Clothing Company (CC) CC is a public limited company. It operates its own branded clothing retail stores only in the US. CC has been a popular choice with both customers and investors. Revenue and profit were consistently high until 2008. CC used to have only four main seasonal ranges: spring, summer, autumn and winter. As digital marketing and fast fashion became more popular, CC struggled to meet the changing needs of its customer base. Originally, clothing was sourced from manufacturers, based in low-income countries, which used flow production. Timeline of CC 2009–2010 Competition from online only retailers reduce CC's market share. 2010–2011 CC sets out new marketing objectives (see Appendix 1). CC invests in digital marketing and increases the number of sales promotions. 2012 CC ends its relationship with existing clothing manufacturers and begins using fast fashion specialist clothing manufacturers. These local clothing manufacturers are able to supply limited order quantities in the short lead times CC requires. CC adapts its marketing mix and begins to sell online (see Appendix 2). 2013 Customer feedback refers to poor quality and design innovation (see Appendix 3). Poor planning of introducing online selling results in disappointing sales. 2014–2015 Revenue from the largest city centre stores decreases. Profit continues to decrease. Dividend payments are reduced and share price decreases (see Appendix 4). 2016 Sulwar Singh is appointed Marketing Director. He has extensive experience of online sales and marketing of premium products. Sulwar introduces viral marketing campaigns and social media influencers are paid to promote the brand. 2017–2019 CC continues to lose market share. Inventories reach record high levels. The marketing objectives set in 2010 are not achieved. 2020 Sulwar loses the confidence of the board and is replaced by John Dee as Marketing Director. John is set an objective to restore CC's brand reputation. 2021–2023 John insists on new quality control procedures. The share price remains low, but stable. Developing an operations strategy for survival and growth The directors of CC are concerned that the business may fail. They believe it needs a new and distinctive operations strategy to reduce costs and increase efficiency. Appendix 1: CC's marketing objectives in 2010 • To increase sales volume by 20% by 2019. • To revise CC's pricing strategy. • To expand CC's customer base. Appendix 2: Changes to CC's marketing mix in 2012 Old marketing mix • Seasonal clothing • Main target segment: 30–50 year olds • Branded with CC logo • Competitive pricing • Limited range of products • Distributed through CC shops New marketing mix • Quick response to fashion changes (fast fashion) • Main target segment: 13–30 year olds • Branded with CC logo • Dynamic pricing • Large range of products • Distributed through CC shops and CC website Appendix 3: Examples of customer feedback in 2013 'CC clothing used to be good quality. My new jumper fell apart in its first wash!' 'I don't know what counts as fashion these days, but I don't like it.' 'There's always something new every time I visit the website.' 'I was going to buy a shirt in a CC shop, then I found it much cheaper on the website.' Appendix 4: Financial data: 2008–2020 | | 2008 | 2012 | 2016 | 2020 | |:---|:---|:---|:---|:---| | Revenue (m) | 100 | 70 | 60 | 75 | | Profit (m) | 10 | 3.5 | 3 | 1 | | Dividend per share () | 2 | 0.75 | 0.5 | 0.25 | | Share price () | 7 | 4 | 3.5 | 3 | Evaluate the effectiveness of CC's marketing strategy between 2010 and 2020.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2024). The mark or mark type is shown in brackets.

1. [3] (AO1 Knowledge and understanding Level 3) Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question.
2. [2] (AO2 Application Level 3) Developed application of relevant point(s) to the business context.
3. [7-8] (AO3 Analysis Level 3) Developed analysis of the overall strategy that identifies connections between causes, impacts and/or consequences.
4. [6-7] (AO4 Evaluation Level 3) Effective evaluation: A developed judgement/conclusion is made in the business context that draws together developed evaluative comments which balance some key arguments in the business context.
5. AO1 Knowledge and understanding (max 3 marks):
6. Knowledge (max 1 mark) can be awarded for any relevant business knowledge about marketing, including: Marketing objectives; Demand and supply; Markets (consumer, industrial, local, national and international); Mass and niche marketing; Market segmentation; Customer relationship marketing; Market research (primary and secondary) and sampling; The marketing mix (product, price, place, promotion); Elasticity (price, income and promotional); Product development, including R&D; Sales forecasting; The need for the marketing strategy to be consistent with the business, the product and the market; The need for, and development of, a coordinated marketing strategy; The development of marketing strategies that are focused towards achieving specific marketing objectives; The changing role of Information Technology (IT) and Artificial Intelligence (AI) in marketing; The contents of a marketing plan: objectives, resources, research, marketing mix; The benefits and limitations of marketing planning.
7. [1 K] Marketing strategy is when a business plans to meet their marketing objectives.
8. [1 DEV] Marketing objectives may include sales maximisation and increasing market share.
9. [1 K] Promotion is the communication from the business to the customer.
10. [2 DEV] It includes advertising, sales and direct promotion. The aim of promotion is often to increase awareness of a product.
11. AO2 Application (max 2 marks):
12. Application (max 2 marks) can be awarded for applying knowledge of marketing/marketing strategy, to CC between 2010 and 2020:
13. [1 APP] CC operates its own branded clothing retail stores only in the US.
14. [1 APP] CC has been a popular choice with both customers and investors.
15. [1 APP] Revenue and profit were consistently high until 2008.
16. [1 APP] CC used to have only four main seasonal ranges: spring, summer, autumn and winter.
17. [1 APP] CC struggled to meet the changing needs of its customer base.
18. [1 APP] Competition from online only retailers reduce CC's market share.
19. [1 APP] New marketing objectives in 2010–11 (any data in Appendix 1).
20. [1 APP] CC invests in digital marketing and increases the number of sales promotions.
21. [1 APP] CC adapts its marketing mix and begins to sell online.
22. [1 APP] Revenue from the largest city centre stores decreases. Profit continues to decrease. Dividend payments are reduced and share price decreases.
23. [1 APP] Sulwar Singh is appointed Marketing Director in 2016.
24. [1 APP] The marketing objectives set in 2010 are not achieved.
25. [1 APP] John is set an objective to restore CC's brand reputation.
26. [1 APP] Any data from Appendix 1–4.
27. AO3 Analysis (max 8 marks):
28. Analysis is likely to be based on CC's objectives in 2010 to increase sales volumes, customer base and pricing strategy (Appendix 1).
29. Analysis of the impact of CC's marketing strategy (A1 and A2 and A3) including:
30. Analysis of the objective: although specific about a measure of success (percentage growth) the time frame in which the objective is to be met is 9 years in the future. The objective is measurable but too vague. The objective is perhaps too easily achievable.
31. Investment into digital marketing and sales promotions – too many options to measure the effectiveness of each strategy.
32. Changes to the marketing mix – completely changes the brands values and identity – this could alienate existing customer base.
33. Focus on digital marketing – low/zero cost promotion – however can be unpredictable and out of the businesses control.
34. Customer feedback in 2013 highlights customer complaints – can this data be trusted? How was this survey completed – may lack the targeting necessary to give accurate and usable data.
35. The pricing method chosen (dynamic pricing), may have led to a reduction in revenue which could have led to the fall in profit.
36. Although market share is lost and inventories are high, revenue has begun to increase which signifies that customers are increasing spend per visit.
37. Profit decreased between 2008 and 2020 even as revenue increased – although profit was not the objective of CC, likely to be important, especially as the share price is reducing.
38. Customer satisfaction has significantly decreased – CC has developed a reputation for poor quality products.
39. AO4 Evaluation (max 7 marks):
40. Evaluation (N1 and N2 and Na) including: Evaluation will largely depend on the points raised in the analysis.
41. A judgement over the success of the marketing strategy between 2010 and 2020.
42. Discussion over how the success of the marketing strategy can be judged and what that judgement could depend upon; link to the marketing objective in 2010, other measures of success for a public limited company (profitability, profit, shareholder objectives, other stakeholder objectives, measures of size).
43. The extent to which the growth in revenue of CC between 2016 and 2020 was based on the marketing strategy or other external factors.
44. The extent to which Sulwar's experience in online marketing influenced the decisions and took the brand away from its original values.
45. Other external influences on CC between 2010 and 2020 other than the marketing strategy (e.g. the state of the economy; economic growth) social factors (e.g. trends and fashions).
46. The extent to which CC updated and changed its marketing strategy between 2012 (the marketing mix) and 2020.
47. Accept all valid responses.