SUBJECT: Marketing Management

CASE: I Playing to a new beat: marketing in the music industryQuestions:

1 . D i s c u s s t h e m i c r o a n d m a c r o f o r c e s t h a t a r e a ff e c t i n g
t h e m u s i c i n d u s t r y.
Answer :
Factors affecting the music industry include the following:

Consumers have created a new value curve for the music industry

Online fi le sharing and downloading where copyright holders are bypassed

has put the traditionalbusiness model of the music industry in doubt

Competition for consumers time, attention and money is increasing

A vibrant world class music scene has enabled some Icelandic bands to benefit
from onlinemarketing (which may entirely take place among their fans)

Packing music CDs with extra features may not be enough to stem the decline of CD
salesNew entrants, easy to use online music stores which offer flexible pricing
structure and quality downloadsthat can be played on a variety of devices, are in an
excellent position to exploit the turmoil and eventuallyredefi ne the way music is
marketed, purchased and enjoyed. This is a threat to the established
musicretailers and labels.
2.Based on this analysis, what strategic options would
y o u r e c o m m e n d f o r b o t h m u s i c p u b l i s h e r s a n d music
retailers in the current marketing environment?
Answer:
Strategic Optionsi) Attract non-usersThe majority of publicity and promotion the
company undertakes utilizes word-of-mouth marketing and other free publicity such
as free giveaways at public events. They may wish to take a more aggressive
approach,with a new media campaign that is specifically aimed at attracting new
users. Whilst it has been noted that the doughnut industry is generally in decline,
They may wish to try and grow the category again, or at leaststem the decline and
gain greater market share of the smaller market.ii) Increase Purchase Levels
Amongst Existing CustomersThis is harder to achieve since the company's current
clientele have been observed to be consumingdoughnuts in smaller quantities. It
would be hard for the company to reverse what is becoming an
importantnationwide trend of healthy eating through marketing strategy. A more
appropriate option would be to tryand gain greater consumption from existing
customers through new products.iii) Increase Premium Charged / Further Quality
LeadershipThey have been noted for the fierce brand loyalty customers exhibit, and
their staunch belief that They arethe very best doughnut one can buy. They wish to
build on that by adjusting it's prices accordingly.
3.Discuss the advantages and disadvantages associated
w i t h o n l i n e d i s t r i b u t i o n f r o m a m u s i c l a b e l s perspective.
Answer:
Over the last ten years, the Internet has evolved from just web pages to e-mail, to
online gaming,to viewing sport and fi lm previews, and to buying and

downloading music online. The Internet has now become one of the music
industry's greatest markets, estimated to reach over 25% of sales in five years.This
may be true, yet the Internet is also one of the music industries greatest
enemies.Fo r s o m e y e a r s n o w o n l i n e s h o p p i n g h a s b e e n a v a i l a b l e t o
a n y o n e w i t h a c r e d i t c a r d a n d a n I n t e r n e t connection. E-commerce
retailers such as Amazon.com sell everything from garden tools, to C.D's
andmini-discs. It is only in the last couple years however, that online
shopping has taken off . Before this the public and businesses alike had not
been taking full advantage of this phenomenal asset, which has beenproven to save
companies millions. It was only with the creation of Windows 98 and other Internet
programsthat people were sure that their credit card numbers and personal
details could not be viewed by another person, or 'hacked'. Once this
huge hurdle was overcome, the way we used the Internet and the eff ect
ithad on the music industry had changed forever.
CASE: III Unilever in Brazil: marketing strategies for low-income
customersQuestion:
1 . D e s c r i b e t h e c o n s u m e r b e h a v i o u r d i ff e r e n c e s a m o n g
l a u n d r y p r o d u c t s c u s t o m e r s i n B r a z i l . W h a t market
segments exists?
Answer :
. In the NE, only 28 per cent of households own a washing machine versus 67 per
cent in the SE.Women in the NE scrub clothes in a washbasin or sink using bars of
laundry soap, a process that requiresi n t e n s e a n d s u s t a i n e d e ff o r t . T h e y
th e n ad d bl e ach to re mo ve tou g h stai n s an d on l y a l i ttl e
d e t e r g e n t powder in the end, primarily to make the clothes smell good. In the SE,
the process is similar to Europeanor North American standards. Women mix powder
detergent and softener in a washing machine and uselaundry soap and bleach only
to remove the toughest stains.The penetration and usage of detergent powder and
laundry soap is the same in the NE and the SE (97 per cent). However, northeasterners use a little less detergent (11.4 kg per years versus 12.9 kg)
and a lotmore soap (20 kg versus 7 kg) than south-easterners. Many women in the
NE view washing clothes as oneof the pleasurable routine activities of their
week. This is because they often do their washing in a public laundry, river
or pond where they meet and chat with their friends. In the SE, in contrast, most
women washclothes alone at home. They perceive washing laundry as a
chore and are primarily interested in ways to improve the convenience of the
process.
2.Should Unilever bring out a new brand or use one of
i t s e x i s t i n g b r a n d s t o t a r g e t t h e n o r t h - e a s t e r n Brazilian
market?
Answer :
Unilever should use diff erent products in the existing brands
.
Unilever could produce a product comparable to Campeiro, its cheapest product,
but would it deliver the benefits that low-income consumerswanted?
Alternatively, Unilever could use Minervas formula but it might be too
expensive for low-incomeconsumers. If they could eliminate some ingredients,

Unilevers scientists could develop a third formula thatwould cost about 10 per
cent more than Campeiros formula. The diffi culty would be in determining
whichattributes to eliminate, which to retain and which, if any would actually need
to be improved relative to bothexisting brands. One solution might be to launch
multiple types and sizes.
3.How should the brand be positioned in the
m a r k e t p l a c e a n d w i t h i n t h e U n i l e v e r f a m i l y o f brands?
Answer
: In re g ul ar de t e rg e n t m ar ke t s Un il e ve r h ad e s t ab li s h e d t h at t h e
m o s t e ff e c t i v e a l l o c a t i o n o f communication expenditure was 70 cent abovethe-line (media advertising) and 30 per cent below-the-line( t r a d e p r o m o t i o n s ,
e v e n t s , p o i n t - o f- p u r c h a s e m a r k e t i n g ) . T h e a d v a n t a g e s o f u s i n g
p r i m a r i l y m e d i a advertising are its low cost per contact and high reach because
almost all Brazilians, irrespective of income,are avid television watchers. One
alternative would be to use 70 per cent below-the-line communication. AtUS$0.05
per kg, this plan would require only one-third of the cost of a traditional
Unilever communicationplan. On the other hand, it would lower the reach
of communication, increase the cost of per contact, and make a simultaneous
launch in all north-eastern cities more difficult to organize.
Case 4 Ryanair: the low fares airlines
Questions:1 . H o w d o e s R y a n a i r s p r i c i n g s t r a t e g y a c c o u n t
f o r i t s s u c c e s s f u l p e r f o r m a n c e t o d a t e ? W o u l d you suggest
any changes to Ryanair pricing approach? Why/why not?Answer:
An integral part of the low fares strategy is revenue enhancement through ancillary
activities,increasingly used to subsidize airfares in order to improve Ryanair margins
to compensate for falls in fareyields. These include on-board sales, charter flights,
travel reservations and insurance, car rentals, in-flighttelevision advertising, and
advertising outside its air-craft, whereby a corporate sponsor pays to
paint anaircraft, whereby a corporate sponsor pays to paint an aircraft with its
logo. Advertising on Ryanairs popular w e b s i t e a l s o p r o v i d e s a n c i l l a r y
i n come . H en ce , I wou l d n ot su g ge st an y ch an g e in i ts cu rre n t
p r i c i n g strategy. Of course Ryanairs response may be to try to upgrade its service
on the basis that it cannot dropits fares any lower, but the problem is that when you
have spent so long forging a strategy and culture thatplaces cost reduction way
above customer service that avenue is essentially denied to you. As the
oldsaying has it, You cant make a silk purse from a sows ear. Cazenove
may be saying Buy Ryanair. Myadvice, for what its worth, is Sell Ryanair.
2 . I s t h e n o - f a r e s s t r a t e g y a u s e f u l a p p r o a c h f o r Ry a n a i r i n
t h e s h o r t t e r m ? I n t h e l o n g t e r m ? Answer:
No fares strategy is not useful for Ryanair in the short term as well as in the long
term. In order for a customer experience to be branded the organization must have
intended to differentiate primarily on thebasis of the customer experience and
designed this to deliver value in and of itself. Whilst the
Ryanair experience is distinctive, it has not been designed to diff erentiate
the airline in a positive way from other airlines. It is more a by-product of
Ryanairs chosen strategy of price leadership.Is this strategy sustainable? Here

comes the crunch. I believe that in order for a brand to continue to grow ithas to
have a loyal following of customers. There has to be a positive emotional
connection between thecustomer and the brand in order for there to be an
enduring relationship. We are much more likely to remainloyal to the brands that we
love
3.Do the issues facing Ryanair threaten its lowfares model?
Answer :
With 66 million customers and brand recognition rocketing, for Ryanair the sky is the
limit. As longas were willing to pay the full price, Ryanair will continue as
one of Europes most distinctive brands.Perhaps paving the way for others
to adopt the Ryanair model, rather than the Southwest Airlines
model.Travellers need to be aware of the hidden cost of low fares. Puerile
charges and lack of transparency arethe tip of the iceberg. Theres
deliberate taunting of customers, dirty tricks, bending of the law and
lipservice being paid to consumer groups. The result is the downgrading of the
whole experience of flying tocattle class
Case V LEGO: the toy industry changesQuestions:
1 . W h y d i d L E G O e n c o u n t e r s e r i o u s e c o n o m i c d i ffi c u l t i e s
in the late 1990s?
Answer :
According to Kjeld Kirk Kristiansen, owner of the business and grandson of its
founder, followingmany years of success the LEGO culture had become inward
looking and complacent and had failed tokeep pace with the changes taking
place in the toy market. This lack of environmental sensitivity was evident
in the US market in 2003, where LEGO failed to predict demand for its Bionicle
figures, resulting intwo of its best-selling products from this range being out
of stock in the run-up to Christmas. It appeared nothing had been learned
from the previous year, when also in the run-up to Christmas the much sought-after
Hogwarts Castle sets were out of stock across the UK.
2.Conduct a SWOT analysis of LEGO and identify the
c o m p a n y s m a i n s o u r c e s o f a d v a n t a g e . Answer : Weaknesses

falling sales

falling market share,

job losses and management reshuffles

Threats

Kids getting older younger

Intensifying competition from the electronic and games market.

Fickleness of young consumers

Power of the retail sector

Opportunities & Strengths


back-to-basics strategy

to create a story-based, multi-channel

diversifying its brand

childrens growing appetite for video games

SUBJECT: Marketing Management
3.Critically evaluate the LEGO turnaround
s t r a t e g y . Answer :
Continuous improvement, in response to changing market trends, is now key if
LEGO is to wardoff the many challenges it still faces. It is still involved in many
licence agreements, making it vulnerable tothis cyclical market. Its back-to-basics
strategy has been widely praised but it remains to be seen if LEGOcan balance
this with its increasing activity in software. With childrens growing
appetite for video gameswith a more violent content, can LEGO satisfy this
target group while still remaining true to its wholesomeplay well brand values?
Will LEGO succeed in its attempts to target young girls and its desire to
target amore adult audience? Will it succeed in its attempts to reduce
costs and improve effi ciencies? Will CEO Jorgen Vig Knudstorp succeed where
his predecessors have failed? Only in the fullness of time will thesequestions be
answered but one thing is for sure: no brand, no matter how powerful, can afford to
becomecomplacent in an increasingly competitive business environment.
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