Download Principles of Marketing May 2013 Exam paper

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