Question 35

Landers Paints Ltd have for many years produced paints and varnishes specifically for industrial use. These products have been sold both directly to the customer and through builders’ merchants. Larger firms tend to buy directly from Landers, whereas smaller customers, such as builders and decorators, use the latter.

The products are sold in large quantities in basic packaging at low prices. This enables Landers to keep costs to a minimum and prices at a competitive level. The most popular products are basic items, for instance, white and magnolia emulsion paint.

However, the recent increase in the popularity of DIY has resulted in a small fall in sales at Landers. Keen to reverse this decrease, the Managing Director, John Smith, is considering whether to launch a range of paints for home decorating. At a recent board meeting, he put forward this proposal.

‘I think that Landers should launch a range of paints and varnishes for the domestic market. Given our expertise and production facilities, the new products will hardly disrupt things around here and should lead to a significant increase in sales.’

The Marketing Manager, Shirley Thomas, reacted with caution.

‘I’m not so sure because there are substantial differences between marketing products made for industrial markets and those for consumer markets. I think it may be a lot harder than you think.’

‘Obviously, there are differences’, replied John, ‘but I really don’t think that some new packaging and a bit of advertising is enough of a reason to miss out on such a good opportunity.’

Questions

1. Explain why the recent increase in popularity of DIY has caused sales at Landers Paints Ltd to decrease. (4 marks)

2 a) Identify the key differences between an industrial market and a consumer market. (3 marks)

b) Analyse the difficulties that may be experienced by Landers Paints Ltd if they move into the consumer market. (8 marks)

3. Landers Paints Ltd decide to launch a range of products for the consumer market. Recommend a marketing mix for the new products. (10 marks)

Question 34

Supreme Kitchens Ltd has been making quality wooden kitchen products for over thirty years. The company was formed in 1968, the founder making some money from a hobby after retiring from the Police force. Over the years, the firm has grown and now employs eighteen staff, including a sales and marketing co-ordinator, a bookkeeper and sixteen crafts people.

The firm specialises in the manufacture of high quality, traditional pieces of furniture for use in kitchens, with the goods being sold through small retail outlets. The crafts people are responsible for designing, carving and making up each piece of furniture by themselves. Although this is time-consuming, the Managing Director, Alan Supreme, believes that this ensures that the final products are not mass-produced and as such, gives them a unique selling point.

However, James Mellencamp, the sales and marketing co-ordinator, feels that this approach is failing to take account of the changing tastes in furniture and is resulting in falling sales. He firmly believes that the majority of consumers no longer want to buy traditional pieces of furniture and favour the flat pack items sold by outlets like IKEA and MFI.

These differing viewpoints have been causing a number of arguments at Supreme Kitchens Ltd. Alan and James are both adamant that their opinion is correct, with neither of them prepared to compromise.

Questions

1. a) State what is meant by the term ‘unique selling point’. (2 marks)

b) Alan believes that the products made by Supreme Kitchens Ltd have a unique selling

proposition. Explain why this is the case. (4 marks)

2. a) Identify the advantages and disadvantages to Supreme Kitchens Ltd of selling products solely through small retail outlets. (5 marks)

b) The firm is considering whether to set up a mail order service. Analyse the possible

consequences of this for Supreme Kitchens Ltd. (6 marks)

3. Discuss whether you think James is right to recommend that Supreme Kitchens Ltd manufacture flat pack furniture. (8 marks)

Question 33

The Product Life Cycle is a very important tool for businesses to use. It must however be used in addition to other tools to study the market.

PLP has just introduced a new product onto the market. They are going to supply personalised fileofaxes to businesses for their customers. They see this as their way forward and have studied their competitors finding that no other competitors in the line of manufacturing and supply of promotional goods to companies are distributing this kind of merchandise. This could be the product that they need to gain market share.

PLP have decided to keep some of their old range as there are still customers who are remaining loyal to them. The management team have also decided that it may be dangerous for them to put all of their eggs in one basket.

The company also realises that it needs to fund the new product with existing sales even if they are in the decline stage, as there are still sales from loyal customers.

Questions

1. Assume that PLP Ltd has a certain amount of success with its new product (the personalised fileofaxes) and has successfully passed through the development stage

of the product life cycle. Discuss the implications that may develop for the company in the

next stages of introduction and growth. (14 marks)

2. From the information given in the case study it is obvious that many of the products on offer at the moment within the portfolio of PLP Ltd are in the decline stage. Explain how

this may have happened and what decisions should be taken at this stage, also detailing

why the company would be in a better position in the maturity stage to fund new product development. (18 marks)