Principles of Marketing Solved Question Paper 2014 [Gauhati University BCOM 5th SEM CBCS Pattern]

Principles of Marketing Solved Question Paper 2014
[Gauhati University BCOM 5th SEM CBCS Pattern]

Full Marks: 80, Time: 3 hours

(The figures in the margin indicate full marks for the questions)

1. Answer the following as directed:             1x10=10

Choose the correct answer from the following options:

a) Which of these is not included in demographic segmentation of markets?

1) Gender.

2) Age.

3) Education.

4) Cultures.

Ans: 4) Cultures.

b) “The heterogeneity across customer experiences is due to people component of services”. This related to which feature of services?

1) Intangibility.

2)  Perishability.

3) Inseparability.

4) Variability.

Ans: 3) Inseparability.

c) The strategic use of a brands’ equity in which the marketer leverages the brand’s good name to buy something new is _______

1) Co-branding.

2) Brand-extension.

3) Line extension.

4) Product extension.

Ans: 2) Brand-extension.

d)  From of testing markets and getting customer feedback of promising ideas is called _______.

1) Idea generator.

2) Concept testing.

3) Product testing.

4) Test marketing.

Ans: 4) Test marketing.

e)   Fast food outlets like McDonalds are an example of which marketing technique?

1)   Product franchising.

2)   Business-format franchising.

3)   E-Commerce.

4)   Relating.

Ans: 2)   Business-format franchising.

f)    Which of these is not an advertising goal?

1)   Attention.

2)   Desire.

3)   Adoption.

4)   Action.

Ans: 3)   Adoption. (AIDA – Attention, Desire, Interest and Action)

g) A company that attaches the same brand name to all of its products is called umbrella branch approach. (Fill in the blank)

h) Consumers who has a goal-oriented lifestyle and for whom image is very important are segmented in the category. (Innovators/Achievers). (Strike off the wrong options)

Ans: Achievers

i) In product development process forecasting stage proceeds commercialization and launch of product. (State true or false)

Ans: False

j) Pricing can be used to shape a brand’s positioning and can attract or repeal different segments through price discrimination techniques. (State True or False)

Ans: False

2. Answer the following questions briefly: (any five)      5x4=20

1) Distinguish between intangibility of a service and its inseparability.

Ans:

2) What is geographic segmentation of market?

Ans: Geographic Segmentation : Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, countries, cites or neighborhood. 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.

3) What is packaging?

Ans: In this age of competition, good and appropriate packaging occupies much significance^. The policies pertaining to the packaging are a part of the product planning and product development program.

Some of the main definitions of 'packaging' are being given hereunder:

In the opinion of Prof. Rustom S. Davar, Packaging is that art and/or science which is related to the development and use of materials, methods and equipment, for the packing of the goods in some containers, so that the product, while passing through various stages of distribution, could remain fully safe.

William Stanton has opined that the meaning of packaging is the total group of activities under the product planning which are related to the chalking out of a design of the outer cover of a product and the concerned production.

Importance (Functions) of Packaging

a) Safety of the Products. The main function of packaging is to protect the things from dust, water, moisture, insects, etc. Good packing saves the products against perishing, loss and other damages.

b) Facility in Marketing Activities. Due to the packing, the movement of the products, shifting, preserving, opening, collect­ing and storage, become economical and easier for both the mid­dlemen as well as the consumers.

c) Advertisement. One of the functions of packing is adver­tisement too. Till there exists any product packet, it keeps us aware of the same.

d) Facility in Collecting. It is easier to store the packaged goods. Due to packing, the products remain safe in the godowns.

4) Write what do you know about celebrity endorsement?

5) Define marketing framework.

6) Write down what do you know about promotion mix.

Ans: 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.

Importance of Marketing Promotion

The marketing promotion plays a very important role in business. Without effective promotion, the product awareness may remain low in the market and lead to lower than expected revenue. But on the other hand, marketing promotion also would require dedicated budget but it helps in creating the awareness in the market enabling the organization to drive additional revenue.

The main aim of marketing promotion is:

1. To introduce a new product

2. To educate customers about the product usage

3. To increase awareness of the product

4. To differentiate from competitors

5. To achieve increase in product recall

6. To build brand value and image

7. To encourage people to buy in bulk especially in off season to level the demand

8. To encourage people to try their product over their existing products

Promotion is one of the P’s of marketing mix. Promotional activities works in tandem with other three P’s which are: Pricing decisions, Product and Place (Distribution strategies).

3. What are the constituents of marketing environment? Discuss.           10

Ans: Marketing Environment: 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 center 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 BPL and Videocon companies.

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 behavior 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 behavior. 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 functions of marketing.               10

Ans: 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.”

Functions of Marketing

1. Product Planning: It involves development and commercialisation of new products, the modification of existing lines and discontinuation of unprofitable products.

2. Packaging: The main purpose of packaging is to preserve the quality and quantity of the contents during storage and transit. Besides, it has tremendous advertisement value, and facilitates the sale of a product. Example: Sachet packing has created a revolution in the shampoo industry.

3. Product Pricing: Product Pricing is an important component of marketing. Pricing decisions affect all the parties involved in production, distribution, selling, and consumption of goods. Price affects the volume of sales and profit.

4. Advertising and Sales Promotion: Advertising is a paid method of business communication to the prospective customers and the main objective is to promote the products. Sales promotion includes activities such as demonstrations, displays, dealer schemes that stimulate purchases by dealers/consumers. The marketing manager has to take decisions regarding the advertisement/sales promotion activities.

5. Distribution: Distribution includes distribution channel, area coverage, channel remuneration, warehousing, inventories, banking and transportation.

6. Marketing Research: Marketing Research involves systematic gathering, recording and analysing of data about problems connected with product, pricing, promotion and distribution. It deals with research on customer demand, behaviour of customers, analysis of sales data, market share, etc.

7. Sales Management: Sales Management is responsible for effective management of sales force and generating income to the organization. Salespersons are the backbone of the organisation and success of the organisation depends upon how effectively they are able to sell goods and services to meet the changing needs of the customers. The salesperson has to educate the customers on products and services, sell the same with benefit to the customer and profit to the seller.

4. Explain the different methods of market segmentation with suitable examples.     10

Ans: Methods of Marketing 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. Geographical Factors: On the basis of geographical factors, market may be classified as state-wise, region-wise and nation-wise. Many companies operate only in a particular area because people behave differently in different areas due to various reasons such as climate, culture, etc.

2. Demographic 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 behavioral 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 consumers 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. Behavior Factors: This is one of the most important bases used for market segmentation. Market is classified on the basis of attitude of consumers and special occasions.

a. Occasions: Sellers can easily find out certain occasions when people buy a particular product. E.g.: Demand for clothes, greeting cards, etc. increases during the festival season. Demand for transportation, hotels etc. increases during the holiday seasons.

b. Benefits: Each consumer expects to fulfill certain desire or to derive some benefits from the product he purchases. E.g.: A person may purchase clothes to save money and another to impress others. Based upon this, markets may be classified as markets for cheap price products and market for quality products etc.

c.Attitude: On the basis of attitude of consumers, markets may be classified as enthusiastic market, indifferent market, positive market, and negative market.

Or

What are the various factors that influence consumer behaviour? Explain.           10

Ans: 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.

(3) 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-worthand love. E.g. In traditional joint families, the influence of grandparents on major purchase decisions affect the lifestyles of younger generations. In urban India with the growth of nuclear families and  both husband and wife working the role of women in major family decisions is prominent. Children and  teenagers are being targeted by companies using the internet as an interactive device.

c. Role and  Status: The person’s position in each group can be defined in terms of role and  status. A role consist of all activities that a person is expected to perform. Each role carries a status. A Vice President of marketing has more status than a sales manager and  a sales manager has more status than an office clerk and  people choose those products that reflect and  communicate their role and  desired status in society.

(4) Personal Factors: The personal factors include the buyer’s age and stage in the life cycle, occupation and economic position, personality and self-concept and 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.

6. Describe about the different distribution channel formats and bring out the factors that affect them.     5+5=10

Ans: Different distribution channel – full notes available in our mobile application

Factors Affecting the Selection of the Channel of Distribution

Every producer, in order to pass on the product to the consumer, is required to select a channel for distribution. The selection of the suitable channel of distribution is one of the important factors of the distribution decisions. The following factors affect the selection of the channel of distribution:

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: The products of a lower price have a long chain of distributors. As against it, the products having higher price have a smaller chain. Very often, the producer himself has to sell the products to the consumers directly.

(2) Perishability: The products which are of a perishable nature need lesser number of the intermediaries or agents for their sale. Under this very rule, most of the eatables (food items), and the bakery items are distributed only by the retail sellers.

(3) Size and Weight: The size and weight of the products too affect the selection of the middlemen. Generally, heavy industrial goods are distributed by the producers themselves to the industrial consumers.

(4) Technical Nature: Some products are of the nature that prior to their selling, the consumer is required to be given proper instructions with regard to its consumption. In such a case less of the middlemen arc) required to be used.

(5) Goods Made to Order: The products that are manufactured as per the orders of the customers could be sold directly and the standardized items could be sold off only by the middlemen.

(6) After-Sales Service: The products regarding which the after-sales service is to be provided could be sold off either personally or through the authorized agents.

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: If the number of customers is large, definitely the services of the middlemen will have to be sought for. As against it, the products whose customers are less in number are distributed by the manufacturer himself.

(2) Expansion of the Consumers: The span over which are the customers of any commodity spread over, also affects the selection of the channel of distribution. When the consumers are spread through a small or limited sphere, the product is distributed by the producer himself or his agent. As against it, the goods whose distributors are spread throughout the whole country, for such distributors, services of wholesalers and the retailer are sought.

(3) Size of the Order: When bulk supply orders are received from the consumers, the producer himself takes up the responsibility for the supply of these goods. If the orders are received piece-meal or in smaller quantities, for it the services of the wholesalers could be sought. In this way, the size of the order also influences the selection of the channel of the distribution.

(4) Objective of Purchase: If the product is being purchased for the industrial use; its direct sale is proper or justified. As against it, if the products are being purchased for the general consumption, the products reach the consumers after passing innumerable hands.

(5) Need of the Credit Facilities: If, for the sale of any product, it becomes necessary to grant credit to any customer, it shall be helpful for the producer that for its distribution, the services of the wholesalers and retailer businessmen be sought. In this way, the need of the credit facilities too influences the selection of the channel of distribution.

C. Factors Pertaining to the Middlemen: The following are the main factors concerned with the middlemen:

(1) Services Provided by Middlemen: The selection of the middlemen is made keeping in view their services. If some product is quite new and there is the need of its publicity and promotion of sales, then instead of adopting the agency system, the work must be entrusted to the representatives.

(2) Scope or Possibilities of Quantity of Sales: The same channel should be selected by means of which there is the possibility of more sales.

(3) Attitude of Agents towards the Producers' Policies: The producers generally prefer to select such middlemen who go by their policies. Very often when the distribution and supply policies of the producers being disliked by the middlemen, the selection of middlemen becomes quite limited.

(4) Cost of Channel of Distribution: While selecting the channel of distribution, the cost of distribution and the services provided by the middlemen or agents too must be kept into consideration. The producers generally select the most economical channel.

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: The manufacturers who are financially sound and are of a larger category, are able to appoint the sales representatives in a larger number and thug could distribute the commodities (products) in larger quantities. As against it, for the smaller manufacturers, it becomes necessary to procure the services of the wholesalers and the retail traders.

(2) Financial Resources of the Company: From the financial point of view, the stronger company needs less middlemen.

(3) Managerial Competence and Experience: If some producer lacks in the necessary managerial experience or proficiency, he will depend more upon the middlemen. The new manufacturers in the beginning remain more dependent upon the middlemen.

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).

Or

What are the alternative and new additions to conventional distribution channels? Discuss their effectiveness and weaknesses.         6+4=10

Ans: Not available at present

7. Differentiate between product promotion and advertising. Also write what do you know about promotion mix? 4+6=10

Ans: Distinguish between advertising and Sales Promotion.

Basis	Advertising	Sales promotion
Meaning	The activity of generating advertisements of products and services to commercialize them is known as Advertising.	Sales promotion refers to short term use of incentives or other promotional activities that stimulate the customer to buy the product.
Strategy	It is permanent strategy.	It is a limited time promotion strategy.
Cost	It is highly expensive.	It is cost effective.
Best suited for	It is best suited for medium and big enterprises.	It is suitable for all enterprises.
Objective	Its main objective is to build brand image and boosting sales.	Its main objective is short term sales push.

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 is 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.

Importance of Marketing Promotion

The marketing promotion plays a very important role in business. Without effective promotion, the product awareness may remain low in the market and lead to lower than expected revenue. But on the other hand, marketing promotion also would require dedicated budget but it helps in creating the awareness in the market enabling the organization to drive additional revenue.

The main aim of marketing promotion is:

1. To introduce a new product

2. To educate customers about the product usage

3. To increase awareness of the product

4. To differentiate from competitors

5. To achieve increase in product recall

6. To build brand value and image

7. To encourage people to buy in bulk especially in off season to level the demand

8. To encourage people to try their product over their existing products

Promotion is one of the P’s of marketing mix. Promotional activities works in tandem with other three P’s which are: Pricing decisions, Product and Place (Distribution strategies).

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.

***