Principles and Practice of Marketing — 2020

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

July 2020

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

Explain five factors that may affect the marketing mix elements of a firm.

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 1(b) — 10 marks

Mrs. Rose is preparing to give a talk on the importance of analysing the competitive market environment to some youths. Outline five key points that she might include.

Model answer

  1. Identifies major competitors and the customers they target.
  2. Reveals competitors’ strengths, weaknesses and likely reactions.
  3. Helps identify unmet needs and attractive opportunities.
  4. Supports suitable positioning, prices and promotional decisions.
  5. Provides warning of threats and a basis for improving the firm’s offer.

Question 2(a) — 10 marks

Describe the steps followed in the consumer decision-making process.

Model answer

  1. Need recognition: the consumer becomes aware of a gap between the present and desired situation.
  2. Information search: the consumer obtains information from experience, people, media and sellers.
  3. Evaluation of alternatives: available options are compared against relevant criteria.
  4. Purchase decision: the consumer selects a product, seller and purchase arrangement.
  5. Post-purchase evaluation: actual experience is compared with expectations, affecting satisfaction and future behaviour.

Question 2(b) — 10 marks

Outline five characteristics of a product at the maturity stage of the product life cycle.

Model answer

  1. Sales growth slows and may stabilise near its peak.
  2. Most likely early customers already know or use the product.
  3. Competition is intense and competing offers are widely available.
  4. Price and promotional pressure reduce margins.
  5. Firms emphasise differentiation, modifications, efficiency and customer retention.

Question 3(a) — 10 marks

Luka Limited is considering using promotional pricing to manage its declining sales. Outline five promotional pricing methods that it may use.

Model answer

  1. Temporary special-event price reductions.
  2. Loss-leader pricing on selected products to attract customers.
  3. Cash rebates or cashback offers.
  4. Coupons or vouchers reducing the purchase price.
  5. Low-interest finance or deferred-payment offers with clearly disclosed terms.

Question 3(b) — 10 marks

Explain five roles of marketing in the economic development of Kenya.

Model answer

  1. Employment: selling, advertising, distribution and related services create jobs.
  2. Market expansion: connecting producers with buyers supports production and trade.
  3. Efficient distribution: goods move from surplus areas to places where they are needed.
  4. Innovation and productivity: customer feedback and competition encourage improved products and business methods.
  5. Income and public revenue: increased trade and enterprise activity raise earnings and taxable economic activity.

Question 4(a) — 10 marks

Dinah Limited has decided to use retailers to distribute its products. Explain five circumstances that may have led to this decision.

Model answer

  1. Many dispersed consumers: retailers provide convenient local access.
  2. Small individual purchases: retail outlets break bulk into manageable quantities.
  3. Limited manufacturer resources: existing retailers avoid the cost of a wholly owned shop network.
  4. Need for product assortment: customers prefer to compare or buy complementary products at one place.
  5. Local service and knowledge: retailers understand customer preferences and can provide demonstrations or routine support.

Question 4(b) — 10 marks

Outline five sources of customer complaints in an organization.

Model answer

  1. Defective products or failure to meet promised quality.
  2. Late, incomplete or incorrect deliveries.
  3. Misleading information, unclear prices or unexpected charges.
  4. Rude, unhelpful or unresponsive staff.
  5. Poor after-sales service or unfair handling of returns and warranty claims.

Question 5(a) — 10 marks

Koko Limited promotes its products aggressively. Explain five reasons for making such a decision.

Model answer

  1. Build awareness: potential buyers need to know the product exists.
  2. Inform customers: communication explains benefits, uses and availability.
  3. Persuade buyers: suitable messages can encourage trial and preference over competing offers.
  4. Support sales channels: demand generated by promotion helps distributors and retailers sell stock.
  5. Defend the market position: reminders and consistent branding help retain customers against competitors.

Question 5(b) — 10 marks

Explain five demographic factors that may influence market segmentation.

Model answer

  1. Age: needs and preferred products differ across life stages.
  2. Income: purchasing power affects affordable offers and price sensitivity.
  3. Gender: some products are targeted according to relevant gender-related needs or preferences.
  4. Occupation: work requirements and spending patterns influence demand.
  5. Family size and life-cycle stage: household composition affects quantities, product choice and consumption priorities.

Question 6(a) — 10 marks

Outline five reasons why it may be necessary for a firm to analyse the macro-environment in which it operates.

Model answer

  1. Identify emerging opportunities in the wider economy and society.
  2. Detect threats from technological, political or economic change.
  3. Adapt to applicable legal and regulatory requirements.
  4. Improve long-term planning and reduce avoidable uncertainty.
  5. Adjust products and marketing activities to demographic and cultural trends.

Question 6(b) — 10 marks

Rosete Limited has invested heavily in Information Communication Technology in its marketing activities. Explain five benefits that may accrue to the firm from this investment.

Model answer

  1. Wider reach: digital channels connect the firm with customers beyond its physical location.
  2. Faster communication: enquiries, offers and service updates can be exchanged promptly.
  3. Better insight: suitable analytics help understand customer behaviour and campaign results.
  4. More precise targeting: relevant messages can be directed to selected customer groups.
  5. Improved efficiency: automated records, ordering and follow-up reduce routine work and support consistent service.

Question 7(a) — 10 marks

Outline five factors that may influence the rate at which an innovation is adopted.

Model answer

  1. Relative advantage: customers adopt faster when the product offers a clear benefit over existing alternatives.
  2. Compatibility: a product that fits users’ values, habits and existing systems is easier to accept.
  3. Complexity: difficult learning or operation slows adoption.
  4. Trialability: low-risk testing or sampling helps customers evaluate the product before full commitment.
  5. Observability: visible results and recommendations from other users make the benefits easier to recognise.

Question 7(b) — 10 marks

Describe five forms of direct marketing that a firm may use to promote its products.

Model answer

  1. Direct mail: addressed promotional material is sent to selected prospects.
  2. Email marketing: relevant offers and information are delivered directly to permissioned email contacts.
  3. Telemarketing: telephone conversations are used to explain offers and seek a response.
  4. Catalogue marketing: product lists with descriptions and ordering details allow customers to choose and order remotely.
  5. Direct-response digital marketing: a website, message or advertisement invites an immediate enquiry, registration or purchase.
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