Marketing Mix sample question
What are the Advantages and Disadvantages of qualitative measurements when doing marketing research?
Qualitative marketing research looks at the motivation behind the process of consumer buying decisions. These research methods commonly are a way of looking at natural variables related to consumers in a day to day setting. The principal aim is to dissect why or how a certain condition or behavior exists in the market platform and this is in complete contrast to the gathering of data in quantitative measurement. Qualitative research is aimed at making a distinction as to why a certain behavior is shown in the process of consumer decision such as buying and variables such as age playing a role in such decisions.
Such a research can be undertaken in a one to one case or might be conducted by including many consumers at the same time. One of the major outcome of conducting a qualitative research is the fact that if an organization comes to a certain conclusion regarding why consumers behave in a particular manner, the same conclusion can be used by that organization to modify the marketing strategy and attract more consumers to its fold. Other advantages would often include how the pricing of a product affects the buying behavior in general and how the best possible pricing strategy can be adopted.
However, the method has its own setoff disadvantages. The method is often found to be time consuming as it needs to focus on several focus groups. Sometimes physical interviews have to be conducted and the same is even more time sapping. Another disadvantage in this type of research which shall be kept in mind is the change of consumer behavior under different variable such as price changes made by a competitor firm and other external factors which varies on a daily basis.
A colleague at your place of employment says to you that when it comes to the decision-making process within his company on a major capital equipment purchase, it's a frustrating experience.
As you respond to the question below, consider how businesses go about making purchase decisions and to what marketers would want to be sensitive when attempting to market their goods to a business. What might be your colleague's rationale for making such a statement? What are some of the things that differentiate the business decision-making process from that of the consumer's decision-making process?
The decision to make an acquisition of a capital intensive equipment is a capital budgeting decision and involves complex financial analysis. The colleague in question has made a statement which take into consideration a decision making or approval process in a large organization and the approval needs discussion among a group of peer’s ad executives and the board of directors who must take into consideration the opinions of the peer groups. In this regard a section of the executives would see reason in investing in the assets where as other others would see not so many benefits. The decisions which would be taken must make use of hard facts available with the group of decision makers and other financial and non-financial data.
There are several factors which distinguishes between a consumer buying decision and business decision:
a) Planning: Even if some of the consumers go about purchasing assets in a planned manner the same is often an impulsive decisions and made at the last minute depending upon the requirements of the consumer. However, a business decision making is never going to be an impulsive decision and is often taken after all the due inconsideration is taken into evaluating the same.
b) In consumer decision making process more often than not the decision maker is the consumer. For example, the head of the family takes a decision to buy a car to make it easier for the family to commute. But the business decision making is a long drawn process which must go through an approval process which is the end result of economic, financial and marketing facts and data. The approval process if often includes qualitative and quantitative in nature.
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What are the benefits to a company of a well-executed BRANDING strategy? What are the benefits to a consumer?
Well executed branding strategy would bring a company the much needed competitive advantage over the competitors and in general to the market where it is operating. A well designed and well-advertised branding method would make sure the firm’s products and brands are well known for its clear identity in the consumer circle. It would help in the distinguishing of the product form other in some traits which other products does not have. It helps in the positioning of the brand in the minds and psyche of the consumer as to the usefulness of the product. Branding strategies which are well designed and well received would make sure that the firm is able to send clear communication of the brands value to the users and consumers and in general to the market. The target audience would thus be able to immediately identify the brand and the product and how the same is different from others competing for the same space.
A well-made branding strategy would make sure that the consumers get the following benefits:
- a) Purchasing decisions would be easy since the consumer would be clear about the product he/she wants and the required traits of the product.
- b) It creates a perception regarding the usability, performance ability and benefits that would flow from using the product.
- c) Benefits are well understood by the consumer.
- d) A strong brand position would help the consumer build a long term relationship if he is satisfied with the perceived benefit and the actual benefits he receives.
The United States has been a "services" economy since the late 1980's, at which time our GNP was focused more on providing services than the manufacture of physical products. Marketers recognize that the marketing of services is different than the marketing of a product because of the different characteristics that distinguish them from physical products.
List these characteristics and demonstrate your understanding of what each means relative to services marketing.
What are some marketing strategies that might be employed with services to ensure positive results? In your answer, provide an example of a service to which your strategies would be utilized.
Marketing of a general physical good is radically different form the marketing of a service. A customer can see and tough a physical product to experience it before purchasing it but the same is not true for a service. The consumer won’t be able to touch or feel a service before it is administered. For example, the service offered by a doctor can’t be experienced before availing it for real. Thus service marketing is quite unique in its ambience and scope and thus poses a challenge to the provider of the service to fulfill consumer expectations.
a) The services are intangible in nature and thus it would be troublesome for a provider to show the impression in a tangible manner. For example, a person rug can be shown to a consumer to impress him but the same can’t be said true about a pest control process or selling of a software. So the marketer would have to be smart enough to create an image in the minds of the consumer.
b) Services are mostly non-standardized in nature and thus the experience would be different for different consumer. Two different doctors providing dental treatment would be an ideal example. In such a case those elements of the procedure which can be standardized shall be separated from those which can’t be. This would be good way to create an image.
c) Most services are regulated in a better manner than most of the goods. This is because the services are very difficult to assess correctly by the consumers. Thus the service marketers must make this part of their services to the consumer. The more compliant they are with regulations the better image the service would have.
An increasing number of companies are basing their prices on the customer's perceived value of the product or service. Explain the concept of perceived value pricing and what is the "key" to pricing in this manner? How might the marketer determine the price that the consumer might pay in exchange for that value that they receive?
Perceived value is the value which is estimated to be the true worth of a product by the consumer. This affects the true worth of the product in the market. For example, if the consumers’ perceived value is higher than the market price set by the firm then the demand for the product would be high in the long term. But on the hand if the perceived value is lower than the market price set by the firm selling it, the demand would be lower than normal demand. In that case the firm would have to adjust the selling price to increase the demand and vice versa. So to keep the market price higher many producers in the past are known to have indulged in strategies which would create a higher perceived value in the mind of the end consumer.
Perceived value which is followed by marketer is thought to be a variant of value pricing. This sategy is used to strengthen a product line by some marketers. The perception of one product would often end up creating a value for other products in the same line up. For example if a marketer is setting out to sell a luxury car then the marketer would include pick up services and delivery at the end of the lease period. As others in the same industry are not offering the same service, it would end up creating an image which would enhance value for the consumer. Thus the ultimate value would include the time saved for the customer and that can be included in the original cost.
Atlantic Wholesale Distributors is located in Wilmington, Delaware, and represents twenty-seven different companies that make electronic stereo equipment components (e.g., DVD players, audio speakers, amplifiers, graphic equalizers, etc).
Given the independent retail customers to which Atlantic sells, you would like to discuss with them the possibilities of their representing your company, Meyerkord Cable Company (you make cable that connects loudspeakers with the stereo equipment, DVD players, etc).
What would be at least six (6) channel functions or services that you would look to Atlantic to provide Meyerkord Cable Company and/or Atlantic's independent retailers that would provide value?
The most important function would be as follows:
1) Transaction function:
The channel partner would be sole connection between the producer and the end consumers. It would buy form you and thus provide revenue to you company but I would deal for you with a no of consumers out of which there would be many retailers. It would also undertake stocking up and invest considerable amount of capital. This is known as the transactional function which is the most important of all the channel function.
2) Value adding
Channel partners would be the ones that add value to a process. They would help in the value add through a no of customizations to suit the needs of the customers.
3) Logistics functions
They would also make the goods and services move from one place to another and tasked with the ultimate delivery of the products in time and to remote places. The logistics is one difficult process which consumes lots of time and cost and this adds value through timely delivery.
4) Act as a facilitator
Facilitating is an important aspect of bring in touch with the entire market chain. Chanel partners like Atlantic would help in the dealings with customers through their own sales people and provide needed services to the customers. They would also get market data and supply the same input to the company for bettering of the product and other services.
5) Support function
Many products are complex in engineering components and require constant touch with the sales people. The channel partners are the ones who would provide the support to the customers on the ground. They are the ones who would ensure better customer reaction and positive relation in the long term.
Edward Smeets is the new sales manager for Grunwald Instrumentation. He has just come aboard to head up a sales force of seventy sales professionals, all of whom possess at least a B.S. in a scientific field. Many have Master's Degrees. Smeet’s sales reps sell highly complex instrumentation systems that are used to analyze a variety of different materials in a variety of laboratory environments. The instruments, sixteen in total, are used to analyze gases, liquids, and blood. Each product is very technical and customers expect their Grunwald sales rep to be very knowledgeable about the technical applications of their product to their analysis requirements of their laboratories.
Each sales professional covers an assigned territory which usually comprises about one-half of a state. In some cases, the sales rep may cover two states, but 80% of the sales reps are within a two-hour drive of their home. The sales team has been divided into twelve teams around the country, with each team having its own sales manager and five to nine sales reps, all of whom call on a variety of customers. Sales teams operate out of the same office, located in a major metropolitan area (e.g., Boston, Dallas, San Francisco, Atlanta, etc).
Sales rep turnover has been 15% annually the past few years and Smeets sees it as imperative that he do something about this. Annual sales have been averaging a 3-5% increase each year over the past five years... but the corporate president wants more, complaining that your competition has been averaging 6-8% sales growth increases in revenue each year.
Analyze the sales force structure. What is the current sales force structure that is being used and what might be the limitation of the sales force structure that is currently employed? What changes, if any, would you suggest that Smeets consider to the sales force structure to effect increased sales?
At present Gunward instrumentation has an internal sales force structure which is further redesigned as a geographical basis. The team has 70 members who are well qualified and they report to the firm’s sales manager who in turn report to the firm’s corporate president. This structure is pretty simple in its structure can is planned to work in a small firm with a smaller territory in sight. The sales people then would be able to do intensive work within their allotted territorial network and sales revenue would be expected to increase sizably year on year. But the size of the territory allotted is too big for even the most experienced and well versed sales people. The area given for them to cover is too vast to act in a consulting role to the existing customers.
Customers’ needs are growing each day and sales people are required to be in touch constantly with each of them to understand their exact needs and customize to fulfill them. Because of the limited size of the force and large territories allocated to them the sales force it seems is a bit out of sync an dare not well versed with the requirements of the customers of the frim.
To tide over the current problem of high turnover which is wasting the training provided to the sales personnel the team would do well to include more technical people on board. These technical people would make periodical calls to customers to assess the working of the instruments supplied and they would also be in better positioning to solve the technical issues on a priority basis while the normal sales people would be travelling wide to meet new customers and get new orders. This would also help the firm increase the standardization of the current products and meet customer needs.
Your product, the iPhone, has had a good Introduction phase and is now in the Growth stage of the Product Life Cycle (PLC). You know that one product-related strategy that you can employ is to offer newer iPhone models or offer more features on current iPhone models. As you prepare to do battle with other companies who area also in the market, what might be some other PRODUCT-related strategies that you might utilize to enhance your product offering that complements your introduction of newer models/features?
(NOTE: This question asks you to focus ONLY on the "product." Responses that focus on what you would do relative to the product's pricing, promotion, and channels of distribution are not what you are asked to provide. )
At the end of this stage the product would see a distinct change in demand and as a result both revenue and profitability would come down. Marketers in general would be required to follow the strategies discussed below:
a) The primary objective of the company would be to help sustain the growth of demand and extend the stage as long as possible. For this a sustained marketing strategy is required. As the product is highly profitable and popular it would not be that difficult for the firm to undertake extensive market surveys and get consumer feedback.
b) Take actions based on the consumer feedback received to help in sustenance the demand.
c) Make pricing and after sales service adjustments to keep demand for the product high.
d) Make new models with different specifications and change the design of the product and quality of the materials used as per the feedback received form the customers in the market.
e) Explore new markets for possible entry in the near term to create new demand.
f) Tie up with new distribution partners to go into hinterlands of the existing markets and possibly explore financing the product with EMI’s to attract new customers.
g) Try different models of selling the product for example try online sales only in some markets to keep costs down.
h) Increase product awareness with increased frequency of advertisement and emphasize on the new format advertising highlighting the creative parts of the product.
You have just become the marketing manager for a new line of DVD players. Your Fixed Costs (FC) for running your plant are $1,300,000 a month. This includes salaries, insurance, rent, amortized capitalization of equipment, etc.
Your Variable Costs (VC) per unit will, of Assignment, vary. You have looked at your hourly salaries, your utilities usage, your raw materials used to make your DVD player, shipping, promotional programs, and other variable costs. These Variable Costs (VC) average $1,634,000 per month.
Your plant is able to produce 76,000 DVD players each month (30 days per month).
Your price to your wholesaler distributor is $71.25. The retailer's price (e.g., Best Buy) from the wholesale distributor is $94.70. Your suggested list price for consumers for the DVD Player at the retail store, e.g., Best Buy, is $129.99.
What is your Unit FC per DVD player?
Your Unit VC per DVD Player?
How many DVD Players do you need to sell each month to "break even"?
The unit Fixed Cost (FC) per DVD player is calculated by dividing the total FC with the no of units produced by the company during a month.
Unit FC = Total Fixed Costs / no of units produced = $1,300,000 / 76,000 = $17.105
As the frim goes on to produce more units the average or unit fixed cost for a period would drastically come down.
Unit VC per DVD player is calculated by dividing the total FC with the no of units produced by the company during a month.
Unit VC = Variable Costs / no of units produced = $1,634,000 / 76,000 = $21.5
The breakeven no of units is the no of units which are required to be sole so that the firm recovers the total fixed cost spent during the period.
Selling price per unit = $71.25
Unto variable cos t = $21.5
Contribution per unit = selling price per unit – unit variable cost = $71.25 - $21.5 = $49.75
Break Even number of units = $1,300,000 / $49.75 = 26,131 units
This means the company is needed to sell a minimum of 26,131 units of DVD to break even (no profit and no loss) in a month. After reaching the milestone of 26,131 units the firm is able to sell more units, each additional unit would be able to earn profit for the frim as the fixed cost is fully recovered at 26,131 units. As the firm is currently selling close to 76,000 the firm is profitable on a monthly basis.
Read More about Breakeven Analysis and marginal costing here
The concept of a Marketing Audit is gaining acceptance within marketing circles, especially as a means to ensure that companies are seen as "above board" and "ethical" in their marketing practices. Were you tasked with creating a Marketing Audit, what would be some things that you would want to consider to ensure that your Marketing Audit was well-structured and was "all inconclusive?"
A marketing audit is defined to be a process which is aimed at ensuring the marketing plan of an enterprise is implemented well and as intended. This takes into consideration both the internal and external influencers on the plan of the entity. The process is usually undertaken either at the beginning or during the implementation of the marketing plan and once the same is done it would help in the following knowledge:
- a) Communication is focused on the delivery of a message for the consumers of the firm.
- b) Make changes to the strategies being undertaken and aimed at tapping the market to have larger market share.
- c) This helps in the tapping of new and so far neglected markets but can be potentially lucrative in the current future.
The following aspects must be let in mind for ensuring a stronger result form the marketing Audit.
- a) Relieve the marketing goals of the firm and make sure the visibility of the products increases in the market for intended audiences.
- b) Current customer profile shall be made with detail.
- c) Product and service profile be described with detail and the purpose of product mix shall be justified.
- d) Make an appropriate competitor analysis and identify the most important competitors in the industry.
- e) Outline the strategy that can be undertaken by the competitors in the future and their current marketing plan and product mix.
- f) Make the outline for an effective communication plan which shall consider advertising, media promotions and different analytics such as events and media platforms.
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