Principles of Marketing Solved Paper 2021 (Held in 2022), Dibrugarh University B.Com 5th Sem CBCS Pattern

 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)
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.


(b) What is marketing environment? Discuss the environmental variables which influence the environment of an organization.     4+8=12


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


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 BPL and Videocon companies.

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.


(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.: 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 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.


(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.


(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.


(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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