marketing management

MKT202_JAN_2019_ExamPaper.pdf

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MKT202

Examination – January Semester 2019

Marketing Management

Wednesday, 22 May 2019 10:00 am – 12:00 pm ____________________________________________________________________________________

Time allowed: 2 hours ____________________________________________________________________________________

INSTRUCTIONS TO STUDENTS:

1. This examination contains THREE (3) questions and comprises SIX (6) printed pages (including cover page).

2. You must answer ALL questions.

3. All answers must be written in the answer book.

4. This is a closed-book examination.

At the end of the examination

Please ensure that you have written your examination number on each answer book

used.

Failure to do so will mean that your work cannot be identified.

If you have used more than one answer book, please tie them together with the string

provided.

THE UNIVERSITY RESERVES THE RIGHT NOT TO MARK YOUR

SCRIPT IF YOU FAIL TO FOLLOW THESE INSTRUCTIONS.

You must answer ALL the questions. (Total 100 marks)

Question 1

In 2016, Alibaba acquired control of Lazada with an investment of US$1 billion, and

boosted its stake to 83 per cent in 2017 with an additional investment of US$1 billion.

Ms Peng, a senior partner at Alibaba and executive chairman at payments affiliate Ant

Financial, said that South-east Asia is a hot spot for growth and exciting opportunities.

"With a young population, high mobile penetration and just 3 per cent of the region's

retail sales currently conducted online, we feel very confident to double down on

South-east Asia. "Lazada is well-positioned for the next phase of development and of

Internet-enabled commerce in this region," Ms Peng said.

Lazada founder Max Bittner, who has served as CEO since 2012, will take on the role

of senior adviser to Alibaba to "assist in the transition and future international growth

strategy". Lazada, founded in 2012 and incubated by Berlin-based Rocket Internet, is

also backed by Temasek Holdings and Tesco.

Maybank Kim Eng senior economist Chua Hak Bin said that Alibaba's big investment

suggests that South-east Asia is becoming the next battleground for global technology

giants. He noted that while the region's consumers will benefit from greater price

competition and choice, traditional retail players will face an even greater risk of

disruption and displacement.

"Many local bricks-and-mortar retail names do not have the deep wallets or tech know-

how to compete. "Local players will have to find their niche and partner the global tech

titans to survive the coming onslaught," he said.

Mr Paul Coutts, CEO of Singapore Post, which is backed by Alibaba, said that any

investment of a significant magnitude will accelerate the growth of e-commerce in

Singapore and the region.

"We continue to focus on initiatives that unlock the full potential of the e-commerce

market that these investments create, to advance SingPost's transformation into a

leading postal and e-commerce logistics company," he said.

Adapted for academic purposes from an article published on March 20, 2018, with

the headline 'Alibaba doubles Lazada investment to $5.3b in The Straits Times.

(a) Describe the role of marketing channels in the context of e-commerce platform Lazada.

(9 marks)

(b) Many fast-moving consumer goods conglomerates such as Kao Corporation (Toiletries and Skincare) have already set up an official store on Lazada.

However, many luxury brands such as Chanel beauty products are hesitant to do

so. Discuss the considerations that are essential to the design and selection of

marketing channels using Kao Corporation and Chanel beauty products as

examples.

(15 marks)

(c) Firms that decide to tap into global markets have to determine the best mode of entry. Briefly explain the various mode of entry for global marketing. Based on

the case, discuss Alibaba’s choice of mode of entry as it becomes increasingly

committed to global markets.

(16 marks)

Read the following case and answer Question 2 & 3.

Huawei Technologies Co. Ltd. (hereafter Huawei) is a leading global

telecommunications solutions provider. Founded in 1987 by Mr. Ren Zhengfei, Huawei

has transformed from a one-room workshop in Shenzhen, China to the world’s largest

information and communications technology (ICT) solutions and services provider with

capabilities across carrier networks, enterprise, and consumer fields.

With a vision “To enrich life through communication,” Huawei has earned a reputation

as one of the most dynamic, fastest growing, innovative multinational technology

companies.

At the beginning, Huawei picked up basic technology by reverse engineering foreign

products and used that as the foundation to develop more complex technologies. As the

Chinese government started to notice Huawei’s achievements, government support

began to play a much larger role in the growth of Huawei.

Huawei gained lots of publicity through high profile visits of government officials and

won large contracts on domestic telecommunication infrastructure development like the

national railway system, in which their technologies were used to develop

communication solutions. Huawei’s technology enabled them to provide top notch

telecommunication switches and mobile communication solutions for the railway

system.

Financial resources, such as loans, were also made more available. Later, Huawei put

strong emphasis on in-house research & development (R&D). With strong in-house

R&D and aggressive undercutting of prices, Huawei has expanded quickly over the

years and its products and solutions have been deployed in over 140 countries, serving

more than one third of the world's population.

In 2014, Huawei recorded profits of 5.5 billion USD (Huawei Financial Results, 2014).

It serves around 80 percent of the world’s largest telecoms operators with BT,

Vodafone, Orange, and T-Mobile among its notable partners. Huawei is the only

Chinese company that received higher revenue from markets outside China (67%) than

from the domestic market.

In 2015, Huawei has around 170,000 staff globally (De Cremer & Tao, 2015), with 22

regional offices and over 100 subsidiaries around the world. Today, the three main

categories that Huawei offers are operators (carrier networks), enterprises and

consumers’ products/services.

Its first segment - carrier network segment includes a wide range of wireless networks,

fixed networks, telecom software and core networks, as well as services solutions to

telecommunications operators.

The second segment, enterprise business segment, is engaged in developing and

manufacturing ICT products and solutions including enterprise network infrastructure,

cloud-based data centers, enterprise information security, and unified communication

and collaboration solutions for government entities, public utilities, energy, power,

transportation, finance and other industries.

Lastly, the consumer business segment develops and manufactures mobile broadband

devices, home devices, tablets, and smartphones, as well as the applications for these

devices (Marketline, 2013).

Since 2012, Huawei started to invest heavily in the consumer market, rolling out

mobile devices to compete with the dominant players like Apple and Samsung. As of

2015, Huawei’s mobile phone market has seen rapid growth, and worldwide exposure

has since been achieved.

Despite its growth, Huawei is facing a number of issues. Firstly, Huawei is still

frequently perceived as low-quality Chinese products, due to its country-of-origin and

aggressive pricing strategies.

Secondly, Huawei’s aggressive low-price approach has directly resulted in eroding

profit margins in some markets.

Thirdly, Huawei’s technology development has also been controversial and the

company is constantly being accused over the theft of intellectual properties.

Lastly, because of historical links to the People’s Liberation Army (PLA) and the

Chinese government, Huawei has not been able to successfully convince certain

segments of the western countries that as a trustworthy multinational technological

firm, Huawei is purely interested in business growth and market share.

In 2014, Huawei’s smartphone business group was the fastest growing of its three main

business groups, with sales expanding 32% for that year. Huawei remains the largest

and most prestigious local smartphone brand within China. However, outside its native

country, the Huawei brand faces the challenge of building brand awareness among

individual consumers.

One reason is that Huawei was a network infrastructure and business-to-business

telecommunication solution supplier rather than consumer-focused mobile device

supplier in the past. There has been some recent progress, as its awareness grew to 52%

globally in 2013, up from 25% in 2012, according to the company (Kim, 2015).

However, its brand awareness comes mainly from the domestic market; thus Huawei

still remains little known to consumers in other parts of the world. Huawei has a long

way to go to boost its international brand familiarity.

Huawei's rise is an indication that growth in the mobile-phone industry is coming

mainly from emerging markets where consumers are in the process of replacing basic

feature phones with smartphones.

While China's increasingly saturated smartphone market is showing signs of slowing

growth, Huawei is expanding rapidly to Africa, the Middle East and Latin America

(Osawa & Kim, 2014). Huawei is prepared to use pricing as a way of building share in

its major markets. It has also made substantial progress in design and quality, but its

future remains uncertain as to whether international consumers will accept a product

from an almost unknown name in preference to established brands.

Source: Guan Chong (2016) Huawei - Chinese Telecommunications Giant Huawei:

Strategies to Success, Nanyang Technopreneurship Case Centre (NTCC). Retrieved

from http://www.ntc.ntu.edu.sg/ntcc/Documents/Full%20Version/13.%20HUAWEI%

20-%20CHINESE%20TELECOMMUNICATIONS%20GIANT%20HUAWEI%20S

TRATEGIES%20TO%20SUCCESS.pdf

Question 2

(a) Apply product life cycle (PLC) model to the smartphone market. Describe how the marketing mix changes at different stages of the PLC. Identify the current

stage that smartphone business is in. Recommend actions that Huawei should

take to succeed at this stage of PLC.

(20 marks)

(b) Identify and describe the macro environmental forces that may influence an organisation's decision making, and affect its performance and strategies. Based

on the case, identify the most dominant macro-environment force that impacts

Huawei and provide justifications. Based on your analysis on the macro

environmental force, discuss how Huawei should respond to the environmental

force.

(10 marks)

Question 3

(a) ‘Segmentation is at the heart of marketing strategy’. Examine the importance of market segmentation in the context of Huawei.

(6 marks)

(b) Suggest four (4) potential market segmentation variables to Huawei [two (2) for consumer markets and two (2) for organisational markets] and discuss how

these variables may be applied to segment the market.

(14 marks)

(10 marks)

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