Business Studies (319) - Oct' 2019 | NIOS SENIOR SECONDARY Solved Papers

Time: 3 Hours
Maximum Marks: 100

1. Purchase of fixed assets is financed through :     1
A.      Long Term Finance
B.      Short Term Finance
C.      A mix of both Short term and Long term finance
D.      Medium Term Finance
2. Communication of ideas to the supervisors is :   1 
A.      Downward Communication
B.      Upward Communication
C.      Horizontal Communication
D.      Diagonal Communication
3. Which concept of marketing emphasizes greater importance to attracting and persuading customer to buy the products?    1
A.      Production Concept
B.      Product Concept
C.      Sales Concept
D.      Marketing Concept
4. Which consumer right suggests that consumer has a right to register his/her dissatisfaction?   1
A.      Right to choose
B.      Right to Safety
C.      Right to be heard
D.      Right to be informed
5. Deposits that can be withdrawn by the lender by giving it one day notice are called:                                               1

A.      Call Deposits.
B.      Cash Credit.
C.      Bank Overdraft.
D.      Trade Credit. 

6. Instruments with maturity period of less than one year are traded in:     1
A.      Capital Market
B.      Money Market
C.      Bombay Stock Exchange
D.      National Stock Exchange
7. A network of social relationship that arises spontaneously due to interaction at work is called:   1
A.      Formal Organization
B.      Informal Organization
C.      Decentralization
D.      Delegation
8. Name the type of plan which refers to future of organization :     1
A.      Objectives
B.      Strategies
C.      Procedures
D.      Rules
9. It is instrument of short term borrowing issued by RBI on behalf of Indian Government :    1
A.      Call Money
B.      Certificate of deposit
C.      Commercial Paper
D.      Treasury Bill
10. Publicity refers to :    1
A.      Paid form of impersonal communication
B.      Non paid form of Personal communication
C.      Paid form of Personal communication
D.      Non paid form of impersonal communication
11. How does planning lead to economy and efficiency in operation?           3
Ans: Planning leads to economy and efficiency in operations because it helps in selecting best methods out of available choices, thus, reducing overlapping and wasteful activities. While planning, alternatives are evaluated and a choice is made regarding which course of action is to be followed.
12. Why packaging is important?        3
Ans: Packaging is the act of designing and producing appropriate container or cover for the product. Packaging protects the product from damage. It helps to identify a product. It enables convenient handling of the product. As package increases the sale of a product, it acts as a silent salesman.
13. What is meant by Consumer Cooperative Stores? Explain two merits of Consumer Cooperative Stores.          3
Ans: Consumer Cooperative Store is another form of large scale retail trade which is owned by the cooperative society. When the consumers of a particular area or group find it difficult to get the items of daily necessity they usually form a cooperative society and run the retailing business. The consumer cooperative store purchase the goods directly from manufacturers or dealers and make them available at a cheaper price. Let us seethe various merits of consumer cooperative stores.
Merits of Consumer Cooperative Stores:
(a)The consumer cooperative stores generally provide the goods at a lower price than the market, because they eliminate the profits of middlemen in the process of distribution.
(b)These stores sell the goods on cash basis. So the risk of bad debts is avoided.
(c)These stores are generally located near the residential area for the convenience of the members as well as general public.

14. Name the process in which marketers give a name to their product. How is it advantageous to the customers? Explain.          3


15. What are benefits derived from Retained Profit?           3

Ans: Benefits of retention of profit.

1. Cheap Source of Capital: No expenses are incurred when capital is available from this source. There is no obligation on the part of the company either to pay interest or pay back the money. It can safely be used for expansion and modernisation of business.

2. Financial Stability: A company which has enough reserves can face ups and downs in business. Such companies can continue with their business even in depression, thus building up its goodwill.

3. Benefits to the Shareholders: Shareholders are assured of a stable dividend. When the company does not earn enough profit it can draw upon its reserves for payment of dividends.

16. “Decentralization is not same as Delegation.” How are they different from each other?     4

Ans: Difference between delegation and decentralisation:


Delegation of Authority



Sharing of the task with the subordinate and granting authority in a prescribed limit by the superior is Delegation.

The systematic delegation to the lowest level of management is called decentralization.

Freedom in action

Less freedom to the subordinate Final authority lies with the delegator.

More freedom given to the subordinate.


This is a process done as a result of Division of work.

This is the result of the policies framed by higher officials.


Its purpose is reduction of workload of the officer.

The purpose is expansion of the authority in the organization.

17. Explain the terms of trade :           4

1.       COD (Cash on Delivery)

2.       FOB (Free on Board)

3.       CIF (Cost Insurance Freight)

4.       Mate’s Receipts

Ans: 1. Cash on Delivery (COD): It is a type of transaction in which payment for goods is made at the time of delivery. If the purchaser does not make payment when the goods are delivered, then the goodwill be returned to the seller.

2. Free on Board (FOB): This include all charges at the post of shipment upto the loading of goods on board the ship and export duty, if any.

3. Los, Insurance and Freight (CIF): This includes the cost of goods all expenses incurred for taking the goods to the post of destinations and insurance charges.

4. Mate’s receipt: The captain or mate will issue a receipt known as “mate’s receipt” after the goods have been loaded. This receipt contains particulars like quantity of goods, number of packets, condition of packing, etc.

18. State the cases of upward, downward, horizontal and diagonal communication.          4

Ans: On the basis of the flow or direction of communication in organisations, it can be classified as upward, downward, horizontal or diagonal. When employees make any request, appeal, report, suggest or communicate ideas to the superior, the flow of communication is upward i.e., from bottom to top. For instance, when a typist drops a suggestion in the suggestion box, or a foreman reports breakdown of machinery to the factory manager, the flow of communication is upward.

When communication is made from superiors down the hierarchy it is called a downward communication. For instance, when superiors issue orders and instructions to subordinates, it is known as downward communication.

Communication can also be amongst members at the same level in the organisation. For instance, production manager may communicate the production plan to the sales manager. This is known as horizontal flow of communication. Here, the communication is among people of the same rank and status. Such communication facilitates coordination of activities that are interdependent.

When communication is made between people who are neither in the same department nor at the same level of organisational hierarchy, it is called diagonal communication. For example, cost accountant may request for reports from sales representatives not the sales manager for the purpose of distribution cost analysis. This type of communication does take place under special circumstances.

19. Explain the services provided by retailers for consumers.             4

Ans: Services of Retailers to Consumers

1)      As retailer holds stocks of goods ready for immediate use and he is prepared to sell in small quantities, the individual or household consumer is relieved of the burden of storing large quantities of every article of daily use.

2)      Retailer provides consumers with a wide variety of choice. Retailers, by assembling products of different variety from different manufactures, enable consumers to make choice from a large variety of goods displayed in their stores.

3)      Retailers buy and stock goods suitable to the consumers.

4)      Retail shops are situated in convenient localities, usually very near to the consumers' residence.

5)      Retailers stock fresh goods to meet daily demands of their customers.

6)      They sell to consumers in quantities, which suit the pockets of different individuals.

7)      Retailers make available to their customers goods of the sizes, styles, types, qualities and prices they prefer.

20. Explain briefly nature of Principle of Management.               4

Ans: Nature of Principles of Management

1. Universal: The management principles are applicable to all types of organisations like government enterprises, educational institutions, business enterprises etc.

2. Flexible: Management principles are modified and applied according to the changing situations. For example, when an organisation started its functioning, it may have adopted principle of centralisation. When the organisation became a large enterprise, it will apply principle of decentralization.

3. Aimed to Influence Human Behaviour: Human behaviour is complex and unpredictable. Management principles influence human behaviour so that human resources give their best to an organisation. For example, principle of order is followed, so that wasteful movement of workers can be avoided.

4. Cause and effect relationship: Management principles indicate clearly the cause of various actions and consequences of various decisions. For example, according to the principle of discipline, smooth running of business is the result of discipline.

21. State in brief the features of planning. (any five)               5

Ans: Following are the features of Planning:

A)     Planning contributes to objectives: Planning starts with the process of setting up the objectives. We cannot think of planning without objectives. After setting up the objectives various activities are decided which would help in the achievement of the same.

B)      Pervasive: Planning is required at all levels of management. It is not a function restricted to top level managers only but planning is done by managers at every level.

C)      Primary Function: Planning is the first function of the management (primacy).On the basis of planning; the other functions of organizing, staffing, directing and controlling are performed.

D)     Forward looking: planning is looking ahead. It is done for the future and not for the past. All the managers try to make assumptions for the future and act accordingly.

E)      Continuous: Planning goes on continuously. It does not stop after a particular period. If plans are made for a month, after one month new plans are made. So Planning goes on without halt.

22. How is the amount of working capital required by business unit is assessed? Describe in brief any three factors determining working capital requirement.              5

Ans: Adequate working capital is very necessary for maintenance of liquidity and running the business smoothly and efficiently. However, the amount of working capital required varies from business to business and from period to period. The various factors that influence such requirement are as follows:

1.       Scale of operations: There is a direct link between the scale of business and working capital. Larger business needs more working capital as compared to the small organizations.

2.       Nature of Business: The manufacturing organizations are required to purchase raw materials, convert them into finished goods, maintain the stock of raw materials; semi finished goods and finished goods before they are offered for sale. They have to block their capital for labour cost, material cost etc, so they need more working capital. In the trading firm processing is not performed. Sales are affected immediately after receiving goods for sale. Thus they do no block their capital and so needs less working capital.

3.       Credit allowed: If the inventory is sold only for cash, it requires less working capital as money is not blocked in debtors and bills receivable. But due to increased competition, credit is usually allowed. A liberal credit policy results in higher amount of debtors, so needs more working capital.

4.       Credit availed: If goods are purchased only for cash, it requires more working capital. Similarly if credit is received from the creditors, the requirement of working capital decreases.

5.       Availability of Raw materials: If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital. But if there is shortage of materials, huge inventory is to be maintained leading to larger amount of working capital.

23. “Many people consider advertising to be wasteful activity.” Give the arguments against advertising. (any five)5

Ans: Several objections have been raised against advertising and some people criticize advertising as a social waste. The main point of criticism is as follows:-

a)      Creates Monopoly in the Market: Advertisement leads to promotion and cover mass level of customers at a time. Large firms can bear the advertisement expenditure but not the small firms, due to that it can eliminate the small firms from the market and creates its monopoly authority in the market.

b)      Higher the Prices of Product: Investment of money in advertisement leads to increase in the price of goods and services for which consumer has to face high prices and pay for it. Hence, more the advertisement cost- more the product cost.

c)       Misleading the consumers: Now days, advertisement misleads the consumers on false representation regarding their goods. Consumer attracts to those goods which are not necessary for them. Thus, advertisement misleads the consumer and sale goods to them.

d)      Wasteful Consumption by the Consumers: Advertisement attracts the consumers for wasteful products which are not necessary for consumers. Due to advertisement businessmen takes undue advantage from them. They sale unhealthy and artificial goods to them and exploits consumer emotions.

e)      Wastage of National Resources: There will be wastage of national resources, valuable stationary, time and energy used by the people or is ignored by them. Here, Valuable resources that can be used to create new industries are wasted in the production of needless varieties and designs.

24. What is a departmental store? Explain any four merits of departmental stores.                5

Ans: Departmental Stores: Departmental Store is a large-scale retail shop where a large variety of goods are sold in a single building. The entire building is divided into a number of departments or sections. In each department specific type of goods like stationery items, books, electronic goods, garments, jewellery etc. are made available. All these departments are centrally controlled under one management.

Merits of Departmental Stores

(a) They sell a large variety of goods to consumers, under one roof. So it saves time and effort of the customers.

(b) Departmental stores offer wide variety of goods produced by different manufacturers.

(c) They buy large volumes of goods, at a time directly from manufacturers, and get good amount of discount from them. They are able to reap the benefits of economies of large-scale operations.

(d) Since these stores are organised on a large-scale basis, they can afford to employ efficient and competent staff to provide the best services.

25. Explain “Management as a Discipline” and “Management as a Group”.          5

Ans: Management as a Discipline: Discipline is a subject that can be studied, organized and taught. It should meet the basic requirements such as It should be acceptable and It should be capable of discovering knowledge, which can be verified, passed on to others and can be successfully applied.

A large number of schools, colleges & universities have introduced management courses. It has got experts, thinkers and philosophers of the subject. These experts are devoted to impart their skill of the subject to learners of the discipline. They follow a code of conduct prescribed for them. As such we can conclude that management is a discipline.

Management as a Group: Management as a GROUP refers to the Board of Directors or Executive Directors who are responsible for effectively managing the affairs of the business by guiding and controlling the work of other managers such as production, sales, finance, personnel, quality control managers, etc. This approach focuses on a team rather than individuals. This is because it is believed that management as a team can contribute more effectively and efficiently than an individual.

26. Both wholesalers and retailers are important link between producer and consumer but are different from each other because of the nature of their functions. Differentiate between the two giving any four points of difference. 6

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.

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.


External trade is an important indicator of economic condition of Nation. Explain briefly the importance of external trade giving any four importances.

Ans: Business transaction taking place within the geographical boundaries of a nation is known as domestic or national business. It is also referred to as internal business or home trade. Manufacturing and trade beyond the boundaries of one’s own country is known as international business.

International or external business can, therefore, be defined as those business activities that take place across the national frontiers. It involves not only the international movements of goods and services, but also of capital, personnel, technology and intellectual property like patents, trademarks, know-how and copyrights.

Importance of External Trade:

(a) Promotes Specialisation: External trade promotes specialisation. When there is expansion in the demand for a particular commodity, its producer is encouraged to specialise in its production.

(b) Improves Standard of Living: On account of import trade, a country can consume goods, which it does not produce. On the other hand, it earns foreign exchange through export trade. The import and export trade thus, help in raising standard of living of a country.

(c)Enhances Competition: External trade enhances competition, which compels the domestic firms to improve technology of production, production process and quality of the products. It ultimately benefits the consumers in getting better quality products at competitive prices. It also provides a large variety of goods.

(d) Generates Employment Opportunities: External trade facilitates the growth of agricultural, commercial as well as industrial activities, which in turn generates more and more employment opportunities for the people.

27. What are the different aspects that have to be kept in view while preparing a sound financial plan. Explain any four such aspects.                       6

Ans: While preparing a financial plan for any business unit, the following aspects should be kept in view so as to ensure the success of such exercise in meeting the organisational objectives.

(a) The plan must be simple: Now-a-days you have a large variety of securities that can be issued to raise capital from the market. But it is considered better to confine to equity shares and simple fixed interest debentures.

(b) It must take a long term view: While estimating the capital needs of a firm and raising the required funds, a long-term view is necessary. It ensures that the planfully provides for meeting the capital requirement on long term basis and takes care of the changes in capital requirement from year to year.

(c) It must be flexible: While the financial plan is based on long term view, one may not be able to properly visualise the possible developments in future. Not only that, the firm may also change its plans of expansion for various reasons. Hence, it is very necessary that the financial plan is capable of being adjusted and revised without any difficulty and delay so as to meet the requirements of the changed circumstances.

(d) It must ensure optimal use of funds: The plan should provide for raising reasonable amount of funds. As stated earlier, the business should neither be starved of funds nor have surplus funds. It must be strictly need based and every rupee raised should be effectively utilised. There should be no idle funds.


What are the factors to be kept in view while deciding the appropriate capital structure. Explain any four such factors.

Ans: Ans: Capital structure refers to the mix of sources from where long term funds required by a business may be raised i.e. what should be the proportion of equity share capital, preference share capital, internal sources, debentures and other sources of funds in total amount of capital which an undertaking may raise for establishing its business. In simple words, capital structure means the proportion of debt and equity used for financing the operations of business and it is calculated by the following formula:             Capital structure = Debt/Equity.

Following factors are to be considered before determining capital structure.

1.       Cash flow position: If cash flow position of the company is sound, then debt can be raised and if cash flow is not sound debt should be avoided and it must employ more of equity in its capital.

2.       Interest coverage ratio: It is the ratio that expresses the number of times the Net profit before interest and tax covers the interest liabilities. Higher the ratio better is the position of the firm to raise debt.

3.       Control: Issue of Equity shares dilutes the control of the existing shareholders, whereas issue of debt does not as the debenture holders do not participate in the management. Thus if control is to be retained, equity should be avoided.

4.       Cost of debt: If firm can arrange borrowed fund at low rate of interest then it will prefer more of debt as compared to equity.

5.       Stock market conditions: If the stock market is bullish, the investors are adventurous and are ready to invest in risky securities. In this case, equity can be issued even at a premium. Whereas in the Bearish phase, when the investors become cautious, debt should be issued as there is a demand for fixed cost security.

6.       Regulatory framework: Before determining the capital structure of a company, the guidelines of SEBI and concerned regulatory authority is to be considered.

7.       Flexibility: Excess of debt may restrict the firm’s capacity to borrow further. To maintain flexibility it must maintain some borrowing power to take care of unforeseen circumstances.

28. Communication can be made more meaningful and effective if its barriers are removed. How can the various barriers of communication in the Organization be removed? Give and explain any four suggestions.        6

Ans: The barriers to an effective communication can be reduced by following measures:

a)      Use of proper people language: Sender should try to make the message meaningful and understandable by using appropriate words.

b)      Message should be precise: Lengthy and unwarranted elaboration makes message less meaningful this should be avoided.

c)       Ensure proper feedback: The sender of the message should take the feedback from the receiver. Feedback of the conveyed message is an essential tool to the check that the message is duly understood. Facilities like suggestion box complaint box secret box helps in making the communication effective.

d)      Good Listener: The sender must listen to receiver’s words carefully on the other hand receiver must also listen with due attention. Attentive listening solves many problems.


What is meant by Monetary Incentive? State five types of monetary incentives.

Ans: Financial or monetary Incentives: Incentives which are directly or indirectly associated with monetary benefits are called financial incentives. Examples for financial Incentives — Pay, allowances productivity linked wage incentives, Bonus, Retirement benefits, Co partnership, commission.

The incentives that have a monetary and financial benefit are called financial incentives. They are:

a)      Profit sharing: It has been accepted that the profit earned by the firm is also due to the effort put by the workers. So they have a full right to receive a share in it. It is an effective incentive which satisfies the workers.

b)      Co-partnership: Under this system, employees share the capital as well as the profits. It motivates them as they share the profits too.

c)       Suggestion system: Valuable suggestions are accepted and the most valuable ones are also rewarded with cash money.

d)      Retirement benefits: Every employee wants his future to be secured. The firm provides retirement benefits, pension, provident fund, gratuity etc.

e)      Perks: various perks such as housing, car allowance foreign trips etc can be given to the managers to boost up his morale.

29. “Management is both Science and Art”. Explain.                  6

Ans: Ans: Management As a Science: Science is defined as a systematized body of knowledge and it uses scientific methods of observation measurement, experimentation etc. Science may be normative and positive both. Its principles are exact and university applicable. Similarly, Management has systematized body of knowledge and its principles are evolved on the basis of observation and are applicable universally. Management is also considered as a science since it is based on certain definite principles and particular methods are applied to solve various problems before the management personnel. But at the same time it should also be born into mind that management cannot be given the place of science like Physics, Chemistry etc. It is not as true and full of facts as the natural sciences are in their subject matter. There are several reasons which do not allow management to be considered as pure science. These are:

a)      Universally unverifiable: Management principles are not universally verifiable.

b)      Modified plans and policies: Unlike science, managers are deals with government, employees, customers etc. who are human beings and it is not possible to hold human beings constant and any prediction about these factors is impossible.

c)       Based on imaginary considerations: Management principles and concepts are based on imaginary considerations like human behaviour, etc. Its principles when executed do not provide exact results.

d)      Incomprehensive: Various managerial techniques are new and not known to each and every manager due to lack of proper training. A manager prefers other ways to solve managerial problems.

Management As an Art: Art refers to the way of doing specific things i.e. it indicates “how an objective is to be achieved. It is the skill and ability to achieve the desired results.  Art is the practical application of skill and ability guided by certain principles or truths. Management is an art in the sense that it calls for ability and skill to translate scientific management knowledge into meaningful practice. The art of management consists in understanding the diverse managerial and organisational situations and in applying relevant management concepts and methods to the practical realities. Managers have to be creative and innovative in their thinking and have to rely on their own previous experience in every situation. Management is also an art in the sense that management involves blending and balancing diverse interests and concerns, at a point of time and over a period of time. In short, Management is considered as an art because of the followings reasons:

a)      The process of management involves the use of ability and skills.

b)      The process of management is directed towards the accomplishment of organisational objectives.

c)       It is creative in the sense that it is the function of creating productive situations needed for further improvements.

d)      Management is personalized in the sense that every manager has his own approach to problems.

Management is both a science as well as an art.  The science of management provides certain principles that can guide managers in the professional efforts, while the art of management deals with tackling every situation in an effective manner.  Planning and organizing emphasize the science of management while direction, communication motivation coordination and control emphasize art of management.  Getting work done through people is an art of management.


The concept of management can be best understood through its characteristics. Explain any four characteristics of management.

Ans: Management is the coordination of all resources through the process of planning, organizing, directing, staffing and controlling in order to attain stated objectives effectively and efficiently.  Effectively means doing the right task, completing activities and achieving goals and efficiently means to attain objectives with least amount of resources at a minimum cost.

Characteristics/Features of Management:

a)      Management is goal oriented: Every management activity is directed towards achieving predetermined objectives of the organisation.

b)      Management deals with several functions: Management includes several functions such as planning, organizing, staffing, directing, co-ordinating, controlling, motivating or actuating, controlling, decision making, leadership and communication.

c)       Management is intangible: It cannot be seen but it can be felt through the performance of the workers. Mismanagement if any is quickly noticed and is a sign of poor management.

d)      Management is a continuous process: It is a never ending process. It is concerned with constantly identifying the problem and solving them by taking adequate steps. It is an on-going process.

e)      Management is dynamic: Under dynamic environment management faces several challenges hence efforts are made to develop and use new techniques for managing the organizations effectively and efficiently.  As social change takes place, management also changes to overcome the problems whenever they arise.

30. Marketing Manager wants to fix the price of a product of his company which should neither be too high nor to be too low. Describe four factors which are to be considered while fixing price.     6

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. The term ― Price need not be confused with the term ― Pricing. Price is the value that is put to a product or service. 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, competitors price etc while fixing price. It is targeted at the defined customers and against competitors. 

Factors determining Fixation of price:

i) Cost of the product: Cost of the product is the main component of the price. No company can sell its product or service at less than the cost of the product. A Fixed and variable cost are to be considered for determining the price.

ii) The utility and demand for the product: Intensive study for the demand for product and service in the market is to be undertaken before the fixation of the price of the product. If demand is relatively more than supply, higher price can be fixed.

iii) Extent of competition in the market: It is necessary to take into consideration prices of the product of the competing firms prior to fixing the price. In case of cut throat competition it is desirable to keep price low.

iv) Government and Legal Regulation: If the price of the commodity and service is to be fixed as per the regulation of the govt., it should also be borne in mind.

v) Pricing objective: Usually at the time of price fixation a certain amount of profit is added to the cost of the product. Objective is to earn higher profit, it may it may add amount of it.

vi) Marketing method used: - Price also influenced by the marketing method used by the company. Example – Commission which is to be paid to the middlemen for the sale of the goods is also added to the price.


In Marketing the consumer is the king whose needs must be satisfied. In selling the product is supreme and the entire focus is on his sale. Explain how selling is different from marketing?

Ans: Selling concept: Now a days, as the technology advances along with the quantity and quality of the goods, the art of selling the goods are also very essential. The firms which follow the selling concept believe that in order to motivate a customer to buy his product, he must be convinced by aggressive selling and promotional efforts. Firms following selling concept make use of advertising powers and other persuation techniques to influence the customers.

Marketing Concept: The marketing concept emerged in the mid 1950’s. The business generally shifted from a product – centered, make and sell philosophy, to a customer centered, sense and respond philosophy. The marketing concept concentrates on the need of the customers. This concept says than product should be designed and produced keeping in mind the need of the customers and try to satisfy the need better than the competitor. The marketing concept holds that the key to achieving organizational goals consist of the company being more effective than competitors in creating, delivering and  communicating superior customers value.

From the above discussion we find the following differences between selling and  marketing:



a) Selling starts and ends with the seller.

a) Marketing starts and ends with the consumers.

b) Seeks to quickly convert products into cash.

b) Seeks to convert customer ‘needs’ into products.

c) Seller is the centre of business universe.

c) Buyer is the centre of the business universe

d) Views Business as a goods producing process.

d) Views businesses as a customer satisfying process.

e) Seller preference determines the formulation of marketing mix.

e) Buyer determines the shape marketing mix should take.

f) Selling is product oriented.

f) Marketing is customer oriented.

h) Selling concept is short term perspective.

h) Marketing concept is a long term perspective.


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