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
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B.Com 5th Principles of Marketing Solved Question Papers (CBCS and NON-CBCS Pattern)
****************************************
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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