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Section A – Cases
I) Argos: Creating Customer Value amid Change and Turbulence

One of the biggest news items in the UK retail sector recently was the £1.4 billion acquisition in
September 2016, of Home Retail Group, the parent company of Argos, by Sainsbury’s, one of the leading
British supermarkets. Unsurprisingly, the highlights of this business decision are the huge sum involved
and the associated risk in the complex marketing environment. So why was this considered a good
decision, especially after the British referendum in favor of leaving the European Union (EU) and the
uncertainty in the business environment that follows? The key answers to these questions are not hard
to find. The deal makers can see the gold in the track record of the organization. Argos, the leading UK
digital retailer, was established in July 1973 as the United Kingdom’s first catalog retailer with only 17
stores; it now has over 750 stores throughout the United Kingdom and the Republic of Ireland, serving
over 130 million customers annually. Approximately one-third of the UK population shops in an Argos
store annually, buying one thing or another. Even before the agreement on the takeover deal, 10 Argos
outlets that opened in Sainsbury’s stores already had a record 30 percent sales increase, and the
takeover is expected to result
in annual savings of £160 million. As part of its attempts to create value for its customers, Argos has
undergone remarkable changes in the 21st century. The design makeover has turned the tatty faux-
wooden floorboards and display cabinets into tiled floors and LED display boards for easy shopping. It is
thus not surprising that Argos was valued so highly by Sainsbury’s. Ultimately, the plan is to have an
Argos center at every Sainsbury’s branch to ensure convenience in shopping for customers. While the in-
stores catalogs are still in use at Argos stores, the centers have been radically transformed into hi-tech
outlets and “digital” stores. The idea behind all these changes is that the customers of today are more
informed and deserve the best. Argos’s approach is to ensure that value creation
for customers permeates every phase of the organization’s activities.

Catalog Retailing
Although Argos is noted for a number of things in the British retail sector, its core hallmark is its
consistent focus on the satisfaction of the needs and wants of its target customers. This is not only
ensured through the thousands of products that it offers its customers both online and across its various
stores in the country, but also in all the phases that encapsulate the customers’ experience in their
transactions, from placing the order to receiving the items. Argos’s focus on catalog retailing is based on
its quest to satisfy customers through convenience. The idea is to make it easier for customers to meet
their needs, especially as the company deals in a variety of products. The shopper checks the catalog,
places the order, and receives it shortly afterwards. So, its twice-yearly catalog and internet site aid the
way the establishment creates value for its customers.

Market Offerings
The assortment of products offered by Argos to its various customers across the country illustrates the
core value that it offers its target market. The organization is noted for offering a wide range of products
that are categorized on its websites to make shopping easy for its online visitors. For example,
customers who are interested in products such as TVs, telephones, or computers would simply need to
click on the “Technology” link to be ushered
into the world of these gadgets. Similarly, there are categories for “Home and Garden,” “Sports and
Leisure,” “Clothing,” “Health and Beauty,” “Toys,” and many more. One critic noted that Argos’s focus is
on being a “working
class” brand, implying that their customers are mainly less well-off. However, former CEO John Walden
disagrees with this customer stereotype and insists that while this may have been true five years earlier,
things have now changed at Argos; the company now targets all demographics. Beyond the rhetoric of
who their customers actually are is the issue of keeping those customers satisfied with seasoned
products and excellent customer service. This has been strategically identified by John Rogers, the new
CEO of Argos, as the cornerstone of his approach in marketing after taking over the job. The core
objective is to ensure not only that the customers are encouraged to shop at Argos but that they are
motivated to stay loyal even when the competition tries to entice them. For example, Tesco has a strong
plan in place to price-match best-selling toys by the end of this year. This is clearly in direct competition
with Argos. The retailer’s mainstay is the continuous effort to clearly outperform competitors like Tesco
and Amazon in meeting customers’ needs and addressing their concerns.

Same-Day Delivery
As the retail environment in the United Kingdom becomes more competitive, Argos also continues to
explore various means of maintaining and improving its market share. To this end, the management has
set a long-term goal of having 250 Argos collection points that will be located within Sainsbury’s to
ensure that customers get their ordered items more quickly than before the acquisition of the firm—
which, according to Mike Coupe, the CEO of Sainsbury’s, was meant to give customers more choice in
their purchasing decisions and make life easier for them. In 2015, Argos introduced a striking and daring
policy—its “Same-Day Delivery” service. As the name suggests, a customer
could now order the desired products and get them immediately in the store or delivered at home on
the same day through a “fast tracked” option. This quickly became a very popular strategy and was
considered a good gesture among the customers. It not only reinforced loyalty among the organization’s
current clientele but
also wooed others keen on efficiency in the marketplace. As the company experienced increase in
demand, it also realized that this would require a commensurate increase in resources, hence the recent
increase in its delivery vans to about 800 and the 30,000 people employed in different areas of the
organization, including customer service, packaging, and order delivery, across its 845 stores. In the run
up to Christmas sales in 2016, Argos reportedly hired several additional seasonal staff, adding to the
current number.

Digital Retailing
Developments in the world of technology are transforming businesses in various sectors, and retailing is
no exception. Based on data from the food and grocery research charity IGD, 5 percent of grocery sales
in the United Kingdom are done online. This small figure is due to a variety of challenges associated with
this transaction mode, but this is very likely to improve over time. As a key organization in the retail
sector in the digital age, Argos is also working toward transforming itself into a “click and collect”
business. Toward the end of 2012, Argos announced its mission to rediscover itself as a digital retail
leader. John Coombe, the chairman of Home Retail, Argos’s parent organization, remarked that Argos is
not only an icon of the British high street but also a leading player in the digital transformation of UK
retailing business. In June 2016, a report indicated that Argos’s Internet sales had gone up by 16
percent, the strongest record in three years. Around the time Argos was being sold to Sainsbury’s, John
Walden debunked the view that being digital would be like operating a traditional retailing outfit with
just one store. According to him, it would still involve hiring people, bringing stock in, expanding, and
upgrading. Around 60 percent of Argos’s sales are now done as online transactions, which is also closely
linked to the fact that the organization is the first retailer in the United Kingdom to make over £1 billion
through mobile payments. Its hefty catalogs are being replaced by iPad-style terminals to facilitate order
processing. All of this has helped Argos make a seamless entry into the digital world in retail business.

Special Offers
Argos’ commitment to delighting its customers is not only evident in the increasing range of products it
offers its customers and the sleek distribution system, but also in the various promotional programs it
offers. Some of these are offered to existing loyal customers through the Argos loyalty card scheme
while others are to attract new customers. Periodically, it sends its customers various promotional
offers, money-off vouchers, and other financing offers. When Black Friday hit the UK high street and its
public awareness grew, Argos was quick to explore the opportunity
through various special price-cut offers that also attracted a response from many new and existing
customers. About 12 million customers reportedly visited the company’s website on the 2015 Black
Friday, resulting in 18 purchases in a second. The expectation for 2016 is that around 38 percent more
sales than what was recorded for the previous year will have been made. John Rogers also estimates
that at least 70 percent of its orders will be taken online on Black Friday while normal trading will
account for 50 percent. The Argos gift voucher promotions, which are managed by the company’s
affiliates, offer its customers something to fall back on during their various subsequent purchases. The
periodic product-specific special offers on certain products like furniture, computers, and TVs also
constitute part
of the package that keeps Argos’ stores busy over the years, and with this, it generates customer value
profitably.

Argos and Society

It is tempting to conclude that Argos’s focus on maximizing customer value is predominantly driven by
profit. However, evidence suggests that the company does believe in taking responsibility for the
environment, improving the local communities, and pursing a number of initiatives that revolve around
long-run benefits for customers and society. Argos is focused on reducing the amount of resources used
in its operations and the CO2 (carbon dioxide) emissions it produces. It clearly communicates its green
credentials on its web pages. Apart from its catalog, which is 100 percent recyclable, it sources the paper
it uses from sustainably managed forests and encourages customers to recycle old catalogs in their
possession as these have proven useful to newspaper print manufacturers. According to the firm, it has
already been able to recycle 91 percent of waste from the business, had a 9 percent reduction in its
carbon footprint, ensured a 35 percent reduction in the waste sent to landfill, and has established a goal
to reduce its CO2 emission per square foot by 40 percent by the year 2020. Argos’s impacts in the local
community are also notable: it supports various charities and other related organizations, and it
specifically chose Macmillan Cancer Support as its charity of the year from 2015 to 2017. Argos has
shown that it is quite possible to create value for customers and still build relationships with
stakeholders.

Questions
 1- To what extent do you think the acquisition of Argos by Sainsbury’s resulted in delivering
superior value to customers? (1 mark, 40 words)
ans-it is offering superior value to customers by identifying their need of products at one place
with their wide range of products, they can now shop in convenience as they are getting one
stop shopping, also it is providing speedy delivery with their sleek distribution system on the
same day to the delight of customers. Also the convenience it provides from placing an order to
receving it is how it creates value.
2- Highlight two ways through which concept of share of customer illustrated in the case study?
(1.5 marks, 50 words)
Ans. Loyalty of customers was important for Argos, it launches loyalty card scheme for that to
reward true friends and attract butterflies
It also helped in taking responsibility for the environment, improving the local communities, and
pursing a number of initiatives that revolve around long-run benefits for customers and society.
Hence it provided a share to the customer in its profit.
3-What is the dominant marketing management orientation demonstrated by Argos? Justify your
standpoint with relevant points from the case study. (0.5 marks, 40 words)
Ans- marketing concept philosophy since it is mainly trying to create customer value by providing what
customer needs, eg a wide range of products, sleek distribution system, and providing sales promotions
as well, it has a customer centric outside in approach.
4- What are two key actions taken by Argos that show that the organization is following the changing
marketing landscape? (2 marks, 100 words)
Ans- it is taking into account the social responsibility by partnering with charity organizations and
supporting them and focusing on recycling which will help them to create a positive image and goodwill
about themselves which is very important in todays world.
Argos was quick to respond to Black Friday campaigns and offered a lot of discounts and promotions and
offers, hence it capitalized on the growing trend of customers giving importance to such sales and
campaigns

II) Video Case: Why China Loves KFC

View the following short clip and answer the questions
below:https://www.facebook.com/361725604257016/videos/360646061155535

1. Identify the factors of macro-environment which KFC has capitalized upon to become a top
performing brand in China. (2 marks, 50 words)
Ansdemographic- it created local variations to entice the people there.
Cultural- many Chinese prefer chicken which kfc offered
2. Identify and briefly justify the category of product which KFC closely aligns with? (0.5 marks
each, 25 words)
It’s a shopping product because differentiation was stressed and consumers compared on
quality and npricve.
3. Identify and briefly justify KFC’s distribution strategy as depicted in the video-case? (0.5
marks, 25 words)
Ans- contractual VMS- it is using manufactured sponsored retail franchise system, and
intensive distribution startegey it opened outlets almost everywhere.

4. Identify and comment on the success of KFC’s pricing strategy in China? (0.5 marks, 25 words)
 Its market skimming pricing because it was priced hugher and competiytion was low, itv
skimmed the initial revenue layers. And itv was thought of as a quality product with high
prices hence it also used psychologiucal pricing

5. What is the type of consumer buying behavior that most closely resonates with fast-food
buying? Is that the case with KFC in China? Justify. (1 mark, 25 words)

Variety seeking- but in china kfc had high involvement with significant difference in brand.
6. Where would you categorize K-Pro on the Ansoff’s Matrix? Justify. (0.5 mark, 25 words)
Market penetration because it’s an existing product in an existing market but they introduced
new healthy variants like paninis,juices, salads.
Section B
Q1. Correctly classify the examples below fromthe brand development grid providing a one-line
justification for your choice. (3 marks)

i. In recent years, Coke has introduced various flavors of its soda (such as, Vanilla, Cherry).

Ans-Line extension- introducing new variant in the existing product category with the same
brand name

ii. Assume that Pakola is considering entering the snack food market, with a range of chips,
popcorn, and pretzels to be marketed under the name “Lava” (and using the slogan – ‘really big
on taste’).

Ans- New Brands- pakola introducing new product category with a new brand name

iii. A fitness center decides to add a ‘super-advanced’ aerobics class for its very fit customers.

Ans- line extension- adding depth to the existing product category with the same brand name

iv. Milo (a chocolate milk flavoring brand) used to be simply a powder to add to milk. But now Milo
is also an ice cream, a cereal, and a breakfast bar.

Ans- Brand Extension- introducing new product category with the same brand name

v. Emirates airline starts a budget priced airline (Fly Dubai) to better compete against price-based
competitors.

Ans- Multibrands- emirates within the same product category introduced an airline with the
new brand name

vi. A successful clothing brand, decides to start marketing shoes and various fashion accessories
under its own brand.

Ans- Brand extension- new product category with the same brand name
Q2.

Launching a Velo lifestyle

A key player among tobacco manufacturing companies, British American Tobacco (BAT) recently
launched flavoured nicotine pouches called VELO in Pakistan. Available in two flavours – berry frost
and polar mint – the product is the first of its kind in the market, with no direct competitors so far. So
what is VELO and how does one use it? According to their website, consumers can use VELO by putting
a single pouch between their gum and lip – allowing the nicotine to be absorbed through their gums.
One pouch lasts up to 30 minutes and each can, which costs Rs 160, contains 20 pouches.

If you are a consumer looking to try VELO, you can find it at the medicine and tobacco counter at
Agha’s, as well as other big stores in major cities.
 a) Identify and justify the product classification for Velo to the intended target group? (0.5
marks, 20 words)
Ans- it is a convenience product, widespread availability, purchased frequently , inexpensive
product, and little time and effort is spent in shopping.
b) Identify and briefly justify the pricing strategy that BAT is deploying for the product? (0.5
marks, 20 words)
Ans- market penetration- trying to penetrate quickly and deeply into the market to gain market
share and increase revenue due to increased sales
c) Determine and briefly justify the communication objective based on the visual above. (0.5
marks, 20 words)
Ans- persuasive objective- velo is trying to persuade young and hip to follow a cool lifestyle
through this.
d) Which distribution strategy is being deployed for Velo? How can it be made “ethical”? (0.5
marks, 20 words words)
Ans- intensive distribution because it is easily available at the stores, it can be made ethical if it
is exclusively available only for people above a certain age group to limit consumption,
e) Identify the brand’s competitive differentiation strength and comment on its positioning
strategy. (1 marks, 25 words)
Ans- product and image differentiation- it is offering a quality product with a cool image to it
More for less positioning strategy- offering a quality product at lower prices compared to other
imported cigarette brands.

Q3. Manfluencersis a terms that describes a new marketing segment. What do you understand by this
term (correctly reference your answer)? Describe two examples of how marketers have responded to
the manfluencers trend. (3 marks, 175 words)

Ans- A survey revealed that 47% of U.S. men now do most of the grocery shopping and cooking
in their homes. A sizable chunk are also clipping coupons and generally overturning long-held
notions of gender roles in the supermarket and in the kitchen — which helps explain why
companies are tripping over themselves to package foods designed to catch the eyes of guys.

https://www.usatoday.com/story/news/nation/2013/10/27/newser-marketing-men/3280773/

marketers are targeting men now because of their changing roles and status.

For example P&G targeted men in their pampers ad as more man are taking up this job of changing
diapers as more women are entering the work force and increasing diversity and Ariel share the load
campaign

Also men are now more metrosexual as seen by the recent cultural shift, hence marketers are offering
products which are targeted for men such as fairness products, eg fair n lovely for men, marketers have
to ensure that they integrate the promotion tools accordingly.such a Product should be priced low as
still a stigma attached with men buying fairness creams, should look robust and strong with a masculine
vibe to it, should be placed with other men products.

Q4.

Identify twocultural shifts that have been capitalized by brands in the visual above? How have
brands in the local market tried to manage the same? Your answer must clearly identity the
local brands and their strategies based on the 4 P’s. (3 marks, 175 words)
Ans-1 stay at home entertainment
2- digital technology taking over.
Our local tv channels are continuously striving to provide at home entertainment through there
tv dramas and game shows especially in lockdowns and covid . mountain dew partnered with
pubg gaming to provide the youth the much needed entertainment they need while promoting
their product.
Mountain dew launched special cans with pubg logo on it
They promoted it extensively on social media
The cans were priced higher to cater to the customers perception of value
Mountain dew made it available only at exclusive dealers.

Q5. You have been assigned to develop the communications plan for a new line of sneakers
that would be launched in Karachi. Using the steps of effective marketing communication,
design the promotional message of the brand. Clearly identify the steps in your answer. (3
marks, 200 words)
Ans-
Identify the TARGET AUDIENCE- men, women falling in the age bracket of 18-34 yrs
 Determine the Communication objective- informative as it’s a new product to create the initial
demand, persuasive because lots of competition available and in order to persuade customers
to try something new.
Designing the message- social appeal because we will be using plastics to make the sneakers,
rational appeal, highlighting the quality of the sneakers.
Choose the media- personal- opinion leaders and bloggers like Danish Ali will be hired to do the
buzz marketing. Non personal- event marketing at malls with babar azam there to display the
sneakers (atmosphere). Print advertisements and tvc and social media advertising on youtubve
and intagram and fb. (major media)
Select the message source- athletes will be the brand ambassador eg, Babar Azam will be our
brand ambassador

Section C

Q1a. State the advertising objective and appeal in the ads below. (1 mark, 10 words)

i.
Ans- rational appeal because facts used
Informative objective- raised awareness
 ii.
Ans- emotional appeal- use of love
Reminder objective- mature brand reminding

Q2. One way to maintain exclusivity for a brand is to raise its price. That’s what luxury fashion and
leather goods maker Louis Vuitton did. The company did not want the brand to become overexposed
and too common, so it raised prices 10 percent and is slowing its expansion in China. The Louis Vuitton
brand is the largest contributor to the company’s $13.3 billion revenue from its fashion and leather
division, accounting for $8 billion of those sales. It might seem counterintuitive to want to encourage
fewer customers to purchase a company’s products, but when price increases, so does the product’s
contribution margin, making each sale more profitable. Thus, sales can drop and the company can still
maintain the same profitability as before the price hike.

a) If the company’s original contribution margin was 40 percent, calculate the new contribution
margin if price is increased 10 percent. {Hint: Refer to Appendix 2, Marketing by the Numbers,
paying attention to endnote 6 on the price change explanation in which the analysis is done by
setting price equal to $1.00.} (1.5 marks)
Ans- sales- 13.3
Variable cost- 7.98
Contribution = 5.32
New contribution=
sales (13.3*110%)= 14.63
v.c= 7.98
new contribution= 6.65
contribution margin= 6.65/14.63=45.454%
b) Determine by how much sales can drop and still let the company maintain the total
contribution it had when the contribution margin was 40 percent. (1.5 marks)
Ans-
New sales- 14.63billion
Old sales- 13.3billion
Sales can drop by 1.33 billion
Q3 (1 mark, highlight the correct answer in red)
i) The pharmaceuticals division of Omni Healthcare holds low market share in a high-growth market.
According to the BCG matrix, the pharmaceuticals division of Omni can be classified as a ________.
A) star
B) bear
C) question mark
D) cash cow
E) dog

ii) Amor, a successful brand of women's clothing, recently introduced a line of fitness equipment.
This is an example of ________.
A) customization
B) diversification
C) niche marketing
D) co-branding
E) targeting

iii) ________ play an important role in efficiently making products available to target markets in the
needed varieties and quantities.
A) Virtual banks
B) Upstream partners
C) Price consultants
D) Uniform-delivery networks
E) Intermediaries

iv) Challenges of managing big data include ________.

A) determining what information to request
B) investing in appropriate technology
C) hiring enough software engineers
D) accessing and sifting through so much data
E) properly routing the information after gathering it