Page 12 - CIMA OCS August 2018 Day 2 Suggested Solutions

CIMA AUGUST 2018 – OPERATIONAL CASE STUDY

EXERCISE THREE (MARKETING)
BRIEFING NOTES

The marketing mix
The marketing mix is used to identify what attributes of the product meet the needs of the
consumer and what is valued by the customer. For products it is normally split into four
categories known as the four P’s - Product, Price, Place and Promotion.
Product

This relates to the attributes of the physical product itself, including the quality of the
teas/infusions, the flavours available and the shelf life. These are the attributes that are valued by
the end consumer. However, there are other aspects such as pack size, packaging and branding
that are also important. If we want the customer to purchase products from us rather than a
competitor it is important to understand what the customer actually wants from the product. For
example, extending the range of infusions by introducing new flavours only makes sense if this is
an attribute valued by customers.
Thomas Fine Teas has invested heavily in producing teas and infusions that are highly regarded by
consumers but it is clear that consumers also have concerns about environmental issues and the
medicinal qualities of the products they consume so these would also be valued attributes that
might result in customers turning to our product over a competitor's.
Moving forward, Thomas Fine Teas can look to expand into other products within the teas/
infusions market, such as loose-leaf unblended teas. We can also, of course, continue to
introduce new blends of tea/ infusions in tea bag form.
Price

Our strong reputation of providing high quality teas and infusions allows us to charge higher than
average retail process for our blends compared to similar blends on the market. However, price
relates not only to how much the product costs to buy but also to things like bulk discounts and
credit terms etc.
Thomas Fine Teas sells all of its products to retailers and wholesalers and therefore the credit
terms offered will be important. If another supplier can produce similar products at similar cost
but offers more generous credit terms then it is possible that the retailer/ wholesaler would
choose the product with the better credit terms.
As the major retailers are going to be buying in bulk they would expect to pay a lower unit cost
than a minor retailer that is only buying products in small quantities. Getting this discount at the
correct level is important so that the retailer feels it is worthwhile whilst not degrading the profit
margin to an unacceptable level. At times, we have special pricing arrangements with
supermarkets so that they can offer half price and buy one get one free promotional deals on our
products.
Moving forward, if Thomas Fine Teas decides to enter new geographical markets or product
markets, an idea would be to enter with full-price product penetration in order to protect the
brand and increase margins.
Place

Place considers the physical location of the factory, offices and sales outlets. Also the stock levels
held and how the product is delivered to the right place to the right people at the right time and is
based around the distribution channels that the company uses in order to satisfy customer needs.

68 KAPLAN PUBLISHING