Marketing Strategies - Assignment Example

1. Identify and discuss the important difference between advertising and sales promotion strategies in the marketing promotion strategy Advertising strategies are used to sell a product or service of a company. It is a way of communication with the customer from the company side. It helps the company to tell the customers about the product or service and its features. It helps the customers in their purchasing decision about the product or service. It is necessary for the companies describe about the new product or services to their customers, so the customers will get an idea of it. The chief use of advertising to sell the product or avail into the marketplace. Characteristics of Advertising Strategy: It is a long term strategy and designed to enhance brand of the product or service. It also aids to increase the sales of the product or service through which the company will earn more revenues. It is an expensive process than sales promotion strategy and takes long time to give results. This strategy is supreme for me medium to large companies. Examples of advertising strategy are commercial ads, newspaper and magazine ads, radio announcements, billboard ad etc. Sale promotional strategy is used for interaction between company and customers. It is designed to increase the sales of the company through promotional activities by interacting with new customers. In this strategy, usually companies promote their product or service adding with free product or service, awards or money to fetch new customers. Characteristics of Sales Promotional Strategy: It is a short term strategy to enhance the sales of the product or service. It is less expensive than advertising strategy and supreme for small companies. Examples of sale promotional strategies are free product or service, printed information, discount coupons and many more. 2. What are the three critical questions that any marketing manager should try to answer when choosing a marketing channel and intermediaries? : When a marketing manager is choosing a marketing channel and intermediaries, then he or she should judge from cost effective, efficient and communication method. These three factors assist the marketing manager to choose best marketing channel and intermediaries with the requirement of the company strategy. All companies have different strategies to interact with the customers to increase their sales. Cost Effective: To choose a marketing channel and intermediaries, a marketing manager should focus on the budget in aspect of the company requirements. So they able to figure out how much should they money spend on marketing channel and intermediaries will be benefits for the company. Efficiency: The marketing manager should know about the marketing channels and intermediaries will work efficiently to increase their sales into the market and enhance the brand of product or services. Communication Method: A marketing manager should know which marketing channel or intermediaries will be best for which product or service so the customer will know about the company and its product or service. A best communication method always leads the company to increase their sales. 3. Discuss ethical consideration in the pricing of critical drugs such as AZT (HIV/AIDS treatment) in the pharmaceutical industry. : Some critical drugs such as AZT cost are very high and it cannot be afforded by poor people, who are suffering from HIV. These drugs are life saving drugs and help many to survive and fight from the critical diseases. The cost of these types of drugs is based on the manufacturing cost. Even though, AZT drugs are very important for HIV patient to cure from this disease. However, some medicines manufacture carried the loss to cut down such type drugs, which can save life of a human being. On the basis of ethics, medicine manufactures provide these drugs at low cost to the poor people, who are suffering from critical diseases. In this case, the price of the medicines is based on two pricing strategy i.e. Pay what you want pricing strategy or price discrimination pricing strategy. In pay what you want pricing strategy, the customers pay the desired amount price of the product or service. In this case, its very suitable, since here HIV patients who have no money to buy the AZT drug, they can pay desire amount. Even though, the price discrimination strategy is very suitable to fix the price AZT drug. In this strategy the medicines manufactures can set different price of AZT drug for different segment. For poor patient the price of the AZT drug will be low and for upper class people price will be high. So the all HIV patients can afford the drugs on the basis of their income. 4. What is line extension strategy? Why is it often used? Support your answer with examples. : Line extension strategy can be defined as adding additional items in a same product category using the same brand name. Like as new flavors, color etc. It gives varieties range of items for the same product of the brand. The items could be in different in packaging, colors, colors and many more for the same product. For example, Sunsilk Shampoo is a product of Unilever Company and it has different product extension like Sunslik Black Shine shampoo, Sunsilk Hair Fall Solution shampoo, Sunslik Perfect Straight shampoo and many more. These all products are extensions of Sunsilk Shampoo with different flavor, but under a same brand name. The line extension strategy generally used to capture the market by producing the same products for different segmentation. It also assists the company to increase their sales via different kinds of flavor, packaging, color of the same product. Up market stretch, down market stretch and both ways can be used for product line extension. 5. Discuss the difference between effectiveness and efficiency in marketing control. Use examples when possible. : Marketing Control is used to execute marketing strategies of a company and check whether the aim of the marketing consequence is fulfilled or not. It helps the company to know about their marketing objectives is fulfilled or not. If the marketing objectives of the company are not fulfilled, then how to figure out the problems and how should be it executed properly so the company’ objective will be fulfilled. It checks that annual sales of the company and its different products or services, through which they able to judge in which area they are lacking and how companies should overcome from these problems, so the company maintains their marketing objective according to company’ strategy. It has four types; annual plan control, strategic control, probability control and effectiveness & efficiency controls. Efficiency Control: Efficiency control is a quantitative control. It checks the efficiency of the marketing objectives by monitoring the marketing activities which have been performed by the sales department of the company. It monitors all functions which are related to sales of the company and its products or services. It inspects all functions of sales like sales volume, the performance of each sales person, the number of accounts managed or controlled by each salesperson. Through this the company gets to know about the exact sales figure and issues related with marketing objective. Effective Control: It is a qualitative control. It checks the effectiveness of the marketing objective and its main function is to improve the marketing activities to achieve the marketing objectives of the company. Market share, customer satisfaction, profitability, etc., These reflect the marketing effectiveness of the company. However, it is not an easy task to monitor, control or audit the effectives of the company. The marketing effectiveness depends on elements like marketing orientation, strategic orientation, customer philosophy, operational efficiency, information about market and strategy of the organization. 6. Define operating leverage, and explain why firms with high operating leverage can offer price discounts, especially when they reach their break-even. : Operating Leverage can be defined as a tool which measure that how the growth of revenue is contributing in the growth of operating income. It also determines the volatility of the operating income of the company. It indicates the degree to which a company incurs the combination of fixed and variable costs. It has been seen that when a business is earning few sales volumes, but each sale is contributing towards high gross profit margin, then it can be said that the company is highly leveraged. But when a company is earning more sales, but each sale is contributing very less to the gross profit margin then it can be said that the company is less leveraged. Thus, it can be said that as the volumes of sales of a company is increasing, then each sale is contributing less towards the fixed costs and more towards the profitability of the company. The degree of operating leverage can be calculated as follows: Degree of operating leverage = percentage change in the operating income of the company/ percentage change in the sales of the company. A firm which is having high operating leverage indicates that the firm may have less sales volume, but each sale is contributing higher to the profit margin thus the company has sold its product at a higher price which has helped it earn breakeven point faster. Thus, when the breakeven point is reached, then the company can offer price discounts at a certain percentage to its customers, which will help to boost its sales volume also. The company has already earned the breakeven point, thus additional earnings will contribute towards its profit only. This is the reason for which a company with high operating leverage can offer price discounts after reaching the breakeven point. 7. Discuss the role of capabilities in developing marketing strategies. : A marketing strategy can be defined as a strategy for fulfilling the objective of marketing to increase the sales of the company and reaching a sustainable competitive advantage. It aids to enhance brand value of it’s and product or service into the market. It is mainly performed to achieve the sales target of the company. It also aids to enhance the company brand value in the market to attract more customers. The marketing strategies of the company can be performed with the help of analysis of the market trough the SWOT analysis, pestle analysis, porters five force model and many more. These analyses are performed to know about the marketing condition and whether the market condition is suitable for the company and its product or service in term of business in the particular market. It helps the company to deal with the new market or new product into the old market, so the company will not suffer from any kind of loss. These marketing strategies help the company about the buying patterns of the population of the market for a specific product and state the ways of communication of product or service to the new customers. This helps the company to increase their sales in the market and enhance their competitive advantage. 8. Discuss the fundamental requirements of effective market segmentation. : Markets segmentation is a process to target the particular customers for the product or service. It helps the company to know about their target customers for the product or service, who will get benefited from the product or service. The segmentation of the customers on the basis of demographic, physiological, behavioral and geographically, so the company enhance their sales by targeting particular customer for their product or service. Since, all product or service is not made for all customers. All customers have different choice and a different need, to identify those customers who needs are matched with the company product or service the market segmentation is needed. This helps the company able to identify the customers who need the product or service of the company. It is very effective to segment the market, according to the needs and wants of the customers which can be classified by the age, gender, income, region, lifestyle and many more which affect the buying pattern of the customers. The customers always buy the product or service according to their need and want to satisfy their demand. That’s the reason, the company should go for market segmentation to identify the perfect customer for their product or service and which help the company to increase the sales. 10. Give examples of four quantitative factors that could be considered when assessing whether the current and future markets for a product are big enough to allow profitable activities. : The four quantitative factors are opportunity cost, break even analysis, market economy and contribution to sales ratio. Opportunity Cost: In this company should compare others opportunity rather than current investment, so that the company may get high return on investment. For example, a company is investing in a product A which may give profit to the company, but there is a another product B which can give more profit to the company than product A. So the company has to take a decision which product will be best for the company to earn more profit. Market Economy: It helps the company to take decisions related to production, investment, and distribution in the aspect of demand and supply and prices of product or service are decided in a free price system. For example, if a company wants to distribute their product in a new market, then the company has to check whether the product is suitable that market or not and how much profit will come from that market. Break Even Analysis: It helps the company analyze to find out at which level the company should fulfill the demand of the market so the company can achieve their return on investment. For example, a company is developing a new product to launch into the market. At that time the company should calculate or analyze their break even point, so there should not be less bearded by the company and achieve the exact amount of investment in the product development and distributions. Contribution to sale ratio: It is important for the company to analyze the profit margins of their sales. For example, a company is developing a new product and wants to achieve profit from that product, then the company should analyze the breakeven point and then the company should fix their profit margin for that product. These four quantitative factors are very essential for the company to determine their current and future market so the company earns profits. 11. Discuss the importance of competitive orientation in marketing strategy. : Competitive orientation in marketing strategy helps the company to analyze their strengths and weakness as compare to the competitors. So the company can improve in their marketing strategy to fulfill their marketing objectives. In this analysis, may include pricing factor, customer satisfaction, production efficiency, market share and employee retention. It helps the company to figure out the critical issues related to their marketing strategy and how to improve and make efficient and effective their marketing strategies so the company starts earning profit. In other words, hoe the company should improve in their marketing strategy to become better from the competitors and can rule over the market. It will help the company to beat their competitors in the market and help to enhance their brand value of the company and its product or service. It also aids the company to increase their sales in aspect of their competitors. 12. Your friend believes that either horizontal or vertical price fixing should be prohibited in Canada, but she is not sure. What would you tell her? : Price fixing is a process in which an agreement is created between the companies in a same industry or sector to fix a price of their product or service in the market. So the products or services of different companies in the same sector can sell their goods in the same price to the customers. It is an unethical process in Canada. There are two types of price fixing; horizontal price fixing and vertical price fixing. In a horizontal price fixing, the prices of goods are fixed for all companies in a same sector by an agreement. So the companies can sell their goods in the market with artificially high price and force the customers to buy it. Hence, there will be no competition among the competitors related to the price of the goods. In vertical price fixing, the price fixed by the manufacturers and distributors by an agreement between them and the distributors have to sell the goods at a fixed price and there will be no discount on that good. It can be done with the help of bait and switch pricing, inflated pricing, unfair pricing and price discrimination. It leads the manufactures to rule over the market and the customers have to pay unwanted over price for product or service. This whole process unethical practice and it is illegal in the Canada. 13. The joint venture is one of the entry modes Mercan System, Inc. considered in its attempt to enter the Indian market (Lesson 12 case study). Discuss its pros and cons for Mercan Systems. : Joint Venture can be defined as an agreement when two or more business organizations agree to develop a new enterprise for a definite time period with new assets which are contributed by all the parties in the form of equities. According to the ratio of equities, enterprises get the assets, revenues, expenses and control over the new entity. However the new venture is a whole new entity and it is separate from the participants’ other business activities. Pros and cons of Mercan system in joint venture:- The main advantage that the company will get from the joint venture is that there will be lower risk as the company is investing a minimum amount of funds to the joint venture. Expenses and risk of losses will be shared among the partners, thus the Mercan system does not have to bear all the risk alone. The company will receive a certain percentage of loyalty from the license. The company will have access to more resources in Indian market. The joint venture will help the company to have knowledge about the local market and technologies which will be useful in the Indian market. Intellectual property and technology used for the new entity will be protected by the partner companies, thus there will be no chance of leaking important information. It will be global strategic harmonization among Mercan system and the partner company. It will be able to achieve economies of scale in the Indian market. On the other side, the joint venture also has some specific disadvantages of the Mercan system like the company will have no access to the licensee’s operations due to lack of coordination. The company will not be able to take all the decisions alone regarding the location of the project and economies of scale thus controlling power will be shared. The financial cost of the company will be increased. Conflict might be raised among the two companies as the corporate culture of both companies is different. Mercan System has a different corporate culture than the companies in India, thus the difference in culture can increase the difference between opinion among the two parties. It will be time and effort consuming to build better relationships among the partners who belong from different cultural background and it will be challenging factor for the new business organization. There might be an imbalance in the levels investment, expertise and assets which will be brought into the new venture by the two companies. Read More