MKT202 Copyright ©2020 Singapore University of Social Sciences (SUSS) Page 1 of 6 Examination – January Semester2020

MKT202

Examination – January Semester2020

Marketing Management

Wednesday, 22 May2020 10:00 am – 12:00 pm
INSTRUCTIONS TO STUDENTS:
1. This examination contains THREE (3) questions and comprises SIX (6) printed pages (including cover page).
2. You must answer ALL questions.
3. All answers must be written in the answer book.
4. This is a closed-book examination.
At the end of the examination
Please ensure that you have written your examination number on each answer book used.
Failure to do so will mean that your work cannot be identified.
If you have used more than one answer book, please tie them together with the string
provided.
You must answer ALL the questions. (Total 100 marks)
Question 1
In 2016, Alibaba acquired control of Lazada with an investment of US$1 billion, and boosted its stake to 83 per cent in 2017 with an additional investment of US$1 billion. Ms Peng, a senior partner at Alibaba and executive chairman at payments affiliate Ant Financial, said that South-east Asia is a hot spot for growth and exciting opportunities. “With a young population, high mobile penetration and just 3 per cent of the region’s retail sales currently conducted online, we feel very confident to double down on South-east Asia. “Lazada is well-positioned for the next phase of development and of Internet-enabled commerce in this region,” Ms Peng said.
Lazada founder Max Bittner, who has served as CEO since 2012, will take on the role of senior adviser to Alibaba to “assist in the transition and future international growth strategy”. Lazada, founded in 2012 and incubated by Berlin-based Rocket Internet, is also backed by Temasek Holdings and Tesco. Maybank Kim Eng senior economist Chua Hak Bin said that Alibaba’s big investment suggests that South-east Asia is becoming the next battleground for global technology giants. He noted that while the region’s consumers will benefit from greater price competition and choice, traditional retail players will face an even greater risk of disruption and displacement. “Many local bricks-and-mortar retail names do not have the deep wallets or tech know- how to compete. “Local players will have to find their niche and partner the global tech titans to survive the coming onslaught,” he said. Mr Paul Coutts, CEO of Singapore Post, which is backed by Alibaba, said that any investment of a significant magnitude will accelerate the growth of e-commerce in Singapore and the region.
“We continue to focus on initiatives that unlock the full potential of the e-commerce market that these investments create, to advance SingPost’s transformation into a leading postal and e-commerce logistics company,” he said.
Adapted for academic purposes from an article published on March 20, 2018, with the headline ‘Alibaba doubles Lazada investment to $5.3b in The Straits Times.
(a) Describe the role of marketing channels in the context of e-commerce platform Lazada. (9 marks)
(b) Many fast-moving consumer goods conglomerates such as Kao Corporation (Toiletries and Skincare) have already set up an official store on Lazada. However, many luxury brands such as Chanel beauty products are hesitant to do so. Discuss the considerations that are essential to the design and selection of marketing channels using Kao Corporation and Chanel beauty products as examples. (15 marks)
(c) Firms that decide to tap into global markets have to determine the best mode of entry. Briefly explain the various mode of entry for global marketing. Based on the case, discuss Alibaba’s choice of mode of entry as it becomes increasingly committed to global markets. (16 marks)
Read the following case and answer Question 2 & 3.
Huawei Technologies Co. Ltd. (hereafter Huawei) is a leading global telecommunications solutions provider. Founded in 1987 by Mr. Ren Zhengfei, Huawei has transformed from a one-room workshop in Shenzhen, China to the world’s largest information and communications technology (ICT) solutions and services provider with capabilities across carrier networks, enterprise, and consumer fields. With a vision “To enrich life through communication,” Huawei has earned a reputation as one of the most dynamic, fastest growing, innovative multinational technology companies.
At the beginning, Huawei picked up basic technology by reverse engineering foreign products and used that as the foundation to develop more complex technologies. As the Chinese government started to notice Huawei’s achievements, government support began to play a much larger role in the growth of Huawei. Huawei gained lots of publicity through high profile visits of government officials and won large contracts on domestic telecommunication infrastructure development like the national railway system, in which their technologies were used to develop communication solutions. Huawei’s technology enabled them to provide top notch telecommunication switches and mobile communication solutions for the railway system. Financial resources, such as loans, were also made more available. Later, Huawei put strong emphasis on in-house research & development (R&D). With strong in-house R&D and aggressive undercutting of prices, Huawei has expanded quickly over the years and its products and solutions have been deployed in over 140 countries, serving more than one third of the world’s population.
In 2014, Huawei recorded profits of 5.5 billion USD (Huawei Financial Results, 2014). It serves around 80 percent of the world’s largest telecoms operators with BT, Vodafone, Orange, and T-Mobile among its notable partners. Huawei is the only Chinese company that received higher revenue from markets outside China (67%) than from the domestic market.
In 2015, Huawei has around 170,000 staff globally (De Cremer & Tao, 2015), with 22 regional offices and over 100 subsidiaries around the world. Today, the three main categories that Huawei offers are operators (carrier networks), enterprises and consumers’ products/services.
Its first segment – carrier network segment includes a wide range of wireless networks,
fixed networks, telecom software and core networks, as well as services solutions to
telecommunications operators.
The second segment, enterprise business segment, is engaged in developing and
manufacturing ICT products and solutions including enterprise network infrastructure,
cloud-based data centers, enterprise information security, and unified communication
and collaboration solutions for government entities, public utilities, energy, power,
transportation, finance and other industries.
MKT202 Copyright ©2020 Singapore University of Social Sciences (SUSS) Page 5 of 6 Examination – January Semester2020
Lastly, the consumer business segment develops and manufactures mobile broadband
devices, home devices, tablets, and smartphones, as well as the applications for these
devices (Marketline, 2013).
Since 2012, Huawei started to invest heavily in the consumer market, rolling out
mobile devices to compete with the dominant players like Apple and Samsung. As of
2015, Huawei’s mobile phone market has seen rapid growth, and worldwide exposure
has since been achieved.
Despite its growth, Huawei is facing a number of issues. Firstly, Huawei is still
frequently perceived as low-quality Chinese products, due to its country-of-origin and
aggressive pricing strategies.
Secondly, Huawei’s aggressive low-price approach has directly resulted in eroding
profit margins in some markets.
Thirdly, Huawei’s technology development has also been controversial and the
company is constantly being accused over the theft of intellectual properties.
Lastly, because of historical links to the People’s Liberation Army (PLA) and the
Chinese government, Huawei has not been able to successfully convince certain
segments of the western countries that as a trustworthy multinational technological
firm, Huawei is purely interested in business growth and market share.
In 2014, Huawei’s smartphone business group was the fastest growing of its three main
business groups, with sales expanding 32% for that year. Huawei remains the largest
and most prestigious local smartphone brand within China. However, outside its native
country, the Huawei brand faces the challenge of building brand awareness among
individual consumers.
One reason is that Huawei was a network infrastructure and business-to-business
telecommunication solution supplier rather than consumer-focused mobile device
supplier in the past. There has been some recent progress, as its awareness grew to 52%
globally in 2013, up from 25% in 2012, according to the company (Kim, 2015).
However, its brand awareness comes mainly from the domestic market; thus Huawei
still remains little known to consumers in other parts of the world. Huawei has a long
way to go to boost its international brand familiarity.
Huawei’s rise is an indication that growth in the mobile-phone industry is coming
mainly from emerging markets where consumers are in the process of replacing basic
feature phones with smartphones.
While China’s increasingly saturated smartphone market is showing signs of slowing
growth, Huawei is expanding rapidly to Africa, the Middle East and Latin America
(Osawa & Kim, 2014). Huawei is prepared to use pricing as a way of building share in
its major markets. It has also made substantial progress in design and quality, but its
future remains uncertain as to whether international consumers will accept a product
from an almost unknown name in preference to established brands.
MKT202 Copyright ©2020 Singapore University of Social Sciences (SUSS) Page 6 of 6 Examination – January Semester2020
Source: Guan Chong (2016) Huawei – Chinese Telecommunications Giant Huawei:
Strategies to Success, Nanyang Technopreneurship Case Centre (NTCC). Retrieved
from http://www.ntc.ntu.edu.sg/ntcc/Documents/Full%20Version/13.%20HUAWEI%
20-%20CHINESE%20TELECOMMUNICATIONS%20GIANT%20HUAWEI%20S
TRATEGIES%20TO%20SUCCESS.pdf
Question 2
(a) Apply product life cycle (PLC) model to the smartphone market. Describe how the marketing mix changes at different stages of the PLC. Identify the current
stage that smartphone business is in. Recommend actions that Huawei should
take to succeed at this stage of PLC.
(20 marks)
(b) Identify and describe the macro environmental forces that may influence an organisation’s decision making, and affect its performance and strategies. Based
on the case, identify the most dominant macro-environment force that impacts
Huawei and provide justifications. Based on your analysis on the macro
environmental force, discuss how Huawei should respond to the environmental
force.
(10 marks)
Question 3
(a) ‘Segmentation is at the heart of marketing strategy’. Examine the importance of market segmentation in the context of Huawei.
(6 marks)
(b) Suggest four (4) potential market segmentation variables to Huawei [two (2) for consumer markets and two (2) for organisational markets] and discuss how
these variables may be applied to segment the market.
(14 marks)
(c) Demonstrate the assembly of Huawei’s product mix in a table by its product mix width and product line length.
(10 marks)