1. Explain how Marketing affects the outcome of the financial equation: Sales-Expense=Profit. What risk the company might be facing in this equation with regards to marketing? Expound on the importance of marketing in sustaining business growth. (5 points.)
In the equation, Sales-Expense=Profit, activities done in Marketing can be said or considered as marketing expenses that includes advertising costs, promotions, PR events and Marketing Research costs (e.g. FGD, etc.). Through the income statement, we can get the Profit or Revenue and costs or expenses. These may include the costs of marketing the product or services with other costs that is deducted from the amount of sales or total sales.
The idea is to increase the revenue while costs are incurred through marketing activities. However, in order to achieve this, marketing activities must be done effectively and the costs or expenses should be managed correctly in order to create good results. Marketing activities that are not managed properly may incur additional costs to the company and continue on to increase. This is especially applicable to companies with different product portfolios and margins, wherein they can incur losses once the profitability of a product decreases.
2. Why do companies resort to market segmentation? Explain why or how segmentation can be an effective market entry/penetration strategy. Give an example not discussed in the class. (10 points)
Better matching of customer needs
Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution.
Enhanced profits for business
Customers have different disposable income. They are, therefore, different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits
Better opportunities for growth
Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product
Retain more customers
Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands
Target marketing communications
Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that (1) the key customers are missed and (2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customer can be reached more often and at lower cost
Gain share of the market segment
Unless a business has a strong or leading share of a market, it is unlikely to be maximizing its profitability. Minor brands suffer from lack of scale economies in production and marketing, pressures from distributors and limited space on the shelves. Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors. In other words, segmentation offers the opportunity for smaller firms to compete with bigger ones.
3. What can be a good segment to target for a facial care product? Why? What can be a compelling consumer insight and your corresponding value proposition? Illustrate your brand DNA diagram and prepare a positioning statement and a tagline. Outline your IMC campaign. (15 points)
Segment - Facial products made especially for men
Customer insight - There are many facial products available in the market but focused only on female needs, including anti-ageing products. Facial care products for men are very limited as not all facial care companies delve into the market. However, due...
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