Southeast University

Southeast Business School

MBA Evening Program
Semester: Spring-2020
Marketing Management & Practices (MKT515)
Final Examination

Submitted To:

Dr. Md. Tabarak Hossain Bhuiyan, IM&A

Managing Director & CEO, Prime Bank

Articling Lawyer and Member

Ontario Law Society and Canadian Bar Association

Submitted By:

Name: Mamunur Rashid

ID: 2019110004037

Section: 3

Batch: 33

Program: MBA (1year)

 Answer to the question no: 1 (A)
Companies must develop new products, but the odds weigh heavily against success. What should
a company understand in order to create successful new products that can deliver superior value
to customers?

There are basically six steps to develop new products that overcome all the odds against success
and create successful new products that can deliver superior value to customers:

1. Target customer pain.

2. Outperform the competition.
3. Discover details of your customers' unmet needs.
4. Develop hypotheses.
5. Build a prototype solution.
6. Test with customers.
7. Analyze variance.
8. Pick strategy.

5 Steps to Creating More Customer Value:

Step 1: Understand what drives value for your customers: Talk to them, survey them, and watch
their actions and reactions. In short, capture data to understand what is important to your
customers and what opportunities you have to help them.

Step 2: Understand your value proposition: The value customers receive is equal to the benefits
of a product or service minus its costs. What value does your product or service create for them?
What does it cost them–in terms of price plus any ancillary costs of ownership or usage (e.g.,
how much of their time do they have to devote to buying or using your product or service?)

Step 3: Identify the customers and segments where are you can create more value relative to
competitors: Different customers will have varying perceptions of your value relative to your
competitors, based on geographic proximity, for example, or a product attribute that one segment
may find particularly attractive.

Step 4: Create a win-win price: Set a price that makes it clear that customers are receiving value
but also maximizes your “take.” Satisfied customers that perceive a lot of value in your offering
are usually willing to pay more, while unsatisfied customers will leave, even at a low price.
Using “cost-plus” pricing (i.e., pricing at some fixed multiple of product costs) often results in
giving away margin unnecessarily to some customers while losing incremental profits from
others.
Step 5: Focus investments on your most valuable customers: Disproportionately allocate your

sales force, marketing dollars, and R&D investments toward the customers and segments that

you can best serve and will provide the greatest value in return. Also, allocate your growth

capital toward new products and solutions that serve your best customers or can attract more

customers that are similar to your best customers.

Your customers are the lifeblood of your business. They are the source of current profits and the

foundation of future growth. These steps will help you find more ways to grow your business by

better serving your best customers.

Answer to the question no: 1 (B)

Very briefly illustrate the major stages in new product development with examples from your
own idea?

1. Idea generation – The New Product Development Process

The new product development process starts with idea generation. Idea generation refers to the
systematic search for new-product ideas. Typically, a company generates hundreds of ideas,
maybe even thousands, to find a handful of good ones in the end.

2. Idea screening – The New Product Development Process

The next step in the new product development process is idea screening. Idea screening means
nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are
screened to spot good ones and drop poor ones as soon as possible. While the purpose of idea
generation was to create a large number of ideas, the purpose of the succeeding stages is to
reduce that number. The reason is that product development costs rise greatly in later stages.
Therefore, the company would like to go ahead only with those product ideas that will turn into
profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial
importance.

3. Concept development and Testing – The New Product Development Process

To go on in the new product development process, attractive ideas must be developed into a
product concept. A product concept is a detailed version of the new-product idea stated in
meaningful consumer terms.
4. Marketing strategy development – The New Product Development Process

The next step in the new product development process is the marketing strategy development.
When a promising concept has been developed and tested, it is time to design an initial
marketing strategy for the new product based on the product concept for introducing this new
product to the market.

5. Business analysis – The New Product Development Process

Once decided upon a product concept and marketing strategy, management can evaluate the
business attractiveness of the proposed new product. The fifth step in the new product
development process involves a review of the sales, costs and profit projections for the new
product to find out whether these factors satisfy the company’s objectives. If they do, the product
can be moved on to the product development stage. In order to estimate sales, the company could
look at the sales history of similar products and conduct market surveys. Then, it should be able
to estimate minimum and maximum sales to assess the range of risk. When the sales forecast is
prepared, the firm can estimate the expected costs and profits for a product, including marketing,
R&D, operations etc. All the sales and costs figures together can eventually be used to analyse
the new product’s financial attractiveness.

6. Product development – The New Product Development Process

The new product development process goes on with the actual product development. Up to this
point, for many new product concepts, there may exist only a word description, a drawing or
perhaps a rough prototype. But if the product concept passes the business test, it must be
developed into a physical product to ensure that the product idea can be turned into a workable
market offering. The problem is, though, that at this stage, R&D and engineering costs cause a
huge jump in investment. The R&D department will develop and test one or more physical
versions of the product concept. Developing a successful prototype, however, can take days,
weeks, months or even years, depending on the product and prototype methods.

7. Test marketing – The New Product Development Process

The last stage before commercialisation in the new product development process is test
marketing. In this stage of the new product development process, the product and its proposed
marketing programme are tested in realistic market settings. Therefore, test marketing gives the
marketer experience with marketing the product before going to the great expense of full
introduction. In fact, it allows the company to test the product and its entire marketing
programme, including targeting and positioning strategy, advertising, distributions, packaging
etc. before the full investment is made.

8. Commercialisation

Test marketing has given management the information needed to make the final decision: launch
or do not launch the new product. The final stage in the new product development process is
commercialisation. Commercialisation means nothing else than introducing a new product into
the market. At this point, the highest costs are incurred: the company may need to build or rent a
manufacturing facility. Large amounts may be spent on advertising, sales promotion and other
marketing efforts in the first year.

Answer to the question no: 2 (A)

Price is a sacrifice you make to gain the benefits of using a product or service; in other words,
price is what you give for what you get.” Do you agree? If yes, explain in your own words the
reasons for your answer?

Yes, I agree price is sacrifice you make to gain the benefits of using or service before setting a
price for your product, you have to know the costs of running your business. If the price for your
product or service doesn't cover costs, your cash flow will be cumulatively negative, you'll
exhaust your financial resources, and your business will ultimately fail.

To determine how much it costs to run your business, include property and/or equipment leases,
loan repayments, inventory, utilities, financing costs, and salaries/wages/commissions.

Customer Sacrifice

Description: Customer sacrifice is the gap between what you deliver and what your customers
really want. A gap of zero means you fully deliver everything they need, with the result that
they are completely satisfied. An infinite gap means you deliver nothing that customers want,
and the chance of anyone becoming your customer is very small.
Customer sacrifice gaps may be deliberate or not. Either way, a sacrifice gap is an opportunity
for competitors to better satisfy your customers and hence lure them away from you.
Example: A company selling lawn mowers offers no seat adjustment for customers of different
height. They do not realize the problems this cause some customers. A competitor offers seat
adjustment and hence gains market share.
A microphone is comfortable for most men, but rather large and heavy for some women. The
manufacturer realizes this and introduce a lighter, smaller model, hence reducing the sacrifice
that women have to make to use the heavier microphone.
Discussion
Most products and services take time and money to design. To perfectly match all customer
needs would require a different offering for each customer. The challenge for product and
service designers is hence to identify the range of offerings that will lead to the minimum total
customer sacrifice across all customers.
Designs are often strongly influenced by reducing cost of manufacture or operation. While this
is certainly important, the loss in sales that this can lead to may well be underestimated.
Intelligent design takes account of both cost and revenue impacts.
To reduce sacrifice, you may be able to simply adjust current products and service. Sometimes
also a completely new innovation is a better approach.
Because pricing decisions require time and market research, the strategy of many business
owners is to set prices once and "hope for the best." However, such a policy risks profits that are
elusive or not as high as they could be.

When is the right time to review your prices? Do so if:

 You introduce a new product or product line;

 Your costs change;
 You decide to enter a new market;
 Your competitors change their prices;
 The economy experiences either inflation or recession;
 Your sales strategy changes; or
 Your customers are making more money because of your product or service

Answer to the question no: 2 (B)

Briefly outline the major pricing strategies. In your opinion, which pricing strategy is preferable?

Three major and most common pricing strategies:

 Cost-Based Pricing.
 Customer Value-Based Pricing.
 Competition-Based Pricing.

Cost-based pricing
While in customer value-based pricing, customers’ perceptions of value are key to setting prices,
in cost-based pricing the seller’s costs are the primary consideration. Costs set the floor for the
price that the company can charge. Therefore, cost-based pricing involves setting prices based on
the costs for producing, distributing and selling the product. In order to make some profit, a fair
rate of return is added to account for efforts and risks.

Some companies, such as Ryanair or Walmart, pursue a low-cost strategy and aim to offer the
lowest prices. This goes along with accepting smaller margins but greater sales. Other
companies, such as Apple or BMW, do not compete based on low prices. By offering superior
customer value, they can claim higher prices and margins – they pursue a customer value-based
pricing strategy. We can see that choosing between the 3 major pricing strategies is closely
related to the overall marketing strategy – actually it is an integral part of it.
Cost-based pricing uses production costs as its basis for pricing and, to this base cost, a profit
level must be added in order to come up with the product price.

Cost-based pricing companies use their costs to find a price floor and a price ceiling. The floor
and the ceiling are the minimum and maximum prices for a specific product or service – the
price range. If it happens that the competitive price is under the price floor, companies normally
price at the floor or try to lower their costs to lower the floor. Cost-based pricing is considered to
be a broken model by many marketing experts: knowing costs is vital to get to understand your
company’s profitability, but problems come when you solely base your price on costs.

In fact, cost-based pricing takes into account neither prices affected by customer demand nor
performance of competitors. It is true that if a product is in short supply, customers may be
willing to pay more for it, but – on the other hand – if demand is low, they will be expecting a
discount. Concerning competition, cost-based pricing is definitely not the right technique for you
if you are in a very competitive business segment because competitors would probably end up
entering the market with lower prices.

Customer value-based pricing

Good pricing usually starts with customers and their perceptions of value. Eventually, the
customer will decide whether a product is worth its price or not. Therefore, we start with
customer value. When customer buy a product, they exchange something of value (the price) to
get something of value (the benefits of having or using a particular product). Therefore, it is
crucial to understand how much value consumers place on the benefits they receive from the
product and setting a price that captures exactly this value.

Summing these considerations up, we can say that customer value-based pricing uses buyers’
perceptions of value as the key to pricing, instead of the seller’s costs. This also means that we
cannot design a product and marketing programme and then set the price. Price is considered
along with all other marketing mix variables before the marketing programme is set.

Value-based pricing, also known as customer-based pricing, is a pricing concept which is

defined as follows: it is about finding the price that your customers are willing to pay.
Customers change their buying habits according to product price, so you need to find out about
your target customers, their perspective on the product and their reactions towards several
prices or even price changes. Companies using value-based pricing consider the value of their
product and their customers’ perceptions of value as the key to pricing, instead of production
costs. They determine how much money or value their product will generate for the customer –
a value which translates into benefits such as increased efficiency, happiness or stability. By
using this type of pricing technique, you may aim at using price to support product image,
increase product sales and create product bundles in order to reduce inventory or to attract
customers.
Competition-based pricing
Finally, competition-based pricing involves setting prices based on competitors’ strategies, costs,
prices and market offerings. In highly competitive markets, consumers will base their
judgements of a product’s value on the prices that competitors charge for similar products. For
instance in the gasoline industry, competition-based pricing is applied.

However, in assessing competitors’ pricing strategies, the company should ask several questions.
First of all, how does the company’s market offering compare with competitors’ market offerings
in terms of customer value? If consumers perceive that the company’s product provides greater
value, the company can charge a higher price. Secondly, how strong are current competitors, and
what are their pricing strategies? If the market is already dominated by large, low-price
competitors, the company may be better advised to target unserved market niches with value-
added products and prices.

In my opinion Cost based pricing strategy is preferable.

Answer to the question no: 3 (A)

What do you mean by product life cycle? What are the different stages of product life cycle?
Explain in your own words the marketing initiatives you would prefer to undertake in each stage
of the product life cycle.

Product life cycle

The product life cycle is the process a product goes through from when it is first introduced into
the market until it declines or is removed from the market. The life cycle has four stages -
introduction, growth, maturity and decline. While some products may stay in a prolonged
maturity state, all products eventually phase out of demand and dropping sales.

4 Stages of the Product Life Cycle

 Introduction
 Growth
 Maturity
 Decline

1. Marketing strategies used in introduction stages include:

Rapid skimming - launching the product at a high price and high promotional level
Slow skimming - launching the product at a high price and low promotional level
Rapid penetration - launching the product at a low price with significant promotion
Slow penetration - launching the product at a low price and minimal promotion

2. Marketing strategies used in Product growth stages

Marketing strategies used in the growth stage mainly aim to increase profits. Some of the
common strategies to try are:
 improving product quality
 adding new product features or support services to grow your market share
 enter new markets segments
 keep pricing as high as is reasonable to keep demand and profits high
 increase distribution channels to cope with growing demand
 shifting marketing messages from product awareness to product preference
 skimming product prices if your profits are too low.

3. Marketing strategies used in maturity stages

When your sales peak, your product will enter the maturity stage. This often means that your
market will be saturated and you may find that you need to change your marketing tactics to
prolong the life cycle of your product. Common strategies that can help during this stage fall
under one of two categories:

Market modification - this includes entering new market segments, redefining target markets,
winning over competitor’s customers, converting non-users
Product modification - for example, adjusting or improving your product’s features, quality,
pricing and differentiating it from other products in the marking

4. Marketing Strategies used in Decline stages

During the end stages of your product, you will see declining sales and profits. This can be
caused by changes in consumer preferences, technological advances and alternatives on the
market. At this stage, you will have to decide what strategies to take. If you want to save money,
you can:

 reduce your promotional expenditure on the products

 reduce the number of distribution outlets that sell them
 implement price cuts to get the customers to buy the product
 fin another use for the product
 maintain the product and wait for competitors to withdraw from the market first
 harvest the product or service before discontinuing it
 Answer to the question no: 3 (B)

Pricing strategies usually change as the product passes through its life cycle. The introduction
stage is particularly challenging as the companies bring out a new product. In view of the above,
explain two broad strategies for new-product pricing and explain the situation suitable for each
of the strategies.

1. Introduction Stage:

The product is introduced in the market and its acceptance is obtained. As the product is not
known to all consumers and they take time to shift from the existing products, sales volume and
profit margins are low. Competition is very low, distribution is limited and price is relatively
high

2. Growth Stage:

As the product gains acceptance, demand and sales grow rapidly. Competition increases and
prices fall. Economies of scale occur as production and distribution are widened. Attempt is
made to improve the market share by deeper penetration into the existing market or entry into
new markets. The promotional expenditure remains high because of increasing competition and
due to the need for effective distribution. Profits are high on account of large scale production
and rapid sales turnover.

3. Maturity Stage:

During this stage prices and profits fall due to high competitive pressures. Growth rate becomes
stable and weak firms are forced to leave the industry. Heavy expenditure is incurred on
promotion to create brand loyalty. Firms try to modify and improve the product, to develop new
uses of the product and to attract new customers in order to increase sales.

4. Decline Stage:

Market peaks and levels off during saturation. Few new customers buy the product and repeat
orders disappear. Prices decline further due to stiff competition and firms fight for retaining
market share or replacement sales. Sales and profits inevitably fall unless substantial
improvements in the product or reduction in costs are made.
The product is gradually displaced by some new products due to changes in buying behaviour of
customers. Promotion expenditure is drastically reduced. The decline may be rapid and the
product may soon disappear from the market. However, decline may be slow when new uses of
the product are created.

Answer to the question no: 4

How do you ensure customer value delivery and customer value communication? Explain in
your own language.

6 ways to make sure you deliver value to your customers:

Value=Contribution/Cost

The higher the contribution a product or service offers the client, and/or the lower the cost, the more
valuable it is.

The obvious but often ignored implication here is that to offer the most value, we must increase the
contribution of our services while at the same time minimizing the client’s cost. Also, addressing clients’
most important needs offers the highest contribution – they typically pay more to address their hottest
issues. To compete, we must clearly provide more value than our peers from the client’s perspective. It is
so basic and yet it is how most contracting work in our market is distributed.

Since the federal contracting market accelerated downward in 2011, too many business leaders have
focused on the market’s impact on them instead of their impact on the market. Protecting ourselves is
instinctive, but knee-jerk reactions often lead to short-sighted and sub-optimal corporate decisions and we
become consumed with protecting our financial results.

With some key actions, you can transform to a value creator.

1. Make the Commitment: Commit leadership to embrace a unified purpose beyond wealth creation
and create extraordinary value for clients above all else. Make it the driving force behind the company, its
mission, values and priorities. Use it to drive decisions affecting clients and employees. Financial
performance is an important measure of value creation effectiveness, but financial targets should not be
the primary goals in and of themselves.

2. Focus on the Client: Focus relentlessly on understanding and addressing your client’s true needs –
not just the requirements of particular contracts. Focus the whole company on delivering targeted
solutions that drive client mission success. Turn talented “brick layers” into “cathedral builders” by
helping project teams understand the real impact of their work on the client’s mission. Even internal
corporate support teams such as Human Resources, Information Technology and Finance should focus
on client service, either directly or indirectly to the teams that do support clients.

3. Grow Your Value: To grow with clients, give them even more value. Offer solutions to client
needs that are adjacent to those you’re already addressing and that provide additional value. This
is different from “upselling” in a subtle but important way. Instead of talking clients into buying
something they may not need, demonstrate your commitment to their success (and not just your
own) by offering value-added, creative solutions to meet even more of their needs.

4. Invest in Your Greatest Assets: Your workforce is your most valuable asset and the “face”
to the client. There is an inextricable link between the value provided to clients and the value of
the people providing it. Make your workforce a priority. Embrace this critical link and invest in
your employees and partners. The benefits are measurable including the ability to attract and
retain top talent, higher quality output and lower attrition.

5. Be Relentlessly Efficient: Establish a culture of efficiency with your clients, and work hard to
produce value quickly with as few resources as possible. The lower the cost, the higher the value
to the client. Accelerate schedules, leverage newer, lower-cost virtual technologies, consolidate
infrastructure and shed the paralyzing inertia of bureaucratic work processes and approval
cycles. On every project, redirect under-utilized staff and leverage lessons learned and outputs
from other projects/clients.

6. Stay Light On Your Feet: Increase your agility by adapting constantly and quickly. Make
continuous learning a part of your culture. There are no failures – only opportunities to learn and
improve. Create a restless culture that constantly provides even more value to your clients.
Celebrate employees who take risks to provide this value.

Differentiating your services from the long line of commodity, merely compliant and often self-
serving competitors will help you avoid the “race to the bottom”. The more value you create, the
more valuable you will become.

Customer value delivery and customer value communication are as follows:

1. Identify what value means to each stakeholders: Value can mean different things to
different people and often it’s presenting it as a solution to a problem they are trying to
solve. An investor is looking for a financial return, although she may also value
responsible behavior in the companies in which she invests. A customer may be looking
 for product value in terms of convenience, quality, or price. Employees may see value in
doing meaningful work with like-minded colleagues, while a company could measure the
value of a service by measuring achievement of strategic objectives as well as the quality
of the experience in working with the service provider.
It’s important to get a good understanding of value and how it is perceived by each of
your stakeholders to convincingly communicate your product or service’s value to that
audience.
2. Define what product or service does, focusing first on benefits and then on features:To
help your business articulate product or service benefits, ask questions, a key tool in
uncovering and revealing answers to questions that may appear easy to answer on the
surface, but hard to do well in reality. Some questions to ask can include the following:
 What’s in it for my stakeholder?
 What’s the purpose of the features of my product or service?
 What does the stakeholder want to do?
 Why are the features of my product or service better than my competitors?
 These questions help you understand the benefits of your product/service, and also help
your stakeholders discover and understand the value.

3. Understand how your stakeholders consume and process information :The better you can
understand how information reaches your stakeholders, the more effective your efforts to
communicate value will be. Shareholders attribute greater value to individual meetings
and investor presentations rather than what they read about in the media. Employees may
receive and respect information delivered directly from the CEO versus a mass email.
And customers may respond better to information presented on a business’s website or a
live demo rather than getting inundated with flyers and emails.
There are several channels by which to communicate information, so it is crucial to get a
good grasp of which channel influences which stakeholder and to what extent.
 Answer to the question no: 5
Briefly outline the tools of integrated marketing communications (IMC) and give at least one
example for each.

Tools of integrated marketing communications (IMC) with example:

1. Advertising : Advertising is the non-personal and paid form of communication. It is

one of the most effective forms of communication where it reaches a mass audience
at once within a short period of time. It not only increases sales but also creates
awareness among consumers. Marketers need to ensure that the right message should
be delivered in the right manner to the consumers. The various media used are print
media, radio, billboards, television etc.
2. Personal selling : Personal selling includes face to face interaction with the end-users
with the motive of promoting the product and convincing the buyer to purchase the
product. It is the most effective tools in IMC as salesperson directly communicates
with the buyer, resolves their issues on spot, Improvise his pitch as per the need of
the buyer and focus on building a long-term relationship with end-users.
3. Direct Marketing : It is the oldest form of communication where organizations
directly communicate with end users through emails, telephone, fax, text messages,
catalogue, brochure, and promotional letter. Nowadays people buy more online, so
marketers help consumers in the buying process by sending those catalogs and other
marketing material which makes the process easier for consumers.
4. Mobile Marketing : Mobile marketing involves communicating with customers
through mobile by sending them a text message. It is the cheapest traditional means
of promotion
5. Social Media Marketing: It is one of the most powerful media where the promotion
of the brand or business can be done through the social media channel. It is one of
the low-cost promotional methods where a large number of users are targeted at
once.
6. Public Relations: It is the practice of managing the relationship between an
organization and the public. It is a two-way communication where the public shares
their feedback to the organization. PR is done to create the goodwill in the market
 and present the product of the company in the positive light. Promotion can be done
through press releases, public appearances, event sponsorships, news, etc
7. Sales Promotion: Sales promotion are the short term incentives given to consumers
to accelerate the sale. It gives them a reason to buy the product by providing
attractive offers like discount coupons, contests, premiums, samples, sweepstakes,
price packs, low-cost financing deals, and rebates.
8. Sponsorships: It is a mixture of sales promotion and public relations. Sponsorships
create brand loyalty and help in differentiating the product with competitors.