Principles and Practice of Marketing — 2021

KNEC Diploma in Supply Chain Management, Module II. Original theory examination questions with explained model answers for revision.

July 2021

Paper codes: 2903/205; 2907/205; 2914/205; 2924/202; 2925/205; 2926/205
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

Outline five micro-environmental factors that may influence marketing of goods and services in an organisation.

Model answer

  1. Suppliers that provide the inputs needed to serve customers.
  2. Marketing intermediaries such as distributors, retailers and agencies.
  3. Customers and their changing needs and buying behaviour.
  4. Competitors offering alternative ways to satisfy the same need.
  5. Relevant publics such as media, financiers and local communities that affect the firm’s ability to operate.

Question 1(b) — 10 marks

Explain five goals of marketing that may be set by an organisation.

Model answer

  1. Increase sales: grow revenue or volume within a specified period.
  2. Improve profitability: attract and retain business at a sustainable marketing cost and margin.
  3. Expand market share: win a larger proportion of the target market.
  4. Build awareness and brand preference: make customers recognise and choose the firm’s offer.
  5. Improve customer satisfaction and retention: meet expectations and encourage repeat purchases and recommendations.

Question 2(a) — 10 marks

Gao Limited is in the process of segmenting its market. Explain the criteria that should be followed when segmenting the market.

Model answer

  1. Measurability: the size, purchasing power and characteristics of each segment can be estimated.
  2. Substantiality: a segment is large or profitable enough to justify a tailored offer.
  3. Accessibility: the firm can reach and serve the segment through suitable communication and distribution.
  4. Differentiability: segments respond differently enough to warrant distinct marketing approaches.
  5. Actionability: the firm has the resources and ability to implement an effective programme for the segment.

Question 2(b) — 10 marks

Explain five circumstances under which the direct channel of distribution may be appropriate.

Model answer

  1. Customer contact: the firm gains first-hand information about needs and reactions.
  2. Greater control: it can manage price presentation, service and product handling directly.
  3. Avoided intermediary margin: suitable direct arrangements can reduce channel charges.
  4. Specialised service: technical, customised or high-value products may require direct explanation and support.
  5. Suitable market conditions: a small, concentrated customer base or reliable digital channel can make direct supply economical.

Question 3(a) — 10 marks

Describe five role players in the organisation buying process.

Model answer

  1. Initiators identify a problem or requirement that may need a purchase.
  2. Users operate or consume the purchased product and help specify practical needs.
  3. Influencers provide technical or other advice affecting specifications and evaluation.
  4. Buyers manage supplier contact, sourcing and negotiation within their authority.
  5. Deciders have authority to choose or approve the purchase, supplier or key terms.

Question 3(b) — 10 marks

Explain the importance of packaging in product management.

Model answer

  1. Protect contents against damage, contamination and deterioration.
  2. Provide clear identification and information about contents and safe use.
  3. Attract attention and communicate the product’s brand and positioning.
  4. Provide convenient units for carrying, storage, opening and use.
  5. Support efficient handling, display, transport and stock control.

Question 4(a) — 10 marks

Explain five ways in which a firm may lower the prices of its products and remain competitive.

Model answer

  1. Improve productivity: reduce waste and resource use so lower prices do not depend solely on reduced profit.
  2. Obtain better input terms: negotiate economical sourcing and appropriate quantity arrangements.
  3. Simplify products and processes: remove unnecessary costs while retaining the benefits customers value.
  4. Improve distribution efficiency: better routes, stock control and channels reduce the cost of serving buyers.
  5. Use targeted price offers: concentrate discounts on suitable segments, quantities or periods instead of reducing every price indiscriminately.

Question 4(b) — 10 marks

Pearl Limited has an efficient customer care department. Outline five functions that the department plays.

Model answer

  1. Answer product, order and service enquiries.
  2. Receive and resolve complaints fairly and promptly.
  3. Provide after-sales support and guidance on product use.
  4. Collect customer feedback for service improvement.
  5. Follow up customers and maintain accurate service records.

Question 5(a) — 10 marks

Pawe Limited does not promote its products at all. Outline five consequences that may arise from this failure.

Model answer

  1. Low awareness among potential customers.
  2. Limited understanding of the product’s benefits and uses.
  3. Lost sales to more visible competing brands.
  4. Weak brand identity and customer preference.
  5. Difficulty introducing new products, entering markets or supporting distribution partners.

Question 5(b) — 10 marks

Describe the stages followed in the consumer adoption process.

Model answer

  1. Awareness: the consumer first learns that the product or innovation exists.
  2. Interest: the consumer seeks more information about its features and benefits.
  3. Evaluation: the consumer considers whether trying it is worthwhile for the intended need.
  4. Trial: the consumer tests it on a limited basis to assess performance and risk.
  5. Adoption: satisfactory experience leads to a decision to use the product regularly.

Question 6(a) — 12 marks

Explain six benefits that may be derived by a customer from buying products through the internet.

Model answer

  1. Convenience: orders can be placed without visiting a physical shop.
  2. Wider choice: customers can access products from more sellers and locations.
  3. Easier comparison: prices, features and reviews can be examined side by side.
  4. Time savings: search and ordering can be completed quickly.
  5. Potential price advantages: lower selling overheads or online offers may produce competitive prices.
  6. Delivery and tracking: suitable sellers bring purchases to the chosen destination and provide order-status information.

Question 6(b) — 8 marks

Outline four disadvantages of segmenting markets.

Model answer

  1. Higher research and analysis costs.
  2. More expensive product variants and separate promotional programmes.
  3. Smaller production runs that reduce economies of scale.
  4. Risk of overlooking other customers or choosing segments that are too small or unstable.

Question 7(a) — 10 marks

Dee Limited has used the variable pricing policy for its products. Outline five benefits of using this method.

Model answer

  1. Allows prices to reflect different customer requirements and willingness to pay.
  2. Supports negotiation for different order sizes and commercial terms.
  3. Helps respond quickly to changing demand and competitive conditions.
  4. Can improve capacity use through suitable off-peak or targeted prices.
  5. Provides opportunities to increase revenue from customers who place different values on the offer.

Question 7(b) — 10 marks

Outline five advantages of adopting the marketing concept in a firm’s operations.

Model answer

  1. Products and services are guided by customer needs.
  2. Greater satisfaction encourages repeat purchases and loyalty.
  3. Coordinated departments deliver a more consistent customer experience.
  4. Better market understanding helps identify viable opportunities.
  5. Stronger customer relationships can support sustainable sales and profitability.

November 2021

Paper codes: 2903/205; 2907/205; 2914/205; 2924/202; 2925/205; 2926/205
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

Benta Limited uses advertising to promote its products. Explain five reasons for choosing this promotion strategy.

Model answer

  1. Broad reach: suitable media can expose the product to a large target audience.
  2. Message control: the firm determines the content, timing and presentation of the paid message.
  3. Repetition: repeated exposure improves recognition and recall.
  4. Brand building: consistent messages communicate positioning and differentiate the offer.
  5. Sales support: awareness and information can encourage enquiries, trial and demand through distribution outlets.

Question 1(b) — 10 marks

Outline five factors that may hinder organizations from developing new products.

Model answer

  1. Insufficient finance for research, development and launch.
  2. Limited technical skills and innovative capability.
  3. Poor information about customer needs and market potential.
  4. High uncertainty about commercial success and competitive response.
  5. Organisational resistance, slow approvals or inadequate coordination.

Question 2(a) — 10 marks

Outline five advantages of adopting the selling concept as part of a firm’s marketing strategy.

Model answer

These are potential short-term benefits. A selling focus does not replace understanding customer needs or guarantee long-term loyalty.

  1. Intensive selling can increase short-term sales of existing products.
  2. Promotion can help move excess stock.
  3. Active persuasion may encourage trial of unfamiliar or unsought products.
  4. Clear sales targets focus and motivate the sales force.
  5. Direct selling effort can generate immediate customer enquiries and buying opportunities.

Question 2(b) — 10 marks

Explain five effects of rising inflation on a marketing organization’s operation.

Model answer

  1. Higher costs: materials, wages and distribution expenditure may rise.
  2. Pricing pressure: prices may need frequent revision, risking customer resistance.
  3. Lower real purchasing power: customers may reduce discretionary spending or switch to cheaper offers.
  4. Planning uncertainty: changing prices complicate budgets, contracts and demand forecasts.
  5. Working-capital pressure: more cash is needed to finance the same quantities of stock and credit sales.

Question 3(a) — 10 marks

Seko Limited has been experiencing customer complaints regularly. Outline five strategies that the firm may adopt to address the complaints.

Model answer

  1. Provide accessible channels for complaints.
  2. Acknowledge and record each complaint promptly.
  3. Investigate the facts and listen respectfully to the customer.
  4. Provide a fair remedy and communicate the outcome clearly.
  5. Analyse recurring causes and follow up corrective action to prevent repetition.

Question 3(b) — 10 marks

Trum Limited operates in a politically stable environment. Explain five benefits that the firm derives from operating in such an environment.

Model answer

  1. Business continuity: reduced unrest lowers the risk of interrupted production and delivery.
  2. Investment confidence: more predictable conditions encourage long-term commitments.
  3. Safer assets and staff: lower disruption risk reduces losses and security burdens.
  4. Better planning: greater policy continuity supports marketing and capacity decisions.
  5. Stronger trade and demand: a dependable operating environment encourages customers, suppliers and business partners.

Question 4(a) — 10 marks

Outline five limitations of segmenting markets geographically.

Model answer

  1. Customers in the same area may have very different needs.
  2. Similar customers in different areas may be overlooked.
  3. Online buying and mobility weaken location-based boundaries.
  4. Regional data may be too broad or outdated for precise targeting.
  5. Geographic segmentation alone gives limited insight into motives, lifestyle and buying behaviour.

Question 4(b) — 10 marks

Explain five organizational factors that may affect a firm’s buying decisions.

Model answer

  1. Objectives: quality, cost, growth and service priorities influence the selected offer.
  2. Policies: approved supplier, tendering and ethical rules constrain buying choices.
  3. Structure: centralised or decentralised authority determines who participates and approves.
  4. Procedures and systems: requisition, evaluation and approval processes affect timing and information.
  5. Resources: budgets, staff competence and technical capacity determine what can be purchased and supported.

Question 5(a) — 10 marks

Explain five factors that may influence a firm’s decisions when designing its marketing mix.

Model answer

  1. Customer needs: the target market’s preferences and purchasing power shape product, price, promotion and access.
  2. Organisational objectives and resources: strategy, budget and capabilities limit feasible marketing choices.
  3. Competition: rival offers, positioning and likely reactions influence the firm’s response.
  4. Product characteristics and life-cycle stage: technical complexity, perishability and maturity call for different marketing combinations.
  5. External conditions: technology, economic conditions, culture and applicable rules affect what marketing actions will succeed.

Question 5(b) — 10 marks

Outline five objectives that a good packaging design should achieve.

Model answer

  1. Protect contents against damage, contamination and deterioration.
  2. Provide clear identification and information about contents and safe use.
  3. Attract attention and communicate the product’s brand and positioning.
  4. Provide convenient units for carrying, storage, opening and use.
  5. Support efficient handling, display, transport and stock control.

Question 6(a) — 10 marks

Explain five circumstances under which a firm may adopt survival as a pricing objective.

Model answer

Survival pricing is usually temporary. Persistent prices that fail to cover the relevant costs cannot support the business indefinitely.

  1. Demand has fallen sharply and the firm needs cash to continue operating.
  2. Excess capacity leaves resources underused.
  3. Intense competition threatens the firm’s immediate market position.
  4. Economic recession or crisis reduces customers’ purchasing power.
  5. Stock is becoming obsolete or perishable and selling it can recover cash and avoid larger losses.

Question 6(b) — 10 marks

Outline five ways in which adopting of information communication technology may positively affect a firm’s distribution strategy.

Model answer

  1. Electronic ordering speeds capture and transmission of customer requirements.
  2. Stock visibility improves allocation and replenishment decisions.
  3. Route-planning systems improve vehicle use and delivery scheduling.
  4. Tracking gives customers and managers timely shipment information.
  5. Digital channels expand market access and permit direct customer contact.

Question 7(a) — 10 marks

Explain five reasons why organizations sponsor events.

Model answer

  1. Brand exposure: event publicity presents the organisation to a relevant audience.
  2. Positive association: the event’s image can reinforce the brand’s values.
  3. Community goodwill: support for worthwhile activities improves stakeholder relationships.
  4. Customer engagement: demonstrations and hospitality create direct contact with buyers.
  5. Business development: events generate leads, networking opportunities and relationships with partners.

Question 7(b) — 10 marks

Mr. Liam is a professional buyer at Pisa Limited. Outline five roles that he plays in the firm’s buying process.

Model answer

  1. Identify and clarify purchasing requirements with users.
  2. Search for and assess potential suppliers.
  3. Obtain and evaluate quotations or tenders.
  4. Negotiate suitable commercial terms and place authorised orders.
  5. Monitor supplier delivery and coordinate resolution of purchasing problems.
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