Principles of Marketing
Solved Paper 2023
COMMERCE (Honours Core)
Paper: COM-HC-5016 (Principles
of Marketing)
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
(1) The starting
point of any marketing activity is the
(a) Human needs
and wants.
(b) Basic human
needs.
(c) Biological
condition of human beings.
(d) All of the
above. (Choose the correct answer)
Ans: (a) Human
needs and wants.
(2) Who is the
father of modern marketing?
Ans: Philip
Kotler
(3) Which of the
following is a threat posed by marketing environment in India?
(a) Curtailment
of and disinvestments in Public sector.
(b)
Liberalisation of Industrial licensing.
(c) Survival of
the fittest rule.
(d) Removal of
subsidies. (Choose the correct answer)
Ans: (c)
Survival of the fittest rule.
(4) Which of the
following is useful for marketing segmentation?
(a) Prospects
identification.
(b) To know the
customers’ tests and preferences.
(c) To target
current clients.
(d) All of the
above. (Choose the correct answer)
Ans: (d) All of
the above. (Choose the correct answer)
(5) Which one of
the following is not an element of demographic segmentation?
(a) Family size.
(b) Population
density.
(c) Income.
(d) Religion.
Ans: (b)
Population density.
(6) ‘Assam Tea’
stands for _______ positioning. (Quality/Geographical area) (Fill in the blank
with correct alternative)
Ans: Geographical
area
(7) ‘Mobile
Handset’ is an example of perishable goods. (Write True or False)
Ans: False,
Durable goods
(8) Which one of
the following brands owned and developed by producers?
(a) Individual
brands.
(b) Family
brands.
(c)
Manufacturers brands.
(d) None of
these. (Choose the correct answer)
Ans: (c) Manufacturers
brands.
(9) At maturity
stage sales continue to increase at an increasing rate. (Write True or False)
Ans: False
(10) Promotion
mix is an important element of _______.
(a) Sales
promotion.
(b) Marketing
mix.
(c) Personal
selling.
(d) All of the
above. (Fill in the blank with appropriate alternative)
Ans: (b)
Marketing mix.
2.
Answer the following questions: 2x5=10
(a) State two distinctions between marketing and selling.
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. |
(b) What is product positioning?
Ans: Product
positioning is an important element of marketing plan. It is the process
presenting the benefits of the products to the target audience. In other words,
Product positioning is a process of identifying the needs of market segments,
product strength and weaknesses and the extent to which competing product are
perceived to meet the consumer needs. It is an attempt to project different or
refined or revised product image in the market than one that has been
prevailing.
(c) What is product line?
Ans: Product line is a group of closely related products which
are able to satisfy a class of need, to be used together, to be sold to the
same consumer groups. Each firm has its own product line. Product-line stands
for the entire range of products manufactured by the firm. For example, LG has
product-line consisting of – TV, Monitors etc.
(d) What is personal selling?
Ans: Personal selling is the process of
assisting and persuading the existing and prospective buyer to buy the goods or
services in person. It involves direct and personal contact of the seller or
his representative with the buyer.
(e) What is advertising agency?
Ans: The
advertising agency is a profession organisation of specialists operating under
a system created by advertising media, to which the advertiser entrusts drawing
up and carrying out of his advertising plans. Advertising agency is a service
organisation which has come to be accepted as a professional body that
undertakes planning and preparation of advertising, it has emerged out as a
highly specialized marketing institution.
3.
Answer any four of the following: 5x4=20
(1) Importance of product as a component of marketing
mix.
(2) Advantages of product branding.
Ans: Branding is
not only beneficial for seller but also useful for buyers. Buyers, sellers and
the society as a whole may derive the following advantages from branding:
Buyers: The buyers can derive the following
advantages:
1) A brand generally denotes uniform
quality to the buyers.
2) It makes shopping easier.
3) Competition among brand can, over a
period of time lead to quality improvements and cost effectiveness.
4) Purchasing a socially visible brand can
give psychological satisfaction to the buyer.
Sellers: A marketer can also derive
following advantages:
1) It helps the sellers in product
identification.
2) In a highly competitive market, it can
carve out a niche for sellers through product differentiation.
3) If brand loyalty can be developed
through successful promotion, the firm will be able to exert quasi-monopolistic
power.
(3)
Reasons of product failure.
Ans: A product fails due to various reasons.
Some of the important reasons for failure are given below:
1. Product
Problems: The products fail in the market due to certain problems with product
itself. For example, as neglect of market needs or ignorance of market preferences,
defects in product function, poor technical design or external appearance, poor
packaging or inappropriate sizes, undependable performance or too high a variation
in quality, etc.
2. Distribution Channel
Problems: Products fail due to certain problems in Distribution such as
inappropriate channels or outlets, lack of co-operation from middlemen, poor
system of physical distribution, etc.
3. Promotional
Problems: Promotional problems that contribute to the product failure are inadequate
or ineffective promotion, advertising directed towards wrong market segments,
improper use of wrong appeals, failure to co-ordinate adequately with distribution
system, improper training to sales force, etc.
4. Pricing
Problems: Pricing problems such as price not on par with product quality, poor cost
estimates caused ‘asking price’ to be too high, inadequate margins for the
middlemen, etc. also responsible sometimes for product failure.
5. Timing
Problems: Timing of product introduction is very important. If product is introduced
too soon or too late, it may fail.
6. Competitive
Problems: Competitors' aggressive strategies with respect to product distribution,
promotion and price may cause serious setback to the product in the market. The
company had to react defensively rather than pursuing strategies.
(4)
Advantages and disadvantages of E-tailing.
(5)
Merits and demerits of product diversification.
Ans: Merits and
demerits of product diversification: Diversification has a number of advantages
to the seller:
1) It helps the
company to increase overall profitability,
2) Addition of
new products helps in attracting new dealers,
3) Sometimes
additional products help in spreading over-head costs, thereby reducing unit
cost of all products,
4)
Diversification helps to level off production and effectively reduce seasonal fluctuations
in production and sales,
5) If the
additional products are based on the raw materials presently being used, the
cost of the raw materials may be reduced because of the advantages of large
purchases,
6) A small scale
firm suffers from the weaknesses of low-level production e.g. high per unit
cost, low level of standardisation, lack of specialisation, etc. These can be overcome
through diversification.
It may, however,
be stated that product diversification is a strategy, and not a panacea for all
ailments of the firm. Diversification is useful if the company can afford to
practise the multiproduct multi-market posture. The company should have the
needed financial and managerial resources to practice diversification. The
management should do a detailed analysis of the company's product-market
posture.
(6)
Essential elements of good branding.
Ans: Elements of
a Good Branding
It is generally
a difficult decision to select any brand, for the producer-firm, for its
produced goods. Although no legal restriction is there regarding the
selection of a brand, yet the marketing managers
are required to keep enough of care and precaution in selecting the brand. While
selecting the brand, the following qualities
must be essentially borne into consideration:
1. Indicative of the Qualities or Merits of the
Product: The brand which is selected must be
capable of expressing the maximum
qualities of the products.
2. No Confusion about the Product: It must not
be leading to confusion to the consumers.
3. Simple and Brief: The
brand must be brief so that the people
could easily remember it, e.g. Murphy, Bush, Amul, Cibaca, Dalda, etc.
4. Simple to
Pronounce: It must be capable of being easily spoken or pronounced.
5. Facility in Advertising: The brand must be
such that by means of any advertising medium, it
could be used to publicize the same.
6. Attractive: The
brand should be such that it could be melodious
in hearing and could attract consumers.
7. Not Vulgar: From
social point of view, the brand should not be vulgar or obscene.
8. Facility in
Registration: The brand should be such that there is not much problem in
getting it registered.
9. Specific: It
must be specific and it must contain some differentiating characteristics,
compared to other products.
10. Economical: There
must not be much expenditure to be incurred in getting the brand printed on the
label or packet during the advertising campaign.
4.
Answer the questions from the following: (any four) 10x4=40
(a) Outline the major functions of marketing.
Ans: 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.
(b)
Discuss about growth and future of marketing in India.
Ans:
(c)
Explain the consumer’s buying decisions process.
Ans:
Steps in buying decision process
The marketing
scholars have developed a “stage model” of the buying process. The consumer
passes through 5 stages. But consumers do not always pass through all five
stages in buying a product. They may skip some stages.
(1) Problem
Recognition: The buying process starts when the buyer recognizes a problem or
need. The need can be triggered by internal or external stimulus. With an
internal stimulus, one of the person’s normal needs hunger thirst etc. become a
drive or a need can be aroused by external stimuli. Marketers need to identify
the circumstances that trigger a particular need by gathering information from
a number of consumers.
(2) Information
Search: An aroused consumer will be inclined to search for more information. A
person at times simply becomes receptive to information about a product or he
may enter looking for a reading material, phoning friends, going online etc.
Through gathering information, the consumer learns about competing brands and
other features.
(3) Evaluation
of Alternatives: The information search and comprehension (evaluation) stages
represent the information processing stage. These 2 stages constitute the
cognitive field of the purchase process. Cognition refers to acquisition of
knowledge.
Some basic
concepts help us in understanding consumer evaluation: first the consumer is
trying to satisfy a need, second the consumer is looking for certain benefits
and third the consumer views each product as a bundle of attributes to satisfy
this need.
(4) Purchase
Decision: The buyer must be convinced that the purchase of the product is the
legitimate course of action. This stage stands as a barrier between a
favourable attitude towards the product and actual purchase. Only if the buyer
is convinced about the correctness of the purchase decision, will be proceed.
At this stage, he may seek further information regarding the product or attempt
to assess the information already available.
(5) Post
Purchase Behaviour: The purchase leads to specific post purchase behaviour;
usually it creates some restlessness in the mind of the individual. He is not
sure about the product. He may feel that the other brand would have been
better. It can be defined in terms of satisfaction. If the performance of the
product falls short of expectations, the consumers is disappointed, if it meets
expectations, the consumer is satisfied, it is exceeding expectations, the
consumer is delighted. These feelings make a difference in whether the customer
buys the product again and talks favourably or unfavorably about it to others.
(d)
Define market segmentation and discuss its importance for a firm.
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."
Advantages
/ Importance / Significance of Market Segmentation:
The
purpose of segmentation is to determine the differences among the purchases
which may affect the choice of the market area and marketing strategies.
Following are some of the benefits of marketing segmentation.
1.
Facilitates consumer-oriented marketing: Market segmentation facilitates
formation of marketing-mix which is more specific and useful for achieving
marketing objectives. Segment-wise approach is better and effective as compared
to integrated approach for the whole market.
2.
Facilitates introduction of suitable marketing mix: Market segmentation enables
a producer to understand the needs of consumers, their behavior and
expectations as information is collected segment-wise in an accurate manner.
Such information is purposefully usable. Decisions regarding Four Ps based on
such information are always effective and beneficial to consumers and the
producers.
3.
Facilitates introduction of effective product strategy: Due to market
segmentation, product development is compatible with consumer needs as there is
effective crystallization of the specific needs of the buyers in the target
market. Market segmentation facilitates the matching of products with consumer
needs. This gives satisfaction to consumers and higher sales and profit to the
marketing firm.
4.
Facilitates the selection of promising markets: Market segmentation facilitates
the identification of those sub-markets which can be served best with limited
resources by the firm. A firm can concentrate efforts on most productive/
profitable segments of the total market due to segmentation technique. Thus
market segmentation facilitates the selection of the most suitable market.
5.
Facilitates exploitation of better marketing opportunities: Market segmentation
helps to identify promising market opportunities. It helps the marketing man to
distinguish one customer group from another within a given market. This enables
him to decide his target market. It also enables the marketer to utilize the
available marketing resources effectively as the exact target group is
identified at the initial stage only.
6.
Facilitates selection of proper marketing programme: Market segmentation helps
the marketing man to develop his marketing mix programme on a reliable base as
adequate information about the needs of consumers in the target market is
available. The buyers are introduced to marketing programme which is as per
their needs and expectations.
7.
Provides proper direction to marketing efforts: Market segmentation is rightly
described as the strategy of "dividing the markets in order to conquer
them". Due to segmentation, a firm can avoid the markets which are
unprofitable and irrelevant for its marketing purpose and concentrate on
certain promising segments only. Thus due to market segmentation, marketing
efforts are given one clear direction for achieving marketing objectives.
8.
Facilitates effective advertising: Advertising media can be more effectively
used because only the media that reach the segments can be employed. It makes
advertising result oriented.
(e) Describe the role and importance of pricing.
Ans: Price is defined as the amount we pay for goods or a
service or an idea. Price is the only element in the marketing mix of a firm
that generates revenue. All other elements generate only cost. Price is a
matter of importance to both seller and buyer in the market place. Only when a
buyer and a seller agree on price, we can have exchange of goods and services
leading to transfer of ownership.
The term ― Price need not be confused with the term ―
Pricing. Price is the value that is put to a product or service and is the
result of a complex set of calculations, research and understanding and risk
taking ability. But pricing is different from price. It refers to decisions
related to fixing of price of a commodity. A pricing strategy takes into
account segments, ability to pay, market conditions, competitor actions, trade
margins and input costs, amongst others. It is targeted at the defined
customers and against competitors.
Role and
Importance of Pricing: Importance
of pricing is spelled out by the following points.
1. Price is the pivot for an
economy: Price
is the prime mover of the wheels of the economy namely, production,
consumption, distribution and exchange price influences consumer purchase
decision. It reflects purchasing power of currency. It can determine the
general living standards of people. In essence, by and large every facet of our
economy life is directly or indirectly governed by pricing.
2. Price Regulates Demand: Price increase or decrease the demand for
the product de- marketing strategy can be easily implemented to meet the rising
demand for goods and service.
3. Price is the competitive weapon: The marketers have to perform in a highly
competitive environment. Price is a very important instrument to fight
competition. It is the competition that contributes maximum to the importance of
pricing. Pricing is a highly dynamic function. Because of the immense
competition and in meeting competition, pricing decisions acquire their real
importance.
4. Price is the Determinants
of profitability:
Price determines the profitability of firm by influencing the sales revenue.
Low price is not always necessary to increase profit. A right price can
increase the sales volume and there by profit. The impact of price rise of fall
is reflected instantly in the rise or fall of the product profitability.
5. Price is a Decision Input: Pricing is highly risky decision area and
mistakes in pricing might reasonably affect the firm, its profits, growth and
future.
6. Marketing Communication: Price plays an important role in marketing
communication. High price may indicate higher quality. Price communicates value
to the consumer. Customers are basically value-maximizes. They want to have the
maximum value from a given purchase. They form an expectation of value and act
on it. A buyer’s satisfaction is a function of the product’s perceived
performance and the buyer’s expectations. So, if the product meets the
expectations of consumers and their value definitions at the given price point,
price is seen as acceptable. Otherwise consumers tend to be dissatisfied. They may
say that the product is overpriced and they may reject the offer.
The above discussion indicates that pricing is a
critical element in any company’s marketing plan, because it directly affects
revenue and profit goals. Effective pricing strategies must consider costs as
well as customer perceptions and competitor reactions, especially in highly
competitive markets. Today, many firms are trying to follow the low-price
trend. At the same time, many marketers have been successful in selling more
expensive products and services by combining unique product formulations with
engaging marketing campaigns.
(f) Explain the various pricing policies available to a
firm in taking its pricing decision.
Ans: Pricing
Methods: There are several methods of pricing and they can be grouped into few
broad categories:
(1) Cost Based
Pricing
(2) Demand Based
Pricing
(3) Competition
Oriented Pricing
(4) Value
Pricing
(5) Product Line
Oriented Pricing
(6) Tender
Pricing
(7)
Affordability Based Pricing
(8)
Differentiated Pricing.
(1) Cost Based
Pricing: Under the cost based pricing, different methods used are:
- Mark Up
Pricing
- Absorption
Cost Pricing
- Target Rate of
Return Pricing
- Marginal Cost
Pricing
- Mark Up
Pricing: It refers to the pricing methods in which the selling price of the
product is fixed by adding a margin to its cost price. The mark ups may vary
depending on the nature of the product and
the market. Usually, the higher the value of the product, the larger is
the mark up.
- Absorption
Cost Pricing: ACP rests on the estimated unit cost of the product at the normal
level of production and sales. The
method uses standard costing techniques and
works out the variable and fixed
costs involved in manufacturing, selling and
administering the product. By adding the costs of operations, we get the
total costs. The selling price of the product is arrived by adding the required
margin towards profit to such total costs.
- Target Rate of
Return Pricing: It is similar to absorption cost pricing. The rate of return
pricing uses a rational approach to arrive at the mark up. It is arrived in
such a way that the ROI criteria of the firm are met in the process. But this
process amounts to an improvement over absorption costing since it uses a
rational basis for arriving at the mark up.
- Marginal Cost
Pricing: It aims at maximizing the contribution towards fixed costs. Marginal
costs include all the direct variable costs of the product. In marginal cost pricing,
these direct variable costs are fully realized. In addition, a portion of the
fixed costs is also realized under competitive market conditions marginal cost
pricing is more useful.
(2) Demand Based
Pricing: The following methods belong to the category of demand / market based
pricing:
- What the
Traffic can Bear’ Pricing
- Skimming
Pricing
- Penetration
Pricing
- What the
Traffic can Bear’ Pricing: The seller takes the maximum price that the
customers are willing to pay for the product under the given circumstances.
This method is used more by retail traders than by manufacturing firms. This
method brings high profits in the short term. But in the long run it is not a
safe concept, chances of errors in judgment are very high.
- Skimming
Pricing : This method aims at high price and
high profits in the early stage of marketing the product. It profitably
taps the opportunity for selling at high prices to those segments of the
market, which do not bother much about the price. This method is very useful in
the pricing of new products, especially those that have a luxury or specialty
elements.
- Penetration
Pricing : Penetration pricing seeks to achieve greater market penetration
through relatively low price. This method is also useful in pricing of new
products under certain circumstances. For e.g. when the new product is capable
of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive
segment, the firm can choose the penetration pricing and make large size sales at a reasonable price
before competitors enter the market with a similar product. Penetration pricing
in such cases will help the firm have a good coverage of the market and keep competition out for some time.
In all demand
based pricing methods, the price elasticity of demand is taken into account
directly or indirectly.
(3) Competition
Oriented Pricing : In a competitive economy, competitive oriented pricing
methods are common. The methods in this category rest on the principle of competitive
parity in the matter of pricing. Three policy options are available to the firm
under this pricing method :
- Premium
Pricing
- Discount
Pricing
- Parity Pricing
Premium pricing
means pricing above the level adopted by competitors. Discount pricing means
pricing below such level and parity
pricing means matching competitors pricing.
(4) Value
Pricing : Value pricing is a modern innovative and distinctive method of pricing. Value pricing
rests on the premise that the purpose of pricing is not to recover costs, but
to capture the value of the product perceived by the customer. Analysis will
readily show that the following scenarios are possible with the cost value
price chain:
Value > Price
> Costs
Price > Value
> Costs
Price > Costs
> Value
Price > Value
> Costs
(5) Product Line
Pricing : When a firm markets a variety of products grouped into suitable
product lines, a special possibility in pricing arises. As the product in a
given product line are related to each other, sales of one influence that of
the others. They also have interrelated costs of manufacturing and distribution. It can fix the prices of the
different product in such a manner that the product line as a whole is priced
optimally, resulting in optimal sales of all the products put together and optimal total profits from the line.
(6) Tender
Pricing : Business firms are often required to fix the prices of their products
on a tender basis. It is more applicable to industrial products and products purchased by Institutional
customers. Such customers usually go by competitive bidding through sealed
tenders. They seek the best price consistent with the minimum quality
specification and thus bag the order.
(7)
Affordability Based Pricing : The affordability based pricing is relevant in
respect of essential commodities, which meet the basic needs of all sections of
people. Idea here is to set prices in such a way that all sections of the
population are in a position to buy and
consume the products to the required extent.
(8)
Differentiated pricing : Some firms charge different prices for the same
product in different zones/ areas of the market. Sometimes, the differentiation
in pricing is made on the basis of customer class rather than marketing
territory.
(g) Explain the various methods
to measure the advertising effectiveness.
(h) Discuss the various factors
which affect promotion mix decision of an organisation.
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.
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.
***
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