Principles of Marketing Solved Question Paper 2021
[Gauhati University BCOM 5th SEM CBCS Pattern]
4 (Sem-5/CBCS) COM HC1 (POM)
2021 (Held in 2022)
COMMERCE (Honours)
Paper: COM-HC-5016 (Principles of Marketing)
Full Marks: 80, Time: Three hours
The figures in the margin indicate full marks for the questions.
1. Answer the following as directed: 1x10=10
(a) Which of the following is not included in demographic segmentation
of markets? (Choose the correct answer)
(1) Gender.
(2) Age.
(3) Education.
(4) Culture.
Ans:
(4) Culture.
(b) Who introduced the concept of ‘Marketing Mix’? (Choose the correct answer)
(1) William J. Stanton.
(2) Philip Kotler.
(3) Henry L. Hemen.
(4) N. H. Borden.
Ans:
(4) N. H. Borden.
(c) Which of the following is not an uncontrollable factor of
marketing environment? (Choose the correct answer)
(1) Economic growth.
(2) Level of education.
(3) Marketing mix.
(4) Price Policy.
Ans:
(4) Price Policy.
(d) Which one of the following is not a psychological factor of consumer
behaviour? (Choose the correct answer)
(1) Motivation.
(2) Family income.
(3) Attitude.
(4) Perception.
Ans: (2) Family
income.
(e) ‘Mobile hand-set’ is an example of – (Choose the correct answer)
(1) Perishable goods.
(2) Non-durable goods.
(3) Durable goods.
(4) None of the above.
Ans:
(3) Durable goods.
(f) Producing a cheaper product is the focus of the ‘product concept’ of
marketing. (State True or False)
Ans: True
(g) Packaging is an activity which is concerned with protection,
economy, convenience and promotional consideration. (State True or False)
Ans: True [This definition is given by Philip
Kotler]
(h) Under ‘Penetration pricing policy’, the price of new product fixed
at initial stage is high. (State True or False)
Ans: False, Lower Price
(i) In
product development process, forecasting stage precedes commercialisation and launch
of product. (State True or False)
Ans: True
(j) A
company that attaches the same brand name to all of its products is called
family umbrella branding. (State True or False)
Ans: True
2. Answer the following questions:
2x5=10
(1) What is
green marketing?
Ans: Green marketing is the marketing of products
or services which are environmental friendly. Examples of green marketing
include advertising the reduced emissions associated with a product’s
manufacturing process, or the use of post-consumer recycled materials for a
product's packaging.
(2) What
is trademark?
Ans:
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.
(3) Write
two advantages of direct marketing.
Ans: a) Direct Marketing eliminates middlemen and
intermediaries which reduces selling cost.
b) Direct marketing focuses on targeted audience
only not on large group of audiences.
(4) What
is impulse goods?
Ans: Impulse goods are those products or goods
which are bought by customers randomly without significant thought process. It
happens because of a well-marketed product
(5) Write
briefly on affiliate marketing.
Ans: Affiliate marketing is the process by
which an affiliate earns a commission for marketing another person's or
company's products through its blog or Youtube channel or mobile application or
by sharing link of the products on social media. The affiliate earns a
commission each time someone makes a purchase through the unique link or code
associated with their recommendation.
3. Answer any four of the following:
5x4=20
(a) Distinguish between selling and marketing.
Ans: Difference between Selling and
Marketing
|
Selling |
Marketing |
|
a)
Selling starts and ends with the seller. |
a)
Marketing starts and ends with the consumers. |
|
b)
Seeks to quickly convert products into cash. |
b)
Seeks to convert customer ‘needs’ into products. |
|
c)
Seller is the centre of business universe. |
c)
Buyer is the centre of the business universe |
|
d)
Views Business as a goods producing process. |
d)
Views businesses as a customer satisfying process. |
|
e)
Seller preference determines the formulation of marketing mix. |
e)
Buyer determines the shape marketing mix should take. |
|
f)
Selling is product oriented. |
f)
Marketing is customer oriented. |
|
g)
Seller’s motives dominate marketing communication. |
g)
Marketing communication is looked upon as a tool for communicating the
benefits / satisfactions provided by the product. |
|
h)
Selling concept is short term perspective. |
h)
Marketing concept is a long term perspective. |
(b) Write the importance of study of consumer behaviour.
Ans:
Importance of Consumer Behaviour: The consumer is the focus of marketing
efforts. The modern concept spells out the real significance of buyer’s
Behaviour. The modern
marketing management tries to solve the basic problems of consumers in the area
of consumption. To survive in the market, a firm has to be constantly
innovating and understand the latest consumer needs and tastes. It will be
extremely useful in exploiting marketing opportunities and in meeting the
challenges that the Indian market offers. It is important for the marketers to
understand the buyer behaviour due to the following reasons.
1. Better Consumer: The study of consumer
behaviour enables us to become a better consumer. It will help consumer to take
more precise consumption related decisions.
2. Studying the need of consumers: It
helps marketers to understand consumer buying behaviour and make better
marketing decisions.
3. Market Prediction: The size of the
consumer market is constantly expanding and their preferences were also
changing and becoming highly diversified. So without studying it, marketers
cannot predict the future of their business.
4. Economic Stability: It is significant for
regulating consumption of goods and thereby maintaining economic stability.
5. Efficient utilisation of resources: It is
useful in developing ways for the more efficient utilisation of resources of
marketing. It also helps in solving marketing management problems in more
effective manner.
(c) Explain the factors influencing product pricing decisions.
Ans: 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:
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.
B. External Factors:
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.
(d) Explain briefly the role of channels of distribution in modern
business world.
(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.
(e) Write five advantages of social marketing.
Ans: Advantages of Social Media Marketing:
a) Social media marketing helps in boosting sales
and increasing market share.
b) It helps in building a better image for the
company.
c) It provides a competitive edge over the
competitors.
d) It helps in quick promotion of new product and forms
a base for growth in the long term.
e) Social marketing promotes initiatives related to
green marketing because no banner and printed materials are used in social
marketing.
(f) Explain the factors influencing in selection of
distribution channel.
A. Factors Pertaining to the Product: Keeping in view the nature, qualities
and peculiarities of the product, could only the channel for distribution be properly
made. The following factors concerning the product, affect the selection of the
channel of distribution:
(1) Price of the
Product (2) Perishability
(3) Size and
Weight (4) Technical
Nature (5) Goods Made
to Order (6) After-Sales
Service.
B. Factors pertaining to the Consumer or Market:
The
following are the main elements concerned with the consumer or the market:
(1) Number of
Customers (2) Expansion of
the Consumers (3) Size of the
Order (4) Objective of
Purchase (5) Need of the
Credit Facilities.
C. Factors Pertaining to the Middlemen: The following are the main factors
concerned with the middlemen:
(1) Services
Provided by Middlemen (2) Scope or
Possibilities of Quantity of Sales (3) Attitude of
Agents towards the Producers' Policies (4) Cost of
Channel of Distribution
D. Factors Pertaining to the Producer or
Company: The
following factors, concerning the producer, affect the selection of the channel
of distribution:
(1) Level of
Production (2) Financial
Resources of the Company (3) Managerial
Competence and Experience.
E. Other Factors
(1) Distribution Channel of Competitors: While determining the channel of
distribution, the channels of distribution of the competitors too must be borne
in mind.
(2) Social Viewpoint: What is the attitude of society
towards the distribution, this fact too must be kept into consideration while
selecting the middlemen.
(3) Freedom of Altering: While selecting the agents, this
fact too must be kept into mind that in case of need, there must be the liberty
of changing or replacing the agents (middlemen).
4. Discuss the different components of marketing
environment. 10
Ans: A variety of environmental forces influence a company’s
marketing system. Some of them are controllable while some others are
uncontrollable. It is the responsibility of the marketing manager to change the
company’s policies along with the changing environment.
According to Philip Kotler, “A company’s
marketing environment consists of the internal factors and forces, which affect
the company’s ability to develop and maintain successful transactions and
relationships with the company’s target customers”.
The
Environmental Factors may be classified as:
1. Internal
Factor
2. External
Factor
External
Factors may be further classified into:
a)
External
Micro Factors and
b)
External
Macro Factors
1. Internal Environmental Factors: A Company’s marketing system is
influenced by its capabilities regarding production, financial and other
factors. Hence, the marketing management/manager must take into consideration
these departments before finalizing marketing decisions. The Research and
Development Department, the Personnel Department, the Accounting Department
also has an impact on the Marketing Department. It is the responsibility of a
manager to company-ordinate all department by setting up unified objectives.
2. (a) External Micro Factors: Some of the important external micro
factors are:
1. Suppliers: They are the people who provide
necessary resources needed to produce goods and services. Policies of the
suppliers have a significant influence over the marketing manager’s decisions
because, it is laborers, etc. A company must build cordial and long-term
relationship with suppliers.
2. Marketing Intermediaries: They are the people who assist the
flow of products from the producers to the consumers; they include wholesalers,
retailers, agents, etc. These people create place and time utility. A company
must select an effective chain of middlemen, so as to make the goods reach the
market in time. The middlemen give necessary information to the manufacturers
about the market. If a company does not satisfy the middlemen, they neglect its
products and may push the competitor’s product.
3. Consumers: The main aim of production is to meet
the demands of the consumers. Hence, the consumers are the centre point of all
marketing activities. If they are not taken into consideration, before taking
the decisions, the company is bound to fail in achieving its objectives. A
company’s marketing strategy is influenced by its target consumer. E.g. If a
manufacturer wants to sell to the wholesaler, he may directly sell to them, if
he wants to sell to another manufacturer, he may sell through his agent or if
he wants to sell to ultimate consumer he may sell through wholesalers or
retailers. Hence each type of consumer has a unique feature, which influences a
company’s marketing decision.
4. Competitors: A prudent marketing manager has to be
in constant touch regarding the information relating to the competitor’s
strategies. He has to identify his competitor’s strategies, build his plans to
overtake them in the market to attract competitor’s consumers towards his
products. Any company faces three types of competition:
a) Brand Competition: It is a competition
between various companies producing similar products. E.g.: The competition
between
b) The Product Form Competition: It is a
competition between companies manufacturing products, which are substitutes to
each other E.g.: Competition between coffee and Tea.
c) The Desire Competition: It is the
competition with all other companies to attract consumers towards the company.
E.g.: The competition between the manufacturers of TV sets and all other
companies manufacturing various products like automobiles, washing machines,
etc.
Hence,
to understand the competitive situation, a company must understand the nature
of market and the nature of customers. Nature of the market may be as follows:
a. Perfect Market
b. Oligopoly
c. Monopoly
d. Monopolistic Market
e. Duopoly
5. Public: A Company’s obligation is not only to
meet the requirements of its customers, but also to satisfy the various groups.
A public is defined as “any group that has an actual or potential ability to
achieve its objectives”. The significance of the influence of the public on the
company can be understood by the fact that almost all companies maintain a
public relation department. A positive interaction with the public increases
its goodwill irrespective of the nature of the public. A company has to
maintain cordial relation with all groups, public may or may not be interested
in the company, but the company must be interested in the views of the public.
Public
may be various types. They are:
a. Press: This is one of the most
important groups, which may make or break a company. It includes journalists,
radio, television, etc. Press people are often referred to as unwelcome public.
A marketing manager must always strive to get a positive coverage from the
press people.
b. Financial Public: These are the
institutions, which supply money to the company. E.g.: Banks, insurance
companies, stock exchange, etc. A company cannot work without the assistance of
these institutions. It has to give necessary information to these public
whenever demanded to ensure that timely finance is supplied.
c.Government:
Politicians often interfere in the business for the welfare of the society and
for other reasons. A prudent manager has to maintain good relation with all
politicians irrespective of their party affiliations. If any law is to be
passed, which is against the interest of the company, he may get their support
to stop that law from being passed in the parliament or legislature.
d. General Public: This includes
organisations such as consumer councils, environmentalists, etc. as the present
day concept of marketing deals with social welfare; a company must satisfy
these groups to be successful.
2. (b) External Macro Environment: These are the factors/forces on which
the company has no control. Hence, it has to frame its policies within the
limits set by these forces:
1. Demography:
It is
defined as the statistical study of the human population and its distribution.
This is one of the most influencing factors because it deals with the people
who form the market. A company should study the population, its distribution,
age composition, etc. before deciding the marketing strategies. Each group of
population behaves differently depending upon various factors such as age,
status, etc. if these factors are considered, a company can produce only those
products which suits the requirement of the consumers. In this regard, it is
said that “to understand the market you must understand its demography”.
2. Economic
Environment:
A company can successfully sell its products only when people have enough money
to spend. The economic environment affects a consumer’s purchasing behaviour
either by increasing his disposable income or by reducing it. E.g.: During the
time of inflation, the value of money comes down. Hence, it is difficult for
them to purchase more products. Income of the consumer must also be taken into
account. E.g.: In a market where both husband and wife work, their purchasing
power will be more. Hence, companies may sell their products quite easily.
3. Ecological
forces/Physical Environment or Natural Forces: 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.
4. Technological
Factors:
From customer’s point of view, improvement in technology means improvement in
the standard of living. In this regard, it is said that “Technologies shape a
Person’s Life”.
Every
new invention builds a new market and a new group of customers. A new
technology improves our lifestyle and at the same time creates many problems.
E.g.: Invention of various consumer comforts like washing machines, mixers,
etc. have resulted in improving our lifestyle but it has created severe
problems like power shortage.
5. Social
and Cultural Factors:
Most of us purchase because of the influence of social and cultural factors.
The lifestyle, values, believes etc. is determined among other things by the
society in which we live. Each society has its own culture. Culture is a
combination of various factors which are transferred from older generations and
which are acquired. Our behaviour is guided by our culture, family, educational
institutions, languages, etc.
The
society is a combination of various groups with different cultures and
subcultures. Each society has its own behaviour. A marketing manager must study
the society in which he operates.
Consumer’s
attitude is also affected by their society within a society, there will be
various small groups, each having its own culture.
E.g.:
In India, we have different cultural groups such as Assamese, Punjabis,
Kashmiris, etc. The marketing manager should take note of these differences
before finalizing the marketing strategies. Culture changes over a period of
time. He must try to anticipate the changes new marketing opportunities.
Or
Discuss the scope and importance of marketing in modern-day
economy. 5+5=10
Ans: Scope of Marketing: The scope of marketing really is related to the old and new
concept of ‘marketing’. Formerly the scope of marketing used to remain very
much limited since the wants of the consumers too were quite limited. The
competition was almost equivalent to nil. In the marketing, the satisfaction of
the consumers was not at all considered. The marketing was commodity based and
immediately after the sale of the products, the marketing process was over.
Nowadays, the scope of marketing has become quite extensive, and the
satisfaction of the customers too is kept in view. The process of marketing
continues even after the sales have been affected. Today, the function of
confirming the product, in accordance with the changing wants, habits and
fashions of people, is undertaken by the process of marketing. Within the scope
of marketing, -the following activities are covered:
1) Study of Consumer Wants and Needs: Goods are produced to satisfy
consumer wants. Therefore, study is done to identify consumer needs and wants.
These needs and wants motivates consumer to purchase.
2) Study of Consumer behaviour: Marketers performs study of consumer
behaviour. Analysis of buyer behaviour helps marketer in market segmentation
and targeting.
3) Production planning and development: Product planning and development
starts with the generation of product idea and ends with the product
development and commercialisation. Product planning includes everything from
branding and packaging to product line expansion and contraction.
4) Pricing Policies: Marketer has to determine pricing
policies for their products. Pricing policies differs from product to product.
It depends on the level of competition, product life cycle, marketing goals and
objectives, etc.
5) Distribution: Study of distribution channel is
important in marketing. For maximum sales and profit goods are required to be
distributed to the maximum consumers at minimum cost.
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.
5. What is consumer behaviour? Explain the various factors that
influencing consumer behaviour. 2+8=10
Ans:
Consumer Behaviour: Behaviour is a mirror in which everyone shows his or her
image. Behaviour is the process of responding to a thing or event. Consumer
behaviour is to do with the activities of individual in obtaining and using the
good and services. The term consumer behaviour is defined as the behaviour that
consumer display in searching for, purchasing using, evaluating and disposing
of products and services that they expect will satisfy their needs.
In the words of Kotler,” Consumer
behaviour is the study
of how people buy, what they buy, when they
buy and why they buy.”
In the words of Solomon,” Consumer behaviour is the study of
the processes involved when individuals or groups select, purchase, use, or
dispose of products, services, ideas, or experiences to satisfy needs and
desires”
In the words of Professor Bearden and Associates,” Consumer
behaviour is the mental and emotional process and the physical activities of
people who purchase and use goods and services to satisfy needs and wants.”
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
psychological, cultural, social and personal factors and they are a part of the
buyer as an individual.
(1) Psychological Factors:
The starting point in the purchase decision process is the recognition of a
felt need. A need is simply the lack of something useful. We all have needs and
we consume different goods and services with the expectation that they will
help to fulfill these needs.
When a need is sufficiently pressing, it directs the person to
seek its satisfaction. It is known as motive. Thus, motives are inner states
that direct people towards the goal of satisfying a felt need. The individual
is moved the root word for motive to take action to reduce a state of tension
and to return to a condition of equilibrium. Although psychologists do not
agree on any specific classification of needs, a useful theory of the hierarchy
of needs has been developed by Abraham Maslow. His list is based on two
important assumptions.
1) People want animals whose needs depend on what they already
possess. A satisfied need is not a motivator. Only those needs that have not
been satisfied can influence behaviour.
2) All needs can be ranked in order of importance from the low
biological needs to the higher level psychological needs. Each level of
unfulfilled need motivates the individual's behaviour, and as each successive
level of need is fulfilled, people keep moving on to the next higher level of
need.
(2) Cultural Factors: Culture
is the fundamental determination of a person’s wants and behaviour. The growing
child acquires a set of values perceptions, Preferences and Behaviours through
his or her family. Each culture consists of various subcultures that provide
more specific identification. It includes nationalities, religions, social
groups and geographic regions.
Every culture dictates its own unique patterns
of social conduct. Within each religion there may be several sects and sub
sects, there may be orthodox group and cosmopolitan groups. The do’s and don’ts
listed out by religion and culture impacts the individual’s lifestyle and
buying behaviour.
(2) 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 consists 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.
(3) Personal Factors: The
personal factors include the buyer’s age and stage in the life cycle,
occupation and economic position, personality and self-conceptand lifestyle and
values.
a. Age and Stage in the Life Cycle: People
buy different products like food, cloths furniture and this is often age
related. Trends like delayed marriages, children migrating to distant cities,
tendency of professionals has resulted in different opportunities for marketers
at different stages in consumer life cycle.
b. Occupation and Economic Position: Occupation
also influences buyer’s behaviour. A blue collar worker will buy work clothes,
work shoes and lunch boxes; a company president will buy dress suits, air
travel and club memberships. Marketers try to identify the occupational groups
and then make products according to their needs and demands. Product choice is
greatly affected by economic circumstances – spendable income, savings and
assets and attitude towards spending and savings.
c. Personality and Self Concept: Each
person has personality characteristics that influence his / her buying
behaviour. Personality means a set of distinguishing psychological traits that
has to response to environmental stimuli. Personality can be a useful variable
in analyzing consumer brand choice. The idea is that brands also have
personalities and consumers like to choose those brands which suits or match
their personality.
d. Income:
The income of a person has an extremely important influence on his
consumption behaviour. He may wish to buy certain goods and services but his
income may become a constraint. Income in this context really refers to the
income available for spending (i.e., income after tax, provident fund and other
statutory deductions). The person's attitude towards spending versus saving and
his borrowing power are also important influencing factors. Small size
packaging in sachets for products such as tea, shampoo, toothpaste, etc., are
meant for the lower income customers who cannot afford a onetime large outlay
of money on such products.
e. Life
Style: Life styles are defined as patterns in which
people live, as expressed by the manner in which they spend money and time on
various activities and interests. Life style is a 69 function of our
motivations, learning, attitudes, beliefs and opinion, social class,
demographic factors, personality, etc. While reading this unit, you are playing
the role of a student. At the same time, you also have your career, family and
social roles to play. The manner in which you blend these different roles
reflects your life style.
Or
What is market segmentation? Describe the different bases used for
market
segmentation. 2+8=10
Ans:
Marketing Segmentation: A market consists of large number of individual
customers who differ in terms of their needs, preferences and buying capacity.
Therefore, it becomes necessary to divide the total market into different
segments or homogeneous customer groups. Such division is called market
segmentation. They may have uniformity in employment patterns, educational
qualifications, economic status, preferences, etc. Market segmentation enables
the entrepreneur to match his marketing efforts to the requirements of the
target market. Instead of wasting his efforts in trying to sell to all types of
customers, a small scale unit can focus its efforts on the segment most appropriate
to its market. It is defined as “The strategy of dividing the market in order
to consume them”.
According
to Philip Kotler, “It is the subdividing of market into homogenous subsets of
consumers where any subset may be selected as a market target to be reached
with distinct Marketing Mix”
According
to Philip Kotler, market segmentation means "the act of dividing a market into distinct groups of buyers who
might require separate products and/or marketing mixes."
According
to William J. Stanton, "Market segmentation in the process of dividing the total
heterogeneous market for a good or service into several segments. Each of which
tends to be homogeneous in all significant aspects."
Basis of Segmentation:
Market
segmentation dividing the Heterogeneous 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.
Geographic Segmentation: Geographic
segmentation calls for dividing the market into different geographical units
such as nations, regions, countries, cites or neighbourhood. One of the major
geographic segmentation in India is the division of rural & urban areas.
The need to segment the market geographically becomes clearer when we look at
some of the characteristics of the market. In India, there are more than 5000
towns & over 6,38,000 villages. Nearly 87% of these villages have a
population of less than 2000 people. This variation in population is important
for the marketer while formulating marketing strategy & plans. In addition
to this products penetration, income levels & availability of
infrastructure like roads & electricity make the task of geographic
segmentation important. For most products, penetration levels in rural areas
are lower than in urban areas. Income & lifestyle issues influence the
penetration rate of products & services. Eg.: Haats & mandis serve important
roles in the exchange of goods & services in rural areas.
1.
Demographic
Segmentation: In demographic segmentation, the market is
divided into groups on the basis of variables such as age, family size, family
life cycle, gender, income occupation, education religion, race generation,
nationality & social class.
a) Age & Life Cycle Stage: Consumer wants
& abilities change with age. Eg: Hindustan Unilever introduced Pears soap
in pink colour specially for children. Johnson & Johnson Baby Powder &
Talcum Powder are classic examples of products for infants & children.
Television channels in India Indicate the segmentation based on age & life
cycle. There are channels like Aastha & Sanskaar target which towards the
old generation, cartoon network, Disney are channels for children etc.
b) Gender: Men & women have different
behavioural orientation. Gender differentiation has been long applied to
product categories such as clothing, cosmetics & magazines. Eg: Axe
deodorant is positioned as a masculine product. Park avenue from Raymond is
positioned as masculine brand. Bajaj wave is a brand specifically designed for
women in the scooter segment.
c) Income: Income segmentation is a long
standing practice in a variety of products & services & is a basic
segmentation variable. Eg: Nirma Washing Powder, was launched as the lowest
priced detergent in India primarily targeted at middle income group. Markets
for many consumer’s products in India are showing rapid growth due to low unit
price packaging.
d) Generation: Each generation is profoundly
influenced by the time in which it grows- the music movies, politics.
e) Social Class: Social class has a strong
influence on preference in cars, clothing, home, furnishings, leisure
activities, reading habits, retailers etc.
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. Behaviour 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.
6. What is product life cycle? Describe the different stages of product
life cycle. 2+8=10
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 is passed. 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, Tube lights), whereas there are others which were immediately taken off
the shelf (HD DVD).
|
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Product Life Cycle |
Thus the Product life cycle deals with
four stages of a products life.
A) Introduction: The stage 1 is where the product is
launched. A product launch is always risky. You never know how the market will
receive the product. There have been numerous failures in the past to make
marketers nervous during the launch of the product. The length of the
introduction stage varies according to the product.
If the product is technological and receives acceptance in the
market, it may come out of the introductory phase as soon as it is launched.
Whereas if the product is of a different category altogether and needs market
awareness, it may take time to launch.
Characteristics of Introductory stages of Product life cycle
Ø Higher investment, lesser profits
Ø Minimal Competition
Ø Company tries to Induce acceptance and
gain initial distribution
Ø Company needs Promotions targeted
towards customers to increase awareness and demand for product
Ø Company needs Promotions targeted
towards channel to increase confidence in the product
B) 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
C) Maturity stage: One of the problems associated with
maturity stages in a technologically advanced environment is the problem of
duplication. Not only is the product available in duplicate markets, but also
there are several competing products which arise with the same features and
capabilities. As a result, the USP’s of the product become less attractive.
Along with competition, Penetration pricing becomes a weapon for
competitors. Competitors sell products with the same features at lesser prices
thereby trying to penetrate in the market. Nonetheless, The sales of a product
(especially sales from return customers) is at its peak point during the
maturity stages. The growth of sales may be lesser, but the sales revenue of
the organization is maximum during the maturity stage of product life cycle.
Characteristics of Maturity stages of Product life cycle
Ø Competition is high
Ø Product is established and promotion
expenditures are less
Ø Little growth potential for the
product
Ø Penetration pricing, and lower profit
margins
Ø The major focus is towards extending
the life cycle and maintaining market share
Ø Converting customer’s product to your
own is a major challenge in maturity stage
D) Decline: 1 product, 10 competitors, minimum
profits, huge amount of manpower and resources in use – A typical scenario
which a product might face in its last stage. In this stage the expenditures
begin to equal the profits or worse, expenses are more than profits.
Thus it becomes a typical scenario for the product to exit the
market. It also becomes advantageous for the company as the company can use
resources it was spending on the declining product on an altogether different
project. Characteristics of Decline stages of Product life cycle
Ø Market is saturated
Ø Sales and profits decline
Ø Company becomes cost conscious
Ø A lot of resources are blocked in
rejuvenating the dead product.
Or
What is new product development? Explain the various steps involved in
new product development process. 2+8=10
Ans:
New Product Development refers to the complete process of bringing a
new product to market. This can apply to developing an entirely new product,
improving an existing one to keep it attractive and competitive, or introducing
an old product to a new market.
Stages
in New Product Development Process
The introduction of new product usually passes through various
stages. In each stage, the management must decide whether to move on to next
stage with the product idea or not. Practically, in this process some of the
ideas will be eliminated at every step. There are six stages involved in the
new product development. The stages are given below:
(I) Idea generation:
New products are produced on the basis of new ideas. Ideas may be generated
from various sources like customers, dealers, distributors, salesman, top
executive, consultancy organisation, Research and Development Department etc.
The first step is to collect ideas as many as possible so that the company can
find out one of the best idea out of those ideas to convert the same in to
actual product.
(II) Screening of Ideas:
All new ideas cannot be converted into products as it requires heavy capital
investments. Those ideas should be screened and all unworkable ideas should be
dropped. Only most viable, feasible and promising one should be selected for
further processing. The company uses the concept testing method. In this
method, consumer response to a description or picture or drawings is measured
even before the product is actually produced. The purpose is to find out few
best ideas.
(III) Business Analysis:
During this stage, an attempt is made to predict the economic consequences of
the product for the company. In these stages, the management should perform the
following:
(a) Identify product features.
(b) Estimate market demand and product profitability.
(c) Establish a programme to develop the product.
(d) Assign responsibility for further study of the product
feasibility.
(IV) Product Development or Prototype
testing: This
step consists of the following:
(a) Prototype development giving visual image of the product.
(b) Consumer testing of the model or prototype product.
(c) Branding, packing and labelling of the product.
The marketing people determine an appropriate brand name, package
and price and making sure that both tangible and intangible features are
considered and included. Focus groups, target market surveys and other market
research techniques with the physical product give the marketer additional
information.
(V) Market Testing:
Test marketing involves placing a full developed new product for sale in one or
more selected areas and observing its actual performance under a proposed
marketing plan. In the words of P. Kotler- “Test marketing is the stage at
which the product and marketing programme are introduced into more realistic
market settings”. The basic purpose is to evaluate the product performance and
marketing programme in a real setting prior to the commercialization. This step
provides the scope of correction and modification of the product as well as
marketing programme. Many products fail after commercialization because of lack
of test marketing. In this process, the marketers approach the trial purchasers
and first repeat purchaser to know their feelings and reaction about the
product as well as marketing programme. On the basis of their opinions the marketers
make certain required modification in the product as well as marketing
programme. After the favourable result usually, products are sent for
commercialization.
(VI) Commercialization:
After favourable response in test marketing, full scale production and
marketing programme are planned and then the product is launched. It may be in
phased manner or the product may be introduced simultaneously depending on the
company’s plan and resources available. The phased manner introduction helps to
avoid short supply of the product due to initial gaps in production and
distribution.
7. What is promotion mix? Explain the factors affecting promotion mix
decisions. 3+7=10
Ans: Promotion Mix
and Factors affecting it
Promotion is an important part of marketing mix of a business
enterprise. Once a product is developed, its price is determined the next
problem comes to its sale i.e., creating demand for the product. It requires
promotional activities. The activities are technique which bring the special
characteristics of the product and of the producer to the knowledge of
prospective customers. Promotion is a process of communication involving
information, persuasion, and influence. The term ‘selling’ is often used
synonymously with promotion. But promotion is wider that selling. Selling is
concerned only with the transfer of title in goods to the purchaser, whereas
promotion includes techniques stimulating demand. These techniques include
advertising, salesmanship or personal selling and other methods of stimulation
demand.
There are many factors which influence
promotional mix and they are known as product market factors.
1. Nature of the product: Different product requires different
promotional mixes. Consumer goods and industrial goods require different
strategies. Consumer goods are sold through advertising, personal selling and
displays. But industrial good require more personal selling.
(a) Product complexity: If a product is technically sound and complex in
nature then it requires personal selling. For example, Industrial products. On
the other hand, if the product is simple we can go for advertising. For
example, most of the FMCG products.
(b) Brand differentiation: Promotional mix is affected by brand
differentiation and the degree to which the brand is differentiated from
competitor’s brand.
(c) Purchase frequency: If buyers buy frequently a product, such as
soap, tooth paste etc. the marketer will invest a good amount on advertising to
push competition brands.
2. Nature of the market: Different market requires different promotional
mixes and strategies. In industrial market, advertising plays a more
informative role then the persuasive role for industrial buyers. Personal
selling emphasizes on two roles, i.e. information and persuasion in the
industrial and consumer’s market.
3. Stage in the product life cycle: The promotional product mix varies
within stage in the product life cycle. The nature of demand varies according
to the stages in the life cycle. During the introductory stage, the customers
do not realize the qualities of the product. Here, information about the
product and its benefits are made known to the buyers. In this stage, more
importance must be given to personal selling and trade shows. In the growth
stage, customers know the qualities of the product. Hence to stimulate demand,
advertising must be increased. In the maturity stage, sales and profits decline
and hence all the promotional activities should be cut down.
4. Market penetration: Here the product is already known to the buyers.
In that situation, a sustaining promotional strategy is suitable. A brand has
insignificant market penetration means it has a small market or struggling
market. Market size and location: Product’s market size and location also
influences the promotional mix. In narrow market, where the numbers of
potential buyers are small, direct mail is used. In a broad market advertising
is used.
5. Characteristics of buyers: The characteristics of prospective buyers
strongly influence the promotional mix. Experienced professional buyers such as
industrial purchasing agents need personal selling. Inexperienced buyers need
advertising. Some buyers give importance to time, some to purchase of products,
buyers act according to the influence of friend, relatives etc.
6. Distribution strategy; Companies fighting more through distribution
for establishing their brands, invest more money on personal selling and
advertising. Companies which have already established their brand in the market
have to invest only a small amount in personal selling and advertising.
7. Pricing strategy: Pricing strategy influence the promotional mix
strategy. If the brand is priced higher than the competition, more personal
selling is needed to get a middleman to stock and push the brand. If the brand
is priced lower, little promotion is needed.
Or
Highlight the importance of advertising. In this context, explain how
marketing goals are met with advertising campaigns. 4+6=10
Ans:
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. Advantages of Manufacturers
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 creates goodwill by making the name
of the manufacturer and his products famous and known in every home.
4) It creates steady demand for products
by smoothening out the seasonal fluctuations in demand.
5) It reduces the cost of production by
making large-scale production possible through creation of demand. The
large-scale production reduces the total cost per unit of production.
2. Advantages to Consumers
1) It facilitates purchasing by educating
consumers to select correct brands of commodities which increase their personal
satisfaction.
2) It makes available goods at reduced
prices as advertisement increases sales, promotes large-scale production,
reduces cost of production and distribution and increases competition. This
result in reduction in prices and consumers get goods at reduced rates.
3) It increases the utility of
commodities. Consumers come to know about the proper and diverse use of
commodities through advertising. This helps to increase the utility of
commodities for the consumers.
4) It ensures good quality of products.
Advertising encourages manufacturers to produce better quality products which
boosts the confidence of the consumers and ensures them availability of goods
quality products.
5) It reduces the possibility of being
cheated as through advertisements the consumers come to know about the prices
and composition of goods.
3. Advantages to Salesmen
1) 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.
2) It educates even salesmen and
increases their confidence, capacity and initiative.
3) It reinforces the sales points and
simplifies work of the salesmen as they cannot reach all places and at all the
times.
4) It reduces the effort of the salesmen
as they can reach the right prospects with the least effort.
5) It increases the remuneration of
salesmen by supplementing their efforts to increase sales and thereby increase
remuneration.
4. Advantages to the Society
Advertisement is beneficial not only
to the manufacturers and the consumers but also to the society at large in the
following ways:
1) It uplifts the living standards of the
people. Advertising acts as an effective tool in raising standard of living.
2) It generates gainful employment
opportunities. Advertisement generates gainful employment opportunities both
directly and indirectly.
3) It provides new horizons of knowledge.
It improves the knowledge, language and style of the people.
4) It provides a regular source of income
to newspapers. It has been estimated that nearly 80% of the income of
newspapers and magazines is secured through advertisements. In its absence, the
newspapers and magazines would have become very costly and beyond the reach of
people at large.
5) It transforms culture of a nation. The
basis of advertising is the taste of the public, its social customs and its
culture. It influences the fashions, tastes, habits, attitudes and likes and
dislikes, etc. of the society at large.
6) It acts as a barometer of a nation’s economic growth. Advertising
promotes healthy competition and provides better quality goods at cheaper rates
to the society.
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