Bmmk5103 Answer Scheme September 2012

COURSE CODE: BMMK5103
COURSE NAME: MARKETING MANAGEMENT

SEPTEMBER 2012 FINAL EXAMINATION
SUGGESTED SOLUTION
1
PART A :
QUESTION 1
Reference: BMMK 5103, MARCH 2011, Topic 1, Page 6
Answer: Consumer Markets Companies selling mass consumer goods and services
such as soft drinks, cosmetics, air travel, and athletic shoes and equipment
spend a great deal of time trying to establish a superior brand image. Much of a
brand's strength depends on developing a superior product and packaging,
ensuring its availability, and backing it with engaging communications and
reliable service.
Business Markets Companies selling business goods and services often face
well-trained and well-informed professional buyers who are skilled in evaluating
competitive offerings. Business buyers buy goods in order to make or resell a
product to others at a profit. Business marketers must demonstrate how their
products will help these buyers achieve higher revenue or lower costs.
Advertising can play a role, but a stronger role may be played by the sales
force, price, and the company's reputation for reliability and quality.
Global Markets Companies selling goods and services in the global

marketplace face additional decisions and challenges. They must decide which
countries to enter; how to enter each country (as an exporter, licenser, joint
venture partner, contract manufacturer, or solo manufacturer); how to adapt
their product and service features to each country; how to price their products in
different countries; and how to adapt their communications to fit different
cultures. These decisions must be made in the face of different requirements for
buying, negotiating, owning, and disposing of property; different culture,
language, and legal and political systems; and a currency that might fluctuate in
value.
Nonprofit and Governmental Markets Companies selling their goods to

nonprofit organizations such as churches, universities, charitable organizations,
or government agencies need to price carefully because these organizations
have limited purchasing power. Lower prices affect the features and quality that
the seller can build into the offering. Much government purchasing calls for bids,
with the lowest bid being favored, in the absence of extenuating factors.
Marks
allocation: Marks Descriptor
18 – 20 The response contains all the important ideas related to the
topic. The ideas are fully developed with lots of facts and
examples. The answer is exemplary, detailed and clear.
14 – 17 The response contains most of the important ideas related to the
topic. The ideas are well-developed with some facts or
examples. The answer is good, has some detail, and is clear.
2
8 – 13 The response contains some of the important ideas related to
the topic. The ideas are satisfactorily developed with supporting
facts or examples. The answer is satisfactory but may be vague
or include some inaccurate information.
1–7 The response contains few important ideas related to the topic.
The ideas are not properly developed. There are numerous
misconceptions. The answer is poor.
[Total: 20 marks]
QUESTION 2

Answer:
The five core business processes to support firm success not only on how
well each department performs its work, but also on how well the
various departmental activities are coordinated are as follow:
(1) the market sensing process—all the activities involved in gathering

market intelligence, disseminating it within the organization, and acting
on the information.
(2) the new offering realization process—all the activities involved in

researching, developing, and launching new high-quality offerings
quickly and within budget.
(3) the customer acquisition process—all the activities involved in defining

target markets and prospecting for new customers;
(4) the customer relationship management process—all the activities

involved in building deeper understanding, relationships, and offerings to
individual customers.
(5) the fulfillment management process—all the activities involved in

receiving and approving orders, shipping the goods on time, and
collecting payment.
In term of examples, students’ responses will vary.
Marks
allocation:
3
Marks Descriptor
1 – 7 The response contains few important ideas related to the topic.
[Total: 20 marks]
4
PART B
QUESTION 1:
QUESTION 1A

Answer:
The internal records system supplies results data, but the marketing intelligence
system supplies happenings data. A marketing intelligence system is a set of
procedures and sources managers use to obtain everyday information about
developments in the marketing environment. Marketing managers collect
marketing intelligence by reading books, newspapers, and trade publications;
talking to customers, suppliers, and distributors; and meeting with other
company managers.
Marks
7–8 The response contains all the important ideas related to the
5–6 The response contains most of the important ideas related to the
3–4 The response contains some of the important ideas related to
1-2 The response contains few important ideas related to the topic.
[Sub total: 8 marks]
QUESTION 1B
Reference: BMMK 5103, MARCH 2011, Topic 3, Page 36-37

Answer:
A company can take several ways (students need to answers any three of
below) to improve the quality of its marketing intelligence.
5
• A company can train and motivate the sales force to spot and report
new developments. Sales representatives are positioned to pick up
information missed by other means, yet they often fail to pass on that
information. The company must "sell" its sales force on their importance
as intelligence gatherers.
• A company can motivate distributors, retailers, and other intermediaries

to pass along important intelligence. Many companies hire specialists to
gather marketing intelligence. Service providers often send mystery
shoppers to their stores to assess how employees treat customers.
Mystery shoppers for McDonald's discovered that only 46 percent of its
restaurants nationwide met internal speed-of-service standards, forcing
the company to rethink processes and training.
• A company can network externally. It can purchase competitors'

products; attend open houses and trade shows; read competitors'
published reports; attend stockholders' meetings; talk to employees,
dealers, distributors, suppliers, and freight agents; collect competitors'
ads; and look up news stories about competitors. Software developer
Cognos created an internal Web site called Street Fighter where any of
the firm's 3,000 workers can submit scoops about competitors and win
prizes. Competitive intelligence must be done legally and ethically,
though. Procter & Gamble reportedly paid a multimillion-dollar
settlement to Unilever when some external operatives hired as part of a
P&G corporate intelligence program to learn about Unilever's hair care
products were found to have engaged in such unethical behavior as
"dumpster diving."
• A company can set up a customer advisory panel. Members might

include representative customers or the company's largest customers or
its most outspoken or sophisticated customers. Many business schools
have advisory panels made up of alumni and recruiters who provide
valuable feedback on the curriculum.
• A company can take advantage of government data resources. The

2000 U.S. census provides an in-depth look at the population swings,
demographic groups, regional migrations, and changing family structure
of 281,421,906 people. Census marketer Claritas cross-references
census figures with consumer surveys and its own grassroots research
for clients such as Procter & Gamble, Dow Jones, and Ford Motor.
Partnering with "list houses" that provide customer phone and address
information, Claritas can help firms select and purchase mailing lists
with specific clusters.
• A company can purchase information from outside suppliers. A.C.

Nielsen Company and Information Resources, Inc. gather consumer-
panel data at a much lower cost than the company could manage on its
own. Biz360 has specialized databases to provide reports from 7,000
sources on the extent and nature of media coverage a company is
6
receiving.
• A company can use online customer feedback systems to collect

competitive intelligence. Online customer feedback facilitates collection
and dissemination of information on a global scale, usually at low cost.
Through online customer review boards or forums, one customer's
evaluation of a product or a supplier can be distributed to a large
number of other potential buyers and, of course, to marketers seeking
information on the competition.
Marks
QUESTION 2
QUESTION 2A

Answer:
Distinctions between these three drivers of customer equity as follow:
Value equity is the customer's objective assessment of the utility of an offering

based on perceptions of its benefits relative to its costs. The sub-drivers of
value equity are quality, price, and convenience. Each industry has to define the
specific factors underlying each sub-driver in order to find programs to improve
value equity. An airline passenger might define quality as seat width; a hotel
guest might define quality as room size. Value equity makes the biggest
contribution to customer equity when products are differentiated and when they
are more complex and need to be evaluated. Value equity especially drives
customer equity in business markets.
7
Brand equity is the customer's subjective and intangible assessment of the
brand, above and beyond its objectively perceived value. The sub-drivers of
brand equity are customer brand awareness, customer attitude toward the
brand, and customer perception of brand ethics. Companies use advertising,
public relations, and other communication tools to affect these sub-drivers.
Brand equity is more important than the other drivers of customer equity where
products are less differentiated and have more emotional impact.
Relationship equity is the customer's tendency to stick with the brand, above
and beyond objective and subjective assessments of its worth. Sub-drivers of
relationship equity include loyalty programs, special recognition and treatment
programs, community-building programs, and knowledge-building programs.
Relationship equity is especially important where personal relationships count
for a lot and where customers tend to continue with suppliers out of habit or
inertia.
Marks
QUESTION 2B

Answer:
Three components of alternative formulation to customer equity by Blattberg,
Getz, and Thomas are as follow:
1. Acquisition is affected by the number of prospects, the acquisition
probability of a prospect, and acquisition spending per prospect.
2. Retention is influenced by the retention rate and retention spending

level.
8
3. Add-on spending is a function of the efficiency of add-on selling, the
number of add-on selling offers given to existing customers, and the
response rate to new offers. Marketing activities can then be judged by
how they affect these three components.
Marks

QUESTION 3:
QUESTION 3A

Answer:
The business market consists of all the organizations that acquire goods and
services used in the production of other products or services that are sold,
rented, or supplied to others. The major industries making up the business
market are agriculture, forestry, and fisheries; mining; manufacturing;
construction; transportation; communication; public utilities; banking, finance,
and insurance; distribution; and services.
Marks
9
QUESTION 3B

Answer:
Business markets have several characteristics (student may answers any five
out of ten characteristics) that contrast sharply with those of consumer
markets:
• Fewer, larger buyers. The business marketer normally deals with far fewer,
much larger buyers than the consumer marketer does particularly in such
industries as aircraft engines and defense weapons.
• Close supplier-customer relationship. Because of the smaller customer base

and the importance and power of the larger customers, suppliers are frequently
expected to customize their offerings to individual business customer needs.
Business buyers often select suppliers who also buy from them. An example
would be a paper manufacturer that buys chemicals from a chemical company
that buys a considerable amount of its paper.
• Professional purchasing. Business goods are often purchased by trained

purchasing agents, who must follow their organizations' purchasing policies,
constraints, and requirements. Many of the buying instruments for example,
requests for quotations, proposals, and purchase contracts are not typically
found in consumer buying. Professional buyers spend their careers learning
how to buy better. Many belong to the National Association of Purchasing
Managers (NAPM), which seeks to improve professional buyers' effectiveness
and status. This means that business marketers have to provide greater
technical data about their product and its advantages over competitors'
products.
• Several buying influences. More people typically influence business buying

decisions. Buying committees consisting of technical experts and even senior
management are common in the purchase of major goods. Business marketers
have to send well-trained sales representatives and sales teams to deal with
10
the well-trained buyers.
• Multiple sales calls. Because more people are involved in the selling process,
it takes multiple sales calls to win most business orders, and some sales cycles
can take years. In the case of capital equipment sales for large projects, it may
take multiple attempts to fund a project, and the sales cycle between quoting a
job and delivering the product is often measured in years.
• Derived demand. The demand for business goods is ultimately derived from
the demand for consumer goods. For this reason, the business marketer must
closely monitor the buying patterns of ultimate consumers. For instance, the Big
Three automakers in Detroit have been driving the boom in demand for steel-
bar products. Much of that demand is derived from consumers' continued love
affair with minivans and other light trucks, which consume far more steel than
cars. Business buyers must also pay close attention to current and expected
economic factors, such as the level of production, investment, consumer
spending, and the interest rate.
• Inelastic demand. The total demand for many business goods and services is
inelastic that is, not much affected by price changes. Shoe manufacturers are
not going to buy much more leather if the price of leather falls, nor will they buy
much less leather if the price rises, unless they can find satisfactory substitutes.
Demand is especially inelastic in the short run because producers cannot make
quick changes in production methods. Demand is also inelastic for business
goods that represent a small percentage of the item's total cost, such as
shoelaces.
• Fluctuating demand. The demand for business goods and services tends to be
more volatile than the demand for consumer goods and services. A given
percentage increase in consumer demand can lead to a much larger
percentage increase in the demand for plant and equipment necessary to
produce the additional output. Economists refer to this as the acceleration
effect. Sometimes a rise of only 10 percent in consumer demand can cause as
much as a 200 percent rise in business demand for products in the next period;
a 10 percent fall in consumer demand may cause a complete collapse in
business demand.
• Geographically concentrated buyers. The geographical concentration of

producers helps to reduce selling costs. At the same time, business marketers
need to monitor regional shifts of certain industries.
• Direct purchasing. Business buyers often buy directly from manufacturers

rather than through intermediaries, especially items that are technically complex
or expensive (such as mainframes or aircraft).
Marks
11
QUESTION 4:
QUESTION 4A

Answer:
Briefly four levels of micromarketing as follow :
Segment Marketing - A market segment consists of a group of customers who

share a similar set of needs and wants.
The marketer does not create the segments; the marketer's task is to identify
the segments and decide which one(s) to target.
Niche Marketing - A niche is a more narrowly defined customer group seeking a

distinctive mix of benefits. Marketers usually identify niches by dividing a
segment into sub segments.
Local Marketing - Target marketing is leading to marketing programs tailored to

the needs and wants of local customer groups (trading areas, neighbourhoods,
and even individual stores).Local marketing reflects a growing trend called
grassroots marketing. Marketing activities concentrate on getting as close and
personally relevant to individual customers as possible such as sponsorship of
local school teams and expert-conducted clinics.
Individual marketing - The ultimate level of segmentation leads to "segments of

one," "customized marketing," or "one-to-one marketing." Today customers are
taking more individual initiative in determining what and how to buy.
Marks
allocation:
12
Marks Descriptor
QUESTION 4B

Answer:
A niche is a more narrowly defined customer group seeking a distinctive mix of
benefits. Marketers in the company usually identify niches by dividing a
segment into sub segments. For example, Progressive, a Cleveland auto
insurer, sells "nonstandard" auto insurance to risky drivers with a record of auto
accidents, charges a high price for coverage and makes a lot of money in the
process.
The customers in the niche have a distinct set of needs
• they will pay a premium to the firm that best satisfies their needs
• the niche is not likely to attract other competitors; the nicher gains
certain economies through specialization
• the niche has size, profit, and growth potential. Whereas segments are
fairly large and normally attract several competitors, niches are fairly
small and normally attract only one or two.
In term of example, students’ responses will vary.

Some of the examples as follow:
Larger companies, such as IBM, have lost pieces of their market to nichers:
13
This confrontation has been labelled "guerrillas against gorillas." Some large
companies have even turned to niche marketing. Hallmark commands a 55
percent share of the $7.8 billion global greeting card market by rigorously
segmenting its greeting card business. In addition to popular sub-branded card
lines like the humorous Shoebox Greetings, Hallmark has introduced lines
targeting specific market segments. Fresh Ink targets 18 to 39 year-old women,
Hallmark En Espanol targets Hispanic card givers, and Out of the Blue targets
those who want inexpensive cards that can be sent for no reason.
Niche marketers presumably understand their customers' needs so well that the
customers willingly pay a premium. Tom's of Maine all-natural personal care
products sometimes commands a 30 percent premium on its toothpaste
because its unique, environmentally friendly products and charitable donation
programs appeal to consumers who have been turned off by big businesses. As
marketing efficiency increases, niches that were seemingly too small may
become more profitable.
The low cost of setting up shop on the Internet has also led to many small
business startups aimed at niches. The recipe for Internet niching success:
Choose a hard-to-find product that customers do not need to see and touch.
This "Webpreneur" followed the recipe with astonishing results
Marks
14
QUESTION 5:
QUESTION 5A

Answer:
Product life-cycle curves are portrayed as bell-shaped as below diagram. This
curve is typically divided into four stages: introduction, growth, maturity, and
22
decline.
1. Introduction -A period of slow sales growth as the product is introduced in the
market. Profits are nonexistent because of the heavy expenses of product
introduction.
2. Growth -A period of rapid market acceptance and substantial profit improvement.
3. Maturity-A slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or decline because of
increased competition.
4. Decline - Sales show a downward drift and profits erode.
Marks
15
QUESTION 5B

Answer:
Sales decline for a number of reasons, including technological advances, shifts

in consumer tastes, and increased domestic and foreign competition. All lead to
overcapacity, increased price-cutting, and profit erosion. The decline might be
slow, as in the case of sewing machines; or rapid, as in the case of the 5.25
floppy disks.
As sales and profits decline, some firms withdraw from the market. Those
remaining may reduce the number of products they offer. They may withdraw
from smaller market segments and weaker trade channels, and they may cut
their promotion budgets and reduce prices further. Unfortunately, most
companies have not developed a policy for handling aging products.
In handling aging products, a company faces a number of tasks and decisions.

The first task is to establish a system for identifying weak products. Many
companies appoint a product-review committee with representatives from
marketing, R&D, manufacturing, and finance. The controller's office supplies
data for each product showing trends in market size, market share, prices,
costs, and profits. A computer program then analyzes this information. The
managers responsible for dubious products fill out rating forms showing where
they think sales and profits will go, with and without any changes in marketing
strategy. The product-review committee makes a recommendation for each
product—leave it alone, modify its marketing strategy, or drop it.
Some firms abandon declining markets earlier than others. Much depends on
the presence and height of exit barriers in the industry. The lower the exit
barriers, the easier it is for firms to leave the industry, and the more tempting it
is for the remaining firms to stay and attract the withdrawing firms' customers.
For example, Procter & Gamble stayed in the declining liquid-soap business
and improved its profits as others withdrew.
16
According to one study of company strategies in declining industries, five
strategies are available to the firm:
1. Increasing the firm's investment (to dominate the market or strengthen its
competitive position).
2. Maintaining the firm's investment level until the uncertainties about the
industry are resolved.
3. Decreasing the firm's investment level selectively, by dropping unprofitable
customer groups, while simultaneously strengthening the firm's investment
in lucrative niches.
4. Harvesting ("milking") the firm's investment to recover cash quickly.
5. Divesting the business quickly by disposing of its assets as
advantageously as possible.
The appropriate strategy depends on the industry's relative attractiveness and

the company's competitive strength in that industry. A company that is in an
unattractive industry but possesses competitive strength should consider
shrinking selectively. A company that is in an attractive industry and has
competitive strength should consider strengthening its investment.
If the company were choosing between harvesting and divesting, its strategies
would be quite different. Harvesting calls for gradually reducing a product or
business's costs while trying to maintain sales. The first step is to cut R&D costs
and plant and equipment investment. The company might also reduce product
quality, sales force size, marginal services, and advertising expenditures. It
would try to cut these costs without letting customers, competitors, and
employees know what is happening. Harvesting is difficult to execute. Yet many
mature products warrant this strategy. Harvesting can substantially increase the
company's current cash flow.
Companies that successfully restage or rejuvenate a mature product often do

so by adding value to the original product. Consider the experience of Pitney
Bowes, the dominant producer of postage meters.
When a company decides to drop a product, it faces further decisions. If the

product has strong distribution and residual goodwill, the company can probably
sell it to another firm. If the company can't find any buyers, it must decide
whether to liquidate the brand quickly or slowly. It must also decide on how
much inventory and service to maintain for past customers.
Marks
17
18

Bmmk5103 Answer Scheme September 2012

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bmmk5103 Answer Scheme September 2012

Uploaded by

Copyright:

Available Formats

COURSE CODE: BMMK5103

COURSE NAME: MARKETING MANAGEMENT

Reference: BMMK 5103, MARCH 2011, Topic 1, Page 6

Global Markets Companies selling goods and services in the global

Nonprofit and Governmental Markets Companies selling their goods to

Reference: BMMK 5103, MARCH 2011, Topic 2, Page 17

(1) the market sensing process—all the activities involved in gathering

(2) the new offering realization process—all the activities involved in

(3) the customer acquisition process—all the activities involved in defining

(4) the customer relationship management process—all the activities

(5) the fulfillment management process—all the activities involved in

In term of examples, students’ responses will vary.

Reference: BMMK 5103, MARCH 2011, Topic 3, Page 36

[Sub total: 8 marks]

Reference: BMMK 5103, MARCH 2011, Topic 3, Page 36-37

• A company can motivate distributors, retailers, and other intermediaries

• A company can network externally. It can purchase competitors'

• A company can set up a customer advisory panel. Members might

• A company can take advantage of government data resources. The

• A company can purchase information from outside suppliers. A.C.

• A company can use online customer feedback systems to collect

[Sub total: 12 marks]

Reference: BMMK 5103, MARCH 2011, Topic 4, Page 47-48

Value equity is the customer's objective assessment of the utility of an offering

[Sub total: 12 marks]

Reference: BMMK 5103, MARCH 2011, Topic 4, Page 48

2. Retention is influenced by the retention rate and retention spending

[Sub total: 8 marks]

Reference: BMMK 5103, MARCH 2011, Topic 6, Page 78

[Sub total: 8 marks]

Reference: BMMK 5103, MARCH 2011, Topic 6, Page 78

• Close supplier-customer relationship. Because of the smaller customer base

• Professional purchasing. Business goods are often purchased by trained

• Several buying influences. More people typically influence business buying

• Geographically concentrated buyers. The geographical concentration of

• Direct purchasing. Business buyers often buy directly from manufacturers

[Sub total: 12 marks]

Reference: BMMK 5103, MARCH 2011, Topic 7, Page 91-93

Segment Marketing - A market segment consists of a group of customers who

Niche Marketing - A niche is a more narrowly defined customer group seeking a

Local Marketing - Target marketing is leading to marketing programs tailored to

Individual marketing - The ultimate level of segmentation leads to "segments of

[Sub total: 8 marks]

Reference: BMMK 5103, MARCH 2011, Topic 7, Page 92

The customers in the niche have a distinct set of needs

In term of example, students’ responses will vary.

[Sub total: 12 marks]

Reference: BMMK 5103, MARCH 2011, Topic 9, Page 119-120

[Sub total: 8 marks]

Reference: BMMK 5103, MARCH 2011, Topic 9, Page 122-123

Sales decline for a number of reasons, including technological advances, shifts

In handling aging products, a company faces a number of tasks and decisions.

The appropriate strategy depends on the industry's relative attractiveness and

Companies that successfully restage or rejuvenate a mature product often do

When a company decides to drop a product, it faces further decisions. If the

[Sub total: 12 marks]

You might also like