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DMM09
Customer Relationship Management
Assignment – I

Assignment Code: 2017DMM09B1                                          Maximum Marks: 100
   Last date of Submission: 15th November 2017

    Section-A
Each question carries 25 Marks.
1.    Prepare a study of Indian Banking Industry and analyse the changes that took place in the relationship practices of this industry?

2.    Explain the concepts of customer retention and customer recall management?
Section-B (50 Marks)

Case Study

Customer Relationship Management in Shopper’s Stop

The foundation of Shopper’s Stop Ltd. was laid on 27th October, 1991 by K. Raheja Corp. Group of Companies.  Being amongst India’s biggest hospitality and real estate players, the Group sets another milestone with their lifestyle venture. The objective was to create a fashion and lifestyle store for the entire brands for the same. It tried to bridge the gap between the unprofessionally managed and poorly stocked merchandise and ill-mannered staff, and the growing urban upper middle class who had money to spend but were asking for a quality environment. The objective was to create a fashion and lifestyle store for the entire brands. It tried to bridge the gap between the unprofessionally managed and poorly stocked merchandise, ill-mannered staff and the growing urban upper middle class who had money to spend but were asking for a quality environment.

From its inception, Shopper’s Stop has progressed from being a single brand shop to becoming a leading fashion & lifestyle store for the family. A pioneer of organized retailing in India, today, it has become the highest benchmark for the Indian retail industry. Its stores are present across various Indian cities such as Bangalore, Hyderabad, Jaipur, Delhi, Chennai, Mumbai, Pune, Gurgaon, and Kolkata. It has a national presence of over 6,00,000 square feet of retail space, stocking over 250 brands of garments and accessories.
In fact, the company’s continuing expansion plans aim to help it meet the challenges of the retail industry in an even better manner than it does today. Its vision is to be a global retailer in India and maintain its No.1 position in the Indian market in the Department store category. Being at the helm of a customer centric business, there is a strong emphasis on customer satisfaction which, in turn, translates into taking all aspects of the business very seriously.

CRM Practices
The retail chain major is eyeing 50% sales growth from its CRM initiatives. The company has also line up an aggressive expansion plan, targeting smaller towns and cities in the country. According to Managing Director and CEO of the company, it has given a new direction to its CRM initiatives after acquiring business intelligence software called “Business Solutions”.

The new software helps generate intelligent data from Shopper’s Stop customer base of about 2,30,000. The company then collects this data and touches base with customers via direct mailers informing them about the upcoming events. A company release says: “Last year, about 50 % of our sales came from repeat customers and this year too we are expecting this number to grow “. The company claims that it has taken its CRM initiatives to a new height and now calls its loyalty programmes.

CEM  Initiatives
Overanalysing of the company’s sales trends and pattern helped realize that most of the sales were coming from the old customers primarily through repeat purchases it thought of focusing on those customers. The company tried to leverage data by providing information and the company may ultimately be benefited. As, if a customer had bought a pair of trousers, it tells him about a new range of shirts that it has just brought into the store.

Under the CEM programme, the members are called “First Citizens”
At the Shopper’s stop, the First Citizens are given the following exclusive benefits and privileges:
•    Reward points every time they shop
•    Exclusive offers
•    Updates on what one can look forward to shop for
•    Exclusive benefits and privileges
•    Exclusive cash counters so that they can spend more time shopping rather than waiting in a line.
There are three membership categories:
1.    Classic moments
2.    Silver edge
3.    Golden glow
The company believes in providing the best experiences possible, including the best benefits and privileges. The programme gets as rewarding as one makes it since it depends on the membership status which is upgraded when one qualifies with the necessary purchases during the membership period.

Co-branded CRM initiatives: Shopper’s Stop has been launching several schemes to benefit its profitable customers and has been coming up in partnership with several leading players who matter for retailing industry. One such programme partner is Citibank.

First Citizen Citibank Credit card: The First Citizen Citibank Credit Card – The first citizen credit card – India’s only co-branded store card combines the benefits of Shopper’s Stop loyalty programme. First Citizen and the advantages of a Citibank Credit card. This entitles customers to the benefit of:

a)    Earn double reward points
b)    0% EMI scheme

First citizen Citibank debit card: The First Citizen ATM/debit card is India’s first co-branded ATM/debit card in the retail sector. While this card can be used as a regular debit card and at an ATM to withdraw cash, it also helps a customer collect reward points every time he purchases merchandise at any shopper’s stop outlet. This also provides automatic membership to First Citizen Shopper’s Stop Loyalty programme for those who are not First Citizen members yet. The company had also gone in for massive IT initiative to support the customer support it had planned for. It chose software tools for facilitating, the analysis of the customer data. They have been using a combination of business objects and the Statistical Analysis System (SAS) solutions for trend analysis, promotion, management, consumer behaviour, segmentation, buying basket analysis, profitability and lifecycle analysis.

Case Questions:

1.     Shopper’s Stop was the first among the organized retail players to initiate CRM     practices. What do you find from the above case study to substantiate this view? 

2.     Shopper’s Stop has initiated many things in the direction of keeping customers for life.     What are those initiatives?

3.     If you were in the place of Incharge of relationship management practices, what     innovation would you have done?                               (15+15+20)


DMM09
Customer Relationship Management
Assignment – II
Assignment Code: 2017DMM09B2                                         Maximum Marks: 100
   Last date of Submission: 15th November 2017

    Section-A
Each question carries 25 Marks.
1.    “CRM programmes are a costly affair, but the long-term reward it generates is much more beneficial than the revenue it generates“. How far do you agree with the statement and why?

2.    Consider yourself as a Business Manager of an insurance company in a city. How would you design a system to study customer feedback of your services and delivery? Explain in full detail.
Section-B (50 Marks)

Case Study

A)    Infosys was recruiting a German. When the candidate was asked why he wanted to join Infosys, he replied he wanted to join the company where Mr. Narayana Murthy works. This shows that the employees remain with the organization with full dedication as long as they are taken care of properly.

Q1.     “Employee care is must in organization today before performance results”. Comment on     the statement.                                        (15 marks)

B)    Once the CEO of Relocation Management Resources found one of his best customer service managers during a frustrating experience at the airport. Upon finding out his flight was cancelled, the CEO called the airline company to complain –bitterly. The women who took the call remained poised despite the CEO‘s self-described ranting and raving. By the end of the conversation, the CEO made the woman a job offer, which she later accepted.
Q2.      “Winning customers through employee behaviour is the key to retain customers”. Comment on the statement?                                    (15 marks)

C)    Cognizant, an IT company celebrates its major milestones with employees, usually by giving them a choice of gifts such as TVs, DVD players, and music systems. This is because the company believes that employee delight is the basis for Customer Delight in a service company. Cognizant believes this is the only way to keep employees happy and make them feel to be a part of the company which may otherwise seem impersonal to most employees if they only maintain an arm’s length relationship.

Q3.      Establishing employee relations by giving gifts in kind is a better option as followed by cognizant or giving financial benefits is far better or recognizing the skills, talents, worth and giving due respect to their existence is the best solution to have employee delight and finally customer delight.  Give your views on this statement?                (20 marks)

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DMM 08
PRODUCT MANAGEMENT
Assignment – I

Assignment Code: 2017DMM08B1                                             Maximum Marks: 100
   Last date of Submission: 15th November 2017

Section-A
Each question carries 25 Marks.
1.     a.      Elucidate why Product Life Cycle is a useful tool for helping managers organizes their
thinking about the   product strategy and management.
           b.      Give   a detailed account of product lifecycle stages of the following product (a) Laptops
(b) Digital camera (c) luxury watches. Justify the position giving appropriated information.                                

2.     a.     “Positioning is the   fountainhead   from   which   flows   the   decision of marketing mix”
Substantiate this statement with examples.
b.     Discuss    the   positioning   adopted   by   one   brand   in the following product category
(a) Soap (b) medium size car (c) Smartphone

Section-B (50 Marks)

Case Study
Tropicana
Tropicana is a very famous brand that sells fruit juice worldwide. PepsiCo experienced great success with its Tropicana brand, acquired in 1998. Then in 2009, the company launched a redesigned package to “refresh and modernize” the brand. The goal was to create an “emotional attachment by ‘heroing’ the juice and trumpeting the natural fruit goodness.” Arnell Group led the extreme makeover that led to an entirely new look, downplaying the brand name, raising the prominence of the phrase “100 percent orange pure & natural,” and replacing the “straw in an orange” graphic on the front of the package with a close-up of a glass of orange juice.


We thought it would be important to take this brand and bring it or evolve it into a more current or modern state.” stated Peter Arnell, director of the creative agency Arnell in his speech explaining the strategy chosen for the Tropicana product.
“Historically, we always show the outside of the orange. What was fascinating was that we had never shown the product called the juice.”
The agency decided then to take the orange and move it to the lid of the bottle. The idea is creative and interesting, as we can see that the cap really has the shape and texture of half an orange that you can squeeze to obtain a fresh orange juice. This message goes along with the new advertising campaign launched by the same time, and both the packaging and the ad include the statement “Squeeze, it’s a natural”.
Tropicana invested 35 million dollars in an advertising campaign that promoted the new packaging for the fruit juice brand. Both the packaging design and the advertising campaign were created by the same agency; Arnell. On January 8th 2009, Tropicana launched the new packaging for its best-selling product in North America – Tropicana Pure Premium, with sales revenues reaching more than 700 million dollars per year.
A few days later, consumers started criticizing the new design, especially on social networks. Consumer response was swift and negative. The package looked “ugly” or “stupid,” and some even confused it with a store brand. Two months later, sales dropped by 20%, and this spectacular decrease in sales represented a loss of 30 million dollars for Tropicana.
Meanwhile, Tropicana’s competitors took advantage of the “Tropicana crisis” and gained the sales lost by the fruit juice brands. After only two months, PepsiCo management announced it would revert to the old packaging On February 23rd 2009, Tropicana announced that it would return to its original packaging design, and within a few months, the old packaging was back for good on all supermarket shelves. In total, this initiative cost Tropicana more than 50 million dollars.

As per product and marketing experts, after the company designs its packaging, it must test it. Engineering tests ensure that the package stands up under normal conditions; visual tests, that the script is legible and the colors harmonious; dealer tests, those dealers find the packages attractive and easy to handle; and consumer tests, that buyers will respond favorably. Eye tracking by hidden cameras can assess how much consumers notice and examine packages.

Case Questions:

1.     Discuss the importance and the process of concept testing.
2.     Describe the factors that contribute to the failure of new product packaging of Tropicana.
3.     Study the current packagings used by Tropicana on internet, and critically evaluate the effectiveness in Indian market.

DMM 08
PRODUCT MANAGEMENT
Assignment – II

Assignment Code: 2017DMM08B2                                             Maximum Marks: 100
   Last date of Submission: 15th November 2017

Section-A
Each question carries 25 Marks.
1.     How does the idea of a product portfolio relate to that of an investment portfolio? Is this analogy useful?

2.     What are the main components of a business analysis foe new product?

Section-B (50 Marks)

Case Study

The global auto industry is in the midst of dramatic growth and change, the likes of which it hasn’t experienced since the industry’s inception. In 2010, a shift in the balance of power within the global auto industry occurred when the world’s emerging growth market led by China, India, Brazil, and Eastern Europe accounted for slightly more than one-half of the 73.2 million light vehicles sold worldwide. Unlike some of the other emerging markets where market shares are more fragmented, the Indian small vehicle segment has been dominated by three major players – Maruti Suzuki, Hyundai Motors and Tata Motor’s. These players with their strong product portfolio, particularly in the small car segment, extensive distribution and servicing reach and strong brand franchise (created over several years) have maintained their market position for years together.
Tata Motor’s targeted this segment for itself in the Indian automobile industry with its Tata Nano. Tata Nano a small car from a big idea attained immortality the moment it was unveiled at the Auto Expo in New Delhi, causing a seismic shift in the automotive world. The creation of Tata Nano is a result of innovation leading to new market creation to tap latent opportunities lying at the bottom of the pyramid in the automobile, four wheeler segment. The car has been widely publicized as the world's cheapest car at Rs.1 lakh that would bring greater mobility to the masses of India and, eventually, the world.  The financial times reported- "If ever there were a symbol of India’s ambitions to become a modern nation, it would surely be the Nano, the tiny car with the even tinier price-tag.
Tata Motor’s wanted to develop the effective positioning strategy for Tata Nano in India. Since one of the most important aspects of successfully marketing a product is “Positioning. In fact, brands can succeed – or fail – depending on how they are positioned.  As the target customers for Tata Nano were lower and middle income families, who aspire to upgrade to 4- wheelers from being 2-wheeler users and since many of such families stay away from purchasing 4- wheelers primarily due to the affordability factor .Management at Tata Motor’s tried to focus on the price factor and developed “Price Positioning Strategy” for Tata Nano. Tata Nano tried to position itself as the most Affordable Car in the world. The former Chairman of Tata, Mr. Ratan Tata, has envisioned Tata Nano to become a “People’s car.” The car was positioned as a people’s car since it offers comfort and affordability to every person but inadvertently Tata Nano got positioned as the “Poor Man’s Car” and “Cheap Car”.
Combining the predictions about car ownership in India with the growth in GDP per Capita in India, predicted that automobile sector, especially the small car market is one of the most competitive sectors in India. In a market like this, a car like Tata Nano had the potential to sell like hot cakes. But those ambitions stalled. Despite a booming economy and strong consumer outlook, Tata Nano failed to leverage this opportunity to gain a foothold in this segment and after four years it was repositioned.
Too Many Crises – Since its launch with great fanfare in 2009, the Nano has swerved from one crisis to another. There was opposition to Tata’s original plans to site the factory in West Bengal, forcing a last-minute scramble to switch the site to Sanand.  The orders then petered out. To make matters worse, a few cars burst into flames, raising fears about the Nano’s safety. Sales, which had been predicted to be 20,000 a month, fell as low as 509 in November 2009. Sales recovered to 10,000 a month in the spring, but fell back again to 3,260 in July, 2010 amid a slump in the Indian car market caused by rising interest rates and fuel prices.
As per experts, Nano was a consumer behavior assessment failure. The brand managers positioned the car as the next upgrade for a family of four with a two wheeler. But every such household had an aspiration to move to something better and not necessarily cheaper. Even if the consumer was in that income bracket, he aspired for something cooler. This point was not taken into consideration while the brand managers were coming up with the positioning.
The next campaign focused on the tier 2 cities with bad roads and little or no inclination to move things along. This further hit the car sales. Finally now the Nano has been positioned as a cool car to have fun with. Also the colors and the powerful AC are being positioned as the differentiators along with the classic adage of better fuel efficiency that has helped its sales. The road ahead for Tata Motor’s continues to be challenging, yet full of opportunities but Tata Motor’s is committed to improve its customer-centricity, to better understand customer needs and translate them into exciting and appropriate products for their markets in order to increase the "perceived value" of its aspirational venture Nano .
After four years of it commercial launch Tata Nano, decided to  create a new niche for itself in august 2013 , by managing to move away from tag like the “world’s cheapest car to "smart city car". Thus they are repositioning Tata Nano as a "smart city car" by focusing on the youth to rejuvenate its image.    Tata Motor’s have repositioned Tata  Nano  by boasting  of some “intelligent features” like  power steering option, improved interior and exterior of the car and  improved fuel efficiency  and additional features like remote keyless entry, twin glove boxes, and a four-speaker Amphi Stream music system with Bluetooth, USB and auxiliary connectivity. The new Nano is available with new personalization kits- Jet, Alpha, Remix, and Peach.  Focusing on the youth to rejuvenate its image because, its buyer profile has been getting younger since the launch of the 2012 edition. About 45% of the buyers are younger than 35 years. Thus moving away from the concept of being an affordable four-wheeler. With the upgrades, Tata Motor’s is trying to increase the value for money proposition it offers to customers.
Although Tata Motors have developed proper repositioning strategies this time that will make the product cater to a larger number of customer segments. Changing perceptions of consumers is not so easy and it will take time. And Jack Trout, one of the world’s leading international marketing strategists has given the Tata Motor’s unsolicited advice to just ‘kill the brand’.

CASE QUESTIONS:

1.     Do you think this  repositioning will transform the Tata Nano's fortunes? - Is there a future for the product? 

2.     What could have been done to position the car better? Discuss 2 alternative positioning stands.

3.     Should the company “kill the brand” as advised by Jack Trout, critically discuss and justify.

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BIRMINGHAM CITY BUSINESS SCHOOL
POSTGRADUATE DEGREES

COURSEWORK FRONT SHEET

MODULE TITLE:        Managing Financial Performance
MODULE CODE:    MAN7040
LECTURER:        Jonathan Mills
ISSUE DATE:        2nd October 2017
HAND IN DATE:        15th January 2018 at 12.00pm (midday)
HAND BACK DATE:    12th February 2018

Learning outcomes and pass attainment level:

•    Evaluate the financial performance of an organisation using financial and narrative information prepared under International GAAP
•    Apply appropriate costing and budgeting techniques to a specific scenario.
•    Evaluate alternate investment projects using appropriate techniques.
•    Evaluate alternative methods of corporate financing on financial performance.
•    Demonstrate a level of competence in the preparation and analysis of financial information.

General guidance
The assessment for this unit is one coursework assignment. The required mark has been set at 50%. If you are attempting a first or second re-sit attempt your pass mark will be capped at 50%.
This is an individual assessment. Whilst there is no objection to you discussing the content of this assignment with your peers, your final submission must be completely your own work. Plagiarism and copying will not be tolerated and may lead to subsequent penalties being imposed. This is an individual assignment and all calculations, analysis and narrative submitted must be your own work.
The assignment will require a considerable personal investment of time and effort.

Structure of the assignment
There are three separate questions included within the assignment and you should attempt all three questions. There is no word limit to questions. If any part of the assignment is ignored this reduces the maximum marks which could potentially be awarded. The assignment answer should be carefully checked before submission for the use of appropriate and acceptable grammar. The correct use of English spelling is to be employed throughout.
All the numbers should be reported in 2 decimal points.
Submission of the assignment
All three questions must be attempted and submitted in one document. You are advised to prepare your assignment in Word format and copy and paste contents from Excel where spreadsheets have been used to support your work. Only Microsoft Word file will be allowed for submission.
Your student ID number should be shown on each page of your assignment.
Your assignment should be submitted electronically via Moodle and you are advised to do this well in advance of the submission deadline to avoid any system related issues. Feedback on your assignment will also be provided via Moodle once the marking has been completed.
Marking of the assignment
The matrix on the following page has been provided to assist you in completing your assignment and is an indicative guide only, not a formal marking scheme.
Indicative marking guide

Fail
(0%-49%)    Pass
(50%-59%)    Commendation
(60%-69%)    Distinction
(70%-100%)
Question 1
A lack of breadth and depth of financial analysis techniques accompanied by incorrect formulae or calculation without appropriate explanation.
Poor layout or presentation in anything other than business report style. Inadequate grammar and lacking in overall knowledgeable synthesis.     Evidence of some financial analysis techniques but with errors of formulae and calculation with insufficient explanation and adequate presentation.
Attempt at a business report format with some supportive appendices. Mainly descriptive with some attempt at synthesis. Grammar and structure being adequate.     Wide range of financial analysis techniques evident and supported by full disclosure of formulae and accurate calculation in a clear format.
Presented in business report format and coherently structured. Supported by referenced appendices. Effective and well-reasoned narrative discussion.      An excellent range of financial analysis techniques which are supported by full disclosure of formulae and accurate calculation in a clear format.
Excellent business report format and well structured. Supported by fully referenced appendices. Excellent analytical and justified explanations showing synthesis and application.
Question 2
A lack of understanding of management accounting and decision making. Unable to produce the correct format and calculations. Limited or no narrative discussion or recommendations and conclusions. Poor academic writing and referencing.
    Ability to apply some management accounting decision making techniques. Demonstrates an adequate understanding of the principles and techniques involved. Reasonable attempt at analysis and discussion of findings, though of limited depth.     A good application of management accounting for decision making. Demonstrates a good understanding of the principles and techniques involved. Good analysis and discussion of findings, with good use of academic references which support clear and well explained conclusions.     Excellent application and understanding of management accounting for decision making. Thorough and detailed critical discussion with excellent use of a range of academic references which support clear, practical, and well explained recommendations and conclusions.
Question 3
A lack of understanding of the topic and the related literature. Limited or no narrative discussion or recommendations and conclusions. Poor academic writing and referencing.
    Ability to research and apply theory to a reasonable degree.
Demonstrates the ability to critically evaluate and make the appropriate conclusions. Reasonable attempt at analysis and discussion of findings, though of limited depth.    A good understanding of the topic. Demonstrates a good understanding of the principles and techniques involved. Good analysis and discussion with good use of academic references which support clear and well explained conclusions.    Excellent understanding of the topic. Thorough and detailed critical discussion with excellent use of a range of academic references which support clear, practical, and well explained recommendations and conclusions.

Question 1
Presented below are the simplified Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position of BT Group plc for the financial years 2015 to 2017.




Required
Prepare a business report for the attention of the board of directors which analyses the performance and financial position of BT Group plc over the financial years 2015 to 2017 and recommend any action the board should take.

Your report should utilise key ratios, horizontal and vertical analysis and include in-depth critical discussion with appropriate academic references.



Marking guide

Financial analysis (using 4 categories of ratios and vertical and horizontal trend analysis) Vertical trend analysis            4 marks
Horizontal trend analysis         4 marks
Profitability ratio analysis        6 marks
Liquidity ratio analysis            6 marks
Efficiency ratio analysis        6 marks
Gearing ratio analysis            6 marks
                                                        ________
Total for analysis                         32 marks                     32 marks

Interpretation with academic references   
Vertical analysis narrative        1 marks
Horizontal analysis narrative        1 marks
Profitability narrative            2 marks
Liquidity narrative            2 marks
Efficiency narrative            2 marks
Gearing narrative            2 marks
                                                        ________
Total for interpretation                  10 marks                     10 marks

    
Conclusions and recommendations                          6 marks

Layout, structure, grammar and referencing                      2 marks

             Total 50 marks



Question 2

You work for VR Wholesale Plc, a wholesale distribution company that has a very wide range of products. Three categories of products within the range have been code named Alpha, Beta, and Gamma. The basic cost card for these is shown below.

The market for these products is highly competitive, but demand is increasing, so the Directors are optimistic about the future and have expansion plans, but first they need your advice to maximise profits from the existing range of products. The board of directors are considering halting the supply of Beta and Gamma that appear to be making no profit.

As you can see from the table below the directors are considering closing products Beta and Gamma in an effort to improve overall profitability, but using your knowledge of cost and management accounting techniques do you agree with this?

You spot that marginal costing would show the results differently and may affect the directors decision.



Requirements for Question 2 part (a)

i.    Use your knowledge of management accounting to calculate the contribution of each product                                    5 marks

ii.    Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Beta            1 mark

iii.    Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Gamma             1 mark

iv.    Discuss how and why marginal costing calculates contribution to pay overheads and why this is useful in evaluating product value to a firm?            1 mark

v.    Do you agree that profitability will improve by ceasing to make Products Beta and Gamma? What do you suggest the company does to increase profitability?                                             2 marks

   Question 2 (a) total 10 marks


Question 2 (continued)

The board have approached you to get your opinion of their expansion plan, which includes a chain of factory outlet stores. Below are the figures for the first one that is planned for a central Birmingham location next year.

Company policy dictates that any decision should be based on the results of calculating Net Present Value (NPV) of 3 years cash flows using a cost of capital of 12%, Payback Period (PBP) must be less than 3 years, and the Internal Rate of Return (IRR) of the project should provide a 5% cushion in case of increases in inflation or interest rates.

The investment consists of £2,000,000 for the land, building costs of £3,950,000, and £915,000 for fittings and equipment.

The cash flows in year 1 are expected to be: total sales revenue £14,300,000; the cost of Alpha products sold £3,950,000; Beta stock sold £2,830,000; staff costs £590,000; light & heat £838,000; other overheads £3,212,000. The cash flows for the following years are the same, but are expected to increase by 2% inflation each year.

Requirements for Question 2 part (b)

Using the information above and in accord with the above stated company policy you are required to calculate:

i.    Net Present Value (NPV)                             5 marks

ii.    Payback period (PBP) and Discounted Payback Period (DPBP)        5 marks

iii.    Internal Rate of Return                             1 marks

iv.    Based on your calculations do you recommend the investment is made and the new outlet store is built?                         2 marks

v.    Critically discuss the limitations of the above project appraisal techniques used and any other recommendations to the board.            2 marks

   Question 2 (b) total 15 marks

Question 2 (a) and (b) Total 25 marks



Question 3 – Essay question


Please write a short academic paper (between 1000 and no more than 2000 words) that critically evaluates the importance of considering financial and non-financial factors when managing the performance of a business.


   Question 3 Total 25 marks

Total 100 marks








End of Paper

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ACCT226 Taxation I                 Instruction and Answer sheet
G C & E Case:  Problem
Due Date: Must be received By January 4,2017. Marks will be deducted for late submissions.
What you need to do?
Use the Profile Tax Software to prepare the return for the taxpayer.
When you are finished please answer the questions included on page 2 of the instructions
Please attach the Tax Summary to your Submission showing all calculations necessary for preparation of the income tax return.
Remember all computer assignments must use the address shown below.
Taxpayer’s Address:
941 Progress Avenue
Toronto, Ontario
M5C 1A7   
Phone # 416-289-5000
SIN: 527-000-129 (Taxpayer) or 527-000-483 (Spouse)










ACCT 226-                All sectionsTAXATION I                 HAND IN CASE         Winter 2017.
Use the Tax Summary of your completed return to answer the following questions:
1.    What type of tax System is being used to Calculate the taxpayer’s income tax payable? Briefly how this tax systems works.

2.    What are the other two types type of tax systems used in Canada? How are these systems different from the answer given in number #1 above?
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3.    Calculate the effective rate of tax payable by taxpayer for 2017. (See Chapter 1- Page 6)



PART B: Global Citizenship & Equity
A desirable qualitative concept of Tax Systems is one of Equity and Fairness. See Chapter 1 (Pages 6-10).
Using the following two Learning Outcome of Global Citizenship & Equity:
Learning Outcome No. 5: Identify and challenge unjust practices in local and global systems; and
Learning Outcome No. 6:  Support personal and social responsibility initiatives at the local, national and global level.
Discuss, briefly, whether the tax payable by the taxpayer is fair and equitable.
In your discussion please indicate the effect the country’s tax rates would have on International Competitiveness if that country’s tax rates are out of line with those in comparable countries.

*Remember to keep your GCE assignments in your on-going GCE portfolio for future professional use.

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INDIVIDUAL ASSIGNMENT 2

Description:  Case Study requiring preparation of workpapers, calculation of taxable income and income tax payable, preparation of an individual tax return, and a letter of advice.

Weighting: 35%

Course Content: Focus on Topics 5-10, with knowledge of previous topics expected.

Due:  Week 11

Remember: The purpose of an assignment is for you to demonstrate your knowledge and understanding of the topic. Make sure your answers are comprehensive enough to achieve this.

NOTE: THIS IS AN INDIVIDUAL ASSIGNMENT.

YOU SHOULD WRITE ALL WORK SUBMITTED YOURSELF AND IT SHOULD BE BASED ON YOUR OWN RESEARCH.  EVIDENCE OF COPYING FROM OTHER STUDENTS WILL BE TAKEN SERIOUSLY AND REPORTED.



ASSIGNMENT INSTRUCTIONS

EMPLOYMENT:

Your client (use your own name as the client name) is the sole director of FinForensics Pty Ltd. The business employs five staff members, including your client who holds the position of managing director. FinForensics analyses financial information and provides investment advice to registered clients.

The payment summary from FinForensics Pty Ltd shows the following:

§ABN 84 111 122 223

§Gross Payments                                                                          $130,000

§Tax Withheld                                                                      $38,376

FinForensics also paid $99 a month for your client’s mobile phone account and additional superannuation contributions of $10,000 under a salary sacrifice arrangement. This amount is in addition to superannuation guarantee requirements. The phone payments related to a fixed monthly contract in the employee’s name and payments were made directly to the phone company by the employer.

Your client owns an Audi Q5. They purchased the car on 1 June 2016 for $85,000. The car travelled 38,500 kms during the year and your client has indicated that about 75% is work related but they have not kept a log book. Your client pays for all the running costs for the vehicle. During the year these costs included:

Fuel & Oil
   

$5,950

Servicing
   

$1,200

Registration
   

$   760

Insurance
   

$1,800

Tyres
   

$2,400

Excess on insurance claim. The insurance company paid for the balance of the cost of repairs.
   

$   500

Car Washing
   

$1,300



DIVIDENDS & INVESTMENTS:

FinForensics Pty Ltd is a large company with two (2) shareholders, your client and their spouse. Your client owns 60% of the issued shares in the company. The shareholders were paid a lump sum of $140,000 in April. They explained that the company had been very successful over the last couple of years and had accumulated significant cash reserves. They described this payment as a fully franked dividend. The proceeds were used to reduce the line of credit that was taken out to purchase the home in which they live. Interest paid on the home loan for the year was $15,000.



The client also has a portfolio of shares that were inherited from their father. The father passed away on July 15, 2016. On finalisation of the estate the following shares were transferred to your client and the client received notification that all the shares had been transferred on 1 December 2016.

Share
   

Date Purchased by Father
   

Number of Shares Purchased
   

Price Paid per Share at time of purchase
   

Market Value at Date of Death

BHP
   

4 Jan 1985
   

2,500
   

$5.00
   

$20.37

CBA
   

12 Sept 1991
   

2,000
   

$5.40
   

$75.94

COH
   

4 Dec 1995
   

1,000
   

$2.90
   

$124.77

FLT
   

1 Dec 1995
   

1,000
   

$0.95
   

$32.29

MYR
   

7 Nov 2009
   

10,000
   

$4.10
   

$1.21

TLS
   

3 Nov 1997
   

2,000
   

$3.30
   

$5.75



The following fully franked dividends were received by your client during the year:

§CBA            $1,990.00

§COH           $1,300.00

§FLT             $    400.00

§TLS             $   155.00

The taxpayer sold the BHP and MYR Shares on 5 January 2017 to raise the deposit for the property purchase discussed below. The BHP Shares sold for $25.63 each and the MYR Shares for $1.35 each. The brokerage fee was based on a percentage of the sale proceeds for each parcel of shares and amounted to $113 for the BHP Shares and $30 for the MYR Shares. These amounts include GST.



RENTAL PROPERTY: 4/285 Pacific Parade, Bilinga, 4225

The taxpayer owns a unit on the Gold Coast which is rented to their daughter. A contract was entered into to purchase the property on 12 January 2017 for $500,000 and settlement took place on 1 March 2017. The taxpayer’s daughter moved in immediately. She pays rent of $400 on Wednesday each week. The first payment was made on the day she moved in. (Hint: You need to research the issues around renting properties to relatives and include your findings in your workpapers and letter of advice.)

The building was originally constructed in 2005. A quantity surveyor’s report commissioned at the time of purchase shows the construction cost of the unit was $140,000. The quantity surveyor also identified the following items included in the purchase for depreciation purposes:

Asset
   

Value at time of purchase

Stove
   

$   750

Hot water system (electric)
   

$   850

Carpet
   

$3,750

Dishwasher
   

$   700

Air conditioner (room unit)
   

$1,200

Window curtains
   

$2,700



The taxpayer purchased a refrigerator for $990 and a washing machine for $1,800. These were installed in the unit for use by the tenant on settlement date. The taxpayer elects NOT to use a low value pool for depreciating assets and chooses the diminishing value method of depreciation where applicable.

Other costs paid in realtion to the property before 30 June 2017 include:

Stamp duty on property purchase
   

$17,195

Legal fees on property purchase
   

$  1,240

Body corporate fees
   

$  1,000

Council rates
   

$     900

Water Rates
   

$     350

Insurance
   

$     685

Loan repayments (interest only)
   

$  7,600

Quantity surveyor’s report fee
   

$     699



OTHER ADDITIONAL INFORMATION:

§Dry cleaning of work suits                                                                             $450

§Personal contributions to superannuation made by the taxpayer          $12,000

(Sunsuper Account #70086511)

§Donations were made to:

o   The Greenpeace Trust $1,000,

o   The Australian Kidney Foundation $1,000; and

o   The “Sea Shepherd” $1,200.

§Association of Financial Advisors Membership Fees                                 $840

§Subscription to “Money Magazine”                                                              $110

§“Vogue Living” magazine subscription                                                                     $120

§Fees paid to the bank in January 2017 to establish the loan to purchase the unit were $600. The loan is for 25 years.

§The taxpayer also has an insurance policy that covers their income in the event of an accident or death. The premium is paid directly from their bank account each month. The total for 2016/17 was $3,000 of which 50% relates to the replacement of income in the event of an accident.

§In 2015 the taxpayer was involved in a car accident and sustained injuries that required medical attention and rehabilitation therapy. In December 2015 the court awarded the taxpayer $8,000 as compensation for medical expenses incurred because of the injuries from the accident. Payment was received in December 2016.

§The family is covered by private health insurance with BUPA. The policy was taken out on 1 April 2017. The premium paid to the end of the year was $1,260 and they claimed a rebate of $113. The policy number is 142536 and the health fund has notified them that the Benefit Code is 30.

§The taxpayer’s date of birth is 16 April 1977, they are married. You can make up the name & date of birth of the spouse. The spouse earned a salary of $64,000 for the 2016/17 year and was entitled to deductions of $1,200.





REQUIRED:

1.      Using a WORD document, prepare a set of work papers.  Include detailed explanations about whether each item is assessable income or gives rise to an allowable deduction. Show all workings, explain why you have treated items as you have, and provide appropriate authority for your decisions by referencing sections of the legislation, case law and/or income tax rulings. Your work papers need to be complete so that they can be reviewed by your supervisor and relied upon in the event of an audit in the future. They should also be reconciled and cross-referenced to reporting labels on the income tax return.



The document should be indexed with a separate heading for each category you deem appropriate. Some suggested headings include:

§      Work Related Income

§      Other Income

§      Capital Gains

§      Rental Property

§      Deductions

§      Tax Payable, Offsets & Levies (include all levies and offsets considered, explain why they are or are not applicable and reconcile to the tax return calculation).



§      Organise your work papers so that amounts are directly transferrable to items on the Income Tax Return and provide cross references to the tax return label where the amount is reported. Make sure that all calculation steps are visible in your workpapers. This is particularly important if you do calculations in Excel and paste them into your Word document.



§      *Depreciation calculations can be done using Handitax with the total transferred back to the rental property section of your workpapers for reconciliation purposes.



TIME MANAGEMENT TIP: YOUR WORKPAPERS SHOULD BE COMPLETE BY THE END OF WEEK 9 OR EARLY IN WEEK 10.



2.       Use Handitax to prepare the income tax return, including any relevant schedules, for the year ended 30 June 2017. Use your own name, and the Dummy TFN that you have been assigned. All other details are to come from the assignment instructions.



3.       Write a professional letter of advice to your client summarising their tax situation and explaining the important aspects of the items that are included in their tax return and those that have been disregarded. You should include advice to the client about potential improvements to their record keeping and other information that is relevant for future tax planning. It is recommended that you seek help from Student Learning Support to ensure that you have used professional language and your letter is error free.  Your letter should be about 2 pages long – comprehensive but concise.  If it is too long your client won’t bother reading it. It should be written in language and pitched at a level your client will understand. It should not be too technical; your client is unlikely to be interested in which sections of the legislation form the basis of your decisions. Do you need to provide your client with any instructions?



SUBMISSION INSTRUCTIONS:

1.        A WORD file containing your work papers and associated explanations should be submitted via the link on MySCU.

2.        Your letter of advice should be in a second WORD document and submitted via the link on MySCU.

BOTH THE ABOVE FILES MUST BE INCLUDED IN A SINGLE SUBMISSION



3.        Further instructions regarding the Income Tax Return will be provided during class in Week 10 and by way of announcements on MySCU in the weeks prior to the due date for submission. DO NOT WAIT FOR THESE INSTRUCTIONS TO START YOUR ASSIGNMENT – IT SHOULD BE ALMOST COMPLETE BY THE BEGINNING OF WEEK 10.  THIS WILL ALLOW YOU TO FOCUS ON COMPLETING THE TAX RETURN COMPONENT IN WEEKS 10 AND 11.

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DMM 06
INTERNET MARKETING
Assignment – I
Assignment Code: 2017DMM06B1                                                                                         Maximum Marks: 100
   Last date of Submission: 15th November 2017

Section-A
Each question carries 25 Marks.
1.     What is a search engine, and how does it works? Why is search engine optimization so important?

2.     Discuss the various online revenue models? What is pay per click (PPC) search engine advertising? Discuss this model in detail.


Section-B (50 Marks)

Case Study

In 2013, Asia-Pacific emerged as the strongest business-to-consumer (B2C) eCommerce region in the world with sales of around 567.3 billion USD, a growth of 45% over 2012, ranking ahead of Europe (482.3 billion USD) and North America (452.4 billion USD). The top three were followed by Latin America, and the Middle East and North Africa (MENA) region, according to Ecommerce Europe1. Globally, B2C eCommerce sales increased by 24% over 2012. This reflects the huge untapped potential of eCommerce by retail companies, both in their country of origin and across borders.
 eCommerce or electronic commerce, deals with the buying and selling of goods and services, or the transmitting of funds or data, over an electronic platform, mainly the internet. These business transactions are categorised into either business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), consumer-to-business (C2B) or the recently evolved business-to-business-to-consumer (B2B2C).
 eCommerce processes are conducted using applications, such as email, fax, online catalogues and shopping carts, electronic data interchange (EDI), file transfer protocol and web services and e-newsletters to subscribers. eTravel is the most popular form of eCommerce, followed by eTail which essentially means selling of retail goods on the internet conducted by the B2C category. According to Ecommerce Europe, country-wise, the US, UK and China together account for 57% of the world’s total B2C eCommerce sales in 2013, with China having total sales of 328.4 billion USD. As against this, India had sales of only 10.7 billion USD, 3.3% of that of China in 2013 with fifth position in AsiaPacific. This is despite the fact that India enjoys high demographic dividends just like China. India’s internet penetration with total e-households at 46 million against China’s 207 million is one of the reasons behind India’s poor B2C sales growth.
Online business models: To get the maximum benefit from eCommerce business, a large number of companies are adopting different innovative ideas and operating models including partnering with online marketplaces or setting up their own online stores. Some key operating models include the following
•     Marketplace and pick-up & drop are a model where sellers often partner with leading marketplaces to set up a dedicated online store on the latter’s website. Here sellers play a key role of managing inventory and driving sales. They leverage on high traffic on the marketplaces’ website and access their distribution network. However, the sellers have limited say on pricing and customer experience.
•     Self-owned inventory is a model where the eCommerce player owns the inventory. The model provides better postpurchase customer experience and fulfilment. It provides smoother operations due to ready information on the inventory, location, supply chain and shipments, effectively leading to better control over inventory. On the flipside, however, there are risks of potential mark downs and working capital getting tied up in inventory.
•     Private label reflects a business where an eCommerce company sets up its own brand goods, which it sells through its own website. This model offers a wide-ranging products and pricing to its customers and competes with branded labels. Here, margins are typically higher than third-party branded goods.
•     White label involves the setting up of a branded online store managed by the eCommerce player or a third party. The brand takes the responsibility of generating website traffic and providing services by partnering with payment gateways. It helps build trust, customer affinity and loyalty and provides better control of brand and product experience. Online business models To get the maximum benefit from eCommerce business, a large number of companies are adopting different innovative ideas and operating models including partnering with online marketplaces or setting up their own online stores.
 CASE QUESTIONS
1.      List out the major ecommerce companies in India. Map them on the basis of product category and revenue.
2.      Categories the above listed companies on the basis of ecommerce model discussed in case study. Which of the above business model is most used model by Indian ecommerce companies?
3.     What is the future of ecommerce in India? List of the major challenges and opportunities for e-retailers in India.


DMM 06
INTERNET MARKETING
Assignment – II

Assignment Code: 2017DMM06B2                                                                                         Maximum Marks: 100
   Last date of Submission: 15th November 2017

Section-A
Each question carries 25 Marks.
1.     What exactly is email marketing? What are dos and don’ts of an email marketing campaign?

2.      Marketers must support the buying process online and offline. Justify. Why are mixed models preferred? What are the main web sites based KPIs. 

Section-B (50 Marks)

Case Study
DOMINO’S DILEMMA

Social media sites are so much part of mainstream culture that the Internet Advertising Bureau (IAB) recently reported they have exceeded the reach of television.  Social media marketing describes the use of social media to engage with customers to meet marketing goals.  It’s about reaching customers via online dialogue.  According to Lloyd Sammons, chairman of the IAB, it’s really about brands having conversations.

But sometimes social media backfires for companies.  Domino’s the national pizza delivery company, found itself in a crisis in April 2009.  Two employees of a North Carolina Domino’s store posted a YouTube video of themselves in the kitchen as they performed disgusting practices with pizza ingredients:
In about five minutes it’ll be sent out on delivery
Where somebody will be eating these, yes, eating
Them, and little did they know that cheese was in his
Nose and that there was some lethal gas that ended
Up on their salami….. that’s how we roll at Domino’s.

What steps should a company take when it faces a social media marketing disaster like this?  Should Domino’s just ignore the videos and assume that the buzz will die down, or should it take quick action?  Domino’s did nothing for the first 48 hours but eventually – after more than one million people viewed the spot-got the video removed from YouTube.  Domino’s also posted a YouTube clip of its CEO who stated:
We sincerely apologize for this incident.  We thank
members of the online community who quickly
altered us and allowed us to take immediate
action.  Although the individuals in question claim
it’s a hoax; we are taking this incredibly seriously.

Domino’s also announced the store where the videos were taken was shut down and sanitized.  In addition, the company opened a Twitter account to deal with consumer questions.  The two employees involved were charged with the felony of delivering prohibited foods and Domino’s is preparing a civil lawsuit against them.
Was this a strong enough response by Domino’s?  Most social media marketing experts grade Domino’s actions as excellent but a bit delayed.  In fact, an Advertising Age survey revealed that 64 percent of readers believed that the company did the best it could to deal with the crisis.  Still, there’s no doubt this incident was a pie in the eye for the company.

Case Questions:

1.    Describe how the video would influence a consumer during the information search stage of this purchase decision.

2.    How might this incident affect brand loyalty for Domino’s in the short-term?  In the long-term?

3.    Would you have done anything differently if your employees posted a disparaging or obscene video?

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DMM 05
MARKETING OF SERVICES
Assignment – I

Assignment Code: 2017DMM05B1                                Last Date of Submission: 15th November 2017
                                                   Maximum Marks: 100

Attempt all the questions.
SECTION – A (25 marks for each question)

1.    Distinguish and differentiate between Products and Services? What are the risks and challenges associated with Marketing of Services? Briefly describe the emergence and growth of service sector in India? Give examples to support your answer?                             (25 Marks)

2.    What do you mean by “SERVICES ENCOUNTER”? Discuss briefly how memorable service encounters assists firms in improving marketability of various services? Discuss how the extended three Ps of marketing are crucial for the airlines and organized retailing industry?                                                                                               (25 Marks)       
Section-B (50 Marks)

Case Study

Physical Evidence – A Case of KFC
The New Logo of KFC
Recently KFC changed its logo and the new logo depicts Colonel Sanders with his signature string tie, but for the first time, replaces his classic white, double-breasted suit with a red apron. The apron symbolizes the home-style culinary heritage of the brand and reminds customers that KFC is always in the kitchen cooking delicious, high quality,, freshly prepared chicken by hand, just the way Colonel Sanders did 50 years ago. This is only the fourth time in more than 50 years that the logo has changed.
KFC Restaurant of the Future
After three years of testing different restaurant designs in the US and international markets, KFC is today revealing its restaurant look of the future. KFC’s new global image is in the process of rolling out in the restaurants around the world and will be implemented in newly constructed stores within the next 12 months.
The new global restaurant design is refreshing, contemporary, highly-differentiated, and helps keep KFC relevant with customers by giving them a higher quality, overall dining experience. The new design is based on thoughtful strategic tenets, which provide a strong brand image foundation, while being flexible for different international market needs. It communicates a progressive and energetic spirit for KFC and prepares the brand for future global growth.
Design features for the US include:
•    Bright, and bold graphics on the restaurant exterior and interior that incorporate the Kentucky Fried Chicken name as well as KFC, communicate a fresh sense of brand pride.   African American artist Charly (Carios) Palmer took KFC’s historical icons and gave them an updated, cool, and modern look. 

•    Graphics and pub signs that showcase the company’s icons: ’11 Secret Herbs and Spices’, ‘Finger Lickin’ Good’, and Sunday Dinner, 7 Days a Week’.

•    Signature symbols (the Colonel, the bucket, Kentucky Fried Chicken) create distinctly KFC retail style shop front designs that invite customers inside with open glass.

•    Heroic use of the signature red colour in a bold architectural way, and crisp white design accents to keep the brand youthful and fresh.
•    Warm and contemporary interior designs with spacious and innovative seating help customers feel welcome and comfortable in groups or along.

•    Thoughtful interior and exterior lighting enhances the customer experience.

•    A digital jukebox that is free of charge for customers to play the music they enjoy most.

•    Southern-inspired brand new menu items, slow-cooked, and served fast to star along-side KFC’s core products.

Since the first Kentucky Fried Chicken restaurant opened its doors in Utah in 1952, the brand continues to enjoy growing popularity around the world. The company’s top markets outside the United States are China, the UK, Australia, South Korea, Mexico, and Europe, including France, Germany, the Netherlands, and Holland.  KFC is also tapping growth in important emerging markets such as India, Russia and Brazil. Each new restaurant opening brings jobs and career opportunities along with economic vitality for that community.
Case Questions for Discussion
1.    Discuss the different physical evidence factors being used by KFC.                  (15 Marks)
2.    Discuss the new logo of KFC. What are the different changes made and why? As a customer, compare your perceptions about the new versus the old logo.                      (15 Marks)
3.    Critically discuss the physical evidence features KFC is going to use in the upcoming outlets.                                                                                       (20 Marks)




DMM 05
MARKETING OF SERVICES
Assignment – II

Assignment Code: 2017DMM05B2                                Last Date of Submission: 15th November 2017
                                                   Maximum Marks: 100

Attempt all the questions.
SECTION – A (25 marks for each question)

1.    Outline the innovative marketing strategies that may be adopted by firms engaged in the following business: Your answer should include all aspects covering the 7 Ps of marketing related to the services sector with clear indication of the basis for segmentation and positioning.

a.    Hospitality and tourism
b.    Heath Care Business

2.    Describe the challenges of using franchisees in the service industry? Why are service employees critical to the success of any service organization? Briefly explain what is service blueprinting and develop a blueprint of a Banking Services.
   
Section-B (50 Marks)

Case Study

SUBWAY’S MARKETING STRATEGY IN INDIA
The Indian fast food industry is pegged at Rs 20 bn with an expected annual growth rate of 40%. Several multinational like Mc Donald’s, Dominos and Pizza Hut have established their presence in India. A new entrant is Subway, a leading sandwich chain which, with 16,900 outlets in Canada and the US, has surpassed McDonald’s branch strength in these two countries Worldwide. It has a total of 22,361 restaurants, spread across 78 countries. Subway operates in India through a wholly owned subsidiary, Subway Systems India (Subway). Currently, Subway has 38 outlets in India and plans to increase this to 200 outlets by 2005. Subway sells a wide range of vegetarian and non vegetarian sandwiches, which costumers can customize. To cater to Indian tastes, it also offers many Indian recipes such as paneer tikka, chicken tikka, chicken seekh kabab, and spicy vegetables. In deference to Indian sentiments and sensibilities, the Company does not use beef products in India. The preparation counters for vegetarian food are kept separate. What is special about Subway outlets is that the orders are prepared right in front of the customers, with the customers being able to even customize their meal. They can choose the toppings, spices to be added, etc. Speaking about the products that the fast food chain sells, Chetan  Arora, Business Development Manager, Subway Systems India, says, “There is no other fast food chain in India that serves the products we serve. Further, customer interaction is maximum at our stores as the customer can be involved at all stages of the sandwich-making process starting from choosing the bread to the meat, the sauces, spices, and so on, which again is unique to us.”

Subway has adopted the franchising route to penetrate into the market. Each store involves an investment of Rs. 4.5-6 Mn. It has area of 700 sq. ft. with two sections - The dine-in and takeaway counters. Justifying the move to use the franchising route, Fred DeLuca, chairman and founder of Subway, said, “We have never compromised on quality and services. But you cannot be present in 70 countries to monitor this on a day-to-day basis. So we follow the franchise route everywhere.” The franchisee has to bear the cost of setting up the outlet. These include an initial franchise fee, and purchasing or leasing the equipment. The franchisee is also responsible for managing the restaurant and personnel. The franchisee should pay a royalty fee of 8% and 3.5% towards an advertising find in lieu; Subway provides assistance in identifying the location for the outlet, in designing the store, in preparing the menu, in setting up operation systems, in conducting training programs, and in carrying out periodic evaluations.

On the pricing front, the prices range from Rs.40 – Rs.200 – depending in the recipe the customer chooses- 10-15% higher than its nearest competitor McDonalds. But analysts are not sure about the company’s premium pricing strategy. Mr. Arvind Singhal, MD of a retail management consultancy firm, KSA Technopak, commented, “as such there is no negative perception about sandwiches in India. However, the premium pricing strategy for the product may have to be altered, keeping the price conscious Indian consumer in mind.”

Subway has a unique arrangement to promote its brand. The advertising expenses are financed from a specially created advertising fund that is operated by the franchisees themselves. The franchisees contribute a certain percentage of the sales proceeds to build the fund. They also promote the brand locally. The development of advertising campaigns is being looked after by Triton advertising agency. The main objectives of the advertising campaigns are to attract customers to the outlet and also to project the image of the outlet as one that offers healthy and fresh food.  

Case Questions:
1.    “We have never compromised on quality and services. But you cannot be present in 70 countries to monitor on a day-to-day basis. So we follow the franchise route everywhere.” Do you agree with this statement? What are the inherent advantages or disadvantages of adopting the franchisee mode of operation?                                                                                  (15 Marks)

2.    Subway has adopted premium pricing strategy with prices 15% higher than those of its competitors. Do you feel that such a pricing strategy is appropriate for the Indian consumer market?                                                                  (10 Marks)

3.    Do you agree with Subway’s overall marketing strategy in India in terms of its product portfolio, spread of outlets, brand promotion efforts, operational processes, customer interaction, physical evidence of stores, etc.? What suggestions would you have for Subway for improving its marketing approach for sustaining competitive advantage in the marketplace?             (25 Marks)