Model Question Bank Marketing Management (MBA – 202)

Model Question Bank

Marketing Management (MBA – 202)

Q1. Explain the meaning and Scope of Marketing?

Ans. Marketing:  the action or business of promoting and selling products or services,   including market research and advertising.

The activities of a company associated with buying and selling a product or services. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get attention of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. Basically Marketing is all about product, place, price and promotion (4P’s of Marketing)

Marketing is a process by which companies create customer interest in products or services. It generates the strategy that underlies sales, techniques, business communication and development. It is an integrated process through which companies build strong customer relationships and create value for their customers and for themselves.

SCOPE OF MARKETING:-

(1)    Study of Consumer wants and needs –

Good are produced to satisfy consumer needs and wants therefore study is done to identify consumer needs and wants. These needs and wants motivate consumers to purchase.

(2)    Study of Consumer Behaviour –

Marketers perform study of consumer behaviour. Analysis of buyer behaviour helps Marketer in Market Segmentation and Targeting.

(3)    Product Planning and Development –

It includes the activities of Product Research, Market Segmentation, Product Development, Determination of the attributes, Quality and Quantity of Product.

(4)    Branding –

Branding of product is adopted by man y reputed enterprises to make their products popular among their customers and for many other benefits.

(5)    Packaging –

Packaging is to provide a container and wrapper to the product for safety, attraction and ease of use and transportation of the product.

(6)    Channels of  Distribution –

Decision regarding selection of most appropriate channels of distribution like whole saling, distribution and retailing is taken by the Marketing Manager and Sales Manager.

(7)    Pricing Policies –

Marketer has to determine pricing policies for their products. Pricing policies differ from product to product. It depends on the level of competition product life cycle, Marketing goals and objectives, etc.

(8)    Sales Management –

Selling is a part of Marketing. Marketing is concerned about all the selling activities like customer identification, finding customer needs, persuading customer to buy products, customer service, etc.

(9)    Promotion –

Promotion includes personal selling, sales promotion and advertisement, right promotion mix is crusial in accomplishment of marketing goals.

(10)  Finance –Marketing is also concerned about the finance as for every marketing activity be it packaging, advertising, sales force budget is fixed and all the activities have to be completed within the limit of the budget.

(11)  After sales service –Marketing covers after sales services given to customers, maintaining good relationships with customers, attending their queries and solving their problems.

Q2. Explain the different philosophies of Marketing Management? Provide your justification for the significance or utility of these philosophies in present business environment?

Ans :- Philosophies refers to the orientation, approaches or concepts that a company focuses and follows the decisions.

Under the Marketing Management philosophies, we shall study the following concepts:-

a.       Production Concept :-

That company who believes in this philosophy thinks that if the goods/services are cheap and they can be made available at many places, there cannot be any problem regarding sale.

Keeping in mind the same philosophy these companies put in all their marketing efforts in reducing the cost of production and strengthening their distribution system. In  order to reduce the cost of production and to bring it down to the minimum level, these companies indulge in large scale production. This helps them in effecting the economies of the large scale production. Consequently, the cost of production per unit is reduced. The utility of this philosophy is apparent only when demand exceeds supply. Its greatest drawback is that it is not always necessary that the customer every time purchases the cheap and easily available goods and services.

b.      Product concept :-

Those companies who believe in this philosophy are of the opinion that if the quality of goods or services is of good standard, the customer can be easily attracted. The basis of this thinking is that the customers get attracted towards the products of good quality. On the basis of this philosophy or idea these companies direct their marketing efforts to increase the quality of their product.

It is a firm belief of the followers of the product concept that the customers get attracted to the products of good quality. This is not the absolute truth because it is not the only basis of buying goods. The customers do take care of the price of the products, its availability, etc. A good quality product and high price can upset the budget of a customer. Therefore, it can be said that only the quality of the product is not only way to the success of marketing.

c.       Selling Concept :-

Those companies who believe in this concept think that leaving alone the customers will not help. Instead there is a need to attract the customers towards them. They think that goods are not bought but they have to be sold.

The basis of this thinking is that the customers can be attracted. Keeping in view this concept, these companies concentrate their marketing efforts towards educating and attracting the customers. In such a case their main thinking is “selling what you have”.

This concept offers the idea that by repeated efforts one can sell anything to the customers. This may be right for some time, but you cannot do it for a long time. If you succeed in enticing the customer once, he cannot be won over every time.

On the contrary, it will work for damaging the reputation. Therefore, it can be asserted that this philosophy offers only a short term advantage and is not for long term gains.

d.      Marketing Concept :-

Those companies who believe in this concept are of the opinion that success can be achieved only through consumer satisfaction. The basis of this thinking is that only those goods/services should be made available which the consumer want or desire and not the things which you can do.

In other words, they don’t sell what they can make but they make what they can sell. Keeping in mind this idea, these companies direct their marketing efforts to achieve consumer satisfaction.

In short, it can be said that it is a modern concept and by adopting it profit can be earned on the long term basis. The drawback of this concept is that no attention is paid to social welfare.

e.       Societal Marketing Concept :-

This concept stresses not only the customer satisfaction but also gives importance to consumer welfare/societal welfare. This concept is almost a step further than the marketing concept. Under this concept, it is believed that mere satisfaction of consumers would not help and the welfare of the whole society has to be kept in mind.

For example; if a company produces a vehicle which consumes less petrol but spread pollution, it will result in only consumer satisfaction and not the social welfare. Primarily two elements are included under social welfare high level of human life and pollution free atmosphere. Therefore, the companies believing in this concept direct all their marketing efforts towards the achievement of consumer satisfaction and social welfare. In short, it can be said that this is the latest concept of marketing. The companies adopting this concept can achieve long term profit.

Q3. What do you mean by Marketing Environment?

Ans:- MARKETING  ENVIRONMENT  :--

·        Businesses do not operate in isolation in the market place.

·        There are various factors/forces that directly or indirectly influence the organisation’s business activities.

·        All these factors/forces form the marketing environment of an organisation.

·        The company operates in a complex marketing environment, consisting of uncontrollable forces, to which the company must adapt.

·        Marketing is the sum total of trading forces operating in a market place, over which a business has no control but which shapes the manner in which the business functions and is able to satisfy its customers.

·        A marketing environment is what surrounds and creates impact on business organisations.

·        Marketing environment is uncontrollable and ever changing.

The key elements of Marketing Environment are as follows:-

(1)    Internal Environment :-

o   The internal environment refers to the forces and actions that are within the organisation and affects its ability to serve its customers.

o   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.

o   It includes marketing managers, sales representatives, marketing budget, marketing plans, procedures, inventory, logistics and anything within the organisation which affects marketing decisions and its relationships with its customers.

o   The research and development department, the personnel department, the accounting department also have an impact on the marketing department.

o   It is the responsibility of a manger to company ordinate all departments by setting up unified objectives.

(2)   External Environment: (A) Micro Environment :-

o   The Micro Environment refers to the forces that are close to the marketing organisation and direct impact the customer experiences.

o   It includes the organisation itself, its suppliers, marketing intermediaries, customer markets or segments, competitors and publics.

o   Happening in micro environment is relatively controllable for the marketing organisation.

              SOME FACTORS IN MICRO ENVIRONMENT:-

·        Suppliers: - Suppliers 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. A company must build cordial and long term relationships with suppliers.

·         Marketing Intermediaries: - Marketing intermediaries are the people who assist the flow of products from the producers to the customers; 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.

·        Consumers: - Consumers are the centre point of all marketing activities. The main aim of production is to meet the demand of the consumers. Each type of Consumer has a unique feature which has to be considered by the marketers before taking the decisions.

·        Competitors: - A prudent marketing manager has to be in constant touch regarding the information relating to the competitor’s strategies.

·        Public: - A company’s obligations are not only 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”.\

(B) Macro Environment:-

o   Macro Environment refers to the forces that are part of the larger society and affects the micro environment.

o   It includes demography, economy, politics, culture, technology and natural forces.

o   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 factors.

SOME FACTORS IN MACRO ENVIRONMENT :-

·          Demography: - Demography is defined as the statistical study of the human population and its distribution that forms the market. A company should study the population, its distribution, age composition, status, etc. before deciding the market strategies.

·        Economic Environment: - it affects a consumer’s purchasing behaviour either by increasing his/her disposal income or by reducing it.

·        Technological Factor: - Every new invention builds a new market and a new group of customers. A new technology improves our life style and at the same time creates many problems.

·        Physical Environment or Natural forces: -  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.

·        Social and cultural factor: - Most of us purchase because of the influence of social and cultural factors. The life style, values, beliefs, etc. are determined among other things by the society in which we live.

Q4. Differences Between:-  Marketing and Selling Concept :

Marketing concept	Selling Concept
Converting customers need into product	Converting product into cash
Emphasis on product planning and development	Emphasis on sale of the product already used
Integrated approach to marketing	Fragmented approach to selling
Seller beware principle followed	Buyer beware principle followed
Customer determine price, price determine cost	Cost determine price

(a)     Industrial Marketing v/s Consumer Marketing :

Basis	Industrial Marketing	Consumer Marketing
Market        characteristics	Geographically           Concentrated	Geographically             disbursed
Customer size	Relatively fewer buyers	Mass market
Product specification                                 and              variant	Technically complex           Products Tailor made products	Standard              Products
Service	Prompt and competent       Service required	Some what            important
Buyer behaviour	Involvement of various functional areas in both buyer and the supplier’s firm	Merely involvement of family members or the peer group
Purchase decision	Based on rational and requirement	Based on social, culture, psychological needs

(b)   Needs v/s Wants :

NEEDS: - A need is generally referred to, as something that is extremely necessary for a person to survive. If a need is not met, it would lead to the onset of disease, the inability to function effectively and efficiently in society, and even death. Needs are categorized into two groups. These are the “objective needs” and “subjective needs”.

Objective needs are those that that are met through tangible things or things that could be measured. Eg. Of these includes food, shelter, air, etc.

Subjective needs are those that are often seen to ensure our mental health. Eg. Of these includes self esteem, a sense of security and approval.

WANTS: - A want is something that a person desires, either immediately or in the future. Unlike needs, wants are those that differ from one person to another. For eg. – one person may want to own a car while other may want to travel to an exotic country. Each person has his/her own lists of wants, each with a varying level of importance. Furthermore, wants can change over a period of time. This is in contrast to needs, which remains constant throughout the life time of the person.

(c)      Goods v/s Services :

GOODS	SERVICES
Tangible	Intangible
Homogeneous	Heterogeneous
Production and distribution are        separated from consumption	Production, distribution and consumption      are simultaneously processess
A thing	An activity or process
Core value processed in factory	Core value produced in the           buyer-seller interactions
Customers don’t participate in            the production process	Consumer participate in production
Can be kept in stock	Cant be kept in stock

Q5. What do you mean by Segmentation? Define a Segment? What are the characteristics of a good segment?

Ans. SEGMENTATION: - The process of dividing a market into smaller homogeneous market with the similar characteristics is called segmentation. Market segmentation is the process of dividing the total market into relatively distinct homogeneous sub groups of consumers with similar needs or characteristics that lead with them to respond in similar ways to a particular marketing programme.

“Market Segmentation is the sub dividing of market into homogeneous sub-sectional of customers, where any sub section may conceivably be selected as a market target to be reached with a distinct marketing mix” – Philip Kotler

Market segmentation consist of taking the total heterogeneous market for a product and dividing it into several sub markets or segments, each of which tends to be homogeneous in all significant aspects.

SEGMENT: - A Segment/Market Segment is a portion of a larger market in which the individuals, groups or organizations share one or more characteristics that cause them to have relatively similar needs. An identifiable group of individuals, families, businesses or organizations, sharing one or more characteristics or need in an otherwise homogeneous market.

CHARACTERISTICS OF A GOOD SEGMENT:-

There are certain characteristics of a good segment which are as follows:-

(a)     MEASURABLE: - Market segment are usually measured in terms of sales, value of volume (i.e. the number of customers within the segment). Reliable market research should be able to identify the size of a market segment to a reasonable degree of accuracy, so the strategists can then decide whether, how, and to what extent they should focus their efforts on marketing to this segment.

(b)    SUBSTANTIAL: - Simply put, there would be no point in wasting marketing budget on a market segment that is insufficiently large, or has negligible spending power. A viable market segment is usually a homogeneous group with clear defined characteristics such as age group, socio-economic background and brand perception. Longevity is also important here : No market segmentation expert would recommend focusing on an unstable customer group that is likely to disperse or change beyond recognition within a year or two.

(c)    ACCESSIBLE: - When demarcating a market segment, it is important to consider how the group might be accessed and crucially, whether this falls within the strengths and abilities of the company’s marketing department. Different segments might respond better to outdoor advertising, social media campaigns, television infomercials, or any number of other approaches.

(d)   DIFFERENTIABLE: - An ideal market segment should be internally homogeneous (i.e. all the customers within the segment have similar preferences and characteristics), but externally heterogeneous. Differences between market segments should be clearly defined, so that the campaigns, products and marketing tools applied to them can be implemented without overlap.

(e)    ACTIONABLE :-  The market segment must be practical value – its characteristics must provide supporting data for a marketing position or sales approach, and this is in turn must have outcomes that are easily quantified, ideally in relation to the existing measurements of the market segment as defined by initial market research.

A good understanding of these principles of marketing segmentation is an important building block of a company’s marketing strategy – the foundation for an efficient, streamlined and ultimately successful approach to customers and a means of targeting its products and services accurately, with the minimum of wastage.

Q6. Discuss the various basis of Segmentation and explain with suitable examples?

Ans. There are majorly four basis of segmentation which are given below:-

(a)     DEMOGRAPHIC SEGMENTATION: - Demographic Segmentation divides the markets into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality. Demographic factors are the most popular bases for segmenting the consumer group. One reason is that consumer needs, wants and usage rates often vary closely with the demographic variables. Moreover, demographic factors are easier to measure than most other type of variables.

AGE: McDonald’s targets children, teens, adults and seniors with different ads and media. Markets that are commonly segmented by age include clothing, toys, music, automobiles, soaps, shampoos, etc.

GENDER: clothes for men, women and kids. Like Chhabra 555 sales only women ethnic wear.

Cosmetics: different cosmetics for men & women.

Magazines: there are certain magazines which are published for women like women’s era. And etc.

INCOME: income of a person decides the life style and purchasing power of that person. This includes housing, furniture, automobile, clothing, alcoholic beverages, food, sporting goods, luxury goods, financial services and travel.

FAMILY CYCLE: Product needs vary according to age, number of persons in the household, marital status and number & age of children. These variables can be combined into a single variable called family life cycle. It includes social class of a family too. Social class is divided into three categories Upper class, Middle class and Lower class.

(b)    GEOGRAPHIC SEGMENTATION: - It refers to dividing a market into different geographical units such as nations, states, regions, cities or neighborhood.

For example: Newspapers are published and distributed to different cities in different languages to cater the needs of the customers.

Geographical variables such as climate, terrain, natural resources and population density also influence consumer products needs.

Companies may divide markets into regions because the differences in geographic  variables can cause consumers needs and wants to differ from one region to another.

(c)    PSYCHOGRAPHIC SEGMENTATION: - It pertains to life style and personality traits. In the case of certain products, buying behavior predominantly depends upon life style and personality characteristics.

PERSONALITY CHARACTERISTICS: It refers to a person’s individual character traits, attitudes and habits. Here markets are segmented according to competitiveness, introvert, extrovert, ambitious, aggressiveness, etc. this type of segmentation is used when a product is similar to many competing products, and consumer needs for products are not affected by other segmentation variables.

LIFESTYLES: It is the manner in which people live and spend their time and money. Life style analysis provides marketers with a broad view of consumers because it segments the markets into groups on the basis of activities, interests, beliefs and opinions. Companies making cosmetics, alcoholic beverages and furniture’s segment according to the lifestyle.

(d)    BEHAVIOURAL SEGMENTATION: - In this, buyers are divided into groups on the basis of their knowledge of, attitude towards, use of, or response to a product. Behavioral segmentation includes segmentation on the basis of occasions, user status, buyer-readiness stage and attitude.

OCCASION: Buyers can be distinguished according to the occasions when they purchase a product, use a product, or develop a need to use a product. It helps the firm expand the product usage. For example; Cadbury’s advertising to promote the product during wedding season is an example of occasion segmentation.

USER STATUS: sometimes the markets are segmented on the basis of user status, that is, on the basis of non-user, ex-user, potential user, first time user and regular user of the product. Large companies usually target potential users, whereas smaller firms focus on their current users.

USAGE RATE: Markets can be distinguished on the basis of usage rate, that is, on the basis of light, medium and heavy users. Heavy users are often a small percentage of the market, but account for a high percentage of the total consumption. Marketers usually prefer to attract a heavy user rather than several light users, and vary their promotional efforts accordingly.

LOYALTY STATUS: Buyers can be divided on the basis of their loyalty status – hardcore loyal (consumer who buy one brand all the time), split loyal (consumers who are loyal to two or three brands), shifting loyal (consumers who shift from one brand to another), and switchers (consumers who show no loyalty to any brand).

BUYER READINESS STAGE: The six psychological stages through which a person passes when deciding to purchase a product. The six stages are awareness of the product, knowledge of what it does, interest in the product, preference over competing products, conviction of the product’s suitability and purchase. Marketing campaigns exist in large part to move the target audience through the buyer readiness stages.

Q7. What do you mean by Positioning? What are the different strategies adopted by marketer to position its product?

Ans. Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind. The end result of positioning is the successful creation of a market focused value preposition, a cogent reason why the target market should buy the product. Each company must decide how many differences to promote to its target customer. The position of a product is the sum of those attributes normally ascribed to it by the consumers- its standing, its quality, the type of people who use it, its strengths, its weaknesses, any other unusual or memorable characteristics it may possess, its price and the value it represents. Many marketers advocate promoting only one central benefit what Rosser Reeves has referred to as Unique Selling Preposition (USP) number one positioning include “best quality”, “best service”, “lowest price”, “best value”, “safest”, “more advanced technology” etc.

Positioning is a platform for the brand. It facilitates the brand to get through to the target consumer. Positioning is the act of fixing the locus of the product offer in the minds of the target consumers. In positioning, the firm decides how and around what parameters, the product offer has to be placed before the target consumers. The significance of product positioning can be easily understood from David Ogilvy’s words: “the results of your campaign depends less on how we write your advertising than on how your product is positioned”.

Positioning of a product or service is nothing but creating an image in the consumer’s mind. Consumers generally tend to use images while making a purchase; they buy brand images rather than the actual products. There are many brands that have a powerful influence on the consumer’s mind. Just think of Pepsi or Coca Cola in the soft drink market, Maruti and Santro in the passenger car market, LG or Samsung in the television market and so on. Brand names add to the offering and create a “meta product”, an emotional loyalty with consumers. Consumer associate brand names with life styles, social positions, professional roles and these associations combine to form an image or position. The terms “Position” or “Positioning” are frequently used to mean ‘image’. To build up a brand image or corporate image a marketer generally used advertising as a tool.

POSITIONING APPROACHES:

There are several approaches to positioning of products and service offerings:

1.      Positioning by product attributes or customer benefits: This approach to positioning is probably the most common and involves setting the brand apart from competitors based on specific brand attributes or the benefits offered. Many products, such as autos, cameras and other durable product brands offer excellent examples. A product that is well made usually offers more than one benefit. In case of toothpaste, brands are positioned on cosmetics, medicinal, taste or economy dimensions. Some brands are using one, two or even three of the above mentioned dimensions to create dual or triple positioning. Examples: promise is positioned on gum care.

Close-up is positioned on fresh breath and cosmetic benefit. Colgate is positioned on fresh breath, decay prevention and taste.

2.       Positioning by price-quality: This approach justifies various price-quality categories of the products. Manufacturers deliberately attempt to offer more in terms of service, features or performance in case to certain products known as premium products and in return, they charge higher price, to cover higher costs and partly to communicate the fact that they are of higher quality.

3.      Positioning by product-user:  This deals with positioning a product keeping in mind a specific user or class of users. For example, cosmetic brands like lakme position themselves targeting fashion-conscious women.

4.      Positioning by use of application:  The idea behind this approach for positioning is to find an occasion or time of use. For instance, Vicks Vaporub is to be used for a child’s cold at night. Iodex is for sprain and muscle pains, Burnol ointment is for burns and Dettol antiseptic is for nicks and cuts. These brands have used this positioning for decades now without any serious challenge from competitors.

5.      Positioning by corporate category:  This positioning is used so that the brand is perceived as belonging to another product category. This is often a strong positioning strategy when the existing product category is crowded. The consumers then perceive the brand in different context. For example, a milk powder, with suitable additions and appropriate packaging, can be positioned as an ‘energy drink’ for sports people or a health-drink for players or a drink for growing school going children etc.

6.      Positioning by corporate identity:  Companies that become tried and trusted household names, use their names to imply the competitive superiority of  their new brands such as Tata, Sony, etc. Corporate credentials are added as by a by-line. This offers a strong positioning and is used in line extensions or brand extensions.

7.      Positioning by Competitors:  Positioning by competitors may be used because the competitor enjoys a well established image in the market. The marketer wants the consumers to believe that the brand is superior, or at least as good as the brand offered by the competitor. It is like telling the people that you live next to some famous movie personality in Delhi rather than getting involved in explaining the locality and streets.  

Q8. What is New Product? What is the necessity of developing a new product? Explain the process of new product development? Why new product does fails?

Ans. New product: Any offer which is different from the existing one. A new product is manufactured to meet the tastes and preferences of the customers which are changed as the passage of time and to retain the existing customers to be interested in the company’s product so companies time to time provide new products to their customers. Businesses focus on designing the new products and selling these products to customers. The company’s goal with creating new products involves two parts. The first part consists of finding a product that customers purchase produce revenue for the business. The second part consists of beating competitors to market. The first company to offer a product generates the greatest number of repeat customers.

The necessity of developing new product :

New product become necessary for meeting the changes in consumer demands: - Innovation is the essence of all growth. This is especially true in marketing. In an age of scientific and technological advancements, change is a natural outcome – change in food habits, change in social customs, change in expectations and requirements. Any business has to be vigilant to these changes taking place in its environment. People always seek better products, great convenience, newer fashion, and more value for money. A business firm has to respond to these dynamic requirements of its clientele and these responses take the shape of new products and new services. Through such a response, the firm reaps good deal of benefits.

New product become necessary for making new profits: - New product becomes necessary from the profit angle too. Products that are already established often have their limitations in enhancing the profit level of the firm. We sees how profits from products decline as they reach the maturity stage of their life cycle and how the profits vanish, as they glide into the stage of decline. It thus becomes essential for business firms to bring in new products to replace old, declining and losing products. New products become part and parcel of the growth requirements of the firm and in many cases, new profits come to the firm only through new products.

New products become necessary for combating environmental threats: - The need for responding to changes and the need for new profits are not the only factors that persuade business firms to go for new products. There is more compelled need – the need to combat the threats arising from the environment. In fact, on the environment front a firm has to combat economic, social, legal, political and technological threats. These threats make some of their current products highly vulnerable. And to reduce the vulnerability of their business as a whole, they seek out new products. Thus for many firms, new product development becomes an avoidable combat against environmental threats.

Process of New Product Development:

The process of New Product Development consists of certain stages. Each of these stages involves considerable study and analysis at each stage and these stages are as following:

1.      Idea Generation: - the first stage in the process is to generate the idea. And the idea can be generated through brain storming, listing attributes, morphological changes (change in size, packaging, weight, etc.) and forced relationship. New product ideas can also come from market research studies. Research studies on the consumers, products, competition, etc. will reveal market gaps by comparing the existing supply of products with the ideal product conceptions of consumers. But all market gaps cannot lead to commercially viable products. The promising ideas will have to be chosen for framing new products concepts.

2.      Idea Screening: - Normally, a new product oriented organization will have at any time several new product ideas with them. The problem lies in identifying which one are promising ideas. In this stage, the various product ideas are put to rigorous screening by expert product evaluation committees. They seek answers to basic questions, like :

   Is there a felt need for the new product?

   Is it an improvement over an existing product?

   Is it close to our current line of business?

   Or does it take us to a totally new line of business?

   Can the existing marketing organization handle the product?

   Or does it need extra expertise on the production and marketing front?

The more attractive looking ideas pass on to the next stage.

3.      Concept development and testing: - In this stage, they seek how to produce those ideas which they adopted in the previous stage. Then they develop concepts for them. They test those ideas by asking the marketers who are experts in marketing. They graphically design those ideas first to check how their new product will look in reality.

Virtual form of ideas is developed here.

4.      Marketing Strategy Development: -    Plans related with the market is marketing strategy. Here companies seek :

    who will be their target in market? (Which income group will be targeted?)

    When and where to position the product?

    What will be the profit goals?

    What will be the product’s price?

    How this/these product/s will be distributed?

    What will be the budget for promotion?

5.      Business Analysis :- In this stage, companies estimates how much expenses will be incurred in producing this/these product/s. Companies estimates the total cost to be incurred in manufacturing the product, total sales (estimates) And also estimates how much profit can be earned by selling this/these product/s. These estimations are made with the help of research & development, financial analysis and the time to achieve the breakeven point.

6.      Commercialization: - At this stage the company takes the decision to go in for large scale manufacturing and marketing of the product. It passes on to this stage only when the results of all the previous steps are found favourable. It is at this stage that the company commits itself to fully commercialise the new product idea through investment in manufacturing and marketing. The various marketing strategies are employed by the company at this stage when it resorts to commercialization of a new product idea. Today, quite a few progressive firms operate separate new product departments and new product committees to take care of new product development.

New Product Failure: \

New product development is highly expensive, time consuming and risk laden affair. Only those organisations that have the capacity to absorb the shocks arising out of all these factors can really go ahead with the task of new product development. Such organisations invest heavily in research and development and they often have several new product ideas in the queue, each in different stages of formulation. While such firms remain leaders in their chosen markets, with all the attendant advantages of being a leader, the vast majority of the companies prefer to be followers entering with similar products after the pioneer establish his new product. Majority of the firms shy away from the task of new product development for the following reasons:

-          New product suffers from a high attrition rate. Many new product ideas, after years of caring, do not reach the market at all. Considerable time, money and effort is thus wasted.

-          New product suffers from a high rate of market failure. That means that even those product which reach the market after years of preparation and work, often fall miserably in the market.

-          Even in the case of successful new products, success is short lived. Many of them suddenly die out after the initial boom.

Q9. What do you mean by Product Life Cycle ? Explain its different stages with suitable diagram?

Ans.  PLC: A product passes through certain distinct stages during its life. This cycle of stages is called the Product Life Cycle (PLC). The PLC is normally presented as a sales curve spanning the product’s course from introduction to decline, as shown in the figure given below. The utility of the PLC concept lies in the fact that each stage in the product life cycle is characterized by a typical market behaviour and consequently each stage lends itself to the application of a certain specific marketing strategy. Understanding the PLC concept managing it does effectively can help prolong the profitable phases of the life span of the product.

It is the path/course through which a product gets its sales and profit in its life.

It is the path through which a product passes in its whole life.

It is the sales/profit graph of a product.

There are four stages in PLC, these are :

 1. Introduction stage, 2. Growth stage, 3. Maturity stage and 4. Decline stage

                             

·        No certainty

·        It is no easy to recognize on which stage the product is

·        No certain period of stages

·        We can only forecast when the product will start facing further new stage

Characteristics	Introduction	Growth	Maturity	Decline
Sales	Low sales	Rapidly rising sales	Peak sales	Declining sales
Costs	High cost per customer	Average cost per customer	Low cost per customer	Low cost per customer
profits	Negative	Rising profits	High profit	Declining
Customers	Innovators	Early adopters	Later majority	Laggards
Competitors	Few/no/ negligible	growing	Stable number	Decline
Marketing Objectives	Create product awareness and try	Maximize market share	Maximize profit while defending market share	Reduced expenditure and milk the brand
Marketing Mix	Basic product offered	Offer product extension, service, warranty	Diversify brands and models	Phase out waste products
Price	Cost + pricing	Price to penetrate market	Price to match the best competitors	Cut price
Place/ distribution	Selective distribution	intensive	More intensive	Go selective and phase out unprofitable outlets
Advertisement	Product awareness	To build awareness and persuasive in the mass market	For brand differentiation and benefits sought	Reduced level of advertisement to retain loyal customers
Sales promotion	Heavy sales promotion	Reduce to take advantage of heavy consumer demand	Increase to encourage brand switching and to defend own brand	Reduce to  minimum level

Q10. Explain the different strategies adopted by a marketer to increase the sales of its product in different stages of Product Life Cycle?

Ans. Product passes through four stages of its life cycle. Every stage poses different opportunities and challenges to the marketer. Each of stages demands the unique or distinguished set of marketing strategies. A marketer should watch on its sales and market situations to identify the stage in which the product is passing through, and accordingly, he should design appropriate marketing strategies. Here, strategy basically involves four elements – product, price, promotion and distribution.

By appropriate combination of these four elements, the strategy can be formulated for each stages of the PLC. Every stage gives varying importance to these elements of marketing mix. Let us analyze basic strategies used in each of the stages of the PLC, as described by Philip Kotler.

Marketing strategies for Introduction Stage :

Introduction stage is marked with slow growth in sales and a very little or no profit. Note that product has been newly introduced, and a sales volume is limited; product and distribution are not given more emphasis. Basic constituents of marketing strategies for the stage include price and promotion. Price, promotion or both may be kept high or low depending upon market situation and management approach.

Following are the possible strategies during the first stage :

                                                                  promotion

                                            high                                                         low     

Rapid skimming strategy	Slow skimming strategy
Rapid penetration strategy	Slow penetration strategy

high

low
 1. Rapid skimming strategy :- this strategy consists of  introducing a new product at high price and high promotional expenses. The purpose of high price is to recover profit per unit as much as possible. The high promotional expenses are aimed at convincing the market the product merits even at a high price. High promotion accelerates the rate of market penetration, in all; the strategy is preferred to skim the cream (high profits) from market.

This strategy makes a sense in following assumptions:

a.       Major part of the market is not aware of the product.

b.      Customers are ready to pay the asking price.

c.       The possibility of competition and the firm wants to build up the brand preference.

d.      Market is limited in size.

2. Slow skimming strategy: - this strategy involves launching a product at a high price and low promotion. The purpose of high [price is to recover as much as gross profit as possible. And, low promotion keeps marketing expenses low. This combination enables to skim the maximum profit from the market.

            This strategy can be used under following assumptions:

a.       Market is limited in size.

b.      Most of consumers are aware of product.

c.       Consumers are ready to pay high price.

d.      There is less possibility of competition.

3. Rapid penetration: - the strategy consists of launching a product at a low price and high promotion. The purpose is the faster market penetration to get larger market share. Marketer tries to expand market by increasing the number of buyers.

            It is based on following assumptions:

a.       Market is large

b.      Most buyers are price-sensitive. They prefer the low-priced products.

c.       There is strong potential for competition.

d.      Market is much aware of the product. They need to be informed and convinced.

e.        Per unit cost can be reduced due to more production, and possibly more profits at low price.

4. Slow penetration :- the strategy consists of introducing a product with low price and low level promotion. Low price will encourage product acceptance, and low promotion can help realization of more profits, even at low price.

            Assumptions of this strategy:

a.       Market is large.

b.      Market is aware of the product.

c.       Possibility of competition is low.

d.      Buyers are price sensitive or price elastic, and not promotion elastic.

Marketing strategies for growth stage :

This is the stage of rapid market acceptance. The strategies are aimed at sustaining market growth as long as possible. Here, the aim is not to increase awareness, but to get trial of the product. Company tries to enter the new segments. Competitors have entered the market. The company tries to strengthen competitive position in the market. It may forgo maximum current profits to earn still greater profits in the future.

            Several possible strategies for the stage are as under:

a.       Product qualities and features improvement.

b.      Adding new models and improving styling.

c.       Entering new market segments.

d.      Designing, improving and widening distribution network.

e.       Shifting advertising and other promotional efforts from increasing product awareness to product conviction.

f.       Reducing price at the right time to attract price sensitive consumers.

g.      Preventing competitors to enter the market by low price and high promotional efforts.

Marketing strategies for Maturity stage :

In this stage, competitors have entered the market. There is severe fight among them for more market share. The company adopts offensive/aggressive marketing strategies to defeat the competitors.

            Following possible strategies are followed:

1.      To do nothing: - to do nothing can be an effective marketing strategy in the maturity stage. New strategies are not formulated. Company believes it is advisable to do nothing. Earlier or later, the decline in the sales is certain. Marketer tries to conserve money, which can be later on invested in new profitable products. It continues only routine efforts and starts planning for new products.

2.      Market modification: - this strategy is aimed at increasing sales by raising the number of brand users and the usage rate per user. Sales volume is the product (or outcome) of number of users and usage rate per users. So, sales can be increased either by increasing the number of users or by increasing the usage rate per user or by both. Number of users can be increased by variety of ways.

Marketing strategies for Decline stage :

Company formulates various strategies to manage the decline stage. The first important task is to detect the poor products.

 After detecting the poor products, a company should decide whether poor products should be dropped. Some companies formulate a special committee for the task known as product review committee. The committee collects data from internal and external sources and evaluates products. On the basis the report submitted by the committee, suitable decisions are taken.

            Company may follow any of the following strategies :

1.      Continue with the original products :

This strategy is followed with the expectations that competitors will leave the market. Selling and promotional costs are reduced. Many times, a company continues its products only in effective segments and from remaining segments they are dropped. Such products are continued as long as they are profitable.

2.      Continue products with improvements :

Qualities and features are improved to accelerate sales. Products undergo minor changes to attract buyers.

3.      Drop the product :

When it is not possible to continue the products either in original form or with improvement, the company finally decides to drop the products.

Products may be dropped in following ways:

a.       Sell the production and sales to other companies.

b.      Stop production gradually to divert resources to other products.

c.       Drop products immediately.

Q11.  What is Packaging? Explain the objectives of packaging?  State the new trends, new innovation emerging in industry?

Ans. Packaging: it is the technology of enclosing or protecting products for distribution, storage, sale and use. Packaging also refers to the process of designing, evaluating and producing packages. Packaging can be described as a coordination system of preparing goods for transport, warehousing, logistics, sale and end use. Packaging contains, protects, preserves, transports, informs and sells. In many countries it is fully integrated into government, business, and institutional, industrial and personal use.

Objectives of Packaging :

a.       Physical protection: the objects in the package may require protection from, among other things, shock, vibration, compression, temperature, etc.

b.      Barrier protection: a barrier from oxygen, water vapor, dust, etc., is often required. Package permeability is a critical factor in design. Some packages contain desiccants or oxygen absorbers to help extend shelf life. Modified atmospheres or controlled atmospheres are also maintained in some food packages. Keeping the contents clean, fresh and safe for the intended shelf life is a primary function.

c.       Containment or Agglomeration: small objects are typically grouped together in one package for reason of efficiency. For example, a single box of 1000 pencils requires less physical handling than 1000 single pencils. Liquids, powders.

d.      Information transmission: packages and labels communicate how to use, transport, recycle or dispose of the package or product. With pharmaceutical, food, medical and chemical products. Some types of information are required by governments.

e.       Marketing: the packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package design has been an important and constantly evolving phenomenon for dozens of years. Marketing communications and graphic designs are applied to the surface of the package and the point of sale display.

f.       Security: packaging can play an important role in reducing the security risks of shipment. Packages can be made with improved tamper resistance to deter tampering and also can have tamper-evident features to help indicate tampering. Packages can be engineered to help reduce the risks of package pilferage: some package constructions are more resistant to pilferage and some have pilfer indicating seals. Packages may include authentication seals to help indicate that the package and contents are not counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags or electronic article surveillance tags, that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention.

g.      Convenience: packages can have features which add convenience in distribution, handling, display, sale, opening, reclosing, use and reuse.

h.      Portion control: single serving or single dosage packaging has a precise amount of contents to control usage. Bulk commodities (such as salt) can be divided into packages that are a more suitable size for individual households. It is also aids the control of inventory: selling sealed one liter bottles of milk, rather

Q12. Define Price? Discuss the objectives of Pricing ?

Ans. Price: A value that will purchase a finite quantity, weight, or other measure of a good or service. It may be fixed by a contract, left to be determined by an agreed upon formula at a future date, or discovered or negotiated during the course of dealings between the parties involved. In commerce, price is determined by what (1) a buyer is willing to pay, (2) a seller is willing to accept and (3) the competition is allowing to be charged. With product, promotion and place of marketing mix, it is one of the business variables over which organisations can exercise some degree of control. It is a criminal offence to manipulate prices in collusion with other suppliers and to give a misleading indication of price such as charging for items that are reasonably expected to be included in the advertised, list or quoted price. Also called sale price or selling price.

Objectives of Pricing :

A firm seeks to meet a number of objectives through pricing. Profit, optimum or maximum, long term or current, cannot be the only objective of pricing. A multiplicity or mix of objectives is inevitably involved in pricing. Each firm seeks to meet a community of interests through its price policy. The interest may be vary from firm to firm. Accordingly, pricing policy may also vary. But no firm can remain satisfied with a single objective in pricing. The various objectives sought to be realized through pricing are listed below:

·         Profit maximization in the short term

·         Profit maximization in the long term

·         A minimum return ( or target return) on investment

·         A minimum return on sales turnover

·         Target sales volume

·         Target market share

·         Deeper penetration of the market

·         Entering new markets

·         Target profit on the entire product line irrespective of profit level in individual products

·         Keeping competition out, or keeping it under check

·         Keeping parity with competition

·         Fast turn around and early cash recovery

·         Stabilising prices and margins in the market

·         Providing commodities at prices affordable by weaker sections

·         Providing commodities/services at prices that will stimulate economic development

Of the basket of objectives different permutations apply to different firms :

Obviously, all the objectives of pricing mentioned above may not be relevant in all the cases. For example, the last two objectives in the list are relevant only to public utility services, infrastructure items and essential commodities distributed through the public distributed system. As regards the vast majority of products and services that are produced and marketed by commercial firms, these considerations enter the pricing decisions only in a subdued manner; their pricing cannot be principally based on societal consideration.

Q13. Describe various methods and strategies of Pricing?

Ans. The two methods of pricing are as follows:

A.    COST ORIENTED METHOD       B. MARKET ORIENTED METHOD

There are several methods of pricing products in the market. While selecting the method of fixing prices, a marketer must consider the factors affecting pricing. The pricing methods can be broadly divided into two groups – cost oriented method and market oriented method.

A.    Cost-Oriented Method :

Because cost provides the base for a possible price range, some firms may consider cost-oriented methods to fix the price.

Cost – oriented methods or pricing are as follows :

1.      Cost plus pricing :

It involves adding a certain percentage to cost in order to fix the price. For instance, if the cost of a product is Rs.200 per unit and the marketer expects 10% profit on costs, then  the selling price will be Rs.220. the difference between the selling price and the cost is the profit. This method is simpler as marketers can easily determine the costs and add a certain percentage to arrive at the selling price.

2.       Mark-up pricing :

Mark up pricing is a variation of cost pricing. In this case, mark-ups are calculated as a percentage of the selling price and not as a percentage of the cost price. Firms that use cost-oriented methods use mark-up pricing.

Since only the cost and the desired percentage markup on the selling price are known, the following formula is used to determine the selling price:

Average unit cost/selling price

3.      Break –even pricing :

In this case, the firm determines the level of sales needed to cover all the relevant fixed and variable costs. The break-even price is the price at which the sales revenue is equal to the cost of goods sold. In other words, there is neither profit nor loss.

For instance, if the fixed cost is Rs. 2,00,000; the variable cost per unit is Rs.10, and the selling price is Rs.15, then the firm needes to sell 40,000 units to break-even. Therefore, the firm will plan to sell more than 40,000 units to make a profit. If the firm is not in a position to sell 40,000 limits, then it has to increase the selling price.

The following formula is used to calculate the break-even point :

Contribution = selling price – variable cost per unit

4.      Target return pricing :

In this case, the firm sets prices in order to achieve a particular level of return on investment (ROI)

The target return price can be calculated by the following formula :

 Target return price = total costs + ( desired ROI investment)/total sales in units

For instance, if the total investment is Rs. 10,000; the desired ROI is 20%, the total cost is Rs.5,000 and the total sales expected are 1,000 units, then the target return price will be Rs.7/ unit as shown below :

5,000 + (20% * 10,000)/7000

Target return price = 7

The limitation of this method (like other cost- oriented methods) is that prices are derived from costs without considering market factors such as competition, demand and consumers’ perceived value. However, this method helps to enusre that prices exceed all costs and therefore contribute to profit.

5.      Early cash recovery pricing :

Some firms may fix a price to realize early recovery of investment involved, when market forecasts suggest that the life of the market is likely to be short, such as in the case of fashion-related profucts or technology-sensitive products.

Such pricing can also be used when a firm anticipates that a large firm may enter the market in the near future with its lower prices, forcing existing firms to exit. In such situations, firms may fix a price level, which would maximize short term revenues and reduce the firm’s medium term risk.

B.     Market- oriented methods :

1.      Perceived value pricing :

A good number of firms fix the price of their goods and services on the basis of customer’s perceived value. They consider customer’s perceived value as the primary factor for fixing prices and the firm’s costs as the secondary.

The customer’s perception can be influenced by several factors, such as advertising, sales on techniques, effective sales force and after sale service staff. If customers perceive a higher value, then the price fixed will be high and vice versa. Market research is needed to establish the customer’s perceived value as a guide to effective pricing.

2.      Going-rate pricing :

In this case, the benchmark for setting prices is the price set by major competitors. If a major competitor change its price, then the smaller firms may also change their price, irrespective of their costs or demand.

The going-rate pricing can be further divided into three sub-methods :

a.      Competitor’s parity method : A firm may set the same price as that of the major competitors.

b.      Premium pricing :  A firm may charge a little higher if its products have some additional special features as compared to major competitors.

c.       Discount pricing : A firm may charge a little lower price if its products lack certain features as compared to major competitors. The going-rate method is very popular because it tends to reduce the livelihood of price wars emerging in the market. It also reflects the industry’s coactive wisdom relating to the price that would generate a fair return.

3.      Sealed-bid pricing :

This pricing is adopted in the case of large orders or contracts, especially those of industrial buyers or government departments. The firms submit sealed bids fo jobs in response to an advertisement.

In this case, the buyer expects the lowest possible price and the seller is expected to provide the best possible quotation or tender. If a firm wants to win a contract, then it has to submit a lower price bid. For this purpose, the firm has to anticipate the pricing policy of the competitors and decide the price offer.

4.      Differentiated pricing :

Firms may charge different prices for the same product or service.

The following are some the types of differentiated pricing:

a.      Customer segment pricing :

Here different customer groups are charged different prices for the same product or service depending on the size of the order, payment terms and so on.

b.      Time pricing :

Here different prices are charged for the same product  or service at different timings or season. It includes off-peak pricing, where low prices are charged during low demand timings or season.

c.       Area pricing :

Here different prices are charged for the same product in different market areas. For instance, a firm may charge a lower price in a new market to attract customers.

d.      Product form pricing :

Here different versions of the product are priced differently but not proportionately to their respective costs. For instance, soft drinks of 200, 300, 500ml, etc., are priced according to this strategy.

Q 14. What do you mean by Distribution Channel? What are the different types of Distribution Channel? Explain each with suitable examples?

Ans. Distribution Channel: The path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor. A distribution channel can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers, distributors, agents and retailers. Each intermediary receives the item at one pricing point and movies it to the next higher pricing point until it reaches the final buyer. Coffee does not reach the consumer before first going through a channel involving the farmer, exporter, importer, distributor and the retailer.

A distribution channel is the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. A distribution channel can include wholesalers, retailers, distributors and even the internet. Channels are broken into direct and indirect forms, with a "direct" channel allowing the consumer to buy the good from the manufacturer and an "indirect" channel allowing the consumer to buy the good from a wholesaler. Direct channels are considered "shorter" than "indirect" ones.

Types of Distribution Channel : Distribution channels are the ways that goods and services are made available for use by the consumers. All goods go through channels of distribution, and your marketing will depend on the way your goods are distributed. The route that the product takes on its way from production to the consumer is important because a marketer must decide which route or channel is best for his particular product.

1.      Manufacturer to Customer :

Manufacturer makes the goods and sells them to the consumer directly with no intermediary, such as a wholesaler, agent or retailer. Goods come from the manufacturer to the user without an intermediary. For example, a farmer may sell some produce directly to customers. For example, a bakery may sell cakes and pies directly to customers. It is also known as direct distribution.

2.      Manufacturer to Retailer to Consumer :

Purchases are made by the retailer from the manufacturer and then the retailer sells the merchandise to the consumer. This channel is used by manufacturers that specialize in producing shopping goods. For example, clothes, shoes, furniture and fine china. This merchandise may not be needed immediately and the consumer may take her time and try on the items before making a buying decision. Manufacturers that specialize in producing shopping goods prefer this method of distribution.

3.      Manufacturer to Wholesaler to Customer :

Consumers can buy directly from the wholesaler. The wholesaler breaks down bulk packages for resale to the consumer. The wholesaler reduces some of the cost to the consumer such as service cost or sales force cost, which makes the purchase price cheaper for the consumer. For example, shopping at some of the warehouse clubs, the customer may have to buy a membership in order to buy directly from the wholesaler.

4.      Manufacturer to Agent to Wholesaler to Retailer to Customer :

Distribution that involves more than one intermediary involves an agent called in to be the middleman and assist with the sale of the goods. An agent receives a commission from the producer. Agents are useful when goods need to move quickly into the market soon after the order is placed. For example, a fishery makes a large catch of seafood; since fish is perishable it must be disposed of quickly. It is time consuming for the fishery to contact many wholesalers all over the country so he contacts an agent. The agent distributes the fish to the wholesalers. The wholesalers sell to retailers and then retailers sell to consumers.

Q 15. What factors should be considered while selecting a Distribution Channel?

Ans. Some of the factors to consider while selecting channels of distribution are as follows:

1.      Product: Perishable goods need speedy movement and shorter route of distribution. For durable and standardized goods, longer and diversified channel may be necessary. Whereas, for custom made product, direct distribution to consumer or industrial user may be desirable.

Also, for technical product requiring specialized selling and serving talent, we have the shortest channel. Products of high unit value are sold directly by travelling sales force and not through middlemen.

2.      Market:

(a) For consumer market, retailer is essential whereas in business market we can eliminate retailing.

(b) For large market size, we have many channels, whereas, for small market size direct selling may be profitable.

(c) For highly concentrated market, direct selling is preferred whereas for widely scattered and diffused markets, we have many channels of distribution.

(d) Size and average frequency of customer’s orders also influence the channel decision. In the sale of food products, we need both wholesaler and retailer.

Customer and dealer analysis will provide information on the number, type, location, buying habits of consumers and dealers in this case can also influence the choice of channels. For example, desire for credit, demand for personal service, amount and time and efforts a customer is willing to spend-are all important factors in channels choice.

3.       Middlemen:

(a) Middlemen who can provide wanted marketing services will be given first preference.

(b) The middlemen who can offer maximum co-operation in promotional services are also preferred.

(c) The channel generating the largest sales volume at lower unit cost is given top priority.

4.      Company:

(a) The company’s size determines the size of the market, the size of its larger accounts and its ability to set middlemen’s co-operation. A large company may have shorter channel.

(b) The company’s product-mix influences the pattern of channels. The broader the product- line, the shorter will be the channel.

If the product-mix has greater specialization, the company can favor selective or exclusive dealership.

(c) A company with substantial financial resources may not rely on middlemen and can afford to reduce the levels of distribution. A financially weak company has to depend on middlemen.

(d) New companies rely heavily on middlemen due to lack of experience.

(e) A company desiring to exercise greater control over channel will prefer a shorter channel as it will facilitate better co-ordination, communication and control.

(f) Heavy advertising and sale promotion can motivate middlemen in the promotional campaign. In such cases, a longer chain of distribution is profitable.

Thus, quantity and quality of marketing services provided by the company can influence the channel choice directly.

5.      Marketing Environment:

During recession or depression, shorter and cheaper channel is preferred. During prosperity, we have a wider choice of channel alternatives. The distribution of perishable goods even in distant markets becomes a reality due to cold storage facilities in transport and warehousing. Hence, this leads to expanded role of intermediaries in the distribution of perishable goods.

6.      Competitors:

Marketers closely watch the channels used by rivals. Many a time, similar channels may be desirables to bring about distribution of a company’s products. Sometimes, marketers deliberately avoid channels used by competitors. For example, company may by-pass retail store channel (used by rivals) and adopt door-to-door sales (where there is no competition).

7.      Customer Characteristics:

This refers to geographical distribution, frequency of purchase, average quantity of purchase and numbers of prospective customers.

8.      Channel Compensation:

This involves cost-benefit analysis. Major elements of distribution cost apart from channel compensation are transportation, warehousing, storage insurance, material handling distribution personnel’s compensation and interest on inventory carried at different selling points. Distribution Cost Analysis is a fast growing and perhaps the most rewarding area in marketing cost analysis and control

Q 16. What do you mean by Promotion Mix?  Explain the objective of promotion mix. Discuss the various elements of Promotion Mix?

Ans.  A specific combination of promotional methods used for one product or a family of products. Elements of a promotion mix may include print or broadcast advertising, direct marketing, personal selling, point of sale displays, and/or merchandising. 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 brings 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.

Elements of Promotion Mix :There are four elements of promotion mix:

Advertising: Advertising is a non-personal presentation of goods, services or idea. In advertising existing and prospective customers are communicated the message through impersonal media like radio, T.V., newspapers and magazine. It involves transmission of standard message simultaneously to a large number of people. The message transmitted is known as advertising.

Personal Selling : Personal selling is the process of assisting and persuading the existing and prospective buyer to buy the goods or services in person. It involves direct and personal contact of the seller or his representative with the buyer.

Publicity : Publicity is a non-personal non-paid stimulation of demand of the product or services or business unit by planning commercially significant news about the services or business unit by planning commercially significant news about in the print media or by obtaining a favorable presentation of it upon radio, television or stage.

Sales promotion: Sales promotion consists of all activities other than advertising, personal selling and publicity, which help in promoting sales of the product. Such activities are non-repetitive and one time offers. According to American Marketing Association, sales promotion include, “those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as point of purchase displays, shows and exhibitions, demonstrations and various non-recurring selling efforts not in the ordinary routine.”

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.

Q 17. Differentiate between Advertising and Publicity. Discuss the role of advertising in promoting goods and services of a company?

Ans. Publicity and advertising both are popular techniques used for market promotion. The key difference between the terms has been discussed below;

Publicity:

1. It is not a paid form of communication.

2. Mostly, publicity can be carried via newspapers, magazines, radio or television.

3. Company has no control over publicity in terms of message, time, frequency, and medium.

4. It is undertaken for a wide variety of purposes. They may include promotion of new product, pollution control efforts, highlighting special achievement of employees, publicizing new policies, or increasing the sales.

5. It may not be repeated. It takes place only once.

6. It has a high degree of credibility or reliability as it comes from mass media independently.

7. It is in forms of news or reports presented differently than propaganda.

8. Publicity can be done at a much lower cost than advertising.

9. It is not given by company or producer. It is given by the third party whose opinion carries more reliability.

10. Publicity message is more likely to be read and reacted by audience.

11. It is useful for society. It has social significance.

Advertising:

1. It is paid by the sponsor who wants to advertise the product.

2. A large number of media are used. Based on various factors like cost, type of message, reliability, etc., media are selected.

3. Company has a complete control over advertising. Company can design its advertising as per its needs.

4. Sales expansion and promotion of a new product are immediate and direct objectives of advertising.

5. Its frequency or repetition depends on company’s need. It can be repeated if company wants.

6. Advertising has less credibility. It is considered as company’s efforts to increase sales.

7. It is in forms of propaganda and it is presented more artificially and attractive manner as per producer’s plan.

8. Advertising is the most expensive promotional tool.

9. It is always sponsored by company or its representatives.

10. Most of the advertising messages are not given more attention.

11. It is exclusively useful for company and its dealers. To some extent, it may be useful to customers.

Role of Advertising in Promoting goods/services of a company :

The promotional mix is the blend of methods used by a company to deliver company, brand and product messages to target customers. Advertising, public relations, direct marketing and selling are common components of a complete promotional mix. Advertising is generally one of the most important promotion methods and the one with the largest budget.

Control

One of the strongest distinctions between advertising and other forms of promotion is that you pay for ad messages, buying time or space on a particular medium. Paying for placement gives you greater control over the design, timing and location of your message. In public relations, you can have some influence, but media reporters can write negative stories just as easily as they can positive ones.

Brand Management

Much of advertising centers on the development and maintenance of a brand image. Building a brand image is an important first step for a successful business. Your messages convey what makes your company, products or service distinct from competitors. However, some brand messages are more intangible, emphasizing qualities such as luxury, sophistication, class, social belonging, relaxation and fun.

Create Value Proposition

Your value proposition is the mix of product or service benefits and price that you offer a particular target customer group. You can base your value on top quality, elite service, organic materials or ingredients, environmentally-responsible behavior, low price or unique designs. Since you control ad messages, you have a greater ability to set out for customers why your brand has superior value. PR includes dealing with negative issues and sales doesn't allow for preplanned message strategies and development.

Passive Communication

Unlike direct marketing and selling, advertising is a one-way, passive form of promotion. You deliver a commercial or print ad and must research or watch business results to find out whether the message affected customers. For this reason, much of advertising is intended to promote brand recall or to persuade customers to buy. If your business sells complex or expensive goods, you often need sales staff at the point-of-sale to interact with customers and overcome their concerns or objections.

Q18. Explain the process of Personal Selling?

Ans. There are six stages in the process of Personal Selling which are as following below :

 1. Prospecting:

Searching for prospects is prospecting. Here, prospect is a person or an institution who is likely to be benefited by the product the salesman wants to sell and can afford to buy it.

Prospecting is the work of collecting the names and addresses or persons who are likely to buy the firm’s products and services. Provide encompasses even the discovery of special needs and multiplying the sales with existing clientele.

While collecting the details, ‘suspects’ must be separated from ‘prospects’ to avoid or reduce waste of time, treasure and talent. There are definite methods of prospecting.

The most popular ones are:

1. Endless chain method,

2. Centre of influence method,

3. Personal observation method,

4. Spotter’s method,

5. Cold-canvas method;

6. Direct mail and

7. Telephone method.

2. Pre-approach:

Pre-approach is to get more detailed facts about a specific individual to have effective sales appeals on him or her. It is a record round effort to get details regarding the prospect such as his ability, need, authority, accessibility to buy; it is a closer look of prospects, likes and dislikes, tastes, habits, financial status, social esteem, material status, family background and the like.

The objectives of pre-approach are to providing additional qualifying information; to design an effective approach strategy; to better the planning information; to avoid serious errors and to build-up confidence.

The sources of information are his fellow salesmen, customers, local newspapers, special investigators, sales office, directories, observation and the prospect.

3. Approach:

Approach means the meeting of the prospect in person by the salesman where he makes face to face contact with prospects to understand them better. Approach is such a delicate and critical stage of the sales process that the sales are either won or lost.

Approach is stepping stone for sales presentation. It is because of this delicacy that sales are likened to a chain where break of one link will break it into useless lump of hooks.

Success follows the salesman who possesses courage, courtesy and confidence. The objectives of approach are: To help the salesman to make a favourable impression; to amplify the detailed information obtained by the salesman at pre-approach level; to convert the favourable attention of the prospect easily and smoothly into the sales proposition.

4. Presentation and demonstration:

Presentation implies an array and decoration of articles in the shop. It is the heart of selling process. Effective presentation has the capacity to convince the customer of his sales proposition. It creates and holds the interest of customers towards the products. It would be wrong to assume that all those who enter the shop do buy the products.

Normally, most of the prospects visit the shop to see prior to their decision to buy. This casual visit can be a commitment visit provided products are displayed, presented and demonstrated by the salesmen in an appealing manner. Demonstration is a part of presentation because, more description is not enough.

Demonstration is the crucial task of providing the proofs and providing the statements about quality, utility, performance and service of a product by evidences of experiment, operation or a test.

The significance of demonstration lies in reducing the sales talk, facilitating the comparison, appealing to senses, fortifying the sales talks and convincing the fastidious customers. Here, A-I-D-A approach works wonders.

5. Overcoming objections:

For a creative and persuasive salesman, the process of selling really starts when the prospect raises objections. In absence of sales resistance the salesman is merely an order booking clerk. For every action of salesman there is prospect’s pro-action or reaction that is, approval or disapproval.

Each salesman should understand the reasons as to why prospects raise objections because; each objection has its roots in the buying decision. An objection is the expression of disapproval of an action taken by salesman; it is an adverse reason or an argument indicating clearly that the prospect is not yet ready to buy.

These objections may be genuine or mere excuses. Overcoming objections is really a delicate stage that makes or mars the unbroken chain of selling process.

Being a very crucial aspect, the experts have a set procedure for overcoming the objections namely, listen to the prospect cushion the jolt anticipate the objections and prevent their occurrence. It is the creative task of bringing the customer to the sales track once again.

6. Closing:

All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation and handling the objections have been designed to induce the prospect to make decision to buy so that a sale can be concluded.

The success in earlier stages will lead to the last stage of closing the sale and clinch the deal. Here, ‘close’ means the act of actually getting the prospect’s assent to the sales proposal or he gets an order.

The underlying point of closing sale is to persuade the prospect to act right now than postponing or delaying the action. It is here that the prospect is turned into a customer desire into demand.

Though it sounds very easy, it is the most difficult task. It is the positive attitude and self-confidence that plays a decisive role in converting wish into desire and desire into demand. A poor closer is a poor salesman and salesman who cannot close well will have to close the line.