Open University of Mauritius

CEMBA [OUpm003]
CEMPA [OUpm004]
MBA GENERAL [OUpm005]
MBA SPECIALISATION [OUpm006]
MBA EDUCATIONAL LEADERSHIP [OUpm007]

EXAMINATIONS FOR: November 2014 – Semester 1

MODULE: C8 – Marketing Management

[OUpm0031104/OUpm0041104/OUpm0051104/
OUpm0061104/OUpm0071104]

DURATION: 3 HOURS

READING TIME: 15 Minutes

INSTRUCTIONS TO CANDIDATES

1. This paper consists of Sections A and B.

2. Section A is compulsory and has 3 Questions.
3. Answer any two questions from Section B.
4. Always start a new question on a fresh page.
5. Total Marks: 100

This question paper contains 6 questions and 8 pages

Page 1 of 8
 SECTION A (COMPULSORY)

Case Study – [60 marks]

Mind the Marketing Gap

Industry profiles - Sizing up Marketer
and Consumer Perception

Adapted from “The Economist Intelligence Unit”

October, 2014

The Economist Intelligence Unit (EIU) conducted two surveys about the
effectiveness of marketing channels in 2013. The respondents were balanced
evenly between the US and the UK and included roughly equal numbers of
executives from five key consumer products industries: automotive,
clothing, banking, travel, and media,. All consumers had used digital channels
to research products and purchases from each of these industries.

New ways of engaging with customers through multiple channels are changing
the customer experience in both the B2C and B2B space. For example, social
media remains in an experimental stage for most B2B companies, although it is
expected to grow in relevance. In parallel, online video is expected to become
more prevalent as a channel, and marketers are customising their messages for
mobile platforms. This makes the design and user experience more important for
marketers to reach customers through instant, highly visual mediums.

Improving customer engagement is building customer lifetime value. This is

particularly important in order to increase retention: to achieve this, delivering a
coherent customer experience is crucial. Such companies are increasingly
looking to use their customers’ experience as a way of differentiating themselves
from their competitors.

At the same time, mining customer insights is crucial to determining trends and
engagement patterns along the buying cycle, allowing companies to tailor
messages to ever-narrower customer segments.

Customer feedback, combined with the new insights gleaned through analytic
tools, are influencing product development and design, as well as increasing
speed to market. Marketing information is becoming more important as a
competitive factor in industry, driving a greater role for the marketing function
across the organisation. To leverage the new role of marketing requires a change
in process or operating structure, enabling marketers to share insights quickly.

Page 2 of 8
Metrics for valuing marketing’s new value are not uniform: many are company- or
even product-specific. Traditional measures of customer awareness, attraction
and retention are still commonplace, but companies are tracking these more
fluidly across channels along the customer lifecycle. Others look to the key
metrics surrounding investment in marketing technologies or new campaign
strategies that are directly tied to cost savings and revenue generation. Some are
harnessing these metrics to realise further efficiencies gained via sharing
customer insights across the entire company.

Marketing’s remit is expanding beyond traditional lines, interweaving internally

with other company functions and externally with a wider variety of customer
touch-points. As the importance of new platforms and technologies continues to
grow, senior marketers need key staff with knowledge of analytics as well as an
understanding of budgets and forecasting. Furthermore, changing business
models are forcing marketers to expand their knowledge of not only their own
business environments, but of those of their clients and supply chains.

Chief Marketing Officers (CMOs) need to recognise the capabilities and

limitations of the tools available to access their clients, deliver their message and
glean customer insights. Although still imperfect, these technologies are
reshaping the function of marketing and opening up a range of new opportunities.
CMOs must earn greater relevance in the boardroom with more cross-functional
understanding and the development of closer relationships with other members
of the C-suite.

The findings of both surveys indicate that although traditional marketing channels
remain important, vendors have shifted more towards interactive communications
as part of an increasing emphasis on personalisation. This trend has grown
despite apparent consumer lack of interest and indifference. 70% of consumers
say they find personalised messages annoying when “attempts at personalisation
are superficial”; some 63% claim they receive so many personalised messages
that they no longer mean anything to them.

This approach, however, raises privacy issues and presents a potential source of
misalignment between marketers and consumers. To create customised offers,
marketers must use increasingly sophisticated analytical techniques to extract
insights from “Big Data”. The survey found that marketing executives
substantially underestimate consumer concern about the use of personal
information collected in the process.

The industry highlights from the survey findings are detailed follow:

Automotive

Shift focus from the product to the customer. Revolution in the car industry is not
only taking place in new business models, but also in marketing and sales. There
is a massive shift in purchasing behavior of the younger target groups. The days
of spending your Saturday at the dealership, taking a few models out for a test
drive and driving home in a brand new, shiny car are officially over.
Page 3 of 8
The same applies to the traditional sales and marketing model of the auto
industry, where sales funnels were attempted at the outset in order to fuel desire
through emotional advertising and the actual sales process began in the minds of
the managers when the potential buyer arrived at the dealership. The
manufacturer’s task is to close the gap between desire (advertising) and
experience (test drive) in the sales process through targeted relationship
management.

The auto industry is focused on expanding and diversifying its customer base
through customised promotions. Deep analysis of consumer data (analytics
target consumer segments rather than individuals) now tops the list of best
marketing strategies cited by auto executives, up from 13% five years ago to
30% today (above the all-industry average of 23%).

Banking

The banking industry is working to regain trust. Customer retention is cited as

the top marketing goal by 42% of executives, a significant jump from 23% five
years ago (and much higher than the all-industry average of 28%). Banks have
moved to personalise outreach to consumers, but they lag behind other
industries in presenting consumers with individualised offers and promotions.
They also assign unusually high importance to their reputation for consumer
service (28% vs. an all-industry average of 16%).

Anatomy of a Customer Experience – Banking sector

Back in 1990, I entered my local bank to carry out a transaction. The clerk asked
me for my ID. The only problem was I had left my ID at home! ”Let me check with
the branch manager” said the clerk. He turned around and simply asked his boss:
“Do you know this gentleman?” The branch manager replied: “Yes, that’s Mr.
Vandersen from New Capitol Hill.”

As a result, two things happened: I got the service I needed and I knew that my
bank knew me really well.

Now, in 2013, the numbers of transactions I have with my bank are increasing
every day, especially thanks to easily accessible new channels like internet and
mobile apps. However, face to face interactions have almost disappeared. These
days when I need to go to my bank, I am relieved when the clerk is able to find
me in the system.

To re-build the customer-bank relationship, opportunity exists for banks to

become more customer-centric by leveraging vast amounts of customer data,
employing customer analytics, and by further developing mobile capabilities to
create more personal interactions.

Page 4 of 8
Customer data can provide understanding of needs and preferences. Banks have
access to more structured and unstructured consumer data than ever before
which can be used to build better customer relationships. However, Banks may
not possess the required analytical tools or may have selected the wrong
analytical tools (due to unclear business objectives), rendering extraction of
insights from data virtually impossible. Based on these insights banks can
differentiate themselves and develop a successful customer retention strategy.

Mobile Banking’s Impact on Building Customer Experience. Over the last

decade, the mobile channel has evolved from a pure customer service instrument
to a tool that drives business growth globally. The customer survey in the report
shows mobile banking is emerging as a key tool for banks to drive customer-
centricity, enable sales, influence the product-channel mix and achieve
differentiation. In developing markets and for younger customers, the quality of
mobile service has been found to be a significant influence on the customer’s
decision to choose or leave a bank.

Clothing

Emerging designers, beware: Even if you are able to create a beautiful product,
the fashion world is fraught with tricky choices on incorporation, competitive
analysis, sales, and protecting your brand.

"It's not just making a design that's great – it's figuring out wholesale margins,
adding in the cost of packaging, shipping, taxes, tariffs, and making sure your
profit margin will keep your business running," Scotto-Dinan, a designer in
clothing model said. "Like many designers, I'm so much more creative than
analytical. But you have to focus on the numbers to make your business actually
work."

In other words, breaking into fashion requires a lot more than just a degree in
design and a talent dreaming up runway styles. “We've interviewed emerging
designers who have built their businesses from scratch, as well as legal experts
who filled in the finer points of financial and legal sustainability to guide you
through the fashion start-up process.”

The clothing industry faces a volatile, multi-tier market that makes clear trends
difficult to discern. But it does stand out for its continuing use of offline channels
and its slow adoption of online channels. This is consistent with the fact that
clothing buyers are not intensive users of company online channels for any
particular part of the purchase decision process, although they are relatively
dependent on peer reviews. Three-quarters (75%) of consumers say pricing/
promotions are what they want most from company channels, somewhat higher
than the all-industry average of 67%.

Page 5 of 8
Media

The media industry—under siege from online competition—gives entering new

markets as its top objective, cited by 45% of executives, up nine points from five
years ago (and compared with an all-industry average of 28%). The industry
assigns more importance than the others to developing deeper consumer
insights (26% vs. all-industry average of 21%). The media industry also leads in
the importance attributed to online channels for building brand awareness, and it
places more emphasis on increasing sales, building customer loyalty,
differentiating products and cultivating influencers. The media industry is second
only to automotive in the proportion of marketing budgets it allocates to e-mail
(33% using more than one-quarter of their budget vs. an all-industry average of
28%).

Travel

The travel industry has been seriously challenged by disruptive technologies as

more and more travel providers deal directly with customers and as services
have become commoditised. Although industry executives report relatively high
increases in the use of online channels to drive sales (70% vs. all-industry
average of 66%), the use of online channels is about average for every other
application. Greater emphasis is now placed on collecting and analysing data for
individual customers.

The industry leads in the use of data for guiding product research, which is cited
as a top marketing strategy by 23% of executives, compared with an all-industry
average of 18%. For their part, travel consumers are ambiguous about their
channel preferences and report lower online use in their product research
compared with consumers in other industries.

Therefore, as innovations in marketing gather pace, the role of marketers is

changing as companies further leverage on customer insights to position
products and services to the marketplace. More accurate prediction capabilities,
greater cross-functionality and a shift from a cost centre to a revenue driver are
giving marketers greater influence across the company. Harnessing these
technologies requires marketers’ skill sets to broaden.

Page 6 of 8
 Attempt all questions - [60 marks]

QUESTION 1

Describe, with examples from the case study, how the distribution mix is now
changing with the emergence of technologies?
[20 Marks]

QUESTION 2

(a) Explain the concept of Big Data and its relevance in the way companies
are today gathering insights about their customers/ stakeholders?
[10 marks]

(b) Using 2 of the Industries surveyed in the case study as example, explain
how each of them are using the Big Data and modern analytics tool to
differentiating themselves in terms of researching its customer base?

[10 marks]

QUESTION 3

Using relevant examples from the case study, explain the SAVE concept and
how the marketing mix has now shifted from the traditional 7Ps model?

[20 Marks]

Page 7 of 8
 SECTION B

Attempt any TWO questions. Each question carries 20 marks

QUESTION 4

(a) Explain the purpose of carrying out a good STP process as part of the
marketing strategy.
[10 marks]

(b) You are the marketing manager for an existing chain of supermarkets and
are planning to consider expanding the business in new locations.

Use a diagram to illustrate your product positioning in the marketplace

against your competition and discuss your proposed positioning strategy

[10 marks]

QUESTION 5

(a) Using the extended 3 Ps of Services Marketing briefly explain the

characteristics and the relevance of Services Marketing in today’s market
place.
[10 marks]

(b) Using a local company of your choice, explain how the Servqual Model can
be used to analyse gap in delivering outstanding customer experience,
giving examples of your choice.
[10 marks]

QUESTION 6

(a) Explain the concept of the Ansoff Growth Matrix and evaluate its practical
usefulnesss as a strategic marketing tool.
[10 marks]

(b) Explain the concept of the PLC and the different ways it can be applied to
an organisation having either only a few product lines or a diversed
portfolio of products. Give examples to support your answer.
[10 marks]

Page 8 of 8