fall into the category of new?  Does the introduction of the various hair formula for different scalps by shampoo manufacturer such as Sunsilk consider to be as 'new product'?  Also, can we consider that despite tailoring certain specific shampoos to deal with particular scalp conditions experience by the user as targeting at new market segment or can we simply just group them into a general category as shampoo user and therefore see them as the 'existing market'?  Will producing an additional variety of a product within the same product line be considered as a 'new product'?

Variety of Sunsilk Shampoos

Click here to see more varieties of Cornetto in Malaysia

Cornetto Mini

Do all these debates matter for your preparation for your A2 exam.  It matters when you are required to evaluate the use of Ansoff's matrix because the evaluation on which particular quadrant does a business fall into in order to determine which strategy to use is highly subjective to the view of the management.  But here is my view (which can still be arguable), a new product will be characterized as offering a product with a significant features that differentiate itself from its predecessor more than a small incremental manner such giving another color option.

Diversification (New Product; New Market) - for this strategy, I advise students to see diversification in two perspectives - (a) introduce a new line of product within the same category of product of a business is producing but target at a different market segment line Brand introducing Inner Shine in addition to its current Brand's essence of Chicken product or (b) introduce a new product that is radically different from what has been produced by the business before such as Apple introducing iPod, iPhone, and iPad which are significantly different from the line of computers it produces and all these non-computer products are targeted at different market segments. 

A good question to test your knowledge and understanding of Ansoff's Matrix in marketing context will be Shoe Style International Q5.

My apology if you see any grammatical errors or spelling mistakes as I wish to push this article out quickly due the urgency of students in getting supportive guide to do their revision early before I can do a proper proofread.  If you do see any particular errors in my writing, please email me so I can do the necessary correction.