MBA 610: Marketing Management
Final Exam
Question #1-A (Readings)
How increasing values to customers improves business
results (S. Vandermerwe)
Business fast
change drives executives to concentrate and succeed with customer value. Marketing
mindset needs creative attitude to win with customers and maximize
profitability out of customer loyalty. Vandermerwe verified the profitability
of focusing on customer demands and mapping all business activities with
customer expectations to obtain higher
values for and from the customer. There are four areas to increase consumer
spending:
- Longevity
- Depth
- Breadth
- Diversity of
services
An executive should not seek higher single-product-revenues
but wider share of customer’s wallet in a specific area. Cutting products, diversifying
services and concentrating on customers needs, Unilever reached excellent revenues.
Being obsessed with customer delight, Baxter model executive shifted his division
activities from manufacturing bags to “care giving”.
All business activities should revolve around open
customer focus strategy based on the following elements:
- Shifting power to
customer to judge the experience
- Creating
demands based customer needs analysis
- Locking-on the customer
instead of locking-in
- Articulating
new expandable market space
- Tapping into
customer’s mind for better positioning
- Affecting results
customers are looking for
- Personalizing
the service and delivery settings and environment
- Training skilled
employees to deliver higher value
- Stretching
demands based on related needs
- Sweeping
supplies
- Drawing
consistent strategy based on delighting customers
Word count: 200
Question #1-B
Delivering
Excellent Service, Learning from The best firms (Ford, Heaton, Brown)
Themes (8), (5), (10) are reflected in this article.
(8)- Several points in the article highlight customer’s
viewpoint at every stage of the service, emphasize the importance of customer delight
commitment, and proved the success of customer satisfaction strategy in major
service organizations. However excellent service requires extensive efforts to
follow the following principles:
·
Sensing customer expectations
·
Aligning core competencies with customer values.
·
Leading and monitoring at customer
front end
·
Empowering employees to handle problems
·
Supporting strong service guestology culture
·
Avoiding failing a customer twice.
(5)- This article reflects also the importance empowering
the customer to judge the value of the benefit bundle. It concentrates on
continuous improvement and integration of the delivered experience from customer’s
view. Building guest-focused-culture fills the gaps between delivery and
customer expectations. For example, Sheraton bellman delighted his guest and resolved
traffic issue without higher management intervention. “Larry chair” reflects also
the importance of communicating customer care to guests.
Empowering customers to reproduce their own
experience helps exploring undeveloped customer satisfaction sources in order
to benefit of. An excellent example is Southwest airlines approach to let
frequent fliers interview new attendants to retrieve their expectations.
(10)- Information solved most problems in the article.
Extensive researching let companies assess customer demands and expectations
and track market changes. Disney guestology culture relies heavily on extensive
customer surveys as well as Ritz Carlton elevator dilemma solution.
Word count: 225
Question #1-C
Both articles emphasize strategic thinking (2) in
order to build competitive advantage with customer delight. Without strategic
thinking Disney could not build innovative guestology culture spread all over
the company nor could Southwest airlines turn a plain customer into a loyal
patron. Strategic vision helped Disney also to:
·
Improve customer experience
·
Tailor settings to meet customer expectations
·
Diversify customer spending within the company
Both articles reflect Creativity worth also.
Locking-on customers helped Unilever to creatively breadth customer spending
and attract even cleaning services to its profit sources. Similar creative
philosophy was behind “Larry Chair” introduction also.
Imaginative thinking dominates both articles
where managers or employees inspire unique solutions or anticipate future
situations to improve customer experience. The Bellman example proves imagination
importance to build customer relationship or when setting customer focus
strategy as in the case of III that sacrificed all its information assets to inspire
and boost customer loyalty.
Word Count: 150
Question #2 – A
Developing a marketing strategy does not
require promotional vision only but it should respect financial conditions also.
Financial executives suspect marketing forecast and substantial budgets that marketers
treat as an investment. However, marketing expenditures on each component should
be assessed also from an expense perspective to optimize resources allocation depending
on the opportunities.
·
Product: Financial
managers look at the basic product only; however, a product is more than the
product itself for marketers who need extra financial resources to brand the
augmented product in order to position it in customers’ mind. In here, a
marketer should be very punctual not to spend too many resources for extensive
positioning of his product. All costs of
potential product will be added to the product cost and a marketer should be
very precise to discount resources on the longer term to rationalize his
budget.
·
Price: Price is the
major source of revenues and it is easier to adjust than other strategy
components. From a marketer point of view, price is the way to enhance sales
but for financial authorities a price is the way to make profit. However, a
marketer should be careful with the financing of new prices especially when
dealing with a price cut. Marketer has to handle pricing well and meet the
financial limits at the same time. It is possible to set different prices based
on: product items, market segments, distribution channels, and purchase
occasions. Marketers should agree with financial managers to set general
pricing objectives and policies based on value, quality, profit margin, and competitive
situation before approving prices proposed by marketing departments.
·
Promotion: Promotion
expenditures are real cost center but a percentage of this budget is invested
in fact in building the brand equity. In addition, this budget should be discounted
over the year of the plan and not only for one year at the launch of a product.
Some of the major factors controlling this budget are:
- Product life
cycle: Marketer should
allocate higher budget to new products to build the brand recognition and less
for known products.
- Market share: Marketer should allocate higher
resources for low market share products.
- Competition:
Marketing budget should
reflect the level of competition in the market for a specific product.
- Promotion
frequency: Marketers should
select wisely the frequency of their campaigns in order to minimize costs
·
Place: This component
might absorb huge resources unless allocated wisely by the marketing
department. Based on the marketing objective and within the financial limits,
distribution channels should be set up in a timely fashion to cover the market
segments of the product within launch period. Moreover, additional budgets
should be allocated for inventories and transportation. It is advisable to rely
on intermediaries when the company lacks enough financial resources to carry
out direct marketing.
·
Target Market: Marketer
should decide on his target before tailoring his marketing mix. Segmenting and
branding calls for substantial amount of money and the marketer has to decide
where and how much to invest in order to achieve the campaign and stays within
profitable limits. Within, targeted segments, marketers can identify most
profitable customers to build stronger relationship with them. However, they
should not forget about other customers.
In few words, for a financial manager,
marketing seek values in everything but knows the cost of nothing, and from a
marketer point of view, a financial executive, see the value of nothing but
allocate costs for everything. The ultimate mix is to make a marketing campaign
profitable and achievable in order to sustain the competitive advantage of the
company with its customers.
Question #2 - B
The information spread affected most industries
and business functions. In the new marketing paradigm, information plays an
important role to support all other activities and it has major impact on the
marketing strategy.
1. Product: The information boom affected most products
and put tighter limits on marketer on how to design and define their products.
From one side, information helped marketers to reflect the features of the core
benefits and basic products. Information makes it easier for marketers to
assess the needs of the customer in order to design the expected and augmented
product and win in the competition.
2. Price: Prices had been highly affected by the
information spread. The most striking example of price information correlation
is the internet. Any customer can visit a web site and will have free wide
scale price comparison for everything. The dilemma of marketer now is not to
set up a price but to know how much is the customer willing to pay and obtain
the value from this prevailing price.
3. Promotion: The popularity and cheapness of information
has lead to explosive growth of promotion tools. Information gathering and
analyzing became cheaper and easier to acquire. For example, direct marketing
had undergone astonishing expansion because of larger database usage, easier
communications with customers, faster delivery and higher interactivity with
clients due to online electronic presence.
4. Place: The information boom makes it easier to
identify profitable distribution channels and how to allocate distribution
efficiently and effectively in order to build stronger, more accessible, and
profitable outlets. At the same time, major distributors benefit of the
information also to target customer bases differently based on their demands,
social classes, or consumption behavior. The internet opened also other
distribution channels whether with customers or with other businesses and
facilitated data transfer and information sharing in order to enhance customer
experience and tap deeper into customer mind at his own spare time.
5. Target: With the wealth of information, it is much
easier to analyze the market needs and customer information in order to segment
the market and find niche markets for a specific product. Positioning becomes
easier to handle also because the marketer knows what to target and on what
basis. Data-mining also improves this procedure to a great extent because it
facilitates market monitoring and assessment and trend anticipating.
Question #3
(1): High interrelationship: Promotion
is a master key to build the real competitive advantage and if the company
continues to treats promotion tools as mere functions in the marketing
department then it will not make a real difference for the product and for the
customer. All components of promotion need a new mindset and innovative way of
doing business. However, personal selling and direct marketing concentrates
more on the commitment to customer delight and each sales person should realize
his responsibility to build customer satisfaction with the company.
(2): High interrelationship: Strategic
thinking in promotion yields best results because it improves the delivery of
marketing message through all promotion tools. Nature of relationship varies
from one promotional tool to the other:
·
Advertisement: In this
speedy age, Ads can not be differentiated without deep imagination and creative
message.
·
Direct Marketing: Because
of its direct relation to information technology, this tool should be always
updated on a solid vision in order to anticipate future trends and proactively
explore its benefits.
·
Public relations: A
company should build its strategic relations with media agencies long before
launching its advertisement story.
·
Sales promotion: This
component also needs wise strategy to distribute and focus on profitable events
in designated areas to achieve best output.
(3): Highest interrelationship: Promotion
success is mainly due to unbeaten planning that makes things happen. It needs
proactive tactics to attract the customer and new ideas to design the
promotional copy that benefit of personalized and customized message to link a
product with customer experience. All victorious companies struggle
continuously to invent creative approach and visions for its promotional mix.
However, new approach does not make things happen but the plan should
concentrate on getting the desired outcome in the mind of the customer and
influence his demands. Planned promotions could help the marketer to suit
customer demands on a regular basis.
(4): high interrelationship: The
promotional mix absorb a major percentage of the marketing budget and sometimes
its ROI is not accepted financially but this theme applies in here as well and
all promotional activities should be assessed from profitability point of view
in order to see where to invest and where to focus the expenditure. Response
functions should be designed for personal selling and sales promotion specially
in order to assess the return of campaigns in these two tools. Advertisement
and public relations are inexpensive, though; their return should be assessed
also.
(5): High interrelationship: Creating
maximum value for the customer will not yield better experience unless this
value is communicated to the customer and here is the power of promotion. Creative
advertisement is fastest and cheapest method to convey the value built in a
product or via a well designed story if highly credible. Personal sales however
is the easiest way to convince the customer of the value attached to the
provided bundle and help to read customer feedback in order to extrapolate
other benefits that improve customer satisfaction.
(6): Medium interrelationship: Promotions
help the company to get closer of its customers because of the relationship
building process attached to the promotional copy. Personal sales are the
preferred methods to get closer to the customer if money is available because this
tool is effective, interactive and create tension.
(7): Medium interrelationship: Promotion
benefit of the focus strategy a company might follow because it is easier to
target one market segment in an ad or a story. The company should however align
its competitive promotional advantages with customer needs in the segment that
can best serve.
(8): High interrelationship: Similar to
all marketing activities, customer is the real assets of all companies and all
activities should start and end at the customer. Promotional mix should be
designed to match customer needs. Ads and personal sales should concentrate on customer
delighting. Direct marketing relies heavily on personalized campaigns targeted
to each customer in order to effectively convey the message.
(9): Highest interrelationship: Integration
is the secret of successful promotions. Promotion mix can not succeed unless
all components are interlinked together and linked to customers and marketplace
in order to create the momentum and synergy to position the product in the
customer mind.
(10): High interrelationship: Information
is the essence of marketing strategy and consequently the essence of the
marketing mix. From one part, direct marketing relies heavily on information
and communication infrastructure these days. Advertisement also needs a lot of
surveys and market sensing in order to test new trends and anticipate such
changes in the campaigns. Sales promotion should be planned with solid
statistical studies to forecast its efficiency in the market.
Question #4 – A: Product Policy
Dabblers: On the core benefit level, Marketers of the magazine must see
themselves as benefit providers and present GROWIT as “Simple garden care”.
Turning GROWIT into a basic product will present the magazine as a fast
reference with charts and tutorials on how to acquire and care for the plants.
The expected GROWIT should convince dabblers that it has clear how-to and
straightforward discussion groups and a relative degree of professional care.
At the fourth level, the marketer should present the augmented value of GROWIT
as intermediary to provide wide variety of information, services, hints,
checklists, and access to community views. At the potential level, GROWIT
should always present another vision to satisfy dabblers and distinguish their
offers.
Masters: On the core benefit level, GROWIT should be presented as the “complete
encyclopedia of gardening” with extra sidebars and detailed professional
information. At the expected level, the journal might allocate some space for
expert suggestions. At the augmented level, the journal should allow enough
space for customer experience and customer feedback or comments in order to let
them feel a part of the story. Potential level for this segment calls for huge
efforts because this category of customers always seeks augmentations and
transformations. GROWIT should always allocate enough space to present what
this category of customers prefers to see.
Question #4 – B: Positioning
Dabblers: GROWIT can be positioned based on its benefit delivering fantasy
experience while gardening such as caring of your beloved flowers. It can be
positioned based on its use as the ultimate source for busy people who has only
one hour to enjoy garden caring. Finally, quality position is suitable where
GROWIT can position itself as offering “Best care” for few dollars.
Masters: Positioning for masters is harder because of their devotion and
expertise. Product positioning is applicable: “GROWIT the garden care magazine”.
User position could be used also to position GROWIT as best for “plants
caretaker”. Last, application position
builds life into the magazine “GROWIT: how to love your garden”.
Question #4 – C: Communications / Promotion mix
Advertisement: Though advertisement is inflexible and impersonal, it can be used to
keep a pervasive contact with masters because it is cheaper and allows enough
room for creativity. GROWIT can use seasonal ads to broadcast new values as
long as it focuses on value creating and message differentiation. This method
suits dabblers most because of lower activity and weaker involvement. In
addition, creative ads and content can attract their attention and convince
them to acquire the journal.
Direct Marketing: is most suitable for dabblers because of
large segment as well as for masters because it is easy to customize and
personalize. Dabblers are looking for convenience and easy information.
However, both segments might show some fear of privacy invasion. Masters, on
the other hand, might accepts dirct marketing as long as it has value.
Personal Selling: This tool is very effective with masters
because they are looking for superior value and they are wiling to provide
direct feedback on the delivered value. Representing 3% of the market only, it
will be financially feasible to focus personal selling in this category and
delight masters in order to build stronger relationship with them. Dabblers are
not looking for special attention because they show less dedication and usually
do not respond immediately to quality offering.
Sales Promotions: This tool lead to immediate sales in dabblers
segments and it is easy to implement. However, it might affect the long term
perceived quality of the journal if extensively used. Masters do not believe in
such promotions and they are not willing to acquire the journal unless it prove
the attractiveness during promotions.
Public relations: Building the value of the journal into a
media story is very effective with dabblers who are willing to listen and
believe. This method suits this category as it is inexpensive and holds people
off guard. However, it might affect the masters if the story has false facts.
In addition, this tool is not easy to be carried out because the same story can
span both segments.
Question #4 – D: Pricing
Masters are willing to pay higher prices if
delighted while dabblers exercise less loyalty while changing prices. However
in both cases, price should not be cost oriented. For dabblers prices are very
elastic and small changes in prices will affect the demand heavily and they are
higher percentage of the clientele. Hence, GROWIT should provide them with
lower prices or offer sufficient bundle to convince them to buy it. Masters are
less sensitive to prices and willing to pay higher as long as they are satisfied.
GROWIT can use perceived value pricing in this segment as long as it
communicates higher value to this segment and should educate masters about the
true value of its expertise but it should also reward this category from time
to time.
