FEEDBACK TUTORIAL LETTER ASSIGNMENT 1 SECOND SEMESTER 2018 MARKETING PRINCIPLES MPS512S

Transcription

1 FEEDBACK TUTORIAL LETTER ASSIGNMENT 1 SECOND SEMESTER 2018 MARKETING PRINCIPLES MPS512S 1

2 1 ASSIGNMENT ONE QUESTION 1 (15 Marks) Discuss 4 segmentation strategies that Thomas shop can use to establish a strong relationship with its customers Students were expected to show their understating of how segmentation works and how it can be applied to Thomas Shop Market segmentation The process that firms use to divide large heterogeneous markets into smaller markets that can be reached more efficiently and effectively with products and services that match their unique needs The purpose of segmenting is to divide the whole market into smaller segments. A market segment consists of a group of customers who share a similar set of needs and wants. Effective target marketing requires that marketers use market segmentation, market targeting, and market positioning to achieve success in the marketplace. Segmentation bases: Thomas shop could use the following segmentation bases: Geographic, Demographic, Psychographic and Behavioral Geographic segmentation Thomas shop could divide the market into different geographical units such as countries, provinces, regions or cities. Demographic segmentation Divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality. The most popular segmentation method because consumer needs, wants and usage often vary closely with demographic variables and are easier to measure than other types of variables Psychographic segmentation Divides buyers into different groups based on social class, lifestyle or personality traits Behavioural segmentation Divides buyers into groups based on their knowledge, attitudes, uses or responses to a product (i.e. occasion, benefits sought, user status, usage rate and loyalty status

3 2 QUESTION 2 (10 Marks) Explain the concept of product positioning and explain to Thomas shop how they can position their products to win back their customers Students were expected to show their understanding of the concept of brand positioning and how it can be applied the Thomas Shop Product Positioning Positioning is the process of developing a specific marketing mix to influence potential customers overall perception of a firm, product or brand The place that a firm, product or brand occupies in consumers minds relative to competing products Marketers need to plan unique positions to gain maximum advantage in selected target markets Design marketing mixes to establish and support planned positions Plan positions that distinguish products from competing brands Positioning assumes that consumers compare products on the basis of important features Effective positioning: assessing the positions occupied by competing products identify the important dimensions underlying the positions choosing a position where the firm s product should occupy Bases for positioning products: Attribute, Benefit, Price and quality, Use or application, Product user, Product class, Competitor, Origin and Technology. Market positioning : Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of the target consumer A positioning statement must be aimed at capturing people s attention and winning a unique position in the mind and heart of customers. A positioning statement is a corporate statement that defines the benefit of a product or service to the target market/customer and states how the organisation, brand, product or service is different from that of competitors.

4 3 QUESTION 3 (10 Marks) Discuss the different pricing strategies that Thomas Shop can use to capture value from customers, in your discussion provide a justification as to why you think these pricing strategies would work Students were expected to show their understanding of the different pricing strategies and how they can be applied to Thomas Shop Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs Major Pricing Strategies Customer Value-Based Pricing Understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value Value-based pricing uses the buyers perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. Value-based pricing is customer driven Cost-based pricing is product driven Good-value pricing offers the right combination of quality and good service at a fair price Cost-based pricing adds a standard markup to the cost of the product Thomas shop could also use the following pricing strategies 1: Product line pricing Takes into account the cost differences between products in the line, customer evaluation of their features and competitors prices 2: Optional product pricing Takes into account optional or accessory products along with the main product 4: By-product pricing Products with little or no value produced as a result of the main product.

5 Producers will seek little or no profit other than the cost to cover storage and delivery 4

6 5 QUESTION 4 (15 Marks) Discuss the internal and external factors that Thomas shop should consider when setting the prices for their products. Students were expected to show their understanding of how Thomas shop would address the macro and micro environments in their business. Students should show an understating of how these 2 environments affects the operations of a business. The marketing environment The actors and forces outside marketing that affect marketing management s ability to build and maintain successful relationships with customers Micro-environment Consists of the actors close to the firm that affect its ability to serve its customers, the firm, suppliers, marketing intermediaries, customer markets, competitors and publics. Internal environment includes: Top management, Finance, research and development (R & D), Purchasing, Operations, Accounting Suppliers Provide the resources to produce goods and services, Treated as partners to provide customer value. Marketing intermediaries Help the company to promote, sell and distribute its products to final buyers, including: Resellers, Physical distribution firms, Marketing services agencies, Financial intermediaries Financial intermediaries Includes banks, credit firms, insurance firms and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods Macro-environment Consists of the larger societal forces that affect the micro-environment: Demographic, Economic, Natural, Technological, Political, Cultural. Demographic environment The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. Is important because it involves people, and people make up markets

7 6 Demographic trends: Age, family structure, geographic population shifts, educational characteristics and population diversity Economic environment Consists of factors that affect consumer purchasing power and spending patterns Monetary policy: monetary policy regulate money supply, interests rates, fiscal polies- taxation affect both consumers and business through tax reforms and the level of taxation. The business cycle: during the downward turn in the business cycle, less disposable income is available. Low demand for goods and services. Natural environment The natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends: Shortages of raw materials, Increased pollution, Increased government intervention Environmentally sustainable strategies, Green marketing Political environment Consists of laws and pressure groups that influence or limit various organisations and individuals in a given society. Legislation regulating business Public policy to guide commerce - sets of laws and regulations that limit business for the good of society at large, Increasing legislation, Protect firms, Protect consumers, Protect the interests of society. Cultural environment Consists of institutions and other forces that affect a society s basic values, perceptions and behaviours