MK187: Principles of Marketing
Outline Solutions: May/June 2014
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Question 1 a) What is “behavioural segmentation”? Explain using examples from the product category
“soup”.
(10 marks)
ANSWER: Student explains the segmentation based on consumer behaviour and how a product such as soup can be packaged/prices/distributed in many different shapes and forms depending on the use of the product by the end-consumer. b) What is the “anatomy of the product”? Explain using the example of a can of Campbell’s
Chicken soup.
(10 marks)
ANSWER: Student explains the anatomy of the product, describing each level (core, tangible, augmented and potential product) and applies it to the example of a can of soup. c) What is the difference between a “manufacturer brand” and a “retailer brand”? Explain using the example of soup.
(5 marks)
ANSWER: Students explains that retailers may put their own brand on products as compared to manufacturers in charge of an original product brand. An example of a soup manufacturer brand and a retail brand is given.
Question 2 a) Draw the “Product Life Cycle”, naming each stage and explaining how the PLC is used in managerial decision making.
(10 marks)
ANSWER: Student draw the PLC, name each stage and explain how this conceptual model can be used to discuss the life of a product and help when making decisions regarding the direction of investment and overall portfolio management. b) Draw the BCG matrix, naming each quadrant and explaining how the BCG matrix can be used when making portfolio management decisions.
ANSWER: Student draws the five-forces model and correctly names each force. No further explanation required.
(10 marks)
ANSWER: Students draws the BCG matrix, and correctly names each quadrant and both axes. The different positions in the matrix are explained in relation to portfolio management decisions regarding strategic investment and deletion of products. c) Draw Porter’s five-forces model. You must name each force but no further explanation is needed.
(5 marks)
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MK187: Principles of Marketing (MS)
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Question 3 a) What is “price elasticity”? Why is this such an important concept for the marketeer?
(10 marks)
ANSWER: Student explains the concept of price elasticity. From a marketing perspective it is important to know what volume changes can be expected in terms of demand at certain levels of pricing. Furthermore the profit implications of price elasticity within the supply and distribution chain need to be understood. b) Explain the 7P model and discuss in which circumstances the 7P model is more useful than the 4P model.
(10 marks)
ANSWER: Student explains how the 7P model is an improvement on the 4P model in the field of services marketing. The 4P model does not take into account the variable nature of services and the importance of people and processes in the delivery of services as compared to physical products. c) What are the five elements of the “promotion mix”? Each element must be named but no further explanation is needed.
(5 marks)
ANSWER: Student names the five elements; direct marketing, sales promotion, advertising, personal selling, and public relations.
Question 4 a) Apart from sales promotion, what is the main purpose of loyalty schemes like the “Nectar card” or “Tesco card” program? Explain using the example of a supermarket chain.
(10 marks)
ANSWER: Student discusses the data the supermarkets can collect about consumer behaviour. When people buy what at which prices can give great insight into shopper behaviour and can help improve the shopping experience and optimise profit levels b) What are the advantages and disadvantages of using celebrities in advertising campaigns?
Discuss using a real-world example.
(10 marks)
ANSWER: Student discusses the product awareness and desire a celebrity can create around the brand that a celebrity is seen with. Consumers want to emulate the celebrity and benefit from the positive association that exists between the brand and the personal characteristics of the endorser. Endorsement can be dangerous when the celebrity shows behaviour which conflicts with the desired brand image. An example is given. c) Draw the Ansoff matrix. Name all axes and quadrants. No further information is needed.
(5 marks)
ANSWER: Student draws the Ansoff matrix with correct axes and quadrant names. No further explanation is needed.
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MK187: Principles of Marketing (MS)
(May/June 14)

Question 5 a) Name the three “generic strategies” proposed by Michael Porter. For each strategy explain what it entails and give an example of a company using this particular strategy.
(10 marks)
ANSWER: Student explains the Cost Leadership, Differentiation and Focus strategies and for each gives a relevant example. b) What is a “market penetration”? Provide a formula to calculate market penetration and explain how it is used as a marketing metric (what does it measure)?
(10 marks)
ANSWER:Student provides the formula (current market demand / potential market demand)*100 and explains that market penetration is an indication of how much of a potential market is covered with the current offering, and how much more potential demand there is if we are willing to change the current marketing mix to attract those extra sales. c) What is the “AIDA” model? Explain what each letter stands for and how this model can be used when constructing a promotion campaign.
(5 marks)
ANSWER: Student mentions Awareness, Interest, Desire, Action and explains that for the early stages advertisting is very useful (creating awareness and interest) whereas later stages towards the action stage are better served by sales promotion and personal selling for instance.
Question 6 a) Compare the “PEST” and “STEEPLE” models and explain how the extra elements in the
STEEPLE model are already integrated in the PEST model.
(10 marks)
ANSWER: Student explains how the Legal, Ecological and Ethical elements of STEEPLE can be categorised under the Political, Technological and Socio-Cultural headings of the original PEST model. b) Provide a PEST analysis for the company Apple, giving at least two relevant elements for each P,E,S and T environment. Give a short explanation of each of your choices.
(10 marks)
ANSWER: Student provides a PEST analysis, with clear explanations as to why the two elements chose in each environment are relevant to the company Apple. c) Give three reasons why “Apple” would actually have been considered an INSANELY BAD brandname to put on a new company/product if you had asked a marketing expert 40 years ago. Explain your reasoning.
(5 marks)
ANSWER: Student explains that “apple” is very generic word. It doesn’t convey what the product does. It doesn’t have a clear “personality”. It would be difficult to protect against others using the same brand in different markets. It’s not spelled similarly in foreign language markets such as France or Germany. It was already used as the record label for the Beatles.
Etcetera.
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MK187: Principles of Marketing (MS)
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