Principles
of Marketing Solved Question Paper 2021
4 (Sem-5/CBCS) COM HC1 (POM)
2021 (Held in 2022)
COMMERCE (Honours)
Paper: COM-HC-5016 (Principles of Marketing)
Full Marks: 80
Time: Three hours
The figures in the margin indicate full marks for the questions.
1.
Answer the following as directed:
1x10=10
(a)
Which of the following is not included in demographic segmentation of markets?
(Choose the correct answer)
(1) Gender.
(2) Age.
(3) Education.
(4) Culture.
Ans: (4) Culture.
(b)
Who introduced the concept of ‘Marketing Mix’?
(Choose the correct answer)
(1) William J. Stanton.
(2) Philip Kotler.
(3) Henry L. Hemen.
(4) N. H. Borden.
Ans: (4) N. H.
Borden.
(c) Which
of the following is not an uncontrollable factor of marketing environment?
(Choose the correct answer)
(1) Economic growth.
(2) Level of education.
(3) Marketing mix.
(4) Price Policy.
Ans: (4) Price
Policy.
(d)
Which one of the following is not a psychological factor of consumer behaviour?
(Choose the correct answer)
(1) Motivation.
(2) Family income.
(3) Attitude.
(4) Perception.
Ans: (2) Family
income.
(e)
‘Mobile hand-set’ is an example of – (Choose the correct answer)
(1) Perishable goods.
(2) Non-durable goods.
(3) Durable goods.
(4) None of the above.
Ans:
(3) Durable goods.
(f)
Producing a cheaper product is the focus of the ‘product concept’ of marketing.
(State True or False)
Ans: True
(g)
Packaging is an activity which is concerned with protection, economy,
convenience and promotional consideration. (State True or False)
Ans: True [This definition is given by Philip Kotler]
(h)
Under ‘Penetration pricing policy’, the price of new product fixed at initial
stage is high. (State True or False)
Ans: False, Lower Price
(i) In product
development process, forecasting stage precedes commercialisation and launch of
product. (State True or False)
Ans: True
(j) A company
that attaches the same brand name to all of its products is called family
umbrella branding. (State True or False)
Ans: True
2.
Answer the following questions:
2x5=10
(1) What is green
marketing?
Ans: Green marketing is the marketing of products or services which are
environmental friendly. Examples of green marketing include advertising the
reduced emissions associated with a product’s manufacturing process, or the use
of post-consumer recycled materials for a product's packaging.
(2) What is
trademark?
Ans: A
trade mark is defined as any sign, as any combination of sign, inherently
capable of distinguish the goods or service of one undertaking. Trade marks may
be a combination of words, letters, and numerals.
(3) Write two
advantages of direct marketing.
Ans: a) Direct Marketing eliminates middlemen and intermediaries which
reduces selling cost.
b) Direct marketing focuses on targeted audience only not on large group
of audiences.
(4) What is
impulse goods?
Ans: Impulse goods are those products or goods which are bought by
customers randomly without significant thought process. It happens because of a
well-marketed product
(5) Write
briefly on affiliate marketing.
Ans: Affiliate marketing is the process by which an affiliate earns
a commission for marketing another person's or company's products through its
blog or Youtube channel or mobile application or by sharing link of the
products on social media. The affiliate earns a commission each time someone
makes a purchase through the unique link or code associated with their
recommendation.
3.
Answer any four of the following:
5x4=20
(a) Distinguish
between selling and marketing.
Ans: Difference between Selling and Marketing
|
Selling |
Marketing |
|
a) Selling starts and ends with the seller. |
a) Marketing starts and ends with the consumers. |
|
b) Seeks to quickly convert products into cash. |
b) Seeks to convert customer ‘needs’ into products. |
|
c) Seller is the centre of business universe. |
c) Buyer is the centre of the business universe |
|
d) Views Business as a goods producing process. |
d) Views businesses as a customer satisfying
process. |
|
e) Seller preference determines the formulation of marketing
mix. |
e) Buyer determines the shape marketing mix should
take. |
|
f) Selling is product oriented. |
f) Marketing is customer oriented. |
|
g) Seller’s motives dominate marketing
communication. |
g) Marketing communication is looked upon as a tool
for communicating the benefits / satisfactions provided by the product. |
|
h) Selling concept is short term perspective. |
h) Marketing concept is a long term perspective. |
(b) Write
the importance of study of consumer behaviour.
Ans:
Importance of Consumer Behaviour: The consumer is the focus of marketing
efforts. The modern concept spells out the real significance of buyer’s
Behaviour. The modern
marketing management tries to solve the basic problems of consumers in the area
of consumption. To survive in the market, a firm has to be constantly
innovating and understand the latest consumer needs and tastes. It will be
extremely useful in exploiting marketing opportunities and in meeting the
challenges that the Indian market offers. It is important for the marketers to
understand the buyer behaviour due to the following reasons.
1.
Better Consumer: The study of consumer behaviour enables us to
become a better consumer. It will help consumer to take more precise
consumption related decisions.
2.
Studying the need of consumers: It helps marketers to understand
consumer buying behaviour and make better marketing decisions.
3.
Market Prediction: The size of the consumer market is constantly
expanding and their preferences were also changing and becoming highly
diversified. So without studying it, marketers cannot predict the future of
their business.
4.
Economic
Stability: It is significant for regulating consumption of goods and thereby
maintaining economic stability.
5.
Efficient
utilisation of resources: It is useful in developing ways for the more
efficient utilisation of resources of marketing. It also helps in solving
marketing management problems in more effective manner.
(c) Explain
the factors influencing product pricing decisions.
Ans: Factors affecting pricing may be categorized into two categories-
internal factors and external factors. In each of these categories some may be
economic factors and some may be psychological factors. Some factors may be
quantitative and some others may be qualitative. Some of the important factors
affecting pricing are given below:
A. Internal Factors:
1. Corporate and
marketing objectives of the firm: All pricing
objectives emanate from the corporate and marketing objectives of the firm. A
business firm will have a number of objectives in the area of pricing. Some of
these objectives are long-term, while others are short-term. Profit is one of
the major objectives in pricing. Firms may not be interested in profit
maximization as such, they may be more interested in long term survival and
growth.
2. The image sought
by the firm through pricing: If a firm offers high
quality goods at high prices, the firm will develop a premium image.
3.The characteristics
of the product: Sophisticated, complex and new to the world
products normally carry high prices. Products having more features carry higher
prices.
B. External Factors:
1. Market
characteristics: Some markets are having very stiff competition
and some are having less. The number of players in a market could be more or
less. Market leadership factors also may be different. Different
characteristics of the market have a bearing on price.
2. Buyer behaviour in
respect of the given product: Value conscious buyers are
likely to be interested in low prices. Image conscious buyers may be more
attracted by product image rather than low price of the product.
3. Bargaining power
of major customers: In industrial buying
situations major buyers have a bargaining power. They are in a better position
to negotiate prices.
(d) Explain
briefly the role of channels of distribution in modern business world.
(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.
(5) Serving
the Consumers: Due to the middlemen only, the consumers get
their required products. Only in accordance with the needs of the consumers,
the retailers arrange to purchase the products from the wholesalers and the
manufacturers.
(6) Minimizing
the Total Transactions: If there were no middlemen, the producer would
have been required to sell the product directly to the consumers which would
have result into more of expenditure and trouble. Really speaking, due to the
existence of the middlemen only, the number of total transactions is reduced
which also reduces the costs of distribution.
(e) Write
five advantages of social marketing.
Ans: Advantages of Social Media Marketing:
a) Social media marketing helps in boosting sales and increasing market
share.
b) It helps in building a better image for the company.
c) It provides a competitive edge over the competitors.
d) It helps in quick promotion of new product and forms a base for growth
in the long term.
e) Social marketing promotes initiatives related to green marketing
because no banner and printed materials are used in social marketing.
(f) Explain
the factors influencing in selection of distribution channel.
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 (2) Perishability (3) Size and Weight (4) Technical Nature (5) Goods Made to Order (6) After-Sales Service.
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 (2) Expansion of the
Consumers (3) Size of the Order (4) Objective of
Purchase (5) Need of the Credit
Facilities.
C. Factors Pertaining to the Middlemen: The following are the main factors concerned
with the middlemen:
(1) Services Provided by
Middlemen (2) Scope or
Possibilities of Quantity of Sales (3) Attitude of Agents
towards the Producers' Policies (4) Cost of Channel of
Distribution
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 (2) Financial Resources
of the Company (3) Managerial
Competence and Experience.
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).
4.
Discuss the different components of marketing
environment. 10
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 centre 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 behaviour 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 behaviour. 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.
Or
Discuss
the scope and importance of marketing in modern-day
economy. 5+5=10
Ans: 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.
Importance
and Uses of Marketing (Role of Marketing)
Marketing is
a unique function of business which satisfies social values, needs and wants of
an individual. It serves as the springboard for all industrial production. The
importance of marketing can be studied under the following heads:
A. Uses to
the Society
(1) Employment
of Various Persons: Since the things are manufactured or produced due to
marketing, hence many people get employment through the production activities.
Transport, storage and wholesale and retail services cover many persons. In
this way, it might be said that by marketing the employment is created.
(2) Availability
of Various Products for Use: Today, the sphere of marketing has become
worldwide or international. Due to it, the products manufactured in the foreign
lands too become available for consumption. All this could become possible due
to the growth of the marketing and its development.
(3) Increase
in the National Income of Country: If the marketing activities are
efficiently undertaken and things are produced in accordance with the needs or
requirements of the customers, there must be some increase in the demand of
the things. The production goes up which leads to the increase in the national
income.
(4) Protecting
the Economy against the Evil Effects of Depressions: If the produced
goods are not sold, there shall be piled up the unsold materials with the
producers and they will fall victim to the depression effects. Thus the
marketing keeps the economy safeguarded against the evil effects of the
depressions.
(5) Increase
in the Standard of Living: By an efficient system of marketing, there
is a fall in the prices of the products which ultimately leads to the
enhancement in the consumption capacity of the society which ultimately brings
reforms and improvement in the standard of living of the society.
B. Uses to
the Producers
(1) Helpful
in Earning More Profits: Whenever any manufacturer produces some
commodity, he has to seek the help of so many people in letting the same reach
the hands of the consumers. For instance, there is the need of the middlemen,
the godown owners, the traders, the owners of transport companies, etc. By
establishing proper distribution channel, more profits can be earned.
(2) Getting
Information Regarding Demand. By the study of marketing, the producers
are able to get information regarding the changing demands.
(3) Reduction
in Distribution Costs. By the wide studies of distribution, it is also
known that the products be passed on to the consumers on the minimum possible
costs.
(4) Helpful
in Production Planning. The producer, by studying the marketing, could
plan his various policies pertaining to production.
C. Uses to
the Consumers
While purchasing the products, the
consumers must have full knowledge of the things. This can be possible only
through marketing. By the study of marketing, the consumer is able to acquire
knowledge as to how the middlemen resort to their exploitation. For avoiding
the middlemen's exploitation, the consumer co-operative societies are being
promoted and developed.
D. Uses to
the Middlemen
By the 'middlemen' is meant those
persons who send the products from the producer to the consumer. The lower are
the expenses of the middlemen, the greater is their profit. By studying the
marketing, they get the knowledge as to how the expenses of distribution be
kept lower. Unless the middlemen possess sufficient knowledge of marketing,
they can't become successful.
E. Uses to
the Nation
With the help of marketing, in the
progressive and developing countries too, good managers and entrepreneurs can
be encouraged. For resorting to the most efficient use of the resources available
in the country, marketing of the commodities is very necessary. By the study of
marketing, the economy could be kept safeguarded against the evil effects of
instability. Only due to the marketing, the processes of production and
distribution continue to exist. In it the condition of full employment could be
achieved. Really speaking, marketing occupies an important role in the economic
development.
5.
What is consumer behaviour? Explain the various factors that influencing
consumer behaviour. 2+8=10
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
behaviour 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.”
Factors that influence consumer
behaviour
The
buyer has a selective perception and is exposed to a variety of products and
information. He may ignore certain piece of information whereas actually seek
out some other information whereas actively seek out some other information
Therefore, marketers must fully understand both the theory and reality of
consumer behaviour. A consumer’s buying behaviour is influenced by
psychological, cultural, social and personal factors and they are a part of the
buyer as an individual.
(1) Psychological Factors: The
starting point in the purchase decision process is the recognition of a felt
need. A need is simply the lack of something useful. We all have needs and we
consume different goods and services with the expectation that they will help
to fulfill these needs.
When
a need is sufficiently pressing, it directs the person to seek its satisfaction.
It is known as motive. Thus, motives are inner states that direct people
towards the goal of satisfying a felt need. The individual is moved the root
word for motive to take action to reduce a state of tension and to return to a
condition of equilibrium. Although psychologists do not agree on any specific
classification of needs, a useful theory of the hierarchy of needs has been
developed by Abraham Maslow. His list is based on two important assumptions.
1)
People want animals whose needs depend on what they already possess. A
satisfied need is not a motivator. Only those needs that have not been
satisfied can influence behaviour.
2)
All needs can be ranked in order of importance from the low biological needs to
the higher level psychological needs. Each level of unfulfilled need motivates
the individual's behaviour, and as each successive level of need is fulfilled,
people keep moving on to the next higher level of need.
(2) Cultural Factors: Culture is
the fundamental determination of a person’s wants and behaviour. The growing
child acquires a set of values perceptions, Preferences and Behaviours through
his or her family. Each culture consists of various subcultures that provide
more specific identification. It includes nationalities, religions, social
groups and geographic regions.
Every culture dictates its own unique patterns of social conduct.
Within each religion there may be several sects and sub sects, there may be
orthodox group and cosmopolitan groups. The do’s and don’ts listed out by
religion and culture impacts the individual’s lifestyle and buying behaviour.
(2) Social Factors: Consumer’s
behaviour is influenced by social factors such as reference groups, family,
social roles and status. The buyer is living in a society, is influenced and
There is a constant interaction between the individual and the groups to which
he belongs. All these interactions affect him in his day to day life.
a. Reference Groups: A person’s
reference groups consist of all the groups that have a direct or indirect influence
on his attitude. They can be family friends, neighbours, co-worker, religious,
professional and trade union groups. Reference groups expose an individual to
new behaviours and lifestyles and influence attitude and self-concept. Brands
like Levi, Prologue and Planet M used teenage icon as brand Ambassadors for in
store promotions.
b. Family: The family is the most important
buying organization in society. From parents a person acquires an orientation
toward religion politics and a sense of personal ambition, self-worth and love.
E.g. In traditional joint families, the influence of grandparents on major
purchase decisions affect the lifestyles of younger generations. In urban India
with the growth of nuclear families and both husband and wife working the role
of women in major family decisions is prominent. Children and teenagers are
being targeted by companies using the internet as an interactive device.
c. Role and Status: The
person’s position in each group can be defined in terms of role and status. A
role consists of all activities that a person is expected to perform. Each role
carries a status. A Vice President of marketing has more status than a sales
manager and a sales manager has more status than an office clerk and people
choose those products that reflect and communicate their role and desired
status in society.
(3) Personal Factors: The
personal factors include the buyer’s age and stage in the life cycle,
occupation and economic position, personality and self-conceptand lifestyle and
values.
a. Age and Stage in the Life Cycle: People buy
different products like food, cloths furniture and this is often age related.
Trends like delayed marriages, children migrating to distant cities, tendency
of professionals has resulted in different opportunities for marketers at
different stages in consumer life cycle.
b. Occupation and Economic Position: Occupation
also influences buyer’s behaviour. A blue collar worker will buy work clothes,
work shoes and lunch boxes; a company president will buy dress suits, air
travel and club memberships. Marketers try to identify the occupational groups
and then make products according to their needs and demands. Product choice is
greatly affected by economic circumstances – spendable income, savings and
assets and attitude towards spending and savings.
c. Personality and Self Concept: Each
person has personality characteristics that influence his / her buying
behaviour. Personality means a set of distinguishing psychological traits that
has to response to environmental stimuli. Personality can be a useful variable
in analyzing consumer brand choice. The idea is that brands also have
personalities and consumers like to choose those brands which suits or match
their personality.
d. Income:
The
income of a person has an extremely important influence on his consumption
behaviour. He may wish to buy certain goods and services but his income may
become a constraint. Income in this context really refers to the income
available for spending (i.e., income after tax, provident fund and other
statutory deductions). The person's attitude towards spending versus saving and
his borrowing power are also important influencing factors. Small size
packaging in sachets for products such as tea, shampoo, toothpaste, etc., are
meant for the lower income customers who cannot afford a onetime large outlay
of money on such products.
e. Life
Style: Life styles are defined as patterns in which people live, as
expressed by the manner in which they spend money and time on various
activities and interests. Life style is a 69 function of our motivations,
learning, attitudes, beliefs and opinion, social class, demographic factors,
personality, etc. While reading this unit, you are playing the role of a
student. At the same time, you also have your career, family and social roles
to play. The manner in which you blend these different roles reflects your life
style.
Or
What
is market segmentation? Describe the different bases used for market
segmentation. 2+8=10
Ans:
Marketing Segmentation: A market consists of large number of individual
customers who differ in terms of their needs, preferences and buying capacity.
Therefore, it becomes necessary to divide the total market into different
segments or homogeneous customer groups. Such division is called market
segmentation. They may have uniformity in employment patterns, educational
qualifications, economic status, preferences, etc. Market segmentation enables
the entrepreneur to match his marketing efforts to the requirements of the
target market. Instead of wasting his efforts in trying to sell to all types of
customers, a small scale unit can focus its efforts on the segment most
appropriate to its market. It is defined as “The strategy of dividing the
market in order to consume them”.
According to Philip Kotler, “It is the
subdividing of market into homogenous subsets of consumers where any subset may
be selected as a market target to be reached with distinct Marketing Mix”
According to Philip Kotler, market segmentation means "the act of dividing a market
into distinct groups of buyers who might require separate products and/or
marketing mixes."
According to William J. Stanton, "Market segmentation in the
process of dividing the total heterogeneous market for a good or service into
several segments. Each of which tends to be homogeneous in all significant
aspects."
Basis of Segmentation:
Market
segmentation dividing the Heterogeneous market into homogenous sub-units.
Heterogeneous means mass marketing, which refers people as a people.
Homogeneous means dividing the market into different sub units according to the
tastes and preferences of consumers. The following factors are considered
before dividing the market:
1. Geographic Segmentation: Geographic
segmentation calls for dividing the market into different geographical units
such as nations, regions, countries, cites or neighbourhood. One of the major
geographic segmentation in India is the division of rural & urban areas.
The need to segment the market geographically becomes clearer when we look at
some of the characteristics of the market. In India, there are more than 5000
towns & over 6,38,000 villages. Nearly 87% of these villages have a
population of less than 2000 people. This variation in population is important
for the marketer while formulating marketing strategy & plans. In addition
to this products penetration, income levels & availability of
infrastructure like roads & electricity make the task of geographic
segmentation important. For most products, penetration levels in rural areas are
lower than in urban areas. Income & lifestyle issues influence the
penetration rate of products & services. Eg.: Haats & mandis serve
important roles in the exchange of goods & services in rural areas.
1.
Demographic
Segmentation: In demographic segmentation, the market is divided into groups
on the basis of variables such as age, family size, family life cycle, gender,
income occupation, education religion, race generation, nationality &
social class.
a) Age & Life Cycle Stage: Consumer wants & abilities change
with age. Eg: Hindustan Unilever introduced Pears soap in pink colour specially
for children. Johnson & Johnson Baby Powder & Talcum Powder are classic
examples of products for infants & children. Television channels in India
Indicate the segmentation based on age & life cycle. There are channels
like Aastha & Sanskaar target which towards the old generation, cartoon
network, Disney are channels for children etc.
b) Gender: Men & women have different behavioural orientation.
Gender differentiation has been long applied to product categories such as
clothing, cosmetics & magazines. Eg: Axe deodorant is positioned as a
masculine product. Park avenue from Raymond is positioned as masculine brand.
Bajaj wave is a brand specifically designed for women in the scooter segment.
c) Income: Income segmentation is a long standing practice in a
variety of products & services & is a basic segmentation variable. Eg:
Nirma Washing Powder, was launched as the lowest priced detergent in India
primarily targeted at middle income group. Markets for many consumer’s products
in India are showing rapid growth due to low unit price packaging.
d) Generation: Each generation is profoundly influenced by the
time in which it grows- the music movies, politics.
e) Social Class: Social class has a strong influence on preference
in cars, clothing, home, furnishings, leisure activities, reading habits,
retailers etc.
3.
Psychological factors: In psychographic segmentation, elements like
personality traits, attitude lifestyle and value system form the base. The
strict norms that consumers follow with respect to good habits or dress codes
are representative examples. E.g.: Mr. Donald’s changed their menu in India to
adopt to consumer preference. The market for Wrist Watches provides example of
segmentation. Titan watches have a wide range of sub brands such as Raga, fast
track, edge etc. or instant noodle markers, fast to cook food brands such as
Maggi, Top Ramen or Femina, women’s magazine is targeted for modern women.
4. Economic Factors: On
the basis of economic factors, markets have been classified in the westerns
countries as follows:
a. Upper Class b. Upper-upper class c. Lower-upper class
d. Middle class e. Upper-middle class f. Lower-middle class
g. Lower class h. Upper-lower class i. Lower-lower class
In our country, it is classified as
upper class (rich), middle class, and the lower class. Another classification
based on income in our country is as follows:
a. Very Rich b. The Rich class c. The Aspiration Class and
d. The Destitute.
5. Behaviour Factors: This is one of the most important bases used for
market segmentation. Market is classified on the basis of attitude of consumers
and special occasions.
a.
Occasions:
Sellers
can easily find out certain occasions when people buy a particular product.
E.g.: Demand for clothes, greeting cards, etc. increases during the festival
season. Demand for transportation, hotels etc. increases during the holiday
seasons.
b.
Benefits: Each
consumer expects to fulfill certain desire or to derive some benefits from the
product he purchases. E.g.: A person may purchase clothes to save money and
another to impress others. Based upon this, markets may be classified as
markets for cheap price products and market for quality products etc.
c.Attitude: On the basis of attitude of
consumers, markets may be classified as enthusiastic market, indifferent
market, positive market, and negative market.
6.
What is product life cycle? Describe the different stages of product life
cycle. 2+8=10
Ans: Product Life Cycle: A product is like a human being. It is born, grows up fast, matures and
then finally passes away. Product life cycle is the stages
through which a product or its category is passed. From its introduction to the
marketing, growth, maturity to its decline or reduce in demand in the
market. Not all products reach this final stage, some continue to grow and
some rise and fall. In short, The PLC discusses the stages which a product
has to go through since the day of its birth to the day it is taken away from the
market.
However, the basic difference in case of human beings and
products is that a product has to be killed by someone. Either the company (to
bring better products) or by competition (too much external competition). There
are several products in the market which have lived on since ages (Light Bulbs,
Tube lights), whereas there are others which were immediately taken off the
shelf (HD DVD).
 |
|
Product Life Cycle |
Thus the Product life cycle deals with four
stages of a products life.
Stages of
Product life cycle:
A)
Introduction: The stage 1 is where the product is launched. A product launch is
always risky. You never know how the market will receive the product. There
have been numerous failures in the past to make marketers nervous during the
launch of the product. The length of the introduction stage varies according to
the product.
If
the product is technological and receives acceptance in the market, it may come
out of the introductory phase as soon as it is launched. Whereas if the product
is of a different category altogether and needs market awareness, it may take
time to launch.
Characteristics
of Introductory stages of Product life cycle
Ø Higher investment, lesser profits
Ø Minimal Competition
Ø Company tries to Induce acceptance and gain initial distribution
Ø Company needs Promotions targeted towards customers to
increase awareness and demand for product
Ø Company needs Promotions targeted towards channel to
increase confidence in the product
B)
Growth: Once the introductory phases are over, the product starts showing
better returns on investment. Your customers and channels begin responding.
There is better demand in the market and slowly the product starts showing
profits.
This
is a stage where competition may step in to squash the product before it has
completely launched. Any marketing mistakes done at this stage affect the
product considerably as the product is being exposed to the market and bad news
travels fast. Thus special care has to be taken in this stage to ensure
competition or bad decisions do not affect the growth stage of the product.
Characteristics
of Growth stage of Product life cycle
Ø Product is successfully launched
Ø Demand increases
Ø Distribution increases
Ø Competition intensifies
Ø Company might introduce secondary products or support services.
Ø Better revenue generation and ROI
C)
Maturity stage: One of the problems associated with maturity
stages in a technologically advanced environment is the problem of duplication.
Not only is the product available in duplicate markets, but also there are
several competing products which arise with the same features and capabilities.
As a result, the USP’s of the product become less attractive.
Along
with competition, Penetration pricing becomes a weapon for competitors.
Competitors sell products with the same features at lesser prices thereby
trying to penetrate in the market. Nonetheless, The sales of a product
(especially sales from return customers) is at its peak point during the
maturity stages. The growth of sales may be lesser, but the sales revenue of
the organization is maximum during the maturity stage of product life cycle.
Characteristics
of Maturity stages of Product life cycle
Ø Competition is high
Ø Product is established and promotion expenditures are less
Ø Little growth potential for the product
Ø Penetration pricing, and lower profit margins
Ø The major focus is towards extending the life cycle and
maintaining market share
Ø Converting customer’s product to your own is a major challenge in
maturity stage
D)
Decline: 1 product, 10 competitors, minimum profits, huge amount of
manpower and resources in use – A typical scenario which a product might face
in its last stage. In this stage the expenditures begin to equal the profits or
worse, expenses are more than profits.
Thus
it becomes a typical scenario for the product to exit the market. It also
becomes advantageous for the company as the company can use resources it was
spending on the declining product on an altogether different project.
Characteristics of Decline stages of Product life cycle
Ø Market is saturated
Ø Sales and profits decline
Ø Company becomes cost conscious
Ø A lot of resources are blocked in rejuvenating the dead product.
Or
What
is new product development? Explain the various steps involved in new product
development process. 2+8=10
Ans: New
Product Development refers to the complete process of bringing a new
product to market. This can apply to developing an entirely new product,
improving an existing one to keep it attractive and competitive, or introducing
an old product to a new market.
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 labelling 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.
7.
What is promotion mix? Explain the factors affecting promotion mix
decisions. 3+7=10
Ans: Promotion Mix and
Factors affecting it
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.
There are many factors which influence promotional mix and
they are known as product market factors.
1. Nature of the
product: Different product requires different promotional mixes. Consumer goods
and industrial goods require different strategies. Consumer goods are sold
through advertising, personal selling and displays. But industrial good require
more personal selling.
(a) Product
complexity: If a product is technically sound and complex in nature then it
requires personal selling. For example, Industrial products. On the other hand,
if the product is simple we can go for advertising. For example, most of the
FMCG products.
(b) Brand
differentiation: Promotional mix is affected by brand differentiation and the
degree to which the brand is differentiated from competitor’s brand.
(c) Purchase
frequency: If buyers buy frequently a product, such as soap, tooth paste etc.
the marketer will invest a good amount on advertising to push competition
brands.
2. Nature of the
market: Different market requires different promotional mixes and strategies.
In industrial market, advertising plays a more informative role then the
persuasive role for industrial buyers. Personal selling emphasizes on two
roles, i.e. information and persuasion in the industrial and consumer’s market.
3. Stage in the
product life cycle: The promotional product mix varies within stage in the
product life cycle. The nature of demand varies according to the stages in the
life cycle. During the introductory stage, the customers do not realize the
qualities of the product. Here, information about the product and its benefits
are made known to the buyers. In this stage, more importance must be given to
personal selling and trade shows. In the growth stage, customers know the qualities
of the product. Hence to stimulate demand, advertising must be increased. In
the maturity stage, sales and profits decline and hence all the promotional
activities should be cut down.
4. Market
penetration: Here the product is already known to the buyers. In that
situation, a sustaining promotional strategy is suitable. A brand has
insignificant market penetration means it has a small market or struggling
market. Market size and location: Product’s market size and location also
influences the promotional mix. In narrow market, where the numbers of
potential buyers are small, direct mail is used. In a broad market advertising
is used.
5. Characteristics of
buyers: The characteristics of prospective buyers strongly influence the
promotional mix. Experienced professional buyers such as industrial purchasing
agents need personal selling. Inexperienced buyers need advertising. Some
buyers give importance to time, some to purchase of products, buyers act
according to the influence of friend, relatives etc.
6. Distribution
strategy; Companies fighting more through distribution for establishing their
brands, invest more money on personal selling and advertising. Companies which
have already established their brand in the market have to invest only a small
amount in personal selling and advertising.
7. Pricing strategy:
Pricing strategy influence the promotional mix strategy. If the brand is priced
higher than the competition, more personal selling is needed to get a middleman
to stock and push the brand. If the brand is priced lower, little promotion is
needed.
Or
Highlight
the importance of advertising. In this context, explain how marketing goals are
met with advertising campaigns. 4+6=10
Ans: Importance/Advantages
of Advertising
In
the present day marketing, advertising has become increasingly important to
business enterprises-both large and small. Even non-business enterprises have
recognized the importance of advertising. The various advantages of advertising
are discussed below:
1.
Advantages of Manufacturers
1)
It creates demand for new products
by informing people about the availability and suggesting them about the use of
such goods.
2)
It promotes increased sales by
maintaining the present demand and expanding the markets by attracting more
people to buy.
3)
It creates goodwill by making the
name of the manufacturer and his products famous and known in every home.
4)
It creates steady demand for
products by smoothening out the seasonal fluctuations in demand.
5)
It reduces the cost of production
by making large-scale production possible through creation of demand. The
large-scale production reduces the total cost per unit of production.
2.
Advantages to Consumers
1)
It facilitates purchasing by
educating consumers to select correct brands of commodities which increase
their personal satisfaction.
2)
It makes available goods at
reduced prices as advertisement increases sales, promotes large-scale
production, reduces cost of production and distribution and increases
competition. This result in reduction in prices and consumers get goods at
reduced rates.
3)
It increases the utility of
commodities. Consumers come to know about the proper and diverse use of
commodities through advertising. This helps to increase the utility of
commodities for the consumers.
4)
It ensures good quality of
products. Advertising encourages manufacturers to produce better quality
products which boosts the confidence of the consumers and ensures them availability
of goods quality products.
5)
It reduces the possibility of
being cheated as through advertisements the consumers come to know about the
prices and composition of goods.
3.
Advantages to Salesmen
1)
It creates a proper base for the
salesman by acquainting more people, in a shorter time, with the merits of a
product, its new uses, new varieties and so on.
2)
It educates even salesmen and
increases their confidence, capacity and initiative.
3)
It reinforces the sales points and
simplifies work of the salesmen as they cannot reach all places and at all the
times.
4)
It reduces the effort of the
salesmen as they can reach the right prospects with the least effort.
5)
It increases the remuneration of
salesmen by supplementing their efforts to increase sales and thereby increase
remuneration.
4.
Advantages to the Society
Advertisement is beneficial not only to the manufacturers and the
consumers but also to the society at large in the following ways:
1)
It uplifts the living standards of
the people. Advertising acts as an effective tool in raising standard of
living.
2)
It generates gainful employment
opportunities. Advertisement generates gainful employment opportunities both
directly and indirectly.
3)
It provides new horizons of
knowledge. It improves the knowledge, language and style of the people.
4)
It provides a regular source of
income to newspapers. It has been estimated that nearly 80% of the income of
newspapers and magazines is secured through advertisements. In its absence, the
newspapers and magazines would have become very costly and beyond the reach of
people at large.
5)
It transforms culture of a nation.
The basis of advertising is the taste of the public, its social customs and its
culture. It influences the fashions, tastes, habits, attitudes and likes and
dislikes, etc. of the society at large.
6)
It acts as a barometer of a
nation’s economic growth. Advertising promotes healthy competition and provides
better quality goods at cheaper rates to the society.
***
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