Principles of Marketing Solved Papers' 2019 | Dibrugarh University

 2019 (November)
COMMERCE (General)
Course: 504 (Principles of Marketing)
The figures in the margin indicate full marks for the questions
(NEW COURSE)
Full Marks: 80
Pass Marks: 24
Time: 3 hours

1. (a) Write True or False:             1x4=4

1) Consumer’s behaviour has no difference with buyer’s behaviour.           False

2) Product differentiation and market segmentation are same.                      False

3) All publicity is advertising.           False

4) Marketing and selling denote same meaning.    False

(b) Fill in the blanks:                    1x4=4

1) Market research and market survey are different.

2) The modern concept of salesmanship is based on the idea of Creating need and convert that need into want.

3)  Inventory Control is one of the components of physical distribution mix.

4) Customer’s buying process has five steps.

2. Write short notes on (any four):           4x4=16

a) Retailers.

Ans: 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.

b) Buying motives.

Ans: Buying motives: A consumer does not buy a product or service just because he wants to buy. There are many factors which affects buying behaviour of consumers. Human beings are motivated by ‘needs’ and ‘wants’. These needs and wants build up inside, causing people to desire to buy a product or a service. These needs and wants built up pressure or tension leads to reasons which are manifested in a psychological wave called ‘motive’. ‘Motive’ is the energy which implies behaviour thought it does not give pre use direction to that behaviour”. Motive is something which is capable of inducing a person to act in a particular way. Motive is the strong feelings, urge, instinct, drive desire, stimuli, thought, emotion, a belief, a tension that makes a person to react in the form of buying decision.

Professor D. J. Duncan defined, “buying motives”, as “those influence or considerations which provide the impulse to buy, induce action or determine choice in purchase of goods and services”.

In the words of Professor William Stanton, “a motive is a drive or an urge for which an individual seeks satisfaction; it becomes a buying motive when the individual seeks satisfaction through the purchase of something”.

c) Marketing environment.

Ans: 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 

d) Market segmentation.

Ans: Marketing Segmentation: A market consists of large number of individual customers who differ in terms of their needs, preferences and buying capacity. Therefore, it becomes necessary to divide the total market into different segments or homogeneous customer groups. Such division is called market segmentation. They may have uniformity in employment patterns, educational qualifications, economic status, preferences, etc. Market segmentation enables the entrepreneur to match his marketing efforts to the requirements of the target market. Instead of wasting his efforts in trying to sell to all types of customers, a small scale unit can focus its efforts on the segment most appropriate to its market. It is defined as “The strategy of dividing the market in order to consume them”.

According to Philip Kotler, “It is the subdividing of market into homogenous subsets of consumers where any subset may be selected as a market target to be reached with distinct Marketing Mix”

According to Philip Kotler, market segmentation means "the act of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes."

According to William J. Stanton, "Market segmentation in the process of dividing the total heterogeneous market for a good or service into several segments. Each of which tends to be homogeneous in all significant aspects."

e) Advertising.

Ans: Advertising: It is the most commonly used tool of promotion. It is an impersonal form of communication, which is paid by the marketers (sponsors) to promote goods or services. Common mediums are newspaper, magazine, television & radio. Advertisements play a very important role in offering innumerable benefits to the manufacturers, customers and to the society in general.

In the present day marketing, advertising has become increasingly important to business enterprises-both large and small. Even non-business enterprises have recognized the importance of advertising. The various advantages of advertising are discussed below:

1.          Advantages of Manufacturers

1)         It creates demand for new products by informing people about the availability and suggesting them about the use of such goods.

2)         It promotes increased sales by maintaining the present demand and expanding the markets by attracting more people to buy.

2.          Advantages to Consumers

1)         It facilitates purchasing by educating consumers to select correct brands of commodities which increase their personal satisfaction.

2)         It makes available goods at reduced prices as advertisement increases sales, promotes large-scale production, reduces cost of production and distribution and increases competition. This result in reduction in prices and consumers get goods at reduced rates.

3.          Advantages to Salesmen

1)         It creates a proper base for the salesman by acquainting more people, in a shorter time, with the merits of a product, its new uses, new varieties and so on.

2)         It educates even salesmen and increases their confidence, capacity and initiative.

4.          Advantages to the Society

Advertisement is beneficial not only to the manufacturers and the consumers but also to the society at large in the following ways:

1)         It uplifts the living standards of the people. Advertising acts as an effective tool in raising standard of living.

2)         It generates gainful employment opportunities. Advertisement generates gainful employment opportunities both directly and indirectly.

f) Product mix.

Ans: 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.

3. (a) What are the elements of marketing mix? Discuss the important variables of product mix of an organization. 6+8=14

Ans: 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.

The Product mix has the following important variables:

1. Product line and Product range: Product line is a group of closely related products which are able to satisfy a class of need, to be used together, to be sold to the same consumer groups. Each firm has its own product line. Product-line stands for the entire range of products manufactured by the firm. For example, LG has product-line consisting of – TV, Monitors etc. Product range on the other hand, speaks of the depth of specialisation in terms of varities based on consumer pockets and functional requirements. Thus, Sony Corporation of Japan has countless models of TV sets, video players and recorders.

2. Product design: The marketing decisions start with designing the product in a way which is required by the target consumer. Product design is an important factor in the sale of many products. The trend in the product appearance is away from ornamentation and leaning towards greater simplicity in form and construction. The form, the colour and the line of all the products are being planned to give greater proportion, beauty and functional utility. An effective product design can properly enhance their utility, attractiveness, ease of operation, safety and appeal.

3. Product package: 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. 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. . 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.

4. Product quality: Establishing and control of quality standards is a basic step in merchandising. Generally, specific grades or quality standards are established for products either by agreement among the producers or by law. These product quality standards are based on factors like – colour, texture, flavour, weight, finish, appearance, size, shape, moisture and other physical features depending on the nature of the product.

5. Product labeling: A label identity the product or brand. Labels are attached one to the product package to help the identification and provide some identity to the customer. A product level may be either descriptive, informative, grade designing or a combination of these. A descriptive lave is one that describes the contents of the package or the ingredients of the product. An informative label may include descriptive material, but it informs primarily the users how the product is made and how to use it for best results. A grade label designates the ISI standard mark to which the product conforms.

6. Product 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.

7. After-sale services: Customers are the assets of every business. Sales professionals must try their level best to satisfy customers for them to come back again to their organization. After sales service refers to various processes which make sure customers are satisfied with the products and services of the organization. The needs and demands of the customers must be fulfilled for them to spread a positive word of mouth. In the current scenario, positive word of mouth plays an important role in promoting brands and products. After sales service makes sure that products and services meet or surpass the expectations of the customers. After sales service includes various activities to find out whether the customer is happy with the products or not? After sales service is a crucial aspect of sales management and must not be ignored.

Or

(b) Discuss the nature and scope of marketing.            7+7=14

Ans: 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 from 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.

4. (a) What do you mean by consumer behaviour? Explain its significance in marketing. 4+10=14

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.          14

Ans: Marketing Segmentation: A market consists of large number of individual customers who differ in terms of their needs, preferences and buying capacity. Therefore, it becomes necessary to divide the total market into different segments or homogeneous customer groups. Such division is called market segmentation. They may have uniformity in employment patterns, educational qualifications, economic status, preferences, etc. Market segmentation enables the entrepreneur to match his marketing efforts to the requirements of the target market. Instead of wasting his efforts in trying to sell to all types of customers, a small scale unit can focus its efforts on the segment most appropriate to its market. It is defined as “The strategy of dividing the market in order to consume them”.

According to Philip Kotler, “It is the subdividing of market into homogenous subsets of consumers where any subset may be selected as a market target to be reached with distinct Marketing Mix”

According to Philip Kotler, market segmentation means "the act of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes."

According to William J. Stanton, "Market segmentation in the process of dividing the total heterogeneous market for a good or service into several segments. Each of which tends to be homogeneous in all significant aspects."

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 do you mean by product packaging? Discuss the essential features of good packaging.     4+10=14

Ans: Meaning of '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.

Characteristics of a Good Package

Packaging must be attractive, protective and economical. A good packaging strategy can increases the sales volume of any product. Some of the key characteristics of good package are given below:

a)      Packaging must be protective: Packaging of products is done to protect them from dust, watering, evaporation and some other natural and artificial factors of damage. Packaging must protect the intrinsic values of the products. Good packaging can extend the product life and reduce distribution costs.

b)      It could attract one's attention: Packaging should be capable of catching the attention of the customers. Package design, weight, colour combination and graphics are to be pleasing to eyes and appealing to brain.

c)       Packaging should make the prompt recognition possible: Provision of adequate product information is another requirement. It must contain all the details of the product so that the buyer can easily recognise the details of the product.

d)      It should assure adjustability: A good packing has the ability of flexibility or is capable of being put to alternative uses. Packaging can be done with plastic, metal or glass containers which can be further used by the consumers in their home.

e)      Packaging should be pollution free: It is a well known fact that packaging of products in plastic packet causes serious damage to the environment. So, packaging of products must be done eco-friendly papers and plastic.

f)       It should create interest and maintain the same: Packaging should be such that it can create interest amongst the consumer about the product and compel them to buy the product. It must impress the heart of the consumer.

g)      It should be convenient: The package so designed should grant highest degree of convenience to manufacturers, distributors and consumers alike. Good packaging increases product sanitation, ease in handling, transporting, storing etc.

h)      It should be economical: The point of protection, attraction and convenience need not be sacrificed for the economy. Economy is something that reduces not only packing and packaging expenses but also brings down other allied expenses such as transport, warehousing, handling etc.

In the end, it might be said that a very well made packing, would immediately attract the attention, would create interest, would develop desire and would ultimately press the consumer either to investigate and make enquiries into the product, or for pur­chasing the same.

Or

(b) What do you understand by product planning? Discuss the basic components of product planning. 4+10=14

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.

Components of Product Planning:

1.       Product Innovation

2.       Product Diversification

3.       Product Development

4.       Product Standardization

5.       Product Elimination

6.       Product Mix & Product Line

1.       Product Innovation: Innovation is a part of continuous improvement. In the absence of innovation, products become stale & hence die in the market. Innovation is required to keep up with the phase of changing market needs. According to Drucker, “Innovation will change customer’s wants, create new ones, extinguish old ones & create new ways of satisfying wants.”

2.       Product Diversification: When a manufacturer offers more products in different areas, it is referred as product diversification. In fact, when a manufacturer diversification. Diversification normally involves business in a new area. E.g.:  ITC entering into hotel business, Sony entering into film production business.

3.       Product Development: It involves introducing a new product either by replacing the existing one or innovating a completely new product. It can either be brand extension or line extension. Company must be careful while developing new products because research shows that 92% of them fall in the market. Another danger of product development is cannibalization.

4.       Product Standardization: It implies a limitation of types of products in a given class. It gives uniformity in terms of quality, economy, convenience & Value. E.g.: Each model of T.V. gives a different standard. Standardization promises a minimum level of performance & hence is used as a benchmark for quality.

5.       Product Elimination: This involves an emotional decision of withdrawing the existing product line. Decision must be carefully taken based upon current market share, future prospects etc. The product elimination involves reviewing the present product portfolio, analyze their profitability & then decide on discontinuance of a product.

6.       Product Mix & Product Line: Product line is defined as a group of products offered by a company which belongs to same family of products or similar to each other or substitutes. E.g.: Product line of ponds for personal care products includes cold creams, talcum powders, etc. Product Mix is defined as combination of product lines offered by a company. E.g.: Product mix of Bajaj includes two wheelers, home appliances, electrical appliances, financial products etc.

6. (a) Discuss the role of physical distribution system and discuss the components of physical distribution in modern marketing.     7+7=14

Ans: Physical distribution and its essential elements

Physical distribution is the process of making the movement of the product to the consumers. It encompasses all the activities involved in the physical flow of products from producers to consumers. Physical distribution makes the product available at the right place and at the right time, thereby maximizing the company’s chance to sell the product and strengthen its competitive position. The products have to be carried to places of consumption; they have to be stored; and they have to be distributed. The product has to be marketed over an extensive marketing territory. It has to be transported through long distances, stored for a considerable length of time before being consumed. Physical distribution largely determines the customer service level. Inefficient physical distribution leads to loss of customers and markets. There are some products which are subject to the seasonality factor - either production is continuous but demand is seasonal, or demand is continuous but production is seasonal. In all such cases, physical distribution acquires additional importance.

Significance or Importance of Physical Distribution Management:

The physical distribution of goods has assumed great importance particularly in recent years, because of the ever increasing competition for markets. The importance of physical distribution lies in the following directions:

1. It Creates Utilities Of Time And Place: By making available a product at the place where and when it is needed.

2. It Accounts For A Major Portion Of Marketing Costs: According to one estimate, physical distribution costs constitute as much 60% of the total marketing cost. Physical distribution is a very important area for cost savings. Over the years, in most businesses, physical distribution costs have grown into a sizeable portion of the total costs. Surprisingly, physical distribution despite being an important cost area, has remained one of the neglected areas for cost reduction. 

3. Bigger Share in the National Wealth: It represents large share in the national wealth in the form of facilities—rail, road, trucks, highways, aircrafts, ship, docking facilities, pipelines, storage facilities and equipment.

4. Specialisation It Facilitates Geographic Specialization: Each area produces goods that its natural resources, climate or pool of manpower resources enable it to produce more efficiently.

5. Determines Standard Of Living: This is so because proper distribution of products makes them available to a large number of people, at a relatively lower cost. Thus it can be said that physical distribution directly affects sales, customer service and satisfaction, and costs.

Physical distribution is a very important area for cost savings. Over the years, in most businesses, physical distribution costs have grown into a sizeable portion of the total costs.

Decisions/ Components/ Elements of Physical Distribution

1. Material Handling: Material handling stands for the product movement after it gets out from manufacturing plant but before it is loaded on the transport mode to the destination of consumer. Material handling is undertaken at every stage of logistics activity namely, during production – storage – transport and packaging processes. Thus, it represents product handling from plant to warehouse or warehouses, location to another within the warehouse and from warehouse to the place of loading from transport models. Material handling is the sub-system of physical distribution system of a firm and is an agent of cost reduction and improved customers service. In effect, an efficient and effective materials handling system in a unit contributes to the efficiency and effectiveness of the total physical distribution system. It is because, sound management of material handling avoids damage in product handling, prevents unnecessary and irrelevant movement, facilitates order-processing and order picking and enables efficient product movement to match with inventory levels and transportation.

2. Inventory Planning and Control: Inventory refers to the stock of products a firm has on hand and ready for sale to customers. Inventories are kept to meet market demands promptly. Inventory is the link interconnecting the customer’s orders and the company’s production activity. In fact the entire physical distribution management rotates around the inventory management. Inventory management is the heart of the game of physical distribution. Marketing managers undertake an inventory planning to develop adequate assortments of products for the target market and also try to control the costs involved in obtaining and maintaining inventory.

3. Order Processing: Order processing includes the activities of receiving, recording, filling and assembling and orders for shipment. Each customer aspects that the order placed by him should be implemented without inordinate delay on one hand and that the goods dispatched match perfectly to his order specification. This implies quality control that ensures the upright execution of orders. That is why, marketers and distribution managers are very much concerned about the order cycle time and every effort is made to keep it rigged.

An order cycle is the period between the time of the placement of an order by the customer to the time of the arrival of the goods at his destination. This cycle is made up of the transmission of the order, document processing in the department and shipment of the goods. Here, document processing is a routine activity which is standardized. Since, order processing involves series of logical steps from receiving order to the dispatch, there should be a standard procedure for receiving the orders, handling the orders, granting of credit, invoicing, dispatching, collecting the bills and post dispatch adjustments. The order processing procedures followed in a firm have dual impact on consumer service level namely, it affects:

1.          Order time that is the time interval between two orders of a customer, and

2.          The consistency and uniformity of delivery time i.e., regular and dependable deliveries.

4. Communications: It is a process of passing information and understanding from one person to another. This includes the information system which should link producers, intermediaries, and customers. Computers, memory systems, display equipment and other communication technology facilitate the flow of information among other members in the channel. A manager to be successful must develop an effective system of communication. So that he may issue instructions, receive the reactions of the subordinates, and guide and motivate them.

5. Organisational Structure: The person in charge of the physical distribution should co-ordinate all Activities into an effective system to provide the desired customer service in the most efficient manner. Examples of organizational consideration are: (i) How can the five elements of physical distribution best be co­ordinated so that a team effort results? How can compartmentalization thinking be avoided? (ii) If a central head is established to direct all physical distribution activities, to whom should he report—The Head of the Marketing or The Chief Executive Officer?

6. Transportation: Transportation as the last component of distribution system is to do with the movement of products from warehouse to the customer destinations. Transportation involves loading and unloading of products and transshipment between the place of dispatch and places of arrival. The major contribution of transportation management is cost reduction because; cost of transportation is 35 per cent of total distribution costs and 15 to 20 per cent of the total price paid by the users. The point lies in cost reduction and creation of maximum of time utility. Every marketer takes sufficient interest in company transportation and transportation decisions because, it is the correct choice of transport mode of modes that will help in gaining the effects as it affects pricing of products, regular and punctual delivery performance and the conditions of the goods in transit – all affecting finally the consumer satisfaction and sales profitability.

Or

(b) Discuss the functions and services of wholesaler in modern marketing.     7+7=14

Ans: Functions of wholesalers

Wholesale traders perform a number of functions in the process of selling the goods. Of them the most important ones are:

1. Assembling and Buying: Assembling implies the collection of small lot of agricultural production for economic bulk buying; it also means bringing together different manufacturers producing same line of goods. Buying’ comprises of selection of manufacturers and placing orders on them and making purchases in cases of seasonal products.

2. Warehousing: Warehousing or storing is closely related to the function of storing. As there is always a gap between the time periods of production and consumption, the goods are to be held and preserved. This involves capital lock-up. This ware housing by wholesalers relieves both the producers and the retailer’s problems of storage.

3. Transporting: In the processes of assembling and warehousing and resale, do undertake transportation of goods from producers to their warehouses to the retailers. What is important is that this transportation is done on economic lines, either through their own fleet or through hired common carriers.

4. Financing: Wholesalers undertake marketing financing. They grant credit terms to retailers on one hand and reduce the financial burden of the by taking early delivery of stocks from them. The very fact that the creditors grant credit is as good as reducing the credit quota of manufacturers to wholesalers.

5. Risk Bearing: Risks are inherent in businesses which are to be borne and wholesalers bear the risks of loss of change in prices, of damage, deterioration, pilferage, theft, fire and the like of the goods held in storage. They also of non or under payment by the retailers. Risk shouldering is the part done.

6. Grading, packing and packaging : Grading is another function of wholesalers they sort-out the stocks in terms of differing sizes, qualities, moisture contents bulk-breaking is done with a view to meet the small lot requirements of manufacturers. In fact, they repack for the consumers as per the orders of the retailers.

7. Dispersing and selling: The goods assembled and held in stock are meant pricing and selling. It is the retailers who buy from the wholesalers. Similarly, do have their own sales-army moving to retailers for collection order.

8. Providing market information: Wholesalers are the vital link between producers and manufacturers. They provide relevant and up-to-date information to retailers affecting their trade interests; so also they reciprocate the same to manufacturers as to whatever retailers feed them on changing market conditions useful wholesalers.

Services of wholesaler

The wholesaler renders a number of services to trade, industries and commerce. The services rendered by the wholesaler may be classified as:

a)      Service to Manufacturer.

b)      Service to Retailer.

c)       Service to Consumer.

d)      General Services.

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 encourages 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 sells 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.

To Consumer

1)      He enables the consumer to purchase required quantities of goods at the desired time because he supplies goods regularly to the retailers.

2)      He provides goods at a cheaper rate because he facilitates in large scale production.

3)      The wholesaler is in a better position to stabilize prices of the products by adjusting demand and supply. The consumers are benefited a lot on account of stabilization of prices.

4)      There is no shortage of goods as the wholesaler goes on large purchasing.

5)      The wholesalers are wealth of information and as such this information are shared by the consumers.

(OLD COURSE)

Full Marks: 80

Pass Marks: 32

Time: 3 hours

1. (a) Write True or False:                             1x4=4

1) Modern concept of marketing is product oriented.                       False, Customer oriented

2) The distribution of goods is the last phase of the process of marketing.                               False, Implementation and control

3) Salesmanship is the art of persuading people to buy the given products or services.     True

4) ‘Trademark’ is a legalized or registered brand.                 False

(b) Fill in the blanks:                    1x4=4

1) Transportation as the last component of distribution system is to do with the movement of products from warehouses to customer destination.

2) The document issued by ware-housekeeper to the persons storing goods as a document of title of such goods is known as dock receipt.

3) Physical distribution is concerned with the physical movement of the goods from the producer to the consumer.

4)  Itinerant Retailers is a retailer who has fixed place of business in a locality but goes on changing his place to exploit the market opportunity.

2. Write short notes on:                                4x4=16

a) Economic force of marketing environment.

b) Consumer behaviour.

c) Industrial product.

d) Product labeling.

3. (a) Explain the objectives and importance of marketing.           5+6=11

Or

(b) Discuss the basic components of ‘marketing mix’. Explain the different variables of ‘promotion mix’.     5+6=11

4. (a) What do you mean by ‘buyer behaviour’? Discuss those economic factors or determinants which influence the consumer behaviour.     3+8=11

Or

(b) What is product positioning? What are determinants of successful product positioning? Discuss the various steps of product positioning.       2+4+5=11

5. (a) What is product planning? Discuss the objectives of product planning and the components of product planning. 2+5+4=11

Or

(b) What is branding? What are the requisites of a good ‘brand name’? Critically explain about the packaging strategies of a product.           11

6. (a) Discuss the various internal and external factors which are influencing the product pricing decisions.     6+5=11

Or

(b) Discuss the various outdoor media of advertising and write down the advantages of outdoor advertising. 6+5=11

7. (a) What is transportation? Explain about the different modes of transportation. Discuss the factors governing the selection of transport media.     2+5+5=12

Or

(b) What is retailer? Discuss the different types of large-scale retailers. What functions rendered by retailer as the last link in the chain of distribution?      2+5+5=12

***

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