MIDTERM EXAM

Due 6 JUL 98
FAX: 315-341-5440

phone: 315-341-2658; email: owen@oswego.edu (don't send excuses!)
URL http://www.oswego.edu/~owen for this and other class documents

FINAL VERSION: Check back with Midterm FAQ for additional comments to student questions.

This take-home exam is being substituted for an in-class exam by class consensus. Rather than a time limit, you have a limit on length. This is not a research project; these are questions that you should be able to answer on a timed in-class exam. Indeed, answers on past exams in which the student apparently relied on library research had a tendency to wander off of the issue of the question (i.e., were lousy answers receiving low marks). This is an MBA level exam for which MBA level knowledge, insights, and writing are expected.

Note that this is an individual project. Although it is expected that students have been discussing the readings and other course related issues outside of class, the final written exam document should be your own individual work. Your answers may reference personal experiences, news events, etc. in addition to the readings used in the course. Do be sure to support and substantiate your answer. You should not be attempting to "core dump" on an exam such as this. That is, do not attempt to confuse your answer with everything that you have learned: just answer the question that is asked. Your answer should, however, be based substantially on the sorts of issues that have been part of class discussions. student presentations and hand-outs, and assigned readings and your answer will be marked on the depth of substance. An additional document is available at the above URL which might be a useful orientation for approaching graduate level exams.

In answering these exam questions, you MUST adhere to the following rules:

1. Do NOT submit your name with the exam. Instead, identify your exam with a fictitious name. Your exam will be blind graded and returned in exchnage for a separate cover page which lists your real name and fictitious name.

2. Your answer must be typed: double space, one-inch margins. Use a standard size and style of font - e.g., 12-point Courier, Times, etc.

3. Use plain white paper with a staple in the top left corner; no report folders.

4. Scoring is based substantially on substance and clarity; printing with an old dot-matrix printer on fan-fold paper is acceptable. Errors of grammar, spelling, typing, etc., however, are not acceptable.

5. Type the question number and the first line of the question above each answer.

6. Start a new question on the page wherever the last one ends (i.e., do not leave any white space by starting a new question on a new page).

7. Limit the entire TEXT of the exam to NINE pages in length; you may add additional pages as an appendix to footnote supporting calculations if necessary. The length of each individual answer may vary, but the entire submission must not exceed nine pages of text in length. Note that not all questions carry the same weighting in the total score.

PART I:marketing environment, marketing mix, breakeven, forecasting, planning and objectives

You MUST answer the following question. 40% of the total exam grade.

TradeOnline* was established in 1996 as a pioneer in online (World Wide Web) investing. TradeOnline is able to offer investors market access, high speed of execution, and low commissions through web-based technology. Customers can place trades, invest in a choice of thousands of mutual funds, write checks, receive real-time quotes (Nasdaq, NYSE, and AMEX stocks), monitor their portfolio, and review their investment history 24 hours a day from anywhere in the world. TradeOnline charges a commission of $9.99 per transaction (trade). According to one source, TradeOnline generates about $60,000 per day from online trading.

In order to sustain growth, TradeOnline believes that it must promote its product on the Web as well as in other print media. The way that the product would be promoted on the Web is through advertising banners - those rectangular boxes that appear at the top of Web pages. Two general methods of placing these banners can be considered.

One method is that the advertising agency has the advertising banner placed at the top of specific Web site pages that are likely to be visited by people in the target market of TradeOnline products. One group of ten includes companies such as Quicken, US News, Individual Investor, etc. If TradeOnline products are advertised in this group, its ads do not appear every time that someone visits each of those ten sites. Instead, ads of several other sponsors are rotated every time someone visits the site. Any particular visitor has a random chance of seeing TradeOnline's ad banner versus seeing any other sponsor's ad banner. An impression is whenever a Web page visitor is exposed to a particular advertising banner.

A second method to consider is placing ad banners on search engines such as AltaVista. If a person searches for specific subjects like "stock," "investments," "brokerage," "broker," etc., an advertising banner for TradeOnline appears on the next page.

In either case, the objective of the advertising is to get people to click on the ad banner to take them to the TradeOnline Web site. When people click on an ad banner to request more information, this is called a clickthrough. Advertisers are charged for Web advertising by the number of impressions, by the number of actual clickthroughs, or by some combination.

One advertising agency posts the following rates:

1. Group Buy: $50 per thousand impressions.

2. Clickthrough: $10 per thousand impressions + $2 per clickthrough.

3. Keyword Search: $75 per thousand impressions.

Currently, the average click rate for banner advertising is about two percent. That is, for every one-hundred impressions, an ad banner gets two clickthroughs on average. However, TradeOnline would likely get a click rate of around fifteen percent if it uses ad banners displayed as a result of a keyword search.

Answer the following questions. You do not necessarily have to break your answer into separate parts or in any particular order, but your answer must address all of the following issues.

A) What should TradeOnline do with regard to banner advertising? What assumptions are you making in order to give this recommendation?

B) There are currently only three other providers of online trading services. How can TradeOnline forecast industry sales for the next three years? How can TradeOnline forecast its own sales for the next three years?

PART II:consumer behavior, organizational behavior, services marketing and management, marketing mix

One question; a second (alternative) question might be added at the end of class on Monday. 30%

One of our presentations was with regard to the services of a local mental health care provider. Contrast this organization with one which manufactures crankshaft bearings that are used in automobile engines. In what ways is the marketing of these two products no different? In what ways is the marketing of these two products very different?

PART III:readings, general

One question; a second (alternative) question might be added at the end of class on Monday. 30%

Many of the articles that we have read are quite old. Levitt's "Marketing Myopia" was first published in 1960, but it is still among the most read, most reprinted, most well known articles of all time in the marketing discipline. Borden's "Marketing Mix" was published in 1964, and the basic elements of that article are still in all of the marketing principles textbooks. Most of the factors discussed in Howard & Sheth's "Buyer Behavior" are the fundamentals taught in all consumer behavior textbooks. What are the most important concepts, ideas, and theories from our readings (through the fifth week) that make up a body of knowledge called "marketing"?