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THE UNIVERSITY OF

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NEW SOUTH WALES

Australian School of Business

School of Marketing
MARK1012: Marketing Fundamentals
Final Examination Session 1, 2012
Instructions: (Please read these instructions carefully)

 This examination paper consists of THREE sections: Section A (10 Fill in the gaps: 10         

marks); Section B (3 Short essay questions: 20 marks) and Section C (50 Multiple choice questions: 20 marks). It has FIFTEEN (15) printed pages excluding this page. Printing is double sided, so check each page carefully. You have two (2) hours to complete this examination plus 10 mins reading time. Read all the questions carefully and answer all questions as instructed. Questions must be answered in ink. Write all your MULTIPLE CHOICE answers (SECTION C) in the Generalised Answer Sheet provided. Note that there are FIFTY (50) Multiple Choice Questions. Print your full name and student ID number {z… } on the first page and sign. Use of UNSW approved calculators is permitted. No other material is to be taken into the examination room. This paper accounts for 40% of your overall course grade (However, it is marked out of 50). You may NOT retain this paper.

SECTION A: FILL IN THE GAPS
(Please write your answer in the gaps provided in each statement)

(10x1 = 10 marks)

1. ‘Marketing’ refers to the activities undertaken to create and _____________ products and values with others. A marketing organisation’s _______________ ___________________is the set of benefits or values it promises to deliver to consumers to satisfy their needs 2. _________ refers to high‐growth, high‐share SBUs or products which generally turn into _________ _________which refer to low‐growth, high‐share SBUs or products. 3. ____________are firms and individuals who provide the resources needed by the company and its competitors to produce goods and service. ____________ are ‘…. any group that has an actual or potential interest in, or impact on, an organisation’s ability to achieve its objectives’. 4. __________________ is ‘the process by which people select, organise and interpret information to form a meaningful picture of the world’; while _______________ describes ‘changes in an individual’s behaviour arising from an experience.’ 5. The business marketer normally deals with far ________________ buyers than the consumer market. The demand for business goods is ultimately ______________ from the demand for consumer goods. 6. In ___________________ marketing, an organisation designs separate offers for each of the identified target markets; __________marketing the company goes after a large share of one or a few submarkets. 7. _______________ occurs when a company lengthens its line beyond its current range, downwards or upwards; _________________ is the process whereby a product line can also be lengthened by adding more items within the current range. 8. In the context of service marketing, the factor of ____________________ indicates that services lack a physical element; while the factor of ___________________indicates that when considering services, there is no stored inventory. 9. Due to continued technological developments, product life cycles (PLCs) are getting _________________. Firms must have a "_______________" of new products to replace existing products as they become obsolete. 10. In ___________ ________________, manufacturers promote the product to wholesalers; wholesalers promote it to retailers; and finally the retailers promote it to consumers; _______________ ____________ on the other hand, calls for spending a lot on advertising and consumer promotion to build up consumer demand.

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SECTION B: SHORT ESSAY QUESTIONS
(Please answer in the space provided below each question) Question B1: (3+3 = 6 marks) a. b.

(20 marks)

What are the advantages of having marketing intermediaries? Explain how marketing channels add value.

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Question B2: (6 marks) Compare and contrast market­skimming and market­penetration pricing strategies. Support your answer using suitable examples.

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Question B3: (3 x 2 + 2 = 8 marks) Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and glass clippers. The company has invested $250,000 in developing this sharpener. This tool which is about the size of a piece of chewing gum, costs $3 to make. Fixed costs for the sharpener is $10,000. The company expects to sell 100,000 sharpeners this year. Diamond Machine's mark­up on sales is 30 percent, and it wants to earn a 20 percent ROI. a. For the sharpener, calculate (i) mark­up price; (ii) target­return price as well as (iii) breakeven volume at both prices. b. Which price should Diamond Manufacturing use? Why? _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________ _____________________________________________________________________________________________________
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SECTION C: (50 Multiple choice questions) (50 x 0.4 = 20 marks)

Answer ALL questions by marking the relevant answer in pencil on the Generalised Answer Sheet supplied. There is no negative marking.

Please supply the most appropriate answer.

1) In many instances, marketing managers try to ensure that there is a sense of excitement (or enjoyment) associated with a market offering and the marketing communication used. In creating excitement, marketers may use _____________:

A) experiential involvement. B) emotional involvement. C) interactivity. D) both experiential and emotional involvement and interactivity. E) their intuition.

2) Telemarketers probably most often employ the ________ concept.

3) The set of actual and potential buyers of a product comprise____ __________; the basic unit of measurement for exchange is ____ ____________.

A) production B) selling C) marketing D) customer E) societal

4) Statement _______ below is not a condition for an exchange to take place. A) two parties each possessing something of value to the other. B) the ability to accept or reject the offer. C) the ability to communicate and deliver. D) each party wanting to deal with the other. E) the existence of a monetary system 5) Relationship marketing ___________

A) a market; a transaction B) a transaction group; a payment C) an exchange group; an offering D) a product selection set; a price E) an exchange; a transaction

A) is not advisable for small scale marketers. B) is a metaphor for the intimacy with which some sales people handle their clients. C) is about developing long term profitable transactions with select clients. D) should not really be encouraged. E) is too expensive for smaller organisations.
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6) The customer’s evaluation of the benefits and costs of a product relative to its competitors is known as: A) a market offering. B) natural desire. C) customer‐perceived value. D) relationship marketing. E) customer satisfaction.

7) If a major part of the market dislikes the products on offer and may even pay a price to avoid it, this market is in a state of: A) demarketing. B) irregular demand. C) full demand. D) unwholesome demand. E) negative demand.

8) Setting the goals for performance in terms of market share, return on investment, and pre‐tax profits all fall under “_____________ “ section of the marketing plan? A) The executive summary B) The current marketing situation C) Threats and opportunities D) Objectives and issues E) Marketing strategies

9) The current marketing situation consists of an analysis of the: A) market, competitor, strategic, distribution, and macroenvironment situation. B) market, competitor, product, distribution, and macroenvironment situation. C) market, company, strategic, distribution, and macroenvironment situation. D) market, competitor, product, distribution, and microenvironment situation. E) All of the above.

10) The SWOT analysis is the tool often used to conduct an analysis of the macroenvironment. What part(s) of the SWOT acronym are relevant to the macroenvironment? A) SW B) OT C) SWOT D) ST E) OW
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Read the MINICASE A (MC­A) below and answer questions 11 ­ 14.

MINICASE A [MC­A]: The marketing manager of a national brand of flavoured milks is considering her micro and macroenvironment in order to complete the situation analysis for this year’s marketing plan. She notes some key points. Small traders are not consistently affording appropriate fridge space to flavoured milks. Energy drinks are continuing to hold favour in the teen market. Young adults aged 18­25 are more conservative than their slightly older cohort 25­35. UHT or long life milk has progressed to the point where taste tests show little noticeable difference.

11) The fridge space problem referred to in MC‐A represents a: A) microenvironment threat. B) macroenvironment threat. C) microenvironment weakness. D) macroenvironment weakness. E) A and B above. 12) The product concerned (in MC‐A) is considered in some states an Australian icon. Given this, which of the key points listed has the clearest strategic implications? A) Small traders are not consistently affording appropriate fridge space to flavoured milks. B) Energy drinks are continuing to hold favour in the teen market. C) Young adults aged 18‐25 are more conservative than their slightly older cohort 25‐35. D) UHT or long life milk has progressed to the point where taste tests show little noticeable difference. E) None of A, B, C, or D above has the clearest strategic implications 13) What would be the most logical strategic implications for the prominence of energy drinks in the teen market? A) Reduce the resource allocation aimed at marketing toward this group. B) Promote the brand as being high in energy. C) Identify opinion leaders amongst this group and provide them with free product. D) Identify favoured celebrities and have them endorse the product. E) All are feasible. 14) Having long life milk means the product can stay longer in the fridge before having to be replaced. To the firm, the main benefit of this is reduction of production and distribution costs. This benefit has been derived through changes in the ___________ A) political environment. B) technological environment. C) distribution environment. D) physical environment. E) economic environment.
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Read the MINICASE B (MC­B) below and answer questions 15 ­ 19.

MINICASE B [MC­B]: At a business park in the north of Melbourne the manger reflect on the mornings meeting with her leading organisations, trying to understand their success. She notes the following. Lenny is consistently noting and looking for information that may help his marketing management decisions. Mendel is conducting a pricing study for his product portfolio. Phillipa is searching the internet to try and solve a marketing problem she has. Simone is running focus groups with retirees to try and understand what motivates their holiday decisions. Peter says he doesn't bother with research because he has experienced staff that he can always rely on to help make decisions.

15) Which of these individuals is clearly engaging in marketing intelligence? A) Lenny B) Mendel C) Phillipa D) Simone E) Peter 16) Lenny’s research referred to in MC‐B above is likely to have been driven by the:

17) In MC‐B above, Phillipa is collecting:

A) taxation department. B) accounting department. C) board room. D) marketing department. E) production department.

18) For her research activities (in MC‐B), Simone’s will need:

A) primary data. B) secondary data C) short‐term data. D) electronic data. E) focused group data.

A) eight to twelve people for this primary data collection process. B) eight to twelve for this secondary data collection process. C) ten to twenty people for this secondary data collection process. D) ten to twenty people for this primary data collection process. E) two to three highly committed individuals who will concentrate on the issue.

19) Based on MC‐B above, Peter is using: A) no research at all to make decisions. B) external records to make decisions. C) internal records to make decisions. D) intuition to make decisions. E) all of these.
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Read the MINICASE C (MC­C) below and answer questions 20 – 23.

MINICASE C [MC­C]: In 1991, Emma needed to make some extra cash. Her husband was a student, and they had two small children. She was already selling Emma's Country Kitchen gourmet cocoa mixes at local fairs and craft shows when she came up with the idea for flavoured creamers for coffee. She developed nine different flavours of creamers including raspberry mocha and cherry vanilla. Response to the creamers was so good she decided to rent a small manufacturing facility. Her continued success brought her to the attention of some national retailers who were interested in carrying her product. National exposure on the Optus shopping channel gave the business a big boost in customer awareness.

20) A consumer who was aware of Emma's Country Kitchen flavoured creamers, but who did not know where or how to purchase the item, its cost, or its contents and was stimulated to seek information about the product, would be in the ________ stage of the new product adoption process.

A) interest B) trial C) diffusion D) adoption E) evaluation

21) Assume that at this time most adopters of Emma's Country Kitchen flavoured creamers fall into the category of early majority. These would be people who:

A) are typically opinion leaders. B) are tradition bound. C) adopt new products and ideas before the average person. D) adopt new products early before most people even know they exist. E) are suspicious of change but know that it is necessary.

22) Emma and her husband are convinced their creamers have a taste superior to any other similar products currently on the market. They want consumers to see the same high level of ________ that they see.

A) compatibility B) communicability C) divisibility D) complexity E) relative advantage

23) One of the important factors that would influence a consumer's purchase of Emma's flavoured creamers is the ability to sample the flavours at home. As a result Emma and her husband developed a sample pack which contained one ounce of each of the creamer flavours. This gave the new product a high level of:

A) relative advantage. B) communicability. C) complexity. D) divisibility. E) compatibility.
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Read the MINICASE D (MC­D) below and answer questions 24 ­ 26.
MINICASE D [MC­D]: Pork is a tougher meat than most consumers realise. Naturally it is much tougher than any poultry. Pork producers are interested in products that will tenderise pork. One of the problems faced with quantifying how tender a piece of pork is defining the word tender. Electromyography is one of the techniques currently used to objectively measure tenderness. It involves attaching electrodes to jaw muscles and measuring on a metre the amount of work the individual expends chewing. One new method commercial meat producers use for tenderising pork is called Hydrodyne. With this method, the vacuum­packed meat is placed in a large vat of water. Shock waves created by a dynamite blast are sent through the meat, which makes it more tender.

24) The sale of both the Electromyography machine and the Hydrodyne system depend on how much pork consumers eat though the total demand for these products is not affected by their prices. This means that demand for the Electromyography machine and the Hydrodyne system is:

25) Based on MC‐D above, what type of buying situation would most likely exist for a pork producer buying dynamite for its three‐year‐old Hydrodyne system?

A) derived and inelastic. B) reciprocal and elastic. C) inelastic and fluctuating. D) inelastic and reciprocal. E) elastic and derived.

A) New task B) Straight rebuy C) Reciprocal buy D) Functional rebuy E) Modified buy

26) According to MC‐D above which of the following is an example of an organisational factor that could affect the purchase of a Hydrodyne system? A) A government ruling that the Hydrodyne adversely affects the shelf life of pork. B) A significant growth in the number of people who are vegetarians. C) A local ordinance against the explosion of dynamite within the city limits. D) A tripling of the price of dynamite. E) A move by its largest customer to centralise its purchasing decisions.

Read the MINICASE E (MC­E) below and answer questions 27 ­ 31.
MINICASE E [MC­E]: Peter has just decided on the segment to target for his companies new offering. He has made a check list to help finalise his decision: (1) He has determined that the ideal segment profile is measurable within New Zealand; (2) he has determined where they live and shops as well as what media they are exposed to; (3) he knows that, if this markets potential is realised, it would more than triple his current sales; and (4) he has the resources and connections to get the product to this market. (Questions are on the next page.)
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27) In MC‐E above, the first item on Peter's checklist represents the market segments is: A) potential. B) growth. C) measurability. D) identification. E) all of the above. 28) The second item on Peter's checklist represents the market segments: A) identification B) behavioural intentions C) lifestyle D) accessibility E) obtainability 29) The third item on Peter's checklist represents the market segments: A) profitability B) volume C) sustainability D) potential E) substantiality 30) The fourth item on Peter's checklist represents the market segments A) accessibility. B) actionability. C) approachability. D) marketing requirements. E) all of the above. 31) Refer to MC‐E above. Peter has identified an unmet need in this segment. Given his evaluations thus far he should now _______________. A) confirm the segment and proceed with setting his objectives. B) identify the segment's profile with relevant criteria. C) brand the product in a meaningful way for the segment. D) implement his marketing mix. E) develop a perceptual map. Read the MINICASE G (MC­G) below and answer questions 32 ­ 35.

MINICASE G [MC­G]: Arabella Quality Meats (AQM) is a star in the processed meat industry. With sales in more than 140 nations, AQM had almost $4.6 billion in sales last year. It owns and operates meat­processing plants in 40 different nations. AQM's business strategy includes product innovation, acquisitions and mergers, and market leadership in a number of different categories. Its growth strategies support an annual 6 percent growth in sales.

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MARK1012 FINAL EXAMINATION: S1 2012

Brands in the Arabella Quality product line are Belle's, Emma’s Home Cookin’, Sunnydale Farms, Sarah’s Cookies, Quick & Tasty and Cordy's Kosher Foods. An AQM executive claims that they “… work very hard at Arabella Quality on brand equity. We have to make sure our new ideas are not only profitable and achieve big volume for our [retail] customers, but also that they are consistent with the quality of the brand and there is a good fit."

Some of AQM's recent new products that seems to have a good fit with the company's other products was Quick & Tasty. Quick & Tasty is described as a lunch combination. It features two small sandwiches, chips, and dessert. The lunch combination was developed and marketed by Emma’s Home Cookin’, a company that prior to the introduction of this product had just made cakes.

32) Refer to AQM Case in MC‐G above. Given what you have read about AQM, you would think that its executives want you to classify the AQM products as: A) homogeneous shopping products. B) specialty products. C) convenience products. D) staples. E) impulse products.

33) Refer to MC‐G above. If you look at AQM as strictly a meat processing company, which of the following statements would best describe the company? A) AQM has a narrow, but deep product mix. B) AQM has a long and deep product mix. C) AQM's product mix lacks consistency. D) AQM has a narrow and shallow product mix. E) AQM has a wide, yet shallow product mix.

34) Refer to MC‐G above. One basis for maintaining AQM's brand equity would be to: A) offer innovative new products on a continual basis. B) make community involvement an important part of AQM's strategic plan. C) curb the entrepreneurial spirits of its decentralised strategic business units. D) make sure customers have a strong perception of brand quality. E) use selective distribution.

35) Refer to MC‐G above. When Sunnydale Farms, a manufacturer of various kinds of sausages, introduced a new line of sausages made with turkey meat under the Sunnydale Farms brand, it was an example of a ________ strategy. A) co‐branding B) brand licensing C) line extension D) multibranding E) brand extension
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Read the MINICASE H (MC­H) below and answer questions 36 ­ 41.

MINICASE H: [MC­H]: At Consolidated Diversified Inc. (CDI), five product managers were reviewing where their products were in the product life cycle [PLC]. Lola's product had seen a fall off in sales and a drop in profits. Boris's product had seen a slowdown in sales growth and a levelling off of profits. Louis's product was gaining rapid market acceptance and increasing profits dramatically. John's product had not shown a profit and needs heavy promotion support. Sonia's product had high costs but no sales to date.

The advertising department at CDI was setting the advertising budget for a new consumer product (packaged goods). Team feelings were that this would be a high­budget product. Blake knew that this product was likely to be a market leader and argued that expenditures would have to be high. Hazel realised that Blake's plan meant that they would need many repetitions to put the product's image across. Sabrina was aware that the competition offered similar products and the advertising would have to work hard to set the product apart. Atom knew it was expensive to launch new products to gain consumer trial. And Tikki was sure that they would have to spend heavily to be heard above the noise of an already crowded market.

36) Which of the following is (are) correct in the context of MC‐H?

37) Based on MC‐H, Blake is focusing on _____________ in setting the advertising budget. A) stage in the product life cycle B) market share C) competition and clutter D) advertising frequency E) product differentiation 38) According to MC‐H, in setting the advertising budget Hazel's concerns address _____ A) stage in the product life cycle B) market share C) competition and clutter D) advertising frequency E) product differentiation 39) In MC‐H, Sabrina is weighing __________________ when setting the advertising budget. A) stage in the product life cycle B) market share C) competition and clutter D) advertising frequency E) product differentiation
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A) Sonia's product is most likely in the product development stage, while Lola’s product is in the decline stage of the PLC. B) John's product is most likely in the introductory stage of the PLC. C) Louis's product is most likely in the growth stage of the PLC. D) Boris's product is most likely in the Maturity stage of the PLC. E) All of the above statements – A, B, C, and D are correct.

40) Refer to MC‐H. Atom is emphasising which factor to be considered when setting the advertising budget?

41) Refer to MC‐H above. Tikki is considering which of the following factors used when setting the advertising budget?

A) stage in the product life cycle B) market share C) competition and clutter D) advertising frequency E) product differentiation

A) stage in the product life cycle B) market share C) competition and clutter D) advertising frequency E) product differentiation

42) Which of the following functions do members of the marketing channel typically perform as they move merchandise from one level to the next?

A) The creation of form utility. B) Activities‐based cost accounting. C) Risk taking. D) Lengthening the channel so as to provide more specialised service. E) Eliminating unnecessary channel functions. 43) A zero‐level channel _____________.

A) may also be called a backward channel. B) is the same as a direct marketing channel. C) has only one intermediary between producer and consumer. D) has three members. E) refers to intensive distribution channels where there are an indeterminate number of channel members.

44) The goal of channels in the service sector is to make the service ______________. A) available and accessible. B) affordable, differentiated, and easy to find. C) risk free, readily available, and differentiated. D) differentiated, targeted, and affordable. E) affordable and accessible.

45) The three degrees of distribution density are _________________.

A) intensive, extensive, and selective. B) extensive, concentrated, and selective. C) intensive, exclusive, and selective. D) extensive, pervasive, and concentrated. E) concentrated, exclusive, and intensive.
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46) The ____________ combines successive stages of production and distribution under single ownership.

47) When a producer has a conflict with its wholesalers, the producer is experiencing ________ conflict.

A) horizontal marketing system B) conventional marketing system C) multichannel marketing system D) corporate vertical marketing system E) contractual vertical marketing system

A) horizontal channel B) multichannel C) direct channel D) vertical channel E) single channel

48) A computer manufacturer sells its machines through retail outlets and catalogues. The retailers are not happy about the catalogue sales because they claim the direct marketing sales are adversely affecting their in‐store sales. This is an example of ______________ conflict.

A) horizontal channel B) direct channel C) multichannel D) vertical channel E) single channel

49) Virgin Blue Airlines has set its ticket prices lower than anyone else's prices. It operates in a market that is highly price sensitive in which low prices stimulate market growth. Its costs have fallen as it has become more efficient at providing airplane service to its customers. Virgin Blue is using a ________ pricing strategy.

A) market‐skimming pricing B) product quality leadership C) maximum current revenue D) market‐penetration pricing E) maximum sales growth

50) Demand is likely to be price elastic if:

A) there are many alternatives and direct substitutes for the product. B) buyers do not readily notice price changes. C) buyers are slow to change their purchasing habits. D) buyers think a higher price is justified by quality differences. E) the buyers can use normal inflation to explain the price increase. END OF EXAM

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