Marketing Examination

Question 1

In order to increase market share in a major urban area, the bottling company in question should consider strategies that focus on market positioning. To expand its revenue, the company can focus on two approaches: positioning strategies that increase market share or global marketing strategies that capture market segments that are willing to spend more on the projects. Thus, the two competing strategies that the company should consider are cost leadership strategy and focused differentiation strategy.

In order to assess which strategy best suits the overall goals of the company, it necessary to outline the key components of each strategy. Cost leadership strategy involves capturing a greater market share by competitively pricing the company products. In this case, the bottling company would utilize a cost leadership strategy by pricing its soft drinks, soda water, and tonic water at prices below the competitors. Through effective cost leadership, the company will increase sales and thus receive greater revenue. In contrast, differentiation seeks to enable a company to increase its prices by highlighting a distinct feature of the product or service that it offers. Thus, if there is a distinct characteristic of the soft drinks, soda water, or tonic water that the bottling company distributes, it can capture a specific segment of the market by highlighting the manner in which the product caters to that segment. For example, high-end beverages might appeal to high-income consumers who are able to pay a higher price for the beverages that they purchase.

Of the two discussed strategies, focused differentiation is the best strategy. While it is true that the large population makes it appealing to simply increase market share through cost leadership strategy, this is the least effective method of targeting consumers. Because the bottling company is distributed in a large city, there are larger market segments in demand for products that cater to their needs. The consequence of adopting a cost leadership strategy is that the bottling company would have to resort to distributing generic products that could be manufactured in a cost-efficient manner. Through focused differentiation, the bottling company can produce a unique product while building brand image among targeted consumer groups. As a result, the company can increase the price of its beverages and increase revenue while appealing to a smaller segment of the soft drink and beverages market.

Question 2

National Australia Bank is one of the largest banks and financial service providers in Australia. In order to develop a successful marketing strategy, the National Australia bank must consider the four characteristics of service, which are intangibility, inseparability, perishability, and variability. Intangibility conveys the idea that service businesses often provide a product that cannot be touched or felt. In the case of National Australia Bank, while customers can withdraw cash deposits, many of the benefits of banking are intangible. For example, online services, the provision of savings and checking accounts, and the provision of ATM machines are all services that vary in their tangibility. In order to effectively reach consumer markets, National Australia Bank must develop a strategy that brings these intangible services to the forefront and enables consumers to become aware of the less tangible aspects of banking. Expanding access to ATM machines is one method of making a less evident service more visible to consumers. Those who wish for banking convenience, an intangible service provided by National Australia Bank will enable consumers to recognize how National Australia Bank provides this service.

In addition to intangibility, inseparability must be considered in the marketing strategy of National Australia Bank. Because in-person banking services are provided at a branch location, National Australia Bank must consider the physical expansion of its facilities as a part of its marketing strategy. The costs of operating a new branch and hiring new employees are among the unique considerations that must be made when determining whether to enter new markets through expansion or acquisition. Next, perishability refers to the idea that services cannot be stored and distributed again at a future date. If National Australia Bank hires employees to serve customers, the company will incur a loss if the price of staffing the bank is not recovered through transactions made during the day. Thus, it is important to adequately staff financial institutions to meet the demand in a specific market. Additionally, variability must be considered in assessing marketing strategy. When it comes to financial services, the level of service a client receives can vary between branches. When developing a marketing strategy that is based upon expansion it is important to ensure that the quality of service a customer receives is similar between branches. Further, it is necessary to ensure that the types of banking services offered are similar. Decreasing variability is important to enhancing the reputation of the brand and sustaining customer satisfaction.

Thus far, the National Australia Bank is doing a satisfactory job of considering the four features of service in its marketing strategy. The bank is transparent in its fees in order to emphasize the less tangible benefits of banking with the organization. Further, the bank has pursued a strategy of expansion in order to ensure that full banking services can be delivered to clients in the markets that the bank serves. The success of the bank as one of the largest financial institutions in Australia evidences that the bank adequately staffs its facilities to ensure that revenues exceed expenditures. Finally, the bank stakes its reputation on providing uniform services for all branches or ATM customers. Regardless of the branch that one visits, they can receive the same banking services, such as opening a checking account or obtaining a loan. Moving forward, it is recommended that the bank continue to develop its online services in order to continue to bring conveniences to consumers. Another bonus of promoting online banking services is that it will reduce variability, which is one of the biggest liabilities of operating a service business.

Question 3

This analysis will consider the marketing channels that can be adopted by a manufacturer of children’s toys. The four primary channels that the manufacturer can consider are direct selling, intermediary selling, dual distribution, and reverse channels. Direct selling involves the selling of products through a set retail location such as Toys R Us, intermediary selling seeks wholesalers and retailers to provide the products to the consumer, dual distribution seeks two or more channels as a means of making a product available to the target market, and reverse channels is when the consumer located the producer or intermediary to initiate the purchase.

In determining the appropriate channel, the toy manufacturer will have to make several considerations. First, the manufacturer must consider the budget they have to allocate towards methods of distribution. Because direct marketing is the most expensive option, it should only be adopted if the manufacturer can afford the costs of establishing a retail outlet. If the manufacturer is limited in its budget, it might consider reverse channel distribution or dual distribution, which would enable it to seek cost-efficient methods of selling its products to consumers. Second, the manufacturer must consider the location, size, and scope of the market they wish to target. If the manufacturer wishes to reach residents of a specific city, establishing a toy store might be necessary in order to develop a physical presence in the market. However, if the manufacturer is considering a wider market, intermediaries will enable them to reach a broader market. Third, the manufacturer must consider the market segment they wish to target. The segment that the manufacturer wished to target will determine which intermediaries it utilizes to distribute its toys or which markets it targets through direct operation of retail outlets or franchising of a retail outlet. These considerations will enable the company to determine which channel fits their overall organizational goals.

Question 4

Elfin Sports Cars is an Australian manufacturer that produced sports and racing cars. Elfin serves to demonstrate that there is a positive relationship between value and the price that consumers are willing to pay for a product. Elfin produces high-end cars that are driven in championship races and by racing enthusiasts. Both the high quality of the brand and the legacy of the brand enhance its value to consumers. As a result, Elfin places a high price tag on its vehicles.

An evaluation of Elfin also demonstrates the positive relationship between cost and demand. Because Elfin sports cars are expensive, they are less likely to be purchased by the average consumer who might desire to own a race car. The high price is one factor that reduces demand for Elfin cars in the automobile market. However, lowering the price enables other market segments to afford the product, which would lead to increased demand. Thus, setting price plays a critical role in influencing demand by determining whether a product will be at the cost that consumers can afford or outside of the cost that consumers can afford. If the price is set at a rate that fewer consumers can afford, the market segments that the product will appeal to will be quite limited. However, lower the price increases the segments of the market that can be reached by a company.

The actions of competitors can also impact the price of a product. Elfin utilizes a strategy of focused differentiation and competes against other makers of high-end sports cars. Thus, the company gains its competitive advantage by boosting the performance of its vehicles and enhancing the specifications of its vehicles. However, the company is not entirely immune to price considerations. If another company can offer a similar quality, yet at a reduced price, this can enable the competing company to increase its market share at Elfin’s expense. Thus, Elfin would need to bring its costs down in order to effectively compete with other companies that are centered on a strategy of focused differentiation. To remain competitive, Elfin would need to determine how to provide similar levels of quality at a lower price. As this scenario reveals, the price strategies of other companies can have a ripple effect by forcing other competitors to match their prices in order to maintain their market share.