unit 4 - chapter 2

Question 1

What are four broad product/market strategies according to Ansoff?

Answer 1

• Market penetration (existing products in existing markets)
• Product development (new products in existing markets)
• Market development (existing products in new markets)
• Diversification (new products in new markets) (new/existing market/product)

Question 2

How can the marketing mix be adapted to achieve marketing penetration?

Answer 2

least risky option since this involves products and markets with which the organisation is already familiar

• Product :Minor changes to product – features, colours, designs; improved attractiveness of packaging; increased packaging sizes.
• Price: Lower prices; price promotions (e.g., buy one get one free); reward/frequent user schemes.
• Place (Convenience and ease of distribution; create internet sites and home delivery schemes; increase promotion and incentives to distributors.)
• Promotion Increase advertising aimed at product awareness and/or benefits over competitors through television, print media, internet, etc.; increase sales-force activity.
• People: Training and rewards to offer superior customer service.

Question 3

What are the issues related to product development?

Answer 3

• Risks are increased as the rate of new product failure can be high, as can the costs involved in new product development (NPD)
• The stage-gate model: clearly defined stages from idea generation through to pilot testing, launch and review are separated by ‘gates’.
• The gates are intended to focus NPD teams on the financial and strategic considerations of progressing to the next stage

Question 4

What is the critique of NPD model?

Answer 4

• The model tends to portray a sequence of discrete and apparently finite activities, which in practice are more likely to be iterative and ‘messy’.
• Information gathering and analysis will be ongoing, reflecting both internal and external environmental changes,
• Studies of the NPD process for both banking and health services (Smith and Fischbacher, 2002, 2005) have shown that NPD can be a very messy process, with various stakeholders

Question 5

What are the advantages of NPD model?

Answer 5

• Benefits of this type of structured, tightly managed approach include an apparently rational, sequential process with emphasis on analysis of the product’s ‘fit’ with organisational objectives and resources.
• provides a common focus and language for various departments/teams implicit multifunctional coordination since the various stages (e.g., testing, business analysis, etc.) would be conducted within different organisational areas, requiring shared information.

Question 6

How is product development achieved through external growth?

Answer 6

• Product development may also be achieved through external growth (mergers, acquisitions, joint ventures, strategic alliances, etc.) as an alternative to engaging in the NPD process.
• Benefits will include speed to market and, potentially, elimination of a competitor.
• Comparative disadvantages include the many problems of managing external growth, such as working with differing organisational and, possibly, national cultures.

Question 7

What are popularly cited market attractiveness factors according to Dibb and Simkin? (market factors)

Answer 7

• Market factors
• Segment size
• Segment growth rate
• Product life-cycle stage
• Predictability of demand
• Price sensitivity and demand elasticity
• Customer bargaining power
• Seasonality issues
• Customer needs and expectations
• Ability to satisfy customer needs

Question 8

What are popularly cited market attractiveness factors according to Dibb and Simkin? (competitive factors)

Answer 8

• Competitive factors –
• Number of competitors and competition level of –
• Quality of competition –
• Threat of substitution –
• Degree of differentiation

Question 9

What are popularly cited market attractiveness factors according to Dibb and Simkin? (Economic and technological factors)

Answer 9

• Economic and technological factors –
• Barriers to entry –
• Barriers to exit –
• Bargaining power of suppliers –
• Level of technology utilisation –
• Required investment –
• Margins available –
• Degree of technological change –
• Scale economies

Question 10

What are popularly cited market attractiveness factors according to Dibb and Simkin? (Environmental factors)

Answer 10

• Environmental factors
• Exposure to economic fluctuation
• Exposure to political and legal factors
• Degree of regulation
• Social acceptability and physical environment impact
• Natural forces

Question 11

what are the key issues in the globalisation/ localisation debate? (Levitt)

Answer 11

. Levitt (1983 p. 92) argued that

• markets were becoming more and more similar because of the increasing amount of world travel, the nature of products, and global communications, which drive customers’ preferences.
• Technology, as ‘the powerful force that drives the world toward a converging commonality’.
• Companies must learn to operate as if the world were one large market;
• ignore superficial differences;
• benefit of economies of scale, resulting in lower prices and higher value for customers.
• standardisation,-
• benefits of lower production distribution and communications costs
• increased potential for learning between markets a consistency of image,
• brand/product recognition and the potential for global communications.

Question 12

what are the key issues in the globalisation/ localisation debate? (Douglas and Wind)

Answer 12

globalisation as a ‘myth’. They argue that consumers are not becoming homogenised and that preferences differ between markets.

three assumptions that they dispute

• 1. customer needs and interests are becoming increasingly homogeneous worldwide. differences exist, not only between nations but also within them
• 2. dispute the assumption that there is a universal preference for low price at acceptable quality (watches etc)
• 3. economies of scale in production and marketing cannot necessarily be achieved through supplying global markets (communication and distribution approaches are unlikely to be standardised).

They suggest a standardisation– differentiation continuum

Question 13

What are issues related to diversification?

Answer 13

Related vs conglomerate

Riskiest of the product/market strategies in Ansoff’s model, as the organisation is simultaneously involved in new businesses that have little or no relationship to the company’s current technologies, products or markets

potential benefits include

• the spreading of risk;
• entry into more profitable markets;
• avoidance of monopoly legislation and the exploitation of under-utilised resources.

disadvantages

• lack of expertise and experience in the new business area will be a problem.
• control may be difficult to maintain due to the size and diversity of operations.

Question 14

What is the product lifecycle?

Answer 14

introduction, growth, maturity and decline

Question 15

What is the introduction stage for PLC?

Answer 15

• Investment is high as development costs continue and promotion/communication is needed to make potential customers aware of the new product and its benefits.
• Price may be high (market-skimming pricing) to take advantage of those consumers who are keen to acquire the product and are willing to pay high prices, or prices may be low (market-penetration pricing) to gain market share ahead of competitors who may be ready to move into the market.
• High costs and relatively little revenue typically result in financial losses at this stage.

Question 16

What is the growth stage for PLC?

Answer 16

Customers are aware of the product and sales increase

• Marketing activity is likely to focus on potential customers who do not as yet purchase the product at all (as opposed to purchasing those of competitors).
• Minor modifications and additional features may be added to the product in response to customer feedback.
• New distributors will be approached and promotion aims to reach a wider audience, particularly beginning to emphasise the benefits over competitors.
• Profits grow as revenue increases and scale economies begin to reduce costs.

Question 17

What is the maturity stage for PLC?

Answer 17

• Mature markets are typified by intense competition, and eventually the market becomes saturated.
• Market share can only be increased through encouraging existing customers to purchase more or by attracting customers away from competitors, possibly through intense price competition.
• Product modifications may include new styles, features and models aiming to satisfy customer needs for improved products.
• New approaches to distribution – for example, through the internet – may be adopted as suppliers attempt to add value to their offerings

Question 18

What is the decline stage for PLC?

Answer 18

• Here demand for the product declines as customers find alternative products to satisfy their needs (video players)
• Competitors may now begin to leave the market looking for opportunities elsewhere.
• Prices may fall as suppliers seek to exploit the remaining demand in the market.
• Alternatively, there may still be profitable niches.
• However, the typical scenario at this stage is that profitability will decline and losses may occur.

Question 19

What are the benefits/usefulness of the PLC model

Answer 19

The PLC model offers a number of benefits as an analytical tool. The model: .

• highlights that the organisation must have a portfolio of products at various stages;
• it therefore emphasises the importance of lead times and that investment in NPD is necessary .
• emphasises how marketing strategies (with respect to markets and products) and tactics (marketing mix) should change at each stage of a product’s life
• can make an important contribution to financial planning, for example, the evaluation of investment decisions, cash-flow planning and forecasting .
• helps to identify the nature of information required by decision-makers at each stage – for example, research with respect to customers’ evaluations of competing alternatives .
• helps in the development of appropriate performance measures, such as with respect to market share and product profitability

Question 20

What are the limitations of the PLC model

Answer 20

The limitations/problems of the PLC model -

• difficult to identify stages at any point in time
• The PLC refers to product forms. Organisations generally focus on brands, which may be more erratic.
• Some products do not follow the traditional PLC – for example, fashions and fads (such as the Rubik’s cube) may have steep growth, short maturity and rapid decline.
• Additionally, products may have several life cycles. . Products may fail and never enter growth or maturity.
• The model assumes effective product management. .
• Many external factors will affect the PLC, and these must be taken into account. Examples of such factors include competitor activity and the development of new technologies. .
• There is no indication as to how long the stages will be.
• Additionally, PLCs are becoming shorter due to technological change etc. .
• The model assumes that mature products are profitable, which may not be the case – for example, it is often expensive to defend market share. .
• Use of the model could result in a self-fulfilling prophecy in that organisations may allow products to continue into decline or drop them altogether rather than regenerate, for example, by increased advertising or product modification.
• . Finally, the PLC focuses on individual products and not the product portfolio as a whole.
• Consequently, important relationships between products – for example, where a major customer buys a number of products – must also be considered.

Question 21

what are the stages of competitor analysis?

Answer 21

• Identifying competitors – actual and potential competition (McDonald’s and Burger King; Boeing and Airbus; Coca-Cola and Pepsi also vs. evening to cinema)
• Identifying sources of competitive advantage and analysing comparative strengths and weaknesses (competitiveness)
• Analysing competitors’ assumptions; past, current and future strategies; and goals (market leaders/challengers)
• Assessing potential reactions
• Collecting competitor intelligence
• Developing a competitive strategy

Question 22

can you provide an example of competitor analysis (Identifying the competition for a social marketing programme – reducing obesity)

Answer 22

• Direct competition
• Competing behaviours
• Competing benefits and motivation
• Personal influences
• Wider influences
• Indirect competition
• Other social marketing messages
• Everyday life
• Wider environmental forces

Question 23

what examples are there of competitor response profiles (Kotler)?

Answer 23

• 1. The ‘laidback’ competitor fails to react strongly or swiftly, little immediate impact on the organisation’s objectives;
• 2. the selective competitor will react to some strategies but not others (for example, reacting to price reductions but not increased advertising);
• 3. the tiger competitor will fiercely react to any competitor activity aimed at its products and markets;
• 4. The stochastic competitor does not exhibit any predictable pattern, and its actions and potential impact on objectives are largely unknown (perhaps most difficult of all)

Question 24

what is product positoning?

Answer 24

It refers to how the organisation wants the target market (and other stakeholders) to interpret the product or brand in relation to others (particularly competing brands).

This is about

• image,
• associations
• and the values and beliefs that customers (and others)

will associate with the brand

Question 25

what is the difference between small-b brand and Brand?

Answer 25

Keller (2003) distinguishes between

• a ‘small-b brand’, defined by the American Marketing Association as a: name, term, sign, symbol, or design, or a combination of them which is intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors. (American Marketing Association, 1960)
• big-B Brand: amount of awareness, reputation, prominence, etc., that creates the brand

Question 26

what choices do organisations make with regard to branding?

Answer 26

• • whether to brand their products at all;
• whether to adopt a family (or umbrella) branding strategy;
• whether to adopt a combination of the two;
• and whether to adopt a local or global branding strategy.

Question 27

brand or no brand?

Answer 27

• the decision not to brand will entail losing the benefits of branding.
• building a brand is expensive and an organisation may prefer to supply unbranded products, allowing distributors to use their own brand names.
  
  • This benefits the original supplier through increased revenue and easy entry into new markets.
  • Additionally, this avoids any negative brand associations
  • . However, the supplier will be dependent on others for the continued success of the business.
  • This is the case for those manufacturers supplying retailers such as Marks and Spencer, Lidl and Wal-mart with goods that will carry the retailer’s brand.

Question 28

Family (umbrella) brand, multiple brands or a combination?

Answer 28

A second decision is whether to use the same brand for all products and services offered – that is, a family or umbrella branding strategy. Often this will be the name and logo associated with the organisation. Microsoft typifies this approach.

The benefits of a family brand include

• lower cost – as the brand becomes recognisable to consumers so new products and services can be introduced under the brand name –
• and less confusion for customers, as they can quickly identify with what the brand means.

Alternatively, organisations such as Unilever and Intercontinental Hotels adopt a multiple branding strategy.

Unilever

• range of food,
• home care and
• personal care brands, including Dove and Lux soap.

IH

• including the Crowne Plaza and Holiday Inn brands,
• while also offering specific sub-brands such as Holiday Inn Express
• so as to cater separately to both the business and the leisure sectors at a range of prices and with a variety of services (e.g., aimed at families with children).

Benefits of multiple branding include

• the ability to target a range of markets that have differing needs
• and, if problems arise that devalue the brand in the minds of customers, this will not be transferred across all the organisation’s activities.

A third alternative is to combine the two and adopt a family brand/logo together with individual brands for specific products.

• This approach is often adopted by technology manufacturers – for example, Sony typically adds a model to the family brand as in the case of Sony Bravia televisions.

Question 29

Local or global brands

Answer 29

Global brands have benefits similar to family brands in that there will be

• economies of scale, for example, in promotion and packaging
• ; less potential for customer confusion;
• and a coherent brand identity.

However, differences in language, perceptions and associations may suggest that brand names should be adapted for local markets.

• For example, the Russian automobile marketed under the ‘Jiguly’ trademark was not a success in Western European and English-speaking countries because of the association with ‘gigolo’.

Question 30

how can customers have various levels of relationships with brands?

Answer 30

Product benefits

• At the base level, we are interested in the product benefits or attributes. These are something we think about and that can be learned from advertising.

two roles:

• functional role – for example, convenience, quality and features. (can be compared in a relatively objective way between competing brands)
• psycho-social role. For example, dressing in clothes bearing the brand names of Gucci and Armani may signal success and have an impact on other people’s perceptions of the wearer.

Personality

• At the second level, advertising can lead us to assign a personality to the brand.
• McDonald’s is a good example since its overt and very successful campaign led many people, and particularly children, to assign the brand personality of the cheerful Ronald McDonald to the company and its products

Emotions

• Finally, the consumer develops emotional bonds with the product/brand.
• Belch and Belch (2009) describe how McCann-Erikson (one of the world’s largest advertising agencies) has adopted this approach, believing that the creation of emotional bonds through advertising is essential to a positive psychological movement towards the product/brand and will reduce the potential for switching behaviour.
• Such emotional bonding with McDonald’s could be achieved through the association with children’s parties and happy family gatherings in which McDonald’s staff and products play a part.

Question 31

what are projective techniques for research into consumer brand perceptions?

Answer 31

Association techniques –

• These involve immediate responses to a stimulus, such as word association.
• For example, ‘What is the first thing that comes into your mind when I say “Sony”?’

Completion techniques –

• The respondent is presented with an incomplete sentence or story and asked to complete it in their own words.
• For example, ‘People who buy Gucci handbags are …’

Construction techniques –

• These include approaches such as picture response techniques and cartoon tests where the respondent expresses their view of what is happening in these by telling stories, completing voice bubbles, etc.

Expressive techniques –

• Respondents are asked to relate the feelings and attitudes of some other person to a situation, such as in role play or third-person techniques.

potential negative factors to consider. -

• It is easy for interviewers/analysts to ascribe meanings to the data that may not be correct – for example, the respondent may really be describing the behaviour of another person rather than their own -
• They can be costly since there will be a relatively small number of respondents and the need for a trained interpreter. -
• It may be considered unethical to try to elicit information in a way that is not transparent to the interviewee.

Question 32

what are the contents of a marketing plan?

Answer 32

• Executive summary
• Current marketing situation
• Threats and opportunities analysis
• Objectives and issues
• Marketing strategy
• Action programmes

Question 33

what are the advantages/disadvantages of a planning approach?

Answer 33

Benefits may include: .

• focuses attention on the setting and achievement of organisational objectives .
• shared understanding of objectives and the means to achieve them provides direction and therefore motivation
• . means of communication to internal and external stakeholders .
• identifies potential opportunities .
• provides a basis for task allocation .
• provides a basis for effective resource allocation through a comparison of alternatives .
• provides a basis for coordination and control .
• a systematic approach provides a basis for learning for the future .
• identifies information needs .
• identifies other resource needs – financial, human.

Problems may include: .

• a planning approach can be inflexible and new opportunities can be missed .
• inflexibility can potentially stifle creativity .
• all models and frameworks have their problems and limitations, which should be recognised – for example, the limitations of product life cycle analysis were outlined in Section 2.1 .
• may lead to a division between ‘planners’ and ‘implementers’ and potential for conflict between the two . can be very expensive.

Question 34

what is the scope of marketing activities?

Answer 34

• Marketing strategy,
• business development and planning
• Analysing customers and context
• Managing customers: customer acquisition and retention
• Marketing management/managing the marketing mix

Question 35

what is the entrepreneurial/simple organisation approach to marketing?

Answer 35

• small business where the owner/manager and a few employees undertake all marketing activities.
• Benefits from a marketing perspective often involve direct contact between senior management and customers and, potentially, flexibility in response to customer needs.
• However, marketing skills may be lacking as well as the resources to employ specialists – for example, advertising or research agencies.
• Many studies have highlighted lack of marketing skills and knowledge as the cause of small business failure.

Question 36

what is the functional structure with regared to marketing approach?

Answer 36

• In Figure 2.8, experts are grouped into functional teams creating specialisation, expertise and functional career paths.
• Other benefits include clear lines of communication and clarity with respect to responsibility, power and authority.
• Problems may develop, however, between functions/ departments.
• These could include poor communication; conflicting objectives; lack of coordination; and reinforcement of stereotypes.
• Organisations such as Procter & Gamble and Gillette were among the first to develop professional marketing departments.

Question 37

What is the divisional structure?

Answer 37

• Pioneered by General Motors and DuPont, the divisionalised structure, as shown in Figure 2.9, divides the business into autonomous regions or product businesses.
• These may be profit or investment centres.
• The structure focuses the attention of management below ‘top level’ on business performance and results, and allows for specialisation in products/regions and for local market interests to be accounted for.
• A number of problems exist, however, including those involved in determining the degree of autonomy and nature of control between parent and subsidiary.
• Duplication of business functions will increase costs, and potential synergies may be lost through poor coordination and communication.
• Additionally, the problems of the functional structure may remain.

Question 38

what is the matrix structure?

Answer 38

• A matrix organisation provides for the formalisation of management control between different brands, products or markets, while at the same time maintaining functional departments.
• Authority is shared between the brand – or product – managers and heads of functional departments.
• Advantages include a focus on a particular product rather than barriers between
• The organisation – marketing strategy, planning and roles functions; improved coordination and communication; and increased flexibility.
• The adoption of a brand management structure is credited with saving brands such as Procter & Gamble’s Camay.
• However, this structure may be costly and problems may result if team members are responsible to more than one manager.

Question 39

what is thenetwork organisatio

Answer 39

• Webster (1992) describes how the problems of traditional, bureaucratic hierarchical organisations, such as inflexibility and poor coordination, communication and control, are leading organisations to develop new structures and forms
• . According to Webster, other driving forces include:
  
  • the need to focus on customer value and to ‘re-define’ what value means to customers;
  • the need to develop customer relationships (which he describes as the key organisational resource);
  • globalisation; and the increasing potential of information technology.
  • New organisational forms include strategic partnerships and networks.
• Webster (1992, p. 8) defines networks as:
  
  • the complex, multifaceted organization structures that result from multiple strategic alliances, usually combined with other forms of organization including divisions, subsidiaries, and value-added resellers.
• The organisation structure illustrated in Figure 2.11 is shown as a wheel.
• The functional specialities, such as marketing, are at the hub of the wheel.