Saturday, November 30, 2019

B.Com 5th Sem: Principles of Marketing Solved Papers' 2014


2014 (November)
COMMERCE (General)
Course: 504
(Principles of Marketing)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. Answer as directed:                                   1x8=8
(a)    Mention one of the branches of marketing management.
Ans: Customers service
(b)   Mention one difference between macro-marketing and micromarketing.
Ans: Macro marketing examines the social effect of marketing, as well as the flow of products and services into an economy whereas micro marketing refers to specific marketing activities and campaigns.
(c)    Marketing begins and ends with the consumers. (Fill in the blank)

(d)   Write one of differences between ‘marketing’ and ‘selling’.
Ans: Marketing starts and ends with the consumer whereas selling starts and ends with the seller.
(e)   What type of relationship exists between a customer and a retailer? (Choose the correct one)
a.       Direct
b.      Indirect
c.       None of the above
 (f)     State one of the disadvantages of market segmentation.
Ans: Increase in promotion and distribution expenditure
(g)    Registration of Trade Mark is compulsory. (Write True or False)
Ans: False, but it is advisable to register trade mark
(h)   All publicity is advertising. (Write True or False)         false
2. Write short notes on:                                4x4=16
a) Marketing environment: A variety of environmental forces influence a company’s marketing system. Some of them are controllable while some others are uncontrollable. It is the responsibility of the marketing manager to change the company’s policies along with the changing environment.
According to Philip Kotler, “A company’s marketing environment consists of the internal factors & forces, which affect the company’s ability to develop & maintain successful transactions & relationships with the company’s target customers”.
The Environmental Factors may be classified as:
1.       Internal Factor
2.       External Factor
External Factors may be further classified into:
a)      External Micro Factors &
b)      External Macro Factors
b) 4 P’s of marketing mix: Principle Ingredients of Marketing Mix (Four P’s) and their importance
Successful businessmen know the importance of marketing mix because they cannot design and promote their products without marketing mix.  It is a mixture of 4 P’s of marketing mix such as product, place, price and promotion. 4 P’s Of Marketing Mix:
1. Product: Product is one of important part of marketing mix because it reflects the good or bad reputation of any organization.  The products represent any business efficiently.  Successful organizations always search out the buying habits of their customers and designed their products based on those buying habits in order to meet the customer’s requirements. They also design their products based on important factors such as purchasing power and geographical locations etc.  They try to design products which are affordable for customers.  Companies always design their products according to customer’s budget and affordability.
They do not compromise on their product quality.  Some companies maintain their quality and do not compromise on price but there are some companies which produce products according to the affordability of customers. Marketers communicate with their customers directly and convince them to buy their products.
2. Price: It is the worth of product on which customers are agreed to buy the products.  Price of the product should be according to the range of regular customers.  Prices are fluctuating according to seasonal requirements. Marketers always try to satisfy their clients at any cost.  If employees of the company are satisfied with their job and performance rewards, they can become an effective asset of any organization.
3. Place: Products always design based on geographical place because customers buy products according to their traditions and seasons.  Companies which are going to spread their business networks throughout the world must visit the place where they want to open their branches. They need to study the traditions and seasonal changes of the country where they want to initialize their products.
4. Promotion: Promotion activities involve marketing and advertising.  Promotional activities are used to create awareness about the products.  Customers know about products and their specification through social marketing media. Companies adopt social marketing media in order to create awareness about their products and services.  Promotional activities and techniques are important if companies initialize new products or make some changes in product’s specifications. Promotional activities include advertising, selling, public relations and sales promotions.  Advertising is a paid form of promotion that grabs the attention of customers through channels or TV. It also involves relationships between customers and companies.  Marketers should design products that meet customers’ needs and demands.
c) Importance of branding: A brand is define as a name, term, sign, symbol or special design or some combinations of these elements that is intended to identify the goods or services of one seller or a group of sellers. A brand differentiates these products from those of competitors. A brand in short is an identifier of the seller or the maker. A brand name consists of words, letters and / or numbers that can be vocalized. A brand mark is the visual representation of the brand like a symbol, design, distinctive colouring or lettering. Some of the importances of good brand name are stated below:
1. Creates customer’s preference: Similar products and services of various companies are available in the market which creates confusion amongst the customer’s mind. Branding helps to attract the customer. It induces customer’s preference towards a product or service.
2. More revenue: Branding helps the companies to increase their market share due to which their revenues also increases. Also, a company with good brand name charges higher price as compare to other competitors.
3. Helps to survive during recession: During recession a company with good brand name can easily survive which is not possible for a new or general company.
4. Increase in employee’s efficiency: When the brand of company is well known, people also want to work with that company. Highly qualified and skillful candidates always prefer to work with the establishment having good brand name.
5. Attracting new distributor: A company with good brand name can easily attract local and global distributor. Every distributor wants to work with good brand because it increases their revenue.
d) Warehouse: It is a place for the storage and preservation of goods in proper condition. It is an establishment for the accumulation of goods for future use. It implies holding or preservation of goods from time of their production or purchase until their consumption or sale. The warehousing service plays an important role in supply and distribution of goods after their manufacture.
Need and importance of warehouses:
a)      To store excess production in anticipation of demand 
b)      To store goods those are produced seasonally 
c)       To store goods those have seasonal demand
d)      Stability in prices
e)      Storage of raw materials 
f)       Basis of Trade 
g)      Processing, curing and packaging of goods.
Types of warehouses: (1) Government warehouses (2) Private warehouses  (3) Public warehouses  (4) Cooperative warehouse  (5) Bonded warehouse (6) Excise Bonded warehouse  (7) Custom Bonded warehouse
3. (a) Discuss the nature and scope of marketing.
Ans: Marketing
Marketing is an ancient art and is found everywhere. Formally or informally, people and organizations engage in a vast numbers of activities relating to exchange of goods and services that could be called marketing. Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others. Marketing deals with identifying and meeting human and social needs or it can be defined as “meeting needs profitably”.
In the words of Philip Kotler, “Marketing is human activity directed at satisfying needs and want through exchange process.”
The American Marketing Association has defined marketing as “an organizational function and a set of processes for creating, communicating and delivering value to the customers and for managing customer’s relations in ways that benefit the organization and the stake holders.”
Peter Drucker says it this way that,” the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. All that should be needed is to make the product or the service available.”
From the above discussion, we can say that marketing is the process of exchange of goods and services and includes all those activities which helps in exchange of goods and services.
Nature of marketing
Buyer and seller affect the demand for products in aggregate areas, market includes both the place and region which buyers and sellers are in a free inter course with another.
1) Marketing is a customer focus: Market intense to satisfy and delight the customer, the activities of marketing must be directed and focused at the customer marketers can remain in customers mind. As they are provided value for what they spend.
2) Marketing must deliver value: Marketer has to track customer needs and deliver the product as per their requirement. The co operate storage must be aimed at delivering greater customer value than competitors.
3) Marketing is business: When a customer is the focus of all activities the marketer has not to search customer to see response to his product. Customer group is decided from whom the product is prepared and presented.
4) Marketing is surrounded by customer need: Marketing starts with identification of customer needs and requirements’. These are termed into probable features that might satisfy the basic needs
5) Marketing is a part of total environment: Total environment mainly defined as the combination of all resources and institutions which are directly related to the production, distribution of goods, services, ideas, places and persons for satisfaction of human needs.
6) Marketing systems effect companies strategies: Marketing has its own sub-systems which interact with each other to turn complete marketing system that is responsible to company’s marketing strategy.
7) Marketing has a discipline: The sub of marketing has emerged out of business which has derived its existence from economic. These are different disciplines of marketing such as consumer behavior, legal aspects marketing research, advertising media, pricing, promotion method etc.
8) Marketing creates mutual beneficial relationship: As the customer is the focus of all marketing activities. The strategies of marketing have been shifting to different ways. Marketing is there for everything that results in mutual benefit of the customer.
9) Universal function: Marketing has a universal function in the sense that it can be applied to both profit motive and non-profit motive organization.
Scope of Marketing
The scope of marketing really is related to the old and new concept of ‘marketing’. Formerly the scope of marketing used to remain very much limited since the wants of the consumers too were quite limited. The competition was almost equivalent to nil. In the marketing, the satisfaction of the consumers was not at all con­sidered. The marketing was commodity based and immediately after the sale of the products, the marketing process was over. Nowa­days, the scope of marketing has become quite extensive, and the satisfaction of the customers too is kept in view. The process of marketing continues even after the sales have been affected. Today, the function of confirming the product, in accordance with the changing wants, habits and fashions of people, is undertaken by the process of marketing. Within the scope of marketing, -the following activities are covered:
1)      Study of Consumer Wants and Needs: Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants. These needs and wants motivates consumer to purchase.
2)      Study of Consumer behaviour: Marketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market segmentation and targeting.
3)      Production planning and development: Product planning and development starts with the generation of product idea and ends with the product development and commercialisation. Product planning includes everything from branding and packaging to product line expansion and contraction.
4)      Pricing Policies: Marketer has to determine pricing policies for their products. Pricing policies differs form product to product. It depends on the level of competition, product life cycle, marketing goals and objectives, etc.
5)      Distribution: Study of distribution channel is important in marketing. For maximum sales and profit goods are required to be distributed to the maximum consumers at minimum cost.
6)      Promotion: Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in accomplishment of marketing goals.
7)      Consumer Satisfaction: The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.
8)      Marketing Control: Marketing audit is done to control the marketing activities.
Or
(b) Distinguish between the traditional and modern concepts of marketing.                11
Ans: Traditional and Modern Concept of Marketing
Traditional concept of marketing
According to this concept, marketing consists of those activities which are concerned with the transfer of ownership of goods from producers to consumers. Thus, marketing means selling of goods and services. In other words, it is the process by which goods are made available to ultimate consumers from their place of origin. The traditional concept of marketing corresponds to the general notion of marketing, which means selling goods and services after they have been produced. The emphasis of marketing is on sale of goods and services. Consumer satisfaction is not given adequate emphasis. Viewed in this way, marketing is regarded as production/sales oriented.
Modern concept of marketing
According to the modern concept, marketing is concerned with creation of customers. Creation of customers means identification of consumer needs and organising business to satisfy these needs. Marketing in the modern sense involves decisions regarding the following matters:
1. Products to be produced
2. Prices to be charged from customers
3. Promotional techniques to be adopted to contact and influence existing and potential customers.
4. Selection of middlemen to be used to distribute goods and services.
Modern concept of marketing requires all the above decisions to be taken after due consideration of consumer needs and their satisfaction. The business objective of earning profit is sought to be achieved through provision of consumer satisfaction. This concept of marketing is regarded as consumer oriented as the emphasis of business is laid on consumer needs and their satisfaction.
From the above discussion, the following differences between these two concepts are drawn:
S. No.
Traditional Concept
Modern Concept
1.
Traditional marketing emphasis on selling and more profit. 
While, modern marketing emphasis on profit as well as consumer satisfaction.
2.
Traditional marketing is start from production and end with sell. 
But in modern marketing it includes planning, product, price, promotion, place and after sell services.
3.
In traditional marketing the manufacturer sell only those products which he produce and not focused on consumer preference. 
But in modern marketing manufacturer analyse the consumer demand then produce.
4.
Traditional marketing concentrate on favourable products.
But modern marketing concentrate on customer needs wants and satisfaction.

4. (a) What do you mean by consumer’s behavior? Explain its significance in marketing. 4+7=11
Ans: Consumer Behaviour: Behaviour is a mirror in which everyone shows his or her image. Behaviour is the process of responding to a thing or event. Consumer behavior is to do with the activities of individual in obtaining and using the good and services. The term consumer behaviour is defined as the behaviour that consumer display in searching for, purchasing using, evaluating and disposing of products and services that they expect will satisfy their needs.
In the words of Kotler, ”Consumer   behaviour   is   the   study   of   how   people   buy,   what they buy, when they buy and why they buy.”
In the words of Solomon,” Consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires”
In the words of Professor Bearden and Associates, ”Consumer behaviour is the mental and emotional process and the physical activities of people who purchase and use goods and services to satisfy needs and wants.”
Importance of Consumer Behaviour
The consumer is the focus of marketing efforts. The modern concept spells out the real significance of buyer’s Behaviour. The modern marketing management tries to solve the basic problems of consumers in the area of consumption. To survive in the market, a firm has to be constantly innovating and understand the latest consumer needs and tastes. It will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers. It is important for the marketers to understand the buyer behaviour due to the following reasons.
1)      Better Consumer: The study of consumer behaviour enables us to become a better consumer. It will help consumer to take more precise consumption related decisions.
2)      Studying the need of consumers: It helps marketers to understand consumer buying behaviour and make better marketing decisions.
3)      Market Prediction: The size of the consumer market is constantly expanding and their preferences were also changing and becoming highly diversified. So without studying it, marketers cannot predict the future of their business. 
4)      Economic Stability: It is significant for regulating consumption of goods and thereby maintaining economic stability.
5)      Efficient utilisation of resources: It is useful in developing ways for the more efficient utilisation of resources of marketing. It also helps in solving marketing management problems in more effective manner.
6)      Studying consumer’s mood: Today consumers give more importance on environment friendly products. They are concerned about health, hygiene and fitness. They prefer natural products. Hence detailed study on upcoming groups of consumers is essential for any firm.
7)      Consumer Protection: The growth of consumer protection movement has created an urgent need to understand how consumers make their consumption and buying decision.
8)      Studying Consumer’s preference: Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives information regarding colour, design, size etc. which consumers want. In short, consumer behaviour helps in formulating of production policy.
9)      Market segmentation: For effective market segmentation and target marketing, it is essential to have an understanding of consumers and their behaviour. 
10)   Marketing research: Marketing managers regarded consumer behaviour discipline as an applied marketing science, if they could predict consumer behaviour, they could influence it. This approach has come to be known as positivism and the consumer researcher who are primarily concerned with predicting consumer behaviour are known as positivists.
11)   As the marketing research began to study the buying behaviour of consumers, they soon realized that many consumers rebelled at using the identical products everyone else used, for example in case of purchase of house, interiors, car, and dress material etc. people prefers unique products. Consumer preferred differential products that they felt reflected their own special needs, personalities and lifestyles.
Or
(b) Discuss the bases for market segmentation.
Ans: A market consists of large number of individual customers who differ in terms of their needs, preferences and buying capacity. Therefore, it becomes necessary to divide the total market into different segments or homogeneous customer groups. Such division is called market segmentation. They may have uniformity in employment patterns, educational qualifications, economic status, preferences, etc. Market segmentation enables the entrepreneur to match his marketing efforts to the requirements of the target market. Instead of wasting his efforts in trying to sell to all types of customers, a small scale unit can focus its efforts on the segment most appropriate to its market. It is defined as “The strategy of dividing the market in order to consume them”.
According to Philip Kotler, “It is the subdividing of market into homogenous subsets of consumers where any subset may be selected as a market target to be reached with distinct Marketing Mix”
According to Philip Kotler, market segmentation means "the act of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes."
According to William J. Stanton, "Market segmentation in the process of dividing the total heterogeneous market for a good or service into several segments. Each of which tends to be homogeneous in all significant aspects."
Basis of Segmentation:
Market segmentation dividing the Hetrogenous market into homogenous sub-units. Heterogeneous means mass marketing, which refers people as a people. Homogeneous means dividing the market into different sub units according to the tastes and preferences of consumers. The following factors are considered before dividing the market:
1.       Geographical Factors: On the basis of geographical factors, market may be classified as state-wise, region-wise & nation-wise. Many companies operate only in a particular area because people behave differently in different areas due to various reasons such as climate, culture, etc.
2.       Demographic Factors: This is the most widely used basis for market segmentation. Market is classified on the basis of population, using ages, income, sex, etc as indicators.
a.       Age: It is known fact that people of different ages like different products, need different things, & behave differently. Almost all companies use this factor to reach the target market. On the basis of age, market in our country is divided into children’s market, teenager’s market, adult’s market, & the market for old people. Companies use the census data to prepare marketing strategies on the basis of age.
b.      Sex: There is a variation of consumption behavior between males & females. This factor is used as a basis for segmentation for products like watches, clothes, cosmetics, leather goods, magazines, motor vehicle, etc.
c.       Family Life Cycle: This is another important factor, which influences the consumer’s behavior. E.g.: Before making purchases, a bachelor may consult his friends, a boy may ask his parents & a married man asks his wife. The study of family life cycle helps a company to prepare an effective promotional strategy.
3.       Psychological factors: In psychographic segmentation, elements like personality traits, attitude lifestyle & value system form the base. The strict norms that consumers follow with respect to good habits or dress codes are representative examples. E.g.: Mr. Donald’s changed their menu in India to adopt to consumer preference. The market for Wrist Watches provides example of segmentation. Titan watches have a wide range of sub brands such as Raga, fast track, edge etc. or instant noodle markers, fast to cook food brands such as Maggi, Top Ramen or Femina, women’s magazine is targeted for modern women.
4.       Economic Factors: On the basis of economic factors, markets have been classified in the westerns countries as follows:
a. Upper Class                   b. Upper-upper class                      c. Lower-upper class
d. Middle class                  e. Upper-middle class                    f. Lower-middle class
g. Lower class                    h. Upper-lower class                      i. Lower-lower class
In our country, it is classified as upper class (rich), middle class, & the lower class. Another classification based on income in our country is as follows:
a. Very Rich                        b. The Rich class                                                c. The Aspiration Class &
d. The Destitute.
5.       Behavior Factors: This is one of the most important bases used for market segmentation. Market is classified on the basis of attitude of consumers and special occasions.
a.       Occasions: Sellers can easily find out certain occasions when people buy a particular product. E.g.: Demand for clothes, greeting cards, etc increases during the festival season. Demand for transportation, hotels etc increases during the holiday seasons.
b.      Benefits: Each consumer expects to fulfill certain desire or to derive some benefits from the product he purchases. E.g.: A person may purchase clothes to save money & another to impress others. Based upon this, markets may be classified as markets for cheap price products & market for quality products etc.
c.       Attitude: On the basis of attitude of consumers, markets may be classified as enthusiastic market, indifferent market, positive market, & negative market.

5. (a) What is meant by packaging? Describe if brief the important functions in packaging products.           4+7=11
Ans: Packaging: In this age of competition, good and appropriate packaging occupies much significance. The policies pertaining to the packaging are a part of the product planning and product development program.
Some of the main definitions of 'packaging' are being given hereunder:
In the opinion of Prof. Rustom S. Davar, Packaging is that art and/or science which is related to the development and use of materials, methods and equipment, for the packing of the goods in some containers, so that the product, while passing through various stages of distribution, could remain fully safe.
William Stanton has opined that the meaning of packaging is the total group of activities under the product planning which are related to the chalking out of a design of the outer cover of a product and the concerned production.
Importance (Functions) of Packaging
a)      Safety of the Products. The main function of packaging is to protect the things from dust, water, moisture, insects, etc. Good packing saves the products against perishing, loss and other damages.
b)      Facility in Marketing Activities. Due to the packing, the movement of the products, shifting, preserving, opening, collect­ing and storage, become economical and easier for both the mid­dlemen as well as the consumers.
c)       Advertisement. One of the functions of packing is adver­tisement too. Till there exists any product packet, it keeps us aware of the same.
d)      Facility in Collecting. It is easier to store the packaged goods. Due to packing, the products remain safe in the godowns.
e)      Information to the Customers. While making the product attractive, the packing could also make the product useful and informative. It can extend necessary instructions and information more effectively to the customer regarding the use of the product.
Or
(b) What do you mean by product development? Discuss the various stages involved in the development of a new product.                4+7=11
Ans: Product Planning and Development
Product planning is the initial step of the overall marketing programme. In the competitive business world, producers try to produce products which can be nearer to consumer expectation. The pressure of competition forces the producers to replace the existing products by developing new consumers’ suitable and friendly products. Product planning covers all activities which enable producers and middle men to determine what should constitute a company’s line of products. Product development covers the technical activities of product research, production and design. The well attempt effort of product development increases the scope to satisfy the needs of the customers.
The product planning and development cover the following decision making area:
(I) What products should be produced?
(II) Expansion of product line.
(III) Determine the new use of its products.
(IV) What brand, package and label are used for different products?
(V) What should be quantity of its production?
(VI) Pricing policy etc.
In short, product planning involves the innovation of new products and improvement in the existing product.  In the words of Karl. H. Tietjen, “Product planning is the act of marketing and commercialization of new products, the modification of existing lines and the discontinuance of marginal or unprofitable items”. As per this definition product planning covers these three considerations.
(I) The development and introduction of new products.
(II) The modification of existing lines to suit the changing consumer needs and preferences and
(III) Elimination of unprofitable products.
Stages in New Product Development Process
The introduction of new product usually passes through various stages. In each stage, the management must decide whether to move on to next stage with the product idea or not. Practically, in this process some of the ideas will be eliminated at every step. There are six stages involved in the new product development. The stages are given below:
(I) Idea generation: New products are produced on the basis of new ideas. Ideas may be generated from various sources like customers, dealers, distributors, salesman, top executive, consultancy organisation, Research and Development Department etc. The first step is to collect ideas as many as possible so that the company can find out one of the best idea out of those ideas to convert the same in to actual product.
(II) Screening of Ideas: All new ideas cannot be converted into products as it requires heavy capital investments. Those ideas should be screened and all unworkable ideas should be dropped. Only most viable, feasible and promising one should be selected for further processing. The company uses the concept testing method. In this method, consumer response to a description or picture or drawings is measured even before the product is actually produced. The purpose is to find out few best ideas.
(III) Business Analysis: During this stage, an attempt is made to predict the economic consequences of the product for the company. In these stages, the management should perform the following:
(a) Identify product features.
(b) Estimate market demand and product profitability.
(c) Establish a programme to develop the product.
(d) Assign responsibility for further study of the product feasibility.
(IV) Product Development or Prototype testing:  This step consists of the following:
(a) Prototype development giving visual image of the product.
(b) Consumer testing of the model or prototype product.
(c) Branding, packing and labeling of the product.
The marketing people determine an appropriate brand name, package and price and making sure that both tangible and intangible features are considered and included. Focus groups, target market surveys and other market research techniques with the physical product give the marketer additional information.
(V) Market Testing: Test marketing involves placing a full developed new product for sale in one or more selected areas and observing its actual performance under a proposed marketing plan. In the words of P. Kotler- “Test marketing is the stage at which the product and marketing programme are introduced into more realistic market settings”. The basic purpose is to evaluate the product performance and marketing programme in a real setting prior to the commercialization. This step provides the scope of correction and modification of the product as well as marketing programme. Many products fail after commercialization because of lack of test marketing. In this process, the marketers approach the trial purchasers and first repeat purchaser to know their feelings and reaction about the product as well as marketing programme. On the basis of their opinions the marketers make certain required modification in the product as well as marketing programme. After the favourable result usually, products are sent for commercialization.
(VI) Commercialization: After favourable response in test marketing, full scale production and marketing programme are planned and then the product is launched. It may be in phased manner or the product may be introduced simultaneously depending on the company’s plan and resources available. The phased manner introduction helps to avoid short supply of the product due to initial gaps in production and distribution.
6. (a) Discuss the concept of sales of promotion. Explain the various methods of sales promotion.            4+7=11
Ans: 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.
Merits of sales promotion:
a)      Attention values: The incentives offered in sales promotion attract attention of the people.
b)      Useful in new product launch: The sales promotion techniques are very helpful in introducing the new product as it induces people to try new products.
c)       Synergy in total promotion efforts: Sales promotion activities supplement advertising and personal selling efforts of the company.
d)      Aid to other promotion tools: Sales promotion technique make other promotion techniques more effective. Salesmen find it easy to sell products on which incentives are available.
Demerits of sales promotion:
a)      Reflect crisis: If a firm is offering sales promotion techniques again and again it indicates that there is no demand of product which can create crisis situation.
b)      Spoil product image: Use of sales promotion tool may affect the image of product as buyer feel that product is of low quality that is why firm is offering incentives.
Sales promotion techniques: (a) Rebate (b) Product combination (c) Lucky Draw (d) Contest (e) Discounts
(a) Rebate: Sometimes, the product is made available at special prices less than the original prices for a limited period of time, e.g., recently Coke and Pepsi announced special price of their 500 ml bottles.
(b) Product Combination: Product combination is the bonus items given free with the purchase of a product. For e.g. A milk shakers along with Nescafe, or mugs with Bourn vita or a diary along with a packet of chips. They are effective in getting consumers to try a new product.
(c ) Lucky Draw: A firm of purchased of a fixed amount gives a coupon to a customer which entitles them for a lucky draw, e.g., Bikanerwala restaurant in particular season gives lucky draw coupon on purchase of Rs. 200 or more to its customers which entitles them to win exciting prizes like car etc.
(d) Contests: In these, consumer’ are required to participate in some competitive event involving application of skills or luck and winners are given some rewards. For instance, Golden Harvest, maker of premium bread usually has children drawing competition.
(e) Discounts: These are like price promotion in which certain percentage of price is reduced as discount from the list price, e.g., most of the retailers of garment like Snow White and Shopper’s Stop offer their product at generous discount during a limited period at the end of the season.
Or
(b)  Define price. How does pricing of a product influence its marketing? Discuss.              4+7=11
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 generates 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 of pricing in marketing:
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. 
7. (a) Write a comparative note on the services rendered by the retailers and the wholesalers to the producers.    12
Ans: Wholesale trader is one who sales to other middlemen, institutions and individuals a fairly large quantity. According to American Management Association, wholesalers sells to retailers or other merchants and/or individual, institutional and casual users but they do not sell in significant amounts to ultimate consumers. Wholesale trade is to do with marketing and selling merchandise to retailers, wholesalers or to individuals commercial and professional or other institutional contrast to household consumers, to individuals for personal use.
Retailer is one whose business is to sell to consumers a wide variety of goods that are assembled at his premises as per the needs of final users. The term retail signifies sale for final consumption rather than for resale or for further processing. A retailer is the last link between the final user and the wholesaler or the manufacturers.
In the words of Professor William Staton, ”Retailing includes all activities directly related to the sale of goods and services to the ultimate consumers for personal or non-business use”
Thus, retailer is that merchant intermediary who buys goods from preceding channel members in small assorted lots and sells them in the lot requirements of final users.
Functions or services of wholesaler to Producers
1)      The wholesaler provides valuable information to the producers regarding the needs and the requirement of the consumer.
2)      As the wholesaler takes the responsibility of collecting order from retailers, he relieves the producers from this task and thereby encourage producers to concentrate on production.
3)      The wholesaler provides finance to the producers at the time of need.
4)      The wholesaler helps the producers in determining the quality and quantity of goods to be produced as he is in direct contact with the retailers.
5)      The producers are helped to maintain steady prices for the product because wholesaler buys when prices are low and sell when prices are high.
To Retailers
1)      The retailers are relieved of maintaining huge stock of goods because the wholesaler fills up the stock regularly. The wholesaler buys in large quantities and sell them at convenient lots to the retailers.
2)      The wholesaler provides finance and credit facilities to the retailer and thereby relieves the financial difficulties of the retailer.
3)      The wholesaler saves retailers from many types of risks. The retailer is not required to carry huge stock as he can get them from the wholesaler at regular interval. By extending credit has saved the retailers a lot.
4)      The wholesaler provides valuable advices to the retailer on all matters relating to new product and market condition and thereby relieves him from collection of market data.
5)      The wholesaler gives trade discounts on bulk purchase and as such it enables the retailers to earn handful amount of profit.
Services or functions of Retailer to Wholesalers and Manufacturers
1)      Retailers give manufacturers or producers access to markets by offering them the opportunity to present their products to consumers.
2)      The manufacturer and the wholesaler are relieved of making individual sales to consumers in small quantities.
3)      Retailers supply valuable and reliable information to wholesalers and manufacturers about the consumers' demands and the changes occurring in their likes and dislikes.
4)      Information about the consumers' likes and dislikes received from the retailers through the wholesalers enable the manufactures to make suitable adjustments in the design, size and contents of their products. Thus they can manufacture right types of goods at right time.
From the above discussion, we get the following difference between Wholesaler and Retailer:
1. Link: Wholesaler servers as a link between producers and retailers on the other hand, a retailer provides a link between wholesalers and consumers. Wholesaler is the first link, whereas retailer is the last link in the chain of distribution of goods.
2. Scale of operations: A wholesaler carries on business on a large scale and requires huge capital. A retailer, on the other hand, deals generally on a small scale and capital invested in retail trade in relatively small.
3. Range of goods: A wholesaler generally deals in one commodity. But a retailer deals in a large variety of goods and caters to the diverse needs of his customers.
4. Dealings: A wholesaler generally sells goods to retailers on credit. But a retailer usually sells goods to consumers on cash basis.
5. Location: A wholesaler can have a go down in a corner of the city and can supply goods there from. But the shop of a retailer needs to be located in the heart of the city to attract a large numbers of customers.
6. Profit margin: A wholesaler has not to spend money on shop decoration etc., and has a large volume of sales. Therefore, he charges a smaller margin of profit than that charged by the retailer.
7. Display of goods: A wholesaler need not display the goods. But a retailer has to display goods and decorate his shop in order to attract customers.
8. Purpose of selling: A wholesaler sells goods for resale. On the other hand, a retailer sells goods for ultimate consumption or use.
Or
(b) Discuss the methods of inventory control mentioning their merits and demerits.            4+4+4=12
Ans: Inventory Control: The term ‘Inventory’ is used to denote (i) goods awaiting sale (the stock items of a trading concern and the finished stocks of a manufacturer); (ii) the goods in course of manufacture, known as work-in-progress, and (iii) goods to be used directly or indirectly in production, i.e., raw materials and supplies.
In a manufacturing company, normally the cost of materials constitutes fifty percent of the production cost and the cost of inventory (i.e., raw materials W.I.P., and finished good) represents about one-third of the total assets. As the costs of materials and inventory are quite formidable but at the same time controllable, there is a great need felt for proper planning, purchasing, handling and accounting for the same, and also to organize the system of inventory control in a manner that it may provide the maximum profitably to the management.
Techniques of Inventory Control
The techniques or the tools generally used to effect control over the inventory are the following:
1.       Budgetary techniques for inventory planning;
2.       A-B-C. System of inventory control;
3.       Economic Order Quantity (E.O.Q.) i.e., how much to purchase at one time economically;
4.       VED Analysis;
5.       Perpetual inventory system and the system of store verification;
6.       Fixation of Stock Level;
7.       Control Ratios.
1)      Budgetary Techniques
For the purchase of raw materials and stocks, what we required is a purchase Budged to be prepared in terms of quantities and values involved. The sales stipulated as per sales Budget of the corresponding period generally works out to be the key factor to decide the production quantum during the budget period, which ultimately decides the purchases to be made and the inventories to be planned.
2)      A-B-C Analysis
To exercise proper control on stores, it is essential that the store items should be classified according to values so that the most valuable items may be paid greater and due a attention regarding their safety and care, as compared to others. The stores are divided into three categories generally, viz., A, B, and C.
In the ABC system, greatest care and control is to be exercised on the items of ‘A’ list as any loss or breakage or wastage of any items of this list may prove to be very costly; proper care need be exercised on ‘B’ list items and comparatively less control is needed for ‘C’ list items. The rules relating to receipt maintenance issue and writing off stores items should be formed in accordance with the utility and value of the items based on the above categorization.
ABC analysis measures the cost significance of each item of materials. It concentrated on important items, so it is also known as ‘Control by importance and Exception’.
3)      Economic Order Quantity
                This represents the normal quantity to be placed on order when the stock has reached its re-order level. Re-ordering quantity is to be fixed taking into account the maximum and minimum stock levels. The quantity ordered must be that which, when added to the minimum stock, will not exceed the maximum stock to be carried at any point of time. The following factors govern the re-ordering quantity:
a)      Average consumption
b)      Cost of pacing order
c)       Cost of storage
d)      Interest on capital etc.
The economic order quantity can be determined by the following simple formula.
EOQ       =             Economic order quantity or number of units in one lot.
A             =             Annual usage in units
S              =             Ordering costs for one order (or set-up costs for one set-up)
I               =             Inventory carrying costs per unit per year.

4)       VED Analysis:
                VED – Vital, Essential, Desirable – analysis is used primarily for control of spare parts. The spare, parts can be divided into three categories – vital, essential or desirable – keeping in view the critically to production.

5)      Perpectual Inventory System
                Perpectual Inventory is a system of records maintained by the controlling department, which reflects the physical movement of stocks and their current balance. It aims at devising the system of records by which the receipts and issues of stores may be recorded immediately at the time of each transaction and the balance may be brought out so as to show the up-to-date position. The records used for perpectual inventory are:
a)      Bin Cards;
b)      Store Ledger Accounts or Stores Record cards;
c)       The forms and documents used for receipt, issue and transfer of materials.

6)      Fixation of stock level
The object of fixing stock levels for each item of material is to maintain required quantity of materials in the store and thereby the expenses may be reduced. The different stock levels are: (1) Minimum stock level (2) Maximum stock level (3) Reorder stock level
a.       Minimum stock level: It represents the minimum quantity of an item of material to be kept in the store at any time. Material should not be allowed to fall below this level. If the stock goes below this level, production may be held up for want of materials. This stock is also known as safety stock level or buffer stock.
b.      Maximum stock level: It is the stock level above which stock should not be allowed to rise. This is the maximum quantity of stock of raw materials which can be had in the stock. It is goes above, it will be overstocking.
c.       Reorder stock level: It is the point at which the storekeeper should initiate purchase requisition for fresh supply. This level lies between the maximum level and the minimum level.
7)      Control Ratios
The control ratios are mainly two –
a)      Inventory Turnover Ratio which we have studied and
b)      Input-output Ratio.
Inventory Turnover: Inventory Turnover is a ratio of the value of the materials consumed during a period to the average value of inventory held during that period.
If the inventory turnover rate in terms of value of materials is high, or if the length of the inventory turnover period is short, the material is said to be fast moving. So if the rate of consumption is fast or if the inventory turnover rate is good, it is a healthy measure of efficiency of materials control, as the capital employed is properly utilized.
 Input-output Ratio: The Input-output Ratio is the ratio of the raw material put into manufacture and the standard raw materials content of the actual output.
This ratio enables one to find out whether the usage of the materials is favourable or not. A standard ratio of input of materials and output of material should be determined and the actual ratio should be compared with the standard ratio.

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