Jan 2019 (Done) - Practice PDF

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a) In the context of Lazada, it is a three-level intermediary between the retailer and their customers. Intermediaries help to gather information, develop and disseminate communications, negotiate, place orders, get funds, take on risk, provide storage, arrange financing, and oversee transfer of own...

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a) In the context of Lazada, it is a three-level intermediary between the retailer and their customers. Intermediaries help to gather information, develop and disseminate communications, negotiate, place orders, get funds, take on risk, provide storage, arrange financing, and oversee transfer of ownership. Among these functions, storage and movement, title, and communications constitute a forward flow of activity from the company to the customer, whereas ordering and payment constitute a backward flow from customers to the company. Similarly, Lazada enforces ecommerce by allowing retailers to sell their goods and services on one platform and facilitating digital payments and connections between the retailer and their customer base. They can also store these goods before their due delivery dates in specialize warehouses and involve logistics personnel to deliver and ship these goods to the customer’s doorstep in place of the retailer.

b) Firstly, we must analyse customers’ desired output levels. For Kao Corporation and Chanel, there will be a contrast in the amount they would have to sell because Kao Corporation sells more of commodities such as shampoo and body soap, while Chanel sells more of high end beauty and fashion products. This would mean that the way that these 2 brands are selling or marketing is different as well. There would be 5 service outputs in this aspect; lot size, waiting and delivery time, spatial convenience, product variety and service backup. Typically, Chanel would have smaller lot sizes, longer waiting and delivery times, less spatial convenience, less product variety and more service backup as compared to Kao Corporation due to the nature and reputation of their brands, especially in brick and mortar stores. It is also less accessible (usually high end stores that only middle to high income customers frequent), most likely to be limited edition each season, and more in need of detailed explanations by experienced personnel of various individual function, benefits or uses of the products to the customer’s skin or style outlook. Secondly, we establish the channel constraints and objectives. In this case, it is now common for all businesses to have a functioning ecommerce website, or to liaise with distributors and intermediaries to help sell their products effectively and efficiently to their consumers. They would also need to account for the different strengths and weaknesses of intermediaries. In this case, Lazada is known to be reliable supplier and distributor, and has quite a considerably large and wellknown presence in the world. Brands such as Kao Corporation and Chanel can rely on such intermediaries for easier and more convenient shopping and check out processes, especially those who prefer to shop at home, or have less time to travel to physical stores to buy their products. Thirdly, They would also need to consider how intensive they would like their distribution to be. In this case, Chanel would have a more exclusive distribution due to their reputation, price and nature of goods, whereas Kao Corporation would have a more intensive distribution because they are selling more of common goods that are used daily, affordable and accessible for frequent use. Lastly, evaluating the major alternatives. There are 3 criteria, namely economic, control and adaptive. Each channel is prone to create different costs, need to work with each other in certain ways, and depending on the volatility of each market, every channel would need a certain structure or policies in place to keep things streamlined and in order.

c) Global marketing refers to selling, marketing and manufacturing goods and services in multiple markets around the world. It provides better profit opportunities, larger customer base to achieve

economies of scale, less dependence on any one market, more desire to counterattack global competitors in their home markets and customers require international service. There are around 6 modes of entry in global marketing. o o o

o o

o

Indirect Exporting Domestic-based export merchants or agents Cooperative organisations Export management companies Licensing & Franchising License to use trademark, patent, trade secret, or other items of value for a fee or royalty Franchising – complete brand concept & operating system Direct Investment Foreign company buys part or full interest in a local company or build own manufacturing or service facilities under own brand name

o o o o o o

Direct Exporting Domestic-based export dept Overseas sales branch/ subsidiary Traveling export sales reps Foreign-based distributors or agents Joint Ventures New setup by shareholders based on common interest Foreign and local companies share ownership & control

Acquisition Acquire existing local brands instead of bringing existing brands overseas o Leverage on existing customer bases and resources of the local brand *Increase in commitment, risk, control and profit potential as we descend o

In this case, Alibaba is choosing Acquisition as a mode of entry. This is because it has acquired control of Lazada with an investment of $1 billion, boosting their stakes to 83% in 2017 with another $1 billion. Other than that, it has been investing rather intensively in South East Asian companies such as Singapore Post.

Question 2 a) Introduction Characterised by a period of slow sales growth as the product is introduced in the market. Profits fare nonexistent because of heavy expenses of product introduction. Introducing the new Huawei Phones, which have certain new functions and designs as opposed to previous phones

Growth Characterised by a period of rapid market acceptance and substantial profit improvement. The newly launched phones are picking up their pace; more customers are attracted by Huawei’s features and prices.

Maturity Characterised by a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilise or decline because of increased competition

Decline Characterised by downward drift in sales and profit erosion. Potentially losing sales for certain product lines, especially for older phones. The number of customers might decline as well.

Huawei has taken much of the market share with their phones. Costs for the phone start to come down, and the number of customers slowly slow down and revenues stop growing as fast as it did in the earlier phases.

As the product life cycle progresses, the marketing mix slowly transcend to being more intensive and aggressive in terms of pricing, mode of distribution and ways to interact or engage with consumers. For growth stage, we offer a basic product, selectively distribute these products at a high price, and slowly build the awareness amongst early adopters and dealers. In the growth stage, we start to offer more benefits to the customers, more value in terms of additional services, extensions and warranties. The price would be adjusted to follow market conditions and at a considerably affordable price. The phones would be distributed more intensively now, and we can start to be more aggressive in our marketing efforts, especially on advertising, online and social media. In the maturity stage, we are gaining a lot of revenue from a large pool of customers who are aware of the brand and their special product features. This is when we start to provide more competitive prices to maximize profits and defend our share in the market, by diversifying brands and items

models, intensively distributing these phones, and entice customers to purchase our phones with benefits that you don’t usually find with competitors. Lastly, in the decline stage, we will reduce expenditures and start to milk the brand out of existing profits before we focus more on newer product lines. We will start to phase out products, slash prices aggressively to encourage people to buy intensively, start to become selective because the interest in the phones have died down and losing profits and keep communications with loyal consumers. Huawei is currently in the maturity stage. This is because they have a relatively established presence in the market, and they are gaining profits from the sale of their phones. However, they are slowing down. Huawei can distribute their phones via more retailers such as Challenger, Harvey Norman outlets, mirror or lower prices than their competitors and start to roll out advertisements or events emphasising on the benefits of their phones.

b) Demographic     

Size and growth rate of populations Age distribution and ethnic mix Educational levels Household patterns Regional characteristics and movements

Economic      

  

Growing shortage of raw materials Increased pollution level Increased government intervention Growing awareness of social responsibility

Sociocultural   



Natural 

Income levels and distribution Savings, debt and credit Interest rate Exchange rate Inflation rate Cost of living

Technological  

   

Innovations Speed of change Increased regulation of technological change Digital Marketing AI/AU Big data Blockchain

Cultures: cores cultures and subcultures Values Attitude: view of ourselves, others, organizations, the society, the nature and the universe Trends

Political/Legal   

Tax, tariffs Trade restrictions Political stability infrastructures

Question 3 a) In the context of Huawei, market segmentation is important because individuals of different ages, social classes, economic status and occupations, personality traits, lifestyles and attitudes have different appeals and uses of the Huawei phone. For example, the working class would use Huawei phone not only as a way of communication, but also for effective presenting or gathering of information online and offline as well. Individuals of a certain income level or status in the organization would be more likely to spend on the newest Huawei phones to enjoy more advanced functions that can be a physical visual extension of themselves to be presented to their customers, peers and employees. Youths and millennials would typically use the phone as an effective way to communicate and text with friends and family members all over the world, and browse for their desired goods, services, information and news about celebrities on social media. The design of the phone would appeal to different audiences as well, especially in terms of colours, designs and textures. If all of these are aligned adequately, customers would be more inclined to purchase Huawei phones, driving revenues, satisfaction rates and positive reviews.

b) For organizational markets, Huawei can apply income and occupation variables, whereas for consumer markets, Huawei can apply personality traits and age variables. (Similar to question 1).

c) Width How many different product lines the product carries Add new product lines to widen product mix

Length Total number of items in the mix Add more items to lengthen each product line Upmarket Stretch (Enter the high-end market)  More growth  Higher margins  Position as full-line manufacturers Downmarket Stretch (Introduce lower price line)  Strong growth opportunities as mass-retailers attract more shoppers seeking value-price goods  Tie up lower-end competitors  Own market stagnating or declining Two way Stretch (stretch line in both directions)...