Marketing and the commercial function: market analysis, marketing mix, digital marketing
Domain 4 - Marketing and the commercial function
Expect a case on segmenting a market, choosing a positioning and building a coherent marketing mix, plus one calculation from a digital campaign. Marks are lost for describing tools without linking them to the chosen target segment.
Core rules and concepts
- STP: segmentation (demographic, geographic, psychographic, behavioural), targeting, positioning; a usable segment must be measurable, accessible, substantial and actionable.
- Mix: product (levels, life cycle, brand), price, place, promotion; services add people, process and physical evidence.
- Pricing: cost-plus, penetration (low launch price to build share), skimming (high launch price for innovators), value-based, psychological/odd pricing, price discrimination.
- Product life cycle: introduction, growth, maturity, decline - the mix changes at each stage.
- Ansoff matrix: existing product/existing market = penetration; new product/existing market = product development; existing product/new market = market development; both new = diversification.
- Distribution intensity: intensive, selective, exclusive.
- Digital marketing: SEO (organic) versus SEM (paid), content and inbound marketing, social media, email. Metrics: CTR = clicks / impressions; conversion rate = conversions / clicks; CAC = spend / customers acquired; ROAS = revenue / ad spend.
Worked example
A campaign costs €600: 50,000 impressions at 2% CTR give 1,000 clicks; a 4% conversion rate gives 40 orders; the average ticket is €80, so revenue is €3,200. ROAS = 3,200 / 600 = 5.33; CAC = 600 / 40 = €15 per customer. If margin per order were only €10, gross margin would be €400 and the campaign would destroy value despite a healthy ROAS - always finish the calculation on margin, not revenue.
Traps that cost marks
- Reporting ROAS as a percentage, or confusing it with ROI.
- Swapping CTR and conversion rate.
- Calling a new product aimed at a new market "market development".
- Writing "lower the price" as a strategy without naming the objective.
- Ignoring that price itself signals quality in positioning.