ABDT5114 Product Management Tutorial 3 Answer June 4, 2011

Question 1
Marketing plan is needed to:

a. Analysis the current business situation.

b. Identify threat and opportunity facing by the business.
c. Establish objective and design strategy and program necessary.
d. Assign responsibility of various personnel for achieving product objective and set timeline.
e. Encourage careful and disciplined thinking to formulate a backup plan.
f. As a guideline to evaluate performance.

It can be best used to maintain focus while allowing flexibility needed to thrive in a dynamic environment.

Question 2
Flexibility becomes more important because changing in the external environment rapidly. These
changes include customer, competitors, macro environment, PLS become shorter and customer complexity.

Customer’s behaviors are very dynamic and changing very fast. The obvious one is the eating habits.
More and more consumer had shifted their diet preference to more healthy way, and this give tone of
opportunity to health food industry and medicine sectors. This change also link closely with consumer’s
lifestyle. They move toward healthier lifestyle. As a result, this change consumers spending pattern, they
spend less in fast food and spend more in healthier food. This had given deep impact to fast food industry as
it’s perceived as unhealthy food in consumer’s mindset.

In this ultra-dynamic marketing, existing competitors are too aggressive. Every company should be
ready in every second. Be ready to crab the opportunity, be ready to make change necessary, be ready to
strike back, be ready to face new competitors, as well as be ready to quit the industry when no choice left.
In order to achieve this, we need lots and lots of flexibility to make changes fast. Besides looking on
competitors, company also need to focus closely on macro environment such as political issues, economic,
social and technology changes.

Another core factor that drives flexibility is the product life cycle had become shorter in recent year.
This happen is because of the intensive of competition. New products are introduced by competitors rapidly
to gain market share, and substitute product or new model in the same products line introduced to
substitute the current product. For example, when Apple new launches its iPhone4, its substitute iPhone3,
and grab iPhone3 market share.

Last but not least, company does not address 1 customer, but many customers at the same time,
this make company hard to deal with every 1 perfectly. Customer becomes complex and hard to
understand, their education level is higher, and information is free nowadays, as a result customers have
higher expectation ever.

In order to plan for flexibility, company must be come out with contingency planning through the
process, conduct periodic review on the process, once thing go wrong, change to contingency plan
immediately.
ABDT5114 Product Management Tutorial 3 Answer June 4, 2011

Question 3
Balancing Act
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Customer orientation Competition orientation

 Focus on customers’ requirement  Focus on competitor
and changing needs. involvement.
 Customers are the king.  Keep track of their strategy.

Competitor-orientation become more important, because customers are not loyal- they will patronize
whoever they believe provides the best satisfaction at the lowest price.

Increase attention on customer services and rotation, had shift from customer orientation toward
competition orientation. Customers are costly to lose, hence better then competitor customer service is
provided in order to retain customer.

Question 4
Strategic planning is the corporate strategy that market price at the highest place level of the organization,
the overall strategic planning has 3 to 5 year horizon.

While marketing planning is performed at the market level that could be termed the product or product line
level of the organization. Marketing planning has only 1 year time horizon.

Strategic planning is to analyze future business situation, targets and goals while marketing planning is
analyze the current business situation.

Question 5
Planning forces manager to think about current situation, opportunities and threats faced, feasible future
prospers, and way to achieve them.

Question 6
Companies stand out as master marketers, win in the following aspects:

1. Product innovation – The innovative product that enable customers have wholly new experience of
the product. E.g. Nike sport shoes.
2. Product performance – Increase the performance such as speed, or add other feature to the
product. E.g. apple iPhone has very outstanding performance in its HD screen, 5MP camera and A4
processor.
3. Customers focus – companies must focus on changing customer’s needs.
4. Well training staff – Provide professional training to staff. This make the staffs provide better
services to the customers. E.g. McDonalds.
5. Philosophy- customers are the King.
ABDT5114 Product Management Tutorial 3 Answer June 4, 2011

Question 7
Relationship marketing become critical in the last decade because customers is lifeblood to the company, its
bring profit to the company for sustain survival.

Relationship marketing calculates customer live time value, which provides company the long term
economic benefit. Without understand this value, company might fail to serve their value customer at the
first place, and hence cause customer goes to competitors.

Other than that, relationship marketing become important is because the increase of competition in the
market. And worse come to worst, customers become not loyal to a particular business anymore. Customers
only go to company that they perceive it’s provide the best product and services.

Hence, customer retention program is important, it’s encourage long term rebuy, and generate profit for
long term basis and increase market share.

Last but not least, according to Pareto principle, the rules of 80/20. The high profit generating group is
actually come from 20% of its customer. So, relationship with this 20% of customers is utmost important to a
company, because it’s too costly to lose this customer.

Question 8
A firm desire to build brand loyalty because of the following reason:

1. Ensure repeat business, by ensuring offer their products at consistent level of quality.
2. Generates a higher level of goodwill for companies to have its own market share.
3. Competitive advantage. Loyalty customer will stay with the company.
4. Reduce cost, because existing customer will introduce new customers to the company, hence
increase company profit.

Question 9
Satisfaction can be assessing by comparing the performance and the expectation. When products/services
performance is higher than customer’s expectation, the customer will be satisfied. However, if the
performance is lower than customer’s expectation, the customer will dissatisfied.

Puffery as a legal term refers to promotional statements and claims that express subjective rather than
objective views, such that no reasonable person would take them literally. Puffery serves to "puff up" an
exaggerated image of what is being described and is especially featured in testimonials. For example, “best
food in the town”, which it’s too subjective to different people point of view.

This gives an implication that, puffery advertising will eventually raise customers expectation, while the
performance of the products/services are unchanged or unmatched with the advertising. As a result,
customer expectation will higher than actual performance, and making satisfaction is less likely to happen.
Finally, a dissatisfy customer is not likely to repurchase again, and might separate negative word of mouth.

Conclusion, puffery is bad, it provide bad implication/ impact to the company.