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Final Exam Marketing

Hey Kitty Kitty is setting a promotional budget and the best method is objective-and-task as

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Ahmed Raeisi
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38 views7 pages

Final Exam Marketing

Hey Kitty Kitty is setting a promotional budget and the best method is objective-and-task as

Uploaded by

Ahmed Raeisi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1- Explain briefly The five effective segmentation criteria:

There are five segmentation criteria, and they are as follow:


1- Measurable: Means the size and the buying power of the segment can be
measured. Size of buyers big enough, do they have money
2- Substantial: means the segment is large and profitable
3- Accessible: means that the segment can be reached and served easily.
4- Differentiate: means that each segment responds differently to marketing
mix. (How react with marketing mix)
5- Actionable: if it is easy to formulate programs to attract and serve the
segments. (Can effective programs – promotion)

2- NicNaks is a specialty Jewellery Store that primarily sells necklaces and


rings. Recently the company decided to introduce a new ring that would
identify the wearer’s birth month. While most rings in the store range from
AED 250 – 450, the management has decided to sell the new ring at AED
645. After a few months they intend to reduce the price to AED 499.
Describe the pricing strategies implemented by NicNaks and briefly state
the conditions that have to be met for the strategy to work well.

Market skimming pricing is a strategy with high initial prices to skim revenue
layes from the market:
1- product quality and image must support the price
2- buyers must want the product at the price
3- costs of producing the product in small volume should not cancel the
advantage of higher prices
4- competitors should not be able to enter the market easily
3- Hey, Kitty Kitty is a leading pet food company in the UAE. The management
has decided to introduce a new flavor of cat food which is a combination of
tuna, chicken, and liver. The company is in the process of setting up a
promotional budget. Briefly explain the four methods Hey Kitty Kitty
company could use in setting a Promotional Budget. Which method would
you think will be more suitable for this company.

Same questions but the required is different

There are four common methods for setting the total promotion budgets:
 Affordable method. It completely ignores the role of promotion as an
investment and the immediate impact of promotion on sales volume. Some
companies set communication expenditures at a specified percentage of
current or anticipated sales or of the sales price.
 Percentage-of-sales method. sets the budget at a certain percentage of
current or forecasted sales or unit sales price.
 Easy to use and helps management think about the relationship
between promotion, selling price, and profit per unit.
 Wrongly views sales as the cause rather than the result of promotion.
 Competitive- parity method. sets the budget to match competitor outlays.
 Represents industry standards.
 Avoids promotion wars.
 Objective-and-task method. sets the budget based on what the firm wants
to accomplish with promotion and includes:
 Defining promotion objectives.
 Determining tasks must be performed to achieve the objectives.
 Estimating costs performing them.
In the above case, it is recommended that the company uses Objective and Task
method since:
1. They are launching a new product and thus, there is no competitive
benchmarking or historical records available on the budget.
2. Objective and task method allows them to fix the budget according to
marketing objective and also states all assumptions about the relationship
between budget, trial rates, usage rate etc.
4- Citi bikes is an initiative by Citi bank, One growth area in big cities is bike-
sharing programs that let members pick up and drop off rented bikes at
street-side stations. In New York City, Citibank struck a $41 million, six-year
deal to sponsor 10,000 cobalt-blue Citi Bikes at 600 stations across the city.
Riders pay a membership fee and a usage fee based on time. The program
has been widely successful; millions of rides were taken in the first year
alone. Observers noted that in New York’s sea of billboards and ads, Citi
Bikes cut through the visual clutter. They also improved consumer
perceptions of Citi as “innovative,” “socially responsible,” and “a company
for me.” With bike stations often located near retail bank branches, Citi also
employs experienced employees to talk to the riders regarding credit card
applications. Which promotional tool or tools are being used by the
company, do you think it is effective?

The above case is an example of Non-personal or mass communication channels


strategy. In this case, Citi Bank has leveraged the power of Events and Experiences
along with Marketing Public Relations to promote its products and brand. Events
and Experiences is a way to build hype around the product or brand without
traditional advertising or sales promotions. This can be used by designing events
and experiences that is picked by the media and consumers for discussion. Citi
Bank wanted to project itself as an innovative and socially conscious company and
its bikes were found effective by the public to avoid the road congestions,
environment-friendly and socially responsible. Besides public relations, they also
use personal selling as a promotion tool for generating revenues from its existing
credit card and other offerings. It is an effective strategy since:
1. It helped generate the required attention from media, consumers and
other stakeholders.
2. The bank was able to achieve the required publicity without paying as much
for the time or space as in advertising, sales promotions etc.
3. The Bank was successful in creating its image as a socially conscious and
innovative brand through the launch of Citi Bikes.
4. Since the bike stations were placed near its retail branches, it allowed them
to easily reach their potential customers through personal selling approach
for products such as credit cards.
5- Profits for discount European air carrier Ryanair have been high thanks to its revolutionary
business model. The secret? Founder Michael O'Leary thinks like a retailer, charging passengers
for almost everything-except their seat. A quarter of Ryanair's seats are free, and O'Leary wants
to double that within five years, with the ultimate goal of making all seats free. Passengers
currently pay only taxes and fees of about $10 to $24, with an average one-way fare of roughly
$59. Everything else is extra: checked luggage ($9.99 per bag) Flight attendants sell a variety of
merchandise, including digital cameras ($149) and MP3 players ($169). Consumers also have
the option of booking flight tickets and hotel accommodation together at one price.
Which pricing method is Ryan air following, do you agree with this, why or why not? Identify
and briefly explain the pricing strategies followed by Ryan Air?
Pricing method
In this case, Ryanair is following a customer values-based pricing method. It is a
method of pricing that involves identifying the value customers place on the
benefits they receive from a product and setting the price accordingly. Ryanair
has used this method of pricing in conjunction with value pricing approach and its
strategy of being a discount carrier such that the company reengineered its entire
operations to become a low-cost producer without sacrificing quality to attract a
large number of customers.
I agree with this method of pricing as it is a type of “less-for-less” pricing that
allows the airline to be a cost leader in the industry. This pricing technique has
allowed the company to be highly profitable as compared to its competitors. It
has also helped it segment the customers who may want cheaper tickets instead
of leisure or comfort as offered by other airlines. By unbundling various aspects of
the travel process, it has created a perception of being a value-airline where
customer pays for only what is required by him.
Pricing strategies
In terms of pricing strategies, the company has adopted the following strategies:
1) Market penetration pricing: The discount carrier has set low prices to
capture the maximum market than setting higher prices for its seats.
2) Product bundle pricing: The company has also adopted a bundling
approach for some of its offering such as flight tickets and hotel
accommodation. In this strategy, the company prices a bundle of products
together. This is done to promote the sales of products that may not sell
otherwise.
3) Optional-product pricing: By unbundling several aspects of the entire flight
experience such as luggage, in-flight dining, web check-in etc., the company
is also following an optimal product pricing where the base ticket price has
been kept zero for most seats. These are optional products as customers
may chose not to carry luggage or check in through the web to save time.
True and False questions, Provide one or two-sentence Justification.

1. A product is anything that can be offered to a market for attention, acquisition,


use, or consumption and that might not satisfy a want or need.
FALSE. A product is anything that can satisfy the wants or needs of the consumer
and that can be offered to a market for attention, acquisition, or use.

2. When Markets can be segmented into groups of nonusers, ex-users, potential


users, first-time users, and regular users of a product. This method of
segmentation is called Usage rate
False. This is an example of segmenting the consumers by User Status under
Behavioural segmentation. Usage status segments consumers based on the
frequency and magnitude of usage such as light, medium and heavy users.

3. A product line contains many product mixes


False, A product mix contains various product lines. A product mix is the set of all
products that a seller offers for sale whereas a product line contains a group of
products with similar functions.

4. A heavily promoted brand of flu medicine sells for much more than a virtually
identical store-branded product. Critics would likely charge that promotion for the
branded flu medicine adds only to the Psychological than functional value.
TRUE, Promoting a brand excessively may create a favorable perception in the
customer’s mind and thus, create psychological value. It has nothing do with
functional value since the basic function of the product remains unchanged.

5. Promotion is communication with the customers


True, Promotion is used to communicate with customers with respect to product
offerings.
6. If Tide came in two scents (Clean Breeze and Regular), two formulations (liquid
and powder), and with two additives (with or without bleach), it would have a
depth of eight because there are eight distinct variants
True, Product depth refers to the number of variants that are offered for each
product in the line. In this case, it is eight as eight different variants of a product
are offered.

7. Upstream from the manufacturer or service provider is the set of firms that
supply the raw materials, components, parts, information, finances, and expertise
needed to create a product or service.
TRUE, A supply chain consist of the upstream and downstream partners where
upstream partners are the suppliers of raw materials, components, information,
finances and expertise to the manufacturer.

8. The length of a product mix refers to the total number of items in the mix
True, Product length is the total number of items in the mix. For example, a
company that has 5 product lines and 4 products each under these product lines
the length of mix is 20.

9. P&G’s product lines are inconsistent in that they are consumer goods that go
through the same distribution channels
FALSE, Consistency of product mix refers to how closely product lines are related
in terms of end use, production, distribution channels etc. In this case, P&G’s
product lines are consistent as their consumer goods go through the same
distribution channel. They are less consistent in the functions they perform for
the buyers.

10. The third level of a product that product planners must consider is the actual
product that offers additional consumer services and benefits
False, Actual product is the second layer which means the features that the
customers expect that the product will have.

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