Name __________________________ Score:_________

Mktg. 202-A
Quiz No. 2
July 15, 2015

Part I (5 points each)

I. Define value chain, discuss and give an example.
2. Explain the 3-characteristics of core competencies and its importance to the
company.
3. Briefly, discuss the Core Business process.
4. In order to maximize competitive advantage, a company has to undergo a process of
alignment.
Discuss this 3-process of business alignment.

Part II: Mini-Case: Online Bookseller (10 pts)

This case is an bookseller, and in contrast to a pet store, this retailer doesn’t advertise.
It relies primarily on paid placements in search engines, and it obtains customers
through their goal-directed searches for particular titles (e.g., old books or price
discounts on new books). Say the price of these placements are a mere P500.00 and
200 customers locate the site through the funded search engines for a per customer
acquisition cost of P2.50. (Gotta love the internet).

Customers are notoriously nonloyal to online retail, especially those providers assessed
through search engines or via price comparisons. This, retention is a rare thing and
each purchase is treated as a new customer. The company has considered various
reards program but has launched none to date. So retention cost are essentially the
same as acquisition cost.

The bookstore has two segments: The first segment buys rare and old books. And it is
profitable (on average, some P2,500). The second segment purchases from the retailer
because its prices beat other online bookstores. (on the average, the margins are P125)

For the bookstore, the discount seeking buyers are not loyal. Retention is 0.4 (and
stead). And even the rare-book buyers will do some comparison shopping; so their
retention is approximately 0.7 (and fairly steady from year to year).

Online book purchasers are likely to buy books on and off through out their life. If
customers find the website by age 33, on the average, their book buying lifespan could
easily be 30 years or longer. (But for comparison purposes, let’s cap it at four).

What observations can you make?

What recommendations can you offer?

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