Part A

Question 1 (4 marks)

Customers are at the core of marketing, and knowledge of customers is a prerequisite for successful marketing. Do you agree or disagree with this proposition? Justify your reasons and illustrate with practical examples where appropriate.

I agree with this proposition.

Customers are at the heart of any marketing effort because they are the ultimate party that will purchase and/or use the product/service, which in turn contributes to the revenues, and therefore profit objectives of the organization.

Growing the company’s market can be through increase in sales or increase market share. In order to do so, an intimate knowledge of what the customer wands/needs is necessary in order to satisfy them with the aim of acquiring new ones and retaining old ones.

Customers can help companies co-create new products or modify old ones to keep competitors away. Such a pull strategy will help instil a sense of partnership between customers and marketers and subsequently this will help build lasting relationships based on trust, respect and imparting a sense of importance. It must be said that such loyalty is mutual, for a company to expect loyalty from their customers; they must first offer it to the customers. This can only be done with customer intimacy.

Note: give examples for the above paragraphs. (eg; the many different loyalty promotion programs offered by marketers)

Question 2 (4 marks)

The buying behavior of consumers and businesses is essentially the same? Do you agree or disagree with this proposition? Justify reasons and illustrate with practical examples where appropriate.

I disagree with this proposition for the following reasons.

Compared with consumer purchases there are several differences in the buying unit, relating particularly to the fact that there is more purchasing procurement effort, and more buyers influence the buying process. Often, buying committees of technical experts are responsible for decisions involving complex products and processes.

• Professional purchasing — Business goods are purchased by trained purchasing agents, who must follow the organisation’s purchasing policies, constraints and requirements. Requests for quotations, proposals and purchase contracts are not usually found in consumer buying. Professional buyers spend their professional lives learning how to buy better, they go to seminars and conferences.
• Several buying influences—Typically, more people influence buying decisions than consumer buying decisions. Buying committees consisting of technical experts and even senior management are common in the purchase of major goods. Also there are fewer business buyers but they buy in larger amounts compared to individual consumers.
• Types of decisions and the decision process – Business buyers face more complex decisions than do consumers and the process is more formalized. Quite apart from helping their customers, salespeople in the business-to-business field are at pains to develop long-term relationships. Business buyers often buy directly from manufacturers rather than through intermediaries, especially items that are technically complex or expensive. Businesses also often buy from suppliers who will buy other goods from them. Businesses also lease products rather that purchasing them outright.

(Note: give examples for the above paragraphs –eg; a procurement manager buying in bulk for a hypermarket.)

Question 3 (4 marks)

a) Select an approach to market research that interests you. Identify a hypothesis (also referred to as a research question) that could be tested using this market research method. (1 mark)

• Structured surveys employ formal lists of questions asked of all respondents in the same way.

• Research Question (hypothesis) – “Rank in order of importance what are the main elements in a mobile phone that you prefer?”

• • Battery life
  • Slimness
  • Applications
  • Price

b) Explain why this method should be used to test this hypothesis. (3 marks)

Using a cause and effect framework in the above to identify critical causes so that appropriate marketing efforts could be used to improve a product to satisfy customers.

Question 4 (4 marks)

a) a)  How do marketing managers benefit from marketing   planning?   (2 marks)

The marketing planning process is part of the marketing management process, which involves two other major steps, which are implementation and control.

• Planning is the process of setting objectives and finding the best ways to achieve them.
• Planning provides objectives and thus a direction and purpose towards helping customers solve their problems (Customers buy things to use them to solve their problems)
• This in turn will motivate marketing staff by providing them with meaningful and purposeful work.
  

• Planning also requires hard facts and figures through market research which gives a better insight of what is required to set objectives that are specific, measurable, attainable, realistic and timely.
  

• This in turn will allow for better management to achieve marketing objectives as it aligns with the axiom of “You can’t manage what you cannot measure.”

b) b)   How does marketing planning help businesses to survive? (2 marks)

It helps the company to stay focus by being objective-driven in their marketing efforts with the aim of efficiency (no waste), effectiveness (meeting customers’ standards of quality) and competitiveness (being better than rivals)

Planning also allows an organization to anticipate changes in the marketing environment so that they can respond faster than their rivals to satisfy customer requirements.

However it must be said that objectives that are set must be from the customers’ perspective. An attitude of “begin with the end in mind”, must be used.

Question 5 (4 marks)

a) Promotion of products using advertising and other promotional tools stimulates unnecessary consumption and is often deceptive? Do you agree or disagree with this proposition? Justify your reasons and illustrate with practical examples where appropriate.

I disagree with this proposition for the following reasons.

• In the past when growing economies fueled the consumerism movement, the increasing affluent middle class would spend regardless of advertising or promotion from marketers.
  

• However, with the increasing spread and education of consumer rights, most of the consuming public have gained heightened awareness of their rights. This means that consumers have the right to choose regardless of the intensity of advertising and promotion

• Consumers today in general are more careful shoppers and look for bargains and value for their hard-earned money. This combined with competitive offerings, shifts the bargaining power of purchase to the consumers side.

• However for the upper income class, most purchases lack rational reasoning. In such segments where reasons for purchase are more emotional than rational, unnecessary consumption and deceptive advertising is a reality.

Part A

Question 1 (6 marks)

a) What makes a service different from a product?

Services are any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

The four main characteristics that differentiate a service from a product are:

• Service Intangibility: ‘Almost pure services, such as a haircut, may be distinguished from almost pure physical products, such as coffee, in that there is no physical element’.

• Service Inseparability: ‘Services cannot be separated from their providers, whether the providers are people or machines’.

• Service Variability: Almost pure services, such as a restaurant or cruise line experience, involve interaction between a patron/guest and customer service personnel. There is the potential for service variability in what have been termed ‘moments of truth’.

• Service Perishability: ‘Almost pure services such as a rock concert, may be distinguished from almost pure physical products, such as coffee, in that there is no stored physical inventory. Once the concert is over, there is only the memory of it.

b) How do these factors influence the marketing mix for banking services?

The characteristics of services require three additional ‘Ps’ called the services marketing mix.

• Physical Evidence – this refers to how the service is presented together with physical elements, which adds to the tangibility of the service offered. An example for the banking industry would be: Convenient & accessible physical location of the bank.  Secured area with 24 hour automatic teller machines and machines that allow for cheque & cash deposits that are in good working order and easy to use.

• Processes – the format of service delivery must be highly visible & tangible to add to physical evidence. For example, immediate acknowledgment of balance after cash withdrawals or cheque or cash deposits.

• People - most services delivered by people, the selection, training & motivation are important in delivering customer satisfaction. Elements of courtesy, responsiveness, approachability helpfulness, empathy and a sense of urgency will all help to this end.

Question 2(6 marks)

a) Why is it important for companies like Coca-Cola to use marketing intermediaries?

Marketing intermediaries or middlemen are the marketing institutions in the distribution channel: that is, business firms that operate between producers and consumers.

Coca-Cola can motivate distributors, retailers, and other intermediaries to pass along important intelligence as they can serve to be Coca-Cola’s ambassadors to help promote and position Coca-Cola positively.

Besides, intermediaries perform many useful and important functions and services to both the seller and the buyer such as:

• Provide economies in distribution of goods;
• Transform assortment of goods from producers to assortments needed by consumers;
• Gather and distribute marketing research and intelligence information;
• Promote goods/services;
• Build up contact with prospective buyer;
• Physically store and distribute goods;
• Help to match demand and supply through breaking bulk;
• Provide financing to consumers and suppliers.

b) How can marketing intermediaries increase exchange efficiencies?

Efficiencies can be achieved when the manufacturer does not have a large enough distribution network or it is not their core business. In such cases outsourcing of distribution to intermediaries who already have an established distribution infrastructure (warehouses, transportation fleets, etc) would be beneficial to both manufacturer and distributors as both can enjoy economies of costs.

Question 3 (6 marks)

a) Define and describe the three basic targeting strategies used by marketers

A target market consists of a set of buyers sharing common needs or characteristics that the company decides to serve. The company can adopt one of three market-coverage strategies:

• Undifferentiated marketing is where the company ignores the market’s differences and goes after the whole market.
• Differentiated marketing is where the company chooses its target markets and design separate offers for each.
• Concentrated marketing is where a company goes after a large share of one or a few sub markets.

b) Give well known example of firms/products for each.

• Undifferentiated marketing – Coca-cola, McDonalds – catered for full range of people of different ages
• Differentiated marketing – Toyota Group: (1) Daihatsu is positioned as small compact fuel efficient cars. (2) Toyota – positioned as reliable, value for money mid-sized passenger cars (3) Lexus – positioned as luxury and luxury sports cars.
• Concentrated marketing – Ferrari or Lamborghini focuses on the ultra rich and famous with extravagant lifestyles.

Question 4 (6 marks)

a) Define what is meant by the term integrated marketing communications.

Integrated marketing communications (IMC) is a concept of marketing communications planning that recognizes the added value of a comprehensive plan. Such a plan evaluates the strategic roles of a variety of communications disciplines—for example, general advertising, direct response, sales promotion and public relations—and combines these disciplines to provide clarity, consistency, and maximum impact through the seamless integration of messages.

b) Discuss the advantages of using an integrated marketing communications strategy for a firm like Virgin.

Virgin with its different strategic business units can use IMC to ensure that the promotion mix delivers a unified and coherent message to the customers and public so that there is no confusion of the company’s unique value proposition.

The proper use of IMC helps in solidifying Virgin’s brand positioning of value for money.

Question 5 (6 marks)

a) Why is innovation important in marketing?

Innovation is being the first to bring to market a unique and creative product or service. It is important to marketing as it helps gain benefits of:

1. Provides a unique and differentiated strategy
2. First-mover advantage
3. The competitive landscape is getting more intense and crowded
4. Keeps the company’s offerings fresh to help attract new customers and retain old ones.

b) How can innovation provide a sustainable competitive advantage for a company?

Companies that successfully innovate will find themselves quickly confronted with increasing number of copycats or imitators. Therefore in order for innovation to provide sustainable competitive advantage, the creative and innovative culture or the organization and especially in the R&D and new product development departments must be a continuous process. One-way to do this is to continuously ask the customers about their changing needs and wants.

Note: The following are merely notes for your assignment, you should add your perspective with relevant examples from the case study “Reconciling Managerial Dichotomies at Honda Motors” (Andrew Mair)

PARADOX OF DELIBERATENESS AND EMERGENCE

Henry Mintzberg (1987) made a distinction between deliberate strategy and emergent strategy. Emergent strategy originates not in the mind of the strategist, but in the interaction of the organization with its environment. He claims that emergent strategies tend to exhibit a type of convergence in which ideas and actions from multiple sources integrate into a pattern. This is a form of organizational learning, (from its environment) in fact, on this view, organizational learning is one of the core functions of any business enterprise (See Peter Senge’s The Fifth Discipline (1990).)

Deliberate strategy on the other hand is involves intentional planning and predetermined outcomes based on internal and external analysis at a current point in time. Such analysis also involves the study of the historical trend of the organization and industry performance. A flawed assumption where the predetermined outcomes are derived from is that the future will behave as in the past and the macro environment will remain relatively stable. Such is not the case with the magnitude, velocity, frequency and abruptness of change reaching new unprecedented levels daily in the business landscape across the world.

The paradox of deliberateness and emergence is whereas deliberate strategies provide an organization with a sense of purposeful direction, emergent strategies imply that the organization is learning from its environment incrementally. This has led to dichotomies of strategies. However Mintzberg and Whittington says that this is not necessarily so, in fact Mintzberg advocates that firms in today’s highly turbulent business landscape need to be purposeful and resourceful simultaneously. In this sense he coined the term “deliberately emergent”. Whittington is in agreement as he classifies deliberate strategies under the classical school and emergent strategies under the evolutionary school both of which share the same outcome of profit maximization. The strategies may be different but the philosophy behind the strategies are in fact the same.

Now your job is to give examples of how Honda has displayed both deliberate and emergent strategies. Some examples are………

Deliberate strategies

• Collective decision-making (symbolized by open office plans)
• A few have clear individual responsibilities (specialists of sorts)
• etc

Emergent strategies

• New technologies for better fuel efficiency amidst renewable resources concerns
• New models to meet changing customer demands in design, fuel efficiency & environmental responsibility.
• Better operations management strategies (Kaizen, TQM, JIT, etc)
• Penetrating new markets and assuming higher risks
• etc

Resolving the paradox would be how Honda strategies have been in a zig-zag fashion between deliberate and emergent strategy whilst moving forwards all the time. (eg: seemingly alternating between centralized and decentalised management styles)

HONDA: RECONCILING DICHOTOMIES  (RIGHT-FIRST TIME VS. BUILD IN QUALITY)

Right-first-time
Operations management is a deliberate change process. It consists of a series of transformation activities/tasks to changes inputs (resources) into outputs (finished products/services) ready for market consumption.

The right-the-first principle states that the outcome of any process (i.e. the performance outcome of any sub-transformation activities/tasks) should be error-free so that subsequent tasks that depend on predecessor tasks are not burdened with having to correct errors or wait for reworks both of which would cause production delays and increase operational costs and increase the costs of lost opportunities of sales earned from customers who prefer not to wait and switch to other brands. The focus is thus on operational efficiency by not wasting time and other resources by increasing productivity. It also allows for more accurate inventory control thus further saving costs.

If this principle is repeated throughout the series of sub-transformation tasks, the final overall transformation tasks would also be error-free. In this sense, the emphasis of the right-first time principle is more focused on process-related capabilities.

Build-in quality
The build-in quality principle focuses on ensuring the effectiveness of the performance outcome of sub transformation activities/tasks. The measures of effectiveness are customer-defined standards of performance. This is achieved by breaking down the aggregate standards of performance measures as expected (if not demanded) by customers to more granular metrics in each sub activity/task so that value-adding can be realized at every step of the way to give a bigger accrued value by the time the operations process reaches its end. This not only saves costs, but may exceed (not merely meet) the customers’ expectations. In this sense, build-in quality emphasizes more on product-related capabilities that are ultimately measured by the customers.

Reconciling the apparent dichotomies
The right-first time vs build-in quality debate is only a dichotomy if a trade-off of getting the benefits from one at the expense of the other is assumed. This is a flawed Western assumption in management thinking because it is viewed only from the manufacturer’s perspective. It must be taken from at least a dual perspective, the manufacturer and the customer, if not a multiple perspective, ie all partners in the supply chain.

Doing things right the first time all the time is a cost savings approach because it helps eliminate waste and rework. Lower operating costs can translate into higher margins and lower retail prices which could attract customers to switch over from rival brands.

Quality is not only measured in terms of product features and attributes but also delivery time and cost of purchase and ownership. It is only in its entire combination that the customer would judge its benefits and therefore value.

Quality is thus both process and product dependent. For instance, the value of high product quality because of its superior features, characteristics and attributes can be negated by slow delivery times if things are not done right the first time.

Honda has shown through its many manufacturing strategies that the notions of right-first time vs. build-in quality is not divergent in nature and does not exist in isolation but are rather convergent and complementary processes if the pull strategy is adopted placing customers ahead of all else.

PORTER’S 5 FORCES ANALYSIS OF THE GLOBAL AUTOMOTIVE INDUSTRY

1. Threat of New Entrants.
In most major western economies with established automotive industry, the threat of new entrants was low in the 1970s and 1980s. In North America for example, it was thought that the Big Three (GM, Ford & Chrysler) were safe. But this did not hold true when Honda Motor Co. opened its first plant in Ohio. The emergence of foreign competitors with the capital, required technologies and better operations management skills began to undermine the market share of North American companies. This was also true when Honda took the risk to enter the British and European markets.

2. Power of Suppliers.
The automobile supply business is quite fragmented (there are many firms) throughout the many regions in the world. Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be devastating to the previous supplier’s business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power because the manufacturers order in volume.

3. Power of Buyers.
Historically, the bargaining power of automakers went unchallenged. Most customers however, became disenchanted with many of the national car makers and began looking for alternatives with better fuel economy, more stylish designs and better technology. Foreign cars provided these attributes. On the other hand, while consumers are very price sensitive, individually, they don’t have much buying power, as they never purchase huge volumes of cars.

4. Availability of Substitutes.
Besides the threat of someone buying a different car we need to consider other modes of transportation as alternatives or substitutes. We need to look at the likelihood of people taking the bus, train or airplane to their destination. The higher the cost of operating a vehicle, the more likely people will seek alternative transportation options. The price of petrol has a large effect on consumers’ decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but they also guzzle gas compared to smaller sedans and light trucks. When determining the availability of substitutes the following should also be considered; time, money, personal preference and convenience in the auto travel industry. The trend today is towards more fuel-efficient, safe and environmentally friendly cars that are affordable to the increasing global middle class.

5. Competitive Rivalry.
Highly competitive industries generally earn low returns because the cost of competition is high. The auto industry is considered to be an oligopoly, (which helps to minimize the effects of price-based competition. The automakers understand that price-based competition does not necessarily lead to increases in the size of the marketplace; historically they have tried to avoid price-based competition, but more recently the competition has intensified – rebates, preferred financing and long-term warranties have helped to lure in customers, but they also put pressure on the profit margins for vehicle sales.

To fend off the foreign car-makers, the more traditionally established ones such as the American, British and European car-makers are increasingly merging or acquiring their foreign counterparts from Japan (Renault & Nissan), Korea (GM & Daewoo).  However emerging country car makers are also doing the opposite such as in China (Geely & Volvo (from Ford) and India (Tata acquiring Jaguar & Land Rover from Ford)

These signals point to a direction where the global automotive industry will be rationalized with a few major players surviving in the long run. This in turn will return the bargaining power to the manufacturers. Smaller players may survive if they beat the bigger companies with innovative alternative fuel cars (electric or hybrid cars) aimed at niche markets.

Hope the above gives you a better insight of the case.  Have fun!

TQ & regards

Albert Lim

MANAGING PROJECTS ASSIGNMENT – TASK 2 NOTES

FEASIBILITY STUDY

What is a Feasibility Study?
A Project Feasibility Study is an exercise that involves documenting each of the potential solutions to a particular business problem or opportunity. Feasibility Studies can be undertaken by any type of business, project or team and they are a critical part of the Project Life Cycle.

When to use a Feasibility Study?
The purpose of a Feasibility Study is to identify the likelihood of one or more solutions meeting the stated business requirements. In other words, if you are unsure whether your solution will deliver the outcome you want, then a Project Feasibility Study will help gain that clarity. During the Feasibility Study, a variety of ‘assessment’ methods are undertaken. The outcome of the Feasibility Study is a confirmed solution for implementation.

Approach to Task 2 of your assignment:

To start Task 2 of your assignment, you should create a table for your   sequence of activities.

This will be the basis for creating your Work Break Down Structure (WBS) diagram and A-O-N network diagram.

A typical sequence of events at a building site could be as follows: (this is just a guide) – NOTE IF ALL OF YOU USE THIS SAME GUIDE YOU WILL BE PENALISED FOR COLLUSION AND PLAGIARISM. Modify this and make it your own you can add or delete some activities you see fit according to your understanding of the question. This is because the question does not give you details and you must make some assumptions. (you should have an assumption section (eg: how many sq. metres (bigger or smaller than existing one, you must justify?, etc) in your feasibility report where you explain your assumptions and limitations of the project)

• Site set-up and management;
• Screening, fencing, setting up temporary offices;
• Demolition and site clearance;
• Ground works such as excavation, filling, and the construction of earth
• Structures e.g. Embankments, bunds and cuttings;
• Construction of temporary roads, car parks, storage areas;
• Construction of foundations and structural works;
• Construction of the envelope of the building, loading and unloading areas, and principally the external facings, cladding and the fixing of windows;
• Mechanical/electrical installations and their interface with civil and Building work;
• Associated trades (i.e. Joinery, painting, plastering etc.);
• Moving furniture and equipment in;
• Recruiting staff
• Training staff
• Landscaping, reinstatement and habitat restoration or creation;
• Site reinstatement, removal of site offices and final clear away.
• Final inspection
• Project handover

More at: http://www.ebrd.com/about/policies/enviro/sectoral/const.pdf

Your next step would be to create a Gantt chart. This will help justify your overall project schedule and time of completion that you will propose in your report.

You should also include a pro-forma cash flow statement (inflows and outflows). You would have to lump up expenditures (outflows) of the above activities to make it simpler. You can Google “cost estimates for building a storage depot” and see what you get to use as a guide (could either be in Ringgit or UK pounds) For example you could group all ground works, then foundation works, external building works, internal building works, staff hiring & training, etc.

From all the above activities you should then include them in your report. Google “project management feasibility study/report templates” and see what you get and then modify to make them your own.

Thank you and have fun with your “project”

Albert S.B. Lim

Useful websites:

1. http://www.businessballs.com/project.htm
2. http://pmbook.ce.cmu.edu/09_Construction_Planning.html#9.3%20Defining%20Work%20Tasks
3. http://www.klariti.com/templates/Feasibility-Study-Template.shtml (this is just a sample for a project plan NOT a feasibility report. The feasibility report template is part of the whole plan in Section 6 which is just a sample – you can use it as a guide but you should come up with one on your own)
4. http://www.bestsamplequestions.com/pmp-sample-questions/pmp-sample-questions-12.html (some MCQ to help you understand the concepts of PM)
5. http://pmbook.ce.cmu.edu/

Here are some of my thoughts on this debate.

1. You need to consider the definitions (with citation support) of what constitutes a scientific approach and an art approach to the study of something.
2. Science to me is an exact study of something.  This requires the manipulation of measured results and their inter-relationships.  What makes it exact is that it is quantifiable. (The question remains as to the exactness of a science approach because any hypothesis is premised on certain assumptions!)
3. An art approach requires more flexibility in thinking about the inter-relationships among different variables.
4. The “management” portion of marketing refers mostly to the performance of the managerial functions needed to ensure that marketing activities have purpose, direction and control.
5. The marketing aspect on the other hand is more fuzzy.
6. If you had to make a stand as to whether marketing management is an art or a science, you can do so with greater confidence if you make your stand within a certain context.
7. What context should that be?
8. To answer the above, consider the evolutionary nature of the definition of marketing and marketing management over the last 10 years. (Look up AMA’s definition in the 90s compared to its most recent one)
9. You will find that the definition has changed its focus.
10. Older definitions focused more on the managerial functions
11. New definitions include phrases like; “establishing lasting relationships”,  “mutually beneficial value exchange process”, “societal and managerial process”, “stakeholders” among others.
12. The above does not suggest that the new definition negates the old one.  It has simply changed focus!  This means the older definition is still useful but managerial activities as applied to marketing is a given.
13. What has not been mastered by most marketers is the focus of the new definition of marketing management.
14. To sum, if you are to make a stand, consider in what context you should make your stand.  Global vs. Local, Past vs. Present, Push vs. Pull, ….. there are many contexts.
15. What is the current context?  What about the future direction of marketing management as a subject of study?

Hope the above helps to invoke some critical thinking on the topic.

Good Luck and Have Fun

Cheers!

Albert Lim