154  ANSWERS

Answers
TOPIC 1: MARKETING IN THE NEW ERA

Exercise 1.1
1. Marketing mix is a term that is used to refer to the main strategies that need
to be managed by an organisation. It is also known as the 4Ps (for general
product). All the four elements in the marketing mix strategy are product,
place, price and promotion. Based on the statement, it clearly proves that
marketing mix for a general product (goods) is different from marketing
mix for services. This is influenced by the unique traits of services.

2. Needs and wants are two important concepts in marketing. The term
„needs‰ refer to the most basic necessity that an individual will try to fulfil.
Meanwhile the term wants means a higher level of needs. For example, an
individual may get a pack of nasi lemak from a roadside hawker at the
price of 50 cent. Other individual may buy a plate of nasi lemak and a cup
of tea at a hotel at the price of RM25.

3. Marketing mix includes four main elements: product, place, price and
promotion. On the other hand, promotion mix refers to elements or
strategies that a marketer may choose; such as advertising, sales promotion,
individual sales, public relation and publicity.

4. A marketer should not have a belief that one element in the marketing mix
is more important than the other. If this happens, the marketing is said to
have been infected with ‰marketing myopia‰. Marketing myopia refers to
wrong market orientations and may lead to failure for the marketer.

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Exercise 1.2
1. consumers

2. relationship marketing

3. The reason that business concepts which are not based on marketing fail is
because the failure of the concept to realise that the main deciding factor of
business in the market, is the customer. The customer is the main factor in
the market. If a company fails to identify and understand the customer,
then when any incident happens in the market, such as the recession and
world war, the business will fail unless it is a business that emphasise on
the customerÊs preference.

4. Marketing myopia is a term used to describe the actions of a business

owner who emphasise or discriminate one from the strategy elements
involved in marketing mix. Usually, business owner who suffers marketing
myopia will fail and will not have the chance to sustain in the market. This
is because a good business strategy in the present time is a comprehensive
business strategy, the one that can manage all the elements of marketing
mix. The reason is, each element of the strategy in the marketing mix is
closely dependent and complements all the other elements.

5. To answer this question, the student needs to understand the idea

illustrated in Figure 1.3. Based on the Figure, the market needs to plan and
perform the marketing mix strategy, which are product, price, place and
promotion emphasising on the strengths and weaknesses of the marketer as
well as any assistance or obstacle that are present in the external
environment. The marketer Ês success to develop an efficient and effective
marketing process not only benefits the marketer in terms of profit but also
benefits the consumer and community.

6. An efficient and effective marketing process is able to maximise customer

satisfaction and reward the community. The accomplishment of fulfilling
the needs and demands of the customer normally brings a very high level
of customer satisfaction. On the other hand, the achievement of the
marketer in providing the best product can improve social welfare and
bring prosperity to the country. This indirectly gives benefits to the
community even though they have never purchased the marketer Ês
product.

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TOPIC 2: MARKETING ADAPTATION IN THE NEW

ECONOMY

Exercise 2.1
1. New economy may be distinguished as an economy that has different
business practices from the business tradition practiced a long time ago. In
short, the differences of old economy and new economy can be summarised
by the table below:

Old Economy New Economy

Marketing management based on product Marketing management based on
unit. customer segment.
Business that focuses on profitable Business that focuses on transaction that
transaction. will give the highest value for customer
lifetime value.
Business that focuses on the interest of the Business that focuses also on the interest of
shareholders. the stakeholders, not only the
shareholders.
Business that focuses only on financially Business that focuses on balanced
balanced score card. marketing score card, other that focusing
on the financially balanced score card.
Only the marketing department perform All the workers and departments will
marketing activities. perform marketing activities.
Business that builds brand recognition by Business that builds brand recognition by
advertising. excellent company performance.
Business that emphasises customer Business that emphasises customer
acquisition. retention.
Business that lacks yardstick to measure Business that have a detailed method to
customer satisfaction. measure customer satisfaction.

2. In summary, old economy companies need to change their management

practice from the old to the new practice, which is the marketing
management based on customer segment, focuses on business trade that
will give a higher value for the customer lifetime, business that needs to
focus balanced marketing scorecard and financially balanced scorecard,
focuses also on the interest of the stakeholders, not only the shareholders,
where all the workers and departments will perform marketing activities,
builds brand recognition by excellent company performance and not
advertising, emphasises customer retention, have a detailed method to

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measure customer satisfaction, and makes less promises and gives more in
their business deal.

3. Among the advantages of Customer Relationship Marketing (CRM) are as

follows:

(a) Customer relationship marketing enables the company to provide

excellent real time services by fostering close relationship with every
regular customer using the method of effective individual account
information.

(b) The company can shape each of its offers according to the order and
taste of a particular customer and thus increase sales.

(c) The company will reduce customer lost.

(d) Allows the company to extend the period of close relationship with
the customer.

(e) Allows the company to improve their growth potential of each of the
customers by shared income, cross selling and upselling.

(f) Provide an opportunity for the company to turn a less profitable

customer to a more profitable customer or cease transaction with
them.

(g) Allows the company to pay more attention to customers with higher
values.

The disadvantages of customer relationship marketing are:

(a) The database requires a huge investment to construct and operate in

terms of equipments and computer software, communication network
and skilled workers. Therefore, the method is neither suitable nor
cost- effective for certain situations such as (i) product is only bought
once in a lifetime such as a piano, (ii) customer are showing least
loyalty to the marketer, (iii) sales unit is small such as candies, (iv) the
cost of gathering information is too high.

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(b) It is difficult for all the workers to be customer oriented and use all the
information available in the customer database. On the contrary,
workers are more incline to perform the traditional transaction
compared to customer relationship marketing (CRM). If this is the
case, CRM will not be able to be fully used and truly benefit the
company.

(c) Not all the customers want close relationship with the company. They
will feel uncomfortable knowing the company is gathering their
private personal information. Therefore, privacy issues may be a
problem or pose a threat to the companies that use CRM.

TOPIC 3: ATTAINING SATISFACTION, VALUE AND

CUSTOMER RETENTION

Exercise 3.1
1. The action or effort to obtain certification from bodies or award of quality
such as the ISO9000 is to enhance customer Ês trust and positive perception
on the quality of the product and the ability of the product to fulfil their
needs and demands. This is as the customers are able to trust a product will
perform the way they want it to, if it has been awarded by the official
bodies or is well-known for its quality. Other than that, the need for
customer focus in the requirement of ISO9000 certification also plays a
positive role in the company operation, as the company will always strive
to maximise customer satisfaction and not only operates to gain profit.
Therefore, the companyÊs action of obtaining the ISO9000 certification is
correct.

2. Customer retention is crucial to ensure that a marketer stays in the market

and have positive effects on the companyÊs revenue acquisition and profit.
It is because other than successfully maintaining their customers (stable
demands), the accomplishment of the marketer to keep its existing
customer also means its success to reduce its cost and in turn increase the
companyÊs profit. Studies show that marketers only bear a relatively low
cost if they manage to retain their customer as compared if they have to
seek new customers as a result of losing their existing customers.

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TOPIC 4: MARKET-ORIENTED STRATEGIC PLANNING

Exercise 4.1
1. Business definition is the first step from the six important steps in strategic
planning. Defining the business is important because it will be the deciding
factor to the planning scope for the next steps in the strategic planning.
Therefore, business definition done by a company will definitely affect
other steps in its corporate strategic planning. It also means that the
environment analysis done later will focus mostly on the environment
defined by the company.

2. Internal environment may be differentiated from the external environment

from the fact whether they can be controlled or not. If a factor or an element
in the environment can be managed by the organisation or the marketing
manager, then that factor can be classified as an internal environment factor
or otherwise.

3. The SWOT analysis is derived from the acronym for Strengths, Weaknesses,
Opportunities and Threats. It means that the analysis is made based on the
marketing environment divisions, which are internal and external. Internal
environment is usually analysed based on its strengths and weaknesses,
while the external environment is analysed based on the opportunities and
threats it presented.

4. Environmental factors can be classified as strength or an opportunity based

on the perspective of positive impacts to the organisation. It means that
strength refers to variable factors that may present positive impacts to the
organisation. Opportunities on the other hand, are the environmental
factors that give positive effect to the uncontrollable factors to the company.

5. The question requires you to understand the concept introduced by either

the BCG or GE matrix. It means, you have to use the result and suggestion
from one of the two matrixes. However, both of the strategic business unit
analysis methods suggest that marketers or the organisation to improve
their ability particularly through selective investment to ensure their
business unit may operate more effectively. Note: the Petronas business
unit is in the question mark quadrant (BCG) or quadrant 5, 6 and 7 (GE).

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6. For market breakthrough strategy, the company needs to increase the

product usage by the existing consumers by suggesting the suitability of
eating snack food when conducting various activities or suggesting the use
of fast food as a cooking or baking mixing ingredients. Meanwhile, in terms
of marketing development that can be implemented by the company is the
effort to explore the new market, either from the geographical of
demographical aspects.

Exercise 4.2
1. Marketing plan reports have to use or be based on the steps in marketing
strategic planning process. It means, the marketing plan report should
begin with the introduction to the business (business definition),
environment analysis, the setting of the aims and objectives, the attempt to
design strategy and tactics and also the marketing control. However, in
order to prepare the best and most systematic report, you have to adhere to
the report preparation structure, which says the report must have pre-
content, introduction, the contents, closing and the reference list
(attachments). The pre-content section does not only consist of the content
index and the appreciation page but also have to begin with the executive
summary, which is the part that summarises the content of the report from
the first until the last page contained in the report.

2. Summary executive is a synopsis of the report content, starting from the

first page until the summary or the conclusion page. It means, even though
it is placed at the beginning of the report, the summary executive is the final
stage of the report, done when the whole action of preparing the marketing
plan report is finished.

3. Controversial arguments in the report can be supported by the usage of

attachments from secondary data or/and the use of references or
bibliography.

4. The marketing plan report format can be divided into three main sections,
which are the pre-content, content and the references list and attachments.
Pre-content includes the appreciation page (if applicable), summary
executive and the content index. If there is any figure or table in the report,
then the figure and report index should be provided. The content will
proceed to report all the measures that have been taken in the marketing
strategic planning. Usually, the content is divided into three sections: the
introduction, content and the closing. The references list and attachment are
prepared to support the information reported in the content section.

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TOPIC 5: OBTAINING INFORMATION AND

MEASURING MARKET DEMANDS

Exercise 5.1
1. marketing intelligence system

2. The information may be obtained from the internal record system.

3. The information in the marketing intelligence system differs from the

information obtained from the internal record system component in terms
of the present value or up-to-date. The market intelligence system provides
current or daily (today) information, while the internal record system
provides past information such as the ones from yesterday, last week, last
month or last year.

4. You can choose three from these research methods to come up with the best
research:

(i) Using scientific method

(ii) Research creativity
(iii) Variety of techniques
(iv) The dependency of the research model and the data
(v) Information cost and value
(vi) An overall conclusion
(vii) Complying with etiquette

Exercise 5.2
1. Likert

2. You are required to list and explain briefly all the steps as listed and
explained in the text on the marketing research process. It means, you need
to list and discuss all the steps (chronologically) such as to determine the
definition and the aim of the research, designing the research plan,
gathering the data, analysing data and distribution of the findings
(preparing report).

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3. The best research has to have an appropriate aim or scope. Appropriate in

this context means that it is neither too general nor too specific. If the
objective or the scope of the research is too general, the researchers
(marketers) may have to conduct research that may require a huge amount
of money and time. The result of the research may not be worth the money
and time spent. On the other hand, if the scope is too specific, it may cause
marketers to ignore certain probably more important information. Besides,
the aim and objective that is too specific might result in a narrow research
finding. This indirectly will affect the usability of the research that has been
carried out.

Exercise 5.3
1. focus group

2. able to qualify

3. The total market potential can be the maximum sales total achievable by all
marketers in an industry for a specific time period and based on the
industrial activities height and a specific marketing environment. The total
market potential can be calculated using the following formula.

Q = npq

Where:
Q = Total market potential
n = The number of consumer for a specific product/market based on
certain assumption
q = Average purchase value of each consumer
p = Average price for every unit

4. Other than the market-buildup method, there are two other methods that
can be used by marketers to measure market area potential, which are the
variable factors index method and the industry sales (market share). The
market build-up method differs from the other two methods from the
aspect of obtaining the value of the market area potential.

Through the market build-up method, marketers need to identify all the
potential buyers in every segment. Next, marketers have to estimate the
purchase value of each segment. Different from the market-buildup
method, through the variable factor index method, marketers are able to

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obtain estimated value from various markers that are available in the
market. Meanwhile, through the industry sales or the market share method,
the marketer can acquire past information from sources such as
government agencies reports or manufacturers association about the
industry sales to make a prediction on the market area potential.

5. There are four most popular methods used by business owners to

implement market demand estimations, which are through surveys of
buyer Ês intention to buy, sales group composite income, expert opinion
and conducting market testing.

6. The components in the information system that will be used are the internal
record system and the market intelligence. This is because, in order to
obtain data regarding past sales performance (the last 18 months) you will
need to get it from the internal record system. Meanwhile, the information
on the price and promotion strategy that are currently practiced by the
competitors are daily or current information. This shows that you need to
refer to marketing intelligence as only this component provides such
information.

7. Marketing research for a new product requires the marketer to implement

all the steps in the new product development process. It means that
marketers need to implement the first step, which is to define the market
research problem until the fifth step which is the preparation of the
research findings report.

8. The advantages of mail communication method are in the aspect of cost

and affordability to cover a huge sample, while the disadvantages are in
terms of low respondent co-operation. Therefore, marketers should
combine it with face-to-face (structured interview) method, survey using
the telephone or online or/and focus group. However, the combination
needs to take into account the ability of the staff and the marketersÊ
financial situation.

9. The Perodua company needs to identify consumers category from the total
market (Malaysian consumers), available market (geographic), qualified
available market and the market target before obtaining the penetrated
market value.

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TOPIC 6: MARKET ENVIRONMENT ANALYSIS

Exercise 6.1
1. C

2. C

3. B

4. B

Exercise 6.2
1. Environment refers to the factors that may positively or negatively affect
the companyÊs ability to continue its operation and growth while
maintaining the transactions with the buyers and the targeted consumers.

2. Marketing macro environment refers to the elements outside the companyÊs

micro environment. Marketing macro environment consists of demographic,
economic, natural, political and cultural environment.

3. The companyÊs internal environment, suppliers, competitors, the public,

and the consumers are the elements of marketing micro environment of a
company.

TOPIC 7: UNDERSTANDING INDIVIDUAL CONSUMERS’

BEHAVIOUR

Exercise 7.1
1. Influencing factors refer to the major factors that influence a person in his
life and shape the characteristics in the individual consumer self.

2. The influencing factors include:

(a) Culture
Consists of institution and other influence that effect as a whole value,
perception, priority and behaviour of the community. Culture will
generally affect how a consumer will behave through his buying
process.

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(b) Social
Refers to influence from the consumer Ês direct and indirect
interaction with the family and the community in their life. It will
affect the process of buying decision making. Social factor consists of
reference group, family, roles and status.

(c) Personality
Refers to the personal trait of the consumer that may influence the rest
of the purchasing process such as the age and life-cycle stage,
occupation type, economic status, lifestyle, personality and self-
concept.

(d) Psychology
Refers to the basic on an individual himself such as motivation,
perception, learning, belief and attitude. The psychological basic
causes a consumer to be different from the other consumer.

Exercise 7.2
1. Nominator ă suggests the buy
Influencer ă influences whether the buy should be made or not
Decision maker ă the real authority to make the buying decision
Buyer ă will conduct the buying
User ă will use the product bought

2. Complex, dissonance, regular and various buying behaviour

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Exercise 7.3
1. Short-answer questions.

2. B

3. B

4. A

5. B

6. A

TOPIC 8: UNDERSTANDING ORGANISATIONAL

CONSUMERS’ BEHAVIOUR

Exercise 8.1
1. Demand type, informed buyers, market size, promotion techniques and
purchase centre.

2. Influencing factors:
Ć Environment
Ć Organisation
Ć Inter-personal
Ć Individuals
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How does it affect individuals?

Individuals are workers who will interact with other workers in an

organisation (inter-personal). The inter-personal influence affects the
individuals. Every worker in an organisation works with a procedure as
well as the organisationÊs regulations. There is organisations influence on
the inter-personal and individuals. The organisation on the other hand
exists in a broader concept, which is the environment. The environment
will affect the organisation directly or indirectly. The environment influence
will affect the organisation and in turn, will affect the inter-personal
relationship and the individuals.

Exercise 8.2
1. First stage ă identifying product problem
Second stage ă identifying product specification
Third stage ă listing the suppliers
Fourth stage ă inviting offer from potential suppliers
Fifth stage ă post-purchase consumer evaluation

2. New task buying, modified rebuy and straight rebuy.

3. A

4. A

5. B

6. A

7. B

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TOPIC 9: MANAGING COMPETITION

Exercise 9.1
1. The companyÊs competitors refer to the competitors that have the same
target market as the company. Nowadays, the competition consists of the
existing and potential competitors regardless whether locally or
internationally.

2. The companyÊs competitors can be identified using two approaches:

Ć Analysing competition form the market concept.
Ć Analysing the competition from the industry concept.

3. The steps to implement competition marketing intelligence are:

Ć Starting the system
Ć Collecting data
Ć Evaluate and analyse data
Ć React to the information

Exercise 9.2
1. B

2. A

3. B

4. A

5. A

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TOPIC 10: IDENTIFYING AND SELECTING MARKET

SEGMENT

Exercise 10.1
1. The four levels of segmentation are:
Ć Mass marketing;
Ć Segment marketing;
Ć Niche marketing; and
Ć Individual marketing.

(a) Mass Marketing

At this level, the company assumes that the available market has the
same needs and wants. The market is a large market and does not
need to be segregated into smaller groups. Based on this view, the
company will produce products which are similar and use the same
marketing activities and promotion program.

(b) Segment Marketing

At this level, the company assumes that the large market consists of
different consumers with different needs and wants. Based on this
view, the company deemed that it is better for the large market to be
segregated into smaller groups known as segments. Every segment
requires different products and different marketing activities.

(c) Niche Marketing

At this level, the company assumes that it is better to focus to only one
market segment. The company will select any segment in the market.
Usually, the segment selected will be sufficiently large, have a high
purchasing power and have a good growth rate.

(d) Individual Marketing

At this level, the company assumes that the customers are different
individuals and they do not have the same needs and wants. Every
product produced is based on every individualÊs taste. This market
emphasises on personal attention and because of that, it is known as
„one to one marketing‰ or „tailor made marketing‰.

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2. An attractive segment is a segment that has these characteristics:

Ć Measurable.
Ć The size is large enough and profitable.
Ć Accessibility; the marketing activities can be performed and accessed by
the consumers in the segment.
Ć Actionability; the marketing activity planned can be effectively
performed.

Exercise 10.2
1. Individual consumer can be segmented into groups based on several
fundamentals such as:

(i) Based on geographical areas

(ii) Based on consumer demography
(iii) Based on psychographic
(iv) Based on consumer behaviour

2. A good market segment has these characteristics:

(a) Measurable
Can be measured in terms of its size, number of population, or its
quantity.

(b) Accessibility
The consumers that we want to provide services or sell goods to can
be met and they can access all the marketing activities that were
performed including advertising activities.

(c) Sustainability
The market segment that has a large number of users and they have a
high purchasing power.

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3. When the company wants to change its marketing concept from mass
marketing to segment marketing it has to perform several things, such as:

 The company needs to segregate the large market into a smaller market
based on certain segments.

 The segregation must be done based on segmentation fundamentals, as

have been previously discussed.

 The company needs to select a segment or several segments that has

been identified as its customer group.

 All the marketing activities that have been planned must be based on
the market segmentsÊ tastes that have been chosen by the company as
its consumer groups.

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