Download PRINCIPLES OF M ARKETING

ANSWERS TO PRINCIPLES OF MARKETINGEXAMINATION
NOVEMBER 2008 RESERVE PAPER
QUESTION 1
(1)
INTANGIBILITY
-
-
-
Services are intangible because a customer cannot taste, feel,
see or smell them before purchase.
Only benefits derived from a banking service – e.g. collecting
cash from an ATM or purchasing an insurance policy – can be
portrayed or are offered by the seller.
Whilst a bank “sells money” – money is not a product because it
is only a medium of exchange.
A bank therefore offers means/services to facilitate exchange or
transactions – the latter are the real services and these cannot
be touched (intangible) or stored (perishable).
An insurance policy offers a secure life at a later date as an
intangible service, whilst the policy is a tangible service the
“better life” is the real service on offer!
* Student must treat the four sub-elements or marketing solutions to
intangibility.
(2)
(a)
Visualization
Pictures showing people using and ATM or elderly people in a
setting showing success as a consequence or earlier prudence.
(b)
Association
Connecting a service to a tangible good, person or object – a
farmer in a healthy field of crops may represent a successful
agricultural financing scheme.
- Tiger Woods and American Express.
- The Rock of Gibraltar is used by insurance firms to represent
stability and security.
(c)
Physical Representation
Bank products use various “metal” colors to symbolize wealth
and prestige – Gold/Platinum credit cards.
(d)
Documentation
Facts and figures are quoted to support claims of performance
and success.
- Rated the No 1 bank of Malawi for three consecutive years
by the Banker Malawi Magazine.
PERISHABILITY
Services are perishable because they cannot be stored – idle bank
clerks when there are no customers cannot have their idle time
inventoried or stored and utilized when customers arrive.
- Notable exceptions to service perishability – thus storable – are
health and life insurance because policies are bought by customers
and held (stored) by the insurance company until needed by the
beneficiaries.
(3)
FLUCTUATING DEMANDS
Service demand is variable because human activities (and hence
demand for services) vary by time of day, week, month and year
leading to highs (peaks) in demand and lows (troughs).
(a)
(b)
Case of idle bank tellers is a result of demand variability creating
fluctuations in resource utilization.
To deal with perishability and fluctuating demand pattern for
bank tellers, multi-skilling would enable the tellers to perform
other essential tasks during service demand troughs.
Allocation of Marks out of 15
1.
INTANGIBILITY
=
7 - 3 – Definitive step
1 – 4
each marketing sub-
element
2.
PERISHABLITY
= 3 - 3 = Straight
3.
FLUCUTUATING DEMAND=
5
15
Question 2: Answer
Role of Marketing in the organisation
There is an infinite number of roles as listed below, however it is up to the
discretion of the marker to see sense in the answers given:
1. Attract customer: No company can exist without customers. To get
customers marketing team has to come up with competitive and
attractive products that appeal to the customers’ needs and wants.
2. Retain customers: There is no point winning customers if they can not
be retained. Research has shown that its more expensive to attract
new customers than retaining old ones. But also customers tend to be
more profitable when retained over time.
3. Satisfy customers: In today’s competitive business environment,
companies can not retain customers if they are not satisfied with the
service. Therefore companies must aim to satisfy or better still delight
the customers to with their lifetime loyalty.
4. Provide competitive offers: Given intense competition no potential
customer will buy from you unless your offer is better than the
competition and therefore it is the duty of marketing g to make sure that
competitive offers are put on the market. Research should continually
be carried out in order to stay ahead of competition.
5. Provide effective communication: Unless the market is aware of your
product and its benefits they will not but from you. Therefore marketers
should make effective and efficient use of the communication mix to
inform the market of the offering.
6. Provide internal customer relationship between employees:
Satisfaction of employees is key to responsive customer service and
customer satisfaction. Unhappy employees can not serve a customer
satisfactorily.
7. Identifying customer needs (through research) and translating these
into products (solutions) with a view to satisfy them and in turn win their
loyalty.
8. Value creation across the delivery chain: Marketers should make sure
that all their activities are done with cost saving in mind so that end of
the day a profit is generated otherwise marketing effort is vain when a
loses are made.
Marks Allocation:
The mention of each stage will attract 1 mark up to 5 marks and then each
explanation to be given another 2 marks making a total of 15 marks.
Question 3: Answer
(FROM MAY 2008)
QUESTION 4
(1)
Need Recognition
Consumer is moved to action by a need.
(2)
Choice of an Involvement Level
(2 marks)
The consumer decides how much time and effort to invest in the
remaining stages.
Identification of Alternatives
(3 marks)
The consumer collects information about products and brands.
Evaluation of Alternatives
(2 marks)
(3)
(4)
(3 marks)
The consumer weighs the pros and cons of the alternatives identified.
Decision
(2 marks)
The consumer decides to buy or not to buy.
Post-Purchase Behavior
(3 marks)
The consumer attempts to resolve anxieties about the choice made.
(5)
(6)
Allocation
=
15
Section B
QUESTION 5
(FROM MAY 2008)
New Product Development Process:
There are 8 stages namely:
1.
2.
3.
4.
5.
6.
7.
8.
Idea Generation
Idea Screening
Concept Development and Testing
Marketing Strategy and Development
Business Analysis
Product Development
Test Marketing
Commercialization
Marks Allocation:
The mention of each stage will attract 1 mark making a total of 8 marks and
then each explanation to be given another 2 marks. At least 7 stages are
expected to get a total of 20 marks.
QUESTION 6
(FROM NOVEMBER 2008)
(a)
Franchising involves a continuing relationship in which a franchisor
(the parent company – in Malawi case this could be First Merchant
Bank and UGI) provides the right to use their trademarks and
management assistance in return for financial considerations from
the franchise (the owner of the individual business unit – in this
case Mr ‘X’ of Mbalachanda).
-
-
The franchise system – i.e. the combination of a franchisor and
franchisee – is a type of contractual vertical marketing system.
(By definition a Vertical Marketing System is a lightly
coordinated distribution channel designed to achieve operating
efficiencies and marketing efficiencies.
Naturally a contractual VMS involves ‘contact’ based
relationships as opposed to the other two called ‘Corporate
VMS’ involving direct channel control by one corporation and the
‘Administered VMS’ where a powerful player in the channel uses
its economic muscle to dictate distribution and marketing
policies in the channel without actually owing the channel.
The franchise system is divided into two major categories:
(1)
-
-
-
The Product and Trade Name Format
This is a distribution and marketing agreement wherein the
franchisor to sell a product line using the parallel company’s
trade name for promotional purposes. Current and most popular
‘Product and Trade Name’ franchises are found in the motor car
trade. Toyota Malawi or BP Malawi in the petroleum sector.
Thus FMB would also Mr X of Mbalachanda to use the name
FMB to open a branch at Mbalachanda. Customer would thus
be attracted to Mr ‘X’s ‘FMB’ Bank.
Meanwhile Mr X – as the franchisee – will agree to buy from
bank design and appearance.#
This format therefore emphasizes ‘what Mr X will be able to
trade in or sell’.
(2)
Business Format
-This kind of franchising covers the entire format for operating a
business involving a firm with a successful business concept
selling the right to operate the same business in a different
geographical area.
-
Current and most popular examples are those of McDonald’s or
Hungry Lion/Shoprite in Malawi.
Business franchise involves the franchisee receiving from the
parent company a proven business format, in return the
franchisor receives from the franchisee payments and
conformance to policies and standards.
-
-
(b)
Advantages and benefits of the Franchise System
-
-
-
-
-
(c)
This format, unlike the product and trade name, emphasize ‘how
the business is run’.
In this format the franchisor may supply the franchisee with
merchandise but this is not strictly applied because franchisee
expects management assistance especially marketing expertise.
Thus Mr X of Mbalachanda will not be pleased with a shop with
FMB colours but will expect FMB to come in and build his
‘banking skills’ as well as market the ‘Mbalachanda FMB
throughout Mbalachanda, Mzimba, the North and even other
parts of Malawi.
It facilitates rapid expansion of the franchisor and his concept
through additional capital generated from franchise fees.
It provides a dedicated and hard working cadre of external
entrepreneurs who are determined to succeed and protect their
personal image and investment.
It provides a dedicated and hard working cadre of external
entrepreneurs who are determined to succeed and protect their
personal image and investment.
Faced with competition from other banks/insurance firms, the
franchise system is a tool to reach into the wider market ,
expand a customer base, enhance business image at low
commitment costs and increased revenues.
Opportunity for management development in channel
development and marketing skills as franchisee is assisted with
site-selection, bank outlet design and layout, technical and
management training, promotional and marketing programs and
joint inventory ordering and supply systems.
It is a tool for both rapid expansion ahead of competition as well
as defence against intense competition in established marketing
regions.
F
QUESTION 7
1.
CONSUMER PRODUCTS/GOODS
These are products /goods/services destined for direct use by households or
ultimate customers.
Services are divided into two
a)
Durable or long lasting



b)
A fixed deposit account or a long term bond could be a good
example.
Carry high profit margins and may require more personal
attention in terms of set up and warranties/ guarantees.
Major bank products are not sold over the counter and
require appointments with the manager or visiting special
departments in the bank.
Non-durable services


Are universally or largely available and usually have low
profit margins requiring high turn over to generate sufficient
profits.
Greater use of ATMs is aimed to eliminate the costly and
time consuming service of paying out cash to clients.

In South Africa and other parts of the world ATMs are also
taking over as cash deposit points especially as wages and
salaries of bank staff continue to rise.

Consumer products can also be divided into three further
categories:
i)

Convenience goods/services
Goods /services that consumers have exhaustive knowledge
before going out to buy them. These may be staple goods
bought on a regular basis.
-Emergency goods bought on a need basis
- Impulse goods bought on impulse or whim
Very few bank products can be bought on a whim but this
does not stop bank marketers’ research into this area as part
of business development.
- Emergency loans exist in banks and increasingly insurance
companies allow their policy holders to take out loans
against their “surplus” premiums.
- Regular ATM withdrawals or over the counter claims are
“staple” type of bank services
QUESTION 8
Answer:
Face-to-face Interviews
Face-to face interviews are conducted between a market researcher
and a respondent. Data is collected on a survey. Some surveys are
very rigid or 'structured' and use closed questions. Data is easily
compared. Other face-to-face interviews are more 'in depth,' and
depend upon more open forms of questioning. The research will probe
and develop points of interest.
(2 Marks)
Advantages of face-to-face interviews




They allow more 'depth'
Physical prompts such as products and pictures can be used
Body language can emphasize responses
Respondents can be 'observed' at the same time
(2 Marks Each)
Disadvantages of face-to-face interviews



Interviews can be expensive
It can take a long period of time to arrange and conduct.
Some respondents will give biased responses when face-to-face with a
researcher.
(2 Marks Each)
( Total 10 Marks Subtotal)
Focus Groups
Focus groups are made up from a number of selected respondents
based together in the same room. Highly experienced researchers
work with the focus group to gather in depth qualitative feedback.
Groups tend to be made up from 10 to 18 participants. Discussion,
opinion, and beliefs are encouraged, and the research will probe into
specific areas that are of interest to the company commissioning the
research.
(2 Marks)
Advantages of focus groups


Commissioning marketers often observe the group from behind a oneway screen
Visual aids and tangible products can be circulated and opinions taken


All participants and the research interact
Areas of specific interest can be covered in greater depth
(2 Marks Each)
Disadvantages of focus groups



Highly experienced researchers are needed. They are rare.
Complex to organize
Can be very expensive in comparison to other methods
(2 Marks Each)
(10 Marks Subtotal)
(20 Marks Total)
Mark Allocation:
2 marks for each description and 2 points for each point making a total of 20
marks.