Principles of Marketing
Solved Question Paper 2022 (Nov / Dec)
COMMERCE (Core)
Paper: C-511 (Group – III)
(Principles of Marketing)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1.
(a) State whether the following statements are True or False: 1x3=3
(1) Consumer is the king in modern concept of marketing.
Ans: True
(2) Market segmentation is based on behavioural differences.
Ans: Yes
(3) Leader’s opinion does not influence consumer’s behaviour.
Ans: False
(b)
Fill in the blanks of the following: 1x3=3
(1) Modern concept of marketing is always _______ oriented.
Ans: Consumer
(2) The objective of sales promotion is to improve _______ shares.
Ans: Market
(3) Label helps in avoiding the _______ confusion.
Ans: Brand
(c)
Very short answer-type questions: 1x2=2
(1) Write one importance of packaging.
Ans: The primary purpose of packaging is to protect the
products from any damage that could happen during transport, handling and
storage.
(2) Who is a
marketer?
Ans: A marketer
is an individual who is responsible for creating an involvement
chain between the customer and the product or service offered by the
organisation.
2.
Write short notes on any three of the following: 4x3=12
(a)
Concept of marketing mix.
Ans: 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.
Features of marketing mix:
1) Combination of four controllable variables: Marketing mix is the
combination of four variables inputs namely product, price, promotion and place
that constitute the core of organizations marketing system
2) Inter relation of variables: The four P’s of marketing mix are
interrelated and independent as the decision of one area automatically depends
upon the other.
3) Managerial activity: Marketing mix is a managerial activity i.e.
it is the responsibility of the marketing manager to combine the four
ingredients in the right proportion as to achieve optimum results.
4) Dynamic concept: Marketing mix is a dynamic concept as there is
need of continuous changes as per the changes taking place in the marketing
environment.
(b)
Benefits of market segmentation.
Ans: 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.
(c)
Total quality management (TQM).
Ans: Total
Quality Management is a management approach that focuses on delivering products
and services with the highest quality to maximize customer satisfaction and
meet regulatory standards. Total quality management is an organization-wide
effort for continuous improvement. That improvement can be defined as an employee’s
ability to provide on-demand products and services that are of value to their
customers, even as their needs change.
That’s the
“quality” in total quality management. The “total” indicates that the effort is
one that touches every inch of every employee of an organization. As a
methodology, however, total quality management has no widely agreed-upon
approach. It does, though, draw from other tools and techniques, such as
project quality control, quality assurance and testing, and others.
(d)
Channels of distribution.
Ans: One of the
important problems of marketing is the distribution of goods & services to
the right place, person & 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 & individuals that
assist in the transferring the little of goods & services as they move from
producers to customers.”
Channel of
distributions plays an important role in marketing some of them are listed
below:
(1) Extending
Suggestions Regarding Price-Determination: 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.
(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.
(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.
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B.Com 5th Principles of Marketing Solved Question Papers (CBCS and NON-CBCS Pattern)
3.
(a) Define the terms ‘market’ and ‘marketing’. How does modern concept of marketing
differ from traditional concept of marketing? 2+2+8=12
Ans: Market: Market is a place where buyers and sellers meet to
exchange goods and services. In marketing, the
term market refers to the group of consumers or organizations that is
interested in the product and has the resources to purchase the product
Marketing: Marketing is an ancient art and is found everywhere.
Formally or informally, people and organizations engage in a vast numbers of
activities relating to exchange of goods and services that could be called
marketing. Good marketing has become an increasingly vital ingredient for
business success. It is embedded in everything we do- from the clothes we wear,
to the web sites we click on, to the ads we see. Marketing deals with
identifying and meeting human and social needs or it can be defined as “meeting
needs profitably”.
The American Marketing Association has defined marketing as “an
organizational function and a set of processes for creating, communicating and
delivering value to the customers and for managing customer’s relations in ways
that benefit the organization and the stake holders.”
Peter Drucker says it this way that,” the aim of marketing is to
know & understand the customer so well that the product or service fits him
and sells itself. All that should be needed is to make the product or the
service available.”
Difference between Traditional and Modern Concept of Marketing
Traditional concept of marketing
According to this concept,
marketing consists of those activities which are concerned with the transfer of
ownership of goods from producers to consumers. Thus, marketing means selling
of goods and services. In other words, it is the process by which goods are
made available to ultimate consumers from their place of origin. The traditional
concept of marketing corresponds to the general notion of marketing, which
means selling goods and services after they have been produced. The emphasis of
marketing is on sale of goods and services. Consumer satisfaction is not given
adequate emphasis. Viewed in this way, marketing is regarded as
production/sales oriented.
Modern concept of marketing
According to the
modern concept, marketing is concerned with creation of customers. Creation of
customers means identification of consumer needs and organising business to
satisfy these needs. Marketing in the modern sense involves decisions regarding
the following matters
1. Products to
be produced
2. Prices to be
charged from customers
3. Promotional
techniques to be adopted to contact and influence existing and potential
customers.
4. Selection of
middlemen to be used to distribute goods & services.
Modern concept
of marketing requires all the above decisions to be taken after due
consideration of consumer needs and their satisfaction. The business objective
of earning profit is sought to be achieved through provision of consumer
satisfaction. This concept of marketing is regarded as consumer oriented as the
emphasis of business is laid on consumer needs and their satisfaction.
From the above
discussion, the following differences between these two concepts are drawn:
|
S. No. |
Traditional Concept |
Modern Concept |
|
1. |
Traditional
marketing emphasis on selling and more profit. |
While,
modern marketing emphasis on profit as well as consumer satisfaction. |
|
2. |
Traditional
marketing is start from production and end with sell. |
But in
modern marketing it includes planning, product, price, promotion, place and after sell
services. |
|
3. |
In
traditional marketing the manufacturer sells only those products which he produces
and not focused on consumer preference. |
But in
modern marketing manufacturer analyse the consumer demand then produce. |
|
4. |
Traditional
marketing concentrate on favourable products. |
But modern marketing concentrate on customer
needs wants and satisfaction. |
Or
(b)
Define online marketing. Briefly explain the difference between online
marketing and traditional marketing. 4+8=12
Ans: Online Marketing
a) Email Marketing: It is a form of direct
marketing which uses electronic mail as a means of communicating commercial or
fund-raising messages to an audience. In its broadest sense, every email sent
to a potential or current customer could be considered email marketing.
However, the term is usually used to refer to:
Ø sending email messages with the purpose of enhancing
the relationship of a merchant with its current or previous customers, to
encourage customer loyalty and repeat business,
Ø sending email messages with the purpose of acquiring
new customers or convincing current customers to purchase something
immediately,
Ø adding advertisements to email messages sent by other
companies to their customers, and
Ø sending email messages over the Internet, as email did
and does exist outside the Internet (e.g., network email and FIDO).
b) Internet Marketing: It is also known as
digital marketing, web marketing,
online marketing, search marketing or emarketing, is referred to as the
marketing (generally promotion) of products or services over the Internet.
iMarketing is used as an abbreviated form for Internet Marketing.
Internet marketing is considered to be
broad in scope because it not only refers to marketing on the Internet, but
also includes marketing done via e-mail and wireless media. Digital customer
data and electronic customer relationship management (ECRM) systems are also
often grouped together under internet marketing.
Internet marketing ties together the
creative and technical aspects of the Internet, including design, development,
advertising, and sales. Internet marketing also refers to the placement of
media along many different stages of the customer engagement cycle through
search engine marketing (SEM), search engine optimization (SEO), banner ads on
specific websites, email marketing, mobile advertising, and Web 2.0 strategies.
In 2008, The New York Times, working with comScore, published an initial
estimate to quantify the user data collected by large Internet-based companies.
Counting four types of interactions with company websites in addition to the
hits from advertisements served from advertising networks, the authors found
that the potential for collecting data was up to 2,500 times per user per
month.
Traditional
Marketing Vs Electronic Marketing
1. Reach and Accessibility: Online marketing
has a global reach and is accessible to a vast audience, regardless of
geographical boundaries, whereas traditional marketing is limited to specific
regions or locations.
2. Cost: Online marketing generally offers more
cost-effective options compared to traditional marketing. Digital channels
often have lower entry barriers, allowing businesses with smaller budgets to
participate in marketing campaigns.
3. Targeting and Personalization: Online
marketing allows for precise targeting based on demographics, interests, and
behaviour. Advertisements and messages can be personalized to individual users,
enhancing relevance and engagement. Traditional marketing methods typically
have broader targeting and limited personalization options.
4. Interactivity and Engagement: Online
marketing offers various interactive features such as comments, likes, shares,
and direct messaging, fostering engagement and building relationships with the
audience. Traditional marketing is typically one-way communication and lacks
immediate interaction.
5. Measurement and Analytics: Online marketing
provides detailed metrics and analytics, allowing marketers to track the
performance of campaigns in real-time. They can measure engagement, conversion
rates, website traffic, and other key performance indicators. Traditional
marketing often lacks such precise measurement capabilities.
6. Flexibility and Adaptability: Online
marketing campaigns can be adjusted and optimized on the fly based on real-time
data and insights. Marketers can experiment, make changes, and adapt strategies
quickly. Traditional marketing campaigns are often planned and executed in
advance, with limited room for immediate adjustments.
4.
(a) Why is consumer behaviour a multi-disciplinary? Explain how the study of
consumer behaviour assists marketers in segmenting the market. 6+6=12
Ans: Why is
consumer behaviour a multi-disciplinary?
WILL BE AVAILABLE IN OUR YOUTUBE CHANNEL
Consumer behaviour in marketing segmentation
The
study of consumer behaviour is a critical aspect of marketing that assists
marketers in segmenting the market effectively. Market segmentation is the
process of dividing a heterogeneous market into smaller, more homogeneous
groups of consumers with similar characteristics and preferences. Understanding
consumer behaviour plays a pivotal role in this process:
1.
Identifying Consumer Needs and Wants: Consumer behaviour research helps
marketers gain insights into what drives consumers' needs, wants, and
motivations. By understanding the factors that influence purchasing decisions,
marketers can identify specific needs and preferences within the market.
2.
Demographic Segmentation: Demographic factors such as age, gender, income,
education, and family size are key components of market segmentation. Consumer
behaviour studies provide data on how different demographic groups behave as
consumers, making it easier to target specific customer segments based on these
characteristics.
3.
Psychographic Segmentation: Psychographic factors encompass consumers'
lifestyles, values, interests, and attitudes. Consumer behaviour research
allows marketers to delve deeper into consumers' psychographic profiles,
enabling the creation of segments that reflect shared psychographic
characteristics.
4.
Behavioral Segmentation: Behavioural segmentation categorizes consumers based
on their actions, such as buying frequency, brand loyalty, product usage, and
response to marketing stimuli. Consumer behaviour studies provide insights into
how customers interact with products and brands, making it easier to target and
tailor marketing strategies to specific behavioural segments.
5.
Geographic Segmentation: Understanding where and how consumers make purchasing
decisions is essential for geographic segmentation. Consumer behaviour research
can reveal regional variations in buying patterns, allowing marketers to adjust
their strategies for different geographical markets.
6.
Cultural and Social Influences: Consumer behaviour is strongly influenced by
culture, social norms, and reference groups. Marketers can segment markets
based on cultural factors and social influences by studying how consumers from
different cultural backgrounds or social groups behave as consumers.
Or
(b)
What do you mean by market segmentation? Discuss the favourable conditions for
successful market segmentation. 4+8=12
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."
Essentials elements for
success of Marketing Segmentation:
Market segmentation has its own benefits and costs.
The strength of it lies in better understanding of consumers for making
intelligent marketing decisions and their implementation. The success of
marketing segmentation of depends on the following points:
1)
Marketing segment must identifiable and measureable: The segment or the group of buyers must be clearly defined. It is
essential to know who is in segment and who is outside the segment to get
demographic, social and cultural data about segment members. These of data
should permit the measurements of the size and importance the segment as a
potential product of marketing strategy.
2)
It evidences adequate market potential:
Either an actual or potential need must exist in order to segment that opens an
opportunity. Actual needs are recognised needs – overt demands for existing
goods and services. Potential needs can be transformed into perceived wants
through education or persuasion. Potential needs are more difficult to
ascertain than the actual needs. Here, marketer is to develop strategies only
for substantial segments – whether actual or potential.
3)
It is economically accessible:
Segmentation involves a search for enough similarity among buyers to permit the
seller each search of these potential customers economically. For example,
segment members could be concentrated geographically, may be shopping at the
same store or may be reordering the same magazines. A segment based on
motivational characteristics cannot be reached economically.
4)
It reacts uniquely to marketing efforts:
A given segmentation, to be meaningful, should differ in their responses to
marketing efforts. Differing responses will help in optimizing the marketing
operations by changing marketing efforts and amount involved.
5)
It is relatively stable over a period of time: Marketing strategies are long-range plans. Moreover, lead-time of
up to a year often is needed to analysis market and to prepare a plan.
Therefore, the segments that emerge rapidly and disappear just as quickly do
not offer very good marketing opportunities for a firm that follows the
generally accepted approach. Only highly innovative entrepreneurs can, at
considerable amount of risk, attempt to serve these segments. It is only an
exceptional case than a rule.
6)
It is dynamic: Once a company finds its
segment, it will not last forever. The marketing is changing constantly. The
segments should be modified with the changing marketing scenario. Technology,
competition, perceptions and attitudes – all are volatile. Because of such changes,
marketers must monitor the market constantly to detect the changes in it to
adapt the strategy accordingly. That is nothing different than dynamic
segmentation.
5.
(a) What is trademark? Explain the difference between trademark and copyright. 4+8=12
Ans: 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.
Difference
between trade mark and copyrights
|
Trade mark |
Copyright |
|
1. Purpose: Trademarks are used to protect logos, brand names,
slogans, symbols, or any distinctive sign that identifies and distinguishes
goods or services of one party from those of others. 2. Scope of Protection: Trademarks protect the commercial identity
and brand reputation associated with products or services, preventing others
from using similar marks that may cause confusion in the marketplace. 3. Duration of Protection: Trademarks can be renewed indefinitely
as long as they are actively used and maintained. 4. Registration Process: Trademarks can be registered with
governmental agencies, such as the United States Patent and Trademark Office
(USPTO), to obtain exclusive rights and legal remedies. 5. Symbol: Trademarks are often denoted by the ™ symbol for
unregistered marks or the ® symbol for registered marks. 6. Infringement: Trademark infringement occurs when someone uses a
similar or identical mark that could cause confusion among consumers
regarding the source or quality of goods or services. 7. Enforcement: Trademark owners can take legal action against
infringers, seeking injunctions, damages, and other remedies to protect their
brand and reputation. 8. Examples: Well-known trademarks include Coca-Cola, Nike, Apple,
and McDonald's. |
1. Purpose: Copyrights protect original works of authorship, such
as literary, artistic, musical, or dramatic creations, including books,
paintings, songs, movies, and computer software. 2. Scope of Protection: Copyrights safeguard the expression of
ideas in a fixed tangible form, granting exclusive rights to reproduce,
distribute, display, perform, and create derivative works based on the
original creation. 3. Duration of Protection: Copyright protection generally lasts
for the author's lifetime plus a certain number of years after their death.
In most countries, it extends for several decades. 4. Registration Process: While copyright protection exists
automatically upon the creation of a work, registering a copyright with the
appropriate copyright office provides additional benefits, such as enhanced
legal protection and the ability to sue for infringement. 5. Symbol: Copyrights are typically denoted by the © symbol,
followed by the year of publication and the copyright owner's name. 6. Infringement: Copyright infringement occurs when someone uses,
copies, or distributes a copyrighted work without authorization, violating
the exclusive rights of the copyright owner. 7. Enforcement: Copyright owners can take legal action against
infringers, seeking injunctions, damages, and other remedies to protect their
creative works. 8. Examples: Famous copyrighted works include novels like "To
Kill a Mockingbird," paintings like "Mona Lisa," songs like
"Imagine," and movies like "Titanic." |
Or
(b)
What do you mean by marketing mix? Discuss the elements of marketing mix. 4+8=12
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.
Four P’s of Marketing Mix
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.
6.
(a) What is product life cycle? Discuss the stages of product life cycle. 4+8=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, Tube lights), whereas there are others which
were immediately taken off the shelf (HD DVD).
 |
|
Product Life Cycle |
Stages of Product life cycle:
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
(b)
Describe the various internal and external forces that influence the pricing
strategy of a firm. 6+6=12
Ans:
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.
7.
(a) What do you mean by physical distribution system? Discuss the advantages
and importance of physical distribution system. 2+10=12
Ans: Physical
distribution System: 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.
Significance or Importance of Physical Distribution
Management:
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Or
(b)
What is sales promotion? Discuss the various methods of sales promotion. 2+10=12
Ans: 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
includes, “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.”
The main aim of sales promotion is to
increase sales and profits of the firm but it is quite different from personal
selling and advertising. In personal selling, customer is persuaded by a sales
person face to face. Advertising is a non-personal mass communication media.
Sales promotion, on the other hand, is a non-recurring and non-routine method.
Its main aim is to supplement and coordinate the personal selling and
advertising. It is a supporting and facilitating element of promotional
strategy. Sales promotion bridges the gap of advertising and personal selling.
Methods of Sales Promotion
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***
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