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Download Principles of Marketing May 2013 Exam paper
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PRINCIPLES OF MARKETING MAY 2013 SUGGESTED SOLUTIONS Answers Question 1 No Benefit 1 Increased purchase support 2 Lower cost 3 Lifetime value increases 4 Sustainable advantage 5 Word-of-mouth 6 Employee satisfaction of and/ or customer competitive Discussion Customer tend to increase support when dealing with a bank with which they have a relationship. Naturally people are prepared to save their money assets with banks they know and trust Attracting new customers is almost always more expensive than retaining existing ones. Lifetime value is a key concept in relationship marketing: the value of a customer is measured by how much she will spend in a lifetime rather than in a single transaction The intangible aspects of a service are often difficult to copy: a bank’s service and its people are unique. By definition loyal customers are difficult for competition to lure away Because services are intangible and often difficult to judge in advance, word-of-mouth plays a much stronger role than is the case with physical products. People rely heavily on recommendations of friends. Decisions about life insurance are based on previous experience and recommendations Staff often prefers working in banks with a loyal customer base because dealing with strangers is stressful. Regular complaints tend to demoralize staff very rapidly Scheme/ Script: Three [1] marks for each benefit treated Number of benefits requested [Total Marks 03 x5 15] Answers Question 2 No 1 Diffusion Stage Innovators PLC Stage Introduction 2 3 Early Adopters Early majority Growth Phase Maturity Phase 4 Late majority Maturity Phase 5 Laggards Decline Phase Product Mix Emphasis Innovators like to be first to own the latest product. Price is not a serious consideration Product quality and price matter Price and availability [place] support matters. A lot of promotion is needed Availability [place] and low prices drive demand Low prices, high availability [place] and a lot of promotion Scheme/ Script: A Draft qualification exam for the Institute of Bankers in Malawi 1 Three [3] marks for each stage treated Number attempted [Total Marks 03 x5 15] Answers Question 3 NO 1 2 Analysis Method Comparison with sales forecasts Comparison with competitor’s sales 3 Comparison with industry sales 4 Cash volume sales analysis 5 Unit sales analysis 6 Sales by geographic unit 7 Sales by product or brand 8 Sales by type of customer Explanation The bank compares the actual sale achieved against what was forecast for the period Using available information, bank can estimate the extent to which marketing activities have made inroads into the competitor’s business. Bank should strive to measure whether growth is due to own initiatives and not the incompetence of the competitor Examine bank’s performance in terms of market share. Easy in a market like Malawi where only a handful of banks are operating Comparison of sales in terms of cash generated. Disadvantage is approach may convince bank that they have done well than is the true situation Comparison of sales in terms of units sold or number of transactions undertaken. Good measure of tellers/ salespersons’ activities. Sales broken down by region or area where banks are located to determine best and least performing regions This is best used as a portfolio judgment exercise to determine ‘stars’, ‘dogs’, ‘cash cows’ etc and thus determine products to be dropped from a range Used to reveal where most effort is being spent especially on customers who may be bringing in very little revenue—the 80-20 principle Scheme/ Script: Three [3] per analysis method treated Number of analysis method requested 03 x5 [Total Marks 15] Question 4 No 1 Reasons for Internationalization Small or saturated domestic markets 2 Economies of Scale Explanation and Examples It is difficult to expand in a small or saturated market. Banking markets are small in Malawi because of the small urban population and the rural market is still generally inaccessible Installing new banking products or innovation occurs at very high breakeven point that must be spread over a larger population. Therefore a world banking market may justify a new banking product or technology A Draft qualification exam for the Institute of Bankers in Malawi 2 3 International production 4 Customer Relationships 5 Market diversification 6 International Competitiveness Involvement in global banking means ability to source resources in the worldwide market and this leads to competitive prices and lower operating costs Bankers in the global market are geared to deliver worldwide, at competitive prices and in different currencies The broader the market served the less risk of the bank suffering if one market fails No bank is immune from competition from outside and therefore the only way to compete is to meet foreign competition on their own ground before they enter one’s home turf Scheme/ Script: Three [3] for each reason Number to be attempted 3 x5 [Total Marks A Draft qualification exam for the Institute of Bankers in Malawi 15] 3 Answers Question 5 Stage Description 1 Product 2 Selling 3 Marketing 4 Societal Marketing Production/ Manufacturing Emphasis Production is the primary concern. Manufacturers are interested in increasing capacity Manufacturers have excess capacity and now seek to push much volume into the market by ‘encouraging’ consumers to take more of the same goods on offer Manufacturers adjust their production capacity by first determining market needs and producing accordingly Manufacturers are more sensitive to the goods they manufacture and the manner those goods are produced in order to be in line with environmental and sustainability concerns Scheme/ Script: Five [5] each stag treated Number of stages requested Marketing Emphasis It is a producer/ suppliers’ market. The customer will take anything on offer. Demand outstrips supply It is a buyer’s market as supply increasingly outstrips demand Sales persons are everywhere working hard to close sales and move surplus volumes Demand and supply are in equilibrium. Manufacturers produce in response to expressed demand Customers buy from producers who pay attention to the need to protect their long-term welfare through concern for the environment and availability of sustainable resources 05 x4 [Total Marks 20] A Draft qualification exam for the Institute of Bankers in Malawi 4 Answers Question 6 No 1 Method Product Description 2 Inspection 3 Sampling 4 Negotiation Description Managers in the organization lay down exactly what is required and the buyer is given a brief of finding the best supplier. For example buyer may be asked to find supplier of the right desk computers for bank tellers Is commonly carried out for variable goods such as second hand bank equipment For example if the bank were to buy second hand cars for certain uses; someone must go and inspect them Commonly used for agriculture products to determine quality. In a bank a computer company may delivery sample units for trial purposes Typically used in one-off buying process. This involves a lot of skills of the buyer and salespersons and managers to arrive at an agreeable price based on quality, quantity and support services Scheme/ Script: Five [5] marks for each method Number of aspects requested 05 x4 [Total Marks Answers Question 7 No Porter’s Five Force 1 The bargaining suppliers 2 The bargaining customers power of power of 3 The threat of new entrants 4 The threat of substitute products or services 5 The rivalry competitors among current 20] Discussion The greater the suppliers’ power, the stronger the competitive pressures The stronger the customers’ power, the more competitive is the environment If it is easy to enter a market or if there is a likelihood that the market is becoming attractive to new players, the market will become competitive New products may come and meet the same needs as the existing products but in different ways. It is thus difficult to see the threat until too late! In some markets competitors are careful not to compete too strongly for fear of losing out in the long-run—oligopolistic markets. In other markets competition is fierce Scheme/ Script: A Draft qualification exam for the Institute of Bankers in Malawi 5 Four [4] marks for each correct approach Number of approaches requested 04 X5 [Total Marks Answers Question 8 No Internet Characteristic 1 Communication Style 2 Social presence 3 Consumer contact control of 4 Customer content control of 20] Description Internet uses an interactive style It is synchronous—happens immediately It is also asynchronous—there are significant time delays between message and response Provides a feeling that communications are taking place at a personal level Internet communications have high social presence as recipient is usually in her home environment Consumers are able to control the time and place when they access information and thus willing to participate in the process of extracting the information from the computer or and disseminating machine Most websites are interactive enabling customers to control the information gathering process If the customer can control content of the message An e-mail address allows customers to ask specific questions and thus tailor the communications Scheme/ Script: Five [5] marks for each of the factors Number of Internet factors requested 05 x4 [Total Marks A Draft qualification exam for the Institute of Bankers in Malawi 20] 6 A Draft qualification exam for the Institute of Bankers in Malawi 7 A Draft qualification exam for the Institute of Bankers in Malawi 8 A Draft qualification exam for the Institute of Bankers in Malawi 9