Introduction to Marketing (MM2711) Consultation Session for accessing exam scripts Part 1 Discuss the answers and common mistakes of the exam paper (9:00 ~ 9:30) Part 2 View the exam scripts (9:30 ~ 10:30) 1 Part 1 Discuss the answers and common mistakes of the exam paper 2 Q1 Almost every time a new-to-the-market electronic device (iPods, iPhone, plasmascreen TVs, digital cameras, PlayStation, etc.) has been introduced, the marketer has used a price skimming strategy. Why? 3 Suggested answer to Q1 • to signal high quality, communicate prestige, exclusivity • to limit demand – give the firm time to build production capacity • to earn back R&D expenditures • to test consumers' sensitivity to price because it is difficult to raise prices once a product has been introduced. Easier to lower prices later • do not know what the demand would be like, to avoid having to try to raise prices later 4 Common mistakes of Q1 • Discuss conditions of using the skimming strategy, instead of the reasons of selecting this strategy. • Discuss the penetration strategy that is not required by the question. 5 Q2 a) There is an old advertising adage, "I know I am wasting half of my advertising budget. I just do not know which half." What is the lagged effect? How does it contribute to this dilemma? b) Despite the problem in (a), why is it still important to try to measure the success of a communications effort? 6 Suggested answer to Q2a • The lagged effect is the delayed response to an IMC campaign. Marketers want to see results from their IMC efforts but, often consumers may need multiple exposures. They do not immediately act in response to marketing communications messages. They may progress slowly from attentioninterest-desire-action (AIDA). 7 Suggested answer to Q2b • Answers should anticipate issues – about allocations to more effective areas, concern for scarce resources, – about improving effectiveness and efficiency, – about determining which areas should be considered for additional investments. • Without some way to compare the expenditures and results, it would be impossible to compare the efforts and outcomes. 8 Common mistake of Q2 • Discuss all the steps in the advertising plan that are not required by the question. • Discuss different budgeting methods that are not required by the question. 9 Q3 Grewal and Levy (2010) said that perhaps no other aspect of globalization has posed more difficulties to marketers than culture. With reference to the video clip “Kraft: Marketing Oreos Globally” shown in the class, describe in detail how a marketer working for an instant noodle manufacturer can determine if its marketing strategy needs to be adjusted in another country. 10 Suggested answer to Q3 • Conduct market research to determine local consumer preferences and make adjustments if necessary, e.g. – taste tests, how locals eat noodles (with fork or chopsticks? – determine length of noodles), – when they eat it (breakfast, snack, main meal? – determine size of packaging), – how they cook it (on a stove, microwave, hot water in a cup? – determine type of packaging), – where they buy it (convenience store, supermarket? – determine where to sell and how many to bundle in a pack) 11 Suggested answer to Q3 (continued) • Get feedback from local partners on how fellow citizens will respond to the specific product and marketing campaign. This is to ensure that local cultures can relate to and will not be offended by the message e.g. may be inappropriate to promote beef noodles in India. 12 Common mistakes of Q3 • Do not provide relevant example of determining local consumer preferences. These examples should be related to the instant noodle. • Discuss issues (e.g. marketing 4P’s) that are not relevant to culture. 13 Q4 The consumer decision process can be influenced by situational factors. Assume that you are opening a new, small restaurant near the campus, and the restaurant targets at the PolyU students and staff. What factors in the shopping situation can influence consumer decision making? What will you do to generate a nice dining environment to attract and maintain your customers? 14 Suggested answer to Q4 Shopping situation is a particular act of buying behaviour occurring at a specific point in space and time. Factors in the shopping situation of a restaurant include: • • • • store atmosphere sales people and other personnel crowding in-store demonstrations (e.g. chef cooking in front of guests) • promotions (e.g. free dessert), and • packaging (e.g. of mooncakes, new year carrot cake, rice dumplings) 15 Common mistakes of Q4 • Do not know what shopping situation means. • Discuss issues (e.g. food quality and price) not relevant to shopping situation. 16 Q5 a) How does market segmentation help companies in achieving higher customer satisfaction? After all, what are the reasons for segmentation? b) Assuming you are the marketing manager of a local leading supermarket chain, discuss who are your target customers and what dimensions/variables you would use to segment the grocery market? 17 Suggested answer to Q5a A market comprises customers of different needs and characteristics and no single company can serve the entire market well or please everyone in the market. Hence, there is a need to divide or segment the entire market into a number of homogeneous groups and target the group of customers which the company has advantages to serve. In doing so, the company can concentrate its resources and direct its marketing efforts in addressing the particular needs of target customers and satisfied them better than competitors. 18 Suggested answer to Q5a (continued) Reasons for segmentation • enable the company in selecting a sub-group, which it has advantages to serve (i.e., who to serve), • give company a focus and come up more specific marketing objectives and plans (i.e., where to go), and • position the company relative to other competitors, which facilitates the branding building (i.e., where we are) 19 Suggested answer to Q5b • The target customers of a local leading supermarket chain are people of main responsibility in buying household products for the family (e.g. housewives) • Three major dimensions: – 1) demographic (e.g., gender, income, social class etc.), – 2) behavioral (e.g., benefit sought/price sensitivity, purchase quantity in each shopping, shopping time and regularity etc.), and – 3) psychographic (e.g., attitudes, opinions, values, lifestyle etc.) 20 Common mistakes of Q5 • Discuss different ways of targeting (e.g. undifferentiated, differentiated, concentrated strategies) that are not required by the question. • Some funny (but incorrect) answers: Target customers of a local supermarket are: – local residents of Hong Kong – people living around the supermarket 21 Q6 a) Describe the distribution intensity commonly adopted for each of the following products as well as the reasons for such choices: i) Soap; ii) Notebook computer and iii) Luxury watch (e.g. Patek Philippe) b)What is disintermediation? Explain, with an example, why new communication technologies (e.g. internet and mobile phone) can support disintermediation 22 Suggested answer to Q6a i) Soap - intensive distribution l Coverage: as many intermediaries as possible l Maximum convenience for customers l Maximum brand exposure – customers will not spend effort in searching l Least selling support provided by the manufacturer l Least control from the manufacturer ii) Notebook computer - selective distribution l Coverage: 1 < X < many (good market coverage) l Good control from the manufacturer l Expect better-than-average selling support provided by the manufacturer l Less costly to manage than intensive distribution l Customers are willing to search and spend time comparing alternatives iii) Luxury watch - exclusive distribution l Coverage: 1 per territory l Prestige image l Maximum control from the manufacturer l Maximum selling support provided by the manufacturer l Protects intermediary – no competing intermediary who will cut price l Legal if not anti-competitive 23 Suggested answer to Q6b Disintermediation – product and service producers are bypassing intermediaries and selling directly to final buyers Example 1: Amazon is an online bookstore. A customer orders the book and completes the transaction online, and Amazon sends the book to the customer without traditional intermediaries such as distributor, wholesaler and retailer. Example 2: Users of mobile phones may purchase and download a ring tone from the Web. The product is an electronic file that can be used immediately after downloading. There is no intermediary including the physical delivery of the product. 24 Common mistakes of Q6 • Do not know what disintermediation means. • Incorrect spelling of jargons: – intermediary intermediate – Intensive Extensive – Selective Selected 25 Part 2 View the exam scripts 26 Important Notes • You have to return the exam script and cannot take it away from this room. • Because of security, privacy and limited manpower (i.e. only me), I can only allow about 10 students to access their exam scripts in each time slot of 10 minutes. 27 Time slots for accessing exam scripts • • • • • • Number: 00 - 00 Number: 00 - 00 Number: 00 - 00 Number: 00 - 00 Number: 00 - 00 Others coming late Time: 9:30 ~ 9:40 Time: 9:40 ~ 9:50 Time: 9:50 ~ 10:00 Time: 10:00 ~ 10:10 Time: 10:10 ~ 10:20 Time: 10:20 ~ 10:30 28 Important Notes (continued) • When you are viewing your exam scripts, – please sit at the first two rows of the room (i.e the two rows closest to the screen). – please do not hold or use any pen before returning the exam script to me. 29 Important Notes (continued) • After viewing the exam script, – if you have no question, please return the exam script to me. – if you have simple questions, please ask me in your time slot and then return the exam script to me. – if you have complicated questions, please return the exam script to me first, and then ask me after 10:30. I have more time to process your questions after all students have accessed 30 the exam scripts.