IPC 2005 Marketing

Maureen Syn
By Andrew Pirie
Contents

• Assessment
o Tables
o Staples
o Measuring Economic Activity
o Retailing and Wholesaling
o Scores
30.512 Marketing and Society
Assignment (2) ; Case study analysis instructions sheet

Part (1) 10% Due date: 28 June 2005

1. Read the case on pages 421 to 423 of the textbook entitled, "Seas: Visions of
Granduer".

2. Write a short summary detailing the problems faced by this company and their
marketing strategy so far. (5 marks)

3. Identify at least five important issues about this company. Use marketing concepts
(from the textbook) to analyse their marketing problems and strategies. Write your
analysis using the format of the table below. An example for each column is shown in
the table below. (25 marks)

4. Remember this table will form the basis of an outline for writing a report on the
company (part two of this assignment).

Issues of the case Supporting evidence in the Marketing concepts used in

E.g. (No marks given if
this example is duplicated)
1. Long tradition,
well-known
retailer but their
strategies to keep
up with other
retailers have not
been successful
2.
case
(No marks given if this example is
duplicated)
In the 1970s, Sears was the
nation's largest retailer... it
was the place where
Americans shopped... their
brands (Craftsman &
Kenmore) are the country's
finest.
But company has not been
keeping up with changes in
American retailing because
of its reliance on "hard"
product lines. When they
tried to develop their instore
clothing section, they spread
itself too thin.....
analysis & discussion
(No marks given if this example is duplicated)
Positioning - as a middle-line
retailer, well established (has long
tradition) but now needs a "new"
positioning statement. However,
need to consider first, what they
are offering to customers, and
how to differentiate themselves
from competitors (refer 218-224).
First, they will need to decide
what type of retailer they are and
the types of products they are
offering............

Leading questions to guide you as you read and think about the case
issues. These should be considered together with those on page 423
(textbook)
1. How will Sears shake its "hardware" image?

2. How could it improve its merchandising?

3. How can the culture clash between Land's End's highly casual management be
reconciled with Sear's?
File: Ass2CaseInst.doc
1
30.512 Marketing and Society
Assignment (2) ; Case study analysis instructions sheet

4. Who is Sears' customer?

5. How can Sears improve its store layout and image?

Part (2) 10% Due date: 8 July 2005

Assume you are a marketing consultant who was commissioned to write a report about
the types of issues the company faces and the strategies they have used so far. In your
report include also your recommendations for their future actions.

Make sure you provide the rationale for your findings (important aspects to pay attention
to for the company) as well as your recommendations in the discussion / analysis section
of the report. Make sure you discuss your points by using theories and marketing
concepts that support your analysis of the issues in the case. To do this, you will be
drawing aspects from part (1) of this assignment.

Remember to read up about "Writing an academic report" on page 10 and page 11 of the
course information booklet for this paper. In addition, glimpse through the marking
schedule (weightage for each section of the report) on page 12. Read the expected
outcomes for each section of the report (read the * phrases under each heading in this
marking sheet). This will prepare you about the expectations on the marking for the
report.

(Length: Maximum 2000 words)

File: Ass2CaseInst.doc
2
 Marketing and Society 30.512

Dr. Maureen Syn

Essay – Assignment 1
Wednesday May 17, 2005

By Andrew Pirie
S2042232

Edited by Lauren Beth Miles 2031208 (Proof Read)

Vu Trang (Proof Read)
Khanh Le Nguyen (Peer Tutor)
Question 3
Discuss the implications of the marketing concept and compare it with the other
marketing philosophies. Give examples discuss how a successful company in the
world has been able to utilize the marketing concept yet has been showing social
responsibility to the communities it serves.

It is stated in the Marketing concept that a firm desires to achieve its goals. These
goals rely on keeping in mind the needs and wants of target markets. This is achieved
if the firm can satisfy their market better than their competitors. Firms must aim for
the appropriate target market and find the right products for them. The path to profits
and sales relies on focusing on the customer “sense and respond” way of thinking,
according to the marketing concept, as opposed to the production, product and selling
concept which focuses on the product “make and sell” way of thinking (Kotler &
Armstrong, 2005, p.10).

The Marketing concept has to find out what consumers need and sell it to them. A lot
of research is done by companies that implement the marketing concept. This research
reveals what their customers desire. By doing this, firms can gather new product and
service ideas and transform these ideas into improvements in their products. This idea
would work well if customers knew what they want. However most of the time
customers don’t know what they want. Firms must combine allowing customers to
give input to help develop new products and inventing new products that will meet
customer needs (Kotler & Armstrong, 2005, p. 10).

Jollibee in the Philippines is a good illustration of a firm which is prospering utilizing

the marketing method and able to show social responsibility to the Filipino
Community. I will discuss how effectively Jollibee is using the 4 P’s price,
production, promotion, & location and by doing this it fulfills social responsibility in
the Philippines.

A lot of people thought that McDonalds would dominate the Filipino fast food market
when it arrived in the Philippines, but a small company which began off as an ice
cream parlor in 1975 which later came to be known as Jollibee proved otherwise
(Jollibee Foods, 2005c, ¶ 1). Today Jollibee is considered the most successful fast
food company in the Philippines and it employs 26,000 people in seven countries and
is growing in the USA and China in total it has over 1,000 outlets (Jollibee Foods,
2005b, ¶ 3). It has captured 65% of Hamburger sales in the Philippines even though it
is dwarfed worldwide by McDonalds in terms of the amount of retail stores and
capital per year (Kotler & Armstrong, 2005, p.48). It has 53% of the market share in
the fast food industry in the Philippines, and this share was more than McDonalds,
Burger King, KFC, and Wendy’s combined (Chang, Worldbizwatch: Jollibee USA).
Jollibee restaurants outnumber McDonalds two to one in the Philippines (Kotler &
Armstrong, 2002, p.583). Jollibee has been successful in the Philippines because it
specializes in providing food catered to Filipino taste (Answers, n.d., ¶ 1). This type
of specialization is known as market niching concentrating on a specific area which is
providing fast food to the Filipino community to suit their tastes. This is also called
consumer-oriented marketing.
Through smart market niching Jollibee has shown that small players can compete
effectively against the market titans such as McDonalds. The Filipino market is an
ideal niche as there is a big enough middle class with children market for them to
target and there is growth potential due a rapidly growing population. Most Filipino
citizens, by western standards, have relatively lower average incomes and are middle
class which Jollibee is targeting. Therefore, Jollibee sells its food at an affordable
price to the Filipino public and its restaurants are always over flowing with middle
class families. The poorer class in the Philippines are mainly unemployed and do not
often have enough money for such luxuries as their living standards are much lower
compared to low class in western nations. With these factors in mind Jollibee
concentrates on niching and maximizing sales rather than maximizing profits through
high price. Jollibee does not use deceptive practices and advertising its prices
accurately and honestly to customers, it makes its customers happy.

Jollibee has 400 stores located around the Philippines which are easily accessible
(Chang, 2005, Worldbizwatch: Jollibee USA). There is at least one Jollibee restaurant
on every major street and every commercial street (Jollibee Foods, 2005e). The
Philippines has an abundance of shopping malls which always have at least one
Jollibee restaurant. It is common to see a Jollibee store next to or opposite every
McDonalds store in the Philippines as a sign of how competitive the two fast food
leaders have become, this setup also allows customer choice.

As mentioned before Jollibee has been able to dominate the Filipino fast food market
with its product. This is because they adapt American products e.g. McDonalds to
cater for Filipino tastes. It serves meals with rice or noodles (Palabok Fiesta meal)
because a lot of Asians prefer rice to french fries. Jollibee Spaghetti is served with
sweet sauce, as Filipinos tend to like sweet food due to the amount of surplus sugar
the Philippines has implements, and utilizes in its food products. The Jollibee
hamburger is similarly prepared the same way a Filipino mother would cook in a
Filipino house hold (Kotler & Armstrong, 2005, p. 48). Products are not shoddy or
unsafe; Jollibee customers can view staff preparing food in the kitchen under hygienic
measures. Burgers are thrown away at the end of the day if no one wants them. Unlike
McDonalds they are not so secretive about what they put in their burgers. They make
it clear that their burgers sauce is mayonnaise and tomato sauce. The recipe for these
burgers is well known amongst Filipinos. A lot of people don’t know what are inside
McDonalds burgers, but their have been a lot of controversies about the possible
ingredients in McDonalds.

Through promotion Jollibee appeals with its ‘jolly-happy strategy’ which is highly
successful innovative marketing. (Chang, 2005, Worldbizwatch: Jollibee USA).
Jollibee also is well known for its good customer relations and well trained staff.
(Jollibee Foods, 2005c, ¶ 5). Members of staff call customers ‘sir’ and ‘mam’, which
is considered casual and respectful in the Philippines. (Chang, 2005, Worldbizwatch:
Jollibee USA). There is no high-pressure selling involved it is entirely customer’s
choice to enter a Jollibee restaurant. If they want to have a look at the menu over the
counter they will be aloud to do this, perhaps a friendly staff member will ask them if
they need help. But customers are treated with courtesy and have the right to leave
and are not forced into buying anything. When waiting in a long queue customer’s
time is not wasted. Unlike McDonalds, Jollibee staff will take your order while you
are waiting in a queue and your food will be ready for you by the time you get to the
front meaning now waiting around for a hot meal.

Jollibee’s advertising targets children by providing them with incentives such as toys,
in store play activities, parties and an interesting cast of characters who walk around
in costumes, customer value for younger customers (Jollibee Foods, 2005d).
They also have adverts which show children having fun and singing Jollibee songs
(Chang, 2004, Worldbizwatch: Jollibee China) for an example of these songs (Jollibee
Foods, 2005a, ¶ 1). This is important as the Philippines have a very large young
population compared to most countries in the world.

Jollibee aims to bring value to Filipino families. The Philippines possesses a huge
population of which a large percentage is families with children who can lure there
parents into taking them to Jollibee time after time. In addition, as part of Filipino
culture, parents tend to treat and feed their children whenever possible (Jollibee
Foods, 2005f, ¶ 1).

If their children are delighted being fed in a tasty Jollibee restaurant, their parents
will feel very happy as they keep their children happy. Jollibee considers this family
happiness customers’ value and it is committed to this value (Chang, 2005,
Worldbizwatch: Jollibee USA).

As part of their promotion Jollibee’s mascot epitomizes the Filipino spirit of light
hearted every day happiness; The bee hops around and is happy even though it is very
busy, like the Filipino people themselves (Chang, 2005, Worldbizwatch: Jollibee
USA). Filipino children feel they can trust Jollibee a lot more than Ronald McDonald.
Mapua student Alvin Borgy jokes that he likes the bee as it has a big huggable bum,
but seriously he likes the fact that the restaurant serves truly Filipino food and makes
him proud to be a Filipino. In a way Jollibee is preventing cultural pollution by having
a brand that strongly identifies with the Filipino people (Jollibee Foods, 2005c, ¶ 9). It
is not harming local businesses but rather encouraging them, it does not buy out
smaller struggling companies.

Finally Jollibee is not providing false wants. It recognizes the Filipinos need for food.
It is providing loyalty to its customers by providing tasty food.

In conclusion Jollibee has done better than expected in the Philippines by providing
affordable and tasty food which is suitable for the Filipinos’ taste and by providing
entertainment for Filipino kids. At the same time they are not sacrificing their use of
the marketing concept. They are utilizing the McDonalds style: tasty food, fast and
effective customer service, and easy-to-locate restaurants. Through innovative adverts
they are maintaining and promoting their customer value and satisfaction through not
using deceptive methods and making their customers happy. In a world of rapid
globalization in which small domestic companies are easily being dominated by
popular huge multinational corporations, Jollibee’s success over McDonalds due to its
smart marketing and ability to adapt is exceptionally admirable. Jollibee is also
adapting to a rapidly changing world of globalization and doing its best to prevent
cultural pollution in its way of being a uniquely Filipino experience.
References

Answers. (n.d). Jollibee. Retrieved May 17, 2005, from

http://www.answers.com/topic/jollibee

Chang, Farland (Producer) (2005). Worldbizwatch: Jollibee USA [Video Clip]. Los
Angeles: CNN International

Chang, Farland (Producer) (2004). Worldbizwatch: Jollibee China [Video Clip]. Los
Angeles: CNN International

Jollibee Foods Corporation. (2005a). Jollibee. Retrieved May 17, 2005, from
http://www.jollibee.com.ph/default.htm

Jollibee Foods Corporation. (2005b). Jollibee. Retrieved May 17, 2005, from
http://www.jollibee.com.ph/corporate/press19.htm

Jollibee Foods Corporation. (2005c). Jollibee. Retrieved May 17, 2005, from
http://www.jollibee.com.ph/corporate/phenomenon.htm

Jollibee Foods Corporation. (2005d). Jollibee. Retrieved May 17, 2005, from
http://www.jollibee.com.ph/services_jolly.htm

Jollibee Foods Corporation. (2005e). Jollibee. Retrieved May 17, 2005, from
http://www.jollibee.com.ph/finder.php

Jollibee Foods Corporation. (2005f). Jollibee. Retrieved May 17,2005, from

http://www.jollibee.com.ph/corporate/marketing.htm

Kotler, P., & Armstrong, G. (2002). Principles of Marketing. (10TH ed.). NJ,1 Upper
Saddle River: Pearson Education, Inc.

Kotler, P., & Armstrong, G. (2005). Principles of Marketing. (11TH ed.). NJ, Upper
Saddle River: Pearson Education, Inc.
 Andrew Pirie Marketing Consultancies
‘Good advice, in an ever changing world’

84 Broadway Avenue, Palmerston North

Andrew Pirie
Cell - # 091922345784
Contact – 06 3232124
Email - pirie@apmc.co.nz

Report for Sears Corporation

Issues faced by Sears and Strategies applied by Sears so

far

July 3, 2005

Lecturer - Maureen Syn

Course - Marketing and Society
Course Number -30.512
 Table of Contents
I. Introduction & Aims
i) Purpose of Report
ii) Aims of report
iii) Scope of report
iv) Limitations of report
v) How was the data collected?
II. Discussion
1. Reliance on Hard lines
1.1 Diversity needed sooner
1.2 Women’s Clothing and customer appeal
1.3 Stick with hardware, but add complements
2. Corporate Culture clash
2.1 Different Views
2.2 Partnership relationship management
2.3 Analyzing market information/better delegation
2.4 Co-Branding
3. Location
3.1 Effective Location
3.2 Downtown, Inner City locations adaptations needed
4. Customers
4.1 No specialised target segment
4.2 African Americans & Hispanics
4.3 Differentiated Target Marketing
5. Store Image
5.1 Hardware or Hybrid?
5.2 Positioning
5.3 Adjustments to decor
III. Findings
IV. Recommendations
V. Appendices
VI. Interview with Staff Member
VII. References
 Introduction & Aims
Purpose of the report

I was commissioned by Sears under contract to write a report about the types of issues the
company faces and the strategies they have used so far.

Aims of the report

APMC objective is to identify problems which Sears faces and to suggest ways to
improve. The aim of this report is to give recommendations on Sears’s future actions.

Scope of the report

 Reliance on Hard lines

 Conflicting views with Lands End. Corporate Clash
 Location inside malls and nearby malls
 Needing to Aim for a successful target customer market segment
 Shabby and uninviting store image.

Limitations of the report

The report was limited to people’s honesty while filling out the survey. There is
estimated to have been a slight margin of error calibrating results as product demand
tended to vary depending were the store was located amongst other factors. Specialising
in one particular area of improvement in one store might have not worked in another shop
due to different demographics (Kottler, p.69) and levels of demand in different states. An
example being some areas had higher concentrations of people in upper incomes that
tended to demand more quality goods and were less price conscious. Upper income
earners were more likely to perceive low priced goods as low quality goods.
Whereas some areas had middle and lower income earners who were looking for lower
price. It was difficult to reach an overall generalisation due to the disparity of factors on
consumers buying decision such as social (income), cultural and sub cultural (ethnic)
backgrounds (which will be mentioned later in the report), and personal factors.

How was the data collected?

Data was collected by presenting Sears store customers with surveys on how to improve
the shop with their purchases (Kottler, p.110). The incentive for customers to fill in these
surveys came with the gift of a $1000 store vouchers to encourage more people to fill in
these surveys. As well as this Sears’s online website provided electronic surveys (Kottler,
p. 114).
 Discussion
1. Reliance on Hard lines

1.1 Diversity needed sooner

A shortage of implementing diversity soon enough has resulted in competing

retailers taking lead of the market. Sears has suffered from a lack of brand
extension.

1.2 Women’s Clothing and customer appeal

In order to improve their brand extension Sears has to put more emphasis on areas
such as its women’s clothing design section. The position of women’s fashion
director was left unoccupied for nine years. Sears needs to start appealing more to
women shoppers in order to get a bigger market share in this area. By sticking to
concentrated or niche marketing in hardware Sears is limiting its own potential
(Kottler, p. 13).

1.3 Stick with Hardware, but add complements

Sears has already proven it can succeed in other areas such as Hardware like
Financial services. Sears should not drop its successful Hardware shops, but it
should diversify a lot more. And if possible Sears should sell hardware products
which are complemented with soft goods. E.g. Barbeques and food to cook on the
barbeque.

2. Corporate Culture clash

2.1 Different Views

As Sears is a big corporation, it has to build up a formal management hierarchy

and corporate rules. It also has to build trust among shareholders in order to gain
capital for its operation.

Sears and Lands End have had several conflicts, due to Sears not determining an
appropriate position for the company. Lands End claims that its first concern is
the consumer, while Sears is accused of the share holder being its first concern.
 2.2 Partnership relationship management

It is clear in order to solve this problem Sears and Land’s End have to improve
their Partner relationship management systems to bring greater value to their
customers. This must be done through willingness to listen and to make
adaptations that make both groups happy (Kottler, p. 18).

2.3 Analyzing market information/Better Delegation

As Sears’s managers are knowledgeable with in-store retailing for hardware, they
can assist Lands’ End in evaluating market information to determine appropriate
level of merchandise and by doing so serve customers better.
Lands’ End should capture information at every possible customer touch point
(Kottler, p.118).

Land’s end managers did not have much experience with in-store retailing and
they still have a lot to learn about it. After 2 years Land’s End has still not
determined the appropriate level of merchandise for purchases, sales, force
contracts, service and support calls, credit and payment interactions, market
research studies. Sears managers use this information to study Lands’ End
customers better and distribute results of research studies to Lands’ End
managers. This collaboration between Lands’ End and Sears will help improve
the apparel department of Sears (Kottler, p.121-2).

Sears needs to help Lands’ End management in retailing instead of putting Lands’
End totally in charge of the apparel section. Or at least determine a clear strategy
that would work for both or integrate more fully.

2.4 Co-Branding

Sears could do this by promoting co-branding to use the brand selling power of
both itself and Lands end instead of Sears just promoting its own name. Sears
could use the Lands End label with its own on some more traditional successful
goods that have been sold well in the past by Lands End and have high customer
loyalty.

3. Location

3.1 Effective Location

Sears needs to improve its store location. Sears has chosen to link itself to
customers through providing shops in and around malls. It would be a major
opportunity for Sears to expand its stores into urban inner-city locations. As rival
chain retailers such as Mom’n Pop are very highly priced in comparison.
 3.2 Downtown, Inner City Locations adaptations needed

If they were going to expand into downtown and inner city locations they would
need to adapt their products for a different type of customer. Hispanic and African
American consumers are the new subcultures that Sears will need to provide
goods for. Hispanic consumers tend to buy more branded, higher-quality
products—generics don’t sell well to this group. And they tend to make shopping
a family affair, and children have a big say in what brands they buy. Perhaps more
important, Hispanics are brand loyal, and they favour companies who show
special interest in them.

In order to cater to the Hispanic market who make up 20% of Sears market, Sears
should continue to promote ads and media in the Spanish language. Sears has
successfully done this and needs to continue providing sponsorship to cultural
events, its magazine Nuestra Gentre (our people), El Espanol (Spears Website in
Spanish) (Kottler p.138-9).

African Americans are more price conscious than any other aspect of buying, but
they are also influenced by quality and brands. Blacks are more fashion
conscious. So that means Sears definitely has to clean up their shabby stores.
Blacks spend twice as much on online services as white consumers. So Sears
would have to make online accessible buying services available (Kottler, p. 139-
40).

4. Customers

4.1 No specialised target segment

Sears has not clearly identified who its target market is. Sears aims to serve all
segments of the market and is ending up not being good at serving any (Kottler,
p.534) especially. Sears need to identify clearly which market segments it can best
serve.
Sears should select the most profitable market segment based on geographic,
demographic, psychographic and behavioural characteristics (Kottler, p. 47)

4.2 African Americans and Hispanics

It is justifiable that Sears should focus on African Americans and Hispanics as

these two groups each make up 12% of American population and Sears already
has a lot of loyal customers in these segments, it is justifiable that Sears has
chosen to maintain serving these segments. But they need to change existing
Lands end strategy and image to match this (Kottler, p.138-9).

4.3 Differentiated Target Marketing

To address the target market conflict between Lands’ End and Sears, Sears can
use differentiated marketing (Kottler, p. 210-1). Under this strategy, Sears can
target several market segments and design separate offers for each. Sears can
avoid introducing Lands’ End in the locations of ethnics’ segments. In these
locations, Sears can concentrate its resources into creating marketing programs to
suit specific tastes and needs of ethnic consumers. This also helps Sears save costs
by not offering Lands’ End to non-profitable customers. However, where Land’s
End market is located, Sears needs to display Lands’ End separately from ethnic
lines in its stores. This reduces confusion for customers (Kottler, p.211-2).
5. Store Image.

5.1 Hardware or Hybrid?

Sears needs to define its image and decide whether it is hardware or hybrid. In
order to address this decision Sears needs to make consistent decisions about
target market, position, production assortment, pricing and décor.

5.2 Positioning

Sears shops have been viewed as Shabby and uninviting by its customers. Sears
again has neglected the women’s clothing line. Sears has to decide on a suitable
position for their market share, instead of aiming their products towards
traditional lower class and attempting to target upper class markets. Sears needs to
concentrate on providing goods that cater to the middle income market, and then
decide how to position itself in this market.

5.3 Adjustments to decor

It can improve this by simply, solving customer complaints. This is a poor in store
strategy which shows their lack of interest or experience in serving the soft
market. To cater better they need to provide more mirrors and hire an interior
design to décor the stores to make them more appealing. Ugly red signs have
remained in place to remind consumers that goods were advertised or on sale,
these need to be redesigned. Upscale lines were jumbled together with cheap
lines. One might find $20 sweaters next to $80 ones. All the cheap clothes need to
be replaced with more expensive ones. And clothes need to be displayed in a
more tidy and logical way (e.g. in increasing price order). Sears need to also
provide extra facilities for its clothing department (Kottler, p.404).
 Findings

1. Reliance on Hard lines.

1.1 Diversity needed sooner.
1.2 Women’s clothing and customer appeal
1.3 Stick with hardware

2. Corporate Culture Clash.

2.1 Conflicting views with Lands End.
2.2 Partner relationship management needed.
2.3 Analysing market delegation information/better delegation.
2.4 Lands End, not utilized

3. Location, unable to compete with larger department stores such as

IC Penny and Wal-mart
3.1 Sears needs to improve its store location
3.2 Inner city and downtown locations would means Sears would
have to change its strategy to appeal to different type of customer.

4. Sears needs to define which segment of the market it wants to

target for its customers
4.1 No specialised target group segment
4.2 African Americans and Hispanics could be targeted more.
4.3 Sears and Lands End need to reduce confusion for customers,
through differentiated Marketing.

5. Needs to improve its stores layout and public image

5.1 Sears needs to define its image and decide whether it’s a
hardware or hybrid.
5.2 Sears shops need to decide on a suitable position for their market
share, instead of aiming their products towards traditional lower
class.
5.3 Adjustments need to be made to shabby and uninviting stores.
Recommendations
1. Reliance on Hard lines
1.1 Break traditional role by not being afraid of venturing into
new potential markets.
1.2 Emphasis on under touched areas such as women’s clothing
design.
1.3 Stick with Hardware but add complements
1.31 Continue to expand into successful areas such as
Financial Services.
1.32 Sell complementary goods to existing products e.g.
Barbeques and food to cook on the barbeque
2.
2.1 Establish a joint company mission statement.
2.2 Partner relationship management program between Sears and
Lands’ End in order to make adaptations that make both groups
happy.
2.3 Sears needs to help Lands’ End in analyzing market
information to determine appropriate level of merchandise to help
serve customers better
2.31 Sears need to conduct research & Surveys need to
study Lands’ End customers better and give the results to
Lands’ End Managers.
2.32 Sears needs to help Lands’ End management in
retailing instead of putting Lands’ End totally in charge of
the apparel section. Or at least determine a clear strategy
that would work for both or integrate the two companies
more fully.
2.4 Sears needs to promote Co-Branding more
2.41 Using Lands Ends’ name as well to promote goods.
2.42 Utilizing Lands End’ customer loyalty
3. Location
3.1 Sears needs to improve its store location in and around malls.
3.11 Opportunity to expand its stores into urban, inner-city
locations.
3.2 Adapting products for Hispanic & African American
consumers if shifting to downtown and inner-city markets
4. Customers
 4.1 Sears needs to clearly identify which market segments it can
serve well.
4.11 Sears should select the most profitable market segment it can
best serve according to geographic, demographic, psychographic
and behavioural characteristics.
4.2 Change existing Lands’ End strategy to better cater for
African American & Hispanic groups.
4.3 Concentrate resources into creating marketing programs to
suit specific tastes and needs of ethnic consumers. Reduce
confusion for customers.
5. Store Image
5.1 Consistent decisions regarding target market, position,
production assortment, pricing and décor.
5.2 Decide on suitable position for market share
5.21 Instead of aiming for lower class & attempting to
target upper class. Sears needs to concentrate on providing
goods that cater to middle income market and decide how
to position itself in this market.
5.3 Adjustments to décor
5.31 Provide more mirrors
5.32 Get rid of the red signs
5.33 Hire interior designer
5.34 rearrange lines - more tidy & logical way (e.g. in
increasing price order.
5.35 Get rid cheap clothes, replace with more expensive
ones.
 Appendices

Malls even from outside look ugly and uninviting. This looks more like a military
base or NASA station than a shop.

Sears also diversifies in other products.

Shows how out of date Sears is in Women’s clothing department.
 Interview with Staff Member
Q: What do you think about the décor of Sears?
A: It is so disorganised in the shop. Buyers often ask me for items they
would like to purchase and I can’t find them half the time it’s such a
mess. In fact we have lost staff members who have went missing inside
this shop.

Q: Our your in store surveys successful

A: Yes & No. Some customers really can’t be bothered with them.
Perhaps if some brilliant person suggested giving out prizes this might
encourage people to actually fill them in.

Q: What’s your opinion of Lands’ End Employees?

A: Their not so business like, they some times come to work a bit late.
They tend to let the customer haggle with them sometimes to get a lower
price on an item, instead of sticking to the standard price.

Q: What type of people do you get in your shop? What market

segments?
A: A lot of African American and Hispanic shoppers. The Hispanic
shoppers are very brand conscious. The African American shoppers
look for bargains. Women often come in and leave very quickly for
reasons we are not sure of.
References
Armstrong, G., Kottler, P. (2004).

Building Customer Relationships (p.13). Customer Value, Customer perceived

value.
Partnership Relationship Management (p. 18).
Market Segmentation (p. 47).
Demographic Environment (p.69).
Survey Research (p.110).
Online Survey Research (p.114).
Analyzing Market Information (p.118).
Distributing and using market information (p.121-22).
Sears: Hispanic & Black Consumers (p.138-40).
Evaluating Market Segments (p.209-15).
Product Assortment & Services decision (p.404).
Company Case: Sears Vision of Grandeur (p.421-3).
Class Exercise 1

By Andrew Pirie
To Dr. Maureen Syn
Marketing and Society

Examine the difference between the marketing concept and the production, product
and selling concepts. Which concepts are easier to apply in the short run? Which
concept offers the best chances in the long run? Why?

There are several differences between the marketing concept and the production, product
and selling concepts. I will discuss the concepts and the reasons why some are easier to
apply in the short run and which ones offer the best chances of survival in the long run.

The marketing concept aims to provide better products to meet the needs and wants of
consumers better than rival companies and by doing so achieving set goals for the
company. This is a highly competitive concept. This concept involves market research
and giving the consumers what they want. But the difficulty of this is that consumer
needs and wants always change. And firms need to estimate, which is not precise or
research what consumers want which takes time and money.

Product concept states that, the product itself solves all the problems. Improving quality,
functions, and versatility of products should be the most important objective for a
company as consumers favor this. The problem of the product concept is that product
features are considered wants not needs. Consumers maybe tricked into believing that
they need something which is not necessarily a necessity.

Production concept aims for management to concentrate on improving production and

distribution of goods. In order to make cheaper products available to the public, this
concept concentrates on quantity (Production concept) of products rather than quality
(Product concept). This idea applies in countries where demand exceeds supply, and
where production cost is high. Not all products are high quality and some are lacking
quality, the production concept doesn’t focus on satisfying consumer needs and wants.

Selling concept mainly relies on advertising of products before consumers will buy
enough of their products. Usually these are products which the company has an excess
left over surplus of as no one has wanted to buy them. This process usually involves
infomercials and aggressive selling techniques (e.g. two dollar madness, clearance sale,
closing down sale). People are pressured into buying products they don’t need. Which is
unlike the marketing concept in which consumers are asked what they need. Consumers
who buy products they don’t need will probably not stay loyal to the brand as they do not
achieve longtime customer satisfaction, as the brand may develop a bad reputation
The Production concept and selling concept are easier to apply in the short run.
Production concept because firms just need to concentrate on mass producing goods and
services and not worry about satisfying consumer needs, so no extra effort needs to go
into researching this. They just take into account that consumers will favor products that
are highly affordable as they are readily available and widely distributed.

The selling concept assumes that firms can sell what they make rather than make what
the market demands. Because firms just need to concentrate on selling goods and services
and again not worrying about satisfying consumer needs. However this may not be
successful as the advertising campaign may not be successful, and the emphasis would
end up being on promotion rather than the quality of the actual product itself. If
consumers are dissatisfied with the product then they will not feel loyal to the brand
anymore and look elsewhere for better products made by different companies to satisfy
their desires.

Historically the Production concept was tried, for example Henry Ford making plain
black cars readily available with the invention of the conveyer belt. At the time the idea
worked as the car was a relatively new invention, and Ford made it easy and accessible to
the general public in America and thus it satisfied consumer needs at the time. As time
went on the selling concept became more popular with the spread of the availability of
television and more importantly television advertisements and infomercials. This concept
allowed firms to convince consumers to buy products they might not necessarily need as
it gave them a way to invade their homes without actually doing it in person such as door
to door salesmen).

The Marketing concept is the best concept in the long run. It is the most widely used
today and the marketing concept asks the consumers what they want. Because the
Marketing concept concentrates on the consumers desires, it is able to build a longer
standing relationship with the consumers by satisfying consumer needs and wants. So
long term relationship means long term profits.

Sources: The Marketing Text Book

Submitted by Andrew Pirie
s2042232
To Dr. Maureen Syn
May 3, 2005

Think of a very good or a very bad experience you have had with a product. Explain
how this experience affected your beliefs about the product, the purchasing process
or shopping in stores. What could make you change these beliefs?

I decided to dye my hair blonde as I thought it was different and going to be a cool and
trendy thing to do. I selected Wella Hair dye which was recommended to me by the sales
women in farmers. When I went into the swimming pool in Christchurch my hair began
to turn green when it reacted with the chlorine. Because there was no warning on the
Wella hair dye packet that warned me of such a thing from happening, I found out the
hard way.

I was so horrified that my hair was turning this awful green color, and it also ruined my
venture at the water park as I was unable to continue with the swim because I feared that
all my hair would turn into this slimy green colour. It looked ridiculous because there was
now a permanent green spot the size of an orange inside my hair. It looked like my scalp
was a golf course and the spot was the green.

Immediately I decided that my view not only on Wella, but my use of the application of
hair dye would be rather cautious from then on. I had decided I would not be using Wella
hair dye again. I decided to bleach my hair with a different product instead of using
Wella which I felt I could no longer trust.

I got my hair bleached at a salon in Manila, Philippines. And I had a plastic bag wrapped
around my head to hold the bleach in. Then my head suddenly felt itchy and I asked the
hair dresser to take the bag off. He refused as he said it was a natural part of the process.
Then when it was finished, my scalp was burnt and the next day started peeling. My mum
had to apply coconut oil to stop the peeling. This influenced my outlook on the concept
of dying my hair. And I decided not to do this anymore.

Shortly after that I got my mum to wash out all the dye and my hair went back to its
natural classic black colour that we all know and love. So for those of you who ask why I
do not dye my hair. These two experiences/experiments may help you understand why.

Evaluation

I selected Wella Hair dye as it was recommended to me by the sellers in Farmers, and to
me this allowed Wella to be presenting me with the highest customer perceived value.

My decision process influenced me to buy the product, as it served a practical purpose

of promoting image by dying my hair. I wanted to dye my hair as I was peer pressured
into it (characteristic, gave in to peer pressure). As a lot of athletes (similar to cultural,
fitting in with a group) were doing that as well and I thought it was really cool. The
price of the product was a bit expensive than what I expected and I would never have got
the product without the extra pressure to buy the product (economic decision). The place
Farmers had a lot of items so I knew I could probably find Hair Dye their. If not I would
have tried in a barber shop. But I knew as a retail shop which buy items in bulk it was
probably the cheapest place were I could the product. There was no Deka or Warehouse
in the area where I happened to be shopping so it was convenient as well (dealer choice).
Promotion wise I needed the product from peer pressure so this didn’t affect my
perception so much, as I didn’t see it on television or hear about it on video, or ask
someone were I could buy it. The promotion it got was from the sales lady (brand
choice) who I asked for hair dye, and this was actually the first time I had heard of Wella.
I decided just to buy only one as I wanted to try it and see if I liked it (purchasing
timing, purchasing amount)

My customer satisfaction with the product was greatly affected. I was dissatisfied as it
fell short of my expectations. I didn’t feel anything bad towards the chain stores such as
Farmers that sold me the goods as they were not responsible for the hair dye problem. I
just felt no brand loyalty to companies such as Wella anymore. In order for Wella to
improve my loyalty to the brand in the first place they should have given clear warning of
chemical reactions which cause hair discolourment in a common public setting such as a
swimming pool. However since this happened I don’t think I will buy their product again
because I have already lost my faith in the company. As a customer I think trust is the
most important factor between customers and firms. Trust can be gained through good
quality products and be built up for a long time but can be lost very easily if the firms
deceive customers into buying their product just one time.
Submitted to Maureen Syn
Marketing and Society 50.512
By Andrew Pirie
Friday 20/05/2005

Discuss the primary differences and difficulties in distinguishing between products

and services (i.e. in their definitions and concept)? Give examples in business
marketing that highlights these differences and when they don’t. In addition, provide
examples of a “hybrid offer”.

A product is anything that can be offered to a market for attention, acquisition, use, or
consumption that satisfies consumer demand. From consumers’ viewpoint, a product
could be anything that has market attention. Products include more than just tangible
goods. They include physical objects, services, events, persons, places, organizations,
ideas, or mixes of these entities. Product can mean any or all of these terms mentioned
above.

Because services are classed as a type of product, this can cause confusion. Because
of importance in the world economy, we give special attention to services. Services
are a form of product that consists of activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not result in the ownership of anything.
Examples of services are banking, hotel, airline, retail, and tax preparation and home
repair services. A service is defined as any act or performance that one party can offer
to another that is essentially intangible and does not result in the ownership of
anything. Its production may or may not be tied to a physical product. Services are
product offerings in which a buyer receives no tangible good. But the service provider
allows the customer to use of tangible items such as an office or bed although he is
not giving these items away to the customer.

The word Hybrid used to describe the combination of two separate entities.
A Hybrid offer consists of equal parts of goods and services, an example being a
major service with accompanying minor goods and services. For example, at the end
of the journey you have had some tangibles such as food drinks, a ticket stub, airline
magazine etc. In order to offer this service it requires a capital intensive good, but the
primary item is a service.

An example of a hybrid offer is McDonalds. They provide a service which is

supplying a fast, effective, and tasty product. McDonalds also provides service to the
customer by pre-preparing & cooking the food, taking orders and sometimes bringing
the food to the customers table if it is not yet ready. The tangible goods that
consumers use in this example are food and drinks because they are necessities and
consumable to fulfill consumer appetites.

Goods and Services are types of products. In some cases they are combined to create a
hybrid offer. This is a combination of goods and services. In the example of
McDonalds, it provides products which are food/drinks to customers and it also offers
them services which are food preparation and food delivery.
Marketing and Society
Exe 5.
June 17,2005
By Andrew Pirie
To Dr. Maureen Syn

Evaluate the pricing strategy of a retail shop in Palmerston North (from their
brochures or other sources). Draw attention to their objectives and explain whether
you think the strategies are successful or not.

‘That’s where you go’ the motto clearly states Dick Smith Electronics’ objectives which
are serving customers with the best possible products and gaining market share through
high sale volumes. In order to achieve these objectives, Dick Smith employs a number of
different pricing strategies such as market-penetration pricing, product line pricing,
product bundle pricing, captive product pricing, optional product pricing, discount and
allowance and promotional pricing. Effective price marketing involves knowing how
much value consumers will place on products set at different prices. DSE understands
that New Zealand as a computer savvy nation will have high demands from both
businesses and consumers for its products.

Dick Smith uses market-penetration pricing. They set a low initial price in comparison to
their competitors to penetrate the market quickly and deeply – to attract a large number of
buyers quickly and win a large market share. For example writable blank CD’s were a lot
cheaper at DSE than Harvey Norman for a long time. High sales volumes resulted in
falling costs, allowing the company to cut prices even further.

Dick Smith positions itself as “NZ lowest prices on PS2 & X-box software guaranteed!”
Dick Smith promises to match any lower price of this product and give an additional 5%
discount when customers bring proof of competitors’ price to the shop. Applying this
matching low price strategy to only PS2 & X-box software, Dick Smith beats competitors
at attracting customers to its shop for this product. While doing this, customers might pay
attention to and actually purchase other Dick Smith products as well.
Products are priced to suit all prices ranges with more expensive models having more
features, for example ASUS laptop computers were available for $1398 and $2098, while
ACER laptops were available for $1197, $1447 and $1947. Hence products are priced on
design and quality (DSE, 2005, Catalogue). This is also an example of product line
pricing as each successive computer in the line offers more features.

Dick Smith uses optional product pricing offering to sell optional or accessory products
along with their main product such as additional software with computers. This way,
customers will find it convenient to buy both main and accessory products at one
shopping location which is Dick Smith. This helps Dick Smith sell more items to
customers, thereby increasing sale volume.

DSE also offers product bundle pricing, as well as selling separate components. A
computer can be considered a product bundle as it is a mixture of different devices e.g.
Scoop 2400 Computer has 17” Monitor, 256MB Ram Chips, 40GB Hard Drive, DVD
Rewriter and Windows XP operating system. All these components can also be brought
separately from DSE. But DSE has created a more desirable and much more conveniently
assembled unit for the consumer. This price bundling promotes the sales of a product by
offering for a lower price than the cost of the individual components after markup.

The software and computer components should be considered captive-product pricing. As

in order to make use of these products a computer is necessary. Its printers such as
Hewlett-Packard (H-P) make very low margins in sales, but very high margins on printer
cartridges and other printing supplies.

Discount and allowance pricing is used as DSE has a VIP Club which offers discounts on
certain items to its members, e.g. 20$ off books, 10% off batteries, and 10% off mobile
phone accessories. This creates segmented pricing as these special members pay different
prices for the same products. It also offers discounts to electricians and people with a
trade’s card.
Dick Smiths promotional pricing creates excitement amongst buyers. It has shown it is
prepared to price products below list and price and sometimes even below cost to create
buying excitement and urgency. The very excited voice on the Dick Smith television
adverts shows that this is obvious. At the sales desk, it has items such as batteries and
optical laser pens being sold at a ridiculously low price. Sometimes you can buy 16-20
batteries for less than $8. Convincing messages in the catalogue such as Hot Price, New!,
Save $50,

Objectives

Dick Smith Electronics aims for product quality leadership. They sell a few brands of the
same product in their shop to give the consumer variety in their buying decisions. Dick
Smith sells electronic components, computer related compliments and technological
goods. Its main competitor in Palmerston North is Harvey Norman, which also
specializes in the same industry. Buyers and sellers trade over a range of prices,
anywhere from $4 to $4000.

Are they Successful or not?

Dick Smith with its objectives of serving customers by providing the best possible
products at the most affordable price with high sale volumes is successful. They have
employed a number of pricing strategies such as market-penetration pricing, product line
pricing, product bundle pricing, captive product pricing, optional product pricing and
allowance and promotional pricing. Effective price marketing involves knowing how
much value consumers will place on products set at different prices. DSE understands
that New Zealanders have a high demand for computers and has adapted this in their
pricing scheme.

Dick Smith electronics “Where everything connects” has been successful in connecting
several different price marketing strategies to create an effective business which began in
Australia. It now has several retail outlets throughout New Zealand. Offering fiercely
guaranteed lower prices than a lot of its competitors on a huge range of high quality
products is Dick Smith’s objective and at the same time offering variety to their
customers on a range of diverse electronic and software products. Mr Dick Smith has
turned what was once a minor outlet into a huge transnational business and is now one of
the richest men in Australasia. DSE is truly one of the most successful if not the most
successful and well known electronic company in Australasia.

References

Dick Smith Electronics (n.d.a), VIP Club (Brochure.

Dick Smith Electronics (n.d.b), Prestige Protection (Brochure)
Dick Smith Electronics, May 30 – June 12 2005 (Catalogue)
Dick Smith Electronics (n.d.), Help us serve you better (Mailing Form)
Marketing and society workbook and class notes

Website
www.dse.co.nz
www.dsepowerhouse.co.nz
To Dr. Maureen Syn
Marketing and Society
30.512
By Andrew Pirie

Exercise No. 6

Examine and discuss different types of retail shops located at the Plaza in Palmerston
North. Discuss at least five differences and five similarities in terms of the retail
strategy used by the shops there.

• Examine and discuss different types of retail shops in the Plaza

• Discuss 5 differences in strategy
• Discuss 5 similarities in strategy

There are many different types of retail shops in Palmerston North Plaza. They can be
classified in terms of several distinct traits, including the amount of service offered, the
breadth and depth of their product lines, the relative prices they charge and how they are
organized. This essay will discuss the different type of retail shops in the Plaza, and 5
differences and similarities in the strategies they apply.

These retail shops include specialty stores in the plaza such as health stores like the Body
Shop & Hardy’s, bookshops like Whitcoulls. These shops carry a narrow product line
with a deep assortment of similar goods.

Department stores carry several product lines, with each line operated as a separate
department managed by specialist buyers or merchandisers, an example being K-Mart
which sells a variety of goods.

Supermarkets have a relatively large, low cost, low margin, high volume, self-service
operation designed to serve the consumer’s total needs for food and household products,
an example being Countdown.

Discount stores carry standard merchandise sold at lower prices with lower margins and
higher volumes. Examples the $2 Shop is somewhat a department as it offers goods at
lower prices with lower margins, however it does not have a higher volume than most
shops as it is quite a small store. K-mart as well as being a department store is also
considered a discount store.

Off-price retailers, sell merchandise at less-than-regular wholesale and retail prices. Often
these can include left over goods, over stocked goods, and goods that can be acquired
cheap from suppliers. There are none of these shops in the plaza. An example is the
Warehouse which is located further in town.

Superstores are very large stores traditionally aimed at meeting consumers’ total needs
for routinely purchasing food and non food items. They include category killers, which
carry a deep assortment in a particular category and have a knowledgeable staff, super
centers and hypermarkets. Generally these shops are very large. There are none of these
in the plaza as these shops would usually be bigger than the entire plaza. New Zealand
has very few of these unlike America and other nations as its population is too small to
meet market demand for more.

Retailers are searching for new market strategies to attract and hold customers. Today,
national-brand manufacturers, in their drive for volume, have placed their branded goods
everywhere.

Differences

Differences include different targets market for different groups. Such as Fly Center
would target individuals who travel, Dick Smith & Telecom Mobile would target people
who are in need of technological gadgets, Countdown sells food which is more of a
necessity which everyone needs, and Whitcoulls sells books to those who like to read.
There are shops in the plaza to meet different peoples needs and wants, and by doing this
a lot of them do not need to compete with each other for customers.

Price decision varies from shop to shop. Buying ice cream or coffee from supermarket
Countdown is going to be a lot cheaper than going to Wendy’s or Starbucks for a similar
product. This is simply because Countdown sells the items for a lower margin but at a
much higher volume.

Shops in plaza have different service mixes. Dick Smith offers a VIP Club which allows
discounts on certain items. Smaller shops such as Hardy’s do not offer discount cards.

Shops create different atmospheres in the plaza. Starbucks gives its customers a relaxing
sense of being in a high quality coffee bar. Whereas the Wendy’s ice cream stall doesn’t
even provide you with seats.

Some shops such as Countdown have experimental products, where they allow customers
to come and eat food samples, and give feedback if they like the product. Countdown is
constantly evaluating the success of the sales of its branded products and making
adjustments to meet consumer’s needs. Other shops do not really offer free samples as
such.

Similarities

The place decision or location of the shops is similar as they are all in the same plaza
(shopping centre) and all easily accessible. Most of the shops have clustered together to
increase their customer pulling power and to give consumers the convenience of one-stop
shopping. The plaza shopping center itself contains 40-100 stores. It contains the typical
supermarket (Countdown), discount store (K-Mart), and some service stores (Chemist &
Fly Center).
A lot of shops used the same types of promotion decision; most of them gave out
brochures and catalogs.

Most of the stores in the mall have innovated in non store retailing such as internet
buying. Dick Smith and Hardy’s provide their entire catalogue on the internet of goods
that they are selling.

A lot of shops also sell goods online, and even offer to deliver them to your home
address. Dick Smith has a feature which allows you to add items to an online basket and
pay via your credit card.

A similarity in marketing strategy is that a lot of shops in the plaza are trying to offer
merchandise no other competitor carries. There is one major book store Whitcoulls, one
major department store – Kmart, one super market –Countdown, one lottery shop, one
health shop – Hardys, and although a lot of places to buy coffee one specialist coffee
shop – Starbucks.

In conclusion there is a variety of stores in the Palmerston North plaza. Which provide a
number of different goods and services which cater to the convergence of shoppers with
different levels of income? These retail stores share several similarities and differences
when it comes to marketing strategies. The biggest advantage of the plaza as a whole for
all shops is that the stores are clustered together making them easily accessible, giving
consumers the advantage of one stop shopping and increasing their pulling power.
Write a short essay on the topic of marketing and social responsibility. You may
select any perspective (for example have at least one major argument about whether
marketing influences society or vice versa) but you must make sure your discussion
is informative, analytical (not judgment), convincing and related to the concepts
discussed in the field of marketing.

Automobile ownership (private good) requires more highways, traffic control, parking
space, and police services (public goods). The overselling of private goods can result in
social costs (Kotler & Armstrong, 2005, ¶ 3).

These marketing influences in society are known as externalities which are produced as a
result of selling a product in this case an automobile. These externalities are known as
“social costs”. For example buying an automobile can result in air pollution, energy
wastage of petrol, traffic congestion and death and injuries from car accidents.

One solution to make automobile manufacturers to build vehicles safer is to internalize

the external social costs in production. The government could require manufacturers to
build cars with more safety features, more efficient engines, and better pollution control
systems. Automakers would have to raise the prices to cover these costs. If buyers found
the price of these cars too high, the producers of these cars would more than likely not be
able to sell cars.

Producers who could support the sum of private and social costs would survive, as
demand from the consumer would shift to them. Another option is to make consumers
pay the social costs; many cities in the world have begun to charge ‘congestion tolls’ with
an effort to reduce traffic congestion (Kotler & Armstrong, 2005, ¶ 3). In Bangkok with
the shortage of fuel, petrol stations are now all closing after 9.00 in the evening. With this
move Thailand hopes to encourage more people to commute and lower traffic congestion.

In New Zealand sellers promote cars with boy racers driving fast, and doing clever
things, and who can not forget the catchy song about the car Alfa Romeo.
Some sell cars directly appealing to their danger, and even sell cars by claiming their cars
are safer than others, by displaying examples of safety features such as airbags. Tire
companies have an advert which promotes how their complementary good can be the
difference between ‘life and death’. The advert with the car going at full speed slamming
into the back of a truck is an example of this.

There a number of adverts, obviously not by the sellers who warn about the dangers of
‘driving to fast’, such as the advert with the man who is haunted by the fact he ran over
and killed a little girl, and wails “She was only four and I killed her”.

An extreme example of car safety was the kid’s cartoon television program ‘Crash Test
Dummies’, that displays a bunch of animated mannequins who get into car crashes every
week, and remind kids to buckle up. Even Ronald McDonald told kids to make it click in
a seat belt advert.

In New Zealand sellers are quite aware of the fact that the consumer must be proven that
cars are safe. This is due to the fact New Zealand has a very high level of death on the
roads per head of population. But it is improving roads as fewer people died on New
Zealand roads in April 2005, than 12 months ago April 2004 (Transport Safety Authority,
2005, ¶ 2-3). It is not just car companies that warn about social costs but other companies
as well that want to make the public aware, by emphasizing social responsibilities.

References

Armstrong, P., Kotler, G. (2005). Principles of Marketing (11th ed.). Upper Saddle River,
NJ: Pearson/Prentice Hall.
Transport Safety Authority (2005). Road death statistics. Retrieved July 13, 2005 from
http://www.ltsa.govt.nz/research/toll.html
30.512 Marketing & Society

International Pacific College

Semester One

Sample Test Questions

Sections

A: Multi-choice 25 marks

B. Match concepts 15 marks

C. True or False (with explanation) 30 marks

D. Short answers 30 marks

Total 100 marks

Answer all sections of the test.

Name : ___________________________

1
30.512 Marketing & Society

Section A : Multiple choice (25 marks) Some examples only

For each question below, tick or circle the most correct answer.
1. Marketing occurs when people decide to satisfy needs and wants through :

a. selling
b. exchange
c. transaction
d. market

2. Considerations for discounts, trade-in allowances and varying terms of credit are all part of which
aspect of the marketing mix ?

a. Product
b. Price
c. Place
d. Promotion

3. Which of the following would be an example of a marketing services agency ?

a. A warehouse
b. A transportation firm
c. An insurance agency
d. An advertising agency

Section B : Identifying concepts (15 marks) Some examples only

For each statement below, identify the correct term for it and write it in the blank next to it.

1. _______________ A trade of values between parties

2. _______________ The study of human populations in terms of size, density, location, age,
gender, race, occupation and other statistics

3. _______________ The state where sellers are so taken with their products that they focus
only on existing wants and lose sight of underlying customer needs.

Terms: Some examples only !!!

Exchange Environmental scanning Transaction
Mass marketing Production concept Target marketing Demography

Section C : True or false (30 marks) Some examples only

For each statement, identify if it is true or false and a short explanation for it.

1. A want is a state of felt loss.

2. The most important of the 4 P’s is promotion because without promotion no one would know
about the products.

2
30.512 Marketing & Society

3. Postpurchase behaviour is the most important step in the buyer decision process.

Section C : Short answers (30 marks) One example only

Choose any two (2) of the following five questions. Write a short paragraph for each question.

1. Define and describe the difference between product and service. Give examples of different
categories of consumer products

3
Marketing
Assignment 1
Essay Outline
By Andrew Pirie

Title Page

• Topic Question
• Marketing Concept (2 paragraphs)

Jollibee

• Jollibee relating to Marketing concept & social responsibility

• Jollibee Today, success specialization & comparison of methods compared to
McDonalds
• Niching target markets, price
• Location, customer choice
• Product, specializing for Filipino taste
• Promotion – “Jolly Happy Strategy”, politeness, no pressure to buy food for
customers
• Advertising to children, entertainment
• Customer value for families
• Family Happiness
• Mascot relates well to Filipino people, preventing cultural pollution
• Recognizing need for tasty Filipino style food fast
• Conclusion

References
Marketing & Society 30.512

Dr. Maureen Syn

International Marketing
Case Study Walmart
Summary

July 13, 2005

By Andrew Pirie
& Dat Nguyen
Deciding which market to enter
International market objective & policy defined before going overseas

• Volume of foreign sales

• Stay small? Or go big – how many countries?
• Type of countries, indicators of market potential
o Demographic e.g. level of education;
o Geographic e.g. population density urban & rural
o Economic factors e.g. income distribution
o Socio cultural factors e.g. consumer life styles, beliefs and values
o Political and Legal Factors e.g. monetary and trade regulations

Example: Mass marketer

E.g. China 1.3BN people is a marketers dream, it has a huge market, which is largely
untapped. There are areas in China still which have no access to super malls. This allows
a lot of growth for foreign companies who would like to setup as the huge Chinese
market has the potential to grow even bigger.
E.g. Colgate going in to China. Aggressive promotional and educational programs
expanded market share from 7 to 35% in a decade.

How to enter market

Exporting
Company may choose to modify the amount of surpluses it decides to export.
• Indirect exporting
• Less investment
• through independent international marketing intermediaries
• No overseas marketing org or set of standards

• Direct exporting
• Handle own exports
• Overseas sales branch handles
o sales, distribution & promotion

Joint Venture
• This is when a company joins a foreign company to produce goods or services.
• Differs from exporting as it involves 2 companies working together.
• 4 types of ventures

Licensing Fee or royalty

Method of entering a foreign market in which the company enters into an agreement with
a licensee in the foreign market, offering the right to use:

• Manufacturing process
• Trademark
• Patent
• Trade Secret
• Other item of value for a fee or royalty

Contract Manufacturing
This is contracts with manufacturers in foreign market to produce product or product
service.
E.g. Sears (retailer) -> Mexico & Spain (manufacturers)

Management Contract
Domestic firm supplies the management know-how to a foreign company that supplies
the capital; the domestic firm exports management services rather than products.

Joint ownership
In which a company joins investors in a foreign market to create a local business in which
the company shares join ownership and control.
One venture joins forces to bring another one in, e.g. Mitsubishi formed a conglomerate
with KFC to introduce it to Japan.

Direct Investment
Entering a foreign market by developing foreign-based assembly or manufacturing
facilities.

• Assembly
• Manufacturing facilities
• Experience in exporting
• Foreign product facilities

Deciding on Global Marketing Program

Standardized marketing mix:
International marketing strategy which uses basically the same product, advertising,
distribution channels, and other elements of the marketing mix in all the company’s
international market.
Adapted marketing mix:
An international marketing strategy for adjusting the marketing mix elements to each
international target market, bearing more costs but hoping for a larger market share and
return.
e.g. In India the marketing mix adaptation McDonalds serves chicken, fish and vegetable
burgers and Maharaja Mac – two all mutton patties, as Indian religion prevents eating of
beef so they have to adapt their product to survive.
Product
Straight product extension:
Marketing a product in a foreign market without any change.
Product adaptation:
Adapting a product to meet local conditions or wants in foreign markets
Product invention:
Creating new products or services for foreign markets.
Promotion
Communication adaptation:
A global communication strategy of fully adapting advertising messages to local markets.
Price
International pricing: Twelve EU countries have adopted the EURO as a common
currency creating “pricing transparency” and forcing companies to harmonize their prices
throughout Europe.
Distribution channels
Whole-channel view: Designing international channels that take into account all the
necessary links in distributing the seller’s products to final buyers, including the sellers
headquarters organization, channels among nations, and channels within nations.

Discussed Case Study

Strategies Wal-mart

• (EDLP) Everyday low prices

• (EDLC) Everyday low cost

Global sourcing
• Improve quality
• Lower price
• Gain efficiencies

1. Identify basic products use world wide

2. Look for opportunity to improve supply
3. Improve quality or lower price of these goods
4. Improve product and make it available worldwide

Additional facts

• More than 60% of Wal-Marts merchandise is from China, due to low costs of
production.

• Wal-Mart (US) makes 256BN Annual sales yearly, employees’ 1.5 million staff
and has 4,900 stores word wide.
• Carrefour (France) main rival super mall chain has $79.7BN year annual sales.
• Target (US) next biggest super mall chain has $48.2BN in annual sales
• If Wal-mart was a country it would be the 8th largest trading partner for China.
Questions Presented

1. Identify the countries that Wal-Mart has done well. Do they have any common
consumer, market, retailer traits, or entry strategies that account for their success?
2. Identify the countries were Wal-Mart has done poorly. Do they have any common
consumer, market, retailer traits, or entry strategies that account for their lack of
success?
3. In your opinion, will Wal-Mart be successful in Japan? Why or why not?

Role Play – Wal-Mart

1) Individuals selected to play the parts of

Wal-Mart Seller
Japan
Germany
Brazil/Argentina
Roles & attitudes on cards

2) Wal-Mart is trying to sell its usual (EDLP) every day low price (EDLC) everyday
low cost goods.

3) Suggestions from audience for every day low price items common worldwide
items.

4) If no suggestions, American flag, pair of converse, $10 perfume & deodorant mix

5) Wal-Mart is trying to sell these products to customers in these countries. All are
absolutely against except Argentina, who are against at first and become more
persuaded.

In What countries has Wal-Mart done well?

Country Successful Name of Outlets

USA The bulk of Wal-Mart sales made here. Wal-Mart
More than 20% of world wide sales.
Canada Bought 122 WILCO Stores, these were WILCO Stores
successful so it expand to 200 stores.
Mexico Expanded through purchasing local CIFRA, Suprema, VIPs,
malls. Suburbia
Puerto Rico Expanded through purchasing local Amigos & Supermarcodus.
malls
UK Expanded through purchasing local ASDA Chain
malls
China Most successful in Asia. CIT, LTD/Wal-Mart China

Identify common consumer market retail traits & entry strategies.

In terms of the above countries, their choices suggest that they chose countries with
healthy economies and people have some disposable income.

 Every Day Low Prices (EDLP)

 Every Day Low Costs (EDLC)
For countries like Mexico and China where incomes are lower and price important

For countries like US, Canada & UK - they share similar heritage and retailing
approach.

 Enter domestic distribution market by acquiring or forming a venture with a local

leader in the market. Joint Venturing (in HK, Mexico and China)
 Managers source purchasing on local expertise
 Focus on goods or items where opportunity to improve quality, lower price or
gain efficiencies.
 Identify basic products people use all over the world and then look for
opportunity to improve supply. Global sourcing

Summarizing - They have been successful when they had access to local market
knowledge and where they could tie in with local operations.

In What countries has Wal-Mart not done well?

Brazil & Argentina until 2004

Germany
Japan

What similar consumer market retailer traits/entry strategies did they use?
Competition

Wal-Mart tried to go into countries with fierce rivals, who were top competitors in the
world super mall market. By going it alone in nations where they did not have the
monopoly Wal-Mart was unable to beat the brand power of its competitors and steal their
opponents market. This forced them to setup smaller or shabbier less recognized shops.

Consumers' demands
The consumers from these countries were more demanding and more quality conscious.
They seem to be less interested in the type of goods that Wal-Mart sells.

Entry strategy
In both Japan and Germany, Wal-Mart bought existing chains with shabby stores and
poor sales. They also did not utilize the expertise of those managers.

Brazil/Argentina
  Economic situation, inflation out of control, devaluation of currencies, political
uncertainty prevented success and demanded different store formats
 Fierce competition from large superstore e.g. Carrefour & Companhania
Brasiliera de Distribuicao (CBD)
 Forced Wal-Mart to settle for setting up smaller shops

Germany

 Laws zoning, scarce land, high real estate

 Fierce competition 5 of top 25 world German super malls 2 in the top 10
 Wal-Mart cannot afford to buy out super retail stores in Germany
 Demanding consumers, quality rather than price. (Wal-Mart cheaper low quality
goods).
 Bad acquisitions. Poor locations. Dirty stores.

Japan

 Purchased Seiyu – shabby stores – declining sales

 Pricey real estate, protective laws
 Middlemen, loyalty, longstanding relationship between suppliers and Japanese
companies made it hard for less established Wal-Mart to cope with complicated
distribution system.
 Japanese consumers quirkier and more demanding
 Fresher goods, orderly, clean stores, short lines, lots of clerks
 Don’t like low price either perceive it as poor quality.

Will Wal-Mart be successful in Japan? Yes or No?

 No.
 Cultural barriers
 Expensive real estate + few locations
 Building loyalty with distribution system takes a long time and might be more
costly than it’s worth.
 They can’t use every day low prices, as = poor quality Japanese buyer perception.

What should they do?

Wal-Mart would have to improve the quality of their assortment, possibly change store
formats, and give them a more upscale look. They would also have to change their
pricing strategy and promotional policies in order to cater to the Japanese consumer.

Japan is difficult to market in because of their protectiveness of their markets and the
closed nature of their distribution system (this is changing slowly). One thing that Wal-
Mart has going for them is that they are American and the Japanese seem interested in
American products. Retailers, however, in Japan have learned the hard way that they
must adapt very, very carefully to the Japanese market.
Will Wal-Mart be successful in Russia? Yes or No?

Yes.
 Stabilizing Economy. Free market. Improving economy.
 146M Population of potential customers
 Less regulations
 Buyers not so picky
 low price strategy would work
 High demand for western goods.

What other countries should Wal-Mart enter? Defend your decisions.

India
 Very large population 1 Billion, only behind China in the world.
 Several large cities Bombay, Calcutta, Hyderabad, Delhi, Madras etc.
 Prepared to buy low costs goods, due to lower incomes
 Businesses such as IBM, Microsoft setting up – demand for western goods
 cheap local suppliers
 cheap cost of labor
 growing economy
 No large MNC retail outlet establishments to compete with.

Other possible nations

 Australia – RAW Materials, exporting economy
 Other European nations – Italy, Spain etc. unlikely same reasons as Germany,
Eastern Europe possible demand for cheaper goods
 Eastern European – low cost of labor compared to Western Europe.
30.512 Marketing & Society
Test (1)

International Pacific College

Semester One, 2005

Mid-term test

Sections

A: Multi-choice 25 marks

B. Match concepts 15 marks

C. True or False (with explanation) 30 marks

D. Short answers 30 marks

Total 100 marks

Answer all sections of the test.

Name : ___________________________

1
30.512 Marketing & Society
Test (1)

Section A : Multiple choice (25 marks)

For each question below, circle the most correct answer in the answer sheet provided.
1. Marketing seeks to create and manage profitable customer relationships by delivering
_____ to customers.
a. competitive prices
b. superior value
c. superior service
d. superior promotion
(Answer: b; p. 4; Easy)

2. Considerations for discounts, trade-in allowances and varying terms of credit are all
part of which aspect of the marketing mix ?
a. Product
b. Price
c. Place
d. Promotion
(Answer: d)
3. Which of the following would be an example of a marketing services agency ?
a. A warehouse
b. A transportation firm
c. An insurance agency
d. An advertising agency
(Answer: d)

4. Today, marketing must be understood in terms of not just making a sale but also ____.
a. satisfying customers’ needs
b. understanding customers’ value
c. understanding customers’ self-images
d. brilliant advertising
(Answer: a)

5. Which of the following is normally shaped by culture and individual personality?

a. wants
b. demands
c. self-concepts
d. desires
(Answer:a)

6. The difference between customer value and customer satisfaction is that value is the
difference between the values the customer gains from owning and using a product
and the _____.
a. cost of delivery of the product
b. cost of obtaining the product
c. cost of competing products
d. cost of the lost experience
(Answer:b)

2
30.512 Marketing & Society
Test (1)

7. When a company divides the parts of the market into smaller groups of buyers
distinct needs, charateristics, or behaviour is most profitably practicing _____.
a. concentrated marketing
b. mass marketing
c. targeted marketing
d. market segmentation
(Answer: d)

8. Factors such as the level of primary demand and the cost of money are part of the
business buyer’s:
a. Economic environmental
b. Social environment
c. Cultural environment
d. Political environment
(Answer: a)

9. A person within a reference group who because of special skills, knowledge,

personality or other characteristics exerts influence on others is also called the :
a. facilitator
b. referent leader
c. opinion leader
d. social role player
(Answer: c)

10. This group shares new cultural concerns, cares about the environment, and responds
favorably to socially responsible companies. Who are they?
a. generation X
b. generation Y
c. teenagers
d. baby boomers
(Answer: a

11. Learning occurs through the interplay of :

a. needs, actions, reward and reinforcement
b. drives, stimulus, cues, responses and reinforcement
c. wants, drives and desires
d. needs, motives, desires and reinforcement
(Answer: b)

12. If Tui Beer goes after the heavy beer drinker with the “tastes great, cost less”
campaign, then it is probably segmenting on the basis of :
a. benefits
b. user status
c. usage rate
d. loyalty status
(Answer: b)

3
30.512 Marketing & Society
Test (1)

13. What is one way that a social class is NOT measured?

a. occupation
b. education
c. income
d. number of children in the family
(Answer: d)

14. Many marketers use a concept related to personality—a person’s self-concept. The
basic self-concept premise is that people’s possessions contribute to and reflect their
identities; that is, “We are what we have.” This leads consumers to _____.
a. buy books to support their self-images
b. use brand personalities
c. begin habitual buying behavior
d. begin variety-seeking buying behavior
(Answer: a)

15. Adirondack Industries sells industrial supplies to markets in six states. The markets
are in major cities because the buyers tend to be geographically _____.
a. dispersed
b. concentrated
c. homogeneous
d. equidistant
(Answer: b)

16. Jorge Juarez will go through all of the stages of the buying process to add an
additional assembly line at work. Jorge is facing a _____ situation.
a. straight rebuy
b. modified rebuy
c. new task buying
d. all the above
(Answer: c)

17. Income segmentation is used to target the _____.

a. affluent
b. middle class
c. lower income class
d. all of the above
(Answer: d)

18. This type of segmentation centers on the use of the word when, such as when
consumers get the idea to buy, when they actually make their purchase, or when they
use the purchased item. What do marketers call this?
a. behavioral
b. psychographic
c. occasion
d. impulse
(Answer: a)

4
30.512 Marketing & Society
Test (1)

19. Sanguine Services practices a marketing strategy where its limited resources are used
to go after a large share of two small niches. Sanguine practices which one of these
strategies?
a. undifferentiated
b. differentiated
c. mass
d. concentrated
(Answer: d)

20. As You Like It, Inc., customizes its offers to each individual consumer. This practice
of tailoring products and marketing programs to suit the tastes of specific individuals
and locations is referred to as _____ marketing.
a. niche
b. micro
c. differentiated
d. none of the above
(Answer: b)

21. A product’s position is based on important attributes as perceived by _____.

a. suppliers
b. competitors
c. market conditions
d. consumers
(Answer: d)

22. Product planners need to think about products and services on three levels. Each
level adds more customer value. The most basic level is the _____, which addresses
the question, “What is the buyer really buying?”
a. actual product
b. augmented product
c. core benefit
d. co-branding
(Answer: c)

23. _____ are products and services bought by final consumers for personal
consumption. These include convenience products, shopping products, specialty
products, and unsought products.
a. Services
b. Consumer products
c. Line extensions
d. Industrial products
(Answer: b)

5
30.512 Marketing & Society
Test (1)

24. The three groups of industrial products and services include all of the following
except _____.
a. materials and parts
b. capital items
c. maintenance and operations
d. supplies and services
(Answer: c)

25. Product line _____ refers to the number of versions offered of each product in the
line. Crest toothpaste comes in 13 varieties, ranging from Crest Multicare to Crest
Baking Soda formulations.
a. length
b. depth
c. height
d. width
(Answer: b)

Section B : Identifying concepts (15 marks)

For each statement below, identify the correct term for it and write it in the blank next to
it.

1. Exchange A trade of values between parties

2. Demography The study of human populations in terms of

size, density, location, age, gender, race,
occupation and other statistics

3. Packaging This involves designing and producing the

container or wrapper for a product.

4. Need recognition The first stage in the buyer decision process

5. Target marketing The process of evaluating each market

segment’s attractiveness, and selecting one or
more segments to enter

6. Mass marketing A practice whereby the company does not

recognise that buyers differ in their needs,
perceptions and buying behaviours

7. Basic needs Needs such as food, clothing and safety

8. Co-branding When two established brand names of different

companies are used on the same product.

6
30.512 Marketing & Society
Test (1)

9. User status Segmentation that is based on ex-users,

potential users, first-time users, and regular
users of a product.

10. Lifestyle This refers to a person’s pattern of living as

expressed in his or her psychographics.

11. Selective retention This happens when people retain information

that supports their attitudes and beliefs.

12. Personality This refers to the unique psychological

characteristics that lead to relatively consistent
and lasting responses to one’s own
environment. It is usually described in traits
such as self-confidence, dominance, sociability,
autonomy, defensiveness, adaptability, and
aggressiveness.

13. Cultural environment This refers to a society’s basic values,

perceptions, preferences, and behaviors.

14. Specialty goods This refers to consumer products and services

with unique characteristics or brand
identification for which a significant group of
buyers is willing to make a special purchase
effort.

15. Brand mark This is the part of a brand that cannot be

vocalized but can be recognized.

Section C : True or false (30 marks)

For each statement, identify if it is true or false and a short explanation for it.

1. Younger consumers are better off financially than mature consumers. They are the
ideal market for exotic travel, restaurants, high-tech home entertainment products, and
leisure goods and services.
False – more for older consumers with higher incomes and that matches their lifestyle
patterns

2. Dove marketers can go beyond the brand’s cleansing cream attributes and talk about
the resulting benefit of softer skin. This is known as product attributes in brand
positioning.
False – This refers to benefit positioning and this could lead to positive belief and attitude
when product experiences are positive or reinforced.

7
 30.512 Marketing & Society
Test (1)

3. Branding only has advantages for sellers and not for buyers at all.
False – They help provide consistency and is an indication of quality for buyers.

4. Shopping For The Rich and Famous is a buying service that helps wealthy clients find
the best buys in exclusive clothing, high-end cars, travel, and financial services. This
firm would use income segmentation.
True – They are grouping a part of the whole market by income levels of people and who
could afford these products which are higher priced.

5. Dissonance-reducing buying behavior occurs when consumers are highly involved

with an expensive, infrequent, or risky purchase but see a lot of difference among
brands.
False - consumers have high involvment but see few brand differences.

6.
Niche marketing offers smaller companies an opportunity to compete by focusing
their limited resources on serving niches that may be unimportant to or overlooked
by larger companies.
True - it is more cost-effective and they are able to use their resources more efficiently.

7. Industrial marketers use mass advertising to market their products instead of personal
selling.
False – personal selling is important to build long-term relationships between supplier
and buyer

8. Marketing management is interested in serving all customers in every way to remain

competitive in today’s markets.
False – the aim is to create customer satisfaction and maintain long term relationship

9. The significant trends in the natural environment include shortages of raw materials,
increased pollution, and decreased government intervention.
False – all true except there is now more government intervention than decreased
government interferences.

10. Business buying process is usually more formal than consumer buying behaviour.
True – it is usually more complex, involves a lot of documentation and discussion.

Section C : Short answers (30 marks)

Choose any three questions. Write a paragraph for each question.

1. Cultural factors exert a broad and deep influence on consumer behavior. The
marketer needs to understand the role played by the buyer’s culture, subculture, and
social class. Describe the differences among culture, subculture, and social class.
Culture - set of basic values, perceptions, wnats and behaviour learned by a member of
society from family and other important institutions.

8
 30.512 Marketing & Society
Test (1)

This may vary from country to country. It is important to kow them in order to avoid
making mistakes about the consymers. It is also useful to keep up with cultural shifts.
They are new opportunities for companies to enter new markets or to develop new
products for these markets.

Sub-culture - A group of people with shared values based on common life experiences
and situations.

Social class - permanent and ordered divisions in a society whose members share similar
values nd behaviours.

2. Explain the four major segmenting variables for consumer markets.

Geographic segmentation divides the market into different geographic units, such as
nations, regions, states, countries, cities, or neighborhoods. Many companies are
localizing their products, advertising, promotion, and sales efforts or are seeking to
cultivate as-yet untapped geographic territory. Demographic segmentation divides the
market into groups based on variables such as age, gender, family size, family life
cycle, income, occupation, education, religion, race, generation, and nationality. They
are the most popular factors because they are easy to measure, and consumer needs,
wants, and usage rates often vary closely with demographic variables. Psychographic
segmentation, on the other hand, divides buyers into different groups based on social
class, lifestyle, or personality characteristics. People in the same demographic group
can have very different psychographic makeups. Behavioral segmentation divides
buyers into groups based on their knowledge, attitudes, uses, or responses to a
product. Many marketers believe that behavior variables are the best starting point for
building market segments.
.
3. Explain how business markets are related to consumer markets and how they are
different. Give at least four differences.

As compared with consumer markets, business markets usually have fewer, larger
buyers who are more geographically concentrated. More buyers are usually involved
in the business buying decision, and business buyers are better trained and more
professional than are consumer buyers. In general, business purchasing decisions are
more complex, and the buying process is more formal than consumer buying.

Business demand is derived, largely inelastic, and more fluctuating.

4. A company has four choices when it comes to developing brands. Describe what
they are.

Line extension, brand extension, multi-branding and new brands. Explain each and
give examples.

9
Marketing & Society 30.512

Dr. Maureen Syn

International Marketing
Case Study Walmart
Questions & Answers

July 13, 2005

By Andrew Pirie
& Dat Nguyen
In What countries has Wal-Mart done well?

Country Successful Name of Outlets

USA The bulk of Wal-Mart sales made here. Wal-Mart
More than 20% of world wide sales.
Canada Bought 122 WILCO Stores, these were WILCO Stores
successful so it expand to 200 stores.
Mexico Expanded through purchasing local CIFRA, Suprema, VIPs,
malls. Suburbia
Puerto Rico Expanded through purchasing local Amigos & Supermarcodus.
malls
UK Expanded through purchasing local ASDA Chain
malls
China Most successful in Asia. CIT, LTD/Wal-Mart China

Identify common consumer market retail traits & entry strategies.

In terms of the above countries, their choices suggest that they chose countries with
healthy economies and people have some disposable income.

 Every Day Low Prices (EDLP)

 Every Day Low Costs (EDLC)
For countries like Mexico and China where incomes are lower and price important

For countries like US, Canada & UK - they share similar heritage and retailing
approach.

 Enter domestic distribution market by acquiring or forming a venture with a local

leader in the market. Joint Venturing (in HK, Mexico and China)
 Managers source purchasing on local expertise
 Focus on goods or items where opportunity to improve quality, lower price or
gain efficiencies.
 Identify basic products people use all over the world and then look for
opportunity to improve supply. Global sourcing

Summarizing - They have been successful when they had access to local market
knowledge and where they could tie in with local operations.

In What countries has Wal-Mart not done well?

Brazil & Argentina until 2004

Germany
Japan
What similar consumer market retailer traits/entry strategies did they use?
Competition
Wal-Mart tried to go into countries with fierce rivals, who were top competitors in the
world super mall market. By going it alone in nations where they did not have the
monopoly Wal-Mart was unable to beat the brand power of its competitors and steal their
opponents market. This forced them to setup smaller or shabbier less recognised shops.

Consuimers' demands
The consumers from these countries were more demanding and more quality conscious.
They seem to be less interested in the type of goods that Wal-Mart sells.

Entry strategy
In both Japan and Germany, Wal-Mart bought existing chains with shabby stores and
poor sales. They also did not utilize the expertise of those managers.

Brazil/Argentina

 Economic situation, inflation out of control, devaluation of currencies, political

uncertainty prevented success and demanded different store formats
 Fierce competition from large superstore (e.g.)
 Forced Wal-Mart to settle for setting up smaller shops

Germany

 Laws zoning, scarce land, high real estate

 Fierce competition 5 of top 25 world German super malls 2 in the top 10
 Wal-Mart cannot afford to buy out super retail stores in Germany
 Demanding consumers, quality rather than price. (Wal-Mart cheaper low quality
goods).
 Bad acquisitions. Poor locations. Dirty stores.

Japan

 Purchased Seiyu – shabby stores – declining sales

 Pricey real estate, protective laws
 Middlemen, loyalty, longstanding relationship between suppliers and Japanese
companies made it hard for less established Wal-Mart to cope with complicated
distribution system.
 Japanese consumers quirkier and more demanding
 Fresher goods, orderly, clean stores, short lines, lots of clerks
 Don’t like low price either perceive it as poor quality.

Will Wal-Mart be successful in Japan? Yes or No?

 No.
 Cultural barriers
  Expensive real estate + few locations
 Building loyalty with distribution system takes a long time and might be more
costly than it’s worth.
 They can’t use every day low prices, as = poor quality Japanese buyer perception.

What should they do?

Wal-Mart would have to improve the quality of their assortment, possibly change store
formats, and give themselves a more upscale look. They would also have to change their
pricing strategy and promotional policies in order to cater to the Japanese consumer.

Japan is difficult to market in because of their protectiveness of their markets and the
closed nature of their distribution system (this is changing slowly). One thing that Wal-
Mart has going for them is that they are American and the Japanese seem interested in
American products. Retailers, however, in Japan have learned the hard way that they
must adapt very, very carefully to the Japanese market.

Will Wal-Mart be successful in Russia? Yes or No?

Yes.
 Stabilising Economy. Free market. Improving economy.
 146M Population of potential customers
 Less regulations
 Buyers not so picky
 low price strategy would work
 High demand for western goods.

What other countries should Wal-Mart enter? Defend your decisions.

India
 Very large population 1 Billion, only behind China in the world.
 Several large cities Bombay, Calcutta, Hyderabad, Delhi, Madras etc.
 Prepared to buy low costs goods, due to lower incomes
 Businesses such as IBM, Microsoft setting up – demand for western goods
 cheap local suppliers
 cheap cost of labour
 growing economy
 No large MNC retail outlet establishments to compete with.

Other possible nations

 Australia – RAW Materials, exporting economy
 Other European nations – Italy, Spain etc. unlikely same reasons as Germany,
Eastern Europe possible demand for cheaper goods
 Eastern European – low cost of labour compared to Western Europe.