Marketing Management

BEM3041

UNIVERSITY OF EXETER

BUSINESS SCHOOL

May 2019

MARKETING MANAGEMENT AND STRATEGY

Module Convenor: Professor Philip Stern

Duration: ONE AND A HALF HOURS

Answer TWO questions.

All questions are worth equal marks.

Approved calculators are permitted.

This is a closed note paper.

PLEASE TURN THE PAGE 2

Q1 Part 1. (20 marks)

Explain why a product (or service) contribution (selling price minus variable cost) is an important element in developing marketing strategy.

Q1 Part 2. (30 marks)

How do competitors in the coffee market (such as Nestle) incorporate contribution in their marketing strategies?

Q1 Part 3. (30 marks)

Philippa Bow the marketing manager for the skincare category of a consumer goods company is considering launching a new brand into the market. Her assistant John has completed some background work and presented Philippa with two options from which to choose (the company only had the capacity to launch one new brand):

A. Launch “Pureskin” a brand focussing on natural ingredients B. Launch “Cleansit” a brand focussing on superior results

Philippa had a great deal of experience in launching new brands. She felt confident that there was a 20% chance that the launch would do quite well, and a 80% chance that it would be a great success, irrespective of which brand she chose to go with, but of course she couldn’t be certain.

If Pureskin was launched and it only went ‘quite well’, then Pureskin would generate a contribution of £150,000. If the Pureskin launch was a ‘great success’ then Pureskin would generate £400,000.

If Cleansit was launched and it went ‘quite well’, then this would result in £40,000 contribution. If the Cleansit launch was a ‘great success,’ it would generate £500,000 in contribution.

Which brand should Philippa launch? Explain your answer using the information provided.

Q1 Part 4. (20 marks)

John contacted a company which specialised in test marketing new brands. He was told that for a fee of £20,000 they could conduct a test to see which of the two brands (Cleansit and Pureskin) would be preferred by consumers, to remove any doubts about which brand to launch. John asked Philippa if he should go ahead with the test market. How should Philippa respond to John?

--------

PLEASE TURN THE PAGE 3

Q2 Part 1. (50 marks)

Provide a definition of Market Research and state the three key reasons for conducting a Market Research Study. Give practical examples of each of the three reasons.

Q2 Part 2. (50 marks)

Describe the market research process, and explain how useful it was in the context of the “Smooth as Silk” case study, which was discussed during the module.

-------

Q3.

The table below shows an extract of data for one company in the Strategist simulation. Each time that cumulative production doubles, the unit cost falls by just over 7.8%. This means that by the time 5,000 units have been produced, the variable cost per unit is £871. Furthermore, when cumulative production reaches 10,000 units, the cost has fallen to £803 per unit.

P1 P2 P3 P4 P5 P6 P7 Production (units) 5000 5000 10000 20000 10000 10000 20000 Investment in cost reduction (£000) 0 500 500 480 0 0 0 Unit sales 5000 5000 10000 17786 17863 14351 15000 Cost of goods sold (£ 000) 4355 3975 7300 11561 10718 8180 8250

Q3 Part 1. (10 marks)

Calculate the variable cost per unit for each period.

Q3 Part 2. (30 marks)

Estimate the unit cost that would be expected from the benefits of the experience curve in period 4 and also period 7.

Q3 Part 3. (30 marks)

Show whether the investment made in cost reduction provided a positive return for the company in this example.

Q3 Part 4. (30 marks)

Explain three problems associated with pursuing a marketing strategy based solely on the experience curve.

-------

PLEASE TURN THE PAGE 4

Q4 Part 1. (50 marks)

Describe the way in which the model developed by the Boston Consulting Group could be used to evaluate the portfolio of a business with multiple brands or business units.

Q4 Part 2. (50 marks)

Describe the implications of using such a model, along with any limitations you consider to be important.

-------

Q5 Part 1. (50 marks) What are the benefits and limitations of using competitive interactive simulation such as “Strategist” within a module such as BEM3041?

Q5 Part 2. (50 marks) Describe your own key learnings about marketing strategy, derived from your participation in the simulation.

-------

Q6 Part 1. (50 marks)

Explain why branding is important.

Q6 Part 2. (50 marks)

Analyse a brand of your choice, showing how it differs from a close competitor. You should use a model such as the brand building blocks or other similar model to inform your analysis.

-------

Q7 (100 marks).

Developing brand loyalty among customers is a key objective of many marketing organisations today. In the context of a manufacturer and marketer of breakfast cereals, explain to what extent you think this objective is appropriate.

-------

PLEASE TURN THE PAGE 5

Q8

When examining the patterns of buyer behaviour associated with frequently purchased brands, one pattern termed “Double Jeopardy” is usually found.

Q8 Part 1. (50 marks)

Explain what is meant by “Double Jeopardy” in this context.

Q8 Part 2. (50 marks)

What are the implications of “Double Jeopardy” in attempting to launch a new niche brand designed to appeal exclusively to a small segment of the market?

-------

END OF EXAM