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PRINCIPLES OF MARKETING MODEL ANSWERS 2015 Section A Question1 Economic environmental factors define the investment climate prevailing in an economy. Factors a) inflation b) interest rates c) foreign currency d) savings e) per capita income f) income distribution etc [3marks each = 15] Question 2 Advantages -all overheads are met -allows for profit return on top of cost -easy to calculate -no need to make frequent adjustments as demand changes -fairer to both producers and consumers Disadvantages -does not take into account other marketing mixes -does not include consumer perception -ignores other factors e.g. going rate for similar products -ignores needs and wants of consumers -may be difficult to identify direct costs and overheads -does not consider elasticity of demand Question 3 a) Process of subdividing a market into distinct and increasingly homogeneous subgroups of customers where any group can be selected as a target to be met through a distinct mix (and any other version students give) [3marks] b) Benefits to firm -more able to spot new marketing opportunities because of better understanding of consumer needs -specialists can be used for each segment -total marketing budget is allocated to take care of needs of each segment -product adjustments can be made to suit each segment -firm can dominate some segments -allows for highly targeted marketing activity [3marks each =12] 1 Question 4 Intensive strategy -distributing products through all available outlets -used for fast moving consumer goods Results in high sales volumes [5marks] Exclusive strategy -granting some outlets exclusive rights to distribute firm’s products -ideal for speciality products that need demonstration [5marks] Selective strategy -selected outlets are allowed to distribute firm’s products -ideal for shopping products [5marks] Section B Question 5 a) Existing Prod (.5 mark Existing market (0.5mark) Market Pene (0.5 mark) New market (0.5 mark) Mkt. Dev (.5 mark) New Prod (.5 mark) Product Dev (.5 mark) Diversification (.5 mark) [4 marks] b)Market penetration -used when firm still has confidence with both market and product Strategies: Reduce prices, increase promotion, increase number of outlets, introduce new uses of product [4 marks] Product development -used when firm still has confidence with the market but not the product Strategies -add new features to the product to make it more attractive -design new product for same market [4 marks] Market development Used when firm still has confidence with the product but not the market Strategy -extend market boundaries -develop new market [4 marks] Diversification Used when firm wants to spread risk from current products and markets Strategy Introduce new product in new market [4 marks] 2 Question 6 Market analysis -overview of micro and macro environment [4 marks] Brand situation analysis -analysis of brand’s personality and individual attributes i.e. is promotion projecting the right image, is packaging aggressive, does product needs updating [4 marks] Targeting future positions -target markets -decide on brand positions -decide on brand scope [4 marks] Testing new offers -once targeting is done, develop new marketing mix and test the brand concept [4 marks] Planning and evaluating performance -set brand’s budget -establish support activities [4 marks] Question 7 -attack by global competitors on the domestic market e.g. low prices -discovery of foreign markets with higher profit opportunities -stagnation or shrinking in the domestic market -need for an enlarged customer base to achieve economies of scale -to reduce dependence on one market so as to reduce risk -company customers may be going abroad and requiring continued service [20 marks] Question 8 Introduction stage Communication objective – create awareness Promotional tool(s)/mix used are: -advertising -sales promotion -publicity -personal selling Growth stage Communication objective – still creation of awareness but at a reduced level Promotional tool/mix Advertising Maturity stage Communication objective – make customers buy more through positioning and repositioning of products Promotional tool/mix 3 Persuasive advertising, sales promotion, personal selling Decline stage Communication objective – promote awareness and communication of product features Promotional tool/mix Advertising and sales promotion [5 marks each = 20] 4