IB Business Management HL 4.2 Marketing planning Question Bank

1. Visionary Toys (VT)
Visionary Toys (VT) produces highly innovative toys for children. VT began operation in January 2017 and its unique selling point/proposition (USP) is producing toy parts with a 3D printer. VT uses the reducing balance method of depreciation. 3D technology changes rapidly and the financial directors are also considering ways of reducing VTs tax liabilities in 2018. The financial director presented financial information for V T at the end of 2017.

MM's growth has been helped by its unique selling point/proposition (USP) of rapid response to customer needs and by its high-quality customer service. New employees undergo detailed training to become skilled in:
- finding out what a customer's objectives are
- helping the customer work towards a marketing plan
- working closely with the customer as M M develops a marketing strategy for them
- maintaining links with the customer to provide an effective after-sales service.

The business takes a multicultural approach to its customers, employees and other stakeholders. MM's approach to diversity is one of the features that stakeholders say they like about the business. The company also ensures that it accommodates many cultural differences.

According to a business service that provides measures of social behaviour for every country, in British businesses:
- employees are accustomed to working in a competitive, individualistic society
- employees often take individual responsibility for their own actions and decisions
- competition is high between both employees and customers
- customers are accustomed to changing contracts when service is bad or competitors offer a better deal.

In comparison, Indian businesses:
- are based on power structures with a greater focus on teamwork than individuality
- are more likely to be hierarchical
- have greater loyalty from their customers
- have greater formality with their customers
- place importance on building business relationships
- are subject to greater variety in culture between businesses and regions.

Maintaining high levels of customer service is expensive. MM has increasing costs (line 107). Rachel is concerned about MM's finances and is examining the latest accounts for the company for 2019 and 2020 (Table 1) to identify problems.

2. Himalayan Trekking
Himalayan Trekking (HT) is a trekking (mountain walking) agency based in Nepal. It has been operating guided treks for tourists in Nepal, Tibet and Bhutan for over 20 years. With a duration of between one and three weeks, H T offerings include treks to the Everest Base Camp, tours to Buddhist sites in Tibet, and treks even to the inaccessible Kingdom of Bhutan. Brand loyalty is very strong, with repeat bookings from many clients (trekkers).
The market for trekking has been growing very rapidly with many new businesses setting up to meet the increased demand for "adventure" holidays. In this competitive market, HT's unique selling proposition (USP) is to provide an unforgettable wilderness experience in a socially and ethically responsible manner. It only uses locally produced food and local guides and trekkers camp without wasting too many resources. All clients have to sign a contract to agree that they will act in a socially responsible manner throughout the trek. Though it always had a strong sense of social responsibility, HT had not promoted this aspect of the business until the management realized that changes in attitudes towards social responsibility could be used to gain competitive advantage.
HT's brochure states that:
- It is a market leader in adventure tourism for Nepal, Tibet and Bhutan. It caters to a wide range of clients from experienced to inexperienced trekkers.
- In recognition of protecting the fragile environment, economic systems and cultures it treks in, HT has been awarded a global quality standard.
- By employing local guides and using locally produced food, H T adds much value to the local region.
- It only employs staff that have previous social and environmental experience.
- It financially supports a non-governmental organization (NGO) for Nepali orphans by giving 5 % of its turnover to Child Environment Nepal (CEN).
Selected financial information for HT for 2013:

3. The $ 1.99 toy shop
James Lai's toy shop is popular with no toy priced above $ 1.99. The toy shop uses psychological pricing at a level much lower than its competitors. James imports 90 % of his stock from China. It is located in a poor part of the city centre. Its target market is low-income families. The shop is very busy at weekends with a long queue (line) at the one cash register. Most employees are teenagers, who are very low paid.
Several stakeholder groups have complained:
- parents are concerned about the quality and safety of the toys and have set up an online social networking web site urging people to stop purchasing from the shop
- older customers have complained about the long queue at the one cash register
- one employee representative (union official) contacted James about employing teenagers on very low wages
- local toy manufacturers have questioned James' use of Chinese suppliers.
Competitors have argued that the $ 1.99 toy shop's psychological pricing method is unethical. James replied to stakeholder concerns, in a letter to a local newspaper, by stating that his shop allows young children to purchase affordable toys and provides job opportunities for teenagers. James has decided to create a social networking web site to respond to critics and to manage customers' perceptions.
James admits that the rate of stock turnover could be improved. He admits that the long queue is causing many customers to leave without buying anything. James is considering opening a second, larger toy shop called $ 4.99. He announced the opening on his social networking web site, informing stakeholders that he would stock higher quality products and have more cash registers. However, he immediately received negative online feedback from customers who saw the $ 4.99 toy shop as just a $ 3 price increase for the same toys.

4. Les Amis PLC (LA)
Les Amis PLC ( L A ) is a public limited company that sells casual clothes for men. Its target market is high-income professionals who value a personalized sales service. LA has developed brand awareness and operates 42 shops around the country. It owns 10 of these shops and leases the remaining 32 . LA employs 950 people, who receive a higher wage than the industry average. LA also pays commission to sales staff working in the shops. LA's organizational culture values the wellbeing and needs of its employees. Labour turnover is very low.
Recently, L A launched an online shop. Since then, online sales have increased considerably, while sales in LA's physical shops have fallen. Shareholders want LA to close all its physical shops and sell online only. However, many of the employees will be made redundant if the physical shops are closed.
LA's current chief executive officer (CEO), Marie Brossard, has a democratic leadership style, and she regularly meets with employees and encourages feedback. LA's managers and employee representatives have never had a conflict. Marie plans to discuss the shareholders' desire to close LA's physical shops with all the shop managers.
Customer returns of clothing orders at L A have increased substantially. Most returns are from online customers unfamiliar with LA's clothing sizes. Marie has consulted the e-commerce department on how to reduce the increasing cost of returns, and they have suggested investing in expensive software that will enable online customers to find their correct clothing size.

4. Exotice
Exotlce (EI) is a private limited company producing and selling ice cream from a centrally located shop in a large capital city. Lena, the founder and chief executive officer (CEO), owns 80 % of the shares. Her two daughters, who travel the world to find new and exotic natural ingredients for new flavours, each own 10 % of the shares. The family value their freedom in the decision-making process and the collaborative and supportive nature of El's culture.
El's unique selling point/proposition (USP) is based on:
- outstanding quality and a variety of exotic flavours made from fat-free natural ingredients
- excellent service provided by highly trained, committed and efficient employees
- customer involvement - with the use of sophisticated technology and staff support, customers can experiment to create their own flavours of ice cream.
A strong brand name and brand loyalty has led to rapid growth in El's market share. However, long queues (lines) are forming and the number of customer complaints is increasing. Lena is worried about the negative impact on E I.
Lena is considering two strategic growth options:
- Option 1: Opening eight new shops locally and nationally over the next four years. To finance this internal growth, El will sell new shares. After the sale, Lena will own 51 % of the shares.
- Option 2: Franchising El nationally. A small focus group conducted by one of Lena's daughters and made up of local entrepreneurs revealed a strong interest in El's USP. Ten franchises will open each year for the next five years throughout the country.

4. Adventures for All (A4A)
Tama Toki founded Adventures for All (A4A), which owns four adventure parks employing 342 people. The parks offer adventure activities such as high wire and mountain biking. A4A's target market is teenagers and adults. A4A's mission statement is "safety and affordability at A4A are the most important reasons for a great time for all".
A4A uses predatory pricing. Its competitors are theme parks and adventure centres. However, social trends are

changing. Many teenagers prefer social networking rather than adventure activities. A4A's sales revenue and profits are falling.

Tama discussed with senior managers two possible growth strategies:

Option 1. Through extensive promotion, attract children and adults with disabilities and access requirements to the parks. This approach would require specialized training for existing staff. No modifications to the parks would be required.
Option 2. Offer corporate team-building activities. A4A would develop specially designed programmes for senior leadership teams to spend three days in newly built conference centres located at the parks. Corporate teams would engage in adventure activities together and then discuss strategic options for their organizations.

Option 2 could be highly profitable. A4A could charge high prices for these programmes. However, some of Tama's senior managers argued that A4A should continue to provide "adventures for all" and not just to a group of highly paid senior leadership teams.

The two options created major disagreements. Two senior managers, working with Tama since the creation of A 4 A, threatened to resign if Option 2 was implemented. Two other senior managers argued that without Option 2 many jobs at A4A were under threat.