BM032-3-3 MKTDM Class Test Question March 2021 – Online Mock Test Exam

Assessment Details:

• Module: Marketing Decision Making
• Words: 2500

 

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BM032-3-3 MKTDM Class Test Question 2021

QUESTION 1

Tan & Tan Berhad, is a public listed company involved in construction and property development plans to expand its investment in 2021 as follows; to build apartments, office buildings, or warehouses project for forwarding agents. The projected investment cost for an apartment will be $450,000 and there is a 70% chance that the apartment can be sold successfully, and a 30% chance that it will fail. If it is successfully sold, the levels of expected profits and the probability of each occurring have been estimated as below;

Probability                  Profits

High:               0.2                  $2,500,000 per annum

Medium           0.5                  $1,300,000 per annum

Low                 0.3                    $ 500,000 per annum

If it is a failure, there is a 0.7 probability that the apartment can be sold for $350,000 and a 0.3 probability that it will be worth nothing at all.

The construction of an office building project is expected to incur an investment cost of $550,000, with 75% chance that it can be sold successfully, and a 25% chance that it will fail. If it is successfully sold, the levels of expected profits and the probability of each occurring have been estimated as follows;

Probability                   Profits

High                0.2                  $2,500,000 per annum

Medium           0.6                  $1,400,000 per annum

Low                  0.2                     $400,000 per annum

The probability of failure of the office building is 0.7 and it can be sold for $250,000, and probability that it will be worth nothing at all is 0.3.

Finally, the investment on a warehouse project is expected to incur an investment cost of $620,000, with 70% chance that it can be sold successfully, and a 30% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as below and if it fails it will be worth only $20,000.

Probability                   Profits

High                0.75                $2,100,000 per annum

Low                  0.25                   $300,000 per annum

Based on the above information:

 

a).  Construct a decision tree for Tan & Tan Property’s investment alternatives and determine all probabilities. (4 marks)

b).  Calculate the expected value of all the three alternatives plans.  (6 marks)

c).  Which of the above property should Tan & Tan Property invest to further expand its business? Justify your answer.  (3 marks)

d).  Based on the above scenario, discuss any FOUR (4) disadvantages of using the decision tree in making decisions for the above investments.  (12 marks)

(Total: 25 marks)

QUESTION 2

Jet Electronic Company, an established manufacturer of microwave oven has decided to open a new outlet for its business expansion, given below is the estimated cost to be incurred;

Variable Production Cost       $160,000

Variable Selling Cost            20,000

Fixed Production Cost              $20,800

Fixed Selling Expenses               $8,200

The company expects to sell 5,000 units of microwave oven in its first year of operation. You are required to provide the following information to the Marketing Director to enable him to make the decision. Give your answer to the nearest whole number.

a).  How many units of microwave of oven need to be sold to break-even if the company decides to set the selling price at $115 per unit? (2 marks)

b).  How many sales in dollar were required to break-even? (2 marks)

c).  Assume the company would like to realise a target profit of $500,000 in its first year of operations, calculate the sales need to be achieved.  (2 marks)

d).  If its variable production costs increase by $5 per unit, what will be its new breakeven output? (2 marks)

e).  Analyse how the increase in variable cost will affect the profits of the company. (2 marks)

f).  Discuss any FIVE (5) limitations of using Break Even analysis in relation to the above scenario. (15 marks)

(Total: 25 marks)

QUESTION 3

The recent growing population of teenagers and young adults in Malaysia has prompted Ms. Jenny to take the opportunity to open an Uptrend Fashion Company store, involved in selling trendy and fashionable female clothing and accessories.

Uptrend Fashion Company usually advertises in magazines whenever it has new lines of clothes. A colour full-page advertisement in “Fashion Today” magazine costs $50,000, and the same advertisement cost $54,000 if it is advertised in “Trendy”.  Fashion Today magazine generally circulated to 3.7million readers, whereas Trendy circulated to 6.2 million of readers. To decide which magazine to advertise, Ms. Jenny needs to find out the cost of reaching 1,000 readers for each magazine.

In addition, Ms. Jenny is also considering a 30-second television commercial on the local Prime Drama slot at a cost of $480,000. This would reach 60,000,000 people in Malaysia and neighboring countries.

a).  Calculate the cost of advertising (cost per thousand reach) for each type of magazine. (4 marks)

b).  What is the cost that needs to be incurred by Ms. Jenny if she wants to advertise on television? (2 marks)

c).  Based on Question 3(a) and Question 3(b), which is the most effective advertising medium Ms. Jenny should choose to promote her new products? Justify your answer with reference to any FOUR (4) advantages of the chosen media. (10 marks)

d).  Apart from the cost factor, evaluate THREE (3) other factors influencing the choice of promotional tools that Ms. Jenny will use in promoting her new fashionable female clothing and accessories. (9 marks)

(Total: 25 marks)

QUESTION 4

Critically evaluate the different approaches taken by consumers in making decisions when purchasing high-involvement versus low-involvement products or services with reference to each element of the 4 P’s of the marketing mix. Support your answer with relevant examples.

(Total: 25 marks)

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