Download principles of marketing answers and marking script nov 2012

PRINCIPLES OF MARKETING ANSWERS AND MARKING SCRIPT
NOV 2012
QUESTION 1
Corporate aims/objectives.
The organisational as a whole should have a set of overall corporate aims and
objectives. For a business these are primarily financial: profitability and return on
capital employed, and growth in earnings per share. Non financial objectives may
include for example, achievement of a particular marker share, or growth in market
share, reputation for social or environmental responsibility, or a reputation as a
leading employer.
All subordinate objectives set by the individual or departments within the
organisation should fit the overall objective and be coordinated with other objectives.
Marketing objectives.
Marketing objectives should be clear statements of where we want to be in
marketing terms. They describe what we expect to achieve as a result of our planned
marketing actions. Examples may be as follows:
a) To grow market share from the current X% to Y% by 200X
b) To achieve sales revenue of KXX million at a costs of sales not exceeding
80% in 201X.
Attributes of good objectives.
Good marketing objectives should be SMART. For example , ‘ to increase sales
profitably’ might serve as a broad aim, but not as an operational objective. It does
not say when. ‘To increase sales profitably in twenty years time’ does not say by how
much and it does not say what profitability.
Criteria for assessing if an activity will help meet marketing objectives.
a)
b)
c)
d)
Effectiveness; Does it fulfil the objective e.g. help increase market share.
Efficiency; does the activity use its resources efficiently e.g. keep deadlines.
Economy; does the activity fall within the budgeted expenditure costs.
Elegance; Does the activity feel right for the company; e.g. does it enhance
the image of the company.
e) Ethicality; does the activity promote socially responsible images.
Scheme/Script; 1a, 1b and 1c five (5) marks each; Total 15 marks
QUESTION 2
Gap Analysis.
Is a planning technique which identifies likely shortfalls in future performance and
considers how best they can be filled.
Gap analysis starts with a comparison of what the organisation wishes to achieve
and what it is likely to achieve if nothing changes. The organisation must then
identify different strategies to fill the gap.
Kmillion
Target profit
Profits
Time
Profit gap of Kmillion to be filled by
growth strategies
Kmillion
Time
Forecast profit
Ansoff’s growth strategies
Ansoff’s growth matrix model identifies four possible options for Divine Processors to
close the sales gap. These strategies include: market penetration, product
development, market development and diversification.
Product
Existing
Existing Market
New Market
Market penetration
Market development
New
Product Development
Diversification

Market penetration: - Involves selling more of existing products in existing
markets. This is a low risk strategy as it focuses on encouraging existing
customers to use more of the product as well as attracting new customers.

Market development: - Involves expanding the market using existing products.
Market expansion can be either geographically or new segments.

Product development: - Involves the development of new products for existing
markets. This is done by tailoring the products to fit the needs of existing
customers.

Diversification: - Involves creating new products to cater to new markets;
however the new products are similar to existing products. This is a high risk
strategy as it involves a whole new marketing mix as well as NPD.
Scheme/Script; 1a, five (5) marks.
1b, two (2) marks for the model and two (2) marks for each
Four (4) of the strategies explanation, total 10 marks.
Total marks
15 marks
QUESTION 3
The bank will need to consider the following when making their decisions about the
marketing mix.
Product
What is the core customer need and determine what is the basic service that is
required to meet this. The augmented product should meet or exceed the customer’s
expectations.
Price
How much should the services cost and what pricing strategy the bank should use
are important considerations. An understanding of the pricing policy of the
competition is crucial to evaluate how the price would affect market share and the
volumes of customer using the bank.
Place
The bank needs to consider the location and additional facilities such as car parking
capacity.
Promotion
Determining what is the most effective means of promoting the bank’s products to it’s
customers is important here. National wide above-the - line or localised, more
personalised promotions could be considered.
Process
All systems supporting the front-line must be efficient to avoid errors and time
delays. Any process that causes the customer to wait any amount of time is likely to
have an adverse effect on perceived customer service.
People
Staff must be polite, friendly, attentive and helpful. For a bank the impression that
customers receive from staff significantly contributes to the perception of a quality
service.
Physical Evidence
The automatic Teller machines, website, visa cards, monthly bank statement,
branded leaflets and receipts will be the physical evidence which also communicate
to the customers.
Scheme/Script; Two (2) marks for each of the element (7), total 14 marks.
One (1) mark for rare insight.
Total 15 marks
QUESTION 4
Demographic factors to be considered.
a)
b)
c)
d)
e)
Size of the population.
Rate of population growth.
Degree of urbanisation.
Population density.
Age structure and composition of the population.
Economic factors considered.
a)
b)
c)
d)
e)
GDP per capita.
Income distribution.
Rate of growth of GNP.
Level of disposable incomes.
Taxation.
f) Inflation rate.
Social – Cultural factors considered.
a) Dominant values.
b) Lifestyle patterns.
c) Ethnic groups.
d) Linguistic fragmentation.
e) Family Life Cycle.
f) Attitude towards business.
Scheme/Script; Five (5) marks each.Student to unpack five items on each (3x5)
Total 15 marks.
QUESTION 5
Application and usefulness of the product life cycle.
The product life cycle concept proposes that all products will go through a life cycle
from introduction of the product to the market through to decline. They do not live
forever; some have a brief moment of glory, others persist in relative obscurity, but
they all wax and wane in popularity
Their ‘lives’ like ours, can be divided into several stages:





Products are ‘conceived’ and developed until they are ready to be launched.
They are introduced on the market i.e. born.
They ‘grow’ to the limits of their sales potential.
They ‘mature’ as their markets become saturated and more competitive.
They decline and ‘die’ as demand falls and alternative products are ‘born’ to
begin the cycle again.
PRODUCT LIFECYCLE (PLC)
a) Product introduction
Company needs promotion to pioneer the acceptance of the product, since it
is not sought out by customers. Potential target customers must be told about
the existence, advantages, and uses of the new product.
b) Market growth
The innovator begins to make substantial profits. Competitors start coming
into the market and each tries to develop the best product design. There is
much product variety. Some competitors copy the most successful products.
c) Market maturity / saturation stage
Many competitors have entered the race for profits. Industry profits decline
throughout the market maturity stage because promotion costs climb and
some competitors begin to cut prices to attract business.
d) Decline stage
New products replace the old. Price competition from dying products may
become very vigorous. As new products go through the introductory stage,
the old ones may retain some sales by appealing to the most loyal target
customers, perhaps older people or those who found unique satisfaction.
Value of PLC
 Recognizes that all products have a life span so new products have to be
developed to replace established ones
 Provide the basis for guidance on appropriate strategies for each stage of the
PLC
 Emphasize that marketing objectives vary according to the stage of the PLC
Limitations of the product life cycle.
a) Stages cannot easily be defined.
b) Some products have no maturity phase and go straight from growth to
decline; others have a second growth period after an initial decline. Some
have virtually no introductory period and go straight into a rapid growth phase.
c) Strategic decisions can change a product’s life cycle.
d) The traditional plc presupposes increasing competition and falling prices
during the growth phase. This pattern of events is not always found in
financial markets where there is a tendency for competitors to follow-myleader quickly.
Scheme/Script; Two (2) marks for explaining the plc concept.
Three (3) marks for unpacking each stage; (4x3);
Total: 12 marks.
Two (2) marks for each limitation; student to mention at least
Three ;( 3x2): total: 6 marks.
Total 20 marks.
QUESTION 6
The concept and importance of branding.
A brand is a name, term, sign, symbol, design or a combination of these that is used
to identify the goods or services of one organisation to differentiate them from those
of the competition. A brand conveys a specific set of features, benefits and services
to customers.
A powerful brand has strong loyalty, name awareness, perceived quality, and strong
brand associations. Marketers need to manage their brands carefully in order to
preserve this equity. This requires continuous investment to provide a constant flow
of improved and innovative products to satisfy customer’s ever changing needs.
What makes a brand.
a) Effective product
b) Distinctive identity.
c) Added values, supported by
d) Visible symbols, advertising, presentation.
e) Invisible attributes such as assets and competences, strong R&D, supply
chain, effective selling and costs.
Benefits of branding.
To customers:
a) Makes it easier to choose between competing products.
b) Helps to cope with information overload.
c) Support aspirations and self image.
d) Confer membership to reference group.
To Marketers:
a) Add value to the product.
b) Creates a favourable impression in the mind of eth customer.
c) Differentiates a product among competitor products.
d) Encourages application of the pull strategy.
e) Reduces the importance of price.
To shareholders.
a) Promises future cash flows.
b) Build market share which can generate high profits through;
i)
Higher volume sales.
ii)
Higher value (higher prices)
iii)
Higher control over distribution.
Scheme/Script: Four (4) marks for explaining the branding concept.
Two (2) marks for each benefit of branding; students to
mention at least 8 benefits. (2x8); total sixteen (16) marks.
Total 20 marks.
QUESTION 7
Characteristics of marketing in the service sector
Intangibility
We cannot normally touch, hold, see or even smell a service. The intangibility makes
them difficult to demonstrate or sample. Because prior evaluation is impossible we
rely on the experience of others to guide our choice of services. The reputation of the
provider of a service becomes a crucial ingredient in the buying decision, and word
of mouth a powerful advertising force.
Inseparability.
Services typically cannot be separated from the creator – seller of the service.
Moreover, many services are created, dispensed, and consumed simultaneously.
For example; a bank teller create and dispense almost all their services at the same
time, and they require the presence of the customer for the services to be performed.
Customers receive and consume the services at the production site.
Perishability.
Services cannot be stored. They cannot be produced in advance and held in stock
until required.
Heterogeneity.
It is impossible for a service industry, or even an individual seller services to
standardise output. Services are non – uniform and difficult to standardize as they
are usually tailor - made for the customer.
Ownership.
Although purchased, services may not be ‘owned’ in the conventional sense.
Services are sold on the basis of access to facilities, information and expertise.
The extended marketing mix (Service mix).
The marketing mix for product’s is the well known 4P’s. For service marketing we
add three additional P’s to our tool kit. The three extra P’s are:
People.
If people are inseparable from the service they provide, they become very important
aspects of marketing of that service. We make decisions about which services to
choose not only on our experience of the quality of what is provided but also on our
perceptions of the person providing it.
Process.
Activities, information flow and supporting procedures and systems which create and
deliver services. For a bank, say an ATM.
Physical Evidence.
Most services have a tangible aspect to them which can provide some physical
evidence to the potential buyer about the service on offer.
Physical evidence is a tangible evidence of the purchase and physical factors in the
purchase environment; example; staff uniforms, tickets, receipts.
Scheme/Script; Two and half (2.5) each point, total of 8 points. (8x2.5); total
marks 20 marks.
Total 20 marks.
QUESTION 8
The Marketing Communication model.
Marketing communications flow from an organization to its customers, potential
customers and the groups who may influence its success. They involve many types
of communications: some deliberate such as advertising, others unplanned such as
personal recommendations. The communications may be supportive such as
personal selling or critical such as adverse press comments. In total, these
communications from an overall impression, or image, which determines how people
thick about an organization and how they may act in relation to its products.
Fundamentally, the communication process requires only four elements:




A message
A source of the message
A communication channel
A receiver
In practice, however, important additional components come into play. The additional
components are:





Encoding
Decoding
Response
Feedback
Noise
The sender:
The person or organization sending the message.
Encoding:
The process of putting abstract ideas into a form which can be understood by others.
The process of putting thoughts into words or pictures.
The message:
The written or spoken words, pictures and other symbols that are actually
transmitted.
The media:
The channels of communication that are used to take the message from the sender
to the receiver.
Decoding:
The process by which the receiver interprets the message encoded by the sender.
The receiver:
The person or group of people who receive the message
Response:
Represent the attitudes and actions of the receiver in answer in the message
Feedback:
Is that part of the response which is received back by the sender of the message.
Noise:
Any external factor that interferes distorts or block out the original communication.
Scheme/Script; Two (2) marks for explaining the communication model.
Two (2) marks for explanation of each of the nine (9) key
stages. (2x9): total 18 marks.
Total 20 marks