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Chapter 12: Setting Product Strategy

Chapter 12: Setting Product Strategy
GENERAL CONCEPT QUESTIONS
Multiple Choice

1. Marketing planning begins with the formulation of an offering to ________ target customers’ needs or wants. a. undermine b. meet c. capture d. compete with e. comprehend Answer: bPage: 318Difficulty: EasyAACSB: Reflective Thinking
2. The customer will judge the offering by three basis elements: ________, services mix and quality, and price. a. performance b. salespeople c. price d. product features and quality e. none of the above Answer: dPage: 318Difficulty: EasyAACSB: Analytic Skills
3.The five product levels constitute a ________. At each level more customer value is added. a. customer-augmented product b. customer consumption system c. customer value-hierarchy d. customer-perceived value e. customer hierarchy Answer: cPage: 318Difficulty: Medium
4. When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ________ product, which encompasses all the possible augmentations and transformations of the product. a. consumption system b. expected c. potential d. augmented e. basic Answer: cPage: 318Difficulty: HardAACSB: Analytic Skills
5. The way the user performs the tasks of getting and using products and related services is the user’s total ________. a. consumption system b. consumable system c. consistent use system d. augmented system e. none of the above Answer: aPage: 319Difficulty: Medium
6. Marketers have traditionally classified products on the basis of three characteristics: ________, tangibility, and use. a. customer value hierarchy b. expected c. augmented d. durability e. none of the above Answer: dPage: 319Difficulty: HardAACSB: Analytic Skills
7. ________ are tangible goods that normally survive many uses. a. Nondurable goods . Durable goods c. Services d. Consumption systems e. Potential products Answer: bPage: 319Difficulty: MediumAACSB: Analytic Skills
8. Because ________ are purchased frequently, marketers should make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. a. nondurable goods b. durable goods c. services d. consumption systems e. potential products Answer: aPage: 319Difficulty: Medium
9. The consumer usually purchases ________ frequently, immediately, and with a minimum of effort. a. specialty goods b. shopping goods c. “must haves” goods . personal goods e. convenience goods Answer: ePage: 320Difficulty: MediumAACSB: Analytic Skills
10. It was sunny when Jenny went to class, but by the time class was over it was raining heavily, so Jenny stopped by the student store to buy an umbrella before she walked back to her dorm. In this case, the umbrella is an example of a(n) ________. a. impulse good b. staple c. homogeneous shopping good d. emergency good e. heterogeneous shopping good Answer: dPage: 320Difficulty: MediumAACSB: Analytic Skills
11. ________ are similar in quality but different enough in price to justify shopping comparisons. . Emergency goods b. Homogeneous shopping goods c. Heterogeneous shopping goods d. Specialty goods e. Impulse goods Answer: bPage: 320Difficulty: MediumAACSB: Reflective Thinking
12. Products such as insurance, cemetery plots, and smoke detectors are examples of ________ that are products that the consumer does not know about or does not normally think of buying. a. specialty goods b. unsought goods c. heterogeneous shopping goods d. homogeneous shopping goods e. none of the above Answer: bPage: 320Difficulty: HardAACSB: Reflective Thinking
13.Industrial goods can be classified as ________, capital items, or suppliers and business services based on their costliness and how they enter the production process. a. service components b. subassemblies c. pieces and parts d. specialty goods e. materials and parts Answer: ePage: 320Difficulty: MediumAACSB: Analytic Skills
14. ________ are the major factors influencing the selection of suppliers for natural products. a. Price and delivery reliability b. Product features and customization c. Price and customization d. Delivery reliability and product features e. Customization and delivery reliability
Answer: aPage: 321Difficulty: Medium
15. Capital items are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and ________. a. natural products b. component materials c. operating supplies d. equipment e. none of the above Answer: dPage: 321Difficulty: EasyAACSB: Reflective Thinking
16. Supplies and business services are short-term goods and services that facilitate ________ or managing the finished product. a. inspecting b. developing c. building d. creating e. none of the above Answer: bPage: 321Difficulty: EasyAACSB: Reflective Thinking
17. Many products can be differentiated in terms of their ________,—size, shape, or physical structure. a. form b. performance quality c. conformance quality d. reliability e. design Answer: aPage: 321Difficulty: EasyAACSB: Analytic Skills
18. Most products can be offered with varying ________ that supplement its basic function. a. reliability b. conformance qualities c. features d. forms e. none of the above Answer: cPage: 322Difficulty: EasyAACSB: Reflective Thinking
19. ________ is the ability of a company to prepare on a mass basis individually designed products, services, programs, and communications. . Mass customization b. Feature fatigue c. Performance quality d. Conformance quality e. Repairability Answer: aPage: 322Difficulty: MediumAACSB: Analytic Skills
20. ________ is the level at which the product’s primary characteristics operate. a. Design b. Conformance quality c. Reparability d. Performance quality e. Durability Answer: dPage: 322Difficulty: Easy
21. Buyers expect products to have a high ________, which is the degree to which all the produced units are identical and meet the promised specifications. a. durability b. reliability c. conformance quality d. form e. performance quality Answer: cPage: 323Difficulty: MediumAACSB: Analytic Skills
22. ________ describes the product’s look and feel to the buyer; it has an advantage of creating distinctiveness that is difficult to copy. a. Design b. Style c. Durability d. Conformance e. None of the above Answer: bPage: 323Difficulty: EasyAACSB: Analytic Skills
23. Ideal ________ would exist if users could fix the product themselves with little cost in money or time. a. durability b. reliability c. style d. design e. repairability Answer: ePage: 323Difficulty: MediumAACSB: Reflective Thinking
24. In increasingly fast-paced markets, price and technology are not enough. _______ is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks, feels, and functions in terms of customer requirements. a. Services b. Performance c. Reliability d. Style e. Design Answer: ePage: 325Difficulty: HardAACSB: Reflective Thinking
25. When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ________, customer consulting, maintenance, and repair. . customer limiting b. customer orders c. niche marketing d. customer training e. customer marketing Answer: dPage: 326Difficulty: HardAACSB: Analytic Skills
26. Delivery refers to how well the product or service is brought to the customer. It includes speed, ________, and care throughout the delivery process. a. length of time for delivery b. type of delivery services c. attributes d. completeness e. accuracy Answer: ePage: 326Difficulty: EasyAACSB: Analytic Skills
27. ________ refers to training the customer’s employees to use the vendor’s equipment properly and efficiently. a. Customer training . Internal marketing c. Client marketing d. Customer relationships e. Technical training Answer: aPage: 326Difficulty: Easy
28. ________ refers to data, information systems, and advice services that the seller offers to their buyers. a. Sales force relationships b. Customer relationships c. Internal marketing d. Customer training e. Customer consulting Answer: ePage: 326Difficulty: EasyAACSB: Analytic Skills
29. Differentiating on ________ is important for companies with complex products and becomes an especially good selling point when targeting technology novices. a. delivery b. ordering ease c. ase of installation d. customer consulting e. repairability Answer: cPage: 326Difficulty: HardAACSB: Reflective Thinking
30. ________ describes the service program for helping customers keep purchased products in good working order. a. Returns b. Ordering ease c. Installation d. Maintenance and repair e. Delivery Answer: dPage: 327Difficulty: MediumAACSB: Reflective Thinking
31. Improved handling or storage, better packaging, and improved transportation and forward logistics are methods for reducing ________. a. installation b. uncontrollable returns c. controllable returns d. product families e. ustomer consulting Answer: cPage: 328Difficulty: MediumAACSB: Reflective Thinking
32. A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges is known as a ________. a. product type b. product class c. need family d. product variant e. product line Answer: ePage: 328Difficulty: Medium
33. A(n) ________ is defined as a distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. . stockkeeping unit b. UPC (uniform product code) c. stock unit d. product type e. none of the above Answer: aPage: 328Difficulty: HardAACSB: Analytic Skills
34. A ________ is the set of all products and items a particular seller offers for sale. a. product line b. product mix c. family of products d. product system e. product class Answer: bPage: 328Difficulty: EasyAACSB: Analytic Skills
35. The ________ of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. a. onsistency b. depth c. width d. length e. composition Answer: aPage: 329Difficulty: Hard
36. The ________ of the product mix refers to the total number of items in the mix. a. width b. length c. depth d. consistency e. height Answer: bPage: 329Difficulty: MediumAACSB: Analytic Skills
37. In offering a product line, companies normally develop a ________ and modules that can be added to meet different customer requirements. a. convenience item b. “best selling” item c. staple item d. product e. basic platform Answer: ePage: 329Difficulty: Medium AACSB: Reflective Thinking 8. The ________ of a product mix refers to how many variants are offered of each product in the line. a. width b. length c. depth d. consistency e. height Answer: cPage: 329Difficulty: MediumAACSB: Analytic Skills
39. A company can classify its products into four types that yield different gross margins, depending upon sales volume and promotional costs. The four classifications include all EXCEPT ________. a. core product b. shopping goods c. staples d. specialties e. convenience items Answer: bPage: 330Difficulty: MediumAACSB: Analytic Skills 40.
The main point in segmenting products into different classes is that companies should recognize that these items ________ in the potential for being priced higher or advertised more as ways to increase sales, margins, or both. a. differ b. are more elastic c. are less elastic d. respond to advertising differently e. none of the above Answer: aPage: 330Difficulty: EasyAACSB: Reflective Thinking 41. A benefit of product mapping is that it identifies ________. a. market matrices b. target markets c. market segments d. consumers e. none of the above Answer: cPage: 330Difficulty: HardAACSB: Reflective Thinking 2. Product-line analysis provides information for two key decision areas—product-line length and ________. a. product-length new items b. product-mix pricing c. product pricing d. popular pricing e. none of the above Answer: bPage: 331Difficulty: Hard
43. ________ occurs when a company lengthens its product line beyond its current range. a. Market reach b. Product reach c. Product adaptations d. Line shrinking e. Line stretching Answer: ePage: 331Difficulty: EasyAACSB: Analytic Skills 44. When a company positioned in the “middle” market introduces a lower-priced product line, this is an example of ________. . product-line length b. up-market stretch c. down-market stretch d. maintenance e. none of the above Answer: cPage: 331Difficulty: EasyAACSB: Analytic Skills 45. Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the core brand’s quality image. a. up-market b. two ways c. one way d. down-market e. none of the above Answer: dPage: 333Difficulty: Medium 46. Companies may wish to implement a(n) ________ to achieve more growth, to realize higher margins, or simply to position themselves as full-line manufacturers. a. up-market stretch . down-market stretch c. service-market stretch d. consulting-model stretch e. obsolescence strategy Answer: aPage: 333Difficulty: MediumAACSB: Reflective Thinking
47. A product line can also be lengthened by adding more items within the present range. There are several motives for line filling: ________, trying to satisfy dealers who complain about lost sales because of missing items in the line, trying to utilize excess capacity, and others. a. responding to senior management wishes b. responding to consumer wishes c. reaching for incremental profits d. eaching for incremental capacity e. responding to sales-force demands Answer: cPage: 334Difficulty: Hard 48. If line filling is overdone, it could result in ________ and customer confusion. a. sales paralysis b. manufacturing inefficiencies c. self-cannibalization d. self-sacrifice e. none of the above Answer: cPage: 334Difficulty: EasyAACSB: Reflective Thinking 49. Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ________ profits on the total mix. a. are ineffective on total b. ave no effect on total c. maximize d. minimize e. capitalize upon Answer: cPage: 335Difficulty: EasyAACSB: Analytic Skills 50. Companies normally develop product lines rather than single products and require sellers to establish ________ quality differences between price steps within the line. a. imaginary b. actual c. perceived d. monetary e. none of the above Answer: cPage: 335Difficulty: MediumAACSB: Reflective Thinking
51. Some service firms often engage in ________, consisting of a fixed fee plus a variable usage fee. a. pure bundling b. pure pricing c. mixed pricing . captive pricing e. two-part pricing Answer: ePage: 336Difficulty: EasyAACSB: Analytic Skills 52. In ________, the seller offers goods both individually and in bundles and often charges less for the “bundle” than for the individual products. a. pirating pricing b. captive pricing c. two-part pricing d. pure bundling e. mixed bundling Answer: ePage: 336Difficulty: MediumAACSB: Analytic Skills 53. The main advantage of co-branding is that a product may be convincingly positioned by virtue of the ________ involved. a. branding synergy b. increased advertising dollars c. ultiple brands d. bundled package e. none of the above Answer: cPage: 337Difficulty: HardAACSB: Reflective Thinking
54. The potential disadvantages of ________ are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer expectations about the level of involvement and commitment are likely to be high, so unsatisfactory performance could be very negative for the brands involved. a. co-branding b. primary service features c. values d. perceptions e. pricing Answer: aPage: 337Difficulty: MediumAACSB: Reflective Thinking 55. _______ is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products. a. Component branding b. Ingredient branding c. Advertising branding d. Sales branding e. None of the above Answer: bPage: 337Difficulty: HardAACSB: Analytic Skills 56. We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ________. a. retailer package b. design package c. shipping package d. consumer package e. one of the above Answer: cPage: 339Difficulty: MediumAACSB: Analytic Skills
57. Various factors have contributed to the growing use of packaging as a marketing tool and include all of the following EXCEPT ________. a. self-service b. consumer affluence c. consumer influence d. company and brand images e. innovation opportunities Answer: cPage: 339Difficulty: HardAACSB: Reflective Thinking 58. ________ are formal statements of expected product performance by the manufacturer. a. Insurance b. Warranties c. Guarantees d. Reputation e. Marketing statements Answer: bPage: 341Difficulty: MediumAACSB: Analytic Skills
9. Many sellers offer either general or specific guarantees. Guarantees reduce the buyer’s ________ risk. a. actual b. perceived c. real d. implied e. stated Answer: bPage: 342Difficulty: EasyAACSB: Reflective Thinking 60. Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product’s quality is ________ to competition. a. not known b. different c. inferior d. equivalent e. superior Answer: ePage: 342Difficulty: MediumAACSB: Reflective Thinking True/False 61. Product is the key element in the market offering.
Answer: TruePage: 317Difficulty: EasyAACSB: Reflective Thinking 62. A product is anything that can be offered to a market to satisfy a want or need. Answer: TruePage: 318Difficulty: MediumAACSB: Reflective Thinking 63. In planning its market offering, the marketer needs to address five product levels, each of which reduces customer value. Answer: FalsePage: 318Difficulty: MediumAACSB: Analytic Skills 64. The customer-value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system. Answer: FalsePage: 318Difficulty: MediumAACSB: Analytic Skills 65.
Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use. Answer: TruePage: 319Difficulty: Medium 66. Durable products normally require more personal selling and service and more seller guarantees than nondurable goods. Answer: TruePages: 319–320Difficulty: MediumAACSB: Reflective Thinking 67. Because they are intangible, durable goods normally require more quality control, supplier credibility, and adaptability than either services or nondurable goods. Answer: FalsePage: 320Difficulty: Medium 68. Carlos always buys bread and milk when he goes grocery shopping.
In this case, bread and milk are examples o f impulse goods. Answer: FalsePage: 320Difficulty: MediumAACSB: Analytic Skills 69. A Maserati sports car is considered a specialty good because interested buyers will travel far to buy one. Answer: TruePage: 320Difficulty: MediumAACSB: Analytic Skills 70. The homogeneity of natural materials limits the amount of demand-creation activity that producers undertake. Answer: TruePage: 321Difficulty: Medium 71. Capital items are long-lasting goods that facilitate developing or managing the finished products. Answer: TruePage: 321Difficulty: MediumAACSB: Analytic Skills 72.
Supplies can be classified as two kinds: maintenance and repair items and operating supplies. Answer: TruePage: 321Difficulty: MediumAACSB: Analytic Skills 73. To be branded, physical products must be differentiated. Answer: TruePage: 321Difficulty: Easy 74. To avoid “feature fatigue,” companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature. Answer: TruePage: 322Difficulty: MediumAACSB: Reflective Thinking 75. Firms should design the highest performance level possible for their products.
Answer: FalsePage: 322Difficulty: MediumAACSB: Reflective Thinking 76. As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras. Answer: FalsePage: 323Difficulty: HardAACSB: Reflective Thinking 77. Design can shift consumer perceptions to make brand experiences more rewarding. Answer: TruePage: 325Difficulty: Medium 78. If the physical product cannot be easily differentiated, the key to competitive advantage lies in the pricing of the related “services” provided by the manufacturer.
Answer: FalsePage: 326Difficulty: HardAACSB: Reflective Thinking 79. Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products. Answer: TruePage: 326Difficulty: MediumAACSB: Analytic Skills 80. The cost of processing a return can be significantly greater than that of an outbound shipment. Answer: TruePage: 327Difficulty: HardAACSB: Analytic Skills 81. The product hierarchy stretches from basic needs to particular items that satisfy those needs. Answer: TruePage: 328Difficulty: MediumAACSB: Reflective Thinking 82.
A product system is a group of diverse but related items that function in a compatible manner and includes the product mix and product assortment. Answer: FalsePage: 328Difficulty: MediumAACSB: Analytic Skills 83. The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business. Answer: TruePage: 329Difficulty: MediumAACSB: Analytic Skills 84. Factors that influence product-line length do NOT include company objectives or management aspirations. Answer: FalsePage: 331Difficulty: HardAACSB: Reflective Thinking 85.
Every company’s product line covers a certain part of the total possible range of products and consumer levels. Answer: TruePage: 331Difficulty: Hard 86. Companies in the “middle market” should never attempt to stretch their line in both directions. Answer: FalsePage: 333Difficulty: MediumAACSB: Reflective Thinking 87. Line filling, if overdone, may result in self-cannibalization and increased customer loyalty. Answer: FalsePage: 334Difficulty: MediumAACSB: Analytic Skills 88. In the rapidly changing market of today’s world, product lines must be continuously updated or modernized.
Answer: TruePage: 334Difficulty: MediumAACSB: Reflective Thinking 89. Price-setting logic must be modified when the product is part of a product mix. Answer: TruePage: 335Difficulty: EasyAACSB: Reflective Thinking 90. Companies normally develop product lines rather than a single product and introduce price steps such as a “low-,” “average-,” and “high-” priced computer system. Answer: TruePage: 335Difficulty: Medium 91. Manufacturers of systems such as razors and ink jet printers use a system of pricing called “two-part pricing”—one price for the disposable products and another for the “hardware. ” Answer: FalsePage: 336Difficulty: Hard 2. A pricing system in which there is a “fixed” fee and then a variable “usage” fee is called bundling. Answer: FalsePage: 336Difficulty: HardAACSB: Analytic Skills 93. Pure bundling occurs when a firm offers goods both individually and in bundles. Answer: FalsePage: 336Difficulty: MediumAACSB: Analytic Skills 94. Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion. Answer: TruePage: 337Difficulty: MediumAACSB: Analytic Skills 95. Ingredient branding can take on a form called “self-branding” in which the company advertises its own branded ingredients.
Answer: TruePage: 338Difficulty: MediumAACSB: Analytic Skills 96. Packaging is all the activities of designing and producing the container for a product. Answer: TruePage: 339Difficulty: EasyAACSB: Analytic Skills 97. Labels can identify the product and must contain legal statements that under various Federal laws cannot be misleading, false, or deceptive. Answer: TruePage: 341Difficulty: MediumAACSB: Reflective Thinking 98. Warranties are formal statements of expected product performance by the manufacturer. Answer: TruePage: 341Difficulty: EasyAACSB: Analytic Skills 99.
A guarantee’s greatest contribution to a product’s success is that it decreases the buyer’s perceived risk in the purchase of the product. Answer: TruePage: 342Difficulty: HardAACSB: Reflective Thinking 100. Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: FalsePage: 342Difficulty: HardAACSB: Reflective Thinking Essay 101. In planning its market offering, the marketer must address the five product levels of the customer-value hierarchy. Describe the “customer-value hierarchy” and identify the five levels of product contained ithin.
Suggested Answer: Each layer adds more customer value, and the five levels are: (1) the core benefit—the service or benefit the customer is really buying; (2) the basic product—the actual product that provides the core benefit; (3) expected product—a set of attributes and conditions buyers normally expect when they purchase the product; (4) the augmented product—the marketer exceeds customer expectations; and (5) the potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.
These five elements constitute the buyers’ consumption system. Page: 318Difficulty: EasyAACSB: Analytic Skills 102. The vast array of products that consumers buy can be classified on the basis of shopping habits and are broken down into four main areas. List these four main classifications of consumer goods and explain what elements are included within.
Suggested Answer: The four main areas are: (1) Convenience goods are bought frequently, immediately, and with a minimum of effort; (2) shopping goods are goods that the consumer characteristically compares on such bases as suitability, quality, price, and style; (3) specialty goods have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort; and (4) unsought goods are those goods that the consumer does not know about or does not normally think of buying.
Page: 320Difficulty: MediumAACSB: Analytic Skills 103. Industrial goods can be classified in terms of how they enter the production process and their relative costliness. Identify the three groups of industrial goods. Suggested Answer: The three groups of industrial goods include: (1) Materials and parts are goods that enter the manufacturer’s product completely. Raw materials (farm and natural products) and manufactured aterials and parts (component materials and component parts) compose this group; (2) Capital items are long-lasting goods that facilitate developing or managing the finished product, such as machinery (installations and equipment); and (3) Supplies and business services are short-term goods and services that facilitate developing or managing the finished product; maintenance and repair and operating supplies are included here. Business supplies include advisory services and other “services” necessary for the ongoing operation of the business.
Pages: 320–321Difficulty: Hard 104. When differentiated, products can then be branded. List the possible ways that physical products can be differentiated. Suggested Answer: Products can be differentiated according to form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 321–323Difficulty: EasyAACSB: Reflective Thinking 105. When a physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving quality.
Identify and discuss the six main service differentiators. Suggested Answer: The six main service differentiators are (1) ordering ease, (2) delivery, (3) installation, (4) customer training, (5) customer consulting, and (6) maintenance and repair. Pages: 326–327Difficulty: MediumAACSB: Analytic Skills 106. Explain the concepts of product-line width, length, depth, and consistency. Suggested Answer: The width of a product mix refers to how many different product lines the company carries.
The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Page: 329Difficulty: HardAACSB: Analytic Skills 107. Explain the concept of line stretching and the three uses for it.
Suggested Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line). Pages: 331–333Difficulty: HardAACSB: Analytic Skills 108. Product-mix pricing can involve a number of pricing strategies for the brand manager. List each of these strategies and briefly define each.
Suggested Answer: There are six situations involving product-mix pricing: (1) product-line pricing—low-, medium-, and high-priced products within the same line, such as different priced ties; (2) optional-feature pricing —charging for “extra” features, such as leather seats in a car; (3) captive-product pricing—when the “user” has no choice but to use the high-priced “disposable” products that make the entire product work (for example, ink cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable usage fee (cell phone usage); (5) by-product pricing—the price of the by-products of goods being used for other purposes (oil refining for example); and (6) product-bundling pricing—pure bundling when the firm offers its products only as a bundle, or mixed bundling when the firm offers its products as a “bundle” and/or individually. Pages: 335–337Difficulty: Hard 109. Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these events.
Suggested Answer: Self-service—an increasing number of products are being sold without any personal interaction, on a self-service basis. Consumer affluence —rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. Company and brand image—packages contribute to instant recognition of the company or brand. Innovation opportunity—innovative packaging can bring large benefits to consumers and profits to producers. Page: 339Difficulty: HardAACSB: Reflective Thinking 110. Sellers must label their products. Labels serve many purposes beyond just “naming” the product.
List the additional services provided by a product’s label. Suggested Answer: A label identifies the product; a label might also grade the product; a label might describe the product; and the label might promote the product. A label may contain information required by law. Page: 340Difficulty: MediumAACSB: Reflective Thinking APPLICATION QUESTIONS Multiple Choice 111. Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow them to walk unobstructed. This is an example of what level in the consumer-value hierarchy? a. Pure tangible good b. Basic product c. Augmented product d. Potential product e.
Consumption system Answer: bPage: 318Difficulty: EasyAACSB: Analytic Skills 112. How a consumer shops for organic foods and how they use and dispose of the product is part of the consumers’ _________ that is important for marketers to consider. a. basic product system. b. customer value system c. potential system d. consumption system e. none of the above Answer: dPage: 319Difficulty: Medium 113. The sellers of ________ goods carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to inform and advise customers. Examples include automobile dealers, furniture stores, and insurance services. a. unsought shopping goods . specialty shopping goods c. homogeneous shopping goods d. heterogeneous shopping goods e. none of the above Answer: dPage: 320Difficulty: MediumAACSB: Analytic Skills
114. ________ are major purchases and are usually bought directly from the producer with the typical sale preceded by long negotiation periods. a. Raw materials b. Materials and parts c. Business services d. Capital goods e. Installations Answer: ePage: 321Difficulty: MediumAACSB: Analytic Skills 115. Most products are established at one of four performance levels: low, average, high, or superior. For example, mountain bikes come in a variety of sizes and physical attributes.
When a consumer purchases a mountain bike costing $1,000, she/he expects the bike to perform to specifications and to have a high _________ meeting the promised specifications. a. features b. durability c. conformance quality d. performance quality e. reliability Answer: dPage: 322Difficulty: MediumAACSB: Reflective Thinking 116. If the Porsche 911 is designed to accelerate to 60 miles per hour within 10 seconds, and every Porsche 911 coming off the assembly line does this, the model is said to have high ________. a. reliability b. conformance quality c. durability d. repairability e. style Answer: bPage: 323Difficulty: MediumAACSB: Analytic Skills 117.
Realizing that although household products is a huge category, taking up an entire supermarket aisle or more, it is an incredibly boring one, the founders of Method Products designed a sleek, uncluttered dish soap container that also carried functional advantages. Method is competing in the crowded market for household products on the basis of superior ________. a. design b. durability c. conformance d. reliability e. performance quality Answer: aPage: 325Difficulty: MediumAACSB: Reflective Thinking 118. When Baxter Medical supplied their hospitals with computer terminals directly linked to Baxter’s ordering system, this was an example of a company differentiating itself versus competition in terms of ________. a. customer relationships b. customer training c. installation d. delivery ease e. ordering ease Answer: ePage: 326Difficulty: HardAACSB: Reflective Thinking 119.
Using the ________ level of the product hierarchy to market its soups, Campbell Soups feature the company name first, then the soup variety on their packaging. a. item b. product-type c. need-family d. product-family e. product-line Answer: ePage: 328Difficulty: Hard 120. A consumer products firm manufacturers and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer’s product mix has high ________. a. consistency b. depth c. height d. product assortment e. width Answer: bPage: 329Difficulty: MediumAACSB: Reflective Thinking 121. Happy Home Products produces detergents, toothpaste, bar soap, disposable diapers, and paper products. This company has a product ________ of five lines. a. depth b. ength c. consistency d. height e. width Answer: ePage: 329Difficulty: MediumAACSB: Analytic Skills 122. When Jack bought his new laptop, he also bought a laptop bag and a spare power cord through the same retailer. These items are considered to be ________. a. core products b. staples c. convenience items d. specialties e. emergency items Answer: cPage: 330Difficulty: MediumAACSB: Analytic Skills 123. A manufacturer of hiking boots looks at data that indicate that their subsegment of the market called “serious hiker” is declining and is predicted to decline into the future. The firm decides to enter the “low-price” segment with its new items.
This is an example of a firm’s ________ to reach a new market. a. down-market stretch b. up-market stretch c. two-way stretch d. marketing research e. capitalizing Answer: aPage: 331Difficulty: MediumAACSB: Reflective Thinking 124. Marriott Corporation now contains hotels and motels from the “budget” end of the consumer spectrum to the “premium” end with their JD Marriott flagship locations. This is an example of a firm that successfully performed a ________ to reach more consumers and ventures that are more profitable. a. marketing diversification b. two-way stretch c. up-market stretch d. down-market stretch e. cross-stretch Answer: bPage: 333Difficulty: MediumAACSB: Analytic Skills 125.
When shopping for tires for your automobile, you notice that the manufacturer you have selected has tires for your car priced low, average, and high, based upon performance and features. This is an example of what type of product-mix pricing? a. Captive-price pricing b. Product-line pricing c. By-product pricing d. Two-part pricing e. Optional-feature pricing Answer: bPage: 335Difficulty: MediumAACSB: Reflective Thinking 126. Purchasers of theatre tickets receive a 20% discount if they purchase and pay for the full season at one time. This is an example of what type of product-mix pricing? a. Mixed bundling b. Pure bundling c. Cross-promotion d. Captive pricing e. None of the above Answer: aPage: 336Difficulty: MediumAACSB: Analytic Skills 127.
McDonald’s restaurants inside Super Wal-Marts and Starbucks inside Super Targets are examples of ________, whose main advantages are that the products can or may be convincingly positioned by virtue of the associated brands. a. cooperative marketing b. co-branding c. retail co-branding d. ingredient branding e. none of the above Answer: cPage: 337Difficulty: MediumAACSB: Reflective Thinking 128. Betty Crocker cake mixes using Hershey syrup in its cake mixes and “Lunchables” lunch combinations with Taco Bell tacos are examples of what special type of branding? a. Mixed branding b. Ingredient co-branding c. Co-branding d. Self-branding e. None of the above Answer: bPages: 337–338Difficulty: MediumAACSB: Analytic Skills 129.
Sales of luxury goods such as perfumes, colognes, and aftershaves depend heavily upon their initial response by the consumer. A well-designed package can create convenience and promotional value. It has been called the “silent salesman. ” Which of the three levels of packaging is this “silent salesman”? a. Retailer b. Consumer c. Shipping d. Secondary e. Primary Answer: ePage: 339Difficulty: MediumAACSB: Reflective Thinking 130. A new product is advertised on the “infomercials” as being “the best cleaner money can buy” and “if not completely satisfied, return the product for a full refund, including shipping. ” The strategy of using a strong guarantee in this instance is sound because ________. a. t is an example of a misleading or false advertising and is illegal b. the product is so superior to competition that there will be no claims for refunds c. it is just “advertising fluff” and the manufacturer has no intentions of refunding money d. for a product that is not too well known, it is “good advertising” because the claims will be a small percentage of sales e. for a product that is not too well known it reduces the buyer’s risk in purchasing Answer: ePage: 342Difficulty: MediumAACSB: Reflective Thinking Short Answer 131. A manufacturer is contemplating introducing a product that is inferior to its competition in its performance, design, and functionality.
However, the manufacturer believes that “good brand marketing” can overcome these shortfalls. Why is this thinking incorrect? Suggested Answer: At the heart of a great brand is a great product, the product is a key element in the market offering. Customers will judge the product (offering) on three basic elements: product features and quality; services mix and quality, and price. Not having a competitive product cannot be overcome by marketing. Pages: 317–318Difficulty: HardAACSB: Reflective Thinking 132. Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy.
First, define the consumption system and second, identify the two upcoming product strategies that are affected by this knowledge. Suggested Answer: This is called the user’s total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy. Page: 319Difficulty: Hard 133. You know that marketers have traditionally classified products based on characteristics of durability, tangibility, and use. You also know that each product type has an appropriate marketing-mix strategy attached.
In analyzing your company’s products, you decide to list each of these products and the appropriate marketing-mix strategy to understand where your products “fit. ” List these products and their appropriate marketing-mix strategies. Suggested Answer: (1) Nondurable goods—the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. (2) Durable goods—tangible goods that normally survive many uses. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees. (3) Services—intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability.
Pages: 319–320Difficulty: HardAACSB: Reflective Thinking 134. Convenience goods, products purchased without much thought, can be classified as impulse goods and emergency goods, and this constitutes one of the four classifications of goods based on shopping habits. The purchase of a Mercedes automobile, life insurance, homogeneous shopping goods, and heterogeneous shopping goods are examples of the other classifications. Identify these “goods” classifications or segments. Suggested Answer: The vast array of goods purchased by consumers can be classified as convenience goods, shopping goods (homogeneous and heterogeneous), specialty goods, and unsought goods. Page: 320Difficulty: Easy 135.
Industrial-goods classifications based on terms of how the products enter the production process and their relative costs include such segments as materials and parts and capital items. Window cleaning services, consumable office supplies, personal computers, desks, paint, nails, and buckets are included in the classifications of industrial goods. List the other “classifications” including subclassifications for industrial goods. Suggested Answer: Industrial-goods classifications include material and parts, farm products, natural products, manufactured materials and parts, and component parts. Capital goods include installations and equipment.
Supplies and business services include maintenance and repair items, operating supplies, and business advisory services. Pages: 320–321Difficulty: HardAACSB: Analytic Skills 136. In your position as a marketing manager for a small industrial company, you have been asked by the president to help differentiate the company’s product from its competitors. In reviewing your marketing management notes, you note that the text stated that physical products could be differentiated in nine ways. These nine areas comprise the “meat” of the memo you are writing to the president of your firm. What are the nine ways that physical products can be differentiated?
Suggested Answer: The nine ways that physical products can be differentiated are form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 321–323Difficulty: MediumAACSB: Analytic Skills 137. You know that your small firm cannot compete with the “big boys” in terms of price and promotion. Instead, you have decided to “outdesign” them. What is necessary for this strategy of “outdesigning them” to succeed? Suggested Answer: Design offers a potent way to differentiate and position a company’s products and services. Design is the factor that will often give a company its competitive edge. Design is the totality of features that affect how a product looks and functions in terms of customer requirements.
The designer must figure out how much to invest in form, feature development, performance, conformance, durability, reliability, reparability, and style. To the company, a well-designed product is one that is easy to manufacture and distribute. To the consumer, a well-designed product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. Page: 325Difficulty: MediumAACSB: Reflective Thinking 138. As the marketing manager for a product often referred to as a “commodity,” you know that incremental sales and profits lies not in physical differentiation but in “service” differentiation. As you compose a memo to your boss regarding the concept of “service” differentiation, you note the six areas where service differentiation can make a difference.
List these six areas for service differentiation. Suggested Answer: The main service differentiators are: ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Pages: 326–327Difficulty: EasyAACSB: Analytic Skills 139. You have been asked to create a product system for your company’s personal digital assistant. Before starting, you must define the term “product system” to the engineers to enable them to start design and production of the aligned items. Define the concept of a “product system. ” Suggested Answer: A product system is a group of diverse but related items that function in a compatible manner. Page: 328Difficulty: Easy 140.
You have been asked to prepare a product-line analysis for your company’s stable of products. Why is it important for product-line mangers to do a product-line analysis? Suggested Answer: Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line’s market profile. Page: 329Difficulty: MediumAACSB: Analytic Skills 141. How do the four product-mix dimensions (width, length, depth, and consistency) affect a firm’s product and corporate strategies? Suggested Answer: These four product-mix dimensions permit the company to expand its business in four different ways.
First, it can add new product lines, thus widening its product mix. Second, it can lengthen each product line. It can add more product variants to each product line and deepen its product mix. Finally, a company can pursue more product-line consistency. Page: 329Difficulty: MediumAACSB: Reflective Thinking 142. As the newest member of the marketing department, your immediate boss asks you to comment on the company’s proposal to add two new shoes to the company’s middle-of-the-road pricing and product-line strategies. The first pair will retail for $ 40. 00 and has as its target market the “bargain” shopper. The second pair will retail for $ 200. 00 and is targeted at the “sophisticated shopper. In relation to product-line strategy, what is the company trying to accomplish with these two new items? Suggested Answer: This is an example of the company trying a “two-way stretch”—introducing products at both ends of the consumer market simultaneously. Page: 333Difficulty: MediumAACSB: Analytic Skills
143. During a meeting, you were asked by the vice-president of marketing, to comment on the company’s pricing strategy for its products. Recalling your marketing management course in college, your comments define the six situations involving product-mix pricing. List these six product-mix pricing strategies. Suggested Answer: Product-mix pricing includes product-line pricing, ptional-feature pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling pricing. Pages: 335–336Difficulty: Medium 144. Your firm is contemplating a bundling strategy for its line of products. In a memo to your boss, you outline the three guidelines for correctly implementing a building strategy. Suggested Answer: Do not promote individual products in a package as frequently and cheaply as the bundle. Second, limit promotions to a single item in the mix if you still want to promote individual products. Third, if you decide to offer large rebates on individual products, it must be the absolute exception and done with discretion. Page: 337Difficulty: HardAACSB: Analytic Skills 145.
As the marketing manager for your firm, you have been approached by your key component manufacturer suggesting that your two firms “ingredient brand” a new item. What are some of the requirements for succeeding in ingredient branding? Suggested Answer: First, the consumer must perceive that the ingredient matters to the performance and success of the product. Secondly, consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. Third, a distinctive symbol or logo must clearly signal to consumers that the host product contains the ingredient. Fourth, a coordinated “pull” and “push” program must help consumers understand the importance and advantages of the branded ingredient.
Page: 339Difficulty: HardAACSB: Reflective Thinking 146. Your research shows that over 53% of all purchases are made on impulse. As you sit down with your packaging design team, you tell them that the package must communicate many of the sales tasks. List the sales tasks that packaging must now incorporate due to the increase in self-service sales. Suggested Answer: These tasks are: attract attention, describe the product’s features, create consumer confidence, and make a favorable overall impression. Page: 339Difficulty: MediumAACSB: Analytic Skills 147. In discussions with the packaging design team, you note that they do not have a firm design objective for the final package.
In an internal memo to your boss, you outline the objectives (both company and consumer orientated) that you wish to see implemented by the design team. List these objectives. Suggested Answer: The objectives of packaging are to identify of the brand; convey descriptive and persuasive information; facilitate product transportation and protection; assist at-home storage; and aid product consumption. Pages: 339–340Difficulty: HardAACSB: Analytic Skills 148. In discussions with the packaging design team, it seems that they are unclear as to what should be included on the final product (consumer package) packaging. You list these objectives in a memo. List these objectives here. Suggested Answer: Labels must first identify the product or brand; the label might also grade the product.
The label should describe the product and promote the product; and finally the label must contain all required government information. Pages: 340–341Difficulty: Medium 149. Your service firm is contemplating adding a “guarantee” component. Members of senior management are unclear as to the marketing advantages of a guarantee. How would you convince members of senior management that a guarantee can provide a marketing advantage? Suggested Answer: Guarantees reduce the buyer’s perceived risk. They suggest that the service/product is of high quality and that the company and its service performance are dependable. Page: 342Difficulty: EasyAACSB: Reflective Thinking 150. As you contemplate the introduction of your company’s newest services, ou think that the offering of a service guarantee would be a “marketing coup” and completely surprise your competition. You remember that your marketing management text stated that guarantees are most effective in two situations. What are these two situations? Suggested Answer: Guarantees are most effective when either the company or the product is not well known, so a “money-back” guarantee in that case would reduce the buyer’s perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Page: 342Difficulty: MediumAACSB: Analytic Skills

Categories
Strategy

Positioning Strategy of Grameen Phone

Positioning Strategy By creating product, service, channel, people & image differentiation Grameenphone reach the consumer touch point more effectively & efficiently in comparing with their competitors in the highly competitive telecommunication sector. 1. Product Differentiation: Network (best, quality): Grameenphone has the largest network with the widest coverage around the country, bringing 98 percent of the population under the coverage of its network. The entire Grameenphone network is also EDGE/GPRS enabled, allowing GP subscribers to access the Internet from anywhere within its coverage area.
The 10,000 Base Stations are located in about 5,700 sites around the country. The company has so far invested more than BDT 10,700 crore (USD 1. 6 billion) to build the network infrastructure since its inception in 1997. It has invested over BDT 3,100 crore (USD 450 million) during the first three quarters of the current year while BDT 2,100 crore (USD 310 million) was invested in 2006 alone. Grameenphone is implementing an aggressive roll-out program by installing new network elements with an emphasis on maintaining quality service.
A number of steps are being taken to identify the problems spots in the network in order to constantly improve quality. Special efforts are being taken to constantly monitor and ensure network quality in the urban areas. In Dhaka and other major cities in- building coverage solutions and microcells have been deployed to provide improved coverage in important high-rise buildings and busy street junctions. 2. Service Differentiation: Business Solutions is a complete, quality business communications service from Grameenphone – designed especially for the business community in Bangladesh.

Their Business Solutions teams are here to help provide their customers with customized telecommunications solutions through consultation with their customers. Messaging Services GrameenPhone have various messaging services allow the customers ways to communicate smarter, faster, more efficiently and more cost- effectively on the go. SMS (Short Message Service): Fast and affordable messaging through SMS. Send a SMS to any mobile phone in Bangladesh and to more than 115 countries with their international SMS service. Voice SMS: Save time and personalize message through a voice SMS.
This service provides the flexibility to record it up to 120 seconds of audio – MMS (multimedia messaging): The MMS service provides to take pictures customize it with animation, music, video clips and send it across the globe within seconds. Cell e-mail: Send emails without a computer. With cell e-mail, Customers have the facilities to e-mail any GP number through an SMS and email any PC across the globe. SMS Banking: Enjoy hassle-free account updates from renowned banks like Standard Chartered Bank, BRAC Bank, Bank Asia, etc. Customer Services
GP strive to take care of their customers all telecommunications needs. Key Account Managers and Customer Service Managers are assigned to provide prioritized service to Business Solutions subscriber’s right from the beginning of the relationship. Priority Service GP believe in the importance of human touch in the business world. As they step into third year of providing innovative communication solutions, Business Solutions aims to provide enhanced priority services. Prioritized Hotline 121 Enjoy prioritized customer service by simply dialing 121.
Dedicated customers care managers are available round-the-clock, 24 hours a day and 7 days a week only to serve. Business Solutions postpaid subscribers can call 121 absolutely free of cost. Value Added Services Take customer business to new heights. Business Solutions pioneers in introducing state of the art Value Added Service to help. Missed Call Alert Missed Call Alert and get SMS notification of the attempted call when phone was off. To subscribe the service, type on and send to 6222. Stock Information The latest updates of the Dhaka and Chittagong Stock Exchange are now in consumer palm.
To avail this service, go to GP WORLD (wap. gpworld. com), then Business City, and download the Bull application. 4. Channel Differentiation GP gain competitive advantage through the way they design their channels coverage expertise & performance. 3. People Differentiation: Almost half the total number of employees of GrameenPhone Ltd. today (Tuesday), participated in the company’s biggest customer care program to date. “This customer service campaign follows up on the “Stay Close” promise from GrameenPhone.
As a caring company, GrameenPhone values its subscribers, stands by them and takes care of them when they need help,” explained GrameenPhone CEO Anders Jensen. Management Team led by, over 2000 employees, representing most of the functional divisions and all the regional offices of GrameenPhone, spent the day interacting with the customers in 124 popular local area markets and important public places across the country. The purpose was to interact with the customers, help them in solving their mobile phone related queries, and demonstrate Grameenphone’s commitment as a helpful and customer-oriented company. . Image Differentiation GrameenPhone logo differentiates from the other companies. For that reason customer easily identify them in the market, which is another effective competitive advantages for GrameenPhone. Positioning Statement: Company and Brand Positioning should be summed up in a positioning statement. GrameenPhone positioning statement is “Stay Close” which explain that customer can easily express their emotion with their close relatives & friends through using GrameenPhone.

Categories
Strategy

When to Consider a Single-Instance Erp Strategy

Reproduction of this publication in any form without prior written permission is forbidden. The Information contained herein has been obtained from sources believed to be reliable. Garner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Garter’s research may discuss legal issues related to the information technology business, Garner does not provide legal advice or services and its research should not be construed or used as such.
Garner shall have no liability for errors, omissions or inadequacies in the information contained herein or for Interpretations thereof. The opinions expressed herein are subject to change without notice. WHAT you NEED TO KNOW Adopting a single-instance, single-vendor enterprise resource planning strategy can deliver benefits, but it does not make sense for every organization. It should only be undertaken If you have a good business case for the project and it matches most or all of Garter’s single-instance success factors.
If the challenges balance or outweigh the success factors, then you should address organizational issues before proceeding. If this Is not feasible, then consider Illimitableness consolidation or a tiered business application strategy. ANALYSIS Most large multinational organizations have a heterogeneous application portfolio hat has built up over time. The portfolio often is made more complex by tactical purchasing and merger and acquisition activity.

Senior executives in such organizations are attracted to the idea of standardizing on applications from a single enterprise resource planning (ERP) vendor because of potential operational cost savings and reduced complexity of the IT landscape (see Note 1). Vendor consolidation is often a first step toward instance consolidation. ; A single instance of an application can run all operating companies on a common process template, a ingle release AT ten application Ana a giggle copy AT ten applications dataset, using a consolidated technical infrastructure.
A single-instance strategy can drive cost reductions in several areas, including integration, interfaces, training, support and hardware. In addition, potential benefits may be found in process improvements, better data consistency and improved visibility of information. However, adopting a single-instance, single-vendor ERP strategy is not a task to be undertaken lightly, because it can create disruption in enterprise operations and often involves replacing some systems that are favored by users.
Even if the business case appears to support the deployment of a single-instance ERP solution, there still may be significant obstacles to overcome. Certain types of organizations will find it more difficult to realize the benefits of a single-instance ERP strategy because of their culture and infrastructure. See Table 1 to determine whether single-system ERP might work for your organization. Rank yourself against each of the categories. If you have mainly (or exclusively) success factors, then a single-instance ERP strategy is more likely to be successful. Table 1 .
Single-Instance ERP Success Factors and Challenges Enterprise Profile Business Model Corporate Culture and Policy Definition Geographical Concentration Success Factors Single primary core business with similar business processes Centralized with strong corporate head office; policy dictated at corporate level and globally enforced Company aspires to operate as a single global company, and operations, sales and marketing are concentrated in a single geographical region Stable, unlikely to undergo dramatic growth or downsizing Challenges Diversified group with wide range of business processes Decentralized tit autonomous business units; policy decided at the business-unit level Company operates as a multinational company, and operations, sales and marketing are distributed globally Dynamic, growing rapidly or downsizing significantly Business Environment publication Date: 28 September 2005/AD Number: GO 30366 2005 Garner, Inc. And/or its Affiliates. All Rights Reserved.
Page 2 of 6 Merger, Acquisition and Divestiture Status Established ERP Systems Technology Environment Acquiring smaller entities that are easily absorbed into the corporate culture Highly likely to be acquired or merge with a company of a similar size (or larger); vesting encore businesses Diverse, with an even spread from potential single- system suppliers Architecture and technology are decided at the business-unit level Elemental mummer, wilt majority AT systems Trot likely single-system vendor Enterprise-level architecture with similar technologies Source: Garner (September 2005) Note that the scope of this analysis is limited to the processes automated through traditional ERP systems, such as financial, HRS, procurement, inventory management, production planning and order management. Single-instance strategies are typically noninsured first in the ERP domain because these processes are more internally focused and homogeneous, and have less impact on competitive differentiation. Suitability of a single-instance strategy in other domains, such as customer relationship management (CRM), product life cycle management (PLUM) and supply chain management (SCM), should be assessed following a similar process. However, with CRM, PLUM and SCM, organizations are even less likely to meet the criteria in Table 1 and will typically discover that a single-instance strategy doesn’t align with the business strategy.
By implication, even if a single-instance ERP environment is successfully created, most organizations will have to support multiple instances of peripheral systems. Enterprise Profile Elements ; Business Model: Organizations in service industries such as software or financial services will find adoption of single- system ERP easier than those with a diversified business model, because the ERP adoption will primarily affect their back-office administrative functions. Process changes in these areas will have less impact on revenue-creating activities and, therefore, are lower risk than changes in operational areas such as manufacturing and logistics operations.
Corporate Culture and Policy Definition: Organizations that operate in a decentralized manner with highly autonomous business units may find these operations unwilling to release control of local systems to a central IT function. If there is a culture of local decision making, then business-unit executives may not be willing to accept a decision that is mandated from the corporate head office. Geographical Concentration: Companies that aspire to operate as global companies (operate on a common set of business processes across the globe) are well- positioned to achieve a global single instance, because they align the IT strategy with he business strategy.
Companies operating as multinationals (have a unique set of business processes for local markets, particularly sales and marketing, and SCM), will have difficulties running their international businesses on a common system. Also, organizations that are physically concentrated in a single geographical region will find it easier to achieve a single instance, because support and operations of the system take place in a narrow range of adjacent time zones. The need to support a single instance around the clock creates issues with available support windows for upgrades and maintenance, and possibly network-related performance and availability issues.
Business Environment: A single-instance ERP strategy may not be appropriate for organizations that face significant change. Implementation of a single-instance system may be thrown into disarray if there is a significant change of direction in the business Page 3 of 6 (for example, a manufacturer decides to sell its manufacturing operations and focus instead on design and logistics services). ; Merger, Acquisition and Divestiture Status: This aspect of the general business situation can have a major impact on a single- instance strategy. Organizations that are likely to acquire or merge with entities of a similar size may find their investment in a significance strategy compromised if they merge with organizations that use different ERP systems.
Established ERP Systems: If the ERP system from a potential single-instance vendor is already used in the majority of the organization, then there may be little resistance to a wider deployment. Many organizations have initially implemented multiple instances of a single ERP system are now considering instance consolidation. However, if there is no nominate provider, then a single-instance strategy will face resistance, because some users are likely to fight to retain their “much loved” locally implemented systems from “their” vendors. Technology Environment: Similar challenges may arise if there is no common technology environment and enterprise architecture in place.
A single- instance strategy requires the adoption of a specific technology environment (operating system, database, middleware and other IT infrastructure), and organizations that already have an enterprise architecture in place will find it easier to implement a single-instance approach. When the technology environment is defined at the business-unit level, local IT functions may resist moving away from their architecture to that which is required to support the single-instance strategy. Determining Who Drives the Initiative Often, instance consolidation initiatives are driven by the IT organization on the basis of simplification of the application landscape, and the IT technical and support infrastructure. Table 1 shows that five out of the seven success factors are within the business domain and entirely outside the control of the IT organization.
This underscores the point that instance installation projects should primarily be business-driven projects, with a business case solidly based on business benefits. Without understanding, sponsorship and commitment at the senior business management level, the project is doomed to fail. The IT organization plays a critical role in educating the business units, and planning and executing the project; however, it does not own the project. What to Do If the generalness outlawed ten success Factors organizations considering giggle-alliance ERP that find the challenges outweigh the success factors have other options: 1 . Consider a limited ERP vendor and infrastructure consolidation strategy, without moving to a single-instance consolidation.
This strategy will enable organizations to achieve some efficiency improvements in the IT organization by consolidating some of the operating and support infrastructure of the ERP systems. However, the strategy will not realize the full benefits of a single-instance system. This strategy may be suitable for organizations that are diversified and decentralized in nature, operate in a highly dynamic market environment and consider IT costs to be a significant factor. A common approach is to adopt vendor consolidation with some level of instance consolidation (for example, regional or divisional instances). 2. Adopt a tiered business application strategy (see “How to Approach Tiered Business Applications”), where specific applications are adopted to address the needs of decentralized business units.
Page 4 of 6 3. Address the organizational issues that are creating the challenges prior to implementing the single-instance strategy. There are two main actions that need to be taken to address these organizational issues: ; Involve business-unit executives in alluding and reviewing the business case to create buy-in. Develop a feasibility study that shows how business-unit requirements can be accommodated in a single- instance implementation, and build an instance strategy to support this. Consider getting business-unit executives to develop a business case to Justify why their business unit should not be included in a single-instance solution.
Get the executive management team to understand and accept how investing in a single-instance strategy can affect your merger and acquisition strategy. During their due diligence, organizations adopting a single-instance strategy must take account of how ERP systems are used by potential acquisition targets. Similarly, a single-instance strategy may limit downsizing options, because it will be difficult to divest parts of the business on an ongoing basis if they do not have their own business applications. If significant divestiture is likely, then a single-instance ERP project should be deferred until the business environment stabilizes. Key Issues How can more value be gained from an enterprise resource planning investment?
Note 1 Definition of Single Instance A single instance of an ERP system is when a single installation of the application is linked to a single database. This significantly sleepless support Ana malfeasance Decease tenure Is only one set AT application infrastructure to be maintained. This does not necessarily mean that all business units have to use the same business rules, because most ERP systems enable different entities within a single instance to have a degree of uniqueness. However, there will be constraints on the capability of the business units to define their own business rules (compared to separate instances for each business unit).

Categories
Strategy

Investment Analysis And Strategy

Introduction
Part A of this paper describes the reasons for selecting corporate bonds as opposed to other types of bonds. Part D defines the benchmarks for each portfolio to compare results at the end of the investment period.
Part A

Investing in bonds is one of the most challenging investment decisions that investors have to make. This is due to the wide variety of bonds that exist on the market in the financial services. This therefore gives the investor not only a wide range of choices but also one of which has many risks. Corporate bonds are good investment areas for financial institutions but also have inherent risks associated with them and the investor must evaluate this first before buying them (Choudhry, 2011, p. 57). In choosing the particular corporate bonds, we were guided by a number of factors. One of them is that the corporate bonds we selected have higher yields within a short time when compared to others like government bonds. Given the time period that we intend to invest in these bonds, the high risks which are always associated with high yielding bonds can be offset during the short period. We also needed a lump sum and dependable income that is steady and allows us to preserve our principal investment. All the corporate bonds we selected from financial institutions have higher rating which makes the safety of our investment guaranteed as seen through the likelihood of repayment of our principal investments and the expected annualized interest. Moreover, we chose corporate bonds as opposed to government bonds because of the diversification of sectors, the quality of credit, and the structure of bonds which are almost in tandem with our objectives for investments (Choudhry, 2004, p.33). The diversity of corporate bonds means that we have more options to choose the most dependable bonds that give better repayment of our principal investment of 20 million pounds while allowing us to market the bonds easily at the end of the one year period. Unlike the government bonds which require longer time to market, corporate bonds can be marketed easily because of their small size and the liquidity of corporate bonds in the market (Ramaswamy, 2004, p. 22).
Part D
A benchmark index is a standard which is used to evaluate the performance of a security performance or investment. Several benchmark indexes are used in the financial investments including the S&P 500, the Russell 2000 Index, and the Dow Jones Industrial Average among many other indexes. Benchmark indexes are important because they help the investor to track the performance of the bonds or stocks on selected markets. The selected benchmark index will assist us in evaluating each of our portfolios on the bond market by allowing us to track the changing values to indicate a stronger or weaker performance and thus enable us to measure our bond portfolios. Because of the variety of industries in which we have bought our bonds, we will have different benchmark indexes used in each of the industry to enable us to discern the broader performance of the market. Our result at the end of the investment period will be evaluated against the benchmark indexes set by the European Central Bank, the UK Central Bank, and the US Federal Bank. Occasionally, bond investors are supposed to choose a market index or a combination of market indexes which act as the portfolio benchmarks and helps in tracking the performance of the bonds in a given market segment (Maginn, Tuttle & McLeavey, 2010, p. 36). With our investment, there are different market segments ranging from finance to housing and will help in tracking the returns on a buy-and-hold basis. Moreover, our benchmark indexes does not attempt to determine the most attractive securities so that we are able to compare actively managed performance portfolio among the selected bonds.
Several factors may cause each of the portfolios to perform differently from the benchmark in what is known as tracking error. However, the tracking error is always positive and is equal to the annualized standard variance of monthly surplus returns (Fabozzi, Martellini & Priaulet, 2006, p. 45). The tracking error will help us to identify investment choices in the future in case we decide to invest in bonds after the period of one year. The benchmark indexes used in our portfolio management have sufficient securities for easier buying. The benchmarks we have selected for each portfolio to present an unambiguous and transparent approach, gives clear weights of securities constituted in the benchmark. It is also considered that the benchmark indexes have securities that can be purchased in the market or reflect the performance of the markets in that sector. We have also considered that the benchmark indexes selected are priced on a daily basis to allow comparison of our performance on a daily basis in the one year maturation period. Moreover, the availability of historical data relates to each of the benchmark index selected for the portfolio is important because it will help us at estimate the returns we anticipate from our investment. We also anticipate that the selected benchmark indexes have a low turnover so that it is not difficult for us to base the allocation of portfolios on the index whose composition changes frequently. More importantly are the frequent updates from the benchmark provider detailing the risk characteristics to enable the comparison of the active and passive benchmark risks facing the investment portfolios (Fabozzi, Martellini & Priaulet, 2006, p. 45).
In selecting each of the benchmark indexes for the portfolio we have evaluated the volatility tolerance and risks associated with one year investment bonds and thus all the benchmarks have high long-term returns and therefore present absolute returns for a shorter period of one year. We have also considered the liquidity of our portfolios and selected benchmark indexes with short duration while avoiding benchmarks with greater risks even with less liquidity and higher interest rates. The selected benchmarks meet the liquidity profile of our investment and thus serve as essential tools which will be useful during our investment period. Another consideration for selecting each of the benchmark has been the range and diversity of our securities and bonds. The benchmark indexes are wide enough to allow the contribution of the portfolio’s overall performance by actively managing the market forces which are likely to have negative impacts on the interest rates anticipated at the end of the year (Maginn, Tuttle & McLeavey, 2010, p. 56).
References
Choudhry, M. (2004).Corporate Bonds and Structured Financial Products. London: Butterworth-Heinemann.
Choudhry, M. (2011). Corporate Bond Markets: Instruments and Applications. Hoboken; John Wiley & Sons.
Fabozzi, F. J., Martellini, L. &Priaulet, P. (2006), Advanced Bond Portfolio Management: Best Practices in Modeling and Strategies. Hoboken; John Wiley & Sons.
Maginn, J. L., Tuttle, D. L. & McLeavey, D. W. (2010), Managing Investment Portfolios: A Dynamic Process. Hoboken: John Wiley & Sons
Ramaswamy, S. (2004), Managing Credit Risk in Corporate Bond Portfolios: A Practitioner’s Guide. Hoboken: John Wiley & Sons.

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Strategy

Essay On Promotional Strategy

Promotion is a very important part of doing business in tourism and recreation industries. It helps the customers get information that will influence them positively and encourage them to use the services. Promotion involves careful planning in order to achieve the company’s goals (Tapan 2007 p114). When coming up with a promotional strategy one need to know the different tools available for marketing. In food and beverage industry several methods of promoting their services and products can be used.
One of the promotional tools that can be used is advertising where an identified sponsor like radio, web pages, emails, print adverts, television and billboards can be used to make the customers aware of the available products and services. Sales promotion is another promotional tool which aims at persuading and helping potential customers to buy goods and services. This can be done though telephone, face to face with the customers, sales presentation and telemarketing it convinces people to buy products or services now instead paying higher prices in future.
Through public relations, a tourism industry can stimulate the customers to buy their services by giving a good presentation of the industry to the media. This can be achieved through magazine and newspaper articles, issue advertising, speeches radio and television and seminars. Another tool that can be used by the industry is improvement of corporate image. The industry should create a good image to the public so that they will be willing to buy the products and services. In order to come up with a good strategy the company should determine its targeted audiences.

Whether they are local or international customers, repeat or first time visitors, young or old and whether they are family members or singles. One should also identify their needs and what they rely on to get information about recreation and tourism opportunities. This is because different customers have different needs and their sources of information are different. These sources should be identified and then find the targeted customers and deliver the information direct to them.
In development of the promotional strategy, one should come up with objectives to show what one want to accomplish after promotion (Lear 2010, p 326). The objectives should state the targeted customers, the change that one want to accomplish after promoting and how much time the objectives will take to be accomplished. In order to come up with a good promotional message it is advisable to develop the content of the message. One can use informative message to tell people about the services and products offered in tourism industry without much concern about their response.
One can also use persuasive message to convince people to buy the goods or services. The other activity in development of a promotional strategy is choosing the right media. One should thoroughly understand the media used by the target customers since by using it the message will be delivered effectively. Evaluation should be done on the promotional strategy to determine whether it is meeting the aid down objectives. Product diversification strategy This can be done to increase the potential of the market.
It involves creation of new customer base which results to expansion of the existing products. It can be done through extension of brands or brands which are new (Tapan 2000 p114). The modification of the product may also result to creation of new market by coming up with new uses of the product. The food and beverage industry can modify its current products and services in order top come up with better new products which will result to attraction of new customers. Product diversification strategy helps in increasing competitiveness thus increasing the revenue income to the sector.
Product diversification can help a company obtain new customers for the products by improving the existing product image or reputation. This strategy requires differentiation of the product and accurate targeting to increase the sales and overall profits and at the same time to avoid ending your market. When implementing this strategy cost need to be kept at minimum as much as possible. Research should be conducted in order to find out what service or product alterations will appeal to the customers and at the same time the changes should not cost the industry huge sums of money (Edward 2000 p448).
These changes include changing the name of the product, slightly improving the product which will result to attraction of customers. Market expansion strategy In order for the tourism industry to overcome the market problems it should expand its market which will increase its profit obtained from new markets. The industry can create new segments in its existing market or can create business outside its existing market. The tourism industry can look for new customers from foreign countries.
In order for a company to achieve this it must be committed to providing the best services and products to the customers. Proper promotion methods must also be used in order for the foreign customers to get aware of the services and products provided. This can be done through the promotional mix like advertising and public relations. When implementing market diversification strategy, the company needs to change and adapt to the different cultures and policies from the foreign customers.
Changes may also occur in pricing structure, promotional strategy and also to the product or service itself (Lear 2010 p114). The industry should be very flexible to accommodate the foreigners who will be having different buying habits and culture. In order for country to earn profits and be competitive, the tourism industry can increase its market through segmented markets and customized holidays. Conclusion In conclusion, due to globalization food and beverage industry faces certain issues like change of customer preferences, change of market trends and even competition as explained in the article.
Due to these problems the industry should come up with marketing strategies which will help it survive in the market. The article gives these strategies which include product development strategy promotional strategy, product diversification strategy and market diversification strategy. With proper implementation of these strategies the industry will be in a position to attract more customers by meeting their needs satisfactorily and this will lead to increase in sales and the overall profits of the company. Reference: Alan F & Brian G 2005.
Tourism marketing: a collaborative approach. Channel View Publications, p219 Bernard D, Andrew L & Sally S 2008 Food and beverage management, Butterworth-Heinemann, p234 Edward L. 2000. Direct marketing: strategy, planning, execution, McGraw-Hill Professional, p448 Lea R. 2010. Food and Beverage Cost Control, John Wiley and Sons, p326 PNV Nair. 2010. food and beverage news. F&Bnews. com Retrieved from http://www. fnbnews. com/redfr. asp? fn=/other/aboutus. asp&title=About%20Us Tapan K. 2007. Tourism Marketing, ICFAI Books, p114

Categories
Strategy

Export Strategy Information Document

The aim of this assignment is to demonstrate knowledge of the information and data needed to formulate an export strategy. This will be achieved by way of addressing the following: 1. What is meant by the ‘business and market environment’ of a target market? What kind of information would an exporter need to collect? 2. What is meant by the concepts ‘market segmentation’ and distribution channels’? What kind of information would an exporter need to collect? 3. What are the financial issues, export practicalities and technicalities that an exporter would need to know about to in the context of developing an export strategy?
Business and market environment of a target market Exporting is a more difficult business task than importing (Weiss 2008). It is a challenge exacerbated by the global economic recession, remarkable growth and emerging economic might of China and India and the increasing pace of globalisation (Albaum and Duerr 2011). Although technological advances such as the Internet have made it possible for even the smallest businesses to sell their products and services around the world with relative ease (Albaum and Duerr 2011), there is still a need for a clearly thought out export strategy.
A nucleus of business activity, this master plan is like a satellite navigation system stating the destination of the business and the route it should take to get there. Weiss (2008) believes exporters need to know as much about target export markets as possible before any business transaction takes place. This information, he argues, should be based on a critical evaluation of the target market and tailored to the relevant product to be exported as part of a ‘market-entry plan including an initial marketing mix’ (Weiss 2008, p101).

What he is referring to is essentially a blueprint of the business and market environment of the target market. The importance of understanding the business and market environment of the target market, namely, the political, ‘legal, regulatory, financial and institutional systems’ are critical factors in determining success in the export sector (Commander and Svejnar 2011, p309). This can give crucial insights into the levels of corruption, number of regulations, taxation laws, business licensing and macroeconomic policies (Commander and Svejnar 2011).
Although target market studies tend to be product dependent, knowledge of local customers’ culture, hopes, language, predilection, buying capability, and the country’s international standards, state of development, infrastructure, transportation and environmental concerns are important considerations when formulating an export strategy. Furthermore, Commander and Svejnar (2011) stress the significance of indicators such as Gross Domestic Product (GDP), human capital and social factors such as health care expenditure and tertiary school enrolment.
The inference here is that a more highly educated workforce may perform better and reduced costs of any necessary training and healthier workers may take less sick leave. In ensuring that a full picture of the target market is obtained, Cadogan et al. (2012) argue that attention should be paid to data other than from the target market and there needs to be more flexibility in export market oriented behaviour. Kalafsky (2009) believes personal relationships can prove influential in some target markets. For example, ‘face-to-face contact is important in the Chinese market’ (Kalafsky 2009, p47).
In an adaptation of Porter’s (1979) Five Forces framework, it could be argued that exporters should take into account rivalry among competitors, threat of potential entry into target market, bargaining power of supplier, negotiating capability of buyers and threats of substitutes. Notwithstanding this, factors such as tariffs and non-tariff regulations, quotas, maturity of market, its structure and rival products are also of significance. In this way a heterogeneous range of perspectives of the business and market environment would give impetus to the export strategy. Market segmentation
Market segmentation is where companies establish ‘segments of demand’, ‘target specific segments’ and ‘develop specific marketing ‘mixes’ for each targeted market segment’ (Hunt and Arnett 2004, p7). According to McDonald and Dunbar (2010, p9) it is an ‘alternative to product differentiation’ – the ‘process of splitting customers, or potential customers, in a market into different groups, or segments’. A crucial factor in McDonald and Dunbar’s (2010) definition is the emphasis on customers, who they are argue, are no longer content to play a secondary role, but are more market savvy and experienced enough to specify exactly what they require.
Part of the reason for segmentation is that it can be used to divide large markets creating sectors that cater for geographic such as climate, area and location; demographic and socioeconomic like income, education, job, age, gender; family dimensions and house occupier status; behaviour relating to brand loyalty and psychographic in terms of attitude, lifestyle choices and values. Segmenting in such a way can ensure accurate and precise product and service placing. An important dimension of an export market strategy is to determine the segment of the market the company wishes to target.
In this way a company will ascertain the potential buyers of its products in the target market, reasons for buying, situatedness of customers and any salient features. Bloom (2005) has argued that ineffective segmentation may lead to strategic marketing opportunities being overlooked and a firm not benefiting from a tactical campaign. Factors such as the proportion of the segment and its profitability are, therefore, crucial features of a marketing plan. Distribution channels
How to operate distribution channels is of critical significance to the success or failure of an export business (Madsen, Moen and Hammervold 2012). This means making important judgements in utilising options such as the choice of foreign export firm to assume responsibility for the operation abroad. The locally recruited company would be charged with unearthing sales outlets, establishing its own export management, trading by way of local representatives, locating and using storage facilities and handle as decisions and setting up its own sales branch.
The level of responsibility assigned to a distributor or agent is dependent on the number of product rights an exporter holds (Madsen, Moen and Hammervold 2012). This may include marketing roles like pricing and delivery strategies, communication and locating customers. However, it is worth noting that overburdening a distributor with too many tasks could make them less effective. Such is the significant role of the distributor that it is essential that good relations are maintained (Zhang, Cavusgil and Roath 2003). ‘Relationships between exporting firms and other members of the international distribution channel
can significantly impede or enhance performance in export markets’ ( Matear, Gray, Irving 2000, p539). With the likelihood of long distances between exporter and their distribution channel trust between parties will be a central feature of this relationship. Financial issues Financial assistance for exporters and investors may be obtained through government schemes, credit export agencies or other financial institutions. According to UK Trade and Investments (2013), such assistance may be available through insurance policies and guarantees on bank loans.
This could also be in the form of bond support, overseas investment insurance, credit insurance and loan guarantees (UK Trade and Investment 2013). Notwithstanding this, due to high default risk and the required level of working capital associated with international trade export, businesses are more sensitive to financial shocks (Amiti and Weinstein 2011). Furthermore, exporters have a greater need for working-capital than those of domestic operating businesses, because of the longer time constraint experienced in international trade, especially when using the sea as the mode of transport (Amiti and Weinstein 2011).
The global economic downturn since 2008 has led to export finance being a main casualty of the European Bank retrenchment and having a high dependency on large amounts for long periods has led to limited financial institutions being able to offer monetary assistance (O’Connell 2012). This undoubtedly have had a significant impact on international business operations, limiting trade opportunities and progression. To increase a business’ prospect for successful exporting a systematic approach should be employed (Cavusgil, Knight and Riesenberger 2008).
The assessment of the potential markets (global market opportunity), organising for export, acquiring the necessary skills and competences and executing export strategies are of significant importance (Cavusgil, Knight and Riesenberger 2008). Export practicalities and technicalities A precise understanding of the practicalities for exporting is vital. When exporting within the European Union (EU), for example, these include commercial documents, duties, charging and accounting for VAT, responsibility for trade statistics, sales list and intrastat (Enterprise Europe Network 2013).
Even though there may be a slight differentiation when exporting outside the EU, there are necessary considerations such as new export system this permits exporters to make electronic declaration. Export licences is also vital. Johnson and Turner (2010) assert licensing reduces restrictions from the host countries regarding entering foreign markets. Further assistance and information on the practices and technicalities involved in exporting may be obtained from the market access database and International Commerce Terms (Incoterms) (Enterprise Enterprise Network, 2013).