Marketing Management (MB221) : January 2004

Question Paper
Marketing Management (MB221) : January 2004
Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 -
30.
• Answer all questions.
• Each question carries one mark.
• Maximum time for answering Section A is 30 Minutes.
1. Khanna is a marketing manager faced with planning marketing strategies during times of
inflation. He should be aware that inflation causes consumers to
a. Purchase more goods and services to support their psychological well-being such as
counseling and stress management training
b. Decrease their brand loyalty to products they have traditionally used
c. Buy in small quantities until inflation is over
d. Consume more meals away from home
e. Put more money into savings accounts because prices are too high.
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2. When Steve goes to the grocery store every other week, he buys the same brands of coffee,
milk, cereal, and dog food. This type of buying behaviour is called
a. Routine response behaviour
b. Extensive decision making
c. Limited decision making
d. Situation convenience
e. Both (b) and (d) above.
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3. If Videocon engineers its washing machines to spin the clothes faster regardless of whether
or not customers want that speed, then Videocon has characteristics associated with
a. Production concept
b. Selling concept
c. Marketing concept
d. Product concept
e. Societal marketing concept.
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4. The Kewl Clothing Company has just hired you to develop a marketing strategy for their new
line of casual wear. The firm wants to target several different ethnic groups, so you suggest a
"stitching niches" approach. Which of the following would you use to illustrate your
suggestion?
a. Create a different product for each of the niche markets the firm is targeting
b. Position the products so they simultaneously meet the needs of the different ethnic
groups
c. Maintain Kewl's core identity by creating different promotional campaigns and brand
extensions for the various markets served
d. Use the same marketing mix that has worked so well for the firm throughout the West
Coast
e. Gain market share by developing an entirely distinct marketing mix for the largest niche
market.
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5. Prasad is trying to decide what kind of new car he is going to buy. He relies on Consumer
Reports, car magazines, and the advice of car mechanics. Prasad is using
a. Marketing controlled information sources
b. Nonmarketing controlled information sources
c. Demographic information sources
d. Secondary data sources
e. Internal search sources.
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6. Pooja, a Chartered Accountant, reads an article that states that CAs receive the highest
starting salary offers from consulting firms. The article also states that marketing majors start
with lower salaries but surpass all other majors' salaries within ten years. Pooja doesn't
remember reading this last part of the article, just the first part. This is an example of
a. Selective distortion
b. Selective exposure
c. Selective retention
d. Subliminal perception
e. Selective comprehension.
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7. When the demand for soft drinks grew by 12 percent in one year, the demand for aluminum
cans and glass bottles grew also. The aluminum and glass industries are enjoying the effects
of
a. Joint demand
b. Inelastic demand
c. Derived demand
d. Unitary demand
e. Elastic demand.
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8. Wrigley's Chewing Gum ran an advertising campaign that targeted heavy smokers. The
advertising indicated that "when you can't smoke, chew Wrigley's." This is an example of
what type of segmentation?
a. Geographic
b. Usage rate
c. Demographic
d. Psychographic
e. None of the above.
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9. Which of the following is the best example of a marketing research objective?
a. To determine why sales have decreased over the past three years
b. To create a print advertisement emphasizing customer service
c. To determine what role children have in influencing family decisions about vacation
destinations
d. To increase sales by 10 percent
e. To develop a method to track consumer attitudes.
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10. Munna jumps out of his truck and runs into a Foodworld store to grab a drink. While he is
paying for his drink, he notices the chocolate bars at the counter and grabs one to buy. The
chocolate bar in this case is considered to be a(n)
a. Specialty product
b. Unsought product
c. Convenience product
d. Shopping product
e. None of the above.
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11. Fabrique, Inc. invented a fabric that was fireproof and tearproof. The week after the product
was invented, a group of the firm's employees got together and listed ways the product might
be used. This is an example of
a. Lateral thinking
b. Concept testing
c. Brainstorming
d. Venture group activities
e. Screening.
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12. Zakki owns Pet Plus, a complete pet service that offers grooming, obedience training, show
training for animals and handlers, boarding, special food preparation, and minor veterinary
care. To maintain a quality image, Zakki provides complete training for each employee in the
company operations, objectives, and expected performance standards. What unique aspect of
services is Zakki attempting to address?
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a. Inventoriability
b. Inconsistency
c. Intangibility
d. Impropriety
e. Heterogeneity.
13. General Electric sells large home appliances both through independent retailers (department
stores and discount houses) and directly to large housing-tract builders. This is an example of
a. Intensive distribution
b. Exclusive distribution
c. Selective distribution
d. Alternative distribution
e. Dual distribution.
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14. The Xerox corporation stays in touch with its customers through phone calls and greeting
cards, periodically sends out needs-assessment questionnaires, and designs new services to
meet new needs. This is an example of relationship marketing based on
a. Financial bonds
b. Service recovery
c. Social bonds
d. Customization bonds
e. Structural bonds.
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15. SoundSensation offers stereo equipment and accessories. It has a deep assortment and low
prices. The store is operated on a self-service, no-frills concept. SoundSensation is a
a. Specialty store
b. Factory outlet
c. Warehouse membership club
d. Discount store
e. Category killer.
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16. The advertisements for Bertone Ramarro Car claim that it is the most expensive car in the
world. This is an example of a
a. Target return pricing strategy
b. Market share pricing strategy
c. Prestige pricing strategy
d. Maintained markup pricing strategy
e. Profit maximization pricing strategy.
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17. Rajeev Kapoor is a chef in a new downtown restaurant. He has sent out press releases to the
major local media and has invited food critics to dine in his restaurant. Rajeev is engaging in
a. Public relations
b. Personal selling
c. Sales promotion
d. Advertising
e. Publicity.
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18. A rental car company with the second largest market share runs advertisements showing how
its customer service is superior to that of the largest competitor. This is an example of
a. Comparative advertising
b. Corrective advertising
c. Primary demand advertising
d. Institutional advertising
e. Pioneering advertising.
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19. Consult-Me Consultants, Inc., has recently been engaged in several special meetings where
issues such as business mission, situation analysis, market and growth alternatives, and
implementation approaches have been discussed. Consult-Me is apparently engaged in
a. Target market planning
b. Writing the mission statement
c. The strategic planning process
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d. Business analysis
e. Strategic contingency planning.
20. Pepsico is a large conglomerate that has separate subsidiaries called Pepsi-Cola (soft drinks),
Tropicana (juices), Pepsi Bottling, and Frito-Lay (snack foods). Each of these subsidiaries
has its own functional departments, its own planning, its own financial goals, and its own
target markets. These subsidiaries may also be called
a. Product market niches
b. Diversified divisions
c. Strategic business units
d. Strategic alliances
e. Heterogeneous elements.
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21. The baking products division of Basic Foods, Inc., is the market leader in a mature and lowgrowth
market. The baking products division generates more dollars than is required in order
to maintain market share, and in portfolio matrix terms it is known as Basic Food's
a. Problem child
b. Cash cow
c. Star
d. Dog
e. None of the above.
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22. A local private college has been offering an accounting program for several years. The
program has a large but declining enrollment, and the program represents the largest income
earner for the business division. The recommended strategic option is to
a. Build
b. Divest
c. Hold
d. Harvest
e. Cultivate.
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23. Product portfolio analysis is based on the idea that
a. A firm's market share and market attractiveness are factors for a marketing strategy
b. A firm has a profitable impact on marketing strategy
c. A product’s market growth rate and its relative market share are important determinants
of its marketing strategy
d. A product’s market growth rate and market attractiveness determine the marketing
strategy
e. A firm’s market growth rate is the only determinant in the marketing strategy.
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24. Tata Tea has its own tea gardens, processing units, packaging units and marketing channels,
spread out all over the country. Tata Tea can therefore be said to have a high degree of
a. Industry scope
b. Vertical scope
c. Market scope
d. Geographical scope
e. Competence scope.
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25. Some banks have increased their market share by offering a new type of account especially
for children, traditionally a market they have ignored. This illustrates which of the following
growth strategies
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
e. Product Penetration.
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26. When Julie gives her customers her card during a sale and invites them to call with any
questions they might have later, which of the following levels of relationship marketing Julie
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is practicing?
a. The basic level
b. The reactive level
c. The accountable level
d. The proactive level
e. The partnership level.
27. Ellen decided to conduct an experiment in her mall's car park to see if shoppers would
respond to a lower parking price to park in some of the under-utilized sections of the car
park. Which of the following types of market research Ellen is using?
a. Exploratory
b. Causal
c. Descriptive
d. Investigative
e. Observational.
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28. When a car dealer complains to the manufacturer that another dealer of the same make of
cars is selling outside their assigned territories, it is a type of
a. Parallel conflict
b. Customer-service conflict
c. Vertical conflict
d. Horizontal conflict
e. Multi-level conflict.
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29. Which of the following see(s) the product, in a commodity market as very important and
demand the deepest discount and the highest service?
a. Bargain hunters
b. Programmed buyers
c. Relationship buyers
d. Transaction buyers
e. Gatekeepers.
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30. A brand is a name intended to identify the product of one seller and differentiate the product
from competing products. Coca-Cola is the best-known brand name in the world. The name
has a high-perceived quality and high brand loyalty among soft drink users. The company has
developed the brand name for over 100 years. Coca-Cola has a valuable
a. Line extension
b. Brand mark
c. Private brand
d. Package
e. Brand equity.
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END OF SECTION A
Section B : Caselets (50 Marks)
• This section consists of questions with serial number 1 – 6.
• Answer all questions.
• Marks are indicated against each question.
• Detailed workings should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1. What challenges did KFC face in its expansion and how did it overcome them successfully?
(8 marks) <>
2. What are the questions an organization should ask when analyzing International Markets?
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KFC, the world's largest fried and rotisserie chicken restaurant chain, offers great-tasting complete meals
and snacks in nearly 10,000 restaurants around the world. KFC operates in more than 76 countries - from
Shanghai to Sao Paolo; from the sands of Saudi Arabia to the sidewalks of New York. Everyday, nearly
seven million meals are served around the world. KFC's menu everywhere includes Original Recipe
chicken-made with the same great taste Colonel Harland Sanders created more than a half-century ago.
What is KFC's secret to global success? First and perhaps most important is the worldwide acceptance of
chicken. In Malaysia, for instance, annual per capita consumption of chicken has doubled during the past
decade. According to the president of KFC International, "Chicken is probably the most universally
accepted source of protein. There is not a country in the world where you won't find chicken". And unlike
other meats, chicken is not forbidden by religions or cultures, except among vegetarians. This acceptance
presented an excellent opportunity for KFC, but it did not guarantee success.
KFC made some early mistakes in Latin America and Europe. The company learned that opening an
American fast-food restaurant abroad is not simple. Cultural differences between countries result in
different eating habits. For instance, people eat their main meal of the day at different times throughout the
world. Different menus must also be developed for specific cultures while still maintaining the core
product-fried chicken. You can always find original recipe chicken, cole slaw, and fires at every KFC
outlet, but restaurants in China feature Chinese tea and French restaurants offer more desserts. Above all,
KFC emphasizes consistency. Whether in Shanghai or Kentucky, the product basically tastes the same.
KFC usually enters a new market by opening a single store. The company locates the store in a large urban
area on the most visible piece of real estate available. If the project fails, the land can be sold. Usually
foreign stores are eat-in restaurants, not the take-out establishments generally found in the United States.
Prices are usually high at first to appeal to an upscale market.
International markets offer many opportunities and challenges for KFC. The company is growing outside
the United States at nearly five times the rate of domestic growth. While many businesses complain about
the inability to compete in Japan, KFC has more than 1,000 restaurants in Japan alone. The secret is quality,
such as using fresh chicken rather than frozen. Freezing chicken causes a discoloring of the bone, which
bothers the Japanese. Eastern Europe also holds great promise for KFC.
KFC also faces several challenges. In some areas of the world, such as Malaysia and Indonesia, it is illegal
to import poultry, a situation that has led to product shortages. Another challenge facing KFC is to adapt to
foreign cultures. The company has been most successful in foreign markets when stores are operated by
people who understand the culture. The objective is to think like a local, like an American company starting
an American business in a foreign country.
Caselet 2
Read the caselet carefully and answer the following questions:
3. Is PSI successful in delivering the message to the target audience? Justify your comments.
(7 marks) <>
4. Government represented organisations play a vital role in the social marketing campaigns. Explain the
advantages and disadvantages if government has an active role in such campaigns.
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The question has the assembled audience squirming. "How many of you have touched a condom this
week? Those who have, raise your hands," urges the speaker. Amidst silence, some shifting and some
embarrassed laughter, Sanjay, Programme Director (HIV/AIDS Prevention), Population Services
International (PSI), tries to make the point that the stigma attached to discussing sexual health issues is
more dangerous than the virus that causes AIDS. Sanjay is giving a presentation at the regional conference
on AIDS prevention.
PSI, which was set up in India in 1988, uses social marketing to deliver health products and services to
lower-income groups in developing countries, to motivate their use and promote healthy behaviour. A
Washington, DC-based non-profit organisation working in over 50 countries, its forte is AIDS prevention,
family planning, maternal and child health. In India, PSI markets its own brand of Masti condoms, and
helps market the Kama Sutra and Nirodh Dlx brands in smaller towns and remote areas. Among other
health products it markets are the Pearl brand of contraceptive pills, the Union Government's Mala D, oral
rehydration solution and a clean delivery kit.
PSI, which has just launched a campaign in Tamil Nadu and Andhra Pradesh, among the States with the
highest incidence of HIV, is involved in social marketing and communications for health. Aimed at
increasing awareness of the risk of contracting HIV/AIDS through unprotected sex with non-regular
partners and at busting certain misconceptions associated with it, the campaign has two parts to it. The
campaign is part of Operation Lighthouse, a port-based HIV/AIDS/STD intervention, set to reach millions
of people, specifically vulnerable populations in port communities, with the information, services, and
products they need to protect themselves from HIV/AIDS. The key target groups include truck drivers,
commercial sex workers and their clients, and port workers. These high-risk populations are responsible for
the vast majority of HIV incidence in port communities. They also play a critical role in accelerating the
spread of HIV to the general population.
"Puli Rajavukku AIDS varumaa?" is the horrified question that rings through the teaser ad. This goes on to
three more spots which advise the target 'consumer' to practise safe sex with non-regular partners. The other
part urges the target group to `be faithful'. The exercise is based on the Balbir Pasha campaign that PSI ran
in Mumbai, one that generated much controversy and flak for the organisation. The Balbir Pasha campaign
(developed by Lowe) was slammed for being "anti-women", perceived as implying that women spread
HIV/AIDS and charged with stigmatizing sex workers but was "remarkably successful" in that post
campaign, PSI's helpline received 250 per cent more calls; its Saadhan clinics, (Saadhan integrates the
multiple issues of family health by offering more accessible information on more choices) voluntary
counselling and testing centres, had 150 per cent more visitors and there was a 300 per cent rise in all
brands of condoms sold in the red light district of Mumbai.
The Puli Raja campaign uses TV, radio, print and outdoors. It uses locations frequented by the target
group. In Mumbai, Kolkata and Delhi, there are clearly defined red light areas, but not so in TN and AP,
which is major challenge of this endeavour.
The points that PSI seeks to address are, that a healthy-looking person or known partner need not
necessarily be HIV/AIDS-free, and that alcohol-induced forgetfulness leads to the failure of using a
condom. In fact, this is the ideal on which the second sub-campaign, Be Faithful, is based. It shows how, by
having extra-marital affairs, men can give HIV to their wives and thus to unborn children, putting their
lives at risk. Puli Raja, who was visualised as a tall, hefty, invincible, fun-loving hero in pre-campaign
testing, actually remains faceless throughout the campaign. "He is every man, his conscience. He's an idea.
By keeping him abstract, it's easier for those in the target group to identify with him. Giving him a face will lead
people to develop associations and reject similarities with him.
The organisation is looking at developing a campaign with a local celebrity who urges the target group to
overcome their reserve in talking about AIDS. In Mumbai, the Balbir Pasha campaign was followed by a
primarily print one which created awareness of the Saadhan clinics, and this is what is planned for TN and
AP too.
The campaign tries to break away from the established pattern of social cause advertising, which is "not
engaging" though informative. Mass media can be effective in such contexts if they are used strategically,
PSI's tack is to focus on the consumer, get him involved in on-ground activity (interpersonal
communication) and then go on to making him aware of the products and the services available.
Caselet 3
Read the caselet carefully and answer the following questions:
5. Explain, with appropriate example, how a global computer manufacturing company can practice mass
customization and create competitive advantage
(8 marks) <>
6. How can Customer Relationship Management (CRM) be an enabling factor to derive full benefits of mass
customization?
(9 marks) <>
Mass customization is best defined as a delivery process through which mass-market goods and services
are individualized to satisfy a very specific customer need, at an affordable price. Based on the public's
growing desire for product personalization, it serves as the ultimate combination of "custom-made" and
"mass production." And it is rapidly emerging as the organizing business principle of the 21st century.
Simply stated, mass customization is about choice; about giving consumers a unique end product when,
where and how they want it. During the last 15 years, choice has become an important ingredient of
consumer purchasing decisions. During this period, the number of automobile models has increased from
140 to 260; the selection of soft drinks from 20 to 90. Today, the U.S. market alone offers consumers 3,000
brands of beer, 50 brands of bottled water, 340 kinds of breakfast cereals, 70 styles of Levi's jeans and 31
types of bicycles.
With choice playing such a critical role in consumer buying habits, mass customization is becoming
increasingly evident in day-to-day life. For example, internet-based e-commerce now makes it possible for
anyone to order a computer designed to his or her exact needs and specifications. Or compile music CDs
containing any combination of songs. Or obtain customized home mortgages. Or design a one-of-a-kind
friend of Barbie®, complete with unique name, clothing and personality.
Unlike mass production, which produces some variety of an item in high volumes, mass customization is
characterized by small volumes - in many cases, lot sizes of one. It is also characterized by competitive
cost, timely deliveries and a move away from centralized manufacturing to more distributed production.
Consequently, when combined with the very latest digital technology, such as e-commerce and robotics,
mass customization not only benefits the consumer, it offers the manufacturer significant benefits as well: a
high degree of product/service flexibility, reduced inventory risk, and a competitive edge in the
marketplace.
In agile product development, product development teams must concurrently develop flexible processes
that are so agile that companies can quickly develop a broad portfolio of niche market products, build
products to order, mass customize individual products at mass-production speed and efficiency, and rapidly
introduce a steady succession of "new" products that are really planned "variations on a theme" based on
common parts and modular product architecture.
Business Process Engineering
Business Process Engineering (BPE) focuses on the design and the improvement of entire process through
the company, such as the fulfillment of customer orders from the first contact with the customer to the
finished product. Organizational structures are changed in order to integrate previously separated functions along
process chains, non-value adding activities are removed, and information systems are re-designed to
efficiently support entire processes rather than single functions.
Quality Function Deployment
Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements
and translating them into specific plans to produce products to meet those requirements. The "voice of the
customer" is the term to describe these stated and unstated customer needs or requirements. The voice of
the customer is captured in a variety of ways: direct discussion, surveys, customer specifications,
observation, warranty data, field reports, etc. This understanding of the customer requirements is then
summarized in a product planning matrix or "house of quality". These matrices are used to translate higher
level "what's" or requirements into lower level "how's" or means to satisfy the requirements.
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 7 - 9.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on Section C.
7. The detergents division of a large household products company with worldwide distribution is planning a
research study among women 21 years and over to determine their attitudes toward home laundering and
the products and brands used in such activities. Studies are to be carried out in a many countries in the Far
East, Middle East, Africa, Western Europe, Eastern Europe, and South America. What data-collection
problems would you expect to experience in doing this research across a variety of countries?
(6 marks) <>
8. Assume that you are the vice-president of marketing in a small firm that includes the following
departments: marketing, finance, purchasing, and strategic planning. The sales force manager has
mentioned to you that one of the salespersons thought that cellular telephones would help the sales force
become more efficient. The manager requests that eight such phones be purchased. Illustrate the six buying
decision roles that would take place for the purchase of these cellular phones?
(8 marks) <>
9. Head and Shoulders Shampoo has targeted a new segment of people with dry scalps. To be useful, a
segmentation scheme must produce segments that meet four basic criteria. Name and briefly describe each
of these four criteria, and assess whether a dry scalp segment meets these criteria.
(6 marks) <>
END OF SECTION C
END OF QUESTION PAPER