QUESTION $1[25$ MARKS$]$

Read the following extract and then answer the questions below.

Xerox: Adapting to the Turbulent Marketing Environment

Xerox introduced the first plain paper office copier $50$ years ago. In the decades that followed,

the company that invented photocopying flat$-$out dominated the industry it had created. The

name Xerox became almost generic for copying. Through the years Xerox fought off round after

round of rivals to stay atop the fiercely competitive copier industry. In $1998,$ Xerox$$s profits

were growing at $20$ per cent a year, and its stock price was soaring.

Then things went terribly wrong for Xerox. The legendary company$$s stock and fortunes took a

stomach$-$churning dive. In only $18$ months, Xerox lost some $$38$ billion in market value. The

once$-$dominant market leader found itself on the brink of bankruptcy. What happened? The

world was quickly going digital, but Xerox hadn$$t kept up$.$ On a broader level, while Xerox was

busy perfecting copy machines, customers were looking for more sophisticated $$document

management solutions$.$

The Xerox transformation started with a new focus on the customers. Before developing new

products, Xerox researchers held seeming endless customer focus groups. As a result of this new

thinking, Xerox now offers a broad portfolio of customer$-$focused products; software and

services that help its customers manage documents and information. It has introduced more than

$130$ innovative new products in the past four years. However, just as Xerox$$s turnaround seemed

complete, yet another challenging environmental force arose$$the great recession. $$The one

thing that$$s predictable about business is that it$$s fundamentally unpredictable $$says the

company$$s most recent annual report.

i$)$ Discuss four unique characteristics that differentiate marketing of Xerox services from

product marketing. $(20$ marks$)$

ii$)$ Assume that Xerox wants to use skimming pricing for its services. Outline any five $(5)$

conditions under which skimming pricing would work well for Xerox. $(5$marks$)$