Dibrugarh University Solved
Question Papers (CBCS Pattern)
Principles of Marketing
Solved Paper 2021 (Held in 2022)
5th SEM TDC POM
(CBCS) C 511
2021 (Held in
January/February, 2022)
COMMERCE (Core)
Paper: C-511 (Principles
of Marketing)
Full Marks: 80
Pass Marks: 32
Time: 3 hours.
The figures in the margin
indicate full marks for the questions.
1.
(a) Write True or False: 1x5=5
a) Packaging
and labeling are same.
Ans: False
b) Creating
customers means exploring and identifying the needs and requirements of
customers.
Ans: True
c) Order
processing is the component of physical distribution mix.
Ans: True
d) Test
marketing is normally the last step in the development process before a new
product is launched either at regional or at national level.
Ans: False,
Commercialisation
e) Registration
of trademark is compulsory.
Ans: True
(b)
Answer as directed: 1x3=3
a) Write one of the differences between ‘marketing’
and ‘selling’.
Ans: Differences between selling and marketing:
|
a) Selling starts and ends with the seller. |
a) Marketing starts and ends with the consumers. |
b) State one of the disadvantages of market
segmentation.
Ans: Sometimes
market segment cannot be identifiable and measurable.
c) Branded product provides psychological satisfaction
to the _______. (Fill in the blank)
Ans: Rich
Consumers
2.
Write short notes on any three of the following: 4x3=12
a) Objectives of Pricing.
Ans: Objectives
of Pricing: A business firm will have a number of
objectives in the area of pricing. These objectives can be short term or long
term or primary objectives:
(i) Profit maximization in the
short term.
(ii) Profit optimization in
the long term.
(iii) A minimum return on
investment
(iv) A minimum return on sales
turnover.
(v) Achieving a particular
sales volume.
(vi) Achieving a particular
market share.
(vii) Deeper penetration of
the market.
(viii) Entering new markets.
(ix) Target project on the
entire product line.
(x) Keeping competition out,
or keeping it under check.
b) After-sales Service.
Ans: 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.
c) Role of Marketing Channel.
Ans: Functions (Role) of
the Channels of Distribution: The following are the main function of the channel
of distribution:
(1) Extending Suggestions Regarding
Price-Determination: The middlemen are in the direct contact of the consumers. Therefore,
they possess the knowledge that on what price may the consumer accepts the
product. Thus, the channel of distribution extends necessary advice to the
producers in the price-determination.
(2) Regularizing the Decisions: The channel of distribution
regularizes the decisions and the transactions, resulting in the lowering of
the costs. If the products are sold off to some such store which has many
branches in the city, the producer then doesn't need going to various branches
frequently or repeatedly. The main cause of the same is that if the product
seems suitable for the store, it will itself send the purchase order to the
manufacturer and in this way, with only the limited efforts, it will become
possible to sell the products in bulk quantities.
(3) Managing the Finance: We find that the agents generally send some advance money along with
the order. Very often the product is supplied to the agents through the bank so
that the company gets the documents discounted from the bank. Thus the finance
is arranged. Thus it-is also the function of the agents to arrange the finance.
(4) Performing the Promotion Activities: By the middlemen, particularly by the retailers, the advertisements,
individual sales, and the sales promotion activities are performed. Very often
the middlemen themselves plan and implement the promotion activities and
sometimes the manufacturers to extend their help in such work. Really, the
result or the outcome of the sales, by the producer, very much depends upon the
promotion activities undertaken by the middlemen.
d) Online Marketing.
Ans: Online Marketing
a) Email Marketing: It is a form of direct
marketing which uses electronic mail as a means of communicating commercial or
fund-raising messages to an audience. In its broadest sense, every email sent
to a potential or current customer could be considered email marketing.
However, the term is usually used to refer to:
Ø sending email messages with the purpose of enhancing
the relationship of a merchant with its current or previous customers, to
encourage customer loyalty and repeat business,
Ø sending email messages with the purpose of acquiring
new customers or convincing current customers to purchase something
immediately,
Ø adding advertisements to email messages sent by other
companies to their customers, and
Ø sending email messages over the Internet, as email did
and does exist outside the Internet (e.g., network email and FIDO).
b) Internet Marketing: It is also known as
digital marketing, web marketing,
online marketing, search marketing or emarketing, is referred to as the
marketing (generally promotion) of products or services over the Internet. iMarketing
is used as an abbreviated form for Internet Marketing.
Internet marketing is considered to be
broad in scope because it not only refers to marketing on the Internet, but
also includes marketing done via e-mail and wireless media. Digital customer data
and electronic customer relationship management (ECRM) systems are also often
grouped together under internet marketing.
3.
(a) Discuss the nature and scope of marketing. 6+6=12
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 company’s 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.
Or
(b)
What is marketing environment? Discuss the environmental variables which
influence the environment of an organization. 4+8=12
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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 and
forces, which affect the company’s ability to develop and maintain successful
transactions and 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 and
b)
External Macro Factors
1. Internal Environmental Factors: A Company’s marketing system is
influenced by its capabilities regarding production, financial and other
factors. Hence, the marketing management/manager must take into consideration
these departments before finalizing marketing decisions. The Research and
Development Department, the Personnel Department, the Accounting Department
also has an impact on the Marketing Department. It is the responsibility of a
manager to company-ordinate all department by setting up unified objectives.
2. (a) External Micro Factors: Some of the important external
micro factors are:
1. Suppliers:
They are the people who provide necessary resources needed to produce goods and
services. Policies of the suppliers have a significant influence over the
marketing manager’s decisions because, it is laborers, etc. A company must
build cordial and long-term relationship with suppliers.
2. Marketing Intermediaries: They are the people who assist the flow of products from the producers
to the consumers; they include wholesalers, retailers, agents, etc. These
people create place and time utility. A company must select an effective chain
of middlemen, so as to make the goods reach the market in time. The middlemen
give necessary information to the manufacturers about the market. If a company
does not satisfy the middlemen, they neglect its products and may push the
competitor’s product.
3. Consumers:
The main aim of production is to meet the demands of the consumers. Hence, the
consumers are the center point of all marketing activities. If they are not
taken into consideration, before taking the decisions, the company is bound to
fail in achieving its objectives. A company’s marketing strategy is influenced
by its target consumer. E.g. If a manufacturer wants to sell to the wholesaler,
he may directly sell to them, if he wants to sell to another manufacturer, he
may sell through his agent or if he wants to sell to ultimate consumer he may
sell through wholesalers or retailers. Hence each type of consumer has a unique
feature, which influences a company’s marketing decision.
4. Competitors: A prudent marketing manager has to be in constant touch regarding the
information relating to the competitor’s strategies. He has to identify his
competitor’s strategies, build his plans to overtake them in the market to
attract competitor’s consumers towards his products. Any company faces three
types of competition:
a)
Brand Competition: It is a competition between various companies
producing similar products. E.g.: The competition between
b)
The Product Form Competition: It is a competition between companies
manufacturing products, which are substitutes to each other E.g.: Competition
between coffee and Tea.
c)
The Desire Competition: It is the competition with all other companies
to attract consumers towards the company. E.g.: The competition between the
manufacturers of TV sets and all other companies manufacturing various products
like automobiles, washing machines, etc.
Hence,
to understand the competitive situation, a company must understand the nature
of market and the nature of customers. Nature of the market may be as follows:
a.
Perfect Market
b.
Oligopoly
c.
Monopoly
d.
Monopolistic Market
e.
Duopoly
5. Public: A
Company’s obligation is not only to meet the requirements of its customers, but
also to satisfy the various groups. A public is defined as “any group that has
an actual or potential ability to achieve its objectives”. The significance of
the influence of the public on the company can be understood by the fact that
almost all companies maintain a public relation department. A positive
interaction with the public increases its goodwill irrespective of the nature
of the public. A company has to maintain cordial relation with all groups,
public may or may not be interested in the company, but the company must be
interested in the views of the public.
Public
may be various types. They are:
a.
Press: This is one of the most important groups, which may make or break
a company. It includes journalists, radio, television, etc. Press people are
often referred to as unwelcome public. A marketing manager must always strive
to get a positive coverage from the press people.
b.
Financial Public: These are the institutions, which supply money to the
company. E.g.: Banks, insurance companies, stock exchange, etc. A company
cannot work without the assistance of these institutions. It has to give
necessary information to these public whenever demanded to ensure that timely
finance is supplied.
c.
Government: Politicians often interfere in the business for the welfare
of the society and for other reasons. A prudent manager has to maintain good
relation with all politicians irrespective of their party affiliations. If any
law is to be passed, which is against the interest of the company, he may get
their support to stop that law from being passed in the parliament or
legislature.
d.
General Public: This includes organisations such as consumer councils,
environmentalists, etc. as the present day concept of marketing deals with
social welfare; a company must satisfy these groups to be successful.
2. (b) External Macro
Environment: These
are the factors/forces on which the company has no control. Hence, it has to
frame its policies within the limits set by these forces:
1.
Demography: It is defined as the statistical
study of the human population and its distribution. This is one of the most
influencing factors because it deals with the people who form the market. A
company should study the population, its distribution, age composition, etc.
before deciding the marketing strategies. Each group of population behaves
differently depending upon various factors such as age, status, etc. if these
factors are considered, a company can produce only those products which suits
the requirement of the consumers. In this regard, it is said that “to
understand the market you must understand its demography”.
2.
Economic Environment: A company can successfully sell
its products only when people have enough money to spend. The economic
environment affects a consumer’s purchasing behavior either by increasing his
disposable income or by reducing it. E.g.: During the time of inflation, the
value of money comes down. Hence, it is difficult for them to purchase more
products. Income of the consumer must also be taken into account. E.g.: In a
market where both husband and wife work, their purchasing power will be more.
Hence, companies may sell their products quite easily.
3.
Ecological forces/Physical
Environment or Natural Forces: Ecology is the study
of living things within their environment context. In a marketing context it
concerns the relationship between people and the physical environment.
Environmentalists attempt to protect the physical environment from the costs
associated with producing and marketing products. They are concerned with the
environmental costs of consumption, not just the personal costs to the
consumer. A company
has to adopt its policies within the limits set by nature. A man can improve
the nature but cannot find an alternative for it.
Nature offers resources, but in a limited manner. A product manager
utilizes it efficiently. Companies must find the best combination of production
for the sake of efficient utilization of the available resources. Otherwise,
they may face acute shortage of resources. E.g.: Petroleum products, power,
water, etc.
4.
Technological Factors: From customer’s point of view,
improvement in technology means improvement in the standard of living. In this
regard, it is said that “Technologies shape a Person’s Life”.
Every new invention builds a new market and a new group of customers. A
new technology improves our lifestyle and at the same time creates many
problems. E.g.: Invention of various consumer comforts like washing machines,
mixers, etc. have resulted in improving our lifestyle but it has created severe
problems like power shortage.
5.
Social and Cultural Factors: Most of us purchase because of the
influence of social and cultural factors. The lifestyle, values, believes etc.
is determined among other things by the society in which we live. Each society
has its own culture. Culture is a combination of various factors which are
transferred from older generations and which are acquired. Our behaviour is
guided by our culture, family, educational institutions, languages, etc.
The society is a combination of various groups with different cultures and
subcultures. Each society has its own behavior. A marketing manager must study
the society in which he operates.
Consumer’s attitude is also affected by their society within a society,
there will be various small groups, each having its own culture.
E.g.: In India, we have different cultural groups such as Assamese,
Punjabis, Kashmiris, etc. The marketing manager should take note of these
differences before finalizing the marketing strategies. Culture changes over a
period of time. He must try to anticipate the changes new marketing
opportunities.
4.
(a) What is consumer behaviour? Discuss the psychological determinants of
consumer behaviour. 4+8=12
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.”
Psychological Determinants
of Consumer behaviour
Psychologists have also provided certain clues as to why a consumer
behaves this way or that way. The major psychological determinants internal to
the individual are – motivation-perception learning – attitude and personality.
1. Motivation: Motivation is the ‘why’ of behaviour. It is an intervening variable
between stimulus and response and a governing force of consumer behaviour,
“Motivation refers to the drives, urges, wishes or desires which initiate the
sequence of events known as behaviour,” as defined by Professor M.C. Burk.
Motivation is an active, strong driving force that exists to reduce a state
tension and to protect, satisfy and enhance the individual and his self-concept.
It is one that leads the individual to act in a particular way. It is the
complex network of psychological and physiological mechanisms. Therefore,
motives can be conscious or unconscious, rational or emotional, positive or
negative.
2. Perception: Marketing
management is concerned with the understanding of the process of perception
because, perception leads to thought and thought leads to action. Perception is
the process whereby stimuli are received and interpreted by the individual and
translated into a response.
3. Learning: In behavioural science, learning means any change in behaviour which
comes about as a result of experience. Learning is the process of acquiring
knowledge. Consumer behaviour is a process of learning because, it is modified
according to the customer’s past experience and the objectives he or she has
set. This process of learning is made up of four stages namely, Drive-cue-response and Reinforcement.
‘Drive’ refers to an internal state of tension which warrants action. Thus,
hunger or thirst can be a drive. A ‘cue’ is an environmental stimulus. For instance,
it can be an ad on food item or soft-drink, ‘Response’ represents the person’s
reaction to cues within his environment. Here, it can be purchased of food
items or soft-drink. ‘Reinforcement’ is the response reward. The food item or
soft drink satisfies the hunger or the thirst. When reinforcement happens, the
response may be duplicated resulting in habit formation or absence of
reinforcement results in extinction of learnt habit.
4. Attitude: The concept of attitude occupies a central position in the consumer
behaviour studies in particular and social psychology in general because,
attitude measurements help in understanding and prediction of consumer
behaviour. ‘Attitude’ refers to a predisposition to behave in a particular way
when presented with a given stimulus and the attitudes towards people, places,
products and things can be positive or negative or favourable or unfavourable. Attitudes
develop gradually as a result of experience; they emerge from interaction of a
person with family, friends and reference groups. There are three distinct
components of attitude namely, cognitive, affective and combative, ‘Cognitive’
component is what an individual believes about an object, thing or an event
whether it is good or bad, necessary or unnecessary, useful or useless. It is
based on the reason and is linked with knowledge and about the object, thing or
an event whether it is pleasant or unpleasant, tasty how an individual respond
to the object, thing or an event. It is based on the other two components and
is related with his behaviour. Each of the three attitude components vary
according to both the situation and the person.
5. Personality: Very often, the word ‘personality’ is used to refer to the capacity
of a person for popularity, friendliness or charisma. However, in strict sense,
it refers to the essential differences between one individual and another.
Therefore, personality consists of the mannerisms, habits and actions that make
a person an individual and thereby serve to make him distinct from everyone
else. It is the function of innate drives, learned motives and experience. This
means that an individual respond with certain amount of consistency to similar
stimuli.
Or
(b)
What is meant by market segmentation? State and explain the importance of
market segmentation. 4+8=12
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."
Advantages / Importance / Significance of
Market Segmentation:
The purpose of
segmentation is to determine the differences among the purchases which may
affect the choice of the market area and marketing strategies. Following are
some of the benefits of marketing segmentation.
1)
Facilitates consumer-oriented marketing: Market segmentation facilitates
formation of marketing-mix which is more specific and useful for achieving
marketing objectives. Segment-wise approach is better and effective as compared
to integrated approach for the whole market.
2)
Facilitates introduction of
suitable marketing mix: Market segmentation enables a producer to understand the needs of
consumers, their behavior and expectations as information is collected
segment-wise in an accurate manner. Such information is purposefully usable. Decisions
regarding Four Ps based on such information are always effective and beneficial
to consumers and the producers.
3)
Facilitates introduction of
effective product strategy: Due to market segmentation, product development is compatible with
consumer needs as there is effective crystallization of the specific needs of
the buyers in the target market. Market segmentation facilitates the matching
of products with consumer needs. This gives satisfaction to consumers and
higher sales and profit to the marketing firm.
4)
Facilitates the selection of
promising markets:
Market segmentation facilitates the identification of those sub-markets which
can be served best with limited resources by the firm. A firm can concentrate
efforts on most productive/ profitable segments of the total market due to
segmentation technique. Thus market segmentation facilitates the selection of
the most suitable market.
5)
Facilitates exploitation of
better marketing opportunities: Market segmentation helps to identify promising market opportunities.
It helps the marketing man to distinguish one customer group from another
within a given market. This enables him to decide his target market. It also
enables the marketer to utilize the available marketing resources effectively
as the exact target group is identified at the initial stage only.
6)
Facilitates selection of proper
marketing programme: Market segmentation helps the marketing man to develop his marketing
mix programme on a reliable base as adequate information about the needs of
consumers in the target market is available. The buyers are introduced to
marketing programme which is as per their needs and expectations.
7)
Provides proper direction to
marketing efforts:
Market segmentation is rightly described as the strategy of "dividing the
markets in order to conquer them". Due to segmentation, a firm can avoid
the markets which are unprofitable and irrelevant for its marketing purpose and
concentrate on certain promising segments only. Thus due to market
segmentation, marketing efforts are given one clear direction for achieving
marketing objectives.
8)
Facilitates effective
advertising:
Advertising media can be more effectively used because only the media that
reach the segments can be employed. It makes advertising result oriented.
5.
(a) Critically discuss the objectives and components of product planning. 6+6=12
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.
Objectives
of Product Planning:
Product planning is one of the most important functions of a marketing
manager. The following are its objectives:
Ø To
offer products based upon customer needs.
Ø To
diversify, to capitalize on the company’s strength.
Ø To
utilize the available resources more profitability.
Ø To
decide on the elimination of non-profitable products.
Ø To
change the features of the product as per the changes in the market.
Ø For
long-term survival.
Components of Product Planning:
1.
Product Innovation
2.
Product Diversification
3.
Product Development
4.
Product Standardization
5.
Product Elimination
6.
Product Mix and Product Line
1.
Product
Innovation: Innovation is a part of continuous improvement. In
the absence of innovation, products become stale and 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 and 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.:
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 and Value. E.g.: Each model of T.V. gives a different standard.
Standardization promises a minimum level of performance and 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 and then decide on
discontinuance of a product.
6.
Product
Mix and 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.
Or
(b)
What do you mean by product development? Discuss the various stages involved in
the development of new product. 4+8=12
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) What is meant by packaging? Describe in brief the important functions
associated with product packaging.
4+8=12
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.
Importance and
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)
Discuss the importance of price as a part of marketing mix. Also discuss the
pricing strategies for a new product. 6+6=12
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 generate
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.
Importance of Pricing: 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 or service. 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.
7.
(a) Write a note on the needs and importance of promotion. 6+6=12
Ans: Promotion is an important part of marketing mix of a
business enterprise. Once a product is developed, its price is determined the
next problem comes to its sale i.e., creating demand for the product. It
requires promotional activities. The activities are technique which bring the
special characteristics of the product and of the producer to the knowledge of
prospective customers. Promotion is a process of communication involving
information, persuasion, and influence. The term ‘selling’ is often used
synonymously with promotion. But promotion is wider that selling. Selling is
concerned only with the transfer of title in goods to the purchaser, whereas
promotion includes techniques stimulating demand. These techniques include
advertising, salesmanship or personal selling and other methods of stimulation
demand.
Role and Need of
Promotion
Though people communicate with one another for good
many reasons, promotion seeks to modify behaviour and thoughts of participants
in some way. The aims and tasks of promotion are basically three namely,
informing, persuading and reminding.
Informing: Informative promotion seeks to convert an existing need into want or
to stimulate interest in a new product. It is generally seen active during the
early stages of product life-cycle. People generally do not buy a product or
service support a non-profit organisation unless and until they know its
purpose and its benefits to them. Informative messages are significant in
promoting complex and technical products like automobiles, computers and
investment services. It is also important for a “new” brand being introduced
into an “old” product class. In a nutshell, informative promotion helps in:
increasing the awareness of a new brand, product class or product attribute;
explaining as to how a product works; suggests new uses for a produce; building
a company image.
Persuading: Persuasive promotion is engineered to stimulate a purchase or an
action. Persuasion generally becomes the main promotion goals when the product
enters the growth stage of its life-cycle. By the time, the target market
should have generally product awareness and some knowledge of how the product
fulfills their wants. Hence, the promotional task switches from informing
consumers about the product category to persuading them to buy company’s brand
rather than that of competitors. At the same time, the promotional message
emphasizes the products and real perceived differential advantages by appealing
to emotional needs like love, belonging, self-esteem and ego satisfaction. In
brief, the persuasive promotion aims at encouraging brand switching; changing
customers’ perceptions of product attributes; influencing customers to buy now,
and persuading customers to call.
Reminding: Reminder promotion is used to keep the product and brand name in the
audience’s mind. Reminder promotion is very active during the maturity period
of product life-cycle. It assumes that the target market has already been
persuaded of the good’s or service’s merits. Its purport is to trigger a
memory. Reminder promotion aims at reminding consumers that the product may be
needed in the near future; reminding the consumers where to buy the product and
maintaining consumer awareness.
Importance of Promotion:
It may be studied in the following heads:
1. Importance to Business: Now a day, it is very
necessary to communicate information regarding quality, features, price uses
etc. of the product to the present and potential customers. Then only the
consumers will select the product from a wide range of competing products. Most
modern institutions cannot survive in the long run without performing promotion
function effectively.
2. Economic importance: In economic sense, it
helps to generate employment opportunities to thousands of people. As a result
of promotion sales will increase and it brings economies in the production
process and it reduces the per unit cost of product.
3. Social importance: Promotion has become an
important factor in the campaign to achieve some socially oriented objectives.
For e.g. Ad against smoking, drinking etc. It also helpful to provide informative
and educational service to the society
4. Importance to non-business organizations: The
non-business organizations like govt. agencies, religious institutions,
educational institutions etc. also realized the importance of promotion and they
are using the various elements of promotion mix very widely.
Or
(b)
Why are distribution channels required? Discuss the factors which are to be
considered for selecting a distribution channel. 4+8=12
Ans: Channels of
Distribution
One of the important problems of marketing is the
distribution of goods & services to the right place, person & the right
time. Manufacturers often find it difficult to decide about the effective
distribution system. The channel of distributions refers to the group of
intermediaries, which perform the distribution functions. A
channel of distribution is an organised net-work or a system of agencies and
institutions which, in combination, perform all the activities required to link
producers with users and users with producers to accomplish the marketing task.
According to Philip Kotler, “The distribution is the
set of all firms & individuals that assist in the transferring the little
of goods & services as they move from producers to customers.”
According to Richard Buskirk, “Channel of distribution is
that system of financial organization by which a producer sends his products to
the hands of consumers.”
According to Cundiff and Still, “Channels of distribution
are those marketing nets through which the producer flow the products toward
the market.”
Factors Affecting the
Selection of the Channel of Distribution
Every producer, in order to pass on the product to the
consumer, is required to select a channel for distribution. The selection of
the suitable channel of distribution is one of the important factors of the
distribution decisions. The following factors affect the selection of the
channel of distribution:
A. Factors Pertaining to the Product: Keeping in view the nature, qualities and peculiarities of the
product, could only the channel for distribution be properly made. The
following factors concerning the product, affect the selection of the channel
of distribution:
(1) Price of the Product: The products of a lower price have a long
chain of distributors. As against it, the products having higher price have a
smaller chain. Very often, the producer himself has to sell the products to the
consumers directly.
(2) Perishability: The products which are of a perishable
nature need lesser number of the intermediaries or agents for their sale. Under
this very rule, most of the eatables (food items), and the bakery items are
distributed only by the retail sellers.
(3) Size and Weight: The size and weight of the products too
affect the selection of the middlemen. Generally, heavy industrial goods are
distributed by the producers themselves to the industrial consumers.
(4) Technical Nature: Some products are of
the nature that prior to their selling, the consumer is required to be given
proper instructions with regard to its consumption. In such a case less of the
middlemen arc) required to be used.
(5) Goods Made to Order: The products that are manufactured as per
the orders of the customers could be sold directly and the standardized items
could be sold off only by the middlemen.
(6) After-Sales Service: The products regarding which the
after-sales service is to be provided could be sold off either personally or
through the authorized agents.
B. Factors pertaining to the Consumer or Market:
The following are the main elements concerned with
the consumer or the market:
(1) Number of Customers: If
the number of customers is large, definitely the services of the middlemen will
have to be sought for. As against it, the products whose customers are less in
number are distributed by the manufacturer himself.
(2) Expansion of the Consumers: The span over which are the customers of
any commodity spread over, also affects the selection of the channel of
distribution. When the consumers are spread through a small or limited sphere,
the product is distributed by the producer himself or his agent. As against it,
the goods whose distributors are spread throughout the whole country, for such
distributors, services of wholesalers and the retailer are sought.
(3) Size of the Order: When bulk supply orders are received from
the consumers, the producer himself takes up the responsibility for the supply
of these goods. If the orders are received piece-meal or in smaller quantities,
for it the services of the wholesalers could be sought. In this way, the size
of the order also influences the selection of the channel of the distribution.
(4) Objective of Purchase: If the product is being purchased for the
industrial use; its direct sale is proper or justified. As against it, if the
products are being purchased for the general consumption, the products reach
the consumers after passing innumerable hands.
(5) Need of the Credit Facilities: If, for the
sale of any product, it becomes necessary to grant credit to any customer, it
shall be helpful for the producer that for its distribution, the services of
the wholesalers and retailer businessmen be sought. In this way, the need of
the credit facilities too influences the selection of the channel of
distribution.
C. Factors Pertaining to the Middlemen: The following are the main factors concerned with the middlemen:
(1) Services Provided by Middlemen: The selection
of the middlemen is made keeping in view their services. If some product is
quite new and there is the need of its publicity and promotion of sales, then
instead of adopting the agency system, the work must be entrusted to the
representatives.
(2) Scope or Possibilities of Quantity of Sales: The same
channel should be selected by means of which there is the possibility of more
sales.
(3) Attitude of Agents towards the Producers' Policies: The
producers generally prefer to select such middlemen who go by their policies.
Very often when the distribution and supply policies of the producers being
disliked by the middlemen, the selection of middlemen becomes quite limited.
(4) Cost of Channel of Distribution: While
selecting the channel of distribution, the cost of distribution and the
services provided by the middlemen or agents too must be kept into consideration.
The producers generally select the most economical channel.
D. Factors Pertaining to the Producer or
Company: The following factors, concerning
the producer, affect the selection of the channel of distribution:
(1) Level of Production: The manufacturers who are financially
sound and are of a larger category, are able to appoint the sales
representatives in a larger number and thug could distribute the commodities
(products) in larger quantities. As against it, for the smaller manufacturers,
it becomes necessary to procure the services of the wholesalers and the retail
traders.
(2) Financial Resources of the Company: From the
financial point of view, the stronger company needs less middlemen.
(3) Managerial Competence and Experience: If some producer
lacks in the necessary managerial experience or proficiency, he will depend
more upon the middlemen. The new manufacturers in the beginning remain more
dependent upon the middlemen.
E. Other Factors
(1) Distribution Channel of Competitors: While determining
the channel of distribution, the channels of distribution of the competitors
too must be borne in mind.
(2) Social Viewpoint: What is the attitude of society towards
the distribution, this fact too must be kept into consideration while selecting
the middlemen.
(3) Freedom of Altering: While
selecting the agents, this fact too must be kept into mind that in case of
need, there must be the liberty of changing or replacing the agents
(middlemen).
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