Principles of Marketing Solved Papers
2013 (November)
Course: 504
Full Marks: 80
Time: 3 Hours
(i) ‘Creating customers’ means
exploring and identifying the needs and requirements of customers. True
(ii) ‘Product differentiation and
market segmentation are same. False
(iii) ‘Test marketing is normally the
last step in the developing process before a new product is launched either at
regional or at national level. False, Commercialisation
(iv) ‘order processing’ is the
component of physical distribution mix. True
(v) The modern concept of salesmanship
is based on the idea of ‘Profit’. False, Create need and convert that need
into want
(b)
Fill in the blanks with appropriate words: 1x3=3
(i) ‘Packing’ facilitates product identification.
(ii) ‘A brand is a/an voice that acts as means of
communication.
(iii) ‘Label’ helps in avoiding the consumer’s confusion.
2.
(a) what are the differences between ‘Marketing’ and ‘Selling’? Discuss the
importance of marketing in modern business. 5+6=11
Ans: Difference between selling & marketing concept
S.N.
|
Selling
|
Marketing
|
1.
|
Selling starts and ends with the
seller.
|
Marketing starts and ends with
the consumers.
|
2.
|
Seeks to quickly convert products
into cash.
|
Seeks to convert customer ‘needs’
into products
|
3.
|
Seller is the centre of business
universe.
|
Buyer is the centre of the
business universe
|
4.
|
Views Business as a goods
producing process.
|
Views businesses as a customer
satisfying process.
|
5.
|
Seller preference determines the
formulation of marketing mix.
|
Buyer determines the shape
marketing mix should take.
|
6.
|
Selling is product oriented.
|
Marketing is customer oriented.
|
7.
|
Seller’s motives dominate
marketing communication.
|
Marketing communication is looked
upon as a tool for communicating the benefits / satisfactions provided by the
product.
|
Importance and Uses of Marketing (Role
of Marketing)
Marketing is a unique function of
business which satisfies social values, needs and wants of an individual. It
serves as the springboard for all industrial production. The importance of
marketing can be studied under the following heads:
A. Uses to the Society
(1) Employment
of Various Persons: Since the things are manufactured or produced due to
marketing, hence many people get employment through the production activities.
Transport, storage and wholesale and retail services cover many persons. In
this way, it might be said that by marketing the employment is created.
(2) Availability
of Various Products for Use: Today, the sphere of marketing has become
worldwide or international. Due to it, the products manufactured in the foreign
lands too become available for consumption. All this could become possible due
to the growth of the marketing and its development.
(3) Increase
in the National Income of Country: If the marketing activities are
efficiently undertaken and things are produced in accordance with the needs or
requirements of the customers, there must be some increase in the demand of
the things. The production goes up which leads to the increase in the national
income.
(4) Protecting
the Economy against the Evil Effects of Depressions: If the produced
goods are not sold, there shall be piled up the unsold materials with the
producers and they will fall victim to the depression effects. Thus the
marketing keeps the economy safeguarded against the evil effects of the
depressions.
(5) Increase
in the Standard of Living: By an efficient system of marketing, there
is a fall in the prices of the products which ultimately leads to the
enhancement in the consumption capacity of the society which ultimately brings
reforms and improvement in the standard of living of the society.
B. Uses to the Producers
(1) Helpful
in Earning More Profits: Whenever any manufacturer produces some
commodity, he has to seek the help of so many people in letting the same reach the
hands of the consumers. For instance, there is the need of the middlemen, the
godown owners, the traders, the owners of transport companies, etc. By
establishing proper distribution channel, more profits can be earned.
(2) Getting
Information Regarding Demand. By the study of marketing, the producers
are able to get information regarding the changing demands.
(3) Reduction
in Distribution Costs. By the wide studies of distribution, it is also
known that the products be passed on to the consumers on the minimum possible
costs.
(4) Helpful
in Production Planning. The producer, by studying the marketing, could
plan his various policies pertaining to production.
C. Uses to the Consumers
While purchasing the products, the consumers must have full knowledge of
the things. This can be possible only through marketing. By the study of
marketing, the consumer is able to acquire knowledge as to how the middlemen
resort to their exploitation. For avoiding the middlemen's exploitation, the
consumer co-operative societies are being promoted and developed.
D. Uses to the Middlemen
By the 'middlemen' is meant those persons who send the products from the
producer to the consumer. The lower are the expenses of the middlemen, the
greater is their profit. By studying the marketing, they get the knowledge as
to how the expenses of distribution be kept lower. Unless the middlemen
possess sufficient knowledge of marketing, they can't become successful.
E. Uses to the Nation
With the help of marketing, in the progressive and developing countries
too, good managers and entrepreneurs can be encouraged. For resorting to the
most efficient use of the resources available in the country, marketing of the
commodities is very necessary. By the study of marketing, the economy could be
kept safeguarded against the evil effects of instability. Only due to the
marketing, the processes of production and distribution continue to exist. In
it the condition of full employment could be achieved. Really speaking,
marketing occupies an important role in the economic development.
OR
(b)
What are the elements of marketing mix? Discuss the variable of product mix of
an organization.
Ans: Marketing Mix
Marketing mix refers to one of the major
concept in modern marketing. According to Philip kotler “marketing mix is a set
of controllable marketing variables that the firm blends to produce the
response it wants in the target market”. It is the combination of four controllable
variables which constitutes the company’s marketing system .the four
controllable variables are:
1) The
product
2) The
price structure
3) The
promotional activities
4) The
distribution system
These elements are inter
related and inter dependent since decisions in one area usually actions in
other area.
Principle
Ingredients of Marketing Mix (Four P’s) and their importance
Successful businessmen know the importance of marketing mix because
they cannot design and promote their products without marketing mix. It
is a mixture of 4 P’s of marketing mix such as product, place, price and
promotion. 4 P’s Of Marketing Mix:
1. Product: Product is one of important part
of marketing mix because it reflects the good or bad reputation of any
organization. The products represent any business efficiently.
Successful organizations always search out the buying habits of their
customers and designed their products based on those buying habits in order to
meet the customer’s requirements. They also design their products based on
important factors such as purchasing power and geographical locations etc.
They try to design products which are affordable for customers.
Companies always design their products according to customer’s budget and
affordability.
They do not compromise on their product
quality. Some companies maintain their quality and do not compromise on
price but there are some companies which produce products according to the
affordability of customers. Marketers communicate with their customers directly
and convince them to buy their products.
2. Price: It is the worth of product on which
customers are agreed to buy the products. Price of the product should be
according to the range of regular customers. Prices are fluctuating
according to seasonal requirements. Marketers always try to satisfy their
clients at any cost. If employees of the company are satisfied with their
job and performance rewards, they can become an effective asset of any
organization.
3. Place: Products always design based on
geographical place because customers buy products according to their traditions
and seasons. Companies which are going to spread their business networks
throughout the world must visit the place where they want to open their
branches. They need to study the traditions and seasonal changes of the country
where they want to initialize their products.
4. Promotion: Promotion activities involve
marketing and advertising. Promotional activities are used to create
awareness about the products. Customers know about products and their
specification through social marketing media. Companies adopt social marketing
media in order to create awareness about their products and services.
Promotional activities and techniques are important if companies
initialize new products or make some changes in product’s specifications.
Promotional activities include advertising, selling, public relations and sales
promotions. Advertising is a paid form of promotion that grabs the
attention of customers through channels or TV. It also involves relationships
between customers and companies. Marketers should design products that
meet customers’ needs and demands.
Components of product mix: The important components of
product mix are:
1. The Core product: The core product is the
use, benefit or problem solving service for which the consumer is purchasing
the product.
2. Features of a product: The product must
contain the following features: Tangibility, exchange value, Intangible and
associated attributes and consumer satisfaction.
3. Brand Name: A brand is define as a name,
term, sign, symbol or special design or some combinations of these elements
that is intended to identify the goods or services of one seller or a group of
sellers. A brand differentiates these products from those of competitors. A
brand in short is an identifier of the seller or the maker. A brand name
consists of words, letters and / or numbers that can be vocalized. A brand mark
is the visual representation of the brand like a symbol, design, distinctive
colouring or lettering.
4. Trade Mark: In General, a trade mark is
defined as any sign, as any combination of sign, inherently capable of
distinguish the goods or service of one undertaking. Trade marks may be a
combination of words, letters, and numerals. They may consist of drawings,
symbols, colours used as distinguish features. The owner of the mark may not be
involved in the relevant trade and acts purely as a certification authority.
The internationally accepted ―ISO 9000 quantity standards are examples of such
widely recognized certifications.
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B.Com 5th Principles of Marketing Solved Question Papers (CBCS and NON-CBCS Pattern)
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3.
(a) What are the various steps of buying process? Discuss The psychological
determinants of consumer behaviours. 5+6=11
Ans: Steps in buying decision process
The marketing scholars have developed a “stage
model” of the buying process. The consumer passes through 5 stages. But
consumers do not always pass through all five stages in buying a product. They
may skip some stages.
(1) Problem Recognition: The buying process
starts when the buyer recognizes a problem or need. The need can be triggered
by internal or external stimulus. With an internal stimulus, one of the
person’s normal needs hunger thirst etc. become a drive or a need can be
aroused by external stimuli. Marketers need to identify the circumstances that
trigger a particular need by gathering information from a number of consumers.
(2) Information Search: An aroused consumer
will be inclined to search for more information. A person at times simply
becomes receptive to information about a product or he may enter looking for a
reading material, phoning friends, going online etc. Through gathering
information, the consumer learns about competing brands and other features.
(3) Evaluation of Alternatives: The
information search and comprehension
(evaluation) stages represent the information processing stage. These 2 stages
constitute the cognitive field of the purchase process. Cognition refers to
acquisition of knowledge.
Some basic concepts help us in understanding
consumer evaluation: first the consumer is trying to satisfy a need, second the
consumer is looking for certain benefits and
third the consumer views each product as a bundle of attributes to
satisfy this need.
(4) Purchase Decision: The buyer must be
convinced that the purchase of the product is the legitimate course of action.
This stage stands as a barrier between a favourable attitude towards the
product and actual purchase. Only if the
buyer is convinced about the correctness of the purchase decision, will be
proceed. At this stage, he may seek further information regarding the product
or attempt to assess the information already available.
(5) Post Purchase Behaviour: The purchase
leads to specific post purchase behaviour, usually it creates some restlessness
in the mind of the individual. He is not sure about the product. He may feel
that the other brand would have been better. It can be defined in terms of
satisfaction. If the performance of the product falls short of expectations,
the consumers is disappointed, if it meets expectations, the consumer is satisfied,
it is exceeds expectations, the consumer is delighted. These feelings make a
difference in whether the customer buys the product again and talks favourably or unfavorably about it to
others.
Factors that influence consumer behaviour
The buyer has a selective perception and is exposed to a variety of products and information. He may ignore certain piece of
information whereas actually seek out some other information whereas actively
seek out some other information Therefore, marketers must fully understand both
the theory and reality of consumer
behaviour. A consumer’s buying behaviour is influenced by cultural, social
and personal factors and they are a part of the buyer as an
individual.
Pshycological/Social Factors: Consumer’s behaviour is
influenced by social factors such as reference groups, family, social roles
and status. The buyer is living in a
society, is influenced and There is a
constant interaction between the individual and
the groups to which he belongs. All these interactions affect him in his
day to day life.
a. Reference Groups: A person’s reference groups
consist of all the groups that have a direct or indirect influence on his
attitude. They can be family friends, neighbours, co-worker, religious,
professional and trade union groups.
Reference groups expose an individual to new behaviours and lifestyles and influence attitude and self concept. Brands like Levi, Prologue
and Planet M used teenage icon as brand
Ambassadors for in store promotions.
b. Family: The family is the most important buying
organization in society. From parents a person acquires an orientation toward
religion politics and a sense of
personal ambition, self worth and love. E.g.
In traditional joint families, the influence of grandparents on major purchase
decisions affect the lifestyles of younger generations. In urban India with the
growth of nuclear families and both
husband and wife working the role of women in major family decisions is
prominent. Children and teenagers are
being targeted by companies using the internet as an interactive device.
c. Role and Status: The
person’s position in each group can be defined in terms of role and status. A role consist of all activities that
a person is expected to perform. Each role carries a status. A Vice President
of marketing has more status than a sales manager and a sales manager has more status than an
office clerk and people choose those
products that reflect and communicate
their role and desired status in
society.
OR
(b)
What are the benefits of market segmentation? Discuss the factors which
contribute in the process of segmentation. 4+7=11
Ans: Advantages
/ Importance / Significance of Market Segmentation:
The
purpose of segmentation is to determine the differences among the purchases
which may affect the choice of the market area and marketing strategies.
Following are some of the benefits of marketing segmentation.
1) Facilitates
consumer-oriented marketing:
Market segmentation facilitates formation of marketing-mix which is more
specific and useful for achieving marketing objectives. Segment-wise approach
is better and effective as compared to integrated approach for the whole
market.
2) Facilitates
introduction of suitable marketing mix: Market segmentation enables a producer to understand the needs of
consumers, their behavior and expectations as information is collected
segment-wise in an accurate manner. Such information is purposefully usable.
Decisions regarding Four Ps based on such information are always effective and
beneficial to consumers and the producers.
3) Facilitates
introduction of effective product strategy: Due to market segmentation, product development is compatible with
consumer needs as there is effective crystallization of the specific needs of
the buyers in the target market. Market segmentation facilitates the matching
of products with consumer needs. This gives satisfaction to consumers and
higher sales and profit to the marketing firm.
4) Facilitates
the selection of promising markets: Market segmentation facilitates the identification of those sub-markets
which can be served best with limited resources by the firm. A firm can
concentrate efforts on most productive/ profitable segments of the total market
due to segmentation technique. Thus market segmentation facilitates the selection
of the most suitable market.
5) Facilitates
exploitation of better marketing opportunities: Market segmentation helps to identify
promising market opportunities. It helps the marketing man to distinguish one
customer group from another within a given market. This enables him to decide
his target market. It also enables the marketer to utilize the available
marketing resources effectively as the exact target group is identified at the
initial stage only.
6) Facilitates
selection of proper marketing programme: Market segmentation helps the marketing man to develop his marketing
mix programme on a reliable base as adequate information about the needs of
consumers in the target market is available. The buyers are introduced to
marketing programme which is as per their needs and expectations.
Basis of Segmentation:
Market
segmentation dividing the Heterogenous market into homogenous sub-units.
Heterogeneous means mass marketing, which refers people as a people.
Homogeneous means dividing the market into different sub units according to the
tastes and preferences of consumers. The following factors are considered before dividing the market:
1)
Geographical
Factors: On the basis of
geographical factors, market may be classified as state-wise, region-wise
and nation-wise. Many companies operate
only in a particular area because people behave differently in different areas
due to various reasons such as climate, culture, etc.
2)
Demographic
Factors: This is the most
widely used basis for market segmentation. Market is classified on the basis of
population, using ages, income, sex, etc as indicators.
a.
Age :
It is known fact that
people of different ages like different products, need different things,
and behave differently. Almost all
companies use this factor to reach the target market. On the basis of age,
market in our country is divided into children’s market, teenager’s market,
adult’s market, and the market for old
people. Companies use the census data to prepare marketing strategies on the
basis of age.
b.
Sex: There is a variation of consumption behavior between males and females. This factor is used as a basis for
segmentation for products like watches, clothes, cosmetics, leather goods,
magazines, motor vehicle, etc.
c.
Family Life Cycle: This is another important factor, which
influences the consumer’s behavior. E.g.: Before making purchases, a bachelor
may consult his friends, a boy may ask his parents and a married man asks his wife. The study of
family life cycle helps a company to prepare an effective promotional strategy.
3)
Psychological
factors: In
psychographic segmentation, elements like personality traits, attitude
lifestyle and value system form the
base. The strict norms that consumers follow with respect to good habits or
dress codes are representative examples. E.g.: Mr. Donald’s changed their menu
in India to adopt to consumer preference. The market for Wrist Watches provides
example of segmentation. Titan watches have a wide range of sub brands such as
Raga, fast track, edge etc. or instant noodle markers, fast to cook food brands
such as Maggi, Top Ramen or Femina, women’s magazine is targeted for modern
women.
4)
Economic
Factors: On the basis of economic factors, markets have been classified in the
westerns countries as follows:
a. Upper Class b. Upper-upper class c. Lower-upper class
d. Middle class e. Upper-middle class f. Lower-middle class
g. Lower class h. Upper-lower class i. Lower-lower class
In our country, it is classified as upper
class (rich), middle class, and the
lower class. Another classification based on income in our country is as
follows:
a. Very Rich b.
The Rich class c. The
Aspiration Class and
d. The Destitute.
5)
Behavior
Factors: This is one of the
most important bases used for market segmentation. Market is classified on the
basis of attitude of consumers and special occasions.
a.
Occasions: Sellers can easily find out certain
occasions when people buy a particular product. E.g.: Demand for clothes,
greeting cards, etc increases during the festival season. Demand for
transportation, hotels etc increases during the holiday seasons.
b.
Benefits: Each consumer expects to fulfill certain desire or to derive some
benefits from the product he purchases. E.g.: A person may purchase clothes to
save money and another to impress
others. Based upon this, markets may be classified as markets for cheap price
products and market for quality products
etc.
c.
Attitude: On the basis of attitude of consumers, markets may be classified as
enthusiastic market, indifferent market, positive market, and negative market.
4.
(a) What is growth stage of ‘product life cycle’? What strategies marketing
houses follow to keep growing? 5+7=12
Ans: Product Life Cycle
A product is
like a human being. It is born, grows up fast, matures and then finally passes
away. Product life cycle is the stages through which a product
or its category bypass. From its introduction to the marketing, growth,
maturity to its decline or reduce in demand in the market. Not all products reach this final stage, some continue
to grow and some rise and fall. In short, The PLC discusses the stages
which a product has to go through since the day of its birth to the day it is
taken away from the market.
However, the
basic difference in case of human beings and products is that a product has to
be killed by someone. Either the company (to bring better products) or by
competition (too much external competition). There are several products in the
market which have lived on since ages (Light Bulbs, Tubelights), whereas there
are others which were immediately taken off the shelf (HD DVD).
 |
Product Life Cycle
|
Thus the Product life
cycle deals with four stages of a products life.
Stages of Product life cycle:
Growth: Once the introductory phases
are over, the product starts showing better returns on investment. Your
customers and channels begin responding. There is better demand in the market
and slowly the product starts showing profits.
This is a stage where competition may step in
to squash the product before it has completely launched. Any marketing mistakes
done at this stage affect the product considerably as the product is being
exposed to the market and bad news travels fast. Thus special care has to be
taken in this stage to ensure competition or bad decisions do not affect the
growth stage of the product.
Characteristics of Growth stage of Product
life cycle
Ø Product
is successfully launched
Ø Demand
increases
Ø Distribution
increases
Ø Competition
intensifies
Ø Company
might introduce secondary products or support services.
Ø Better
revenue generation and ROI
Strategies
for the differing stages of the Product Life Cycle
A) Introduction: The need for
immediate profit is not a pressure. The product is promoted to create
awareness. If the product has no or few competitors, a skimming price strategy
is employed. Limited numbers of product are available in few channels of
distribution.
B) Growth: Competitors are attracted
into the market with very similar offerings. Products become more profitable
and companies form alliances, joint ventures and take each other over.
Advertising spend is high and focuses upon building brand. Market share tends
to stabilise.
C) Maturity: Those products that
survive the earlier stages tend to spend longest in this phase. Sales grow at a
decreasing rate and then stabilise. Producers attempt to differentiate products
and brands are key to this. Price wars and intense competition occur. At this
point the market reaches saturation. Producers begin to leave the market due to
poor margins. Promotion becomes more widespread and use a greater variety of
media.
D) Decline: At this point there is a
downturn in the market. For example more innovative products are introduced or
consumer tastes have changed. There is intense price-cutting and many more
products are withdrawn from the market. Profits can be improved by reducing
marketing spend and cost cutting.
OR
(b)
Critically discuss the objective and the component of product
planning. 6+6=12
Ans: Ans: Product
planning is the initial step of the overall marketing programme. In the competitive
business world, producers try to produce products which can be nearer to
consumer expectation. The pressure of competition forces the producers to
replace the existing products by developing new consumers’ suitable and
friendly products. Product planning covers all activities which enable
producers and middle men to determine what should constitute a company’s line
of products. Product development covers the technical activities of product
research, production and design. The well attempt effort of product development
increases the scope to satisfy the needs of the customers.
The product planning and development cover
the following decision making area:
(I) What products should be produced?
(II) Expansion of product line.
(III) Determine the new use of its products.
(IV) What brand, package and label are used
for different products?
(V) What should be quantity of its
production?
(VI) Pricing policy etc.
Objectives of Product Planning:
Product planning is one of the most important
functions of a marketing manager. The following are its objectives:
Ø To offer
products based upon customer needs.
Ø To
diversify, to capitalize on the company’s strength.
Ø To utilize
the available resources more profitability.
Ø To decide on
the elimination of non-profitable products.
Ø To change
the features of the product as per the changes in the market.
Ø For
long-term survival.
Components of Product Planning:
1. Product
Innovation
2. Product
Diversification
3. Product
Development
4. Product
Standardization
5. Product
Elimination
6. Product Mix
and Product Line
1. Product Innovation: Innovation
is a part of continuous improvement. In the absence of innovation, products
become stale and hence die in the
market. Innovation is required to keep up with the phase of changing market
needs. According to Drucker, “Innovation will change customer’s wants, create
new ones, extinguish old ones and create
new ways of satisfying wants.”
2. Product Diversification: When a
manufacturer offers more products in different areas, it is referred as product
diversification. In fact, when a manufacturer diversification. Diversification
normally involves business in a new area. E.g.: ITC
entering into hotel business, sony entering into film production business.
3. Product Development: It involves
introducing a new product either by replacing the existing one or innovating a
completely new product. It can either be brand extension or line extension.
Company must be careful while developing new products because research shows
that 92% of them fall in the market. Another danger of product development is
cannibalization.
4. Product Standardization: It implies
a limitation of types of products in a given class. It gives uniformity in
terms of quality, economy, convenience and
Value. E.g.: Each model of T.V. gives a different standard. Standardization
promises a minimum level of performance and
hence is used as a benchmark for quality.
5. Product Elimination: This
involves an emotional decision of withdrawing the existing product line.
Decision must be carefully taken based upon current market share, future
prospects etc. The product elimination involves reviewing the present product
portfolio, analyze their profitability and
then decide on discontinuance of a product.
6. Product Mix and
Product Line: Product line is defined as a group of products
offered by a company which belongs to same family of products or similar to
each other or substitutes. E.g.: Product line of ponds for personal care
products includes cold creams, talcum powders, etc. Product Mix is defined as
combination of product lines offered by a company. E.g.: Product mix of Bajaj
includes two wheelers, home appliances, electrical appliances, financial
products etc.
5.
(a) Discuss the factors that influences the pricing decision of an
organization 11
Ans: Price is defined as the amount we pay for goods or a
service or an idea. Price is the only element in the marketing mix of a firm
that generates revenue. All other elements generates only cost. Price is a
matter of importance to both seller and
buyer in the market place. Only when a buyer and a seller agree on price, we can have exchange
of goods and services leading to transfer of ownership.
The term ―
Price need not be confused with the term ― Pricing. Price is the value that is
put to a product or service and is the result of a complex set of calculations,
research and understanding and risk taking ability. But pricing is different
from price. It refers to decisions related to fixing of price of a commodity. A
pricing strategy takes into account segments, ability to pay, market
conditions, competitor actions, trade margins and input costs, amongst others.
It is targeted at the defined customers and against competitors.
Factors
Affecting Pricing
Factors
affecting pricing may be categorized into two categories- internal factors and
external factors. In each of these categories some may be economic factors and
some may be psychological factors. Some factors may be quantitative and some
others may be qualitative. Some of the important factors affecting pricing are
given below:
A. Internal Factors:
As regards
pricing, the firm has certain objectives -long term as well as immediate. For
example, the firm has certain costs of manufacturing and marketing; and it
seeks to recover these costs through the price and thereby earning a profit. In
respect of all the products, the firm may have a basic philosophy on pricing.
The pricing decisions of the firm have to be consistent with this philosophy.
Pricing also has to be consistent with the overall objectives of the firm.
These objectives could be achieving market share, short term or long term
profit. The firm may be interested in seeking a particular public image through
its pricing policies. All these constitute the internal factors that influence
pricing. From the above, it appears that pricing is influenced by objectives
and marketing strategy of the enterprise, pricing philosophy, pricing
objectives and policy. More specifically, the internal factors are:
1. Corporate and marketing objectives of the firm: All pricing objectives emanate from the corporate and
marketing objectives of the firm. A business firm will have a number of
objectives in the area of pricing. Some of these objectives are long-term,
while others are short-term. Profit is one of the major objectives in pricing.
Firms may not be interested in profit maximization as such, they may be more
interested in long term survival and growth.
2. The image sought by the firm through pricing: If a firm offers high quality goods at high prices,
the firm will develop a premium image.
3.The characteristics of the product: Sophisticated, complex and new to the world products
normally carry high prices. Products having more features carry higher prices.
4. Price elasticity of demand of the product: If price increases, demand decreases and if price
decreases demand increases. Marketers may decide on pricing based on ‘what the
traffic can bear’. The marketer takes the maximum price which the customers are
willing to pay for the product under the given circumstances.
5. The stage of the product on the product life cycle: When a product is introduced for the first time it
carries a higher price. Gradually with increasing consumer acceptance and
competition price decreases.
6. Use pattern and turn around rate of the product: Price of newspaper and magazines may be different
for the immediacy factor, permanence and the pass along readership. Newspapers
are having a short life, while magazines enjoy a pass along readership.
7. Costs of manufacturing and marketing: Costs determine price to a great extent. Marketers
will have to cover the cost and earn a profit.
8. Extent of distinctiveness of the product and extent
of product differentiation practised by the firm: Products having uniform size, shape and compositions
can be manufactured at a lesser cost compared to products having
differentiation.
9. Other elements of the marketing mix of the firm and
their interaction with pricing:
Amount spent on product research, advertising, dealer development etc. are some
factors which influence price of a product.
10. Composition of the product line of the firm: A firm may sell a number of products in the same
product line. In
that case , the products are likely to be sold under different prices depending
on their quality, features etc.
B. External Factors:
In addition to
the internal factors mentioned above, any business firm has to encounter a set
of external factors while formulating its pricing decisions. An enterprise
exists in an environment and is influenced by environmental factors. The
external factors are:
1. Market characteristics: Some markets are having very stiff competition and
some are having less. The number of players in a market could be more or less.
Market leadership factors also may be different. Different characteristics of
the market have a bearing on price.
2. Buyer behaviour in respect of the given product: Value conscious buyers are likely to be interested
in low prices. Image conscious buyers may be more attracted by product image
rather than low price of the product.
3. Bargaining power of major customers: In industrial buying situations major buyers have a
bargaining power. They are in a better position to negotiate prices.
4. Bargaining power of major suppliers: Similar is the case with major suppliers. They are
in a better position to supply bulk quantities. They are also in a better
position to negotiate terms.
5. Competitors’ pricing policy: Firm’s decision to set a price is heavily influenced
by the price set by the competitors. In case of highly unique product having a
niche market, a firm can have its own price. In most of the cases, competitive
reactions to the price set by the firm have to be seriously studied for future
programmes.
6. Government controls/regulations on pricing: As stated earlier the Governmental measures like
import duties, excise, subsidy, sales tax etc. influence pricing decisions.
7. Social considerations: Firms have a responsibility to society and to its
customers. Firms are not expected to exploit consumers by unnecessarily
charging high prices.
As discussed
above pricing decisions are complex. For pricing an individual product the firm
has to consider its overall objective, prices set for other products, costs
etc. These are internal factors. In addition, the pricing decisions are
influenced heavily by the external factors as stated above.
OR
(b)
What are the components of promotion mix? Discuss the various components of
communication. 5+6=11
Ans: Ans: Marketing Mix: Marketing mix refers to one of the major
concept in modern marketing. According to Philip kotler “marketing mix is a set
of controllable marketing variables that the firm blends to produce the
response it wants in the target market”. It is the combination of four
controllable variables which constitutes the company’s marketing system .the
four controllable variables are:
a) The
product
b) The
price structure
c) The
promotional activities
d) The
distribution system
These elements are inter
related and inter dependent since decisions in one area usually actions in
other area.
Elements of Promotion Mix
There are four elements of promotion mix:
a) Advertising: Advertising
is a non-personal presentation of goods, services or idea. In advertising
existing and prospective customers are communicated the message through
impersonal media like radio, T.V., newspapers and magazine. It involves
transmission of standard message simultaneously to a large number of people.
The message transmitted is known as advertising.
b) Personal Selling:
Personal
selling is the process of assisting and persuading the existing and prospective
buyer to buy the goods or services in person. It involves direct and personal
contact of the seller or his representative with the buyer.
c) Publicity: Publicity
is a non-personal non-paid stimulation of demand of the product or services or
business unit by planning commercially significant news about the services or
business unit by planning commercially significant news about in the print
media or by obtaining a favorable presentation of it upon radio, television or
stage.
d) Sales promotion:
Sales
promotion consists of all activities other than advertising, personal selling
and publicity, which help in promoting sales of the product. Such activities
are non-repetitive and one time offers. According to American Marketing
Association, sales promotion include, “those marketing activities other than
personal selling, advertising and publicity that stimulate consumer purchasing
and dealer effectiveness, such as point of purchase displays, shows and
exhibitions, demonstrations and various non-recurring selling efforts not in
the ordinary routine.”
Elements of Communication Process
The
process of communication is the inter relationship between several independent
components. It consists of a chain of related actions and reaction which
together result in exchange of information. In order to understand the process
of communication, it is necessary to describe each of these components. A model
of communication process is as follows:-
1. SENDER
2. IDEATION
3. MESSAGE
4. INCODING
5. TRANSMISSION
6. RECEIVER
7. DECODING
8. BEHAV IOUR
OF RECIEVER
9. FEEDBACK
1.
Sender: The sender
is the first component of the process of c communication. The sender may be a
speaker, a writer or any other person. He is the one who has a message and
wants it to share it for some purpose.
2.
Ideation: Ideation
is the preliminary step in communication where sender creates an idea to
communicate. This idea is the content and basis of the message to be
communicated. Several ideas may generate in the sender’s mind. The sender must
identify, analyze and arrange the ideas sequentially before transmitting them
to the receiver.
3.
Message: Message is
the heart of communication. It is what the sender wants to convey to the
receiver. It may be verbal i.e. written or spoken or non verbal i.e. body
language, space language, etc.
4.
Encoding: To encode
is to put an idea into words. In this step the communicator organizes his ideas
into a series of symbols or words which will be communicated to the intended
receiver. Thus the ideas are converted into words or symbols. The words and the
symbols should be selected carefully, it should be understandable and most of
all it should be suitable for transmission and reception.
5.
Transmission: Next in
the process of communication is transmission of the message as encoded messages
are transmitted through various media and channels of communication connects
the sender and the receiver. The channel and media should be selected keeping
in mind the requirement of the receiver, the communication to be effective and
efficient the channel should be appropriate.
6.
Receiver: Receiver
is the person or group for whom the message is meant. He may be a listener, a
reader or a viewer. Any neglect on the part of the receiver may make the
communication ineffective. Receiver is thus the ultimate destination of the
message. It the message does not reach the receiver the communication is said
to be incomplete.
7.
Decoding: Decoding means
translation of symbols encoded by the sender into ideas for understanding.
Understanding the message by receiver is the key to the decoding process. The
message should be accurately reproduced in the receiver’s mind. If the receiver
is unable to understand the message correctly the communication is ineffective.
8.
Behaviour of the
receiver: It refers to the response by the receiver of the communication
received from the sender. He may like to ignore the message or to store the
information received or to perform the task assigned by the sender. Thus
communication is complete as soon as the receiver responses.
9.
Feedback: Feedback
indicates the result of communication. It is the key element in the
communication and is the only way of judging the effectiveness of
communication. It enables the sender to know whether his message has been
properly interpreted or not. Systematic use of feedback helps to improve future
message. Feedback, like the message could be oral, written or non verbal. It
has to be collected from the receiver.
6.
(a) What is channels of distribution? How are channels classified? What are the
role of marketing channels nowadays? 2+6+3=11
Ans: Channels of Distribution
One of the important problems of marketing is
the distribution of goods and services
to the right place, person and the right
time. Manufacturers often find it difficult to decide about the effective
distribution system. The channel of distributions refers to the group of
intermediaries, which perform the distribution functions. A
channel of distribution is an organised net-work or a system of agencies and
institutions which, in combination, perform all the activities required to link
producers with users and users with producers to accomplish the marketing task.
According to Philip Kotler, “The distribution
is the set of all firms and individuals
that assist in the transferring the little of goods and services as they move from producers to
customers.”
According to Richard Buskirk, “Channel of
distribution is that system of financial organization by which a producer sends
his products to the hands of consumers.”
According to Cundiff and Still, “Channels of
distribution are those marketing nets through which the producer flow the
products toward the market.”
Types of Channels
A.
Zero-level channel (producer to consumer): It is also called as direct
marketing or direct selling. This channel consists of the producer who directly
sells his products to the ultimate consumers. This is the shortest, simplest,
and cheapest form of distribution.
Producers are benefited by increased profit, whereas consumers are benefited by
reduced price. This is possible because it eliminates the middleman completely.
With the development of sophisticated and
efficient retailing like supermarkets, chain-stores, automatic selling
machine is financially sound follow this channel of distribution. For products
like jewelry and industrial goods like
machinery, this is the best channel.
B.
One-Level Channel (Producers Retailers Consumers or producers Wholesalers Consumers):
This is a short channel where the manufacturer may himself perform some of the
wholesaler. This is considered to be the best channel as it eliminates some of
the marketing intermediaries and at the
same time gets advantages of inclusion of retailers. In case of perishable
goods, this is the best channel. When there is large scale promotion, inelastic
demand and when manufactures are
financially sound this channel is preferred.
C.
Two-Level Channel (Manufactures Wholesalers
Retailers Consumers): This is the traditional
channel. It is more useful in the case of buyers, sellers, and manufactures who operate in small scale. The
manufacturer sells his products in large quantities to a wholesaler who in turn
sells in small quantities to retailers and
finally retailers sell to ultimate consumers. Products which have low
unit value and which are purchased
frequently may be distributed through this channel.
D.
Three Level Channel (Manufactures Wholesalers Agents Retailers Consumers): In
this method manufactures appoint agent such as consignees to sell their
products. It is preferable for exporters or MNCs.
Functions (Role) of the Channels of Distribution
The following are the main function of the
channel of distribution:
(1) Extending Suggestions Regarding Price-Determination: The
middlemen are in the direct contact of the consumers. Therefore, they possess
the knowledge that on what price may the consumer accepts the product. Thus,
the channel of distribution extends necessary advice to the producers in the
price-determination.
(2) Regularizing the Decisions: The channel of distribution
regularizes the decisions and the transactions, resulting in the lowering of
the costs. If the products are sold off to some such store which has many
branches in the city, the producer then doesn't need going to various branches
frequently or repeatedly. The main cause of the same is that if the product
seems suitable for the store, it will itself send the purchase order to the
manufacturer and in this way, with only the limited efforts, it will become
possible to sell the products in bulk quantities.
(3) Managing the Finance: We
find that the agents generally send some advance money along with the order.
Very often the product is supplied to the agents through the bank so that the
company gets the documents discounted from the bank. Thus the finance is
arranged. Thus it-is also the function of the agents to arrange the finance.
(4) Performing the Promotion Activities: By the
middlemen, particularly by the retailers, the advertisements, individual sales,
and the sales promotion activities are performed. Very often the middlemen
themselves plan and implement the promotion activities and sometimes the
manufacturers to extend their help in such work. Really, the result or the
outcome of the sales, by the producer, very much depends upon the promotion
activities undertaken by the middlemen.
(5) Serving the Consumers: Due to the middlemen
only, the consumers get their required products. Only in accordance with the
needs of the consumers, the retailers arrange to purchase the products from the
wholesalers and the manufacturers.
(6) Minimizing the Total Transactions: If
there were no middlemen, the producer would have been required to sell the
product directly to the consumers which would have result into more of
expenditure and trouble. Really speaking, due to the existence of the middlemen
only, the number of total transactions is reduced which also reduces the costs
of distribution.
OR
(b)
What is physical distribution? Discuss the various component of transport
mix. 3+8=11
Ans: Physical distribution is the process of making the
movement of the product to the consumers. It encompasses all the activities
involved in the physical flow of products from producers to consumers. Physical
distribution makes the product available at the right place and at the right
time, thereby maximizing the company’s chance to sell the product and
strengthen its competitive position. The products have to be carried to places
of consumption; they have to be stored; and they have to be distributed. The
product has to be marketed over an extensive marketing territory. It has to be
transported through long distances, stored for a considerable length of time
before being consumed. Physical distribution largely determines the customer
service level. Inefficient physical distribution leads to loss of customers and
markets. There are some products which are subject to the seasonality factor -
either production is continuous but demand is seasonal, or demand is continuous
but production is seasonal. In all such cases, physical distribution acquires
additional importance.
Decisions/ Components/ Elements of
Physical Distribution
1. Material Handling: Material handling
stands for the product movement after it gets out from manufacturing plant but
before it is loaded on the transport mode to the destination of consumer.
Material handling is undertaken at every stage of logistics activity namely,
during production – storage – transport and packaging processes. Thus, it
represents product handling from plant to warehouse or warehouses, location to
another within the warehouse and from warehouse to the place of loading from
transport models. Material handling is the sub-system of physical distribution
system of a firm and is an agent of cost reduction and improved customers
service. In effect, an efficient and effective materials handling system in a
unit contributes to the efficiency and effectiveness of the total physical
distribution system. It is because, sound management of material handling
avoids damage in product handling, prevents unnecessary and irrelevant
movement, facilitates order-processing and order picking and enables efficient
product movement to match with inventory levels and transportation.
2. Inventory Planning And
Control: Inventory
refers to the stock of products a firm has on hand and ready for sale to
customers. Inventories are kept to meet market demands promptly. Inventory is
the link interconnecting the customer’s orders and the company’s production
activity. Infact the entire physical
distribution management rotates around the inventory management. Inventory
management is the heart of the game of physical distribution. Marketing managers undertake an
inventory planning to develop adequate assortments of products for the target
market and also try to control the costs involved in obtaining and maintaining
inventory.
3. Order Processing: Order processing includes
the activities of receiving, recording, filling and assembling and orders for
shipment. Each customer aspects that the order placed by him should be
implemented without inordinate delay on one hand and that the goods dispatched
match perfectly to his order specification. This implies quality control that
ensures the upright execution of orders. That is why, marketers and
distribution managers are very much concerned about the order cycle time and
every effort is made to keep it rigged.
An order cycle is the period between the time
of the placement of an order by the customer to the time of the arrival of the
goods at his destination. This cycle is made up of the transmission of the
order, document processing in the department and shipment of the goods. Here, document
processing is a routine activity which is standardized. Since, order processing
involves series of logical steps from receiving order to the dispatch, there
should be a standard procedure for receiving the orders, handling the orders,
granting of credit, invoicing, dispatching, collecting the bills and post
dispatch adjustments. The order processing procedures followed in a firm have
dual impact on consumer service level namely, it affects:
1.
Order time that is the time interval between two
orders of a customer, and
2.
The consistency and uniformity of delivery time
i.e., regular and dependable deliveries.
4. Communications: It is a process of passing information and
understanding from one person to another. This includes the information system
which should link producers, intermediaries, and customers. Computers, memory
systems, display equipment and other communication technology facilitate the
flow of information among other members in the channel. A manager to be successful must develop an effective system of
communication. So that he may issue instructions, receive the reactions of the
subordinates, and guide and motivate them.
5. Organisational Structure: The person in charge of the physical
distribution should co-ordinate all Activities into an effective system to
provide the desired customer service in the most efficient manner. Examples of
organizational consideration are: (i) How can the five elements of physical
distribution best be coordinated so that a team effort results? How can
compartmentalization thinking be avoided? (ii) If a central head is established
to direct all physical distribution activities, to whom should he report—The
Head of the Marketing or The Chief Executive Officer?
6. Transportation: Transportation as the
last component of distribution system is to do with the movement of products
from warehouse to the customer destinations. Transportation involves loading
and unloading of products and transshipment between the place of dispatch and
places of arrival. The major contribution of transportation management is cost
reduction because, cost of transportation is 35 per cent of total distribution
costs and 15 to 20 per cent of the total price paid by the users. The point
lies in cost reduction and creation of maximum of time utility. Every marketer
takes sufficient interest in company transportation and transportation
decisions because, it is the correct choice of transport mode of modes that
will help in gaining the effects as it affects pricing of products, regular and
punctual delivery performance and the conditions of the goods in transit – all
affecting finally the consumer satisfaction and sales profitability.
7.
Write short notes on: 4*4=16
(a) Ecological force: Ecology is the study of living things within their
environment context. In a marketing context it concerns the relationship
between people and the physical environment. Environmentalists attempt to
protect the physical environment from the costs associated with producing and
marketing products. They are concerned with the environmental costs of
consumption, not just the personal costs to the consumer. A company has to adopt its policies within
the limits set by nature. A man can improve the nature but cannot find an
alternative for it. Nature offers resources, but in a limited manner. A product
manager utilizes it efficiently. Companies must find the best combination of
production for the sake of efficient utilization of the available resources.
Otherwise, they may face acute shortage of resources. E.g.: Petroleum products,
power, water, etc.
(b) Product positioning: Product
positioning is an important element of marketing plan. It is the process
presenting the benefits of the products to the target audience. In other words,
Product positioning is a process of identifying the needs of market segments,
product strength and weaknesses and the extent to which competing product are
perceived to meet the consumer needs. It is an attempt to project different or
refined or revised product image in the market than one that has been
prevailing. It is the delicate task of relating a product to the market or a
market segment. It is that method which emphasizes the product that proves
attractive to the consumers. For instance, a two-wheeler manufacturer might
engineer the product to be safer, more accommodative, more fuel-efficient than
those of competitors.
According to Professor Philip Kotler,
“Positioning is the act of designing the company’s image and value offer so
that the segment’s customers understand and appreciate what the company stands
for in relation to its competitors. “
(c) Advertising: It is
the most commonly
used tool of promotion. It is an impersonal form of communication, which is
paid by the marketers (sponsors) to promote goods or services. Common mediums
are newspaper, magazine, television and
radio. Advertisements play a very important role in offering
innumerable benefits to the manufacturers, customers and to the society in
general.
Importance/Advantages of
Advertising
In the present day marketing, advertising has
become increasingly important to business enterprises-both large and small.
Even non-business enterprises have recognized the importance of advertising.
The various advantages of advertising are discussed below:
1) It
creates demand for new products by informing people about the availability and
suggesting them about the use of such goods.
2) It
promotes increased sales by maintaining the present demand and expanding the
markets by attracting more people to buy.
3) It
facilitates purchasing by educating consumers to select correct brands of
commodities which increase their personal satisfaction.
4) It
creates a proper base for the salesman by acquainting more people, in a shorter
time, with the merits of a product, its new uses, new varieties and so on.
5) It
educates even salesmen and increases their confidence, capacity and initiative.
Limitations/Disadvantages/Objections
to Advertising:
Several
objections have been raised against advertising and some people criticize
advertising as a social waste. The main point of criticism is as follows:
a) Creates Monopoly in the
market
b) Higher the prices of product
c) Misleading the consumers
d) Wasteful consumption by the
consumers
e) Wastage of national resources
(d) Inventory control: The term
‘Inventory’ is used to denote (i) goods awaiting sale (the stock items of a
trading concern and the finished stocks of a manufacturer); (ii) the goods in
course of manufacture, known as work-in-progress, and (iii) goods to be used
directly or indirectly in production, i.e., raw materials and supplies.
In a manufacturing company, normally the cost
of materials constitutes fifty percent of the production cost and the cost of
inventory (i.e., raw materials W.I.P., and finished good) represents about
one-third of the total assets. As the costs of materials and inventory are
quite formidable but at the same time controllable, there is a great need felt
for proper planning, purchasing, handling and accounting for the same, and also
to organize the system of inventory control in a manner that it may provide the
maximum profitably to the management.
Techniques of Inventory Control: The
techniques or the tools generally used to effect control over the inventory are
the following:
1) Budgetary
techniques for inventory planning;
2) A-B-C.
System of inventory control;
3) Economic
Order Quantity (E.O.Q.) i.e., how much to purchase at one time economically;
4) VED
Analysis;
5) Perpetual
inventory system and the system of store verification;
6) Fixation
of Stock Level;
7) Control
Ratios.
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