MALAWI ASSEMBLIES OF GOD UNIVERSITY

PRINCIPLES OF MARKETING- CCC 2103

MID SEMESTER EXAMINATION- APRIL 2017

EXAMINATION INSTRUCTIONS
TIME ALLOCATION; TWO HOURS (2 HRS)
THIS PAPER CONTAINS 10 PAGES, PLEASE CHECK
ANSWER ALL QUESTIONS ON THE ANSWER SHEET PROVIDED

SECTION A: MULTIPLE CHOICE

SECTION INSTRUCTIONS
THIS SECTION CARRIES 30 MARKS
EACH QUESTIONS CARRIES A MARK
ANSWER ALL QUESTIONS IN THIS SECTION
INDICATE YOUR ANSWER BY WRITING A, B, C, OR D

1. Which of the following statements is correct?

A. Marketing is the term used to refer to the sales and advertising functions within a
firm.
B. Marketing managers do not usually get involved in production or distribution
decisions.
C. Marketing is an activity that considers the needs of the organization first; not the
needs of society as a whole.
D. Marketing is the processes for creating, communicating, delivering, and exchanging
offerings that have value for customers and society at large.

2. Which of the following is the most recent stage of marketing evolution?

A. Marketing department era.
B. Marketing company era.
C. Production era.
D. Sales era.

3. ___________ are wants backed by the ability to buy.

A. Needs.
B. Resources.
C. Demands.
D. Values.

4. The term marketing refers to _____________.

A. New product concepts and improvements.
B. Advertising and promotion activities.
C. An idea that stresses customer value and satisfaction.
D. Planning sales campaigns.

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5. In a ___________orientation, the role of marketing research is to determine customer
needs and how well the company is satisfying them.
A. Selling.
B. Marketing.
C. Production.
D. Product.

6. A marketing philosophy summarized by the phrase 'a stronger focus on social and ethical
concerns in marketing' is characteristic of the _________.
A. Production.
B. Sales.
C. Marketing.
D. Societal marketing.

7. Which of the following factors contributed to the transition from the production period to
the sales period?
A. Increased consumer demand.
B. More sophisticated production techniques.
C. Increase in urbanization.
D. The Great Depression.

8. Newsletters, catalogues, and invitations to organization-sponsored events are most

closely associated with the ____________ element of the marketing mix.
A. Packaging.
B. Distribution
C. Production.
D. Promotion.

9. ___________ is the only element of the marketing mix that produces revenue.
A. Product.
B. Price.
C. Place.
D. Promotion.

10. When a new developed product concept is tested, the next immediate step is to
__________.
A. Develop market strategy.
B. Develop a testing technique.
C. Develop intermediaries.
D. Develop logistic network.

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11. __________ are relatively inexpensive, frequently purchased items for which buyers
exert only minimal purchasing effort.
A. Consumer products.
B. Convenience products.
C. Shopping products.
D. Unsought products.

12. During the __________ stage of the Product Life Cycle (PLC), the sales curve peaks and
starts to decline and profits continue to fall.
A. Introduction.
B. Growth.
C. Maturity.
D. Decline.

13. New-product development starts with _____________.

A. Idea screening.
B. Idea generation.
C. Concept development and testing.
D. Marketing strategy development.

14. A detailed version of a new idea stated in meaningful customer terms is called a
_____________.
A. Product concept.
B. Product idea.
C. Prototype.
D. Product version.

15. During which stage of new-product development is management most likely to estimate
minimum and maximum sales to assess the range of risk in launching a new product?
A. Product analysis.
B. Market analysis.
C. Business analysis.
D. Prototype analysis.

16. In which stage of the Product Life Cycle (PLC) will promotional expenditures be high in
an attempt to react to increasing competition?
A. Introduction.
B. Growth.
C. Maturity.
D. Decline.

17. Line extension refers to ___________.

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 A. A company extending existing brand names to new forms, colors, sizes or flavors.
B. A brand created and owned by a reseller of a product or service.
C. A company extending a current brand name to new products in a new category.
D. A product carries the brand name that is created by a retailer.

18. A measure of the value and strength of a brand, including an assessment of a brand's
wealth is known as ____________.
A. Brand personality.
B. Brand perception.
C. Brand value.
D. Brand equity.

19. Which of the following is not a tangible market offering?

A. Detergents.
B. Automobiles.
C. Investment management.
D. Soft drinks.

20. _____________ is not an element of people (in the marketing mix).

A. Motivation.
B. Team work.
C. Worker uniform.
D. Customer training.

21. Which of the following would be difficult for customers to evaluate before purchasing?
A. Jewelry.
B. Auto repair.
C. Furniture.
D. Clothing.

22. Temporarily reducing prices to increase short-run sales is an example of ____________.

A. Segmented pricing.
B. Dynamic pricing.
C. Geographical pricing.
D. Promotional pricing.

23. ____________ is the amount of money charged for a product or service.

A. Price.
B. Accountancy.
C. Demand.
D. Value.

24. Costs that do not vary with production or sales levels are called __________.
A. Standard costs.
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 B. Direct costs.
C. Fixed costs.
D. Variable costs.

25. The type of market that consists of many buyers and sellers trading in a uniform
commodity such as tomato is known as _____________.
A. Perfect competition.
B. Monopolistic competition.
C. Oligopolistic competition.
D. Pure monopoly.

26. If a Lilongwe based university charges different tuition rates to Lilongwe students and
students from outside Lilongwe, then the university is practicing a form of ___________.
A. Promotional pricing.
B. Institutional pricing.
C. Segmented pricing.
D. Psychological pricing.

27. If a company pursues ___________, it often temporarily prices products below the list
price, and sometimes even below cost, to increase short-run sales.
A. Psychological pricing.
B. Promotional pricing.
C. Symbolic pricing.
D. Psychographic pricing.

28. When different versions of a product are priced differently but not in accordance to
differences in their value, it is a form of ______________.
A. Customer-segment pricing.
B. Product-form pricing.
C. Location pricing.
D. Time pricing.

29. The most elementary pricing method is to add a standard ________ to the product’s cost.
A. Target margin.
B. Target price.
C. Markup.
D. Margin.

30. What is captive product pricing?

A. Setting prices across an entire product line.
B. Pricing bundles of products sold together.
C. Pricing products that must be used with the main product.
D. Pricing low-value by-products, to get rid of them.
THIS SECTION CARRIES TEN MARKS
ANSWER ALL QUESTIONS IN THIS SECTION
EACH QUESTION CARRIES ONE MARK
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INDICATE WHETHER THE STATEMENT IN THIS SECTION IS TRUE OR FALSE BY
INDICATING A FOR TRUE AND B FOR FALSE

31. A product can be a person, place, or an idea.

A. True.
B. False.

32. A good example of a pure tangible good would be air travel.

A. True.
B. False.

33. A company’s offer to the marketplace often includes both tangible goods and services—
for example, when people patronize restaurants both for their food and their service. This
would be an example of a pure service.
A. True.
B. False.

34. Product mix width refers to the number of different product lines the company carries.
A. True.
B. False.

35. Service intangibility means that a service cannot be stored for later sale or use.
A. True.
B. False.

36. Brand personality is defined as the practice of using the established brand names of two
different companies on the same product.
A. True.
B. False.

37. A private brand is created and owned by a manufacturer of a product or service.

A. True
B. False

38. Many consumers use price as an indicator of quality and value.

A. True.
B. False.

39. In trying to maximize market share for a new product, a firm would be best served to use
a market-skimming pricing strategy.
A. True.
B. False.

40. If demand hardly changes with a small decline in price, we say that the demand is
inelastic.
A. True.
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 B. False.

SECTION C: OBJECTIVE QUESTIONS

SECTION INSTRUCTIONS
THIS SECTION CARRIES TWENTY MARKS
ANSWER ALL QUESTIONS IN THIS SECTION
MARKS ALLOCATION ARE INDICATED ON EACH QUESTION

41. XYZ Ltd. is in the process of developing a new product. Concept testing has already been
done. However management is planning for test marketing. Explain the difference
between concept testing and market testing. (5 marks)

Concept testing is the process of using quantitative methods and qualitative methods
to evaluate consumer response to a product idea prior to the introduction of a
product to the market.
Test marketing is a procedure by which a company attempts to test on a small basis
the commercial viability of the marketing plan for a new or modified product or
package.

42. People differ in the way they try or adopt new products. Describe the five adopter groups
for new product. (5 marks)

Innovators
– Less than 2.5% of population, First adopters of new products, venturesome
in nature, important as the initial target, A new product that fails to win the
esteem of this group is unlikely to penetrate the mass market
Early adopters
– 13.5% of population, Careful choosers of new products, respected members
of the community and are likely to be opinion leaders
Early majority
– 34% of the population, Those who adopt a new product just before an
average person, more cautious of new products than the early adopters, Need
more information
Late majority
– 34% of the population, Those who adopt the new product when they feel it is
necessary to do so, skeptical about new products and harder to persuade,
greater importance on word of mouth recommendations than the media for
product information.
Laggards

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 – 16% of the population, last adopters, who distrust new product, forced to
adopt new products when their favoured items have been discontinued often
older and or from lower socio-economic groups

43. There are four basic elements of the marketing mix. However the marketing mix of
services has additional three elements making it a total of seven. Briefly explain the
importance of the additional three elements to a restaurant of your choice. (6 marks)

People
• The selection, training, and motivation of employees can make a huge difference in
customer satisfaction.
• Ideally, service employees should exhibit competence, a caring attitude,
responsiveness, initiative, problem-solving ability, and goodwill
• Customers are important because they are a source of influencing other customers

Physical evidence
• contribute towards the image of the service (organisation) as perceived by the
customer
– E.g. Cleanliness in doctor's clinic, exterior appearance and interior decor of
restaurant, the comfort of the seating arrangement in a cinema hall
• physical, tangible and controllable aspects of a service organisation
Types
• Peripheral evidence: possessed as a part of the purchase of service but by itself is of
no value
– E.g. Airline ticket, cheque book, receipt for a confirmed reservation in a hotel
• Essential evidence: cannot be possessed by the customer
– E.g. building, décor, logo, colours

Process
• System by which a service is delivered
• Three kinds of delivery processes that are applicable in case of service products
– line operations: consumer moves through logically arranged operations
which are organised in a sequence e.g. self service restaurants, shops etc
– job shop operations: When the consumers require a combination of services
using different sequences e.g. hospital
– intermittent operations: useful when the type of service is rarely repeated e.g.
consultancy services, advertising

44. Explain the four objectives that organisations pursue when setting prices for their
products. (4 marks)

• Income-related. How much money can be made?

• Volume-related. How many units can be sold?
• Competition-related. What share of the available business is wanted?
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 • Societal. What are the responsibilities to customers and society as a whole?

SECTION D: ESSAY QUESTIONS

SECTION INSTRUCTIONS
THIS SECTION CARRIES FOURTY MARKS
EACH QUESTION CARRIES TWENTY MARKS
QUESTION 45 IS COMPULSORY AND CHOOSE ANY OTHER ONE IN THIS SECTION

45. Describe how the five characteristics of service operations can be related to AXA Bus
Services. (20 marks)

Inseparability/ Customer Participation in the Service Process

The presence of the customer as a participant in the service process requires an
attention to facility design that is not found in traditional manufacturing operations.
The presence of the customer during service delivery (jounrney/ transportation)
requires attention to the physical surroundings of the buses that is not necessary for a
typical factory. For the customer, a bus service is an experience occurring in the front
office of the service facility, and the quality of service is enhanced if the service facility
(bus) is designed from the customer’s perspective. Attention to interior decorating,
furnishings, layout, noise, and even color can influence the customer’s perception of the
service.

Ownership
The customers have access to the bus (facilities) but do not own anything after
purchasing the service

Perishability
A bus services is a perishable commodity. Empty seats in a bus travelling from Mzuzu
to Lilongwe represent a lost opportunity. Because a service cannot be stored, it is lost
forever when not used. The full utilization of service capacity becomes a management
challenge, because customer demand exhibits considerable variation and building
inventory to absorb these fluctuations is not an option.
Consumer demand for bus services typically exhibits very cyclic behavior with
considerable variation between the peaks and valleys.

Intangibility
When buying a product, the customer is able to see it, feel it, and test its performance
before purchase. For a service, however, the customer must rely on the reputation of the
service firm.

Heterogeneity
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The combination of the intangible nature of services and the customer as a participant
in the service delivery system results in variation of service from customer to customer.
The interaction between customer and employee in services, however, creates the
possibility of a more complete human work experience. In services, work activity
generally is oriented toward people rather than toward things.

46. Using relevant examples, discuss the five branding strategies that manufacturers can use.
(20 marks)

Line extension
• Introduce additional items in the same product category under the same brand
name, such as new flavors, forms, colors, added ingredients, and package sizes.
– E.g. Dannon introduced several Dannon yogurt line extensions, including
fat-free “light” yogurt and dessert flavors such as “mint chocolate cream
pie.”
• The vast majority of new products are actually line extensions
Brand extensions
• A company may use its existing brand name to launch new products in other
categories.
– E.g. Autobytel.com, a pioneer of Internet-based car sales, used brand
extensions to introduce automotive financing, insurance, and car repairs
on its Web site
Multibrands
• A company will often introduce additional brands in the same product category.
• Sometimes the firm is trying to establish different features or appeal to different
buying motives
New brands
• When a company launches products in a new category, it may find that none of
its current brand names are appropriate
Co- branding
• A rising phenomenon is the emergence of co-branding (also called dual
branding), in which two or more well-known brands are combined in an offer.
• Each brand sponsor expects that the other brand name will strengthen
preference or purchase intention.

47. Most organisations market individual products that are part of a broader product mix and
prices must be set using product mix pricing strategies. Using relevant examples, discuss
the five product mix pricing strategies. (20 marks)

Product line pricing

takes into account the cost differences between products in the line, customer
evaluation of their features, and competitors’ prices

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* For example channel offers 20 different collections of bags of all shapes and sizes
at price that range from under $50 to more than $1,250.
Optional-product pricing –
A business sets a low cost for its most basic product and then benefits from selling
more costly accessories
Takes into account optional or accessory products along with the main product
E.g. a car buyer may choose to order a GPS navigation system & Bluetooth wireless
communication.
Captive-product pricing
involves products that must be used along with the main product
Examples of Captive products are razor blade cartridges , Gillette once you bought
the razor, you are committed to buying replacement cartridges at $25 an eight pack
By-product pricing
Refers to products with little or no value produced as a result of the main product.
Producers will seek little or no profit other than the cost to cover storage and
delivery.
Petroleum products often results in by-products.
Product bundle pricing
combines several products at a reduced price
E.g. fast food restaurants bundle a burger , fries and a soft drink at a combo price

End of semester examinations

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