Understanding 'place' in the marketing mix (6)

Question 1

Once the analysis has been conducted, products are placed into one of the four categories?

Answer 1

• Dog
• Problem child or question mark
• Stars .
• Cash cows
• Regular analysis of an organisation’s brands and products is recommended in order to effectively manage the product mix and make any necessary adjustments to the product line

The following example provides a practical case study of a group’s portfolio of companies. With sufficient information, each of these businesses within the group can be placed in one of the quadrants of the Boston matrix.

Question 2

Which type of product generates low sales revenue in a
market that has low growth potential?

Answer 2

Dog

Question 3

Which products to keep, which to invest more money in, and
which to sell off?

Answer 3

The Boston growth-share matrix

Question 4

Which product line requires further investment even though
their current market share is good?

Answer 4

Stars

Question 5

What is meant by the term ‘product mix decision’?

Answer 5

A decision regarding adding a new product and eliminating
an existing product

Question 6

Services generally have five main characteristics, as illustrated in the figure below.

Answer 6

• Intangibility
• Inseparability
• Intangible Heterogeneity
• Ownership
• Perishability

Question 7

Kotler describes the following five product levels?

Answer 7

• Core benefit
• Generic product:
• Expected product
• Augmented product
• Potential product:
• Core benefit: This refers to the main need or want that the product satisfies.
• Generic product: This refers to a version of the product that only has the features that it needs in order to function.
• Expected product: This refers to the set of features that buyers expect when they buy a product.
• Augmented product: This refers to any extra characteristics, benefits or related services that differentiate the product from its competitors.
• Potential product: This refers to any changes or expansions that the product may undergo in the future.

Question 8

Explain Consumer products?

Answer 8

are those products which are bought by the final consumers for personal consumption, and can be classified in terms of how consumers go about buying them. There are four subcategories of consumer products, namely convenience products, shopping products, speciality products and unsought products.

Question 9

There are two main types of shopping products:

Answer 9

• Homogeneous shopping products: These are products that a customer views as being basically the same, and customers want the lowest price; for example, certain types and sizes of fridges or washing machines. To avoid price competition in this category, firms may change the product somewhat and use promotions to differentiate them from competing brands.
  Heterogeneous shopping products:

Question 10

These are products that a customer regards as being different and customers want to be assured of quality and suitability, ahead of price. Examples of these products include furniture, clothing or cameras.

Question 11

Unsought products are products that potential consumers do not yet want or products they do not know about yet

Answer 11

• Regularly unsought products are those that are unsought but are ultimately purchased. For example, life insurance policies or security systems, where sales are often face-to-face and can involve aggressive sales techniques.
• New unsought products are those that offer new but unknown ideas and which can be brought to the attention of prospects by informative promotion. Examples of originally new unsought products include home water purifiers, solar power systems or integrated cell phone applications such as a GPS.

Question 12

Explain Industrial equipment Characteristics?

Answer 12

Industrial equipment
Characteristics:
- Buildings
- Installation equipment, such as accessory equipment
- Operating equipment, such as tools and instruments
- Furnishings and fittings

Question 13

Explain Industrial materials?

Answer 13

Industrial materials
- Raw materials
- Processed materials
- Fabricating materials

Question 14

Explain Equipment services Characteristics?

Answer 14

• Equipment services
• Facilitating services, such as advisory and consultative services

Question 15

Industrial equipment includes the following items?

Answer 15

• Buildings
• Operating equipment
• Tools and instruments
• Furnishings and fittings

Question 16

Industrial materials include the following items?

Answer 16

Industrial materials include the following items:
- Raw materials
- Processed materials:
- Fabricated materials (including components)
- Fabricating materials

Question 17

Which product is an example of a convenience product?

Answer 17

Milk

Question 18

Which characteristic describes a service, rather than a
product?

Answer 18

The output is challenging to standardise

Question 19

Which product level requires a product to contain extra
benefits or related services that differentiate it from its
competitors?

Answer 19

Augmented product

Question 20

Which type of product would a TV usually be classified as?

Answer 20

Shopping product

Question 21

We will now discuss the four phases of the product life cycle?

Answer 21

• Phase 1 – Introduction
• Phase 2 – Growth
• Phase 3 – Maturity
• Phase 4 – Decline
• Phase 1 – Introduction
  This is the first stage in the life of a new product. This phase typically sees low sales and the organisation has to work to create awareness and establish a target market for the product.
• Phase 2 – Growth
  In this stage, demand for the product grows and the market expands. The organisation sees increased sales and competitors start to enter the market.
• Phase 3 – Maturity
  In the maturity phase, demand does not increase, so the rate of sales becomes level. Few competitors enter the market at this stage, but improved products that meet the same consumer needs may be introduced into the market, so the organisation must defend its market share.
• Phase 4 – Decline
  The decline phase sees a rapid decline in sales as consumers lose interest in the product. Competitors and alternative products may have increased market share.

Question 22

Name the Different kinds of product life cycles?
(Product life cycles may differ from one another)

• The traditional product life cycle curve follows the phases of introduction, growth, maturity, and decline as discussed above.
• The classic product life cycle curve sees sales increase rapidly and then plateau due to a lack of new consumers or an outlet.
• The fashion fad product life cycle sees sales increase and decline at the same rate. Examples of these products are toys and clothing featuring the latest popular children’s movie.

Question 23

The marketing mix and product life cycles?

Answer 23

• Introduction (Branding, quality, parents, Trademarks)
• Growth (additional features, Increased services)
• Maturity (increased differentiation, Repacking)
• Declines (Alternative uses, Discontinued)

Question 24

What does the product life cycle describe?

Answer 24

The stages that all products go through, from their
introduction into the market, through to their decline

Question 25

What is the decline stage of the product life cycle characterised by in terms of marketing?

Answer 25

Reduced marketing efforts, reduced prices and increased
promotions

Question 26

Which stage in the product life cycle would the business want
to add differentiation to their product, or offer promotions to
maintain market share?

Answer 26

Maturity

Question 27

Which stage in the product life cycle is characterised by low
sales and a considerable investment in marketing to increase
brand or product awareness?

Answer 27

Introduction

Question 28

Which stage in the product life cycle is characterised by both
increasing sales and more competition with other
organisations?

Answer 28

Growth

Question 29

Packaging serves some of the following functions?

Answer 29

• Protecting the product from damage
• Protecting consumers from hazardous products
• Acting as a crucial marketing tool
• Helping companies attract new customers and retain established ones

Question 30

packaging must be created in a way that ensures the product is?

Answer 30

easily protected, stored, handled, transported and identified by the consumer

Question 31

Explain Package design?

Answer 31

A product’s package design must help to protect and sell the product. It should be cost-effective and well suited to the production line speeds; it should also be user-friendly for the consumer while meeting the necessary legal requirements

Question 32

Functional packaging requirements (Package design) must meet the following functional criteria?

Answer 32

• In-home requirements
• Production requirements
• Distribution and safety requirements
• Legal Requirements
• Environmental considerations
• In-home requirements: Consumers need to be able to easily use and store the packaging in their homes. The packaging offers the consumer instructions and advice on how to use the product, reinforces their expectations of the product, and serves as a reminder to the consumer for future purchases.
  In-store requirements: Packaging needs to be easy for retailers to store, check out and transport (particularly in the case of online shopping where products are delivered). Additionally, packaging must attract consumers’ attention and differentiate the product from its competitors on the same shelf.
• Production requirements: Packaging must be cost-effective and easy to produce. Package design should consider the production line speed; for example, if the packaging is not appropriately shaped, the product may have difficulty flowing into its container.
• Distribution and safety requirements: It is imperative that the packaging does not allow the product to be damaged or the consumer to be hurt (e.g. by sharp edges on the packaging), as this could result in a detrimental loss of sales or a lawsuit. The packaging needs be able to deal with the presence of moisture, temperature changes and rough handling, and it should be tamper-proof and childproof.
• Legal requirements: Packaging must adhere to the relevant laws, particularly regarding safety and labelling. For example, a product with unsafe chemicals may need to be packaged within specific materials, and there are laws against misleading customers through the packaging.
• Environmental considerations: Consumers are increasingly demanding packaging that is environmentally friendly, whether through the use of recycled materials or packaging that can easily be reused at home.

Question 33

Sales packaging requirements
-Package design must meet the following sales-related crite?

Answer 33

• Apparent size
• Attention-drawing power
• Impression of quality
• Brand name readability
• Apparent size: The packaging should aim to be as big as possible without misrepresenting the product inside.
• Attention-drawing power: The packaging should be attractive and make the product seem appealing.
• Impression of quality: The packaging should be designed in a way that gives the consumer the impression that its contents are of good quality.
• Brand name readability: The design should not be over-complicated, and the consumer should be able to quickly see the brand name on the packaging. The logo should be clearly visible and easy to read.

Question 34

Labels on packaging need to adhere to?

Answer 34

certain regulations.

Question 35

There are numerous reasons why an organisation may choose to redesign the packaging for existing products?

Answer 35

• Breathing new life into a product that is in the maturing phase
• Responding to a competitive threat
• Making changes to the product
• Reducing packaging costs
• Restructuring the product line

Question 36

The term ‘in-home requirements’ describes which features of
packaging?

Answer 36

Customers can easily store the product, and access
instructions/advice on how to use the product

Question 37

Which feature of packaging describes a functional packaging
requirement?

Answer 37

• It draws consumer’s attention
• It gives the impression that the product has high quality
• It protects the product from being damaged when it is
  being transported or stored

Question 38

What information are food items legally required to include on
their packaging?
Any potential allergens contained in the food

Answer 38

Any potential allergens contained in the food

Question 39

What does the term ‘packaging strategy’ refer to?

Answer 39

The strategy for using packaging to gain.a competitive
advantage

Question 40

Which feature of packaging describes a sales packaging
requirement?

Answer 40

It draws consumers’ attention

Question 41

There are five types of new products?

Answer 41

• New inventions
• Products that are new to the organisation
• Additions to an organisation’s current product lines
• Product improvements
• Repositioning products to new target markets or for new uses

Question 42

Organisations can introduce new products?

Answer 42

externally (i.e. they acquire the product, or obtain the rights to market the product, from another organisation); or
internally (i.e. they develop the new product themselves).

Question 43

There are typically seven steps in the new product development process?

Answer 43

• Idea generation: Brainstorming many ideas for new products.
• Idea screening: Narrowing down the ideas through a process of elimination and evaluating the ideas according to the organisation’s vision and strategic objectives.
• Concept development and testing: Conducting marketing research.
• Business analysis stage: Analysing the new product idea for its marketability and affordability.
• Prototype development: Transforming an idea into a product.
• Test marketing: Testing the product prototype in real market situations.
• Commercialisation: Introducing the product to consumers on a large scale.

Question 44

Various organisational aspects can influence the speed and efficiency with which new products are introduced. Some of these include the following?

Answer 44

• Organisational structure: Does the organisational structure encourage communication and the sharing of ideas? Are lower-level employees allowed to make decisions? How are planning and implementation carried out?
• Leadership: Are top managers involved in the development process? Do managers encourage employee involvement? Are they flexible and do they make space for trial and error?
• Team building: Do different departments communicate and cooperate with one another? Do all the teams understand the organisational objectives and the strategy?

Question 45

Which organisational factor helps facilitate the new product
development process?

Answer 45

An organisation that encourages employee input and
participation in new product development

Question 46

Which stage in the new product development process
involves setting up experiments in real stores and using real
buyers to assess the product and its marketing strategy?

Answer 46

Test marketing

Question 47

What happens during the stage of idea generation (the first
step in the new product development process)?

Answer 47

Many ideas for new products/services are generated but
they are not analysed or evaluated

Question 48

What does the stage of concept development involve?

Answer 48

Promising ideas are developed into more detailed ideas
that further specify the product and target market

Question 49

Which stage in the new product development process
involves ensuring that the new product idea is financially
feasible, marketable and affordable?

Answer 49

Business analysis

Question 50

Sometimes it is to the advantage of the manufacturer to combine some of the functions of the distribution channels; this is known as?

Answer 50

channel integration

Question 51

there can be conflict in the channel. Horizontal conflict develops between organizations?

Answer 51

on the same level of distribution (often better thought of as competition

Question 52

Vertical conflict?

Answer 52

is conflict between producer and wholesaler or producer and retailer. This often happens when the manufacturer of a product tries to sell to retailers or directly to the end consumer. This is known as vertical integration.

Question 53

Pule started manufacturing quality sandals two years ago. Retail prices range from R 100 to R 200. At first she sold her sandals through mail order from her shack. Later she began selling directly to large department stores.
Required:
- Draw a diagram showing the distribution channels Pule used for her products.

Answer 53

Manufacturer ➝ Customer
Manufacturer ➝ Retailer ➝ Customer

Question 54

Pule started manufacturing quality sandals two years ago. Retail prices range from R 100 to R 200. At first she sold her sandals through mail order from her shack. Later she began selling directly to large department stores.
Required:
1. Why do you think she decided on short distribution channels?

Answer 54

She is using short channels to save costs, save time and to keep more control over the distribution channel. Whether or not she is really saving on cost is debatable.

Question 55

Pule started manufacturing quality sandals two years ago. Retail prices range from R 100 to R 200. At first she sold her sandals through mail order from her shack. Later she began selling directly to large department stores.
Required:
- What is the advantage of selling her products to the department store?

Answer 55

She is able to target a larger group at the department store than through mail order. It could also create the impression that her business is in fact much bigger than it really is.

Question 56

Pule started manufacturing quality sandals two years ago. Retail prices range from R 100 to R 200. At first she sold her sandals through mail order from her shack. Later she began selling directly to large department stores.

Required:
Because her products have to be handled with care, Pule has always taken special care with the packaging and transport of her products. For longer distances she uses specialised parcel delivery businesses. Give at least three reasons for her decision to make use of road transport only.

Answer 56

She is not producing in bulk, so rail is not an option. Air is too expensive an option for a small manufacturer. It is easier to make alternative arrangements when something goes wrong via road. The perception remains that road is the most reliable transport option.

Question 57

When selecting a distribution channel, a business must
consider various market, product, producer and competitive
factors. Which category of factors does the consideration of
the type of buyer fall into?

Answer 57

Market factors

Question 58

What are the entities between the point of the producer and
final consumer called?

Answer 58

Intermediaries

Question 59

Who is the final role player in the distribution channel?

Answer 59

Consumer

Question 60

Middlemen perform vital functions in the?

Answer 60

distribution channel.
- In essence, they adjust to the differences between the producer and the consumer.

Question 61

Middlemen can also do research, develop promotions, engage in negotiations, sell?

Answer 61

store and distribute.

Question 62

Retailers engage in the following activities?

Answer 62

• Purchasing and stocking of products
• Selling these products to final consumers
• Buying goods from producers, wholesalers or agents

Question 63

Name the Mass merchandising?

Answer 63

• Department stores
• Supermarkets
• Superstores and hypermarkets
• Discount houses
• Wholesale clubs
• Catalogue showrooms

Question 64

Explain what is meant by ‘Non-store retailing’?

Answer 64

• Direct selling (This involves direct distribution to consumer markets, for example door-to-door sales of World Books or Tupperware home parties.)
• Direct marketing (Marketers can use a variety of media to sell directly to customers, including direct mail or the Internet.)
• Multi-level marketing (The idea with multi-level marketing is that the customer becomes the marketing agent or retailer and is incentivised for doing so.)

Question 65

Wholesalers and distributors sell to other businesses and their function?

Answer 65

is to provide a service to retailers.

Question 66

Agents sell to retailers and business customers. Agents do not take ownership of the product, whereas wholesalers and retailers will buy the sunglasses and take on?

Answer 66

the risks associated with ownership, such as theft and damage. Agents and brokers merely bring the buyer and seller together

Question 67

Explain an Independent sales agents?

Answer 67

These are very similar to agents or brokers. They represent particular manufacturers and are allocated an area each in which to do business. In most cases they do not set up once-off deals. Their job is to look for long-term purchasing contracts.

Question 68

State which distribution channel you will use for each of the following examples and motivate your answer?
- Milk
- Welding machines for space shuttles
- Small tools for harvesting grapes

Answer 68

Milk: Producer to Retailer to Customer
The distribution channel must be short as it is a fresh product.
The product must be easily available as it is a convenience product.

Question 69

State which distribution channel you will use for each of the following examples and motivate your answer?
Welding machines for space shuttles

Answer 69

Welding machines for space shuttles: Manufacturer to NASA
- There are very few potential clients.
- The product must be made to customer specifications.
- The seller must have expert knowledge.

Question 70

Small tools for harvesting grapes?

Answer 70

Small tools for harvesting grapes: Manufacturer to Cooperation to Farmer
- The product must be available at a place where farmers shop.
- Selling directly to wine farms is another option.

Question 71

Without physically distributing the product, a marketer cannot hope to sell it. Distribution is, in fact?

Answer 71

.more than half of the marketing cost.

Question 72

The following procedures will typically be followed to achieve effective physical distribution?

Answer 72

• Order processing
• Materials handling (the act of physically moving the product)
• Warehousing
• Inventory/stock control
• Transportation – e.g. rail, road, sea, airways and pipeline

Question 73

There are a variety of methods of sending a certain product by courier, with all modes of transport being used. A few commonly used modes are:

Answer 73

• Bicycle or motorbike
• Delivery trucks and railway
• Airplanes

Question 74

Differing economic conditions may apply in foreign environments – i.e. fluctuations in inflation, recession and deflation, which could?

Answer 74

have an effect on strategy.

Question 75

Exxplain Competitive environment?
Rosenbloom, 2013).

Answer 75

In some cases, due to differences in competitive structures in different countries, the channel structure may have to change to suit alternative competitive structures. It might even be appropriate to create completely separate channel structure for different countries (Rosenbloom, 2013).

Question 76

Explain Socio-cultural environment?

Answer 76

People from different backgrounds, experiences and regions will have different values, attitudes, behaviours and norms, and it is important for organisations to be sensitive to socio-cultural differences and to try to understand how business is done in other parts of the world

Question 77

Explain Technological environment?

Answer 77

Some countries have a higher level of technological advancement than others, and this can place a great amount of pressure on channel structures in less developed nations to develop technologies that can meet the demands of foreign companies

Question 78

Explain Legal/political environment?

Answer 78

Organisations that want to establish channels of distribution in other countries need to consider the government regulations and policies which may impact on this process, and are often quite complicated.

Question 79

A popular South African fast food brand has decided to
expand into the European market. However, the business is
experiencing some challenges due to differing tastes,
preferences and behaviours. Which external factor is
impacting the business?

Answer 79

Sociocultural factors

Question 80

Which external environment refers to the rules, laws and
regulations with which a business is required to comply?

Answer 80

Legal environment

Question 81

In the context of physical distribution, which factor specifically should be considered when looking at the delivery of a delicate mirror?

Answer 81

Packaging material

Question 82

Paul, who lives in South Africa, has just been informed that his
mother is ill and that he needs to go to Australia to care for
her. Unfortunately, his passport has just expired, so he needs
to apply for an emergency passport. Which factor should the
passport distributors be particularly aware of, in this
instance?

Answer 82

The level of service required

Question 83

Green Leaves, an outdoor furniture manufacturer, has recently
experienced significant financial strain. This is largely due to
the high inflation rate and the weakening local currency.
Which environmental factor is impacting Green Leaves?

Answer 83

Economic factors

Question 84

Channel design is a crucial element of an organisation’s marketing strategy because it can help them to gain and maintain a competitive advantage. The steps outlined below should be followed when making decisions related to channel design?

Answer 84

• Step 1 – Recognising the need for a channel design decision
• Step 2 – Setting and coordinating of distribution objectives
• Step 3 – Specifying the distribution tasks: Channel managers must clearly communicate the nature of all the required tasks.
• Step 4 – Developing possible alternative channel structures
• Step 5 – Evaluating any variables that may affect the channel structure
• Step 6 – Choosing the optimum channel structure
• Step 7 – Choosing the channel members
• Step 1 – Recognising the need for a channel design decision: Channel managers must assess the internal or external circumstances and determine whether a channel design decision is necessary.
• Step 2 – Setting and coordinating of distribution objectives: These objectives must be aligned with the company’s overall objectives and strategies.
• Step 3 – Specifying the distribution tasks: Channel managers must clearly communicate the nature of all the required tasks.
• Step 4 – Developing possible alternative channel structures: Channel managers must consider other channel structures if that will help them to meet their distribution objectives.
• Step 5 – Evaluating any variables that may affect the channel structure: These may include market, product, company, intermediary, environmental and behavioural aspects.
• Step 6 – Choosing the optimum channel structure: As far as it is possible, channel managers must choose a channel structure that is both effective and low in cost.
• Step 7 – Choosing the channel members: Channel managers need to find prospective channel members, determine their suitability and then make a final selection.

Question 85

Distribution channels fulfil three important functions?

Answer 85

• Providing specialisation and division of labour
• Overcoming discrepancies
• Providing contact efficiencies

Question 86

Marketing channels can help producers to overcome the discrepancies caused by?

Answer 86

economies of scale in production

Question 87

These discrepancies can be the difference between what the producer makes and what the customer wants. Examples of such discrepancies include?

Answer 87

• Discrepancy of quantity
• Discrepancy of assortment
• Temporal discrepancy
• Spatial discrepancy
• Discrepancy of quantity: Distribution channels store excess products and distribute them in the appropriate amounts, making products available in quantities that consumers desire.
• Discrepancy of assortment: A consumer may lack some of the items needed to receive full satisfaction from a product. - Distribution channels can overcome this problem by assembling many of the products necessary to complete a consumer’s needed assortment.
• Temporal discrepancy: A product may be produced before the consumer is ready to buy it. Distribution channels overcome this problem by maintaining inventories in anticipation of demand.
• Spatial discrepancy: Markets are often spread out over large geographic regions. Distribution channels overcome these spatial discrepancies by making products available in locations convenient to consumers.

Question 88

Distribution channels have the function of providing contact
efficiency. In what way do they do this?

Answer 88

They reduce the number of stores that a customer must
shop at to get everything they need

Question 89

What is the final step in designing the distribution channel?

Answer 89

Choosing channel member

Question 90

In addition to overcoming discrepancies and providing
contact efficiencies, what other function does the distribution
channel perform?

Answer 90

Specialisation and division of labour

Question 91

Why is the distribution channel design such a crucial element
of a business’s marketing strategy?

Answer 91

It creates competitive advantage.

Question 92

A jewellery manufacturer sells its product to Icicles, a luxury
jewellery store. Icicles have been in the business for 30 years
and are highly experienced in marketing and selling their
product to customers, many of whom they have a good
relationship with. Which function of the distribution channel is
being referred to here?

Answer 92

Specialisation and division of labour

Question 93

Satisfying buyer requirements Attendant services?
Do buyers have limited knowledge or desire specific

Answer 93

data about a product or service?

Question 94

Satisfying buyer requirements Convenience?

Answer 94

• Proximity or driving time to a retail outlet
• Amount of time and hassle
• Websites must be easy to locate and navigate and downloads must be fast

Question 95

Satisfying buyer requirements Variety?

Answer 95

Buyers’ interest in having the choice of numerous items
Breadth and depth of products and brands

Question 96

Satisfying buyer requirements Information?

Answer 96

• Delivery requirements
• Installation requirements
• Credit requirements