INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS

Size: px

Start display at page:

Download "INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS"

Octavia York
5 years ago
Views:

1 Page 1 of 7 ASSIGNMENT 1 ST SEMESTER : PRACTICE OF MARKETING (M2) MARKETING 2 (MAR202) CHAPTERS COVERED : CHAPTERS 2, 3, 4 AND 7 DUE DATE : 3:00 p.m. 20 MARCH 2012 TOTAL MARKS : 100 INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS The complete Instructions to Students for Completing and Submitting Assignments must be collected from any IMM GSM office, the relevant Student Support Centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes. 1. You are required to submit ONE assignment per subject. 2. The assignment will contribute 20% towards the final examination mark, and the other 80% will be contributed by the examination, however, the examination papers will count out of 100%. 3. Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam. 4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page. 5. The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper. Unless otherwise specified, this assignment must be completed within a limit of 2000 words, excluding the bibliography. Students who exceed the word limit may find that only part of the submitted assignment will be marked. 6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the front of each assignment. 7. Retain a copy of each assignment before submitting, in case the original does not reach the IMM GSM. 8. The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 20 March Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on 20 March 2012 and up to 5:00 p.m. the following day, after which no assignments will be accepted. 9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked. Results will be available on the IMM GSM website, on Friday, 4 May 2012.

2 Page 2 of 7 SPECIFIC INSTRUCTIONS: This assignment is based on the Hein and Mann Case Study which appears on pp of your prescribed textbook. Du Plessis, J.P., Jooste, C.J., and Strydom, W.J., Applied Strategic Marketing. 3 rd ed. Cape Town: Heinemann. PLEASE NOTE: TEN MARKS (10) WILL BE ALLOCATED FOR THE TECHNICAL QUALITY OF THE ASSIGNMENT AND STUDENTS WILL BE PENALISED IF THE ANSWERS EXCEED THE MAXIMUM LENGTH REQIUREMENTS. MAXIMUM LENGTH OF ASSIGNMENT: 2000 words READ THE CASE STUDY AND ANSWER ALL THE SECTIONS. QUESTION 1 [90] Use the framework of a typical marketing plan (Du Plessis et al., 2009, Figure 7.3, p.171) and develop a detailed marketing plan for Hein and Mann. Your plan must include the following sections: SECTION 1 [10] The four most important trends in the macro-environment that will impact on Hein and Mann s future success. Structure your answer using the following table format: TREND DESCRIPTION OF TREND IMPACT ON INDUSTRY SECTION 2 [30] A detailed analysis of the market, competitive structure of the industry and customers.

3 Page 3 of 7 SECTION 3 [10] A SWOT analyses Use the following framework for presenting your SWOT: STRENGTHS WEAKNESSES OPPORTUNITIES THREATS SECTION 4 [10] A proposed market strategy. SECTION 5 [30] Target market choice and a detailed marketing strategy for targeting the selected market. PRESENTATION [10] ASSIGNMENT TOTAL: 100

4 Page 4 of 7 Hein & Mann (Pty) Ltd The organisation In 1937 Joop Hein, born in Holland, and Gunther Mann, born in Germany, decided to join forces and start Hein & Mann (Pty) Ltd, in South Africa. Since 1932, Joop Hein had manufactured high-quality dining-room suites, while Gunther Mann had specialised in upholstered and wooden-armed lounge furniture. The organisation became well known in the industry for its high-quality, highly priced dining-room and lounge furniture. Originally the furniture was sold directly to customers and to furniture stores aimed at the top end of the market, but by 1965 the demand for less expensive (i.e. medium-priced) furniture became evident, and the two partners decided to expand their organisation into the value for money (i.e. good quality at an affordable price) segment. In 1972, Joop Hein died after a long illness and Gunther Mann decided to sell the business. Hein & Mann (Pty) Ltd was sold in February 1973 to Steven Cohen and Manny Lieberwitz, two relatively young executives who received their training in the furniture trade from Gomma Gomma. The new owners continued with the organisation as before until 1986, when Steven Cohen s father-in-law became a sleeping partner by investing R5 million in the organisation. The new partner, Hymie Harmel, had for most of his life been involved in an import-export organisation, and he held the exclusive rights to import Omega and Tissot watches into southern Africa. His business contacts with Swiss organisations made him believe that Hein & Mann (Pty) Ltd should export its quality furniture to Germany, Switzerland and Austria. Hymie and Steven went on a fact-finding mission in August and September 1986 and discovered a great deal of interest for their more exclusive lounge and dining-room suites, especially those made from yellowwood and blackwood. They signed deals with exclusive distributors in each country and came home with orders for at least a year s production capacity. On their return, an emergency meeting was held to discuss future actions, especially how to cope with local orders as well as the new overseas contracts. It was decided to buy a second factory where furniture for the local market would be manufactured, while using the existing factory for the international contracts. A loan was granted in March 1987 and the organisation immediately acquired the building, bought the plant and machinery, and started recruiting staff. The original factory had 331 employees (267 labourers) and the expansion created a further 182 employment opportunities. The furniture market The furniture market can be divided into three categories: top end, middle and economy. At the top end (15% of the total market), high-quality furniture at high prices is supplied on an exclusive or selective basis to customers who order directly from the factory or to exclusive/selective dealers. The middle, value-for-money section (55% of the total market) is a large segment of the market, catering mainly for middle- to upper-income homeowners. These stores include Russells, Furniture City, Joshua Doore, Beares and Home and Leisure stores.

5 Page 5 of 7 The economy segment (30% of total market) caters for first-time buyers or people in the lower socio-economic bracket. Most of these stores are found in townships and smaller towns and they sell mostly on credit. In terms of total turnover, the market in South Africa grew by 8% per annum from 1990, but exploded in the 2000s with a growth of 20%. The export market had also grown in leaps and bounds since the release of Nelson Mandela in 1990 and the first democratic elections in Hein & Mann (Pty) Ltd was very fortunate that its focus was on the exclusive/selective market (which grew by 18%) and the middle value-formoney segment (which grew by 22%), and Hein & Mann s exports grew by more than 20% per annum. Meanwhile, the economy segment had been hard hit by high unemployment and high interest rates, and recorded a decline of 10% per annum strategy Hein & Mann decided to increase its export turnover, but the plant was running at 120% capacity (one shift per day). This meant the second factory would have to be reorganised to increase production for more export orders, while also coping with orders for the local top-end and middle-range value-for-money dealers. There were indications that direct sales to customers were levelling off, probably due to the reactive attitude of Hein & Mann. The organisation waited for customers to visit the factory and place orders, and never did any advertising, direct marketing or personal selling to this market segment. The exclusive/selective local furniture stores were complaining about the bleak outlook for the next five years, as many top executives and professional people were either emigrating or being retrenched. This market could show a growth of no more than 7,5% per annum over the following five years. The organisation s biggest customer had recently complained bitterly about the unavailability of top executives at Hein & Mann, their poor service and take it or leave it attitude. The middle-market value-for-money segment was characterised by fierce competition, price cuts, sales promotions, discounts, special deals and clearance sales. More and more South Africans were buying on credit and the middle class appeared to display a culture of non-payment. Hein & Mann believed it was not in its interests to discount its furniture and began accusing the trade of inefficiency and a lack of push support. Hein & Mann decided to ask a marketing consultant to help investigate the total market. The consultant s report presented a grim picture, and proposed that Hein & Mann expand its export contacts, preferably into the United Kingdom and the ANC countries (Australia, New Zealand and Canada). Research indicated that among South Africa s local exclusive/selective dealers, Hein & Mann had a reputation for good quality furniture but high prices and a hard-nosed attitude. Delivery times were slower than promised, its if you want quality you have to wait approach was unhelpful, and its cash-on-delivery policy was unpopular. The value-for-money dealers were no longer loyal to Hein & Mann. As the chief buyer at one of these dealers put it: We are bleeding. The manufacturers should know this and help us. We are much more demanding now than ever before and far less loyal. I m doing business with suppliers who can give me extra discounts and better service. A market investigation indicated a market for upholstered and woodframe lounge furniture, wooden dining-room suites and wooden headboards in the

6 Page 6 of 7 lower- to upper-middle price categories. The current Hein & Mann price range was upper/middle. Hein & Mann s market share had decreased in the value-for-money segment from 40% in 1986 to 24% in 1993 and 18% in This had caused excess capacity in the factory and a lack of motivation amongst staff. Rumours abounded that staff/labourers would soon have to be retrenched. The dealers in this segment, especially Beares and Furniture City, said they preferred ordering from a number of suppliers so as to reduce reliance on one manufacturer. In the past, Hein & Mann s exports had been restricted by capacity. With the decline in orders from the middle-range value-for-money dealers, Hein & Mann would be able to expand its export organisation as well as introduce new export products. The situation was not ideal, however, according to Manny Lieberwitz, as he did not want to lose further market share locally, and feared it would lead to friction and cause labour problems in the factory if the unskilled labourers felt that skilled labourers were taking over. The consultant s report also mentioned that his UK contact, Jim McDermot, was of the opinion that Hein & Mann could do a lot of business in the UK via mail-order houses. They would, however, have to expand their product range considerably, (e.g. by manufacturing Laz-E-Boys, bedroom furniture, liquor cabinets, etc.). The economy market, which Hein & Mann had never considered, was fast declining in South Africa, but the consultant was of the opinion that Africa could be a lucrative export market, for pine furniture in particular. Industry figures indicated that the potential cost of raw materials was only 42%, whereas for the more selective/exclusive furniture, it could be as high as 59%. The consultant evaluated the attractiveness of the different markets available, as well as Hein & Mann s ability to compete in each of them. This data is presented in tables 1 and 2. Table 1: Attractiveness of different markets 10 point scale: 1 = very unattractive and 10 = very attractive Markets Market size Market growth rate Competition Profitability Power of retailers SA exclusive SA value-for-money SA economy Export exclusive Export economy Weight 20% 25% 15% 30% 10%

7 Page 7 of 7 Table 2: Hein & Mann s ability to compete in the different markets SA exclusive SA valuefor-money SA economy Export exclusive Export economy Price competitiveness Distribution Product quality Brand awareness Relationship with retailers Note: The consultant felt that all the above factors were of equal importance for success in the different markets. Source: Du Plessis et al., 2009.

ASSIGNMENT 1 ST SEMESTER : PRINCIPLES OF MARKETING (M1) MARKETING 1 (MAR101)

Page 1 of 7 ASSIGNMENT 1 ST SEMESTER : PRINCIPLES OF MARKETING (M1) MARKETING 1 (MAR101) CHAPTERS COVERED : CHAPTERS 1-6 DUE DATE : 3:00 p.m. 19 MARCH 2013 TOTAL MARKS : 100 MATERIAL SUPPLIED : ANSWER