QUESTION: 93

A leading supermarket chain is undertaking environmental scanning as it is concerned that it is becoming uncompetitive and profits have started to fall. The Board is concerned that when the next Annual General Meeting is held, it will need to have a viable strategy to present to its shareholders, in order to prevent shareholders' protests.

In the past the company has been reluctant to offer an Internet shopping service. However, it now believes that by offering this service and also introducing customer relationship marketing (CRM) this will produce a strategy that will help it to improve its competitiveness.

Which of the following statements apply to CRM?

Select ALL that apply.

CRM utilises marketing resources to retain, rather than simply attract new customers.
The company must be prepared to take customers' needs into account and be able to meet these needs.
In mature markets, existing customers provide the most likely source of future earnings.
CRM is about marketing to customers to obtain their loyalty, so customer research is not needed.
The CRM process needs to include increasing the range of products that will be offered to customers.

Answer(s): A,B,C

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QUESTION: 94

PPP uses the Boston Consulting Group Matrix (BCG Matrix) to prioritise products for investment and divestment. PPP invests or divests according to the quadrant of the BCG Matrix that the product occupies.

Which TWO of the following quadrants might receive only as much investment as required to maintain PPP's relative market share?

Stars
Question marks
Dogs
Cash cows

Answer(s): A,D

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QUESTION: 95

VWX manufactures and sells a wide range of products. All these products utilise lenses and digital imaging technologies. VWX is considering how to manage its product portfolio.

Management is concerned about two product ranges in particular: cameras and home projectors.

VWX's cameras are Single Lens Reflex (SLR) cameras featuring interchangeable lenses and provide detailed, high quality images of objects both at very close range and at considerable distances. VWX has the largest share of the camera market but the market sales are falling as people increasingly use their mobile phone handsets to take and share photographs.

VWX has a small share of the home projector market. As a consequence the range is loss making. The home projectors are used to show photographs or films on large wall-sized formats. There is a growing trend for customers to buy home projectors to connect to mobile phones, tablets and games consoles to project the content into a larger image and in order to share it.

Which THREE of the following product management strategies should VWX adopt?

Cancel or postpone further investment spending on developing new SLR cameras.
Use marketing expenditure to try to make the camera brand to appeal to professional
photographers.
Invest in promotional campaigns to encourage people to view and share content using a VWX home projector.
Invest in promotional campaigns intended to convince the general public of the superiority of SLR camera pictures over the images from mobile phone handsets.
Cut promotional expenditure on home projectors to seek to restore the profitability of the range.

Answer(s): A,B,C

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QUESTION: 96

DDD has just issued a profit forecast in connection with a proposed take-over of a business. The take-over is strongly opposed by the target company. DDD's Management Accountant played a large part in helping DDD's Finance Director prepare the profit forecast. However, the Management Accountant believes that the profit forecast is overly optimistic and is based on some false assumptions. As a result the Management Accountant thinks the profit forecast is misleading. Select THREE of the actions below which are consistent with CIMA's Code of Ethics.

The Management Accountant should follow established internal procedures.
The Management Accountant should obtain advice from his professional body/bodies.
The Management Accountant should resign from his job.
The Management Accountant should maintain a discreet silence.
The Management Accountant should anonymously inform the media of his concerns.
The Management Accountant should publicly accuse the Finance Director of issuing a misleading profit forecast.

Answer(s): A,B,C

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