MT631 First Examination
Fall Quarter 1996

This exam is an open-book, open-notes exercise. You must answer/work three of the four questions/problems in the first section. Each of these responses is worth twenty points. You must answer/work two of the three questions/problems in the second section. Each of these responses is worth twenty-five points. Limit your responses to the space provided. DO not write on the back of the paper.

SECTION #1
LECTURE MATERIAL

1.In the Perceptual Space depicted in this problem, assume that brand placement for this specific market segment is determined by the sum of the weighted attributes within two distinct factors. We will label these two dimensions as: 1. Service quality and 2. Perceived value. Each of these factors is composed of three different items (benefits sought). This segment's evoked set consists of five different brands within this market. They are: Brand W, Brand X, Brand Y, Brand Z, and Brand A. The importance weights, and the ratings for each of the brands, for each of the six defining items are:

RATINGS
DIMENSIONAL
FACTORS		IMPORTANCE
WEIGHTS		BRAND
W		 BRAND
X		BRAND
Y		BRAND
Z		BRAND
A
SERVICE QUALITY

SPEED
FRIENDLY
ACCURATE


1
2
4


2
0
2


3
4
2


3
2
4


4
3
2


1
2
2

PERCEIVED VALUE

RELATIVE PRICE
DURABILITY
STYLE


3
4
2


4
2
1


2
3
4


3
4
3


2
2
3


2
3
2

WEIGHTS
0=not a factor
1=not very important
2=somewhat important
3= very important
4=extremely important
RATINGS
0=very low
1=below average
2=average
3=average
4=very high

Using the data given above, map each of the five brands within the perceptual space on the following page. Be certatin to give the appropriate numerical values to the axes and end-point (corners) of the graph. Also give the numerical coordinate scores for each brand.

Next give the rank ordering of assumed preference for the five brands from most desired to least desired.

PERCEPTUAL MAP
High









Service
Quality









Low
Low-------------------------Perceived Value-------------------------High
  1. Most Preferred Brand = Brand____

  2. Next Most Preferred Brand = Brand____

  3. Next Most Preferred Brand = Brand____

  4. Next Most Preferred Brand = Brand____

  5. Least Preferred Brand = Brand____
2. Since the customers' beliefs about competing brands reflects their perceptions of each brand's marketing program, You should be able to guess the specific strategies adopted by each of the brands. Using your understanding, given the data above, of these different strategies, contrast the five brands in terms of their competitive strengths within the market at large (that is the broader market beyond the specific segment outlined above). Also designate the best promotional tactic for brand W to take to capitalize on the consumer's beliefs about brand W.
3. The headline story in the current (October 21, 1996) issue of Marketing News (the biweekly business publication of the American Marketing Association) was on the sales growth in organic foods. For the past four years (1991-1995), total U.S. sales for organic foods increased more than twenty percent annually with 1996 sales estimated at $3 billion. Additionally, the number of new organic food and beverage products rose from 512 in 1991 to 1015 in 1995. Assume that you are a producer/distributor of a branded line of processed frozen foods. You picked up this news item during your routine "environmental monitoring".

Assume futher that you are in agreement with the "experts" cited in this article who stated "...the feeding frenzy shows no sign of abading." (Here the feeding frenzy referred to the tremendous increase in competitive offerings.) And..."This is not a fad".

Discuss the strategic implications of this trend on you as a marketer of food products. To structure your response begin with a basic situational analysis.
4. Suppose that you are contracted to determine the feasibility of a retail service center within a moderate-to-small-sized urban area. For purposes of this analysis we'll assume that this metropolitan area is populated by approximately 350000 people, It is connected by major interstate to a substantial urban hub of 5 million people some 100 miles to the southeast. Two other major trade centers bracket our imaginary city. One is a 1 million person city to the west also on a major interstate. The other city is located due north and has 2 million people. Otherwise the surrounding area is generally rural.

As a minimum requirement you want to demonstrate that the center will breakeven within a reasonable period. For this calculation you can get cost figures from your accounting staff. You' ll also need revenue estimates. Here's the rub, don't you know. How are you going to make reliable estimates of unit sales. (Note this problem focuses on distributional strategies.)
SECTION #2
FRITO-LAY DIPS

5.In preparing this case you discovered that profit contributions for 1986 are expected to be less than for 1985 given the current strategy and resource allocation. What is the magnitude of this difference and why did it occur?
6. What sales volume will be required for the dip line to preserve its 1985 profit contribution (as a % of sales) given budgeted promotion expenses. You may assume that G&A expense remains at the level forecasted in Exhibit 3. What level of market share would this increase represent?
7. What are your estimates of the sour-cream dip potential for both the chip dip and the vegetable dip markets in 1986. Be certain to state clearly your assumptions regarding the numbers that you select to use in determining these estimares.