CIMA E1 Exam Surgery
Past Paper Answer – Q30
Q30 DD
Marking scheme
Marks
(a)
Up to 2 marks per valid point referenced to the scenario
10
(b)
Up to 2 marks per valid point referenced to the scenario
10
(c)
Up to 2 marks per valid point referenced to the scenario
5
25
Our answer shows what we consider the most appropriate points to make. Other relevant points that
answer the question would earn marks. However, irrelevant points that do not answer the question
would not earn marks.
(a)
Some of DD’s activities have implications for its ethical stance and CSR position.
Aiming television advertising at children and teenagers could be seen as unethical and irresponsible.
Children do not have the ability to make reasoned judgements. Encouraging children to drink
potentially unhealthy products will be seen as unethical by some, and contradicts DD’s commitment
to ‘behave ethically while helping improve the quality of life of society generally’. Targeting teenagers is
less controversial, as teenagers understand the concept of advertising and should be able to make an
informed decision.
Whilst supporting sporting events and promoting healthy lifestyles could be seen as ethical, it could
also be seen as unethical. By trying to establish a link between healthy activities and its possibly
unhealthy products, DD could be seen as hypocritical and be accused of misleading the public,
particularly children.
The celebrity endorsement of Mr TT has caused concern. Mr TT’s association with exploitation of
females, violence and bad language does not fit with DD’s ethical, responsible image. However, Mr
TT appears to appeal to teenagers, DD’s target segment.
Involvement with Mr TT exposes what seems to be a fundamental mismatch between DD’s squeaky
clean ethical and CSR position and the attitudes of a key target market (teenagers). Whether DD should
be overly concerned about the people offended by their association with Mr TT is debatable, as these
people probably don’t buy DD’s products.
The admission by DD that using Mr TT was a mistake will have positive and negative repercussions. The
back-down may limit damage to DD’s ethical, responsible reputation, but to a large extent the damage to
their reputation has been done. By ending it’s association with Mr TT, DD may have lost credibility
with a key target market, teenagers. This could damage sales, for example teenagers may start an online
campaign in support of Mr TT and start a boycott of DD.
It isn’t clear from the scenario how long has elapsed since the health watchdog report stating that DD’s
products have high sugar levels and linking them to gum and tooth decay was released. It is essential
that DD responds promptly and honestly to the report. It may be necessary to introduce ‘low sugar’
products to better reflect the current expectations of society.
One aspect of DD’s activities that should help support its ethical, socially responsible stance is the
donating of a percentage profits to a number of local charitable causes every year. However, if the
products themselves are seen as unhealthy and DD appears to be misleading the public, this will
outweigh the positive public sentiment generated by the donations.
(b)
Market positioning involves designing the company's offer and image so that it occupies a distinct and
valued place in the target customer's mind.
DD’s main target market appears to be children and teenagers, as most advertising targets this group.
The marketing mix (product, price, promotion, place) and branding play an important role in DD’s
positioning to appeal to children and teenagers.
The ‘product’ includes the drink itself, the packaging and the ‘package of benefits’ the consumer gets
from the purchase. The taste, ingredients, any health benefits (or adverse effects) and physiological
benefits such as feeling part of a particular social group are relevant. The social aspect is particularly
important for teenagers who generally seek social acceptance and want to be seen as ‘cool’ or ‘hip’.
DD’s pricing strategy is typical of that found in the soft drink sector. DD’s premium products are
branded as DD offerings. DD produces other, cheaper products that are branded in a different way, for
example supermarket own brands. Price is used to reinforce customer perceptions of quality – the
implication is that a DD branded drink must be higher quality as it is more expensive. Teenagers, even
those who are relatively cash poor, are often prepared to pay a premium price to buy-in to the brand
culture (if they identify with it).
Promotion has proved to be problematic for DD. The target market of teenagers identify with
personalities such as Mr TT whose image seems at odds with DD’s highly ethical, socially responsible
public image. To retain credibility with a key target market (teenagers), DD may need to consider
relaxing its ethical stance and trusting the public to understand that a relationship between DD and
with Mr TT does not mean DD endorses violence and the exploitation of women. The alternative would
be to perhaps target a different market segment, such as the over 20s. This would probably require
product development (perhaps a sports rehydration drink) and some market repositioning, which
carries risk.
Place refers to how the product is distributed and how it reaches its customers. Soft drinks are
generally purchased at supermarkets, other convenience stores and from vending machines. The
support of the large supermarket chains is vital to ensure an effective route to market (supermarket
shelf space is highly sought after). Teenagers are increasingly using supermarkets, particularly the
smaller ‘local’ or ‘metro’ stores located in town and city centres.
Branding is important in the drinks industry. Effective branding can result in a drink becoming
associated with a certain attitude and lifestyle. This breeds brand loyalty, and explains why people
are often prepared to pay more for a branded drink than they will for a supermarket ‘own brand’
product that they may actually struggle to taste the difference between in a blind tasting. Branding
requires extensive, effective advertising, so is expensive. Effective spending on branding is an
investment in future sales.
(c)
The likely benefits of DD’s increased use of the Internet for marketing purposes include the following.
Increasing online advertising should enable DD to spend less on television advertising
The Internet provides DD with the potential to establish a community and to spread its message
using e-mail and social networking tools such as Facebook (to go ‘viral’).
The Internet provides interactivity, speed (instant feedback) and convenience (including access via
mobile devices). Potentially, DD can reach people anywhere, anytime. This is particularly true of
teenagers, who tend to be early adopters of technology such as the mobile web (and fans of web 2.0 with
users interacting and collaborating with each other).
DD can use the Internet to forge relationships with other organisations, both commercial and
charitable. For example, the DD website could host music quizzes with electronic iTunes vouchers as
prizes. Links to charities could also be provided, free of charge, to reinforce DD’s ethical, responsible
position.
DD could also launch a mobile application (‘get the DD app’). To appeal, this must be credible and offer
something more than just DD marketing material. For example, a deal with a record label could be
struck which allowed limited streaming of music videos through the DD app.