Answers_-_Hossam_ElDeen_Moustafa

Answers for Question - 1

MCQ (1) ____________ involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors.

d. Market segmentation

Market segmentation: is the science of dividing an overall market into key customer subsets, or segments, whose members share similar characteristics and needs. OR

It is the process of dividing the market according to similarities that exist among the various subgroups within the market. The similarities may be common characteristics or common needs and desires.

Market segmentation: comes about as a result of the observation that all potential users of a product are not alike, and that the same general appeal will not interest all prospects.

Therefore, it becomes essential to develop different marketing tactics based on the differences among potential users in order to effectively cover the entire market for a particular product.

There are four basic market segmentation strategies: behavior segmentation, demographic segmentation, geographic segmentation, and physiographic segmentation.

-------------------------------------------------------------------------------------------------------- MCQ (2); Beyond attracting new customers, the goal of marketers is to ____________.

a. retain existing customers and grow their business with the company

Goals of Marketer:

1 – To attract new customers by promising superior value. 2 – To keep & grow current customers by delivering satisfaction. 3 – To reach those of us who are the most likely to be interested in the offers that they make.

-------------------------------------------------------------------------------------------------------- MCQ (3); The more loyal the company's profitable customers, the ____________.

c. the higher the firm's customer equity.

Customer Equity is the combined discounted customer lifetime values of all the company’s current & potential customers.

It is a better measure of a firm’s performance than current sales or market share. --------------------------------------------------------------------------------------------------------

MCQ (4); what three considerations should firms balance in setting their marketing strategies?

b. consumer wants, society interests, company profits

Thus, not only are companies held responsible for maximizing profits for the owners and shareholders and for operating within the legal framework, they are also expected to support their employees' quality of work life, to demonstrate their concern for the communities within which their businesses operate, to minimize the impact of various hazards on the global environment, and to engage in purely social or philanthropic endeavors.

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MCQ (5); which stage in the new-product development process deals with evaluating a new project's sales, costs, and profit projections to determine whether they satisfy the company's objectives?

d. Business analysis

New Product Development Process

1. Idea Generation- is the idea worth considering? Ideas might come from internal sources: R & D, top mgt’ employees; External sources: Customers, competitors, distributors, suppliers, research institutes.

2. Idea Screening- Is the product idea compatible with company objectives, strategies? Strength and weaknesses, Fit with objectives, Market trends, Rough ROI (Return on Investment) estimate Ideas are evaluated against criteria; most are eliminated. Errors: A GO-Error A DROP-Error.

3. Concept development and testing-Can we find a good concept for the product that consumers say they would try? Concept: who will use the product? What primary benefit should the product provide? When will people consume? Concept testing is the way of testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. It can be presented symbolically or physically. Nowadays are designed and developed in a computer Obtain: Reactions from customers, Rough estimates of cost, sales and profits.

4. Marketing strategy development-can we find a cost-effective, affordable marketing strategy? Preliminary market strategy plan describe: • the target market, product positioning, and sales, share, and profit goals for the first few years. • Product price, distribution, and marketing budget for the first year. • Long-run sales and profit goals and the marketing mix strategy.

5. Business Analysis Evaluating proposal’s business attractiveness - Will this product meet our profit goal? Management prepares sales, cost, and profit projections. As new information comes in, the analysis will undergo revision and expansion

6. Product development R&D or reengineering – developing physical product Prototype development and testing 7. Market testing Not all companies undertake market testing. New-to the market products, high risk, and high investment cost influence market testing. Questions: have product sales met expectations? Or should we send the idea back for product development (stage 6)? How much market testing should be done and what kind? How many test cities? Which cities? Length of test? What information? What action to take? 8. Commercialization-Are product sales meeting expectations? Contracting for manufacture or build or rent a full-scale manufacturing facility. The company launching a new product must first decide on introduction timing, geographic strategy, target market prospects and introductory market strategy. When? (Introduction timing) – First entry – Parallel entry – Late entry (due to the many problem) - Where? (Geographic strategy) – Single location, – a region, – the national market or – the international market. To Whom? (Target market prospects) – Determining initial distribution and promotion – Early adopters, heavy users and opinion leaders how? (Introductory market strategy) – Developing action plan for introducing the product – Critical path scheduling (CPS) can be used.

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MCQ (6); Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers is _____________.

c. positioning

Positioning aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer.

Companies apply this strategy either by emphasizing the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.) through advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility.

Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.

De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.

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MCQ (7); Identify the only element in the marketing mix that produces direct revenue.

d. Price.

Importance of price in marketing mix:

• Price is the amount of money charged for a product or a service, or the sum of the values that consumers exchange for the benefits of having or using the product or service • Price is the only element in the marketing mix that produces revenue. • Price is also the most flexible element of the marketing mix.

The most common mistakes in setting prices are;

– pricing that is too cost oriented – prices that are not revised enough to reflect the market changes – pricing that does not take rest of the marketing mix into account – prices that are not varied enough for different products, market segments & purchase occasions

-------------------------------------------------------------------------------------------------------- MCQ (8) Identify the major components of the “microenvironment”.

b. company, suppliers, intermediaries, customer markets, competitors, and publics.

Microenvironment components:

They are the elements close to a company that impact the company's ability to serve its customers.

There are six components of the microenvironment:

1 – Company's internal environment, composed of the management personnel and including the finance, purchasing, manufacturing, research and development and the marketing dept.

2 – Company's suppliers, who provide the goods and services necessary for the production of the company's products.

3 – Marketing intermediaries are composed of all the individuals or companies who help in the promotion, selling, and distribution of the company's products.

4 – Customers are consisting of the five types of markets in which the company may sell its products (consumer, industrial, reseller, government, and international markets)

5 – Company's competitors; and 6 – Company's various publics, which can be any individual or group that can affect the company's ability to achieve its objectives, such as citizen action groups, the media, or the government.

Macro-environment is the universe of sociological elements that affect a company's ability to serve its customers or sell its goods and services.

There are six major macro-environment forces:

1 – Cultural: The cultural environment includes institutions and other forces that affect the basic values, behaviors, and preferences of the society-all of which have an effect on consumer marketing decisions.

2 – Demographic: The demographic environment includes the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistical information.

3 – Economic: The economic environment consists of all factors-such as salary levels, credit trends, and pricing patterns-that affect consumer spending habits and purchasing power.

4 – Natural: The natural environment involves all the natural resources, such as raw materials or energy sources, needed by or affected by marketers and marketing activities.

5 – Political: The political environment includes all laws, government agencies, and lobbying groups that influence or restrict individuals or organizations in the society.

6 – Technological: The technological environment consists of those forces that affect the technology and which can create new products, new markets, and new marketing opportunities.

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MCQ (9) "Services cannot be stored for later use" is a (an) ------------------ characteristic:

b. Perishability

Perishability:

It is one of the four fundamental characteristics (inseparability, intangibility, variability and Perishability) of a service, it refers to the fact that (in general) services cannot be produced and stockpiled (inventoried) before consumption: they exist only at the time of their production.

-------------------------------------------------------------------------------------------------------- MCQ (10) Value Based pricing is mainly built on:

c. The relative importance of the product or service to the consumer

Value Based pricing:

It is a pricing method based on the perceived worth of product or service to its intended customers. --------------------------------------------------------------------------------------------------------

MCQ (11) which of the following is the best definition of value?

d. The best ratio of benefits to costs available to buyers

Value:

The extent to which a product or service is perceived by its customer to meet his or her needs or wants, measured by customer's willingness to pay for it.

It commonly depends more on the customer's perception of the worth of the product than on its intrinsic value. --------------------------------------------------------------------------------------------------------

MCQ (12) Consumer goods are:

c. The combination of shopping and specialty goods

Consumer goods:

Broad category that covers mass-market items divided into consumer durables, consumer non-durables, and soft goods.

Consumer Product:

Merchandise or other item of common or daily use, ordinarily bought by individuals or households for private consumption.

-------------------------------------------------------------------------------------------------------- MCQ (13) __________ products are those bought by final consumers for personal consumption.

c. Augmented

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MCQ (14) In spite of their absolute loyalty to the business, they are sometimes a burden that the marketers may decide to "fire". I am describing:

b. Barnacles

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MCQ (15) How does the marketing process serve consumers?

a. By focusing on their needs, wants and demands

Marketing:

It is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development.

Marketing is used to identify the customer, satisfy the customer, and keep the customer. With the customer as the focus of its activities

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MCQ (16) For the past months "ON THE GO" fast food served 6th of October with a variety of quick meals and sandwiches. Their products are gaining wide success through word of mouth coupled with an extensive sales promotion tactic as giving free drinks and fries. Their sales and profits are shooting high and the number of customers is increasing by the day. They are passing through the ---------------- stage of the product life cycle.

b. Growth

Product Life Cycle

The product life cycle is defined as the period that starts with the initial product design (research and development) and ends with the withdrawal of the product from the marketplace. It is characterized by specific stages, including research, development, introduction, maturity, decline, and obsolescence. Each stage is often linked with changes in the flows of raw materials, parts and distribution to markets. Conventionally, four main stages compose a product's life cycle:

1) Introduction. This stage mainly concerns the development of a new product, from the time was initially conceptualized to the point it is introduced on the market. The great majority of ideas do not reach to promotion stage. The corporation having an innovative idea first will often have a period of monopoly until competitors start to copy and/or improve the product (unless a patent is involved as it is the case in industries such as pharmaceuticals). Generally, associated freight flows take place within developed countries and/or close to markets where to product is likely to be adopted.

2) Growth. If the new product is successful (many are not), sales will start to grow and new competitors will enter the market, slowly eroding the market share of the innovative firm. The product starts to be exported to other markets and substantial efforts are made to improve its distribution since competition mainly takes place more on the innovative capabilities of the product than on its price. This phase tends to be associated by high levels of profits.

3) Maturity. At this stage, the product has been standardized, is widely available on the market and its distribution is well established. Competition increasingly takes place over cost and a growing share of the production is moved to low cost locations, particularly for labor intensive parts. Associated freight flows are consequently modified to include a greater transnational dimension.

4) Decline. As the product is becoming obsolete, production essentially takes place in low costs locations while developing countries become net importers. Production and distribution economies are actively sought as profit margins decline. Eventually, the product will be retired, an event that marks the end of its life cycle.

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MCQ (17) A marketing offer combines products, services, information, or experiences to a market in order to _____________________________________.

d. fulfill the needs and wants of consumers

Market offering: Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. eg, banks, airlines.

---------------------------------------------------------------------------------------------------------------------- MCQ (18) The other day, I went to get my hair cut in "Look Good" beauty shop. Not only did he provide excellent service, he's a really nice guy. In addition I look darn good too. Unexpectedly I was given a 50 % discount being a resident of the neighborhood. I am describing a case of ------------------------:

d. Customer delight

Customer delight: promising only what a company can deliver, & then delivering more than promised. ----------------------------------------------------------------------------------------------------------------------

MCQ (19) Because the consumer is not highly involved with the purchase, the least buying effort undergone on part of the consumer is with:

c. Convenience products

Convenience products: They are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.

Least-effort principle: It is a theory among advertisers that consumers will make purchases based upon the least amount of effort possible and will tend to buy what is handy. This is one of the underlying theories of point-of-purchase advertising , whereby consumers will make a purchase because they do not have to expend any effort to do so.

---------------------------------------------------------------------------------------------------------------------- MCQ (20) A Penetration strategy is:

b. Meant to obtain a high market share

Market penetration strategy: seeks to increase market share of the current product or services in the existing market.

Also Market penetration strategy is one of the four growth strategies of the Product-Market Growth Matrix. Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc). Market penetration occurs when the product and market already exists. Other growth strategies include:

• Product development: (existing markets, new products): McDonalds is always within the fast-food industry, but frequently markets new burgers.

• Market development: (new markets, existing products): Lucozade was first marketed for sick children and then re-branded to target athletes.

• Diversification: it’s done for new markets, new products. --------------------------------------------------------------------------------------------------------

Section (II): Answer the following questions:

Answers for Question - 2

1. A. Marketing Research Problem

It is a situation where your company intends to sell a product or service that fills a specific gap, or intended use.

To ensure there will be a market for the product, the company hires a special team of experts to perform demographic analysis, opportunity-cost assessment for production, distribution and marketing - and locates special focus groups to test the use of the cool product under very specific conditions - as a product of its design.... All for not, because once the research found that the product is absolutely perfect... and the investment is made to launch it... You find that the general public never took notice.....

Example: Because of wonder-pen, that could write upside-down, and in the vacuum of space - for $39.99 - was passed-over in favor of a 12 cent lead pencil...

1. B. Management decision Problem

It is whereby when a situation arises, and management of a company needs to make a decision which requires research and hence starts the research process. There is no actionable guidance. It is simply a statement of the issue that management is dealing with, and there must be restatement in the research terms.

Management Decision Problem versus the Marketing Research Problem

Management Decision Problem Marketing Research Problem Asks what the decision maker needs to do Asks what information is needed and how it should be obtained Action oriented Information oriented Focuses on symptoms Focuses on the underlying causes Should a new product be introduced? To determine consumer preferences and to purchase intentions for

the proposed new product. Should the advertising campaign be changed? To determine the price elasticity of demand and the impact on sales

and profits of various levels of price changes. Should the price of the brand be increased? To determine the effectiveness of the current advertising campaign.

2. A.

S/N Research Question Hypothesis Justification 1. What is the mean income of

heavy-drinkers of beer? The lower income people consume more beer.

Heavy – drinker = Alcoholic, But he has low income, if he has high

income; he will drink finest kind of spirit drinks.

2. What age group of purchasers of product 'X' buys 'X' the most?

The age group 35–44 is the heaviest user.

This hypothesis refers to a question about which age group is the

heaviest users, so the question must target the age group.

3. What will be the result on sales

of a 20% increase in price? A 20% increase in price will not lead to decrease in sales.

It seems a monopolistic market & inelastic demand that to be dare to

increase 20% at once!! 4. What is more important

component of the marketing strategy targeting the segment of lower-income shoppers?

Competitive pricing is more important to the lower-income shoppers.

Since price is competitive that means the company focuses its efforts on other ways to attract new segment (lower-income shoppers).

5. How important is in-store service?

In-store service is affecting sales in a directly proportional manner.

This URL shows how Harrods’ present such service and using it to

increase sales http://www.harrods.com/services/in-

store 6. Which is much higher in quality

of C&A brands; hardware or apparel?

The quality of C&A brands is much higher for hardware than for apparel.

C&A is well known brand for apparel & dresses more than

hardware & appliances 7. Are Zara stores conveniently

located? Zara stores are conveniently located. Place or location is one of marketing

mix components; Zara is great brand and it must be accessed easily and

locates at finest area too.

8. For the purchase of hardware; is Sears’ preferred over competitors?

Sears is preferred over competitors for the purchase of hardware.

Sears’ has great brand equity for hardware & appliances

9. Is Sears preferred for the purchase of women’s clothing?

It seems that Sears’ is not preferred for the purchase of women’s clothing.

Sears’ is not a brand for clothing & dresses

10. Which is higher in Sears’ market share; hardware or men’s clothing?

Sears’ market share is higher in hardware than it is in men’s clothing.

Sears’ is well known brand for hardware & appliances more than

clothing & dresses 11. How does Sears’ market share

compare to Macy’s in home furnishings?

Macy’s market share in home furnishings is much greater than Sears’

Macy’s has great brand equity for home furnishings compared with

Sears’ 12 Find the relationship &

correlation between “Store Patronage” & Store evaluation”?

Store patronage is a linear function of store evaluations.

Store patronage is an important techniques of direct selling

13 Which demographic characteristic is the most important in influencing store patronage?

The most important influencing demographic characteristic of store patronage is the “Gender”

I believe that “Ladies” are being greatly gifted in “Store Patronage”

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Answers for Question - 3

S/N Symptoms Causes 1. Declining market share 1. Marketing strategy is not up to date.

2. Wild competition and losing the competitive advantage. 3. Poor quality of the product. 4. Poor customer service. 5. No creativity & No innovation. 6. Consumer behavior is changed and company couldn’t be synchronized

with that change. 2. Decline in profits 1. Inefficient cost analysis.

2. Cost of production is too high. 3. Overhead cost is too much and couldn’t be affordable by budget. 4. Material Price Increase 5. OPEX is increasing. 6. Poor aligning of cost versus price.

3. Inability to gain channel participation

1. Stiff requirements, regulations & agreements. 2. Mismatching the market dynamics’ access. 3. Wild competition among domestic distribution chains. 4. Product is missing the diversifications. 5. Supply inelasticity and absolute marginal response of producers. 6. Lack of specialty to be innovative.

4. Heavy turnover in Sales force 1. Miss matching features of hiring sales men (Miss – Recruitment). 2. Working Nature (Stressful & over loading because of % of selling). 3. Insufficient training, mentoring & coaching. 4. Poor reputation of the company. 5. Poor sales techniques. 6. Inappropriate base of pay, commission & rewards to sales team.

5. Decline in company sales 1. Market demand fluctuations. 2. Poor Selling Strategies. 3. Insufficient sales’ channels & not updated concepts of selling. 4. Poor advertising & promotion campaigns. 5. Fluctuations of the human-interest. 6. Incompetent sales force & Heavy turnover in Sales force.

Answers for Question - 4

You are Vice President of Marketing for American Airlines and would like to increase your share of the business market. Make a list of relevant objectives for American Airlines. As the DM, what are your personal objectives?

Relevant objectives for American Airlines

• Positioning: to be ranked 1st or 2nd place among class “A” air lines companies at USA by 2013.

• Customer Satisfaction & Loyalty: to increase customer satisfaction & loyalty using customer delight approach to increase adds on sales by 10% from 2011 – 2012.

• Efficient Cost NOT cutting cost: To send an incentive message of “Work more, walk the extra mile, you will increase your income Otherwise you will get nothing at all” instead of cost cutting policies.

• Networking: to build good connections with great tours companies & chain of hotels as B2B network which will support increasing the market share.

• To improve the pricing policies to more competitive.

My Objectives:

• Market share objectives: to achieve a certain level of market share to obtain 3% more of market share of the air lines industry at USA by 2012.

• To increase profit: to increase sales 10% from 2011 – 2012.

• To survive: The hard times the business is currently in.

• To grow: to grow by 15% year on year for the next five years.

• To increase brand awareness & brand loyalty of “AA”.

Answer for Question – 5

Calculations

Table - 1

Size of Batch

Cost of Batch y = a x + b

S/N X Y X² Y² XY 1 20 1.4 400 1.96 28 2 30 3.4 900 11.56 102 3 40 4.1 1600 16.81 164 4 50 3.8 2500 14.44 190 5 70 6.7 4900 44.89 469 6 80 6.6 6400 43.56 528 7 100 7.8 10000 60.84 780 8 120 10.4 14400 108.16 1248 9 150 11.7 22500 136.89 1755

73.3333333 6.21111111 63600 439.11 5264

n=9 X (Mean) Y (Mean) ∑X² ∑Y² ∑XY

[X (Mean)]² 5377.777778

[Y (Mean)]² 38.577901

Statistical Lows

Table - 2

a = COV (x,y) / VAR (x)

a ={∑XY - n[X(Mean)]*[Y(Mean)]} / ∑X² - n[X (Mean)]²

Y (Mean) = a X (Mean) + b

b = Y (Mean) - a X (Mean)

r = COV (x,y) / √[VAR (y) * VAR (x)]

r ={∑XY - n[X(Mean)]*[Y(Mean)]} / √{∑X² - n[X (Mean)]²}*{∑Y² - n[Y (Mean)]²}

Results

Table - 3 a = Slope 0.07662281 b = y intercept 0.59210526 "r" value is 0.98537399 "r²" value is 0.9709619

Regression Line deduced is

y = 0.0766x + 0.5921

Answer for Question – 5 (Continued) a) The dependent variable (Y) is the cost of batch & the independent variable (X) is the size of batch. b) Please look at the drawing below which drawn by using MS Excel. Straight line looks fit. c) ∑X² = 63600, ∑Y² = 439.11 & ∑XY = 5264. d) Slope value is 0.0766 KUSD/piece. e) Interpretation of the slope: for one piece will be increased at the batch size, the batch cost will be increased by 76.6 USD. f) Value of the "y" intercept is 0.5921 KUSD. g) Interpretation of the "y" intercept: The setup cost or the initial cost to start manufacturing the product is 592.105 USD. h) Estimated cost for a batch of 125 pieces is 10.1699 KUSD according to the regression line equation y = 0.0766x + 0.5921 I) Value of correlation coefficient "r" is 0.9854 and it indicates to strong & direct relation between the size of the batch & its cost. j) "R²" equals 0.971 which means that the regression line is highly fitting the real data.

Chart Title

y = 0.0766x + 0.5921R2 = 0.971

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