MG206: Marketing Principles & Strategies

Discipline of Management and Public Administration

School of Business & Management

MID-SEMESTER TEST
S1 2022

FACE TO FACE/BLENDED MODE

Duration of Test: 2 hours

Reading Time: 10 minutes
Writing Time: 1 hour 50 minutes

SOLUTIONS
This test has two compulsory parts:

Part 1: Case study – 10 marks

Part 2: Two Short Essays – 10 marks

Write your answers in the answer sheet provided

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 Part-1: Case Study - 10 marks
Read the following Case Study and write an essay on the questions, following the case
study:

Case study: Customers

The following is a hypothetical marketing related case study created by the course
coordinator.

Mr. Arnold Deo owns a supermarket, namely Deo’s Budget Supermarket in Laucala
Bay, Suva, Fiji. The current product line of Deo’s Budget Supermarket includes all
common groceries as well as some stationery products.

While Mr. Deo’s target market is the Laucala Bay residents and USP students, he does
at times, serve irregular customers and those who only purchase from him during sales
promotions. Mr Deo largely focuses on his frequent customers and is thinking about
how he can grow his current customers.

Case Study Essay question:

Write an essay on the following: a) using the case study, discuss the four types of
customers in terms of profitability and loyalty (6 marks); b) explain how Mr Deo can
grow his existing customers (2 marks); c) distinguish between customer retention and
customer attraction (2 marks).

Solution: Case Study Essay key points:

a) Four types of customers in terms of profitability and loyalty 6 marks: 1.5 marks
per customer type
 “Strangers” – show low profitability, little loyalty – they are not actually
current customers, will only purchase when they come to Laucala Bay, eg those

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 who visit their family members studying at USP, or those who attend conference
at USP and don’t stay close by, Mr Deo should not invest in them.
 “Butterflies” – can be profitable but are not loyal, customers who only purchase
when Mr Deo holds sales promotions in his supermarket. Mr Deo should use
sales promotion techniques such as discounts to attract them, create profitable
transactions during these times but stop investing on them until the next sales
promotion campaign.
 “True friends” – best customers, very profitable and loyal – Mr Deo’s regular
current/existing customers who only purchase from his supermarket. He should
make continuous investments on them to delight, retain and grow them.
 “Barnacles” – can be very loyal but are not very profitable. They may stay
close by but only spend few dollars regularly. If they are not profitable ‘fire’
them - discourage them from being your customer, do not allow them to
purchase on credit.

b) Grow existing customers through cross-selling – Mr Deo should encourage

customers to purchase other products he sells that they are not currently buying.
Eg. If regular customers only purchase food products, encourage them to
purchase some stationery products too. This will increase their overall purchase.
Mr Deo should also use upselling: Eg. If regular customers purchase certain
food products like frozen chicken regularly (weekly), encourage them to
purchase more of these by offering discounts when they purchase in larger
quantities. 2 marks

c) Customer retention is retaining, keeping current set of existing customers. Mr

Deo should ensure that his regular, current customers continue to purchase from
his supermarket and not switch to the nearby competitor supermarkets. 1 mark

Customer attraction is attracting the attention of new/potential customers who

are not currently Mr Deo’s customers and maybe competitor customers. Mr Deo
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 should entice these customers to purchase products from his supermarkets, using
frequent and interesting sales promotions and advertisements. 1 mark

Part 2: Short Essays: Answer both questions - 10 marks

1. Using some South Pacific country examples, discuss the political and social
environments (5 marks).

Answer:
1. Legislation Regulating Business:
To protect companies from each other – protect smaller companies from larger
companies who compete unfairly eg, using predatory pricing – selling products
at very low prices which cannot be matched by smaller competitors. Smaller
competitors are driven out of the marketplace because they can’t
compete/survive. 1 mark
To protect consumers from unfair business practices like misleading
advertisements, selling faulty, expired products. 1 mark
To protect the interests of society against unrestrained business behavior –
eg. dumping rubbish/factory waste into the sea, affecting villagers livelihood. 1
mark
Pattern: Increasing Legislation & Changing Government Agency Enforcement

2. Increased Emphasis on Ethics and Socially Responsible Actions

Socially Responsible Behavior - “do the right thing” – be ethical, transparent in
all business activities, do not cheat or be unfair to consumers, employees. 1
mark
Cause-Related Marketing – participate in worthwhile causes, eg. donate
computers to village schools. 1 mark

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2. Compare and contrast between the buying behaviours of ‘habitual buying’ and
‘complex buying’. Give a few examples from the South Pacific countries (5 marks).

Answer:
Habitual Buying Behavior 2.5 marks: 0.42 marks per bullet point
 low customer involvement - little to no research done before purchase.
 low-cost – less expensive,
 frequently purchased (eg. bought every week, fortnightly, monthly),
 customers perceive little to no brand difference
 e.g. salt, grocery items
 customer buys the same brand over the years, happy with the brand, buys out of
habit. Eg. I buy Pacific Crown tomato sauce every time

Complex Buying Behavior: 2.5 marks: 0.36 marks per bullet point
 high customer- involvement – means customer spends a lot of time and effort
into researching about the product, the company, other brands before buying the
product;
 product bought will be expensive,
 risky – spending so much but not sure of product performance
 infrequent purchase (one-off or bought once in five-ten years) and
 highly self-expressive (product personality is equal to customer personality). Eg.
If I define myself as cool, I’ll go for a car which looks cool.
 customer perceives significant differences between the brands offering the same
type of product. Customer thus researches and then buys what he/she finds the
best in terms of brand and in line with his/her budget.
 Eg. purchase of vehicles.