Marketing Management BBA 205

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THIRD SEMESTER
MARKETING MANAGEMENT (BBA-205),
END-TERM EXAMINATION (2009)
Time: 3 Hours. M. M: 75
Q.l. (a) Define the modern concept of marketing. Distinguish between
marketing and selling. (8)
, Sol. The Marketing Concept-Consumer oriented marketing has given rise to a
philosophy in business known as 'marketing concept'. The marketing concept
emphasizes the determination of the requirements of potential customers and
supplying products to satisfy their requirements. Determination of wants of the
customers takes precedence over production. The marketers following consumer
orientation regard the creation of customer and satisfaction of his wants as the
justification of business. Thus marketing concept is based on the following four
fundamental premises: ' '
(i) All company planning and operations should be 'customer-orien,ted
(ii)" The goal of a firm should be profitable sales and not just the volume of sales.
(iii) All marketing activities in a firm should be organizationally coordinated.
(iv) A company must define its markets carefully.
Distinguish between Marketing and selling
Marketing activities indude consumer research (to identify the needs of the
customers), product develoPIPent (designing innovative products to meet existing or
latent needs), advertising the products to raise awareness and build the brand. The
typical goal of marketing is to generate interest in the product and create leads or
prospects.
On the ather hand, sales activities are focused on converting prospects to actual
paying customers. Sales involve directly interacting with the .prospects to persuade
them to purchase the product. '
Marketing thus tends-to focus on the general population (or, in any case, a large
set of people) whereas sales tends tofocus on individuals or a small group of prospects.
, Basis Marketing Selling
Approach Customer orientation - Listens to and
eventual accommodation of the
target market and determine future
needs
One to many
Generate leads - fulfill customer's
wants and needs thru products and!
or the company can offer
Customer orientation - makes
customer demand' match the
products the company
currently offers
Usually one to one
Generate purchases/orders, -
fulfill sales volume objectives
Short term
Once a product has been
created for a customer need,
persuade the customer to
purchase'the product to fulfIll
her needs
P\lsh '
Sales is a narrower concept '
Process
Focus
Horizon Longer term
Identifying customer needs
(research), creating products to meet
thos,e needs, promotions to advertise
said products.
Pull '
Marketing is a wider conceot
Scope
Strategv
Concept
2
- ---
ThirdSemesterMarketingManagement-2009(BBA)
(b) Explainthenatureandimportanceof marketing. (7)
Sol.Marketingisanancientart& iseverywhere. Formallyorinformally,people
& organizationsengageina vastnumbersofactivitiesthatcouldbecalledmarketing.
Good marketinghasbecome anincreasinglyvitalingredientfor busjnesssuccess. It
isembeddedineverythingwe do- fromtheclotheswewear,totheweb we click
"on, to the ads we see. Marketingdeals withidentifying& meetinghuman& social
needsoritcanbedefinedas"meetingneedsprofitably"
TheAmericanMarketingAssociationhasdefinedmarketingas"anorganizational
function & a setofprocessesfor creating,communicating& delivering value to the
customers& for managingcustomer'srelationsinwaysthatbenefittheorganization
& thestakeholders. .
, Or
. .
Marketingmanagementistheart& scienceofchoosingtargetmarkets
"
& getting,
keeping& growingcustomersthroughcreating,delivering& communicatingsuperior
customervalue.
Or
"Deliveringa higherstandard.ofliving" "
For a managerial definition, marketinghas been defined"as "the art ofselling
products"butpeople are surprisedwhentheyhearthatthe mostimportantpartof
marketingisnotselling.Sellingisonlythetipofmarketingiceberg.
Drucker saysit thiswaythat the aim ofmarketing is to know& understand
thecustomersowellthattheproductorservicefits him& sellsitself.Allthatshould
beneededistomaketheproductortheservice available. Eg. ThesuccessofIndica,
the first indigenously designed car by Tata Motors. Backed by strong,customers
delight,thecompanydesigneda vehiclewithluggagespace& legroom& offeredita
priceeasilyavailable& affordabletomiddleclass.
(2) GillettelauncheditsMarchIIIrazor.
, Marketingpeople areinvolvedinmarketing10typesofentities: goods services,
events,experiences,persons,places,properties,organizations,information& ideas.
.Thereforeidealmarketingshouldresultinacustom,erwhoisreadytobuy.
"ImportanceofMarketing:Financialsuccessofanyorganizationdependsupon
marketingabilityqfthatorganization.Thereshouldbesufficientdemand,for products
& servicesS6thecompanycanmakeprofit.Thereforemany'companiescreatedchief
marketingofficer(CMO) positiontoputmarketingona mo.re- equalfootingwithother
e-Ievelexecutives. Marketingis tricky & large well knownbusiness such as Levi's,
Kodak, Xerox etc. hadtorethinktheir business models, Even Microsoft, Wal-Mart,
Nikewhoaremarketleaderl;lcannotrelax.
Thus,wecansaythatmakingtherightdecisionisnoteasy& marketingmanagers
musttake major decisions aboutthefeatures ofthe product prices & design of the
product,wheretosellproducts& expenditureonsales& advertising.Goodmarketing
isno accidentbuta resultofcareful planning& execution. Marketingpractices are
continuouslybeingrefinedtoincreasethechancesofsuccess. Butmarketingexcellence
israre& difficulttoachieve& isaneverendingtask.
E.g.NIRMA- ThebrandiconoftheyounggirlhasadornedthepackageofNirma
washingpowder.Thejinglehasbecomeoneof the, timesinIndianadvertising.
Q. 2. (a) Describe themarketingenvironmentalfactors thataffect the
company'sabilitytoserveitscustomers. (8)
Sol.Themarketingenvironmentconsistsofthefollowingfactors:-
(i) Demographic:Demographicisa majorelementtobestudiedinenvironment
analysis. Several factors relating to population, such as size, growth.rate, age
distribution, religious composition, needtobestudied.Aspects such as composition
LP. UnivE
ofworkforce, householdpatterns,
needtobestudiedastheyareapart4
(ii) Socia-culturalEnvironii
important component the enviro
lifestylesofthepeopleina given sociI
Culture: Culture is the combi
education& upbringing.
SocialClass:Socialclassisonei
AsocialclassisdeterminedbyincomE
(iii) Economic Environment:
environmentare:- .
GeneralEconomicconditio]
EconoInicconditionsof diffe
income,purchasingpowerE
Rateof growthof theecono:
Income,prices&consumpt
availability&.,inten
Inflationrate
Foreignexchangereserves
Exchangerates
Taxrates
Behaviorofcapitalmarket
(iv) PoliticalEnvironment:E
politicalenvironment,sinceeconomic,
depends on its political environmen
industrialgrowthdependstoagreatE
regulatingbusinessesarealsoa prodt
. (v) NaturalEnvironment:
NaturalResQurces: Busi
materialisonemajorpart of
availability;theyneedtokn,
criticalrawmaterials,they
Ecology:Issueslikeenviror
arethefactorsconcernedWi
Climate:Firmswithprodu
dependingonclimatedepen(
withthisfactor.Thesefirms
productionlocation&mark,
(vi)TechnologyEnvironment:]
products but also its rawmaterial pI
segmentse.g. ITIndustry,Telecomind
OptionsAvailableinTech
&costseffectivenessof alter]
changestakingplaceinthe'
Govt'sApproachinResp4
mattersrelatingtotechnolo
firm.
TechnologySelection:Fii
selecttechnologiesthatwill
.
"""' I!!! . .......... ... QstitN!...,,"'''''"'''''''''''''''=='''''''...... .....
:Management-2009(BBA)
Lce of marketing. (7)
,
.',
,erywhere.Formallyorinformally,
factivitiesthatcouldbe.calledmarketmg.
.yvitalingredientfor busjnesssuccess. It
clotheswewear,totheweb sitesweclick
;hidentifying &meetinghuman& social .
sprofitably"
1S definedmarketingas"anorganizational
communicating &deliveringvalue to the
ionsinwaysthatbenefittheorganization
Or , .
ienceofchoosingtargetmarkets,&getting,
ting,delivering&communicatingsuperior
Or
"
ng has been defined'as "the artofselling
theyhearthatthemostimportantpartof
ltipofmarketingiceberg.
laimofmarketingistoknow&understand
lrvicefitshim&sellsitself.AllthatshoUld
erviceavailable.Eg. ThesuccessofIndica,
Motors. Backed by strong,customers
rithluggagespace&legroom&offeredita
:lIeclass.
or. .
rketing10typesofentities: goods services,
lrties,organizations,information&ideas.
lit ina whoisreadytobuy.
11 successofanyorganizationdependsupon
shouldbesufficientdemandforproducts
it.Thereforemanycompaniescreatedchief
larketingona equalfootingwithother
large well knownbusiness such as Levi's,
usinessmodels, EvenMicrosoft,Wal-Mart,
Lt isnoteasy&marketingmanagers .
tures ofthe product prices & designofthe
tureonsales& advertising.Goodmarketing
tlning&execution. Marketingpractices are
chancesofsuccess.Butmarketingexcellence
endingtask.
munggirlhasadornedthepackageofNirma
eoftheenduringtimesinIndianadvertising.
r factors thataffect the
:- . (8)
,rs.
sistsofthefollowingfactors:-
majorelementtobestudiedinenvironment
,opulation, such as size, growth.rate, age
L to be studied.Aspects suchascomposition
I.P University-AkashBooks 3
ofworkforce, household patterns,regionalcharacteristics,populationshiftsetc. alsq
needtobestudiedastheyareapartofdemographicenvironment..
(ii) Socio-cultural Environment: Socio-cultural environment is ap.other
important component ofthe environment. Culture, traditions, beliefs, vaiues &.
lifestylesofthepeopleina givensocietyconstitutethesocioculturalenvironment.
Culture: Culture is the combined result offactors like religion, language,
education&upbringing.
SocialClass:Socialclassisoneimportantconceptinsocioculturalenvironment.
Asocialclassisdeterminedbyincome,occupation,location,ofresidenceetc.
(iii) Economic Environment: The factors to be considered under economic
environmentare:-
GeneralEconomicconditions . .
Economicconditionsof differentsegmentsofthepopulation,theirdisposable
income,purchasingpoweretc.
Rate of growth of the economy, rate of growthof each sectorof the economy
Income,prices&consumptionexpenditure
Creditavailability&,interestrates
Inflationrate
Foreignexchangereserves
Exchangerates
Taxrates
Behaviorofcapital 0
(iv) Political Environment: Economic environment is a by- product ofthe
politicalenvironment,sinceeconomic&industrialpoliciesfollowedbya nationgreatly
depends on its political environment. Political environmerit has several aspects;
industrialgrowthdependstoa greatextentonthepoliticalenvironment.Legislation
regulatingbusinessesarealsoa productofthepoliticalconfiguration.
.(v) NaturalEnvironment:
NaturalResQurces:Businessfirms depend on naturalresources. Raw
material is one majorpart of these resources &firmsare concerned withtheir
availability;theyneedtoknowwhethertherewillbeashortageinanyof the
criticalrawmaterials,theyalsoneedtoknowthetrendsgoverningtheircost.
Ecology: Issues like environmental pollution, protection of wild life &wealth
arethefactorsconcernedwith ecology&govt.
Climate:Firmswithproductswhose demanddependsonclimate&firms
dependingonclimatedependentrawmaterialswillbeparticularlyconcerned
with this factor.These firmshave tostudy the-climatein depth&decide their
productionlocation&marketingterritoriesrespectively..
(vi)TechnologyEnvironment:Fora firm technology affects not onlyitsfinal .
products but also its raw material processes & operations as well as its customer
segmentse.g. ITIndustry,Telecomindustry.
Options AvailableinTechnology:Afirmhastoassesstherelativemerits
&costseffeC,tiveness of alternatetechndlogies. It has to analyzetechnological
changestakingplaceintheindustry.
Govt'sApproachinRespectof Regulationsbythegovt.in
mattersrelatingtotechnologyrestrictthe freedomofoperationofbusiness
. firm. .
TechnologySelection:FirmshavetoscanthetechnologyenVironment&
selecttechnologiesthatwillbeappropriateforthefirm&thegivenproduct
.,
4 ThirdSemesterMarketingManagement-2009(BBA)
LP. Uilive
- marketsituation.Theyhavetoforecasttechnologicaltrends,assesscurrent
Communicate the USPs to the
&emergencytechniques.
advertising.Usebanners,slogans,ioe
(vii) LegalEnvironment- Business have to operate withintheframeworkof yourbrandoffersforthemtodecidew
prevailing legal environment. They have to understand all legal provisions. Legal
4.Knowyourcompetitors
environmentdependson:-
Amarketermustbeaware.
(a) Corporate affairs
knowhowyourproductisb
(b) Consumersprotection
Neverunderestimate your<
. (c) Employeeprotection
LetthetargetaudienCekno
(d) Sectoralprotection
ThemarketersmustalwaysI
(e) Corporateprotection
5.Waystopromotebrands
if) Protectionof society
Choosetherightthemefor1
(g) Regulationsonproducts,prices& distribution'
Usecatchytaglines.
(h) Controlontradepractices
Theadvertisementmustno
(i) Protectingnationalfinusagainstforeignfirms
Themarketermusthighlig}
Q.(b) \What isproductpositioning? Explainstages involvedinproduct
6.Maintainthepositionof theI
positionirtgprocess. . (7)
Foraneffectivepositioning
.Sol.Theprocessofcreatinganimageofaproductinthe the
liveuptotheexpectations0
consumersiscalledaspositioning.PositioninghelpstocreatefirstImpreSSIOnof
Nevercompromiseonquali1
brandsinthemindsoftargetaudience.Insimplerwordspositioninghelpsincreating
Don'tdrasticallyreducethe
a ?fa productorserViceamongsttheconsumers.
.AMercedescarwouldnotbE
Example:
level.
Thebrand"Bisleri"standsfor purity.
ARadowatchwouldloseitsc
Thebrand"CeatTyre"standsforbettergrip.
Watch.
Steps'toproductPositioning
Q.3.(a) Whatarethebasesfor:
Marketerswiththe processtrytocreatea uniqueidentityoraproduct
suitablebasisformarketsegmenta
amongstthecustomers.
Sol.Marketcanbesegmentedusi!
1.Knowyourtargetaudiencewell: It is essentialfor the marketers to first
(i) Geographic'8egmentatio,n:(
identifythetargetaudienceandthenunderstandtheirneedsandpreferences.Every
, marketinto different geographical uni
individualhasvariedinterests,needsandpreferences.Notw<hndividualscanthink'
. neighborhood. Oneofthe
onthesamelines. Knowwhatyourcustomersexpectoutof 'you. Theproductsmust
rural& urbanareas;Theneedto
fulfillthedemandsof thein<lividu,als..
'. whenwe lookatsome ofthe
2.Identifytheproductfeatures:Themarketersthemselyesmustbewellaware'
ofthefeaturesandbenefitsoftheproducts. Itisrightlysaidyoucan'tsellsomething
unless and until youyourselfareconvinced ofit.Amarketer sellingNokia phones
shouldhimselfalsouseaNokiahandsetforthecustomerstobelievehim.
.' 3.UniquesellingPropositions:EveryproductshouldhaveUSPs;atleastsome
features whichareunique:TheorganizationsmustcreateUSPsoftheirbrandsand
effectively communicate the same to the target audience. The marketers must
themselvesknowwhatbesttheirrroductcando.
Findouthow:theproductscanbeusefultotheend-users?
Whydo people "AntiDandruffShampoo?"
than 5000 towns & over 6, 38,600 Vi
populationof lessthan2000people.Tl
marketerwhilefonuulating.marketing
(ii) DemographicSegmentatiOl
dividedintogroupsonthebasisofvari
gender, incomeoccupation, education
class.
Age & Life Cycle Stage: Consu
Hindustan Uni Level introduced Pea
Johnson& JohnsonBabyPowder&
AntiDandruff Shampoosaremeanttogetridofd;mdruff.Thisishowtheproduct .forinfants&: children.Televisionchan
ispositionedinthemindsof theindividuals.
:onage&lifecycle. Therearechannels
.' theoldgeneration,cartoonnetwork,Di
Iridividualspurchase"DaburChyawanprash"tostrengthentheirbody'sinternal
defensemechanismandfight againstgerms, infectionsandstress.That'stheimage
Gender: Men & women have
ofDaburChyawanprashinthemindsofconsumers.
. differentiationhasbeenlongappliedt<
,&magazines. Eg:Axe deodorantis po
USPofaNokiaHandset- Betterbatterybackup.
from Raymondis positione(,l asmascu
.USPofHorlicksFoodles- Healthysnack
designedfor womeninthescootersegn
,.; .
I
5 Management-2009(BBA)
:ecast technologicaltrends,assess' current
lave tooperatewithintheframeworkof
understand all legal provisions. Legal
distribution'
foreignfirms
Explainstagesinvolvedinproduct
, (7)
igeofaproductinthemindsofthe
tioninghelpstocreatefirstimpressionof
.mplerwordspositioninghelpsincreating
theconsumers.
, grip.
trytocreatea uniqueidentityoraproduct
:Itis essentialfor themarketersto first
rstandtheirneedsandpreferences.Every
preferences. No tw<l'individualscanthink'
lers expectoutof 'You. Theproductsmust
, marketersthemselvesmustbewellaware'
.Itisrightlysaidyoucan'tsellsomething
ld ofit.Amarketer sellingNokia phones
rthecustomerstobelievehim.
y productshouldhaveUSPs;atleastsOlne
:>os mustcreateUSPsoftheirbrandsand
e target audience. The marketers must
nido.
IItotheend-users?
mpoo?"
getridof Thisishowtheproduct
Is.
lprash"tostrengthentheirbody'sinternal
ns, infectionsandstress.'Thaestheimage
nsumers.

lck
I.P. University-AkashBooks
Communicate the USPs to the target audience through effectiye ways of
advertising. Usebanners,slogans,insertsandhoardings.Letindividualsknowwhat
yourbrandoffersforthemtodecidewhatisbestforthem.
4.Knowyourcompetitors
Amarketermustbeawareofthecompetitor'sofferings.Lettheindividuals
knowhowyourproductisbetterthanthecompetitors?
Neverunderestimateyourcompetitors.
Letthetargetaudienceknowhowyourproductisbetterthanothers.
Themarketersmust alwaysstrivehardtohaveanedgeovertheircompetitors.
5.Waystopromotebrands
Choosetherightthemefortheadvertisement.
Usecatchytaglines.
Theadvertisementmustnotconfusepeople.
Themarketermusthighlightthebenefitsoftheproducts.
6.Maintainthepositionof thebrand "
Foraneffectivepositioningitisessentialfor themarketerstocontinueto
liveuptotheexpectationsof theend- users..
Nevercompromiseonquality.
Don'tdrasticallyreducethepriceof yourproducts.
'AMercedescarwouldnotbethesameif itspriceisreducedbelowacertain
level.
ARado watCh would loseits charmif its priceis equal to aSonata or a Maxima
Watch.
Q.3.(a) Whatarethebasesformarketsegmentation?Whatshouldbethe
suitablebasisformarketsegmentationincaseof TV? (8)
Sol.Marketcanbesegnlentedusingseveralrelevantbasestheyare:-
(i) Geographic-Segmentation:Geographicsegnlentationcallsfor dividingthe
\marketintodifferent geographicalunitssuchasnations,regions,countries,citesor'
,neighborhood. One ofthe!llajorge0/p"aphic segnlentationinIndiaisthedivisionof
,rural&urbanareas.Theneedto themarketgeographicallybecomesclearer
.. whenwelookatsomeofthecharact\risticsofthemarket. InIndia,therearemore
than5000 towns & over 6, 38,000 villages:'Nearly 87% ofthese villages have a
populationof lessthan2000people.ThisvariationinpopulationisimportantfOf the
marketerwhileformulating.marketingstrategy&plans.
(ii) DemographicSegmentation:IIidemographicsegmentation,themarketis
dividedintogroupsonthebasisofvariablessuchasage,familysize,familylife'cycle,
gender, incomeoccupation, educationreligion, race generation, nationality& social
:1 class., ,
Age & Life Cycle Stage: Consumer wants & abilities change with age. E.g.:
1Hindustan Uni Level introduced Pears soap in pinkcolor especiallyfor 'children.
Johnson&JohnsonBabyPowder&TalcumPowderareclassicexamplesofproducts
,for infants&; children.TelevisionchannelsinIndiaIndicatethe' segmentationbased
i onage&lifecycle. TherearechannelslikeAastha&Sanskaartargetwhichtowards
.theoldgeneration,cartoonnetwork,Disneyarechannelsforchildrenetc.
Gender: Men & women have different behavioral orientation. Gender
'differentiationhasbeenlongappliedtoproductcategoriessuchasclothing,cosmetics
;& magazines. Eg:Axe deodorantispositionedasamasculine product. ParkAvenue
.from Raymond is positionec;l asmasculinebrand. Bajaj waveis a brand'specifically
,designedforwomeninthescooterseginent.
6
-14'

Third MarketingManagement-2009(BBA)
Income:Incomesegmentationisa longstandingpracticeina varietyofproducts
& services & is a basic segmentationvariable. E.g.: Nirma Washing Powder was
launchedasthelowestpriceddetergentinIndiaprimarilytargetedatmiddleincome
group.Marketsformanyconsumers'productsinIndiaareshowing-rapidgrowthdue
tolowunitpricepackaging.
SocialClass:Socialclasshasa stronginfluenceonpreferencein, cars,clothing,
home,furnishings,leisureactivities,readinghabits,retailersetc.
(iii)PsychographicSegmentation:Inpsychographicsegmentation,elements
like personality traits, attitude lifestyle & value system form the base. The strict
norms that consumers follow with respect to good habits or dress codes are
representativeexarr.ples.E.g.: Mr. Donald'schangedtheirmenuinfndiatoadaptto
consumerpreference.Titanwatches havea wide rangeofsubbrands suchas Raga,
_fasttrack,edgeetc.orinstantnoodlemarkers,fasttocookfoodbrandssuchasMaggi,
TopRamenorFemina,
(iv)BehavioralSegmentation:Marketscanbesegmentedonthebasisofbuyer
behavioraswell.Theprimaryideain buyerbehavioristPatdifferentcustomergroups
expectdifferentbenefitsfromthesameproduct& accordinglytheywillbedifferentin
their motives_inowningit. Inbuyerbehaviorbasedsegmentationalso, several sub
factorsformthebasis.E.g.:Purchaseoccasioncanbeonebase,buyercanbesegmented
onthebasis01whethertheyareregularbuyersorspecialoccasionbuyers. Degreeof
usecanbeanotherbase,theycanbesegmentedonthebasisofwhethertheyarelight,
mediumorheavyusersoftheproductorwhethertheyareenthusiasticorindifferent
ornegativetowardstheproduct._ -
MarketSegmentationof TV _
Geographicsegmentationanddemographicsegmentationcanbe usedasbases'
for sellingTV. Ingeographicsegmentationmarketis dividedbylocation. Marketers
haveobserveddivergentconsumerpurchasingpatternsamongurban,'sub-urbanand
- ruralareas.Whiledemographicsegmentationistheprocessofsegmentingthemarket
on demographic characteristics. Age, sex, marital status,income, occupation and
educationaremostoftenusedasthebasisfordemographic
(b)Whatistargetmarket?ExplainthePhilipKotler'sfivestepswhichare
involvedintargetmarketselection. '. (7)
SoLA targetmarketis a group ofcustomers -thatthe business has decided to
aim its marketingefforts and ultimatelyits merchandise towardsPlAwell-defined
targetmarketis thefirst element to a marketingstrategy. The targetmarket and
themarketingmixvariables ofproduct, place(distribution),promotionandpriceare
thefourelementsofa marketingmixstrategythatdeterminethesuccessofa product
inthemarketplace.
PhilipKotler'sfive stepswhichareinvolvedintargetmarketselection
(i) UndifferentiatedMatketing- Usinganundifferentiatedmarketing(ormass
marketing)strategy,afirmmightdecidetoignoremarketsegmentdifferences
andtargetthewholemarketwithoneoffer. Thismassmarketi.p.gstrategy
focuseson what is common in the needs ofconsumers rather than on what is
- -different.Thecompanydesignsaproductandamarketingprogramthatwill
appealtothelargestnumber
(ii) DifferentiatedMarketing- Usinga differentiatedmarketing(orsegmented
marketing)strategy,a firmdecidestotargetseveralmarketsegmentsand
designs separateoffersfor each. Generalmotorstriesto producea carfor
every"purse,purpose,andpersonality.".WhileHindustanUnilevermarkets
eightvariantsofsoaps
(iii) ConcentratedMarketing- Usinga concentratedmarketing (or niche
marketing)strategy,instead, of going after a small share of a large market,
LP. Uni
thefirmgoesafteralarg
Yetthesmaller,upscale
itsgiantrivals.Through
marketpositionbecause
nichesitservesandthe
startedasanicher,sellinl
consumers.Today,itis0
(iv) Micro marketing- It is
programstosuitthetast
.seeingacustomerineve
everycustomer.
(v) LocalMarkettng- It inv(
andwantsoflocalcuston
stores.Forexample,Wa
meettheneedsoflocals
Q.4.(a)Whatdoyoumean1
involvedin-theprocessofdevel4
SoLTheoverallprocessofstra
marketing plan creation and eval
Inbusinessandengineering,newI
of bringinga newproducttomarke
andcanbe tangible (thatis, some:
service,experience,orbelieD.There
one involves the idea generation,
involvesmarket andmark,
developmentasthefirststageingl
theoverallstrategicprocessofprod
theirmarketshare.
Thesevenstagesorprocessor
arelistedasfollows:
1. Ideageneration.-
2. Ideascreening.
3.. Concepttesting.
4. Business an;llysis.
5. Productdevelopment.
6. Testmarketing
7. Commercialization
Nowlet'sdiscusseachstageill
1.Ideageneration:Thefirst:
Newideascanbegeneratedby:
Conductingmarketingr
invitingsuggestionsfrOJ
Invitingsuggestionsfro
Brainstormingsuggesti
SearchingindifferentD
new-productideas.
Gettingfeedbackfromal
Studyingthenewprodl
7 gManagement-2009(BBA)
gstandingpracticeina varietyofproducts
riable. E.g.: Nirma Washing Powder was
Indiaprimarilytargetedatmiddleincome
lctsinIndiaareshowing rapidgrowthdue
ginfluenceonpreference in. cars,clothing,
inghabits,retailersetc.
:Inpsychographicsegmentation,elements
& value system form the base. The strict
:pect to good habits or dress codes are
I's changedtheirmenuinIndiatoadaptto
a wide rangeofsubbrandssuchasRaga,
;ers,fasttoco()kfood brandssuchasMaggi,
ketscanbesegmentedonthebasisof buyer
!r behaviorist}:J.atdifferentcustomergroups
oduct& accordinglytheywillbedifferentin
iviorbasedsegmentationalso, severalsub
ioncanbeonebase,buyercanbesegmented
myersor specialoccasionbuyers.Degreeof
entedonthebasisof whethertheyarelight,
whethertheyareenthusiasticorindifferent
graphic segmentationcanbeusedas bases
>n marketis divided bylocation. Marketers
asingpatternsamongurban,'sub-urbanand
Ltionistheprocessofsegmentingthemarket
!X, marital status,'income, occupationand
is fordemographicsegmlmtation.
11 thePhilipKotler.'sfivestepswhichare
. . - . . (7)
:ustomers'that the business has decided to
, itsmerchandise towards,l11 Awell-defined
marketing strategy. The targetmarket and
place(distribution),promotionandpriceare
ltegythatdeterminethesuccessof a product
lvolvedintargetmarketselection
fsinganundifferentiatedmarketing(ormass
iltdecidetoignoremarketsegmentdifferences
!lithoneoffer. Thismassmarketi:pgstrategy
heneedsof consumersratherthanonwhatis
; aproductandamarketingprogramthatwill
Ifbuyers.
nga differentiatedmarketing(orsegmented
cidestotargetseveralmarketsegmentsand
:h. Generalmotorstriestoproducea carfor
lonality.".While HindustanUnilevermarkets .'
singa concentrated marketing(or niche
fgoingaftera smallshareofalargemarket, .
l.P University-AkashBooks
thefirmgoesaftera largeshareofoneorafew smallersegmentsorniches.
Yetthesmaller,upscaleretailerisgrowingfasterandmoreprofitablythan
itsgiantrivals.Throughconcentratedmarketing,thefirmachievesastrong
marketpositionbecauseofitsgreaterknowledgeof consumerneedsinthe
nichesitservesandthespecialreputationitacquires.Forexample,Nirma
startedasanicheI',sellingonlylow- priceddetergentstoruralandsemi-urban
consumers.Today,itisoneofthebiggestdetergentbrandsinIndia.
(iv) Micro marketing- Itis the practice oftailoringproducts andmarketing
programstosuitthetastesof specificindividualsandlocations.Ratherthan
seeingacustomerineveryindividual,micromarketersseetheindividualin
everycustomer.
(v) LocalMarkettng- Itinvolvestailoringbrandsandpromotionstotheneeds
andwantsoflocalcustomergroups- cities, andevenspecific
stores. Forexample,Walmartcustomizesitsmerchandisestorebystoreto
meettheneedsoflocalshoppers.
Q.4.(a)Whatdoyoumeanbyproductdevelopment?Whatarethestages
involvedintheprocessofdevelopinganewproduct? (7)
Sol.Theoverallprocessofstrategy,organization,conceptgeneration,productand
marketing plan creation and evaluation, and commercialization ofa new product.
Inbusinessandengineering,newproductdevelopment(NPD)isthecompleteprocess
ofbringinga newproducttomarket.Aproductisa setofbenefitsofferedfor exchange
andcanbe tangible(thatis, somethingphysicalyou'can,touch)orintangible(like a
service,experience,orbelief).TherearetwoparallelpathsinvolvedintheNPDprocess:
one involves the idea generation,product designand detail engineering; the other
involvesmarket andmarketinganalysis.Companiestypicallyseenewproduct
developmentasthefirststageingeneratingandcommercializingnewproductwithin
theoverallstrategicprocessof productlifecyclemanagementusedtomaintainorgrow
theirmarketshare.
Thesevenstagesorprocessorstepsinvolvedinthedevelopmentofa newproduct
arelistedasfollows:
1. Ideageneration.
2. Ideascreening.
3. Concepttesting.
4. Business an;ilysis.
5. Productdevelopment.
6. Testmarketing
7. Commercialization
Nowlet'sdiscusseachstageintheprocessofa new-productdevelopment.
'1. Ideageneration:Thefirststepinnew-productdevelopmentisidea generation.
Conductingmarketingresearchtofindouttheconsumers'needsandwants.
invitingsuggestionsfromconsumers.
Invitingsuggestionsfromemployees.
Brainstormingsuggestionsfornew-productideas.
Searchingindifferentmarketsviz.-, nationalandinternational-marketsfor
new-productideas.
Gettingfeedbackfromagents ordealersaboutservicesofferedbycompetitors.
Studying thenewproductsof thecompetitors.
2. Ideascreening:Mostcompanieshave a "IdeaCommittee."This committee
I
studiesalltheideasverycarefully.Theyselectthegoodideasandrejectthebadideas.
Beforeselectingorrejectinganidea,thefollowingquestionsareconsideredorasked:
I
1. Isitnecessarytointroduceanewproduct?
2. Cantheexistingplantandmachineryproduce newproduct?
3. Cantheexistingmarketingnetworksellthenewproduct?
4. Whencanthenewproductbreakeven?
Ifthe answers to these questions are positive, then theidea of!l- new-product
development is selected else itis rejected. This step is necessaryto avoid product
failure.
3. Concepttesting:Concepttestingisdoneafterideascreening. It isdifferent
fromtestmarketing.Inthisstageofconcepttesting,thecompanyfindsout: .
1. Whethertheconsumersunderstandtheproductideaornot?
2. WhethertheconsumersI}eedthenewproductornot?
3. Whethertheconsumerswillaccepttheproductornot?
Here,a smallgroupofconsumersiSSEflected.Theyaregivenfullinformationabout
.thenewproduct. Thentheyareaskedwhattheyfeelaboutthenewproduct.Theyare
askedwhethertheylikethenewproductornot.So,concepttestingisdonetofindout
theconsumers'reactionstowardsthenewproduct. Ifmostoftheconsumerslikethe
product,thenbusinessanalysisisdone. .
li. Businessanalysis:Businessanalysisisaveryimportantstepinnew-product
development. Here, a detailed-business analysis is done. The company finds out
whetherthenewproductiscommerciallyprofitableornot. So,thecompanystudies
thenew productfrom thebusiness pointofview. Ifthenewproductisprofitable, it
willbeaccepted.elseitwillberejected. .
5.Productdevelopment:Atthis stage,thecompanyhas decidedtointroduce
the new productin the market. It will take all necessary steps to produce and
distribute the new product. The production departmentwill make plans to produce
the product. Themarketingdepartment will make plims to distribute the product.
ThefinancedepartPlent providethefinanceforintroducingthenewproduct.The
advertisingdepartmentwill plantheadvertisements for thenewproduct. However,
allthisisdoneasa smallscaleforTestMarketing.
6.Testmarketing:Testmarketingmeanstointroducethenewproductonavery
smallscaleina very smallmarket.If thenew productis successful inthismarket,
thenitisintroducedona largescale.However,iftheproductfailsinthetestmarket,
thenthecompanyfinds outthereasonsforitsfailure. It necessarychangesin
the newproductandintroduces itagainina smallmarket. If the newproductfails
again the company will reject it:. Test marketingreduces the riskoflarge-scale
marketing.It isa safetydevice. It isverytime-consuming.Itmustbedoneespecially
forcostlyproducts.
7. COJQmercialization:If the testmarketingis successful, then the company
introducesthenew productona largescale, sayall over thecountry. Thecompany
makes a large investment in thenew product. It produces and the new
producton a huge scale. It advertises the new: productonthe mass media like TV,
Radio,NewspapersandMagazines,etc. .
(b) Explain the concept ofproduct life cycle. Suggest appropriate
marketingstrategiesforeachstageof theproductlifecycle.(8)
Sol.Product management(orPLCM)isthesuccessionofstrategiesused
bybusinessmanagementasa productgoesthroughitslife.cycle. Theconditioninwhich
a productis sold(advertising, saturation)changes over timeandmustbemanaged
as itmoves throughits su,ccessionofstages. he concept of. product life cycle (PLC)
concernsthelifeofa productinthemarketwithrespecttobusiness/commercialcosts
LP. Uni
andsalesmeasures.Theproductlil
many professional disciplines, ani
managementmakesthefollowing1
Productshavealimited
Productsalespassthrou
opportunities,andprohl
ProductsrequirediffereI1
andhumanresourcestr:
Strategiesusedatdifferent
IntroductionstageofPLC:
Theproductis promotedtocreatea
a skimmingprice strategyisempl
fewchannelsof distribution.Advel
GrowthstageofPLC: Com
similarofferings. Productsbecome
venturesandtakeeachotherover.,
brand.Marketsharetendstostl:\bi
marketplace.
MaturitystageofPLC:Tho
spend longest in this phase. SaIl
Producersattemptto differentiate
and intense competition occur.
Producersbeginto-leavethemark
widespreadanduses a greaterVal
competition.
Decline stage ofPLC:At tl
examplemoreinnovativeproduct!
There is intense price cuttingaI
market.Profitscanbeimprovedb)
Q.5.(a) thetermpri.
forcesthatinfluencethepricinl
Sol.Thetermpriceisthequar
toanotherinreturnforgoodsorseI
orothermeasure' ofagood
.As theconsiderationgiven in
theessentialbasisof commercial t
Factorsaffectingpricingdecisi
NumerousfactorsaffecttheJl
couldbestudiedundertwogrOUP!
factors aretheforces which can1
company objectives, marketingIJ
outsidethefirmoverwhicha busi
Internal' factors .
Marketing objectives
Marketing mix
strategy
Costs
Organizational
considerations
Facto
9 lanagement-2009(BBA)
e a "Idea Committee." This committee
thegoodideasandrejectthebadideas.
ringquestionsareconsideredorasked:

ryproducethenewproduct?
sellthenewproduct?
:m?
,sitive, thenthe ideaofa new-product
his.step is necessary.to avoid product
oneafterideascreening.It isdifferent
<lsting, thecompanyfindsout:
1theproductideaornot?
lWproductornot?
theproductornot?
id.Theyaregivenfullinformationabout
.eyfeel aboutthenewproduct.Theyare
>t. So,concepttestingisdonetoundout
lduct. Ifmostoftheconsumerslikethe
isa veryimportantstepinnew-product
ilysis is done. The company finds out
lfitable ornot. So, thecompany studies
iew. Ifthe new productisprofitable,it
,thecompanyhasdecidedto introduce
.e all necessary steps to produce and
lepartmentwill make plans to produce
.make plans to distribute the product.
ICe forintroducingthenewproduct.The
sementsfor thenewproduct. However,
eting.
,s tointroducethenewproductonavery
productissuccessful inthismarket,
r,if theproductfailsinthetestmarket,
sfailure. ItmaJl:-es necessarychangesin
, smallmarket.If thenewproductfails
keting reduces the riskof large-scale
(i-consuming.It mustbedoneespecially
keting is successful, thenthecompany
sayall overthe country. The company
:it. It, produces anddistributesthe new
lW, product on the mass likeTV,
:t life cycle. Suggest appropriate
,productlifecycle.(8)
isthesuccessionofstrategiesused
oughitslife-eycle.Theconditioninwhich
anges over time andmustbe managed
.he conceptof. product life cycle (PLC)
ithrespecttobusiness/commercialcosts
J.P. University-AkashBooks
andsalesmeasures.Theproductlifecycle proceedsthroughmultiplephases,involves
many professional disciplines, and requires many skills, tools and processes. PLC
managementmakesthefollowingthree,assumptions: '
Productshavealimitedlifeandthuseveryproducthaslifecycle.
Productsalespassthroughdistinctstages,eachposingdifferentchallenges,
opportunities,andproblemstotheseller.
Productsrequiredifferentmarketing,financing,manufacturing,purchasing,
andhumanresourcestrategiesineachlifecyclestage.
Strategiesusedatdifferentstagesof PLC
IntroductionstageofPLC: The need for immediateprofitis not a pressure:
Theproductispromotedtocreateawareness.Iftheproducthasnooi fewcompetitors,
a skimmingpricestrategyis employed. Limitednumbersofproductareavailablein
few channelsofdistribution.Advertisingdifferentiatestheproduct.
Growth stage ofPLC: Competitors are attracted intothe marketwith very
similarofferings.Productsbecomemoreprofitableandcompaniesform alliances,joint
venturesandtakeeachotherover.Advertisingspendishighandfocusesuponbuilding
brand.Marketsharetendstost&bilize.Advertisingestablishesparticipationwiththe
marketplace.
MaturitystageofPLC:Those products thatsurvivetheearlierstagestendto
spend longest in this phase. Sales grow ata decreasing rate and then stabilize.
Producersattemptto differentiate products andbrands are key to this. Price wars
and intense competition occur. At this pointthe marketreaches saturation.
Producersbeginto-leavethemarketdue to poor margins. Promotionbecomes more
widespreadanduses a greatervarietyQf media.Advertisingputspriceaheadofthe
competition.
Decline st&ge ofPLC:At this point there is a downturn inthe market. For
examplemoreinnovativeproducts areintroducedorconsumertasteshavechanged.
There is intense price cutting and many more products are withdrawn from the
market.Profitscanbeimprovedbyreducingmarketingspendandcostcutting..
Q.5.(a) Det1nethetermprice.Describethevariousinternaland'external
forcesthatinfluencethepricing of a firm. ,'__' (8)
Sol.Thetermpriceisthequantityofpaymentorcompensationgivenbyoneparty
toanotherinreturnforgoodsorservices.Avaluethatwillpurchasea definitequantity,
orothermeasureofagood<ir service.
Astheconsiderationgiven in exchange for transfer of ownership, price forms
theessentialbasisof .commercial transactions.
Factorsaffectingpricingdecisions
Numerousfactors affectthepricingpoliciesanddecisions ofa firm. Suchfactors
couldbestudiedundertwogroups:(i) InternalFactors;(ii)Externalfactors. Internal
factors are theforces which canbe controlled by a firm to a certainextentsuch as
company objectives, marketing mix, costs, etc. But external factors are the forces
outsidethefirmoverwhichabusinesshasnocontrol.
Internal' factors
External factors
Nature of the market
Marketing mix
and demand
strategy
1""'...-:.-... Competition
Other environmental
Organizational
factors (economy,'
considerations
resellers, government)
Costs
Factorsaffecting pricedecisions
I
10 ThirdSemesterMarketmgManagement-2009(BBA) LP. Ur
InternalFactors Q.6. (a) Explainthefactor
(1) MarketingObjectives:Before price,thecompanymustdecideon
distributionchannels.
itsstrategyfortheproduct.If thecompanyhasselecteditstargetmarket Sol.FactorsinchoiceofDistr:
andpositioningcarefully,thenitsmarketingmixstrategy,includingprice,
(A)Product Consideration
will befairly straightforward. For example,ifGeneralMotors decides to
isone ofthe important eiemenb
produceanewsportscartocompetewithEuropeansportscarsinthehigh-
productrelatedfactors are:
incomesegment,thissuggestschargingahighprice.Atthesametime,the
Productsoflow unitva
companymay seek'additional objectives. The clearer a firm is aboutits
middlemen.Whereas,e:
objectives, the easieritistosetprice. Examples ofcommon objectives
solddirectlybythepro(
aresurvival, current profit maximization, market share leadership, andproduct
Perishableproducts; pI
quality leadership.
style aswellasheavy:
(2) MarketingMix Strategy: Price is only oneof the marketing mix toolsthat
andaregenerallydistri
acompanyusestoachieveitsmarketingobjectives.Pricedecisionsmustbe
Industrial products ree
coordinatedwithproductdesign, distribution, andpromotiondecisionsto
serviceareoftensolddiI
formaconsIstentandeffectivemarketingprogram.Decisionsmadeforother
of technicalnatureareI
marketingmixvariablesmayaffectpricingdecisions.
(3) Costs:Costssetthefloorforthepricethatthecompanycanchargeforits
Allentrepreneurprodu
to setuphisownretail
product.Thecompanywantstochargeapricethatbothcoversallitscosts
forproducing,distributing,andsellingtheproductanddellversafairrateof
otherhand,firmsprodu
returnforitseffortandriskAcompany'scostsmaybeanimportantelement
throughwho:
initspricingstrategy. .
Anewproductneedsg
hencefewmiddlemenn
(4) OrganizationalConsiderations:Management mustdecidewhowithinthe
organization shouldset prices. Companies handle pricingin a varietyofways. (B) Market Consideration
Insmallcompanies,pricesareoftensetbytopmanagementratherthanby distributionchannelisthenature
themarketingors'alesdepartments.Inlargecompanies,pricingistypically inthisrespectare:-
handledbydivisionalorproductlinemanagers.
If themarketfor thepI
ExternalFactors
distributionwillnotne
(1) TheMarketandDemand:Whereascostssetthelowerlimitof prices,the
largequantities.short0
marketanddemandsettheupperlimit.Bothconsumerandindustrialbuyers
thecaseofthegoodsme
bahincethepriceofa productorservice againstgthebenefitsofowningit.
beinvolved.
Thus, before setting prices, the marketer must understand the relationship
Ifthe number ofprospee
l
.betweenpriceanddemandforitfiproduct. .
isgeographicallylocatl:
(2) Competitors' Costs, Prices, and Offers: Another external factor affecting While in case of a largE
thecompany'spricingdecisionsiscompetitors'costsandpricesandpossible becomesnecessary.
competitorreactionstothecompany'sownpricingmoves.Aconsumerwhois
Ifthecustomers placE
consideringthepurchaseof aCanoncamerawillevaluateCanon'spriceand
preferred.But,ifthepre
valueagainstthepricesandvaluesofcomparableproductsmadebyNikon,
todistributesuchprod
Minolta,Pentax,andothers. .
(C) OtherConsiderations:-
(3) Economicconditions:EconomicConditionscanhavea strongimpacton
musttake into accountwhile che
the firm's pricingstrategies. Economicfactors suchasboom orrecession,
follows:-
inflation,andinterestratesaffectpricingdeCisionsbecausetheyaffectboth
Anewbusinessfirmill<
thecostsofproducingaproductandconsumerperceptionsoftheproduct's
promoteitsproduct,wh
priceandvalue. .
maysellitsproductdi]
(4) Thegovernment:It is anotherimportantexternal influence onpricing
Asmallfirmwhichcar
decisions; .
hastodependonmiddl,
(5) Socialconcerns:Insettingprices,a company'sshort-termsales,market
firmcanestablishitsI
share, and profit goals may have to be tempered by broader societal
IfthedemandfortheJ:
consiaerations. . :i
tpprofitably!iistributl
(b) Whatisconsumeradoption?Explainthestepswhichareinvolvedin
ifthedemandislowOJ
consumeradoptionprocess. (7)
All thesefactors orconsider
Sol. ReferEndTermQ.3(a)2011
areinter-relatedandinterdepen
, price,thecompanymustdecideon
hecompanyhasselectedits market
tsmarketingmixstrategy,includingprice,
For,example, ifGeneral Motors decides to
petewithEuropeansportscarsinthehigh-
:hargingahighprice.Atthesametime,the
objectives. The clearera firm is aboutits
let price. Examples ofcommon objectives
market share leadership, andproduct
eisonlyoneofthemarketingmixtoolsthat
arketingobjectives.Pricedecisionsmustbe
n, distribution,andpromotiondecisions to
larketingprogram.Decisionsmadeforother
ffectpricingdecisions.
le pricethatthecompanycanchargeforits
chargea pricethatbothcoversallitscosts
sellingtheproductanddeliversafairrateof
lmpany'scostsmaybeanimportantelement
ns:Managementmustdecidewhowithinthe
ompanies handle pricing in avariety of ways.
)ftensetbytopmanagementratherthanby
ents.Inlargecompanies,pricingistypically
tlinemanagers.
ilereascostssetthelowerlimitof prices,the
limit.Bothconsumerandindustrialbuyers
:Jr service benefitsofowningit.
marketermustunderstandtherelationship
product.
IndOffers: Anotherexternalfactoraffecting
iscompetitors'costsandpricesandpossible
pany'sownpricingmoves.Aconsumerwhois
anoncamerawillevaluateCanon'spriceand
luesof comparableproductsmadeby
tmicConditionscanhavea strongimpacton
:conomicfactors suchasboom orrecession,
pricingdecisionsbecausetheyaffectboth
:taridconsumerperceptionsoftheproduct's
Ler importantexternal influence on pricing
rices,a company's short-termsales,market
have to be tempered by broader societal
thestepswhichareinvolvedin
, (7)

J.P. University-AkashBooks 11
Q.6. (a) Explainthefactorsthatshouldbeconsideredintheselectionof
distributionchannels. (7)
Sol.FactorsinchoiceofDistributionChannels'
(A) Product, Consideration:Thetypeandthenatureofproductsmanufactured
isone ofthe important eiements in choosing the distribution channel. The major
productrelatedfactors are:
Productsoflow unitvalueandofcommon use aregenerallysold through
middlemen.Whereas,expensiveconsumergoodsandindustrialproductsare
solddirectlybytheproducerhimself. '
I'erishable products; products subjectedtofrequentchangesinfashion or
style aswell asheavyandbulkyproductsfollow relativelyshorterroutes
andaregenerallydistributeddirectlytominimizecosts.
,. Industrialproducts requiringdemonstration, installationandafter sale
serviceareoftensolddirectlytotheconsumers.Whiletheconsumerproducts
oftechnicalnaturearegenerallysoldthroughretailers.
Anentrepreneurproducingawiderangeofproductsmayfinditeconomical
tosetuphis ownretailoutletsandselldirectlyto theconsumers. Onthe
otherhand,firmsproducinganarrowrangeofproductsmaytheirproducts
throughwholesalersandretailers. '
Anewproductneedsgreaterpromotionalefforts intheinitialstagesand
hencefewmiddlemenmayberequired.
(B) MarketConsideration:- Anotherimportantfactorinfluencingthechoiceof
distribution channel isthe nature of the target market.SOme of the important features
inthisrespectare:-
Ifthemarketfortheproductis meantfor industrialusers,thechannelof
distributionwillnotneedanymiddlemenbecausetheybuytheproductin
largequantities.shortoneandmayastheybuyinalargequantity.Whilein
thecaseof the goods meant fordomestic consumers, middlemenmay have to
beinvolved.
If the number of prospective customers is smallor the market for the product
isgeographicallylocatedina limitedareii, directsellingismore suitable.
While incaseofa largenumberofpotentialcustomers,useofmiddlemen
becomesnecessary.
If.thecustomers place orderfor the productinbiglots, direct sellingis
preferred.But,iftheproductissoldinsmallquantities,middlemenareused
todistributesuchproducts.
(C) OtherConsiderations:- Thereareseveralotherfactorsthatanentrepreneur
musttakeinto accountwhile choosinga distributionchannel. Some oftheseareas
follows:-
Anewbusinessfirmmayneedtoinvolveoneormoremiddlemeninorderto
promoteitsproduct,whileawellestablishedfirmwithiigoodmarketstanding
maysellitsproductdirectlytotheconsumers.
AsmallfirmwhichcannotinvestinsettingupiJsowndistributionnetwork
hastodependonmiddlemenforsellingitsproduct.Ontheotherhand,alarge
firmcanestablishitsownretailoutlets.
If thedemandfortheproductishigh,more of channelsmaybeuseli
tf)profitably!listributetheproducttomaximumnumberof customers.But,
if the islowonlyafewchannelswouldbesufficient.
All thesefactors orconsiderations affectingthechoice ofa distributionchannel
areinter-relatedandinterdependent.
(b) Describethevariouskinds ofmiddlemen functioningin lJifferent
spheresofbusiness.' (8)
Sol.Thereisa varietyofintermediarie'sthatmaygetinvolvedbefore a product
getsfromtheoriginalproducertothefinaluser. Thesearedescribedbrieflybelow:
Retailers
Retailersoperateoutletsthattradedirectlywithhouseholdcustomers.Retailers
canbeclassifiedin severalways: '
Type ofgoods being sold(e.g. clothes, grocery, furniture)
Typeofservice(e.g.self-service,counter-service)
Size(e.g.corner shop;superstore) .
Ownership(e.g.privately-ownedindependent;public-quotedretailgroup
Location(e.g.rural" city-centre,out-of-town)
Brand(e.g. nationwideretailbrands;localone-shopname)'
Wholesalers ' , "
Wholesalers stock a range ofproducts from several producers. The role ofthe
wholesaler is to sell onto retailers. Wholesalers usually specialize in particular
products. .
Distributorsanddealers
Distributorsordealershaveasimilarroletowholesalers- thatoftakingproducts
ftom producers andsellingthemon. Hpwever, theyoftensellontotheendcustomer
rather than a retailer. They also usually have a much narrower product range.
Distributorsanddealersareofteninvolvedinprovidingafter-salesservice.
Franchises
Franchisesareindependentbusinessesthatoperatea brandedproduct(usually
a service)inexchangeforalicensefeeandashareof sales,
Agents
Agents selltheproductsandservicesofproducersinreturnfora commission(a
percentageofthesalesrevenues)
Q.7. (a) Explaintheadvantagesanddisadvantagesof railtransportand
roadtransport. (8)
Sol.Theadvantages& disadvantagesof railwaytransport.
Railwaytransportoccupiesa significantroleinthetransportsystemof a country
becausethedevelopmentoftrade,industryandcommerceof acountrylargelydepends
onthedevelopmentof railways.
'I
i
Advantages:
(i) It facilitatelongdistancetravelandtransportof bulkygoodswhicharenot
easilytransportedthroughmotorvehicles.!
. (ii) Itis a quickandmore regularform oftransportbecauseithelps inthe
.transportationofgoodswithspeedandcertainty.
(iii) Ithelpsintheindustrializationprocessof acountrybyeasytransportation
of atacheaperrate.
(iv).It helps in thequick movement of goods fromoneplace toanother at thetime
of emergencieslikefaminesandscarcity.
(v) Itencourages mobilityoflaborad therebyprovides a greatscope for
employment.
(vi) Railway is'the safestform oftransport. The chances of accidents and
breakdown ofrailways are minimum as compared to othermodes of
transport. .
(vii) The carrying capacity of the railways is extremely large_
I.P. l
Disadvantages
(i) TherailwayrequiresI
maintenanceand ove
modesoftransport.
(ii) AnotherdisadvantagE
timingscannotbe adj
... (iii) Railtransportcannot'
track. "
(iv) As railwaysrequireh
andworkagainstpub
(v) Railwaytransportis1
trafficofgoods.
(vi) Itinvolves muchtimE
throughrailwaysasC(
(vii) Because ofhuge cap
operatedeconomically
eventoday; This caus,
areas.
Advantagesanddisadvantage:
RoadsarethemeansthatCOl
You musthave seenroadsinyo
alike.Someofthemaremadeoff
Youfinddifferentvehiclesplying
truck,buses,etc.Alloftheseconi
ofroadtransportmaybedivided
(i) Mandriven;
(ii) .l},nimal driven;and
(iii) Motordriven.
Advantages:
(i)' It is'arelativelycheap
(ii) Perishablegoodscanhi
shortdistance.
(iii) It isaflexiblemodeof'
destination.It provide
(iv) It helpspeopletotraVEl
whicharenotconnectE
Disadvantagesof Roadtransp,
- (i) to limitedcarryill
distancetransportatio
(ii) Transportationofhea,
(iii) Itis affectedbyadvel
sometimescreateobst
(b) Definepersonalselling
Sol.Personalsellingiswhel
productaftermeetingface-to-faci
Thesellerspromotetheprod
productknowledge. Theyaimto
trialtheproduct.
13
f middlemen functioning in (jifferent
(8)
ie's thatmaygetinvolvedbefore a product
user.Thesearedescribedbrieflybelow:
irect;lywithhouseholdcustomers.Retailers
thes,grocery,furniture)
counter-service)
'e)
dindependent;public-quotedretailgroup
out-of-town)
'ands; one-shopname)'
:ts from several producers. The role ofthe
lolesalers usually specialize in particular
roletowholesalers- thatof takingproducts
lever, theyoftensellontotheendcustomer
lly have a much narrower product range.
inprovidingafter-salesservice..
thatoperatea brandedproduct(usually
i a shiueofsales.
3 ofproducersinreturnfor a commission(a.
andtransportofbulkygoodswhicharenot
Itorvehicles.;
lrform oftransportbecauseithelps inthe
peedandcertainty.
n processof a countrybyeasytransportation
cheaperrate.
; of goodsfromoneplacetoanotheratthetime
3dscarcity.
.bor ad thereby provides a great scope for
)ftransport. The chances ofaccidents and
minimum as compared to other modes of
iilwaysisextremelylarge.
LP. University-AkashBooks
Disadvantages
(i) Therailwayrequiresalargeinvestmentofcapital.Thecostofconstruction,
maintenance andoverhead expenses are very high as comparedto other
modesoftransport.
(ii) Anotherdisadvantageofrailwaytransportisitsinflexibility.Itroutesand,
timingscannotbeadjustedtoindividualrequirements.
... (iii) Railtransportcannotprovidedoortodoorserviceasitistiedtoaparticular
track. ' .
(iv) As requirehugecapitaloutlay,theymaygive riseto monopolies
andworkagainstpublicinterestatlarge.
(v) Railwaytransportisunsuitableanduneconomicalfor shortdistancesand
trafficofgoods. .
(vi) Itinvolves much time andlaborinbookingandtakingdeliveryofgoods
throughrailwaysascompat:edtomotortransport.
(vii) Because ofhuge capital requirements and traffic, railways cannot be
operatedeconomicallyinruralareas.Thus,largeruralareashavenorailway
even today. This causesmuchiriconvenience to the people livinginrural
areas.' '.
AdvantagesanddisadvantagesofRoadtransport
Roadsarethemeansthatconnectoneplacetoanotheronthe' surfaceoftheland.
You musthave seenroads inyourvillage, intowns andcities. Notall ofthemlook
alike.Someofthemaremadeof sandandsomemaybeof chipsandcementorcoaltar.
You finddifferentvehiclesplyingonroadslikebullockcarts,cycles,motorcycles,cars,
truck,buses,etc.Alloftheseconstitutedifferentmeansofroadtransport.Themeans
ofroadtransportmaybedividedintothreetypes:-
(i) Mandriven;
(ii) i}nimaldriven;and
(iii) Motordriven.
Advantages:
(i) Itis'arelativelycheapermodeof transportascomparedtoothermodes.
(ii) Perishablegoodscanbetransportedatafasterspeedbyroadcarriersovera
shortdistance. ' .
(iii) Itisaflexiblemodeof transportasloadingandunloadingispossibleatany
destination.Itprovidesdoor-to-doorservice. .
(iv) It helpspeopletotravelandcarrygoodsfromoneplacetoanother,inplaces
whicharenotconnectedbyothermeansof transportlikehillyareas.
Disadvantagesof Roadtransport .
. (i) tolimitedcarryingcapacityroadtransportisnoteconomicalfor long
distancetransportationofgoods.
(ii) Transp'ortationofheavygoodsorgoodsinbulkbyroadinvolveshighcost.
(iii) Itis affected by adverse weatherconditions. Floods, rain, landslide, etc.,
sometimescreateobstru<;tionstoroadtransport.
(b) Definepersonalselling.Explainthestepsinpersonalsellingprocess
, , (7)
Sol.Personalsellingiswherebusinessesusepeople(the"salesforce") tosellthe
productaftermeetingface-to-facewiththecustomer.
Thesellerspromotetheproductthroughtheirattitude,appearanceandspecialist
productknowledge. Theyaimtoinformandencouragethecustomertobuy,oratleast
trialtheproduct. "
Agoodexampleofpersonalsellingis foundindepartmentstoresontheperfume
andcosmeticcounters. .
A customer can get advice on how to apply the product and can try different
products. Products with relatively highprices, or with complex features, are often
sold using personal selling. Greatexamples include cars, office equipment (e.g.
photocopiers) and many products that are sold by businesses to other industrial
customers.
StepsinpersonalSellingprocess
1. Pre-sale preparation: The first step in personal selling is the selection,
trainingandmotivationofsalespersons.Thesalespersonsmustbefullyfamiliarwith
the product, thefirm, themarket andthe selling techniques. They shouldbe well-
informedaboutthecompetitor'sproductsandthedegreeofcompetition. Theyshould
alsobe acquainted'with themotives and behavior of prospectivebuyers..
2. Prospecting:It referstolocatingorsearchingoutprospectivebuyerswhohave
theneedfortheproductandtheabilityto buyit.Potentialcustomersmaybespotted
through observation, enquiry and analysis ofrecords ofexistingcustomers. Social
contacts, business associations arid dealers can be helpful inthe identification of
potentialbuyers'.
3.Approaching:Beforecallingontheprospects,thesalespersonshouldfullylearn
theirnumber,needs,habits,spendingcapaCity, motives,etc. Suchknowledgehelpsin
selectingtherightsalesappeal.Mtersuchlearning,thesalespersonshouldapproach
thecustomerina politeanddignifiedway. Heshouldintroducehimselfandhisproduct.
to the customer. He should greet thecustomerwith a smile and make him feel at
home. Heshouldintroducehimself andhisproductto thecustomer.Thesalesperson
hastobeverycarefulinhisapproachasthefirstimpressionisthelastimpression.
4. Presentation:For this' purpose, thesalespersonhas to presentthe product
anddescribe its features'in brief. The presentation should be matched with the
attitudeoftheprospectso thatthesalesmancancontinuollslyholdhisattentionand
createinterestintheproduct. '.
5. Demonstration:In.orderto maintain customer's interestarid to arouse his
desire,thesalescpersonmustdisplayanddemonstratetheproduct. He hastoexplain
the utilityand distinctive qualities ofthe productso thatthe prospectrealizes the
needfor theproductto satisfyhiswants. Heshouldnotbeina hurrytoimpressthe
.customerandshouldavoidcontroversy.
6. Handlingobjections:Presentationanddemonstrationof theproductarelikely
to createdoubts and questions in his mind. The salesman' should clear all doubts
andobjections without enteringinto a controversy andwithout losing his temper.
Testimonials,money-backguarantee,tactandpatiencearepopularmeansofwinning
overshesitantbuyers.Thesalesmanshouldconvincethecustomerthatheismaking
thebestuseofhismoneybypurchasingtheproduct. Forthispurpose,thesalesman
shouldprovethesuperiorityofhisproductoverthecompetitiveproducts.
7. Closingthesale:Thisisthe climaxorcritical pointinthe personal selling
process. Completingthesaleseemstobeaneasytaskbutinappropriate.handlingof
the customercan result in loss of sale.Thesalesman should not force thedealbut let
thecustomerfeel thathe hasmadethefinal decision. He shouldguidethecustomer'
inmakingthechoicewithoutimposinghisownview. Salesshouldbeclosedina cordial'
mannersothatthecustomerfeelsinclinedtovisittheshopagain.Inclosingthesale,
the article shouldbe packedproperlyandhandedaverto thecustomerwith speed
andaccuracy.Oncethecustomerhaspurchasedthearticle,thesalesmanshouldshow
andsuggestanalliedproduct.Forinstance,hemaysuggestsocks,ties,handkerchiefs,
vests, etc., to a customerpurchasinga Thisisknown as additional salesand
requires skillandtact..
.J.P. Uni'
8. Post-salefollow-up:It refe
customerissatisfiedwiththearticl
oftheproducts,checkingandensuril
sale service. It helps tosecure re
evaluatesalesman'seffectiveness.
Q.B. (a) "Pushstrategyisbet
versaforindustrialproducts."El
SoLTheterm'pushstrategy'de!
,toperformtogettheproducttothe(
channelsandpersuadingmiddle m
technique can work"particularly v
consumergoods(FMCGs),whenCUE
item intotheirbaskets andarerea
,now broadly encompasses most dir
retailersto stockyourproduct, desi
to face. New businesses often ado}l
< generateexposure anda retailchal
, canbeintegratedwitha pull
'Pullstrategy'refersto theCUstol
placing orders for stockdue to dire
highlyvisiblebrandwhichcanbede'
tactics. Ifcustomerswanta produc1
initspurestformandthisistheba!
; supplychannelswillalmostlookaft
useonlypushstrategies; some dire
mostlargecompanies usesome con
media advertisingand consumerPl
force andtradepromotionstopushi
(b) Whatdoyoumeanbyadvt
withexamples.
SoLAdvertisingisdefinedas
isthe formof thelinep
Advertisingpresentsorpromol
varietyofmediasuchasTV, radio,
tobuy.
Advertisingis a forin ofcommt
persuade anaudience (viewers,
continueortakesomenewaction.
Themainadvantages anddisa
are:
Advantages
Widecoverage .
. ControlofmessagebeingpromotE
Repetitionmeansthatthemessa
canbecommunicatedeffectively
Canbeusedtobuildbrandloyalt
15
Management-2009 (BBA)
und in department stores on the perfume
apply the product and can try different
'ices, or with complex features, are often
include cars, office equipment (e.g.
e sold by businesses to other industrial
step in personal selling is the selection,
le salespersons must be fully familiar with
: selling techniques. They should be well-
end the degree of competition. They should
of prospective buyers. ,
searching out prospective buyers who 4ave
buy it. Potential customers may be spotted
is of records of existing customers. Social
lrs can be helpful in the identification of
prospects, the salesperson should fully learn
:Idty, motives, etc. Such knowledge helps in,
l learning, the salesperson should approach
He should introduce himself and his product
;tomer with a smile and make him feel at
is product to the customer. The salesperson
he first impression is the last impression.
the salesperson has to present the product
presentation should be matched with the
Ilan can continuously hold his attention and
Iltain customer's interest and to arouse his
demonstrate the product. He has to explain
Le product so that the prospect realizes the
He should not be in a hurry to impress the
n and demonstration of the product are likely
lind. The salesman' should clear all doubts
and without losing his temper.
Gand patience are popular means of winning
uld convince the customer that he is making
the product. For this purpose, the salesman'
:t over the competitive products.
max or critical point in the personal selling
an easy task but handling of
Ile salesman should not force the deal but let
'inal decision. He should guide the customer,
s own view. Sales should be closed in a cordial
to visit the shop again. In closing the sale,
nd handed over to the customer with speed
chased the article, the salesman should show
ce, he may suggest socks, ties, handkerchiefs,
,hirt. This is known as additional sales and
J.P. University-Akash Books
, 8. Post-sale follow-up: It refers to the activities undertaken to ensure that the
1customer is satisfied with the article and the firm. These activities include installation
, of the products; checking and ensuring its smooth performance, mainte,nance and after-
sale service. It helps to secure repeat sales identify additional 'Jrospects. and to
evaluate salesman's effectiveness.
Q.8. (a) "Push strategy is better than pull strategy for FMCG and the vice
, versa for industrial products." Explain. . (7)
SoL The term 'push strategy' describes the work a manufacturer of a product needs
to perform to get the product to the customer. This may involve setting up distribution
channels and persuading middle men and retailers to stock your product. The push
technique can work-particularly well for lower value items such as fast moving
consumer goods (FMCGs), when customers are standing at the shelf ready to drop an
" item into their baskets and are ready to make their decision on the spot. This term
now broadly encompasses most direct promotional techniques such as encouragirig
retailers to stock your product, designing point of sale materials or even selling face
to face. New businesses often adopt a push strategy' for their products in order to
: generate exposure and a retail channeL Once your brand has been established, this
" can be integrated with a pull strategy.
'Pull strategy' to the cUstomer actively seekingout your product and retailers
placing orders for stock due to direct consumer demand. A pull strategy requires a
highly visible brand which can be developed through mass media advertising or similar
tactics. Ifcustomers want a product, the retailers will stock it - supply and demand
in its purest form and this is the basis of a pull strategy. Create the demand, and the
supply channels will almost look after themselves. Some industrial goods companies
use only push strategies; some direct-marketing companies use only pull. However,
most large companies use some combination of both. For example, Amul uses mass-
media advertising and consumer promotions to pull its products and a large sales
force and trade promotions to push its products through the channels.
, (b) What do you mean by advertising? DiscuSs about the advertising media'
with examples. (8)
Sol. Advertising is defined as any "paid.for method of promotion". Advertising
is the main form the line promotion".
Advertising presents or promotes the product to the target audience through a
variety of media such as TV, radio, cinema, online and magazines to encourage them
to buy.
Advertising is a fOrIn of communication for marketing and used to encourage or
persuade an audience (viewers, readers or listeners; sometimes a specific group) to
continue or take some new action.
The main advantages and disadvantages of advertising as method of promotion
are:
Advantages Disadvantages
Wide coverage
,Control of message being promoted
Repetition means that the message
can be communicated effectively
Can be used to build brand loyalty
Often expensive
Impersonal
One way communication Lacks flexibility
Limited ability to close a sale (', ,
II'
,
.1
f,
16 ThirdSem'esterMarketingManagement-2009(BBA)
Variousadvertisingmedia
,
'1. Televisionadvertising:TheTVcommercialisgenerallyconsideredthemost
effective mass-market advertising format, as is reflected by the high prices TV
networkschargeforcommercialairtimeduringpopularTVevents.TheannualSuper
BowlfootballgameiI). theUnitedStatesisknownasthemostprominentadvertising
eventon television. The average cost ofa single thirty-second TVspot during this
gamehas reached US$3.5 million(asof2012). Some televisioncommercials feature
a songorjinglethatlistenerssoonrelatetothe product., Time:3 Hours.
2. Radioadvertising:Itisa formofadvertisingviathemediumofradio.Radio "
advertisements are broadcast as radio waves to the air from a transmitterto an
antenna and a thus to a receiving device. Airtime is purchased from a station or '
network in exchange for airingthe commercials. While radio has the limitation of
being restricted to souml, proponents ofradio advertising oftencite this as an '
advantage. Radioisanexpandingmediumthatcanbefound notonlyonaii,butalso
online. '
3. Onlineadvertising:Onlineadvertisingisa form ofpromotionthat 'usesthe
Internet andWorldWide Web for the expressed purpose ofdelivering marketing ; thebrand.Thetypicalgoalofm,
messagestoattractcustomers.Onlineadsaredeliveredbyanadserver. Examplesof,
onlineadvertisingincludecontextualadsthatappearonsearchengineresultspages, ,:
bannerads,intextads,RichMediaAds, Socialnetworkadvertising,onlineclassified;
advertising,advertisingnetworksande-mailmarketing,includinge-mailspam.
4.Pressadvertising:Pressadvertisingdescribesadvertisingina printedmedium
suchasa newspaper,magazine,ortradejournal.Thisencompasseseverythingfrom '
media with a very broadreadership base, such as a major national newspaper or ,
magazine, to more narrowly targeted media such'as local newspapers and trade;
journalsonveryspecializedtopics.Aformof isclassifiedadvertising,;)
whichallowsprivateindividualsorcompaniestopurchasea small,narrowlytargeted'!
adfor a lowfee advertisinga productorservice.Anotherform ofpressadvertisingisj Importance, of Marketingin1
theDisplayAd, whichisa largerad(canincludeart)thattypicallyruninanarticle :;
sectionofa newspaper. ,\
\ .

5.Billboardadvertising:Billboardsarelargestructureslocatedinpublicplaces.
whichdisplayadvertisementstopassingpedestriansandmotorists. Mostoften,they ,
arelocatedonmainroadswitha largeamountofpassingmotor,andpedestriantraffic.
6. In-storeadvertising:In-storeadvertisingis anyadvertisementplaced ina
retailstore. It'includesplacementofa productinvisiblelocationsina store, suchas
ateye level, atthe ends ofaisles and near checkout counters (aka POP-PointOf
Purchase display), eye-catching displays promoting a specific product, and
advertisementsinsuchplacesasshoppingcartsand videodisplays. "
7. Streetadvertising:'
,
Thistypeofadvertisingfirstcametoprominenceinthe ,"
UKby StreetAdvertisingServices to create outdooradvertisingon street'furniture','
andpavements.WorkingwithproductssuchasReverseGraffiti,airdancer'sand
pavementadvertising" themediabecame an,affordable andeffective tool for gettingii
brandmessagesoutintopublicspaces. ':
8.Celebritybranding:Thistypeof advertisingfocuses uponusingcelebritypower,;
fame, money, popularityto gainrecognition for theirproducts andpromote specific'\
stores or products. Advertisers often advertise their products, for example, when)
celebritiessharetheirfavoriteproductsorwearclothesbyspecificbrandsordesigners.
Celebrities are ofteninvolved in advertisingcampaigns such as televisionor print
advertsto advertise specificorgeneral products. Celebrities suchas BritneySpears
haveadvertisedfor multipleproductsincludingPepsi,Candiesfrom Kohl's,Twister,
NASCAR,Toyotaandmanymore.
THIRl
MARKETING 1\11
END-TERM I
Q.l.(a) HowMarketingis
ofmarketingintoday'sworl.
Sol.Marketingactivitiesinc
of the produ,ctdevelo
existingorlatentneeds),adverti!
andcreateleadsorprospects.
Ontheotherhand,salesact
actualpayingcustomers.Salesi
'topersuadethemtopurchasetb
Marketingthustendsto fOCI
a large setof whereass
groupofprospects.
(A) Marketingcommuni4
An integratedmarketingcomm
to the righttarget audience, c'
create the "top ofmind" aware;
prospectinto a customer. Reco
make it much easier for your
scheduleanappointment.Com
"know" and have positive pe
recognizedcompanies. '
(B) Preferredbrandsco
term: Go through a process
proposition, and then start
marketplace(promotioJ;l.)Th'
differentiationbetweenyoua
industriesyouselltobegintor
choicefor a certainproductor
(C)Happycustomersno
value: Happy customers ta
lng Management-2009 (BBA)

commercial is generally considered the most
nat, as is reflected by the high prices TV ..
iuringpopular TV events. The annual Super .
is known as the most prominent advertising ..
, a single thirty-second TV spot during this ...
2012). Some television commercials feature
: to the product. '
If advertising via the medium of radio. Radio.
waves to the air from a transmitter to an
ice. Airtime is purchased from a station or
Imercials. While radio has the limitation of
of radio advertising often cite this as an :
1m that can be found not only on air, but also .
vertising is a form of promotion that uses the
expressed purpose of delivering marketing
ds are delivered by an ad server. Examples of
s that appear on search engine results pages,
, Social network advertising, online classified
mail marketing, including e-mail spam.
sing describes advertising in a printed medium
.e journal. This encompasses everything from'
ase, such as a major national newspaper or 'I
media such 'as local newspapers and trade!
n of press is classified advertising,
panies to purchase a small, narrowly targeted;;
r service. Another form of press advertising is J
In include art) that typically run in an article 1
ds are large structures located in public places .
g pedestrians and motorists. Most often, they
mount of passing motor. and pedestrian traffic.
advertising is any advertisement placed in a
Jroduct in visible locations in a store, such as
near checkout counters (aka POP-Point Of
:plays promoting a specific product, and
ingcarts and in-store video displays.
of advertising first came to prominence in the
reate outdoor advertising on street' furniture
such as Reverse Graffiti, air dancer's and 3D
lIe an affordable and effective tool for getting
.advertising focuses upon using celebrity power,
lition for their products and promote specific
ldvertise their products, for example, when
>1' wear clothes by specific brands or designers.
tising campaigns such as television or print
products. Celebrities such as Britney Spears,
lcluding Pepsi, Candies from Kohl's, Twister"
THIRD SEMESTER
MARKETING (BBA-205)
END-TERM EXAMINATION (2010)
Time: 3 Hours. M. M: 75
Q.l. (a) How Marketing is different from selling. Give importance
of marketing in today's world; (7.5)
Sol. Marketing activities include consumer research (to identify the needs
of the product development (designing innovative products to meet
existing or latent needs), advertising the products to raise awareness and build.
the brand. The typical goal of marketing is to generate interest in the product
and create leads or prospects.
On the other hand, sales are focused on converting prospects to
actual paying customers, Sales involve directly interacting with the prospects
to persuade them to purchase the product.
Marketing thus tends to focus on the general population (or, in any case,
a large set of people) whereas sales tends to focus on individuals or a small
.'
group of prospects.
Importance of Marketing in today's competitive environment
(A) Marketing communications creates "top of mind" awaren.ess:
An integrated marketing communications plan that gets your messaging out
to the right target audience, consistently
.
and over, time, WILL eventually
.
create the "top of mind" awareness for your product or service that turns a
prospect into a customer. Recognition and awareness for your company also
make it mUCh, easier for your sales' staff to get someone on the phone or
schedule an appointment. Companies like to do business with companies they
"know" and have positive perceptions of. Likewise, investors like to buy
recognized companies. '
(B) Preferred brands command a premium price - short and long-
term:' Go through a process of determining your companis unique value
proposition, and then start purposefully communicating that to the
This is the only way you will create a point of
differentiation between you and your competitors. As your customers .and the
industries you sell to begin to recognize your company (brand) as the preferred
choice for a certain product or service, it allows you to charge premium pricing.
(C) Happy customers not only send referrals, they create perceived
value: Happy customers talk to other potential customers, even in the
.
:
. .
.-
,-j
ii
18 Third Semester Marketing Managemen,t-2010 (BBA)
LP. Un
industrial world. A good percentage of Manufacturers new business comes! quality, performance, innovativl
through referrals from satisfied customers. It also takes a marketing strategy 1. 'quality and reasonably priced
that positions your company (in the minds of your target audience) as the r the product matters.
market leader in customer satisfaction and Its part of the (C) Selling Concept: The
image you build around your brand - it's the magic result of well executed r alone, will not buy enough ofthl
brand development and marketing communications. .1' must undertake an aggressive
(D) Repeat"revenue streams ensure a profit now and later: ThIs:l company uses various selling
really falls more into the other marketing functions than that ofI" products. The selling concept is:
communications, but a smart marketing strategy not only focuses on a: offices, & political parties.
company's core market and value proposition, it also finds ways to build1 (D) The Marketing Conc
rise to a new philosophy in 1:
marketing concept emphasize
potential customers and supp]
Determination of wants of the (
multiple channels for recurring revenue. Smart marketers (and business i'
owners) look for ways to diversify their offerings and especially in areas where'
repeat sales require little to no effort on the part of the sales team. With the ,:
Intern.et, this is more possible than ever before; particularly if you sell a !',
product that is not custom engineered, or a service that can be easily classified' '.
without a lot of customization.
(E) Nothing lasts forever: marketing has to be a long-term'
investme.nt: Consistent and persistent messaging, going to an integrated mix
of contact points with your customers and prospects, is an investment in your
company's stability and value.
(F) Employees who are "brand ambassadors" sell your company -
to customers AND potential buyers: Today, marketing is not just something;
YOli do "outside"ofyour company. If you truly to create a powerful image ...
and value proposition for your business, the first group of people you have t0
5
convince are your own employees. An employee that feels aJ>preciated and
fairly compensated (and that doesn't' always equate to their salary) is much
more likely to sing the praises of your company.
(b) ,What are different Marketing Philosophies? Give examples to'
illustrate them. (7.5)
Sol. Various Philosophies of Marketing
Philip Kotler has shown five competing concepts for carrying out marketing .'.
activities in an organization: .
(A) Production Concept: In case of production concept, emphasis. is.
mainly laid on achieving high production efficiency and wide distribution"
cove,rage. High production efficiency means that input-output ratio is favorable..',
.
It means that customer favors' products offered at a lower price and also easily ,
available. Many service organizations also operate on the production concept.;
(B) Product Concept: The firms following this philosophy believe that '.'
by making superior products and improving their quality overtime, 'they will,
be able to attract customer. The underlying assumptIonis that customer favors' "
. (E) The Societal Markl
customer's satisfaCtion and Ion
to satisfying organizational goal
soft drinks in tetra packs (e.g.
empty tetra packs & plastic bot
experts have suggested human:
that the firm's task is to detei
. m;rkets & to deliver desired :
enhances the consumer's &
Q.2.(a) ' What are the bl
following?
(i) Watches'
(ii) Toothpaste'
(iii) Washing Machine
(iv) Shoes
Sol. (i) Watches-
Four Major Market Segme
-Mass Market Watches (LEi
Sub-segments
Fun Fashion Watches
Sports Watches
Character and Sports Lc
-Middle Market Watches (J
-Upper Middle Wa
-LuXury and High Luxury
ngManagement--2010(BBA)
LP. University-AkashBooks . 19
ofManufacturers new business comesL
quality,performance,innovativefeatures,etc.It meansifproductsareof good
mers.It alsotakesa marketingstrategyj,
. quality and reasonably priced thenconsumer does nothave much say, only
minds ofyour target audience) as theY theproductmatters.
atisfaction and Its partofthe (C) SellingConcept:The selling concept holds thatcustomers, ifleft'
- it's the magic result ofwell executed' alone,willnotbuyenough(jftheproductsof anorganization.Theorganization
mmunications. ' , mustundertakeanaggressive sellingandpromotioneffort. Underselling, a
ensure a profitnow andlater:This "
company uses various selling methods to persuade custoqlers to buy its
. marketing functions than that of:
products.ThesellingconceptisalsopracticedintheNGO's,collegeadmissions,
'keting strategy not only focuses on a"
offices,& politicalparties.
;>roposition, it also finds ways to build (D) TheMarketingConcept:Consumerorientedmarketinghas given"
,enue. Smart marketers (and business1 rise to a new philosophy in business,known as 'marketing concept'. The
irofferingsandespeciallyinareaswherei, marketingconcept emphasizes the determination ofthe requirements,of
t onthe 'part(jfthesalesteam.Withthe:'
potential customers and supplying products to satisfy their requirements.
1 ever before; particularly ifyou sell a" Determinationofwantsofthecustomerstakesprecedenceoverproduction.
1, ora servicethatcanbeeasilyclassified
(E) The Societal MarketingConcept: It is aimed at generating
customer's satisfactionandlongtermconsumerandpublicwelfare asa key
marketinghas to be a long-term ,tosatisfyingorganizationalgealsandresponsibilities.Forex,consumersprefeJ;.
mtmessaging,goingtoanintegratedmix softdrinksintetrapacks(e.g. frooti) orplasticbottles(e.g. Coke,Pepsi). But
s andprospects,isaninvestmentinyour; emptytetrapacks& plasticbottlescreateenvironmentalhazards.Thisiswhy,
.Iue. expertshavesuggestedhumanisticorsocietalmarketingconceptwhichholds
ldambassadors"sellyour'company-
the firm's task is todetermine the needs, wants & interests oftarget
rs:Today,marketingisnot just :
markets & to deliver desired satisfactions in such a way that preserves or
enhancestheconsumer's& thesociety'swellbeing.
fOU truly tocreatea powerfulimage!
less, thefirstgroupofpeopleyouhaveto'f Q.2.(a) ,What are the bases ofmarketsegmentation in case of
!\n employee that feels appreciated and following? (7.5)
'f always equateto theirsalary)ismuch '
(i) Watches,.
Ircompany.
(ii) Toothpaste.
tingPhilosophies?Giveexamplesto
(iii) WashingMachine
(7.5)
(iv) Shoes
\farketing
Sol.(i) Watches-
petingconceptsfotcarryingoutmarketing .
FourMajorMarketSegments:
-MassMarketWatches(LessthanRs2500)
case ofproduCtion concept, emphasis.is ';
Sub-segments
1uction efficiency and wide distribution"
FunFashionWatches
meansthatinput-outputratioisfavorable'
i
SportsWatches
.ctsofferedata lowerpriceand3J.so easily:
CharacterandSportsLogoWatches
lS alsooperateontheproductionconcept. Ii
-MiddleMarketWatches(Rs2500- Rs15000)
ns following this philosophy believe that ,'
-UpperMidd.le Watches(Rs15000-Rs50000)
lprovingtheirqualityovertime,'theywill:-
-LuXuryandHighLuxuryMarketeRs50000-Rs250000orMore)
rlyingassuinptionisthatcustomerfavors',
20
I.P. Unb
ThirdSemesterMarketingManagement-2010(BBA)
Forex;ThailandTOUriSI
(ii) Toothpaste: Amix of demographic, benefit, behavioral and;
is"smoothassill< whe
psychographic segmentation is generally used to segmentmarkets forl
i
Positioningagainstc,
toothpaste. Forex, '
tomeetthecompetition
PrincipalBenefit Flavor,productappearance Brightnessof teeth
Behavioralcharacteristics Users ofspearmintflavor Smokers
Demographics Children Teens,youngadults
Psychographies High-self involvement Highsociability
destinations.Thisform
advertisingwarsinthe
PositioningbyendOl
productsuccesses.Reel
Positioningbyphys:
physicalevidenceslike
(iii)WashingMachine:Thewashingmachinemarketcanbesegmented
to solidify the'image
inthefollowingways:'
customer'smind,
Density:UrbanandSuburban
PositioningofFMCG(Fastm
Economy:Middleandupperincomegroup
Thechiefchallengefor theI
Benefits:Automatic,Semi-automatic,etc.
oflanguageto reachouttothe'8
(iv) Shoes:Inthe sportshoeindustry, a firm caneitheroffer ageneral(
requires powerful languages w:
purposecross-trainershoeora runningshoeanda basketballshoe. Across
l
.
Malayalam,Kannadaetctobere
trainershoehaswideappealforallconsumersbutsatisfiesnoconsumer'sneeds
_careof, the productandbrand8
inp.articular, whilethespecific shoeseachsatisfythe needs ofa particular
and consequent inability-of.a
segmentof consumersbut-havelittleappealfQrtheothersegment.Ontheother
challengeandsubsequentinnov/;
hand,thefirmcanofferbotha runningshoeandabasketballshoe.
packaging and pricing
(b) What.are the various ways ofpositioning? In what way
grandmamedicine, sweetmeats
positioningdiffer incase ofFMCG andSMCG? Give to
are now daily used items for t
illustrateyouranswer. " (7.5)!
channeled much ofthe ruralm
Sol.Thevariouswaysthatcanbeusedforpositioning'theproductare:,; andservices.Howeverthediffic1
Positioningbyattributes,features or customer benefits../,
market is,understandable. Thi
Marketers,whileusingthisapproach,placeemphasisonthe ,
particularlylikeHaldiranis,Sha
of theparticularfeaturesorattributesoftheoffering. 'r:
ethnicflavored products. These
,- 'S
becauseofthereinstatementof(
Positioningbypricevalue: Value for moneycanbe utilizedfo'
theneedsof themarket,before
,positioningtheofferingeffectively. .
Positioningof SMCG, (Slow]
Positioningbyuseofapplication:Serviceofferingispositione.
onthebasisofthereasonforitsuse.Forex;HotelInter-Continental,!
Generallythe3Dapproach'
New Delhipositionsitselftothemeetingmarketwith"themeetin :)
to pushthe slow moving good:
place"& promisesone-stopmeetingsolutions,consistentstandards,'i
retailersareturningoffrepleni
attentiontodetailandpersonalizedservice.
oftheitems,tradebackagreel
inventory control for slow mo'
Positioningaccordingtousersorclassof users:Thisrelatest
thatisrequiredtoeliminate/
consumersegmentsusing a service offering.Airlines targetth'
side. Whenlaunchinga newp
executiveclass,thefrequentfliersandthetourists.
byidentifYingcleargapsinden
Positionwithrespectj;oproductclass:Thepositioningcouldh ,:
relationships / tie ups withtb
basedonfunctionalbenefitsaswellassymbolic& emotionalbenefit;
).. "
I.P. University-Akash Books 21
,ng Management-2010 (BBA)
For ex; Thailand 'Iburism positions as holding a convention in Thailand
-mographic, benefit, behavioral and.. "
is " smooth as sill\. where sky is the limit"
nerally used to segment markets for
Positioning against competition: This positioning approach is used
:lduct appearance Brightness of teeth
pearmint flavor Smokers
Teens, young adults
involvement, High sociability
to meet the competition "HEAD-ON" to bring out differences between
destinations. This form of positioning had been responsible for many
advertising wars in the market place.
<='.
Positioningby endorsement: It involves use of celebrities or other
product successes. Reebok has used Rahul Dravid for their products.
Positioning by physical evidence: The service organization use
physical evidences like advertisements, brochures, visiting cards, etc
shing machine market can be segmented
to solidify the'image of the organization and its offering in the
customer's mind.
Ian Positioning of FMCG (Fast moving
r income group
The chief challenge for the FMCG marketer is to cut across the barriers
automatic, etc.
oflanguage to reach out to the 'all India' market. Just the southern belt itself
dustry, a firm can either offer agenerali,.
requires powerful languages with tremendous following like Tamil, Telgu, '
tling shoeand a basketball shoe. A crossl;; Malayalam, Kannada etc to be reckoned with. While these bridges can be taken
nsumers but no consumer's
_care of, the product and brand approaches have to keep in mind the poverty,
es each satisfy the of a particular:; and consequent inability of f.l large market to exercise their choice. The
appeal fQr the other segment. On the other j challenge and subsequent innovations, then is often to break bulk, through
lng shoe and a basketball shoe. ,; packaging and, pricing im;lOvations. The shampoos, cooking oils, daily life
vays of positioning? In what grandma medicine, sweetmeats and even pickles have been sachet-sized and
\'ICG and SMCG? Give exaniples are now daily used items for the rural Indian. This has regenerated and
" (7.5) /: channeled much of the rural market to shift attention to modern products
le used for positioning 'the product are: / and services. Ho.wever the difficulty to penetrate a broad products based rural
utes, features or customer market is understandable. This is though certain FMCG food industries,
> place emphasis on the particularly like Haldirarns, Shakthi Masala, etc have deep inroads with
Ir attributes of the offering. '1: ethnic flavored products. These success stories have corrie into being, simply
.lue: Value for money can be utilized
t,
because ofthe reinstatement of conventional marketinglogic,Le understanding
ectively. the needs of the market, before you deliver them products.
>plication: Service offering is positione Positioning of SMCG(Slow moving consumer goods)
lr its use. For ex; Hotel Inter-Continental Generally the 3D approach
4
(distress sale, donation, destructions) is used
to the meeting market with "the meetin' to push the slow moving goods. actions that are commonly taken by
) meeting solutions, consistent standards retailers are turning off replenishment of identified item, increasing visibility
;;onalized service. of the items, trade back agreements! grouping of items and improvement of
o users or class of users: This relates t ,inventory control for slow moving goods. One of the major push strategies
5 a service offering. Airlines target th that is required to eliminate / avoid slow moving goods ,is from the company
nt fliers and the tourists; side. When launching a new product the company can avoid slow movement
product class: The positioning could b;l by identifYing clear gaps in demand and consumer requirement, establish good
s as well as symbolic & emotional benefit' j 'relationships / tie ups with the retailers to ensure that their brands are on
1
:.'
i
I.P.l
, l'
;r,
ThinlSemesterMarketingManagement-2010(BBA)
display, effective marketinginvolving correcttargeting and positioning and ....
filially establish a proper sales and distributhin channel to ensure the
availabilityof goodsatthevariousretailstores.
22
Q.3. (a) WhatisProductInnovation diffusionprocessinthe..'
fieldofmarketing?TakethecaseofCFL'sandillustratetheprocess.
andstagesinvolved. (7.5)
. Sol.Intheprocessofnewproductdevelopment,alargenumberoffactors
are examinedtoknow thereaction ofconsumers regardingadoption ofnew
product. The process ofaccepting new product idea is known as diffusion .
process. Diffusionisth.) processbywhichtheacceptanceofaninnovationis
spreadbycommunication(massmedia,salespeople)tomembersof thesocial
systems.
Stagesinthe AdoptionProcess
The consumermoves through five stages in arriving at a decision to .
purchaseorrejectanewproduct:

1. Awareness- Awareoftheproductbutlackdetailedkn.owledge.
2. Interest- Curious- seekmoreinformation
3. Evaluation- Decidingwhethertotesttheproduct
4. Trial- Usingtheproductontestbasis.
5. Adoption.Decidingtobecomea user
I
(b)Whatmarketingstrategiesyouwouldrecommendformaturity ._.
phaseofPLC? (7.5)
Sol. Because ofthe intense competition and falling profits, not all
.,'
,',
companiescansurviyethisstage.Thus,anumberpf proactivestepsareneeded
tostayprofitable.Someof thestrategies'are:
(i) MarketModificati
companieslookfor:
NewUsers
NewMarketseg!
Increasedusage
(Pepsiis
(ii) ProductModificatic
more users, a COl
improvementssud
Quality
Features
Styles
(iii) MarketingMix- V
(FrequentFlierPrl
QA.(a)Whatareprice
Sol.PriceFactorsaffe
NumerousfactOrs affect
factors could he studied une
'factors. In.ternalfactors are
cel"\tain extentsuch as com
factors aretheforc
control.
Internalfactors '
Marketingobjectives
Marketingmix
strategy
Costs
Organizational
considerations
Fact
InternalFactors
(1) MarketingObje(
onitsstrategyfor
marketandposit
includingpric'e,W
(2) .MarketingMix
toolsthata coUip
23
ingManagement-2010(BBA)
g correcttargeting and positioning and....
ld distributm-n channel to ensure the
tailstores.
lvadona;nd diffusionprocessinthe..
ofeFL'sandillustratetheprocess .
(7.5)
t development,a largenumberoffactors
)fconsumers regardingadoption ofnew,"
lew product idea is known as diffusion .'
N'hich theacceptanceofaninnovationis '
ia,salespeople)to membersofthesocial'
. .
\.doptionProcess
hestages in arriving at a decision to
oducthutlackdetailedknowledge'
re information
hertotesttheproduct
testbasis
me aregullil1user
..':-': c,'/:": '. :-', ::'," ". .:", _"..
'
s wouldrecommendformaturity '.,
(7.5) .
)mpetition and falling profits, not all :'
IS, a.number9f proactivestepsareneeded -,'
gies are:
(i) MarketModification- In orderto increase the consumption, the
companieslookfor:
NewUsers
NewMarketsegments
. Increasedusageamongpresentcustomers
. .
(PepsiisbombardingIndiawith"YeDilMaangeMore".)
(ii) ProductModification- Inordertoincreaseconsumptionandtoattract
more users, a company may attempt product characteristics
improvementssuchas:
Quality
Features
Styles
(iii) MarketingMix- Value for money concepts, Contests, Prizes, etc.
(FrequentFlierProgrammeofJetAirways)
Q.4.(a)Whatarepriceandnonpricefactorsinsettingprices?(7.5)
Sol.PriceFactorsaffectingpricingdecisions
Numerousfactors affectthepricingpoliciesanddecisionsofafirm. Such
factors could be studiedundertwo groups: (i) Factors;(ii) External
. factors.Internalfactorsaretheforceswhichcanbe controlledbya firm to a
cel"\tain extent such as companyobjectives, marketing--ma;\:OSts, etc. But
factors aretheforces outsidethefirm overwhicha businesshasno
control.
External factors
Natureofthemarket
anddemand
Competition
Otherenvironmental
factors(economy,
Internalfactors
Marketingobjectives
Marketingmix
strategy
Costs
Organizational
considerations
Factors-affectingpricedecisions
InternalFactors
(l)MarketingObjectives:Beforesettingprice,thecompanymustdecide
onitsstrategyfortheproduct.Iftbecompanyhasselecteditstarget
marketandpositioningcarefully,tlltln itsmarketingmix strategy,
includingpric"e,willbefairlystraightforward.
(2) MarketingMixStrategy:Priceisonly one ofthemarketingmix
toolsthatacompanyusestoachieveitsmarketingobjectives. Price
I
l
decisionsmustbecoordinate.dwithproductdesign,distribution,and
promotion decisionsto form a consistentand effective marketing
program.
(3) Costs:Costssetthefloorforthepricethatthecompanycancharge
foritsproduct.Thecompanywantstochargeapricethatbothcovers
allitscostsfor producing,distributing, andsellingtheproductand
deliversafairrate foritseffortandrisk.
(4) OrganizationalConsiderations: mustdecide who
withintheorganizationshouldsetprices.Companieshandlepricing
,ina variety ways. Insmallcompanies, pricesareoftensetby top
management ratherthanbythemarketingorsalesdepartments.In
largecompanies,pricing istypicallyhandled bydivisionalor product
linemanagers. . '.
ExternalFactors
(1) TheMarketandDemand:Whereas costs setthelowerlimitof
prices,themarketanddemandsettheupperlimit. Bothconsumer
andindustrialbuyersbalancethepriceof aproductorserviceagainst
thebenefitsofowningit. Thus,before settingprices,themarketer
I,
mustunderstandtherelationshipbetweenpriceanddemandforits
product.
(2) Oompetitors;Costs,Prices,andOffers:Anotherexternalfactor
affecting thecompany'spricingdecisionsiscompetitors'costsandprices
andpossiblecompetitorreactionstothecompany'sownpricingmoves.,
Aconsumerwhoisconsideringthepurchaseof a Canoncamerawill
evaluateCanon's priceandvalue againstthe pricesandvalues'of
comparableproductsmadebyNikon,Minolta,Pentax,andothers.
(3) Economicconditions:Economic Conditionscanhave a strong
impactonthefirm'spricingstrategies.Economicfactorssuchasboom
. orrecession, inflation, andinterestratesaffect pricingdecisions
because they affect boththe costs of producing aproductand consumer
perceptionsoftheproduct'spric'eandvalue.
(4) The government: Itis another impOJ:tant external influence on
"'.;
.pricingdecisions.
(5) Socialconcerns:Insetting prices, a company's short-term sales,
marketshare,andprofitgoalsmayhavetobetemperedbybroader
societalconsiderations.' .
NonPrice,factors
Emphasizeproductfeatures,service,qualityetc. Canbuild loyalty
towardsthebrand.Mustbeabletodistinguishbrandtl1roughunique
features.
I.P. :
Customermustbeabletc
asdesirable.
Shouldbedifficult(impo
(PATENTS)
Mustpromotethedistinl
PricedifferencesmustbE
Sellers shift the demant
attributes(consumersmustI
(b) Give various pric
product?
Sol.VariousPricingT4
(1)CostplusPricing:
Thefirm calculatesthecostc
(profit) to that price to give
has two flaws; ittakes nc
determinirigifpotentialcust
price.
(2)Skimmingorcream
duringtheinitialstagesof th
fixes higher price ofhis pr
quickly. A games console co
years,charginga premiuml
cycle.
(3)PenetrationPricinl
salesandmarketshare. On
wellthenincreasetheirprit
to getsubscribersthen.incn
(4)Competitive,pricin
Really a fIfmhasthree opt
orpricehigher ,
(5)PremiumPricing:
quality, unique features,
distributionchannelandpr
strategy.
(6) PsychologicalPri
ofprice andthe positionin
sellingaproductat$3.950
(7) Discriminatory0
sameproductin different
fordifferentclasses,suchl
25
Management-2010(BBA) -
withproductdesign,distribution,and
fa consistentandeffective marketing
thepricethatthecompanycancharge
rantstochargeapricethatbothcovers
ttributing,andseIlingtheproductand
loritseffortandrisk.
Managementmustdecide who
(d setprices.Companieshandlepricing
I
f companies,pricesareoftensetbytop
themarketingorsalesdepartments.In
bicallyhandledbydivisionalorproduct
I: Whereascostssetthelowerlimitof
lndsettheupperlimit. Bothconsumer
rthepriceofaproductorserviceagainst
before settingp. rices, themarketer
I.shipbetweenpriceanddemandforits
is, andOffers:Anotherexternalfactor
gdecisionsiscompetitors'costsandprices
I .
iionstothecompany'sownpricingmoves.. :,
.ngthepurchaseof a Canoncamerawill
value againstthe prices andvalues'of
lyNikon,Minolta,Pentax,andothers.
conomic Conditionscanhave a strong
trategies.Economicfactorssuchasboom
interestratesaffect pricingdecisions
ostsof produeingaproductandconsumer
priCeandvalue.
.other important external influence on
g prices, a company's short-term sales,
lIsIllayhavetobetemperedbybroader
.,
,
:e,qualityetc.Canbuildcustomerloyalty
stinguishbrand unique
LP. University-AkashBooks
Customermustbeabletoperceivethedifferencesinbrandsandviewthem
asdesirable.
Shouldbedifficult(impossible)forcompetitorstoemulatethedifferences
(PATENTS)
Mustpromotethe featurestocreate awareness.
Pricedifferencesmustbeoffsetbytheperceivedbenefits.
Sellers. shift the demand curve out to the right by stressing distinctive
attributes(consumersmustperceiveanddesireparticularattributes).
(b) Give variouspricingtechniques to determine the prices of
product? (7.5)
Sol.VariousPricingTechniques
(l)CostplusPricing:Cost-plus pricingisthesimplestpricingmethod.
Thefirmcalculatesthecostofproducingtheproductandaddsona percentage
(profit) to that price to give the selling price. This method although simple
has two flaws; it takes no account of demand and there is no way of
determiningif potentialcustomerswillpurchasetheproductatthecalculated
price.
(2)Skimmingorcreamingpricing:Underthis,higherpricesarecharged
duringtheinitialstagesof the ofanewproduct.Themanufacturer
fixes higher price ofhis productin orderto recover his initial investment
quickly. A games console company reduces the price oftheir console over 5
years,charginga premiumatlaunchandlowestpriceneartheendofitslife
cycle.
(3)PenetrationPricing:Heretheorganizationsetsalowpricetoincrease
salesandmarketshare. Oncemarketsharehasbeencapturedthefirm may.
wellthenincreasetheirprice.Atelevisionsatellitecompanysetsa lowprice
togetsubscribersthenincreasesthepriceastheir,customerbaseincreases.
(4)Competitive,pricing:Settinga priceincomparisonwithcompetitors.
Really a firm hasthreeoptions andtheseareto price lower; pricethe same
orpricehigher .
(5)PremiumPricing:If acompanyhasa premiumproduct,Le.,sp.perior
quality, unique features, andlatest technology; itcan employ premiuin
distributionchannelandpromotionalprogramme' alongwithpremiuinpricing
strategy.
. " .
(6)Psychological Pricing:Thesellerherewillconsiderthepsychology
ofprice andthe positioning ofprice within the market place. Forexample,
sellingaproductat$3.95or$3.99,ratherthan$4.00.
(7) Discriminatoryordual pricing: Settinga different price for the
sameproductindifferentsegmentstothemarket. Forexample,thiscanbe
fordifferentclasses,sucha,1'l ages,orfordifferentopeningtimes.
.. i
ThirdSemesterMarketingManagement-2010(BBA) 26
Q.5. (a) What are the activitiesinvolved as a partofphysical
distribution?Explaintheminbriet; (7.5)
Sol. 1. PhysicalDistribution: Physical distribution refers to those
activities which are rela,ted to providing customer service.. It requires
performing order receipt and processing, deploying inventories, storage,
handling and outbound transportation within a channel ofdistribution. It
coordinates with market planning such as pricing, promotional support,
customer service levels, delivery standards, handling returns and lifecycle
support. It's main objective is to assistin revenue generation by providing
desiredcustomerservicelevelsatthelowesttotalcost. .
2. Manufacturingsupport: These activities are related to planning,
scheduling and supporting manufacturing operations. It requires master
schedule planning and per-forming work-in-progress storage, handling,
transportationandtimephasingofcomponents. Itisresponsible for storage
ofinventory at manufacturing site and maximum coordination between
manufacturingandphysicaldistributionactivities.
3. Procurement:Itisrelatedto obtainingproductsandmaterialsfrom
outsidesuppliers.Itperformsresourceplanning,supplysourcing,negotiation,
orderplacement,inboundtransportation,receivingandinspection,storageand
handlingandqualityassurance.Itsmainobjectiveistosupportmanufacturing
orresaleorganizations ~ providingtimelypurchaseatthelowesttotalcost.
(b) Whatis7Rconceptinlogistics? (7.5)
Sol.7Rightsoflogistics:
~
I.
. MovetheRightMaterials!Products
IntheRightQuantity
.IntheRightcondition
AttheRighttime
'1b theRightPlace
AttheRightCosts
'1b theRightCustomers,Associates,suppliersandstockholders
Itincludesvariousactivities:
1. Transportation!Distribution
Decisiontobetakenregardir'Ig h e modeoftransport
Serviceselection
Freightconsolidation
Carrierrouting
Vehiclescheduling
I.P.UJ
Claimsprocessing
Freightrateandqua
2. InventoryManagement
Short-termsalesforE
Productmixatstock
Number,sizeandloc
JustinTime(JIT)or
3. Orderprocessing
Orderinformationtr,
Orderingintervals
4. Warehousing
t?pacedetermination
Stocklayoutanddesi
Stockplacements
5. Materialshandling
Equipmentselection
EquipmentreplaceIDi
6; Packaging
Handling
Storage
Protectionfromlossl
7. Informationmaintenanc
Collection
DataanalysisandCOl
Q.6.(a) Whatarechanne
Sol.Varioustypesofchanr
A marketing manager hal
product. Directly reaching Cl
middlemen.Hencethedecision
togofoi-DirectMarketingorf(
IndirectMarketingwillbe:
Numberof buyersis
Frequencyofpurchal
Volumeperpurchase
Marketisdecentraliz
27
., .
Management-2010(BBA)
.involved as a partofphysical
(7.5)
hysical distribution refers to those
ling customer It requires
ng, deploying inventories, storage,
within a channel ofdistribution. It
:h aspricing, promotional support,
ards, handling returns and lifecycle
in revenue generation by providing
westtotalcost.
e activities are related to planning,
ring operations. It requires master
'ork-in-progress storage, handling,
lponents.It isresponsiblefor storage
ad maximum coordination between
activities.
>taining productsandmaterialsfrom
,lanning,supplysourcing,negotiation,
,receivingandinspection,storageand
1objectiveistosupportmanufacturing
,elypurchaseatthelowesttotalcost.
cs? (7.5)
, suppliersandstockholders
g modeof transport
Claimsprocessing
Freightrateandquality-ofservice
Short-termsalesforecasting
Productmixatstockingpoints
Number,sizeandlocationofstockingpoints
JustinTime(JIT)orpushorpullstrategies
3. Orderprocessing
Orderinformationtransmittalmethods
Orderingintervals
4. Warehousing
determination
Stocklayoutanddesign
Stockplacements
5.Materialshandling
Equipmentselection
. Equipmentreplacement
6: Packaging
Handling
Storage
Protectionfromlossanddamage
7. Informationmaintenance
Collection
Dataanalysisandcontrolprocedure
Q.6.(a) Whatarechannelstrategies?illustratethemwithexample?
(7.5)
Sol.Varioustypesofchannelstrategyusedbymarketers
A marketing manager has two options for distribution ofthe services
product. Directly reaching customer aIid reaching customer through the
middlemen.Hencethedecisionrelatingtodistributionmixistodecidewhether
to goforDirectMarketingorfor IndirectMarketingorboth.
IndirectMarketingwillbeagoodstrategyif thefollowingconditidnsexist:.
Numberofbuyersislarge,
Frequencyofpurchaseishigh,
Volumeperpurchaseissmall.
. -
Marketisdecentralized, . r;"-" .. - ..L; .. _........... . __ ,
Third SemesterMarketingManagement-2010(BBA) 28
I.P. Uni
Financialpositionof manufacturerisnotstrong,
Retail:Retailersselld:
WhenmanufaCturewouldliketosharerisk,and
orcatalog.
Whenbusinessistobeexpanded.
Salesagent/manufa
TheIndirectMarketingStrategyinvolvesuseofintermediaries.Theyhelp
..functiontoacompany
inmakingtheproductavailableto consumerthroughthe process ofsharing
agroupofsimilarcust
riskandprovidingfinancialandinformationsupport.Forexampleairlinesuse
. Q.7. (a)ExplaintheprOCE
indirectmarketingthroughGSA(GeneralSalesAgent),ABA(AuthorisedBook
ateachstageoftheprocess
Agents) and travel agents. According to Philip Kotler: 'The case for using
Sol.Stepsinperso.nalSe]
middlemenwouldrestontheirsupplierefficiencyintheperformanceofbasic
.,
1. Pre-salepreparation:T]
marketing tasks and functions. Marketingintermediaries, through their
trainingandmotivationof salesp
experience,specialization,contactsandscaleoffertheproducingorganization
.withtheproduct,thefirm,them
morethanitcanusuallyachieveonitsown."
bewell-informedaboutthecompl
DirectMarketinginvolvesdireetlycontactingthecustomers.
Theyshouldalsobeacquainted
(b) What are channel ofdistribution used these days?
buyers.
Explainthemhl-briefwithsuitableexamples. (7.5)
2. Prospecting:Itreferstc
Sol. A distribution channel is the method a company uses to get their
whohavetheneedfortheproduc
productsintothemarketplaceforconsumeruse.Thetraditionalchannelgoes
maybespottedthroughobservat
from manufacturer,distributor,wholesalerandretailer.
i customers. SocialcontaCts, busi
Distribution channels arethepathwaysthatcompaniesuse to selltheir
intheidentificationofpotential
products to end-users. B2B companies can sell through a single channel or
3.Approachh.1g;Beforecal
throughmultiplechannelsthatmayinclude
fullylearntheirnumber,needs,
Direct/salesteam:Oneormoresalesteamsthat youemploydirectly.
knowledge helpsinselectingthl
You mayusemultipleteamsthatspecializeindifferentproductsor
salesperson should approachthl
custom<er segments. should introduce himselfandh
thecustomerwitha smile andl
Direct/interhet:Sellingthroughyourown website.
himselfandhisproducttotheCll
.. Direct/catalog:Sellingthroughyourowncatalog.
inhisapproachasthefirstimpr,
Wholesaler/distributor: Acompanythat buys productsin bulk from
4. Presentation: For this
many andthenre-sells smallervolumesto resellers
productanddescribeitsfeatures
orretailers;
,] withtheattitudeoftheprospeci
Value-added reseller (VAR): AVAR works with end-users to provide
hisattentionandcreateinterest
customsolutionsthatmayincludemultipleproductsandservicesfrom
5. Demonstration:Inorder
differentmanufacturers.
hisdesire,thesales-personmust
Consultant:Aconsultantdevelopsrelationshipswithcompaniesand
toexplaintheutilityanddistincti
provideseitherspecificorverybroa!lservices;theymayrecommend
realizestheneedfor the prOOuc
amanufacturer'sproductorsimplypurchaseittodelivera solution
hurrytoimpressthecustomera
for thecustomer.
6. Handlingobjections:PI
Dealer:Acompanyor person who buys inventoryfrom eithera
arelikely to create doubts and
manufacturerordistributor,thenre-sellstoanend-user.
clearalldoubtsandobjectionswi
29
gManagement-2010(BBA)
I.P.University-AkashBooks
:turerisnotstrong,
Retail:Retailersselldirectlytoend-usersviaaphysicalstore,website
..
etosharerisk,and
:.,
ded.
volvesuseofintermediaries.Theyhelp
lsumerthroughthe processofsharing
ation Forexampleairlinesuse
ralSalesAgent),ABA(Authorised;Book
,to Philip Kotler: 'The case for using
,refficiencyintheperformanceofbasic
keting intermediaries; through their
I scaleoffertheproducingorganization
:; own."
'contactingthecustomers.
l ofdistribution used these days?
e examples. (7.5)
El method a company uses to get their
mmeruse.Thetraditionalchannelgoes
;or, wholesalerandretailer.
.hwaysthatcompanies use to selltheir
)s can sell through a single channel or
rlclude
loresalesteamsthatyouemploydirectly.
:; thatspecializeindi:f!erentproductsor
roughyourown website.
, '
oughyourowncatalog.
companythatbuysproductsinbulkfrom
lenre-sellssmallervolumestoresellers
I.):AVARworkswithend-userstoprovide
lcludemultipleproductSandservicesfrom
evelopsrelationshipswithcompaniesand
ery services;theymayrecommend
r simplypurchaseittodelivera solution
rson who buysinventoryfrom either a
r, thenre-sellstoanend-user.
Or catalog.
Salesagent/manufacturer'srep:You canoutsourceyour sales
functiontoacompanythatsellsdifferentmanufacturers'products.to
a groupofsimilarcustomersinaspecificterritory.
Q.7. (a) Explaintheprocessof personalsellingbygivingexamples
ateachstageoftheprocess . (7.5)
Sol.StepsinpersonalSellingprocess
1. Pre-salepreparation:Thefirststepinpersonalsellingistheselection,
trainingandmotivationof salespersons.Thesalespersonsmustbefullyfamiliar
.withtheproduct,thefirm,'themarketandthesellingtechniques.Theyshould
bewell-informedaboutthecompetitor'sproductsandthedegreeofcompetition.
Theyshouldalsobeacquaintedwiththemotivesandbehaviorofprospective
buyers.
2. Prospecting:Itreferstolocatingorsearchingoutprospectivebuyers
whohavetheneedfortheproductandtheabilitytobuyit.Potentialcustomers
maybespottedthroughobservation,enquiryandanalysisOfrecordsofexisting "
customers. Social contacts, business associations and de:;llers cap. behelpful
intheidentificationofpotentialbuyers.
3. Approaching:Beforecallingontheprospects,thesalespersonshould
fully learntheirnumber,needs,habits,spendingcapacity,motives,etc. Such
knowledge helpsinselectingtherightsalesappeal.Aftersuchlearning.the
salesperson should approachthe customerina polite anddignified way. He
should introduce himselfand his product to the customer. He should greet
the customerwitha smileandmakehimfeel athome. He shouldintroduce
himselfandhisproducttothecustomer.Thesalespersonhastobeverycareful
inhisapproachasthefirstimpressionisthelastimpression
4. Presentation: For this purpose, the salesperson has to present the
productanddescribeitsfeaturesinbrief.Thepresentationshouldbematched
withtheattitudeoftheprospectso thatthesalesmancancontinuouslyhold
hisattentionandcreateinterestintheproduct.
5. Demonstration:Inordertomaintaincustomer'sinterestandtoarouse
hisdesire,thesales-personmustdisplayanddemonstratetheproduct.Hehas
toexplaintheutilityanddistinctivequalitiesof theproductsothattheprospect
realizestheneedfor the productto satisfyhiswants. He shouldnotbein. a
hurrytoimpressthecustomerandshouldavoidcontroversy.
6. Handlingobjections:Presentationanddemonstrationoftheproduct
arelikelyto create doubts andquestions inhis mind. The salesmanshould
clearalldoubtsandobjectionswithoutenteringintoa controversyandwithout
i
I.P. Uni' 30 Third Semester Marketing Management-:2010 (BBA)
-:.
'I,
'"
I.p. Books 31
19 Management--:2010 (BBA)
Q.8.Write'noteson: ,
r-backguarantee,tactandpatienceare
(a) Factorsimportantinselectingmediaforadvertising (7.5)
buyers. The salesman should
. .
laking the best use ofhis money by
Sol.Factorsto bekeptinmindwhileselectinga mediaofadvertising
rpose, the salesman should prove the
(1) ResoUrce availabilityandthe cost,ofeachpromotional tool:
lpetitiveproducts.
Advertising(particularlyontelevisionandinthenationalnewspaperscanbe
climax orcritical pointinthe person;li
'i very expensive). The overall resource budgetfor the promotional campaign
tobeaneasytaskbutinappropriate willoftendeterminewhichtoolsthebusinesscanaffordtouse.
nloss ofsale. Thesalesmanshouldnot
(2) Marketsize andconcentration:Ifa marketsizeissmallandthe
:el thathehasmadethefinal decision.
numberofpotentialbuyersissmall, thenpersonalsellingmay be themost
ingthechoicewithoutimposinghisown
cost-effective promotional tool. Agood-example ofthis would be businesses
dial manner so thatthe customerfeels
'sellingsoftwaresystems forsupermarketretailers.Ontheotherhand,
ingthesale,thearticleshouldbepacked
where markets are geographically disperse, or, where.there aresubstantial
Jmerwithspeedandaccuracy. Oncethe
.;.' numbersofpotentialcustomers,advertisingis,usuallythemosteffective.
thesalesmanshould show and suggest
nay suggest socks, ties, handkerchiefs,
1 shirt.Thisisknownasadditionalsales
's totheactivitiesundertakento ensure
he article and thefirm. Theseactivities
ts, checking and ensuring its smooth
ialeservice.Ithelpsto securerepeatsales
valuatesalesman'seffectiveness.
(7.5)
fegy?
between two mainkinds ofpromotional
tegymakesuseof acompany'ssalesforce
'eateconsumer'demandfor a product.
to wholesalers, thewholesalerspromote
(3) Customerinformationneeds:Somepotentialcustomersneedtobe
providedwithdetailed,complexinformationtohelpthemevaluatea purchase
(e.g. buyers of equipment for nuclear power stations, or health service
managersinvestinginthelatestmedicaltechnology). thissituation,personal
sellingisalmostalwaysrequired- oftenusingsellingteamsratherthrnjust
one individual. By contrast, few consumers need much information about
products such as baked beans or bread. Promotionaltools such as brand
advertisingandsalespromotionaremuchmoreeffectiveinthiscase.,
(b)PromotionMix. (7.5)
Sol.Therearefive mainaspectsofa promotionalmix.Theseare:
Advertising:Presentationandpromotionofideas;goods,orservices
by anidentified sponsor. Examples: Printads, radio, television,
billboard,directmail,brochuresandcatalogs, signs,in-storedisplays,
posters,motionpictures,Webpages,bannerads,andemails.(Always
inPaid nonpersonal)
PersonalseIling:Aprocessof helpingandpersuadingoneormore
prospectstopurchaseagoodorserviceortoactohanyideathrough
where the major I
theuseof anoralpresentation.Examples:Salespresentations,
kia promote their products via retailers.
meetings, salestrainingandincentive programsfor
1Sareoftenthemosteffectivepromotional
.ti
salespeople,samples,andtelemarketing. Canbeface-to-face orvia
_for example offering subsidies on the
telephone.
ellhighervolumes.
Salespromotion:Mediaandnon-mediamarketingcommunication
is one that requires high spending.on "
areemployedforapre-determined,limitedtimetoincreaseconsumer
ion to build up consumer demand for a
demand,stimulatemarketdemandorimproveproductavailability.
Examples:Coupons,sweepstakes,contests,productsamples,rebates,
msumers will ask their retailers for the ,s
tie-ins, self-liquidatingpremiums, trade shows, trade-ins, and
wholesalers, andthewholesalers will ask
exhibitions.
.
32 Third Semester Marketing Managemen1r-2010 (BBA)
Public relations: Paid intimate stimulation of supply for a product,
.service, or business unit by planting significant news about it or a;
favorable presentation of it in the media. Examples: Newspaper and .
magazine articles/reports, TVs and radio presentations, charitable'
contributions, speeches, issue advertising, and seminars.
Direct Marketing is a channel-agnostic form of advertising that.,
allows businesses and nonprofits to communicate straight to the ..
customer, with advertising techniques such as mobile messaging, .
email, interactive conslimer websites, online display ads, fliers, catalog'
distribution, promotional letters, and outdaor advertising.
;1
.,
},
:i
;
':;
'-

MARKETING M
END-TERM
"
Time: 3 Hours.
Q.l. Discuss various COl
gaining importance in tod.ay
Sol. Various Concepts of:
Philip Kotler has shown five
activities in an organization:
.. (A) Production Concept:
mainly laid on achieving high
coverage. High production efficie
It means that customer favors' p
available. Mlmy service
(B) Product Concept: The
by making superior products an
be able to attract customer. The I
quality, performance, innovative
quality and reasonably priced t
the product matters.
(C) Selling Concept: The
alone, will not buy enough of the

I,
must undertake an aggressive s
company uses various selling
products. The selling concept is a:
offices, & political paz:ties.
. . (D) The Marketing Conce
:.i rise to a new philosophy in bl
d marketing concept emphasizes
;1 potential. customers and suppl)
iI Determination of wants of the Cl
1. (E) Th,e Societal Markel
customees satisfaction and long
f to satisfying organizational goals
soft drinks in tetra packs (e.g. fr
'1 empty tetra packs & plastic bottl
experts have suggested humanis
J that the firm's task is to detElrl
markets & to deliver desired
;) enhances the consumer's & the;
":.:.:
ingManagement--2010
imatestimulationof supplyforaproduct,:;1:
y plantingsignificant news aboutitora'1t
THIRD SEMESTER
;inthemedia.Examples:NewspaperandV
MARKETING MANAGEMENT (BBA-205)
TVs andradio presentations,'charitable
meadvertising,andseminars.;,:
EXAMINATION (2011)'
I'
lannel-agnosticform ofadvertisingthat]"
Time:3 Hours.
M.M:75
nprofitstocommunicate straighttothe
Ig techniques such asmobile messaging,F
Q.l.Discuss various concepts ofMarketing. Why Marketingis
rwebsites,onlinedisplayads,fliers,catalog. gainingimportanceintoday'scompetitiveenvironment? (15)
letters,andoutdeoradvertising. Sol.VariousConceptsofMarketing
PhilipKotlerhasshownfive competingconceptsforcarryingoutmarketing
. activitiesinanorganization: .
.(A) Production Concept:Incase ofproduction concept, emphasis is
mainly laid on achieving high production efficiency and wide distribution
.. coverage. Highproductionefficiencymeansthatinput-outputratioisfavorable.
'; Itmeansthatcustomerfavors' productsofferedatalowerpriceandalsoeasily
ei available.ManyServiceorganizationsalsooperateontheproductionconcept.
. (B) ProductConcept:The firms following this philosophy believe that
. by makingsuperiorproductsandimprovingtheirqualityovertime,theywill
)1 beabletoattractcustomer.Theunderlyingassumptionisthatcustomerfavors'
H quality, performance,innovativefeatures,etc.Itmeansif'productsareofgood
quality andreasbnablypriced then consumerdoes not have much'say, only
:1
, theproductmatters. , .
. . (C) SellingConcept:The selling concept holds thatcustomers, ifleft
;.;, alone,willnotbuyenoughof theproductsof anorganization.Theorganiiation
mustundertake anaggressive sellingand promotioneffort. Underselling, a
company'uses various selling methods to persuade customers to buy its
.' products.ThesellingconceptisalsopracticedintheNGO's,collegeadmissions,
offices,&political .
;1
'G . (D)TheMarketingConcept:Consumerorientedmarketinghasgiven
rise to a. new philosophy in business known as 'marketing concept'. The
marketing concept emphasizes the determination ofthe requirements of
potential. customers and supplying products to satisfy their' requirements..
Determinationofwantsofthecustomerstakesprecedenceoverproduction.
(E) Tb,e Societal Marketing Concept: Itisaimed at generating
customer;s satisfactionandlongtermconsumerandpublic welfare as a key
tosatisfyingorganizationalgoalsandresponsibilities.Forex,consumersprefer
:. softdrinksintetrapacks(e.g.frooti) orplasticbottles(e.g. Coke,Pepsi).But

emptytetrapacks&plasticbottlescreateenvironmentalhazards.Thisiswhy,
expertshavesuggestedhumanisticorsocietalmarketingconceptwhichholds
'j thatthe firm's task is to determine the needs, wants & interests oftarget
markets & to deliver desired satisfactions in such a way that preserves or .
a enhancestheconsumer's& thesociety'swellbeing.
i

'
34 ThirdSemesterMarketing (BBA)
Importanceof Marketingintoday'scompetitiveenvironment
(A) Marketingcommunicationscreates"topofmind"awareness:
An integratedmarketingcommunicationsplanthatgetsyourmessagingout
to the right targetaudience, consistently and over time, WILL eventually
createthe "top ofmind"awarenessfor your product orservice thatturns a
.prospectinto a customer. Recognition a,nd awarenessfor yourcompanyalso
make itmuch easier for your sales staffto get someone on the phone or
scheduleallappointment. Companiesliketodo businessWithcompaniesthey
"know" and have positive perceptions of. Likewise, investors like to buy'"
recognizedcompanies.
(B) Preferredbrandscommanda premiumprice-shortandlong-
term: Go through a process ofdetermining your company's unique value
proposition, and then start purposefully communicating that to the
marketplace (promotion.) This is the only way you will create a point of
differentiationbetweenyouandyourcompetitors.Asyourcustomersandthe . ':'.
industriesyouselltobegintorecognizeyourcompany(brand)asthepreferred
choiceforacertainproductorservice,itallowsyoutochargepremiumpricing. ,i
(C)Happycustomersnotonlysendreferrals,theycreateperceived
value:,Happy customers talkto other potential customers, even in the II
industrial world.A good percentage ofManufacturers new business comes ':i
throughreferralsfrom satisfiedcustomers.It alsotakesa marketingstrategy
that positions your company (in the minds ofyour target aadience) as the
marketleaderin overall customer satisfaction and intimacy. Its parto(the .4
.image you build around your brand- it'sthe magic result ofwell executed :'
branddevelopmentandmarketingcommunicationn.
(D) Repeat revenuestreamsensurea profitnowandlater:This
really falls more into the other marketing functions than that of
communications, but a smart marketing strategy not only focuses on a'
J
I
company's core market and value proposition, it a1so finds ways to build
multiple channels for recurring revenue. Smart marketers (and business
owners)lookforwaystodiversifytheirofferingsandespeciallyinareaswhere
repeatsalesrequirelittletonoeffortonthepartofthesalesteam. Withthe
Internet, this is more possible than ever before; particularly ifyou sell a
productthatisnotcustomengineered,oraservicethatcanbeea:;;ilyclassified
withoutalotofcustomization.
(E) lasts forever: marketingbas to be a long-term
investment:Consistentandpersistentmessaging,goingtoanintegratedmix
i
ofcontactpointswithyourcustomersandprospects,isaninvestmentinyour
companY'slong-termstabilityandvalue..
(F)Employeeswhoare''brandambassadors"sellyourcompany-
to customersAND potential buyers: Thday, marketing is not just something
youdo "outside"of yourcompany.If youtrulywantto createa powerfulimage
andvaluepropositionforyourbusiness,thefirstgroupofpeopleyouhaveto
convince areyour'own employees. Understandingtheirunique role inyour
company'sbrandpromiseisjustthebeginning;if youwantbrandambassadors,
I.P. 1
you need happyemployees.
compensated(and thatdoes]
likelytosingthepraisesof Y4
Q.2.(a) Whataretheb:
(i) TV
(ii) MobilePhones
(iii) Toothpaste
Sol.(i) TV- Geographicse
beusedasbasesforsellingT1
bylocation.Marketershave01
amongurban,sub-urbanand
the process ofsegmenting th
sex, maritalstatus,income,01
thebasisfor segJ
(ii) MobilePhones-Use-reh
be used as bases for mobile
consumersintermsof produci
usagerate,awarenessstatus
hand, Inbenefit
particularbenefitthattheysh
resolutioncamera, bigtouchs
(iii) Toothpaste-Amix of
segmentationisgenerallyusel
PrincipalBenefit
Fl
Behavioralcharacteristics
UI
Demographics
Cl
psychographies
Hi
(b) Whatarethevarious
product?
Sol.Thevariouswaysthat
Positioningbyattribl
while usingthisapI
particularfeaturesOJ
Positioningby pricE
positioningtheofferi:
Positioningbyuseof;
basisof thereasonfo
Delhipositionsitself
&promisesone-stopn
todetailandpersona
Positioningaccordii
consumersegments
executiveclass,thefi
:lg (BBA) j
i
I.P. University,-Akash Books 35
'scompetitiveenvironment you need happyemployees. An employee that feels appreciated and fairly
lS creates"topofmind"awareness: J compensated (andthatdoesn't always equateto theirsalary)is much more
. . gout %. likelytosingthepraisesof yourcompany.
;ionsplanthatgetsyourmessagm;;
.ently and over time, WILL eventually>, Q.2.(a) Whatarethebasesusedtosegmentmarketsfor:
(7.5)
oryour productor servicethatturns a . (i) TV
1 andawarenessfor yourcompany.also 'it (ii)MobilePhones
staffto get someone on the or ,;i (iii) Toothpaste
"II'ke todo businesswithcompamesthey (if
" Sol.(i) TV- Geographicsegmentationanddemographicsegmentationcan
lns
of. Likewise, investors like touy
b
i;; .
.. beusedasbasesforsellingTv. Ingeographicsegmentationmarketisdivided
bylocation.Marketershaveobserveddivergentconsumerpurchasingpatterns
lld a premiumprice-shortandlong-
. amongurban,sub-urbanandruralareas.Whiledemographicsegmentationis
erminingyour company's uniquevalue
the process ofsegmentingthemarket on demographic characteristics. Age,
lOsefully'communicating that t? the "
sex,maritalstatus,income,occupationandeducationaremostoftenusedas
he only way you will create a pomt of .f;
thebasisfordemographicsegmentation. -
rcompetitors.Asyourcustomersandthe "
(ii)Mobile segmentationandBenefit can
lzeyourcompany(brand)as
be used as bases for mobile phones.\Use-related segmentation categorizes
itallowsyoutochargepremIum
consumersintermsof orbrandusagecharacteristicssuchas
,sendreferrals,theycreateperceived usagerate,awarenessstatus,anddegreeof brandloyalty.While,ontheother
)ther potential customers, in the ."
hand,Inbenefitsegmentationmarketersandadvertisersseektoisolateone
e ofManufacturers new busmess comes
particularbenefitthattheyshouldcommunicateto theconsumer.Forexhigh
;omers.It alsotakesamarketingstrategy
resolutioncamera,bigtouchscreen,longbatterylife, etc.
le minds ofyour target audience) aS thhe
(iii) Toothpaste-Amix ofdemographic, behavioral and psychographic
f
satisfaction and intimacy. Its parto.t e j
segmentationisgenerallyusedtosegmentmarketsfor toothpaste.Forex,
d- it'sthemagic resultofwell executed

ensurea profitnowandlater:This ..
:lr marketing functions than that of
arketing strategy not only focuses on. a
proposition, itaiso finds ways to?Ulld
(b) Whatarethevariouswaysthatcanbeusedforpositioningthe
'evenue. Smart marketers (and busmess ,
product? . (7.5)
leirofferingsandespeciallyinareas
Sol.Thevariouswaysthatcanbeusedfor positioningtheproductare:
)rtonthepartof thesales Withthe l
Positioningby featuresorcustomerbenefits- Marketers,
PrincipalBenefit Flavor,productappearance Brightnessof teeth
Behavioralcharacteristics Usersofspearmintflavor Smokers
Demographics Children Teens,:youngadults
psychographies High-self involvement Highsociability
.an ever before; particularly you a
while usingthisapproach, place emphasison thebenefitsofthe
:ed,oraservicethatcanbe claSSIfied
particularfeaturesorattributesof theoffering.
Positioningby price value": Value for moneycanbe utilized for

marketing bas to be a
positioningtheofferingeffectively.
stentmessaging,goingtoanintegratedmIX.
Positioning by. use of application- Service offering is positionedon the
ersandprospects,isaninvestmentinyour
basisofthereasonforitsuse.Forex;HotelInter- Continental,New
value. ,.
. Delhipositionsitselftothemeetingmarketwith meetingplace"
andambassadors"sellyour
. & promisesone-stopmeetingsolutions,consistentstandards,attention
y-ers:Today,marketingisnotjust .
todetailandpersonalizedsemce.
[fyoutrulywanttocreateapowerfulImage::i
Positioning according to usersor class ofusers- This relatesto
siness thefirstgroupofpeopleyouhaveto
consumersegmentsusing a service offering. Airlines targetthe
I. Understandingtheiruniquerole in
executiveclass,thefrequentfliersandthetourists. '
.ebeginning;if youwantbrandambassadors,

,.
'
36 ThirdSemesterMarketingManagement-2011(BBA) I.P. UniVI
Positionwithrespecttoproductclass- Thepositioningcouldbebased NewInnovativeProducts
onfunctionalbenefitsaswellassymbolic& emotionalbenefits.For Television:introducedir
ex; ThailandTourism positionsasholdinga conventioninThailand ColortelevisionintheIl
is"smoothassilkwhereskyisthelimit"
VideoRecordersinthel'
Positioning againstcompetition- This positioningapproach is used ',:
tomeetthecompetition"HEAD-ON"tobringoutdifferencesbetween', Multichanneltelevision
destinations.Thisformofpositioninghadbeenresponsibleformany. DVD'sinthe1990s
advertisingwarsinthemarketplace. Flatscreentelevisionin
,. Positioningby endorsement- Itinvolves use ofcelebrities or other HighDefinitionTV inth.
,productsuccesses.ReebokhasusedRahulDravidfortheirproducts. b' ;
( ) What are the variou:
Positioning by physical evidence- The service organization use"Development? '
physicalevidenceslikeadvertisements,brochures,visitingcards,etc
to solidify the image ofthe organization and its offering in the Sol.The sevenstagesorproce
, anewproduct -arelistedasfollows:
customer's mind. , " ,
Q.3.(a) ExplainwitlJ, examplesProductInnovationandDiffusion; 1. Ideageneration.
process. ' (7.5),' 2. ,Ideascreening.
Sol.Intheprocessofnewproductdevelopment,alargenumberof factorsi' 3. Concepttesting.
are examined to knowthereaction ofconsumersregardingadoption ofnew'} 4. Businessanalysis.
product. The process of accepting new productidea is known as ' 5. Productdevelopment.
process. Diffusionistheprocessby whichtheacceptanceofaninnovationis
I',"
I .
spreadbycommunication(massmedia,salespeople)tomembersofthesocial;: 6. 'lestmarketing "
systems. ;; 7. Commercialization
StagesintheDiffusionProcess/AdoptionProcess M Nowlet'sdiscusseach.stagein1 1
The consumer moves through five stagesin arriving at a decision' 1. Ideageneration:The first-
purchaseorreJecta newproduct: ;') generation.Newideascanbegener,
1. AwareI,less-Aware ofthe product but lack detailed knowledge :.: ConductiIig marketing res!
2. Interest- Curious- seekmoreinformation -, wants.
3. Evaluation- Decidingwhethertotestthepro!iuct Invitingsuggestionsfrom.
4. Trial- Usingtheproductontestbasis Invitingsuggestionsfrom
5. Adoption- Decidingtobecomearegularuser Brainstormingsuggestionf
tel.rdeenatsm. ,ark dudifiic'
l'
Gettingfeedbackfrom ag,
1M competitors. -
'M Studyingthenewproductt

2.Idea screening:Most corn
studies:;lH, theideasvery
,'11reJect the bad ideas. Before selec:
1jQuestionsareconsideredorasked:
t:} 1. Isitnecessarytointroducl
:0 - 2. Cantheexistingplantand
,. 3. Cantheexistingmarketin
4. Whencanthenewproduci
i

B
" '" -', ' '",
The Adoption-Decision Process'-
E.'vere,ttR,.og'ers ','
37 J.P. University-AkashBooks.
ingManagement-20l1(BBA)
ductclass- Thepositioningcouldbebased NewInnovativeProducts
ellassymbolic& emotion.al For Television:introducedinthe1930s
ionsasholdingaconventlOnm ThaIland ,. Colortelevisioninthe1970s
ky isthelimit" -. VideoRecordersinthe1970s
tition- Thispositioning approachis used,., Multichanneltelevisioninthe1980s&90s
EAD-ON"tobringoutdifferencesbetween'_;, DVD'sinthe1990s
). ositioninghadbeenresponsiblefor many.',;
Flatscreentelevisioninthelate90s
lrketplace. -;
nt- Itinvolves useofcelebrities or other ' HighDefinitionTY inthe2000s
hasusedRahulDravidfortheirproducts.. (b) What' are the various stages involved in New Product
evidence- The service organization.use<Development? (7.5)
\Tertisements,brochures, etc Sol.Thesevenstagesorprocessorstepsinvolvedinthedevelopmentof
the organization and its offermg m the! a newproductarelistedasf?llows:
1. Ideageneration.
lesProductInnovationandDiffusion, 2. Ideascreening.
(7.5),.
LIct development,alargenumberoffactors';, 3. Concepttesting.
1 ofconsumers regarding adoption.ofn.ewq' 4. Businessanalysis.
:new product idea is known.as 5. Productdevelopment.
{whichtheacceptanceofanmnovatlOn.lsjl 6. Testmarketing
edia,salespeople)tomembersofthe '7. Commercialization
. P \Nowlet'sdiscusseachstageintheprocessofanew-productdevelopment.
;/AdoptIon rocess . -;) , . '.'
. . ing at a decision to 1 1.Ideageneration:The first stepinnew-product development isidea
h. five stages m arnv Newideascanbegeneratedby:
,t Conductingmarketingresearchtofindouttheconsumers'needsand
productbutlackdetailedknowledge
.. wants.
noreinformation
Invitingsuggestionsfromconsumers.
lethertotesttheproduct
ontestbasis
Brainstormingsuggestionsfornew-producti4eas.
lcome aregularuser
Searchingin different marketsviz., national andinternational markets
" fornew-productideas.
>n......OeCisiq" Process"
Gettingfeedbackfrom agentsordealers aboutservices offeredby
competitors. .

Studyingthenewproductsof thecompetitors.
2. Idea screening: Most companies have a "Idea Committee." This
studiesf;llltheideasverycarefully.Theyselectthegoodideasand
the bad ideas. Before selecting or rejecting an idea, the following
f,questionsareconsideredorasked:
'I'
1. Isitnecessarytointroducea newproduct?
2. Cantheexistingplantandmachineryproducethenewproduct?

3. Cantheexistingmarketingnetworksellthenewproduct?
4. Whencanthenewproductbreakeven?
Confinnation
... ..
Ifthe answers to these questions are positive, then the idea ofa new-;!
product developmentis selected elseitis rejected. This step isnecessarytoif
avoidproductfailure. ';;
3. Concepttesting: Concept testing is done after idea screening. Itisr;
differentfrom testmarketing. Inthisstageofconcepttesting, the company/,
finds out: "
1. Whethertheconsumersunderstandtheproductideaornot? :;
2. Whethertheconsumersneedtpenewproductornot?
3. Whethertheconsumerswillaccepttheproductornot?
Here, a small group ofconsumers'isselected. They are given fullt
informationaboutthenewproduct.Thentheyareaskedwhattheyfeel about(
thenew product. They are asked whetherthey likethenew prQductornot.)
So, concepttestingis done to find outtheconsumers' reactionstowardsthl{
newproduct. If mostof theconsumersliketheproduct,thenbusiness
. d' .. ,d
m "
.4.Businessanalysis:Businessanalysisisaveryimportantstepinnewit;
productdevelopment. Here,adetailedbusinessanalysisisdone.The
finds outwhetherthenew productis commercially profitable ornot. So, thefg
,Ii
companystudiesthenewproductfrom thebusinesspointofview. If the
productisprofitable,itwillbeacceptedelseitwillberejected.
5. Productdevelopment:At this stage, the company has decided
introduce the newproductinthemarket. Itwill take all necessarysteps
- .
produceanddistributethenewproduct.Theproductiondepartmentwill
planstoproducetheproduct.Themarketingdepartmentwill make plans
distributethe product. The finance departmentwill provide the finance
,introducing the new product. The advertising dep:;irtment will plan
advertisementsforthenewproduct.However, allthisisdoneasa small
forTestMarketing. "
6.Testmarketing:Testmarketingmeanst-o introducethenew producf
ona verysmallscaleina verysmallmarket.If thenew productissuccessfuj),
.. inthismarket,thenitisintroducedona largescale. However, iftheproduc(f
failsinthetestmarket,thenthecompanyfinds'outthereasonsforits
Itmakesnecessal"J changesinthenew productandintroducesitagai.n in
smallmarket. Ifthenew productfails againthecompanywill rejectit.
marketingreducestheriskoflarge-scalemarketing.Itisa safety'device. Ii
isverytime-consuming.Itmustbedoneespeciallyforcostlyproducts.
7. Commercialization: Ifthe test marketing is successful, then
companyintroducesthenewproducton alargescale,sayalloverthe
Thecompanymakesa largeinvestmentinthenewproduct.Itproduces
distributesthenewproductonahugescale. Itadvertisesthenewproduct
themassmedialikeTV, Radio,NewspapersandMagazines,etc.
Q.4. What factors kept in mind in SelectingChannel
Marketing? What arevarioustypes ofchannel strategyusedhi,',
marketers? (15i!
Sol.Factorsinchoice DistributionChannels .
. N
J"

LP.
(A) ProductConsidl
manufacturedisone ofthe
channel.Themajorproduc1
Productsoflow u
through middlell
industrialproduct
Perishableproduc1
orstyleaswellas
routesandareger
Industrial
serviceareoftens,
productsof technil
An entrepreneur
economical to set
consumers. On th
products maythe
retailers.
Anewproductnee
andhencefew mid
.. (B) Market
choiceofdistributionchann,
importantfeaturesinthisn
Iftheinarketforth
ofdistribution wil
productinlargequ
quantity.Whileint
middlemenmay
Ifthenumberofpr
productisgeogra}:
moresuitable.'Whi
useofmiddlemen
Ifthecustomerspl
ispreferred.But,if
areusedtodistrib
;;) OtherConsidera
entrepreneurmusttakejn1
Someoftheseareasfollow:
Anewbusinessfil
ordertopromotei1
marketstanding1
Asmallfirm whic
networkhastode
otherhand,alart?
39
r

Management-2011(BBA) }
:
illS are positive, then the idea ofa new-
;e itis rejected. This stepisnecessaryto
is done after idea screening. Itis "
his stage ofconcepttesting, the company',;,
!rstandtheproductideaornot?
lthenewproductornot?
theproductornot?
uniers is selected. They are given fun::
.Thentheyareaskedwhattheyfeel about,
Nhethertheylike thenew productornot.
outthe consumers' reactions towards the
ersliketheproduct,thenbusinessanalysis;
.i
;sanalysisisaveryimportantstepinnew-';
ledbusinessanalysisisdone.Thecompany;;
t iscommerciallyprofitableornot. So, the0.
from thebusinesspointofview. If thenew
i
;
elseitwillberejectedl
.t this stage, the company has decided
market. Itwill take all necessary steps
Iduct.Theproductiondepartmentwillmake1
marketingdepartmentwill makeplans
departmentwill provide thefinance
he advertising depilrtment will plan the;a
However,allthisisdone asasmallscale:;j
]
ketingmeanst-o introducethenewproducl1
,all market.If thenewproductissuccessfuli
edonalargescale. However,ifthe
:ompanyfinds'outthereasonsforitsfailurel
le new productandintroducesitagai,n in
: fails againthe will rejectit: Te1
'ge-scale marketmg. ItIS a safetydevIce.
,e doneespeciallyfor costlyproducts.
;he test marketingis successful, then thl
uctonalargescale,sayalloverthe
stmentinthenewproduct.Itproduces
hugescale.Itadvertisesthenewproduct
ewspapersandMagazines,etc.
in mind in Selecting Channeldl
LIS types ofchannel usedhi

ributionChannels I'

B,

I.p. University-AkashBooks
(A) Product Consideration: The type and the nature of products
manufacturedis one oftheimportantelementsinchoosing thedistribution
channel.Themajorproductrelatedfactorsare:
Productsoflowunitvalue andofcommon use aregenerallysold
through middlemen. Whereas, expensive consumer goods and
industrialproductsaresolddirectlybytheproducerhimself.
Perishableproducts;productssubjectedtofrequentchangesinfashion
orstyleaswellasheavyandbulkyproductsfollowrelativelyshorter
routesandaregenerallydistributeddirectlytominimizecosts.
Industrialproductsrequiringdemonstration,installationandaftersale
serviceareoftensolddirectlytotheconsumers.Whiletheconsumer
productsoftechnicalnaturearegenerallysoldthroughretailers.
An entrepreneurproducinga wide rangeofproductsmayfind it
economical to setuphisown retailoutletsandselldirectlyto the
consumers. On theotherhand,firms producinga'narrowrangeof
products maytheir products distribute throughwholesalers and
retailers.
Anewproductneedsgreaterpromotionaleffortsintheinitialstages
andhencefew middlemenmayberequired.,
. (B) Market Consideration:Another important factor influencing the
choiceofdistributionchannelis natureofthetargetmarket.Someofthe
importantfeaturesinthisrespectare:-
Iftheinarketfortheproduct ismeantforindustrialusers,thechannel
ofdistributionwill notneed anymi9dlemenbecausetheybuythe
productinlargequantities.Shortoneandmayastheybuyinalarge '
quantity. Whilein the case ofthegoodsmeant fordomestic consumers,
middlemenmayhavetobeinvolved.
Ifthenumberof prospectivecustomersissmallorthemarketforthe
productisgeographicallylocatedina limitedarea,directsellingis
more suitable. Whilein case of alargenumber of potential customers,
useofmiddlemenbecomesnecessary.
If thecustomersplaceorderfortheproductinbiglots,directselling
is preferred.But,iftheproduct is soldin small quantities,1J:liddlemEm
,areusedtodistributesuchproducts.
(C) Other Considerations:There are several other factors that an
entrepreneurmusttakejntoaccountwhile choosing a distribution channel.
Some oftheseareasfollows: '
Anewbusinessfirm mayneedtoinvolveoneormoremiddlemenin
ordertopromoteitsproduct,whilea:wellestablishedfirmwithagood
marketstandingmaysellitsproductdirectlytotheconsumers.
Asmallfirm whichcannotinvestinsettingupitsoWn distribution
networkhastodependonmiddlemenforsellingitsproduct.Onthe
otherhand,alargefirmcanestablishitsownretailoutlets.'
LP. UI
If the demand for the product is high, morenumber of channels may ,.',
Pull:A "pull" selling str:
be usedtoprofitablydistributetheproducttomaximumnumberof <'
advertising and consumer pr
customers. But,ifthedemandislowonly afew channelswould be!
product.
sufficient.
Ifthe strategyis successf
All these factors or considerations affecting the choice ofa distributiO'n
product,theretailerswill ask
channelareinter-relatedandinterdependent.
theproducers.
Varioustypes ,of channelstrategyusedbymarketers
Factorstobe inmind1
A marketing manager has two options for distribution ofthe services
(1) Resource availabilH
product. Directly reaching customer and reaching customer throughthe
middlemen.Hencethedecisionrelatingto distributionmixistodecidewhether
togo for DirectMarketingorforIndirectMarketingorboth.
IndirectMarketingwillbe agoodstrategyif thefollowingconditionsexist:
Numberofbuyersislarge,
Frequencyofpurchaseishigh,
Volumeperpurchaseissmall,
Marketisdecentralized,
Financialpositionofmanufacturerisnotstrong,
Whenmanufacturewouldliketosharerisk,and
Whenbusinessistobeexpanded.
TheIndirectMarketingStrategyinvolvesuseof intermediaries.Theyhelp
inmakingtheproductavailableto consumerthroughthe process ofsharing
riskandprovidingfinancialandinformationsupport.Forexampleairlinesuse
indirectmarketingthroughGSA(GeneralSales Agent),ABA(AuthorisedBook
Agents) and travel agents. According to Philip Kotler: 'The case for using
middlemenwouldrestontheirsupplierefficiencyintheperformanceofbasic
marketing tasks and functions. Marketingintermediaries, through their
experience,specialization,contactsandscaleoffertheproducingorganization
morethanitcanusuallyachieveonitsown."
DirectMarketinginvolvesdirectlycontactingthecustomers.
Q.5.DiscussPushvIs Pullstrategy.Whatfactorsarekeptinmind
atthetimeofselectinga Mediaforadyertising?Discussinbrief.(15)
Sol."PushorPull"
Marketingtheory distinguishesbetween two mainkinds ofpromotional
strategy- "push"and"pull".
Push:A"push"promotionalstrategymakesuseofacompany'ssalesforce
andtradepromotionactivitiesto createconsumerdemandfor a product.
The producerpromotesthe productto wholesalers,thewholesalers promote
ittoretailers,andtheretailerspromoteittoconsumers.
A good example of"push" selling is mobile phones, where the major
handset ,manufacturers such as Nokiapromote their products via retailers.
Personalsellingandtradepromotionsareoftenthemosteffectivepromotional'
tools for companies such as Nokia - for example offering subsidieson the
handsetstoencourage to sellhighervolumes.
Advertising(particularlyonte
very expensive). The overall I
willoftendeterminewhichtoo
(2) Marketsizeandcon
numberofpotentialbuyersis
cost-effective promotional tool
sellingsoftwaresystemsdesign
,where markets are geographi
,numbersofpotentialcustomer
(3) Customerinformati<
providedwithdetailed,comple
(e.g. buyersofequipment fa
managersinvestinginthelates
sellingisalmostalwaysrequiI
,one individual. By contrast, j
products such as baked bean
advertisingandsalespromotic
Q.6. What are the \far
designing Pridngstrate,
Techniques.
S91.FactorsaffectingpJ
Numerousfactors affecttl;
factors could be studiedundel
factors. Internalfactors areth
certain extent such as compi
externalfactors aretheforces
control.
Internal factors
Marketing mix
strategy
Costs
OrganizationaI
,considerations
Factor:
41
gManagement-2011 (BBA)
;-0. ;ishigh,morenumberof channelsmay
lte theproducttomaximumnumberof
ld islow only a few channelswould be
;; affecting the choice ofa distributi()'h
endent.
llsedbymarketers
ptions for distribution ofthe services
, and reaching customer throughthe
todistributionmixistodecidewhether
ectMarketingorboth.
ltrategyifthefollowingconditionsexist:

n,
lcturerisnotstrong, g
ketosharerisk,and
nded. ;:
"
1 f' t di' Th h lp .
nvovesuse0 III erme anes. ey eli
jnsumer.throughtheprocessofsharing:'
mationsupport;.Forexampleairlines
leralSalesAgent),ABA(AuthorisedBook .-'
19 to Philip Kotler: 'The case for using 0;'
ierefficiencyintheperformanceofbasic't
lrketing intermediaries, through their ;
Cld scaleoffertheproducingorganization "
tsown."
y contactingthecustomers.

ltegy.WhatfactorsarekeptinmimI
[)rad,!,ertising?Discussinbrief. (15)

,r::;
between two mainkinds of

,

:.egymakesuseofacompany'ssalesforce
eateconsumerdemandfor a product.
to wholesalers, thewholesalers promote(i
wte itto consumers.
ng is mobile phones, where the major l!
dapromote their products via retailers.
sareoftenthemosteffectivepromotional
- for example offeringsubsidieson the
highervolumes.
I.P. University-AkashBooks
Pull:A "pull" selling strategy is one that requires high spending on
advertising andconsumer promotion to build up consumer-demand for a
product. . . -
Ifthe strategy is successful, consumers will ask their retailers for the
product,theretailerswill askthewholesalers, andthewholesalers will ask
theproducers.
Factorsto inmindwhileselectinga mediaofadvertising
(1) Resource availabilityandthe costofeach promotional tool:
Advertising(particularlyontelevisionandinthenationalnewspaperscanbe
very expensive). The overall resource budgetfor the promotional campaign
willoftendeterminewhichtoolsthebusinesscanaffordtouse"
(2)Marketsize and If a market' sizeis small and the
numberofpotentialbuyers is small, then personal selling may be themost
cost-effective promotional tool. Agood example ofthis would be businesses
sellingsoftwaresystemsdesignedforsupermarketretailers.Ontheotherhand,
where markets are geographically disperse or, where there are substantial
.numbersofpotentialcustomers,advertisingisusuallythemosteffective.
(3)Customerinformationneeds:Somepotentialcustomersneedtobe
providedwithdetailed,complexinformationtohelpthemevaluatea purchase
(e.g. buyers ofequipment for nuclear power stations, or health service
managersinvestinginthelatestmedicaltechnology).Inthissituation,personal
. I . d' 11
selling' isalmosta waysreqUIre - oftenusingse ingteamsratherthanjust
.one individual. By contrast, few consumers need much information about
products such as baked beans orbread. Promotional tools such as brand
advertisingandsalespromotionaremuchmoreeffectiveinthiscase.
Q.6. What are the various factors to be kept in mind while
designing Pricing strategies? Discuss in briefvarious Pricing
Techniques. (15)
S91.Factorsaffectingpricingdecisions
Numerousfactorsaffectthepricingpolicies anddecisionsofa firm. Such
factors could be studiedundertwogroups:.(i) Internal Factors;(ii) External
factors. Internalfactors aretheforces whichcanbe controlledbya firm to a
certain extent such as company objectives, marketing mix, costs, etc. But
externalfactors aretheforces outsidethefirm over whicha businesshasno
control.
Internal factors
Marketing mix
strategy.
Costs
Organizational
considerations
External factors
Nature ofthe market
and demand
Competition
. Other environmental
factors (economy,
Factorsaffectingpricedecisions
J.P. Un
InternalFactors VariousPricingTechniques
(1) MarketingObjectives:Beforesettingprice,thecompanymustdecide (1) CostplusPricing- Co
onitsstrategyfor theproduct. Ifthecompanyhasselecteditstargetmarket Thefirmcalculatestl:
andpositioningcarefully,thenitsmarketingmixstrategy,includingprice,will percentage(profit)toj
befairly straightforward.Forexample,ifGeneralMotorsdecides to produce althoughsimplehas
a newsports car to compete with European sp'orts cars in the high-income
is no way ofdetermir
segment,thissuggestscharginga highprice.Atthesametime,thecompany productatthecalcula1
mayseekadditionalobjectives.Theclearera firm is aboutitsobjectives,the
easieritis to setprice.Examplesofcomnionobjectives aresurvival, current (2) Skimmingor
profit maximization, market share leadership, andproduct quality leadership. duringthe initialstal
(2) MarketingMixStrategy:Price is only one ofthe marketing mix'.: manufacturerfixeshil
tools thata companyusesto achieveitsmarketingobje,ctives. Pricedecisions initialinvestmentquic
must be coordinatedwith product design, distribution,and promotion decisions of their console over 5J
toforma consistentandeffectivemarketingprogram.Decisionsmadefor otlier . priceneartheendof i
marketingmixvariablesrnayaffectpricingdecisions.,: (3) PenetrationPricing- H
(3) Costs: Costssetthefloor for the price thatthe companycanchargef .salesandmarketshaJ
for itsproduct. Thecompanywantsto chargea pricethatbothcovers allits firmmaywellthenincl
costs for producing, distributing, andsellingthe product anddelivers a fair ,setsa low priceto get
rateofreturnfor itseffort andrisk.Acompany'scostsmaybean customerbaseincreasl
.;f
1
I:
elementinitspricingstrategy. (4) Competitivepricing- S
(4) Organizational Considerations: Management must decide who Reallyafirmhasthree
within the organization should set prices. Companies handle pricing in sameorpricehigher
varietyofways. Insmallcompanies,pricesareoftensetbytop management (5). PremiumPricing- a <
ratherthanbythemarketingorsalesdepartments.Inlargecompanies,pricingjj quality,uniquefeatw-ef
istypicallyhandledbydivisionalorproductlinemanagers. distributionchannelan
ExternalFactors $ pricingstrategy.
(1) .TheMarketandDemand:Whereascostssetthelowerlimit (6)
,. PsychologicalPricing- I
. the marketanddemand setthe upperlimit. Both'consumer and
. priceandthepositioninJ
buyersbalancethepriceofa productorserviceagainstthebenefitsofowning
i
; sellingaproductat$3.
it.Thus,beforesettingprices,themarketermustunderstandtherelationship; (7)
. dd dfi't d t .: Discriminatoryordual
b t
e weenpncean eman or1 s pro uc. ' ." d '. .'
(2) Competitors'Costs,Prices, andOffers: Another external factor,}' dIfferentsei
affectingthecompany'spricingdecisionsiscompetitors'costsandpricesandS . e or 1 erentclasses,
possiblecompetitorreactionstothecompany'sownpricingmoves.Aconsumeri Q. 7. What are the vario
whoisconsideringthepurchaseofaCanoncamerawillevaluateCanon'sprice'I' for.cons.umersaj
andvalueagainstthepricesandvaluesof comparableproductsmadebyNikon,. relatIOnsaredIfferent?Give:
Minolta,Pentax,andothers. . Sol.Salespromotionisone
(3)Economicconditions:EconomicConditionscanhavea strongimpact'!lI Salespromotionscanbe directel
on thefirm's pricingstrategies. Economic factorssuchasboom orrecession,I channel members (such as re1
inflation, andinterestratesaffectpricingdecisions becausethey affectboth consumer are called consumer '
the costs ofproducing a productandconsumer perceptions ofthe atretailersandwholesalearec;
price value, . . . salespromotionte
(4)Thegovernment:It isanotherimportantexternalinfluenceon . (1) Coupon _M t
d ., :, S os consurn
eCISIons. . , . promotion,whichofferl
(5) SocIal concerns:In settmgpnces, a company's shott-term sales,;;" when'theco . '. .
" ,ilJ uponIS rec
andprofitgoals mayhave to be tempered by broader short:.terminnaturesil
consIderatIOns. :i afterwhichthevalue11
'i1 .
:)
l<;;
"'
.... ..II'I" .. .. ..
}to
.7'
...
1

Cing Management-2011(BBA) i J.P. University-AkashBooks 43
i VariousPricingTechniques
.resettingprice,thecompanymustdecide
ecompanyhasselecte,dits 1
rrketingmixstrategy,mcludmgpnce,willS;
pIe, ifGeneralMotorsdecides,to p.roduce\
sports cars inthe hlgh-mcome !.Zi
ighprice,Atthesametime,thecompany
clearera firm isaboutitsobjectives,the i
fcomnionobjectives aresurvival, current ..,
'adership, andproduct quality leadership.
:Price is only one ofthe marketing mix
eitsmarketingobje.ctives. Price
:sign,distribution,andpromotiondeCISIOns
lI'keting Decisionsmadefor other
pricingdecisions. .,'.
[)r
t
hepricethatthecompanycanchar,ge .
.
sto chargea pricethatbothcoversallItS .'1
ndsellingthe product and deliv.ers a
t"
<.. Acompany's costsmaybeanImpor
t
an
'fl
'. . t' d .d h ',r<
lrations: Management mus eCI e w 0
It prices. Companies handle pricing in a..
is, pricesareoftensetbytop
esdepartments.InlargecompanIes,pncmg.;
.productlinemanagers.
i
:Whereascostssetthelowerlimitofprices,fi
lpper limit. Both' consumer and
lCt orserviceagainstthebenefitsofowmng{\
narketermustunderstandtherelationship
lroduct. '::;
ces, andOffers: Another factor ..
.., t'tors'costs andpncesand111
clslOnsIS compe 1 . . .
'" company'sownpncmgmoves.Aconsumer..
(1).CostplusPricing- Cost-pluspricingisthesimplestpricingmethod.
Thefirmcalculatesthecostofproducingtheproductandaddsona
percentage(profit)tothatpricetogivethesellingprice.Thismethod
although simplehas twoflaws;it takesnoaccountofdemandand there.
isno way ofdeterminingifpotentialcustomerswill purchase the
productatthecalculatedprice,
(2) Skimmingorcreamingpricing- Under higherpricesarecharged
duringtheinitialstagesoftheintroduction ofa newproduct. The
manufacturer fixeshigher priceofhis product inorder torecoverhis
initial investment quickly. Agames consolecompany reducesthe price
oftheir console over 5years, charging apremiumat launch and lowest
, priceneartheendofitslifecycle.
(3) PenetrationPricing- Heretheorganizationsetsalowpricetoincrease
.salesandmarketshare. Once marketsharehasbeencapturedthe
'
firmmay well then increase their price. Atelevisionsatellite company
,setsa lowpriceto getsubscriQers thenincreasestheprice astheir
customerbaseincreases.
(4) Competitivepricing- Settingapriceincomparisonwithcompetitors.
Reallv.afirmhasthreeoptionsandthesearetopricelower,pricethe
sameorpricehigher
(5) PremiumPricing- Ifa companyhas a premium product, i.e., superior
quality,uniquefeatures,andlatesttechnology;itcanemploypremium
distributionchannelandpromotionalprogrammealongwithpremium
pricingstrategy.
(6) PsychologicalPricing- Thesellerherewillconsiderthepsychologyof
price and the positioning of price within themarket place.For example,
sellingaproductat$3.95or$3.99,rather than$4.00.
(7) Discriminatoryordualpricing- Settingadifferentpriceforthesame
productindIfferentsegmentstothemarket. Forexampl;e, thiscan
befordifferentclasses,suchasages,orfordifferentopeningtimes.
..'
Q.7. What are the varIous Sales promotIon schemes usedby
. . .
will al t C on's marketersfor consumersandtraders? How publICIty and publIc
aCanoncamera' eV uta eadanebyNikon :1 relationsaredifferent?Givesuitableexamples. . (15)
bl d
uc s m ': . . . '. .. lIuesofcompara epro
. .'
onomicConditionscanhavea strongimpact:
, . factorssuchasboom orrecession,
,conomlC .
t pricingdecisionS becausetheyaffect
and consumer perceptions ofthe product
Sol.SalespromotIonIS one ofthesevenaspects ofthepromotIOnal mIX.
Salespromotions canbe directed thecustomer, .staff, ordistribution
channel members (such as retaIlers). Sales promotIons targeted at the
all d I t' Sit' t d
are c e consumer saes promo IOns. a promo IOns argete
atretaIlers andwholesalearecalledtradesales
. ... ..' .. ,'IConsumer sales promotion techniques. ... . ...
)therImportantexternalmfluenceonpncmg.. (1) Coupons- MostconsumersareqUItefamIlIar WIththISform ofsales

ting.prices, a company's short-term
ayhaveto be temperedbybroader

g
promotion,whichofferspurchaserspricesavingsorotherincentives
whenthecouponisredeemedatthetimeofpurchase. Couponsare
short:.terminnaturesincemost(butnotall)carryanexpirationdate
afterwhichthevaluemaynotbereceived.
..
(2) Rebates- Rebates, likecoupons, offer value to purchaserstypically
byloweringthecustomer'sfinalcostfor acquiringtheproduct.
(3) Promotional pricing- One ofthe most powerful sales promotion
techniques is the short-term price reduction or, as known insome
areas,"on sale"pricing.Loweringa product'ssellingpricecanhave
animmediateimpactondemand, though marketersmustexercise
cautionsincethefrequentuseof thistechniquecanleadcustomers
to anticipate the reduction and, consequently, withhold purchase,
untilthepricereductionoccursagain. ,;
(4) Trade-In- promotionsallowconsumerstoobtainlowerprices. ' .
by exchanging something the customer possess, such as an older''.'
productthatthenewpurchasewillreplace.
(5) Loyal RewardProgram: Consumerscollect points, miles, orcredits
forpurchasesandredeemthemforrewards.
(6) Samples,Freeproducts- Samplingandfreetrialsgivecustomersthe
opportunityto experienceproducts, ofteninsmallquantitiesorfor
a short duration, without purchasing the product. Today, these
methodsareusedinalmostallindustriesarid areespeciallyuseful
II:
for gettingcustomerstotrya productforthefirsttime.
(7) Contests- Contestsarespecialpromotionsawardingvaluetowinners
basedonskillstheydemonstratecompared to others. Forinstance,
a bakingcompany mayoffer free vacations to winners ofa baking
contest.
(8) DemonstrationsandPersonalappearances- Many productsbenefit
from customers being shown how products are used through a
demonstration.Whetherthedemonstrationisexperiencedin-person
t l
or via video form, such as over the Internet, this promotional,:
techniquecanproducehighlyeffectiveresults.
TradeSalesPromotions
(1) Pointofpurchasedisplays(POP)- Pointofpurchase(POP)displays,j
arespeciallydesignedmaterIalsintendedforplacementinretailstores.,j
.Thesedisplaysallowproductstobeprominentlypresented,oftenin']
I
hightrafficareas,andtherebyincreasetheprobabilitytheproduct}j
willstandout. i! .
: i
: ,
, (2) Advertisingsupportprograms- In additionto offering promotionaq
supportintheformofphysicaldisplays,marketerscanattractchannel'j
members'interestbyofferingfinancial assistance inthe form od
advertisingmoney. ,:
J.P. 1
,(5) Promotionalproduc
promotionsisthepr<
orcompanynametl
instance,companie!
pensthatcontaintlJ
(6). TradeShows- Onefi
show (a.k.a.. exhibit
events.thatbringb4
central location. Sp,
allsalespromotions
Differencebetweenpublici
Publicityiswayof providiJ
anditsproductto the genera
newsworthyinformationabou
tothemedia.Themediawill0
release to contain genuine nE
product. The ofpu
andl;lsuallyreachesalargerw
Public relationsis closely
the relationship between you
public. Itfocuses less on sellil
companyasagoodneighborlU
Q.8.Writenotesonthej
(a) Marketing
of Productlifecycle
Sol.PLC:Marketingstrl
Effectsand Growi
respo,nses
Product
Distribution
,,Price
Advertising
Sales. Promotion
Augmenting
IntensivePi:
Pricetopene
market
Mass Comm
Moderate
(b) Whatare the activi1
(3) TradeAllowances- Allowancescanbe in theform price
supplychain
(a:k.a.off-invoicepromotion)andbuy-backguaranteesif the
Sol. Supply chain managE
doesnotsellincertainperiodoftime. .
managingthemovementof raw
(4) Salesincentivesorpushmoney- Anextracommissionpaidto retailS
employeestopushproducts.
ofthe.internalprocessing
offinished goods outoftheorl
activitiesare: I

.
17
ng Management-2011 (BBA) I.P. University-Akash Books 45
ons, offer value to purcllasers typically ,(5) Promotional products- Among the most widely used methods of sales
:inal cost for acquiring the , promotions is the promotional product; products labeled with the brand
of the most powerful sales promotion or company name that serve as reminders of the actual product. For
n price reduction or, as known in some ; instance, companies often hand out free calendars, coffee cups and
lVering a product's selling price can iic: pens that contain the product logo. '
though marketers must exerCIse :\ (6)', Trade Shows- One final type of trade promotion is the industry trade
lIse of this technique can lead customers,: show (a.k.a. 'exhIbitions, conventions). Trade shows are organized
lcuarnSda'gCaoI'nn.sequently, With,hold purchase events that bring both industry buyers and sellers together in one
central location. Spending on trade shows is one of the highest of
IDS allow consumers to obtain lower prices " , allsales promotions.
the customer possess, such as an older' Difference between publicity and public relations
lase will replace. ; Publicity is way of providing newsworthy information about your company
onsumers collect points, miles, or credits and its product to the general public. Itinvolves Writing a Press Release of
them for rewards. newsworthy information about your company and its products and sending it
lffipling and free trials give the;t to the media. The media will oftenuse the information if it consid.ers the press
products, often in small quantItIes or for release to contain genu;ine news and not information designed to sell your
t purchasing the product. product. The advantage of publicity over advertising is that publicity is free
st all industries and are especIally and \1sually reaches a larger and broader audience
'y a product for the first time. 1; Public relations is closely related to publicity and focuses on managing
cial promotions awarding value winners the relationship between your company and its customers and the general
nstrate compared to others. For mstance, public. Itfocuses less on selling your products and more on promoting your
ffer free vacations to winners' of a baking '.company as a good neighbor and a valuable part of the community.

lonal appearances- Many products benefit
hown how products are used through a ,;W, ,
. . d 'n person 1,(
,he demonstration IS experience 1 -;t
as over the Internet, this
ghly effective results.
'S (POP) - Point of purchase (POP)
;erialsintendedfor placement in retail stores.
ducts to be prominently presented, often in
lereby increase the probability the product

. : .
grams- In addition to offering
rsicaldisplays, marketers can attract
ffering financial assistance in the form of;(
lVancescan be in the form price
lion) and buy-back guarantees ifthe
)eriod of time. ' -J
1 money- Anextra commission paid to .
U
cts.
&
.)
Q.8. Write notes on the following: (7.5x2)
,
(a) Marketing strategies used at" Maturity" and "Growth" stage
of Pro,d,uct life cycle
Sol. PLC: Marketing strategies
Effects and
respo.nses
Product --
Distribution
. Price
Advertising
Sales Promotion
Growth
Augmenting products
Intensive Distribution
Price to penetrate the
market

Mass Communication,
Moderate
Maturity
Diversification of brands and
models
Retention of higher shelf space
What consumers can bear and
best competitors are offering
Stress on brand differences
High to build loyal consumers
(b) What are the activities as a part of Marketing logistics and
supply chain
Sol. Supply chain management is a' cross-function approach including
managing the movement of raw materials into an organization, certain aspects
of theinternal processing of materials into finished goods, and the movement
of finished goods out of the organization and toward the end-consumer. The
activities are:
.
rf'i"':''''!:'-:- ----, --
46 ThirdSemesterMarketingManagement-2011 (BBA)
Strategiclevel
Strategicnetworkoptimization,includingthenumber,location,and
sizeof warehousing,distributioncenters, facilities.
Strategicpartnershipswithsuppliers,distributors,andcustomers
THIRD
Productlife cycle management, so thatnew and existing products

can be optimally integrated into the supply chain and capacity
managementactivities. .
(BBA-205) ]
Informationtechnologychainoperations.
liime:3.00hrs.
Where-to-makeandmake-buydecisions.
\lote:Attempt any five questions. A
Aligningoverallorganizationalstrategywithsupplystrategy.
..;;
Itisforlongtermandneedsresourcecommitment. Q.l.(a)Whatarethewaysof Sel
Tacticallevel ADs.Marketsegmentationinvolve!
.ithdifferentneeds,characteristicsorI
. Productiondecisions,including-contracting,scheduling,andplanning ziixorstrategies.
processdefinition. . -:' Markettargetingconsistsofevalu:
Inventory decisions, including quantity, location, andquality of oneormoremarketssegmen!
inventory. ofMarketSegmentation
'?1
Transportationstrategy,includingfrequency, routes,andcontracting. i1 1.GeographicSegmentation:Ar
,"
Benchmarking of all operations against competitors and unitssuchasnations,stat.
implementationofbestpracticesthroughouttheenterprise. .i\ oneorafewgeographicalarea,ortoop
FocusoncustomerdemandandHabits. lifferencesinneedsandwants.
F.orexampleCitibank.offersdiffere
Operationallevel ;. hb h dd h
neig or 00 emograp icsareas
Dailyproductionanddistributionplanning,includingallnodesintheiI A brandcanbepop}llar
supplychain. "nbedIVIdedonthebasesof zones,vi
Productionschedulingforeachmanufacturingfacilityinthesupply Forexample,Amu] wasinitiallyI
chain(minuteby minute).;;2.DemographicSegmentation:'
Inbound operations,including transportation from suppliers andrito groupsbasedon variables,suchasa
receivinginventory. iducation,religionandnationality.Den
customergroups,customer
Productionoperations,includingtheconsumptionofmaterialsand 'thd
If emographicvariables.
flow offinishedgoods. , ;f (a) AgeandLifeCyclestage:,con
Outboundoperations,includingallfulfillmentactivities,warehousing. use a!5e andLife-cycle segn
andtransportationtocustomers. marketmgapproachesfordiffi
'" .
'i!For examples,HDFCStandard Li1
sothattheydonothavetodeper
.(b) Gender:Thissegmentationhas
example,Barbieachainof retailStl
'1 manymostlywome
qenshnes.NIVea marketsNiveafor1\1
inmarketsrangingfrom
. ',! .(c). Income:Themarketerofprodu
qsmetIcs, financial services, andtravE
targetcustomerwithluxuryg(
.:!pnce, luxuryhotels provide ameniti
1?-ch asfamilie's,expectantmoms,andI
[lg Management-2011 (BBA)
ion, including the number, location, and
Ition centers
,
and
,
facilities.
.
suppliers, distributors, and customers
THIRD SEMESTER
lent so that new and existing products MARKETING MANAGEMENT
ld the supply chain and capacity
(BBA-205) DECEMBER 2012
in operations. fume : 3.00 hrs.
M.M.: 75
,1
Illy decisions.
AtteJnpt any five questions. All questions carry 15 marks each.
na! strategy with supply strategy.
Q.l.(a) What are the ways of Segmentation Targeting the markets?
Is resource commitment.
.4
Market segmentation involves dividing a market into smaller groups of buyers
.rith different needs, characteristics or behaviors that might require separate marketing
ing-contracting, scheduling, and planning rlix or strategies. .
; Market targeting consists of evaluating each market segments attractiveness and
,ding q\lantity, location, and quality of one or more markets.segments to enter.
lases ofMarket SegmentatIon

:luding frequency, routes, and contracting.
::1 1. Geographic Segmentation: Amarketer divides the target market into different
. units such as nations, states and regions. Acompany may decide to operate
perations against compet.itors and
none or a few geographical area, or to operate in all area but pay attention to geographical .
dices throughout the enterpnse.
Gfferences in needs and wants.
l and Habits.
For example Citibank offers different mixes of branch banking services depending
II neighborhood demographics areas
bution planning, including all nodes in theM A particular brand can be popular only in North India then North Indian market
In be diVided on the bases of villages, cities, climate etc;
each manufacturing facility in the SUpplY',ll For example, Amul was initially marketed in Gujarat.
:,j 2. Demographic Segmentation: Demographic segmentation divides the market
. t .rt tion from suppliers andigto groups based on variables, such as age, gender, family life cycle, income, occupation,
d
1 mg ranspo a !i;lucation, religion and nationality. Demographic factors are the most popular bases for
. , .'I d customer groups, customer needs, wants and usage often very close
the consumption of matena s an Jtjth demographic variables. '.
.' . ii (a) Age and Life Cycle stage: ,consumer needs and wants change with age. Some'
lding all fulfillment activities, warehousing .ginpanies use age and Life-cycle segmentation, offering different products or using
;omers.fIerentmarketing approaches for different age and life cycle groups.
. For examples, HDFC Standard Life Insurance has launched pension plans retired
so that they do not have to depend on anyone for their financial needs.
. .(b) Gender: This segmentation has been usedin clothing, cosmetics and magazines.
example, Barbie a chain of retail stores in India offers clothing only for girls.
.
More recently, many mostly women's cosmetics makers have begun marketing's
(en's lines. Nivea markets Nivea for Men. A neglected gender segment can offer new
in markets ranging from motorcycles to' guitars. .'
(c) The marketer of products and services such as automobiles, clothing,
l.smetics, financial services, and travel have long used income segmentation. Many
target customer with luxury goods and convenience services. For example, for
Eprice, luxury hotels provide amenities to attract specific groups affluent travelers;
as familie's, expectant moms, and even pet owners.
:
I
48 ThirdSemester,MarketingManagement(December-2012)
,
However,notallcompaniesthatuseincomesegmentationtargettheaffluent.For
example,manyretailers,suchas,BigBazaarwithitstagline"lsse.sastaaurkahan" ,

successfullytargetlowand.rniddle-incomegroups. '

:1
3.Behavioralsegmentation:Behavioralsegmentationdividesbuyersintogroups ,
I
basedon theirknowledge.,attitudes,uses,orresponse,to a product. Manymarketer: I
believethatbehaviorvariablesarethebeststartingpoint forbuildingmarketsegments. :
I
(a) Occasions:Buyerscanbegroupedaccordingtotheoccasionswhentheygetthe "
idea to buy, actually make their purchase or use the purchased,item. Occasion'
segmentationcanhelpfirmsbuildupproductusage.
\1
Example:Coco-ColapromotesitsbrandsasIifamilydrinkonoccasi.onslikediwali,'
Christmas andfamily outings. Some occasions like Valentine Day's were originally',
promotedpartlytoincreasethesaleof candy,flowers,cardsandothergifts. '
Occasions
Holiday
j
I,
Specialoccas
(b) BenefitsSought: Apowerfulsegmentationistogroupbuyersaccordingtothe.
differentbenefitsthattheyseekfromtheproduct.Benefitsegmentationrequiresfindingi'.
themajorbenefitspeoplelookforintheproductclass,thekindsofthepeoplewholook.'
foreachbenefits,andthemajorbrandsthatdelivereachbenefit. :
Forexample,"FitandPolish"consumersseeka balancebetweenfunction and,
style- theyexerciseforresultsbutwanttolookgooddoingit."Serioussportscompetitors"
exerciseheavilyandliveinandlovetheiractivewear-theyseekperformanceandfunction.
Thus,eachsegmentseeks'hdifferentmixof benefits.
Benefits
Convenience
Speed
Quality
Economy
(c) Userstatus: markets can be- segmented into nonusers, ex-users,'potential
'users,firsttimeusers,andregularusersof aproduct.Marketerswanttoreinforceand:
retainregularusers,attracttargetedllonusersandreinvigoraterelationshipswithex-
.:J!senvi "
ofthebrideinvestheavilyingiftsfortheirdaughtertofacilitatethe
';ikCa'bl'i%nmeritiofanewhomefortheyoungcouple.Mastersremindsparentsthattheir
mattressandpillowswillbetheidealgiftforalongandhappylifefor;
their daughter.Throughtheuse ofjingles like "Meri nanhipari..Naey Ghar chali", master
attractsyoungcouples-to-beandtheirparentsthroughitshighlyemotionalmessage.
Service
LP. Unh
UElSI
Exuser
(d) UsageRate:marketsca
users. Heavyusersareoftena s
percentageoftheconsumption.
Fans",(age18to34).Theyeat
Usage
Lightuser
(e) LoyaltyStatus:A ma
Consumers can be loyal to brl
Companies (Toyota). Buyers can
loyalty. Someconsumersarecon
example,Applehasanalmostell
Othersconsumersaresoniev
givenproductorfavoronebrand,
noloyaltytoanybrand.Theyeith
buywhateveronsale.
Nc
4.EconomicSegmentati(
isusedbymost of the marketers<
andstudiesof consumerbehavio
ForExample:Proctoi' and
powder,calledARIELMICROS'
kg.thecompanyhasspentalot(
thatitshowed anoverallloss 0
launchedanewproductARIEL
(December-2012)
ne segmentation target the affluent. For }
with its tagline "Issesasta aur kahan" ,
mps. p
l segmentation divides buyers intO groups ,
rresponse toa product. Many mar}l:eter ( ,
rting pointfor bUilding market segments.
:ordingto the occasions when they getthe I:
or use the purchased .item. Occasion f
, I
:unp. , " I
as a family drink on occasions like diwali, I
ms like Valentine Day's were originally'.
,flowers, cards and other gifts.
Seasonal
Holiday
','
Itation is to group buyers according to the ';
uct. Benefit segmentation requires finding ?
uct class, the kinds ofthe people who look '
deliver each benefit; ,
ers seek a balance between function and
:good doing it. "Serious sports competitOrs"
seek performance and function.
.x of benefits.
----.

Economy
tented intO nonusers, ex-users; potential ;.
, product. Marketers want toreinforce and,
lrs and reinvigorate relationships with ex-
ily ingifts for their daughter to facilitatethe
Duple. Masters reminds parents that thei "
Ie the ideal gift fora long and happy life for ,. ,
''Meri nanhi parLNaeyGhar chali", maste
tsthroughits highly emotional message.
I.p. Books 49
Uesr Status
Potential user
Firs(ti(i,e user
(d) Usage Rate: markets can be segmented into light, and heavy product
users. HeaVy users are often a small percentage of, the market but accountfor a high
percentage of the consumption. For example, Burger King targets what it call "Super
Fans", (age 18 to 34). They eat Burger King on average of 16 times a month.
Usage Rate
Heavy user
Light user Medium user
(e) Loyalty Status: Amarket can also be segmented by consumer loyalty.
Cont;;umers can be loyal to brands(colgate), stores(Big bazaar! Shopper's Stop),"
Companies (Toyota). Buyers can be divided intO groups according to their degree of
ioyalty. Some consumers are completelyloyaL- they buy one brand all the time. For
example, Apple has an almost cutlike following ofloyal users.
Others consumers are somewhat loyal - they are loyat to two or three brands of a
given product or favor one brand while sometimes buying others. Stiliotherbuyers show
no loyalty to anybrand. They either want something different each time they buy or they
buy whatever on s,ale. '
Status
Strong
'None
Medium
4. Economic Segmentation: Market segmentation on the basis ofincome levels ,
is used bymost ofthemarketeisofconsumergoods. Most ofmarketing research activities ,
and studies ofconsumer,behavior are also basedonthe income levels ofthe consumers.
For Example: Proctor and Gamble haslamlched a very high-quality detergent
powder, calledARIEL MICROSYSTEMfor high income levels. It is priced at Rs. 96 per
kg.the company has spent a lot ofmoney on advertising and popularizing it, so much so
that it showed an overall loss ofRs. 7.14 Slrores in 1992-1993. No:w the company has
launched a new product ARIEL GREEN for middle high income group and is confident" '
,. ".., .
1
I
50 Third Semester, Marketing Management
of penetrating into the middle high in.come level group. Its sale price is about 20 percent
less than that ofthe previous one. So, the company decided to emphasise in a particular
segment of the market base on its income levels.
5. Psychographic Segmentation: It involves developing sub group identification
on the basis ofpsychological characteristics. For example, perceptions, attitude, opinions,
interests or a combination of these.
Psychographic segmentation divides buyers into different groups based on social
class, lifestyle or personality characteristics. People in the saI]1e demographic group
can have very different psychographic makeups.
Social Class: Lower lowers, upper lowers, working class, middle class, upper, uppers
.Lifestyle: Achievers, Strivers, Survivors
Personality: Compulsive, gregarious, authoritarian, ambitious
Target market consists ofa set ofbuyers who share common needs or characteristics
that the company decides to serve.
Many targeting can be carried out.at several different levels.
1. Undifferentiated Marketing (or Mass Marketing): A company's attempt to
appeal to the whole market with a single basic marketing strategy intended to have a
mass appeal. In this, a firm might decide to ignore market segment differences and
target the whole market with one offer. This strategy focuses on is common in the
needs of consumers rather than on what is different. Company design a product and
marketing program that will appeal to the largest number of buyers.
Single Mix One mass mark,et
2. Differe!ltiated Marketing (or Segmented Marketing): Acompany's attempt
to appeal to two or more well defined market segments with a marketing strategy
tailored to each segments.
Marketing mix 1 Market Segment 1
Marketing mix 2 Market 2
Marketing mix 3 Market Segment 3
Marketing mix 4 -----'-+ Market Segment 4
In this strategy, a firm decides to target several market segments and designs
separate offers for each.
General Motors tries to produce a car for every "purse, purpose and personality":
HUL markets eight variants of soaps (personal wash category) .
P andG markets six different laundry detergents brands, which compete with each
other on supermarket shelves.
By offering product and marketing variations to segments, companies hope for
higher sales and stronger position within each market segment. But differentiated
marketing also increases the costs ofdoingbusiness. Afirm usually find it more expensive
to develop and produce say, 10 units of 10 different products than 100 units of one.
product. Developing separate marketing plans for separate segments requires extra
marketing research, forecasting, sales analysis, promotion planning, and channel
management.
3. Concentrated Marketing: The con'{pany attempt to appeal to one well-defined
market segment with one tailor made mar}l.:eting strategy.
I.p. Uni'
. Inthis strategy, instead of g,
after large share of one or a few
. Single marketing mix-----l
Through concentrated marb
of its greater knowledge of con
reputation it acquires. It can ma
and programs to the needs of c
efficientJy, targeting its product!
toward only consumers that it Cl
Niches are smaller segment
For' example, Nirma started
and semi-urban consumers. TOdl
Concentrated marketing ca:
higher then normal risks. Compl
business will suffer greatly if the
to enter the same segment with
prefer to diversify in several mal
, Differentiated and
programs to meet the needs ofva
they do not customize their offer!
4. Micromarketing is the'p
to suit the tastes of specific indh
It includes:
(a) Local Marketing
(b) Individuai Marketing
Local Marketing: involves
wants oflocal customer groups-
For example, Wal-Mart CUI
needs of local shoppers. Wal-M:
according to .neighborhood chan
. made meals for busy workers.
Individual Marketing: Ind
programs to the needs and prefel
has also labeled one to one ma
marketing.
Mass customization is the p
masses of customers to design ]
needs. .
Dell creates
Hockey stick maker
dozen options - including stick Ie
customized stick in five days.
51
Zfit?Bri

1gement(Il-ecember-2012)
:roup. Itssalepriceisabout20percent
,ydecidedtoemphasiseinaparticular
'esp.evelopingsubgroupidentification
(ample,perceptions,attitude,opinions,
;intodifferentgroupsbasedonsocial
inthesal}1e demographicgroup
Irkingclass,middleclass,upper,uppers
oritarian,ambitious
)sharecommonneedsorcharacteristics
II differentlevels.
51 Marketing):Acompany'sattemptto
marketingstrategyintendedtohavea
noremarketsegmentdifferences and
ltegyfocusesonwhatiscommoninthe
'erent. Companydesigna productand
numberof buyers.
Onemass
ltedMarketing): Acompany'sattempt
,segments with a marketing strategy
1
2
,
3
, I
I
4
several market segments and designs
...ery"purse,purposeandpersonality":
jonalwashcategory) ,
brands,whichcompetewitheach
;ions to segments, companieshope for
:h market segment. Butdifferentiated
ess. Afirmusually findit more expensive
ff'erent products than 100 units ofone.
:; for separatesegmentsrequires extra
sis, promotion planning, and channel
lYattempttoappealtoonewell-defined
ngstrategy.
LP. University-BBA-AkashBooks
Inthis strategy, instead of going after asmall share of a large market, the firm goes
afterlargeshareofoneorafewsmallersegmentsorniches.
. Singlemarketingmix Marketsegment1
Marketsegment2
Marketsegment3
Marketsegment4
(Andsoonarerecognizedbutnottargeted)
Throughconcentratedmarketing,thefirmachievesastrongmarketpositionbecause
ofits greater knowledge ofconsumer needs inthe niches itserves andthe special
reputationitacquires.It canmarketmoreeffectivelybyfinetuningitsproducts,
and programs to the needs ofcarefully defined segments. It canalso marketmore
efficientJy,targetingitsproductsorservices,channelsandcommunicationsprograms
towardonlyconsumersthatitcanservebestandmostprofitably.
Nichesaresmallersegmentthatmayattractonlyoneorfewcompetitors.
Forexample,Nirmastartedasnicher,sellingonlylow- priceddetergentto rural
andsemi-urbanconsumers.Today,itisoneofthebiggestdetergentbrandsinIndia.
Concentratedmarketingcanbehighly profitable.Atthe sametime, itinvolves
higherthennormalrisks.Companiesthatrelyononeorafewsegmentsforall of their
businesswillsuffergreatlyifthesegmentturnssour.Orlargercompetitorsmay decide
toenterthesamesegmentwithgreaterresources.Forthesereasons,manycompanies,
prefertodiversifyinseveralmarketsegments:
Differentiated and concentrated marketer tailor their offers and marketing
programstomeettheneedsof variousmarketsegmentsand'niches.Atthesametime,
theydonotcustomizetheirofferstoeachindividualcustomer.' ,
4.Micromarketingisthe"prachceof tailoringproductsandmarketingprograms
tosuitthetastesofspecificindividualsandlocations.
It includes:
(a) LocalMarketing
(b) IndividualMarketing
Local Marketing: involves tailoringbrands and proI,Ilotions to the needs and
wantsoflocalcustomergroups-'Cities,neighborhoodsandevenspecificstores.'
Forexample,Wal-Martcustomize itsmerchandise store by store tomeets the
needs oflocal shoppers. Wal-Mart store designers create eachnew store's format
according to' neighborhood characteristics-stores near office parks, featuring ready-
.mademealsforbusyworkers.
IndividualMarketing:IndividualMarketingtailoringproductsandmarketing
programstotheneedsandpreferencesof individualcustomers.Individualmarketing
has also labeled one to one marketing, mass customization, and markets ofone
marketing.
Mass customizationis the processthroughwhichfinns interactone to onewith
masses ofcustomers to design products and services tailor - made too individual
needs.
Dellcreates computers.
HockeystickmakerBranchesHockeyletscustomerschoosefrom morethantwo
dozenoptions- includingsticklength,bladepatternsandbladecurveandturnsouta
customizedstickinfive days.
1
(b) Segmentthemarketsfor(i) Toothpase(ii) EducationalService.
Ans.MarketSegmentationfortoothpasteandeducationservices
TQothpaste: Amixof demographic,behavioralandpsychographicsegmentationis
generallyusedtosegmentmarketfortoothpaste.Inbehavioralsegmentwemayeither
adoptuserstatussegmentation(nonuser,exuser,potentialuser,firsttimeuser,regular
user)orloyaltystatus(none,mediumstrong)segmentationorbenefitsought.
Educationalservice:Forthistypeofservice we mayadopteithergeographic
segmentationor psychographic segmentation. Geographic segmentationdivides the
targetmarketinto different geographical units such as nations, states and.regions
whereaspsychographicsegmentationinvolvesdevelopingsubgroupidentificationon
thebasis'ofpsychologicalcharacteristics.Forexample,perceptions,attitude,opinions,
interestsora combinationof these.
Q.2.(a) WhatistheprocesofNewProduct Development?Givestepsinvolved
Ans.Thesevenstagesorprocessorstepsinvolvedinthedevelopmentofa new
pI-odm;tarelistedasfollows:
1. Ideasgeneration.
2.Ideascreening.
3. Concepttesting.
4. Businessanalysis.
5.Productdevelopment.
6.Testmarketing.
7. Commercialization.
Nowlet'sdiscusseachstageintheprocessof anewproductdevelopment.
1. Ideageneration:Thefirststepinnew-productdevelopmentisideageneration.
Conductingmarketingresearchtofindouttheconsumers'needsandwants.
.Invitingsuggestionsfromconsumers.
Brainstormingsuggestionsfornew-productideas.
Searchingindifferentmarketsviz.,nationalandinternationalmarketsfornew- .
productideas. '
Gettingfeedbackfromagentsordealersaboutservicesofferedbycompetitors.
. Studyingthenewproductsof thecompetitors.
2. Ideascreening:Mostcompanies have a "IdeaCommittee." This committee
studiesalltheideasverycarefully.Theyselectthegoodideasandrejectthebad e s ~
Beforeselectingorrejectinganidea,thefollowingquestionsareconsideredorasked:
1. Isit necessarytointroduce 'anewproduct?
2. Cantheexistingplantandmachineryproducethenewproduct?
.3.Cantheexistingmarketing-networksellthenewproduct?
4.Whencanthenewproductbreakeven?
, . . .
Ifthe answers to these questions are positive, then the idea ofa new-product
developmentisselectedelseitis rejected.Thisstepisnecessarytoavoidproductfailure:
3.Concepttesting:Concepttestingis done afteridea screening. It isdifferent
fromtestmarketing.Inthisstageof concepttesting,thecompanyfindsout:
LP. University
1. Whethertheconsumersunderst
2. Whethertheconsumersneedthl
3.Whethertheconsumerswillacc
Here,asmallgroupof ctmswilersiE
thenewproduct.Thentheyareasked1
askedwhethertheylikethenewprodu
theconsumers'reactionstowardsthe1
product,thenbusinessanalysisisdonE
, 4.Businessanalysis:Businessan
. Ii development.Here,adetailedbusiness;
the newproductiscommerciallyprofil
,product from the business pointofviI
acceptedelseitWill berejected.
5.Productdevelopment:Atthis:
newproductinthemarket.It willt k e ~
I newproduct.Theproductiondepartme
marketing department will make pI
departmentwill providethefinancefOJ
departmentwillplaptheadvertisemen
:asa smallscaleforTestMarketing.
6.Testmarketing:TestmarketinJ
.smallsaleinaverysmallmarket.If thE
itisintroducedona largescale.Howev
, thecompany findsoutthereasonsforitE
: productane!introducesitagainina sn
: companywillrejectit.Testmarketingr
:safetydevice.It isverytime-c'onsuming
7. Commercialization:If the teE
]introducesthe newproductona large
,makes a large investmentin the new
,productonahugescale.It advertisesthE
NewspapersandMagazines,etc.
Q.2.(b) WhatisInnovationDiffu
Ans.Adoptionisanindividual'sde,
Sequence ofeventsbeginningwithe
.. trialusageandculminatinginfull and
adoption process resembles a bellcur
majorityof,consumers,lateadopters,a
Aninnovationisanygood, servie
Theideamayhavealonghistory,buti
, new. Innovations taketimeto spreadj
: innovationdiffusionprocessas"the:
'; orcreationtoitsultimateusersoradoJ
.Theconsumer-adoptionprocessfo<
individualpassesfromfirsthearingabc
newproductshavebeenobservedtomo
1. Awareness: Theconsumerbecom
..aboutit.
53
!ment(December-2012)
(ii) EducationalService.
educationservices
andpsychographicsegmentationis
1 behavioralsegmentwemayeither
otentialuser,firsttimeuser,regular
lentationorbenefitsought.
we mayadopteithergeographic
segmentationdivides the
:uch as nations, states and regions
rei opingsubgroupidentificationon
lple,perceptions,attitude,opinions,
levelopment? Givestepsinvolved.
volved inthedevelopmentofa new
.a newproductdevelopment.
,ductdevelopmentisideageneration.
theconsumers'needsandwants.
:tideas.
:llandinternationalmarketsfornew- .
loutservicesofferedbycompetitors.
Drs.
l "IdeaCommittee."This committee
Ie goodideasandrejectthebadideas.
gquestionsareconsideredorasked:
:lucethenewproduct?
henewproduct?
;ive, thenthe idea ofa new-product
pisnecessarytoavoidproductfailure .
.e afterideascreening.It isdifferent
ing,thecompanyfindsout:
q

I
I.p. University-BBA-AkashBooks
1. Whethertheconsumersunderstandtheproductideaornot?
2. Whethertheconsumersneedthenewproductornot?
3.Whethertheconsumerswillaccepttheproductornot?
Here, asmall group of consumers is selected.They are given fullinformation about
thenewproduct.Thentheyareaskedwhattheyfeelaboutthenewproduct.Theyare
askedwhethertheylikethenewproductornot.So,concepttestingisdonetofindout
,theconsumers'reactionstowardsthenewproduct. Ifmostoftheconsumei"-slikethe
:product,thenbusinessanalysisisdone.
4.Businessanalysis:Businessanalysisisaveryimportantstepinanew-product
development.Here,adetailedbusinessanalysisisdone.Thecompanyfindsout whether
thenewproductiscommerciallyprofitableornot. So, the companystudiesthenew
productfrom the business pointofview. Ifthe new product is profitable, itwill be
acceptedelseitWill berejected.
5.Productdevelopment:Atthisstage,thecompanyhasdecidedtointroducethe
newproductinthemarket.It willtake allnecessarystepstoproduceanddistributethe
newproduct.Theproductiondepartmentwillmakeplanstoproducetheproduct.The
marketing department will make plans to distribute the product. The finance
departmentwillprovidethefinanceforinfroducingthenewproduct.Theadvertising
departmentwillplaptheadvertisementsforthenewproduct.However,allthisisdone
asa smallscaleforTestMarketing. .
6.Testmarketing:Testmarketingmeanstointroducethenewproductonavery
.smallsaleinaverysmallmarket.Ifthenewpfoductissuccessfulinthismarket,then
itisintroducedona largescale. However,iftheproductfailsinthetestmarket,then
thecompanyfindsoutthereasonsforitsfailure.It makesnecessarychangesinthenew
,productamIintroducesitagainina smallmarket: Ifthenewproductfails againthe
companywillrejectit.Testmarketingreducestheriskoflarge-scalemarketing.Itisa
safetydevice.It isverytime-consuming.It mustbedoneespeciallyforcostlyproducts.
7. Commercialization: Ifthe testmarketingis successful, thenthecompany
introducesthenew product on a large scale, sayall overthecountry. Thecompany
makes a large investmentin the new product. It producesand distributes thenew
productonahugescale.It advertisesthenewproductonthemal?smedialikeTV;Radio,
NewspapersandMagazines,etc.
Q.2.(b) WhatisInnovation-Diffusionprocess?
ADs.Adoptionis'anindividual'sdecisiontobecomearegularuserof a product.
Sequence ofevents beginning with consumer awareness ofanew product leading to
:. trialusageandculminatinginfullandregularuseof thenewproduct.Overtimethe
:adoption process resembles a bell curve formed by innovators, earlyadopters, the
; majorityof consumers,lateadopters,andlaggards.
Aninnovationisanygood,service,orideathatisperceived bysomeoneasnew.
Theideamayhavea jonghistory,butitisaninnovationtothe.personwhoseesitas
: new. Innovationstaketime to spreadthroughthe' social system. Rogers defines the
: innovation diffusion process as "the spread ofanewideafromitssource ofinvention
: orcreationtoitsultimateusersoradopters." .
: .Theconsumer-adoptionprocessfocuses onthemental processthroughwhichan
, individualpassesfromfirsthearingaboutaninnovationto.finaladoption.Adoptersof
,newproductshavebeenobservedtomovethroughfivestages:
I I.Awareness: Theconsumerbecomesawareoftheinnovation but lacksinformation
..'aboutit.
I

!
54 Third Semester, Marketing Management (December-2012)
2. Interest: The consumer is stimulated to seekinformation about the innovation,
3. Evaluation: The consumer considers whether to try the innovation.
4. Trial: The consumer tries the innovation to improve his or her estimate of its
\',
value. '
5. Adoption: The consumer decides to make full and regular use ofthe innovation.
Q;3. What are Price and Non Price Factors in setting prices of product?
Explain various techniques of setting prices.
ADs. Price Factors affecting pricing decisions: Numerous factors affect the
pricing policies and decisions of a firm. Such factors coilldbe studied under two groups:
(i) Internal Factors; (ii) External factors. Internal factors are the forces which can be
controlled by a firm to a certain extent such as company objectives, marketing mix,
costs, etc. But external factors are the forces outside the firm over which a business has
no control
Internal'factors ' ,
External factors
Nature of the market
Marketing mix ' ' ,and demand
strategy, ' Competition
Costs' ' 'Other enVironmental
Organizational,
{actors (economy, " ,
'considerations
Factors affecting price decisions
Internal factors
(1) Marketing Objectives: Before setting price, the company must decide on its !
strategy for the product. If the company selected its target market and positioning i
carefully, then its marketingmix strategy, including price, will be fairly straightforward. i
. (2) Marketing Mix Strategy: Price is only one of the marketing mix tools that a
company uses to achieve its marketing obje,ctives. Price decisions must be coordinated
with product design, distribution and pr,omotion decisions to form a consistent and
effective marketing program.
(3) Costs: Costs set the floor for the price that the company can charge for its product. '
The companywants to charge a price thatboth covers all its costs for producing, distributing, ;
and selling the product and delivers a fair rate of return for its effort and risk.
(4) Organizational ConsideratioJ:ls: Management must decide who within the i
organization should set prices. Companies handle pricing in a variety ofways. In small :
companies, prices are often set by top management,rather than by the marketing or :
sales departments. In large companies, pricing is typically handled by divisional or .
product line managers. 11'
External Factors
(1) The Market and Demand: Whereas costs set the lower limit of prices, the r
market and demand set the upper limit. Both consumer and industrial buyers balance i
.the price of a product or service against the benefits of owning it. Thus, before setting'
prices, the marketer must understand the relationship between price and demand for
its product: '
LP. Un
(2) Competitors' Costs, F
company's pricing decisions is
reactions to the company's oVI
of a Canon camera w
values of comparable prod
(3) Economic Condition
firm's pricing strategies. Econ
interest rates affect pricing del
product and consumer percepti
(4) The government: It
decisions.
(5) Social concerns: In se
and profit goals may have to bl
,Non Price factors
Emphasize product featu
towards the brand. Must be abl
Customer must be able to
desirable.
Should be difficult (imp
(PATENTS)
Must promote the distingu
Price differences must be c
Sellers shift the demand Cl
(consumers must perceive and
Various Pricing TechniqUe!
(1) Cost plus Pricing: Co:
calculates the cost of producinl
price to give the selling price. 1
account of demand and there
purchase the product at the cal
(2) Skimmingorcreamir
the initial stages oftqe introdt
price of his product in. order to:
company reduces the price oftl
and lowest price near the end (
(3) Penetration Pricing:
. and market share. Once market
their price. A television satell
increases the price as their em
(4) Competitive pricing:
firm has three options and the)
(5) Premium Pricing: If
unique features, and latest tel
and promotjonal a
55
lanagement(December-2012)
l toseekinformationabouttheinnovation,
; whethertotrytheinnovation.
ationtoimprovehisorherestimateofits
Ilakefullandregularuseof theinnovation.
Factorsinsettingpricesofproduct?
rices.
g decisions: Numerousfactorsaffectthe
l factorscouldbestudiedundertwogroups:
lternalfactors aretheforces whichcanbe
ch as companyobjectives, marketingmix,
i outsidethefirmoverwhichabusinesshas
External factors
.Nature of the market
'and demand
Competition
.Other environmental
(economy,
.ing price decisions
ttingprice,thecompanymustdecideonits
sselecteditstargetmarketandpositioning
lcludingprice,willbefairlystraightforward.
sonlyoneoftIlemarketingmixtoQlsthata
aJ:tives.Pricedecisionsmustbecoordinated
lmotiori decisions to form a consistentand
ethatthecompanycanchargeforitsproduct..
h. coversallitscostsforproducing,distributing, i
lteof returnforitseffortandrisk.
i: Managementmustdecidewhowithinthe
handlepricinginavarietyof ways.Insmall:
nagementyatherthanbythemarketingor '
ricingistypically handledbydivisional or'
reas costs setthelowerlimitofprices, the
Dthconsumerandindustrialbuyersbalance'
,e benefitsofowningit.Thus,beforesetting;
relationshipbetweenpriceanddemand
LP University-BBA-AkashBooks
(2)Competitors' PricesandOffers:Anotherexternalfactoraffectingthe
company's pricingdecisions is competitors'costsandprices andpossible competitor
reactions to the company's own pricing.moves. A consumer who is considering the
purchaseofa CanoncamerawillevaluateCanon'spricearidvalueagainsttheprices
andvaluesofcomparableproductsmadebyNikon,Minolta,Pentax,andothers.
(3)EconomicConditions:EconomicConditionscanhaveastrongimpactonthe
firm's pricing strategies. Economic factors such as boom orrecession, inflationand
interestratesaffectpricingdecisionsbecausetheyaffectboththecostsofproducinga
productandconsumerperceptionsoftheprodUct'spriceandvalue.
(4) The government:It is another important external influence on pricing
decisions.
(5)Socialconcerns:insettingprices,acomp;my'sshort-termsales,marketshare,
andprofitgoalsmayhavetobetemperedbybroadersocietalconsiderations.
NonPricefactors
Emphasize produCt features, service, quality etc. Can build customer loyalty
towardsthebrand.Mustbeabletodistinguishbrandthroughuniqueproductfeatures.
Customer mustbe able to perceive the differences inbrands and view themas.
desirable.
Should be difficult (impos.sible) for to emulate the differences
(PATENTS)
Mustpromotethedistinguishingfeaturestocreatecustomerawareness.
Pricedifferencesmustbeoffsetbytheperceivedbenefits.
Sellersshiftthedemandcurveouttotherightbystressingdistinctiveattributes
(consumersmustperceiveanddesirepaiticularattributes).
VariousPricingTechniquestothepricesofproductare:
(1) CostplusPricing:Cost-pluspricingisthesimplestpricingmethod.Thefirm
calculatesthecostofproducingtheproductandaddsona percentage(profit)tothat
pricetogivethesellingprice.Thismethodalthoughsimplehastwoflaws;ittakesno
account ofdemand and there is no way ofdetermining ifpotential customers will
purchasetheproductatthecalculatedprice.
(2)Skimming orcreamingpricing:Underthis,higherpricesarechargedduring
theinitialstagesoftQe introductionofa newproduct.Themanufacturerfixes higher
priceof hisproductin,ordertorecoverhis,initialinvestmentquickly.Agamesconsole
companyreducesthepriceoftheirconsoleover5years,charginga premiumatlaunch
andlowestpriceneartheendofitslifecycle.
(3) PenetrationPricing:Heretheorganizationsetsalowpricetoincreasesales
.andmarketshare.Oncemarketsharehasbeencapturedthefirmmaywellthenincrease
their price. A television satellite company sets a low price to get subscribers then
increasesthepriceastheircustomerbaseincreases.
(4)Competitivepricing:Settingapriceincomparisonwithcompetitors.Reallya
fir-m hasthreeoptionsandthesearetopricelower,pricethesameorpricehigher
(5)PremiumPricing:Ifacompanyhasapremiumproduct,i.e.,superiorquality,
uniquefeatures, andlatesttechnology; itcanemploypremiumdistributionchannel
andpromotional alongwithpremium strategy.
I
56 Third Semester, Marketing Management (December-20l2)
(6) Psychological Pricing: The seller here will consider the psychology of price
and the positioning of price within the market place. For example, selling a product at
$3.95 or $3.99, rather than $4.00.
(7) Discriminatory or dual pricing: Settinga different price for the same product
in different segments to the market. For example, this can be for different classes, such
as ages, or for different opening times.
Q.4.(a) What is Promotion Mix? Give a briefexplainatio of each element.
Ans. Promotion mix is used to refers to the combination of different kinds of
promotional tools used by a firm to advertise and sell its products.
The Five major promotion tools called the promotion mix, are advertising, personal
selling, sales promotion, publicity and public relations. Each of these promotion tools
has its own characteristics.
1. Advertising: Advertising is a unilateral and paid form of non-personal mass
communication by a clearly identified sponsor. Usually it is designed to create a
\, '
favorable attitude toward the company or product. _
2. Sales Promotion: Sales promotion includes all short ~ incentives, generally
organized on a temporary andfor local basis, and designedto stimulate immediate
purchase and to move sales forward more rapidly thanwould otherwise occur, and to
effect higher demand.
3. Public Relations: Public relations involve a variety of actions aimed at
establishing a positive corporate image and a climate ofunderstanding and mutual
trust between a firm and its various publics. Here, the promotion objectives is less
to gain moral support from public opinion for the firm's economic activities, which
ultimately would help the company in accomplishing its objectives.
. 4. Personal Selling: Personal selling has the objective of organizing a verbal
dialogue with potential and current customers and to deliver a tailor made message
with the short-termobjective ofmaking a sale. Its role is also to gather information
for the firm.
5. Publicity: Publicity, Like advertising is an impersonal method of promotion
and it is also addressed to grouIJs of audience. It differs from advertising in the sense
that it is not sponsored by the seller. It is the coverage of commercially significant"
information regarding the company and/or its products is form of a news itemor
popular article by the media on its own.
Q.4(b) What sales promotion methods can be used to increases the footfalls
adn convert these footfalls into actual customers in case ofretail organizations?
Ans. The following sales promotion techniques can be usedto increase the footfalls
and convert these footfalls into actual customers in case of retail organisation.
1. Distribution ofSamples: It is an expensive but a powerful tool ofsales promotion.
Many marketer offer free samples of their products to the selected people in order to
popularize their products. The samp-Ie may be delivered door to door, offered in retail
stores or fairs. This device is suitable for introducing new products such as soaps,
drugs, cosmetics, perfumes, tea etc. since distribution of samples is costly, this device is
confined to those products which are likely to create repeated sales.
2. Discount or Price Off: In order to increase sale, many producers introduce price
off offer to the customers. The product is offered is offer!.ld at aa price lower than the
normal price'.' -
For example, fans, coolers and refrigerators-may, be offered 20% to 30% off
price.
I.P Unive
3. Coupons Discount: Coupo
saving on the purchase of a s
manufacturers either directly by
issued through newspapers and n
The holder ofthe coupons can I
cheaper price.
4. Premium or Gift offer: It
the customers who buy a specified
5.. types of premium offer:
(a) With-pack premium: m
The gift create lure to buy the pro(
Example: Lux launched a sd
(b) Free in mail premiums:
at the time of making a purchase.
proof of purchase or multi pIe pun
making chocolate the kids to send
(c) Container Premium: it:
milk additive, jams, now even w
containers for packaging which COl
Example: Bournvita
6. Quantity Deals: Seller dey
product to buyer at the same price.
free' offer for beauty soaps like Nt:
or 555 detergent bar.
7. Quiz Contests: there may
contest. Contest for consumers is h
Such slogan centres around tlle qUE
fonnulationofnew advertising ide
Example: the contest may als
simple questions, as done by Bajl
through radio, TV, newspapers, m:
8. Fairs andExhibitions: bu
their special features a'nd usefulne:
their finn and products to the pub
India and the developing-nations
9. Displays of Products: it
displayed artistically laid out win
like railways stations and bus sto
since it helps in informing the Cll!
10. Free Offer: recently, seVI
their products. Example, Tooth
purchase of a LED TV.
Q.5.(a) What are Pull vis P,
used? Give examples.
Ans. The purpose ofany prom<
>let as per the communication that:
en,t(December-2012)
considerthepsychologyofprice
Forexample,sellingaproductat
ifferentpriceforthesameproduct
; befordifferentclasses,such'
ofeachelement.
)mbination ofdifferent kinds of
Jitsproducts.
ionmix,areadvertising,personal
ns.Eachof thesepromotiontools
laid formofnon-personal mass
Usuallyitisdesignedtocreatea
short incentives,generally
esignedtostimulateimmediate
;han wouldotherwiseoccur,andto
'e a variety ofactions aimed at
late ofunderstanding and mutual '
re,thepromotionobjectivesisless
firm's economic activities, which
gitsobjectives.
objective oforganizinga verbal
Itodelivera tailormademessage
role isalsotogather information
lpersonalmethodofpromotion
lffersfromadvertisinginthesense
verageofcommerciallysignificant"
[lroductsisformof anewsitemor'
eusedtoincreasesthefootfalls
incase ofretail organfzations?
:anbeusedtoincreasethefootfalls
case,ofretailorganisation.
It apowerful toolofsales promotion.
;totheselectedpeopleinorderto
'ereddoortodoor,offeredinretail
cing new products suchas soaps,
nof samplesiscostly,thisdeviceis
repeatedsales.
He,manyproducersintroduceprice
ataapricelowerthanthe
-may; be offered20% to30%off
57 I.P. University-BBA-AkashBooks
3.CouponsDiscount:Couponisacertificatethatentitleditsholdertoaspecified
savingonthepurchaseofa specifiedproduct. Coupons maybe issuedbythe
manufacturers either directly bymail orthrough the dealers the coupons are also
issuedthroughnewspapersandmagazines.
Theholderofthecouponscangototheretailersandgettheproductorserviceatthe
cheaperprice. ,
4. Premiumor Gift offer: It is an offer ofacertain amount of product atno cost to
thecustomerswhobuya specifiedquantityof aproductoraspecialpackthereof. '
5.. typesof premiumoffer:
(a) With-packpremium:marketerpacksomegiftinsidetheproductpackage.
Thegiftcreateluretobuytheproduct.
Exampie:LuxlaunchedaS1::hemeinwhichagoldpendantwasputinsideit.
(b) Freeinmailpremiums:inthis,thecustomersdo notgetimmediatebenefit
atthetimeof makinga purchase.Forexample,Customerrequireda wrapperorsome
proof ofpurchaseormultiplepurchasestoclaimthebenefit.Forinstancea company
makingchocolatethekidstosendspeciallymarkedwrapperstoclaimgifts. .
(c) 'ContainerPremium:itisverypopularwith.themarketersofproductslike
milk additive, jams, now even with detergents and soaps.marketer devise special
containersforpackagingwhichcouldbeusedbythecustomerforsomeuse.
. . . .
Example:Bournvita
6.QuantityDeals:Sellerdevisespecialpackagewhichgivesextra quantity of the
producttobuyeratthesameprice.Thesedealscomeintheformof'buythreeget one
free'offerforbeautysoapslikeNirma,Lux,No.1and'50gramextrafreeofferofF'ena
or555detergentbar. '
7.QuizContests:theremaybecustomerscontest,salesmencontest,arid'dealer
contest.Contestforconsumersisheldonthesubjectofwritingasloganontheproduct.
Suchslogancentresaroundthe astolinkingsofacustomerfortheproduct,or
:ofnewadvertisingideafortheproduct.
,Example:thecontestmayalsobeforenteringthe'DekhBhaiRave'andfillingup
, ,simplequestions, as done by BajajAutofor itsnewscooterRave.Suchcontestheld
throughradio,TV,?ewspapers,magazinesetc. ' "
" 8.FairsandExhibitions: businessmancandemonstratetheirproductsexplaining
theirspecialfeaturesandusefulness.theycarialsodistributefreeliteraturetointroduce
theirfirmandproductstothepublic.Thisdeviseof salespromotionisverypopularin
Indiaandthedeveloping-nations,
9.DisplaysofProducts:itis.anonsightmethodofpublicity.Goodscanbe'
displayedartisticallylaidoutwindowsattheshopfrontsoratimportantbusycenters
likerailwaysstationsandbusstops.WindowdisplayisverypopUlarwiththeretailers'
sinceithelpsininformingthecustomerthetypesof goodavailablewiththem.
. 10.FreeOffer:recently,severalcompanieshavebeenusingfreeofferstopromote
their products. Example, TopthBrushfree withToothpaste, DVD free with the
purchaseof a LEDTV '
Q.5.(a) WhatarePullvis PushStrategy? For what typesofproductseilch is
, used?Giveexamples. ' \
Ans. Thepurposeofany promotional activity istoinform,topersuade,and'tosuggest to
actaspertheconununicationthatisdissectedfromthemanufacturer,retailer,ormarketer.
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The promotion can be directed in two ways- towards middlemen or towards end-
users. When promotion is directed at middlemen, it is known as push strategy and
when it is directed at end users it is known as pull strategy.
Basis Push strategy Pull strategy
Target Group Distributors, Whole End u.sers
salers and Retailers
Purpose Product selling Demand creation
Primary product Industrial goods, Consumer durables,
suitability consumer durables consumer goods
Product availability Already available Need reinforcement else
to consumer product failure /
Promotional Efforts
Advertisement Specific magazines like TV, newspaper, radio,
trade journals target magazines
Sales promotion Dealer contests, trade Discount coupons, economy
rebates, discounts, packs, contests, samples
vacations, gifts
Personal selling Meeting dealers for Meeting consumers for
sales call sales calls
Speed ofpromotion Slow . Fast
for demand creation

Some industrial goods companies use only push strategies, some direct marketing
companies use only pull. However, most large companies mfe some combination ofboth.
For example, Amul uses mass media advertising and consumer promotions to pull its'
products and a large sales force and trade promotions to push its products through the
channels. In recent years, consumer goods companies have been decreasing the pull
portions oftheir mixes in favor ofmore push. This has caused concern that they may be
driving short run sales at the expens.e oflong term brand equity.
Q.(b) What are Pull vIs Push Strategy? For what types of products each is
used? Give examples.
ADs. Amanufacturer or a trade can make use ofthe following advertising media to
spr"ead his message to the people:
. 1. Press Advertising: Press advertising i.e advertising through newspaper,
magazines, journals etc. is commonly used bymodern businessman, Advertising is an
important source of finance for the press or print media. Because of advertising is an
important'source offinance for the press media. .
(a) Newspaper Advertising: newspaper reading is a common habit among most
of the educated people Therefore, newspaper can be used as a medium of advertisement
with great advantage.
While selecting a newspaper for advertising purpose, an advertiser has to take into
consideration:
the strength ofcirculation
the class ofreaders it serve
the geographical over w4ich it is popular and
the cost of space
I.P. Universi
(b) Magazine Advertising: Ml
advertisement when a high quali
advertisements can be directed
can avoid wasteful expenditure on a(
2. Outdoor Advertising: Its pu
roads and markets.'It includes the USI
display, and ve.hicular display.
(a) Poster display: Posters ar
public places. It is also quite comm(
jn bold letters on the walls
long distance.
(b) Bill Board Displays: Painte
directly painted on the boards meant
fixed at outstanding locations like bw
tops of ridges and important buildini
(c) Electrical Displays: it invob
to attract the attention ofpeople, par
is illuminated in tubes of different,
Electrical displays are fixed at heavy
(d) Vehicular Displays: it has b
transport for advertising. The space 0
other vans may be hired by the busi
mobility to the message. ' .
3. FilmAdvertising: Films are I
concerns usually get a short motion
cinema houses for displaying it before
the periods of intermission.
In it advertiser explain the fea1
film advertisement can be adopted only
cost.
4. Radio Advertising: Radio a
Advertisements are broadcast fromth
All India and FM Radio and picked UI
advertisements are normally broadclJ
5. TelevisionAdvertising: It is t
of huge expansion of electronic
both the eye and the ear. Products cal
advertisements. Advertising may t:
programmes.
(a) Direct MailAdvertising: It
It is used to send the message directl,}
has to maintain a mail list which can
names from the list.
Adv that are sent by direct mail
booklets and catalogues.
(b) Circular letter: are sent to
the merits of the product and to creat
(December-2012)
,_ towards middlemen or towards end-
len, itis known as push strategy and
lull- strategy.
-Pull strategy

End u.sers
ailers
r
,
Demand creation
:Is,
Consumer durables,
Ibles
Ible
consumer goods
Need reinforcement else
product failure I
like TV; newspaper, radio,
,
target magazines
;s, trade
Discount coupons, economy
IlI1ts,
packs, samples
s
rs for
Meeting consumers for
sales calls
. Fast
, push strategies, some direct marketing
:ompanies ulfe some combination ofboth.
ing and consumer promotions to pull its
notions to push its products through the
iffipanies have been decreasing the pull
'his has caused concern that they may be
term brand equity.
? For what types of products each is
use ofthe following advertising media to
ng i.e advertising through newspaper,
,modern businessman. Advertising is an
rint media. Because ofadvertising is an
ia.
r reading is a common habit among most
an be used as a medium ofadvertisement
ng purpose, an advertiser has to take into
lrand
Lp.University-BBA-Akash Books 59
(b) 0: are a.n exce.llent of
advertisement when a hlgh quahty of prmtmgmcolour lS deSIred. Magazme
advertisements can be directed towards a partiCular class of people. Thus, marketers
can ayoidwasteful expenditure on advertising. - ,
2. OutdoorAdvertising: Its purpose is to gain the attention ofthe people at busy
roads and markets.'It includes the use ofposter displays, 'Bill board, electric or electronic
and vepicular display.
(a) poster display: Posters are fixed on walls of buildings, bridged and other
public places. It i.s also quite common to write slogans and other message about the
products in bold letters on the walls to attract the attention of the people even from a
long distance. ..' ,
(b) Bill Board Displays: Painted or bill board displays involve the advertisements
.directly painted on the boards meant for this purpose. They are quite big in size and are
fixed at locations like busy markets and crossings. They are also erected on
tops of ridges and important buildings.
(c) Electrical Displays: it involves the use ofelectric electronic lights or neon tube
. to attract the attention of people, particularly during night. Generally a short message
is illUlIlinated in tubes of different colours so .that it is conspicuous and attractive.
Electrical displays are fixed at heavy traffic consumer centers.
(d) Vehicular Displays: it has become a fashion these days to use modes ofpublic.
transport for advertising. The space outside and inside the buses railway carriages and
other vans may be hired by the businessmen to spread their messages. Vehicle give
mobility to the message.
3. FilmAdvertising: Films are an important mediumof'advertisement. Business
concerns usually get a short motion picture prepared and distribute it to different
cinema houses for displaying it before the commencement ofthe regular shows or during
the periods of intermission. .
In it advertiser explain the features, uses and superiority of the product. But
film advertisement can be adopted only by the well established firms. Since it involves high
cost.
4. Radio Advertising: Radio adv. Are gaining greater popularity these days.
Advertisements are broadcast from the transmitting stations ofthe commercial service
All India and FM Radio and picked up by the receiving sets owned by the public. Radio
advertisements are normally broadcast along with popular programmes of music
. 5. TelevisionAdvertising: It is the fast growingmedium.ofadvertisement because
of huge expansion of electronic media an,d cable network. It makes its appeal through
both the eye and the ear. Products can be demonstrated as well as explained as.in film
. advertisements. Advertising may take form of short commercials and sponsored
programmes.
(a) Direct Mail Advertising: It is the most selective ofall the advertisiIlg media.
It is used to send the message directly to the customer. For this purpose, the advertiser
has to maintain a mail list which can be expanded orcontracted by adding or removing'
names from the list.
Adv that are sent by direct mail may be in the form ofcircular letters, calendars,
booklets and catalogues. "
(b) Circular letter: are sent to the prospective customers to inform them about,
the merits of the product and to create their interest in the product.
I
r
60 Third Semester, Marketing Management (December-2012l
I.p. 1
(c) Booklets and catalogues: contain information about the products advertised'
(b) What is Dual Dish
Information about the term of sale and prices of different varieties of the product i's
Ans. A system is know
given to the prospective customer through catalogues.
channels to distribute san
6. Window Display: Window display is an on sight method of advertising, goods
customers,direct mail sellin
can be exhibited in artistically laid out windows at the shop fronts or at important busy
and also online selling.
centers like railway stations and bus stops. The retailers also organize attractive
It is used nowadays to
display with the retailers since it helps in informing the customers about the types of
goods available with them. , ' 1. To increase market c(
The main objective of window display is to draw the attention of the public and 2. To reduce channel cos
arouse their interest in the product displayed.
3. To enable customizec
Window display creates the demand for the product. Window display acts as silent '
Q.7. Whatarethevari
salesman. Articles should be arranged ''in a systematic way and if possible price tags '
Management? What is 7R
should also be attached with the articles. It is better if window displays are changed
Ans. Supply chain man
regularly to make the customers look at the displays every time they visit the shop.
the movement of raw mate]
7. Speciality Advertising: Many business firms offer specialty articles to the
processing of materials into
present and prospective customerS: !Fhese articles may be diaries, pen holders, desk
the organization and towarc
trays, key cl),ains, purses, paper weights, cigarette cases and calendar. the name and
address of the advertiser is printed in or inscribed on the specialty items. They also
Strategic level
bear the brand name of the firm, Since these articles are ofdaily use, they have greater
Strategic network opl
capacity to remind their users about the brand name of the firm offering such articles.
warehousing, distribut
8. ONLINEADVERTISING: OnlineAdvertising is a form ofprornotion that uses the
Strategic part?erships
Internet or World Wide Web for the expressed purpose ofdelivering marketingmessages to
Product life cycle mana
attract customers.Online ads include contextual ads that appear on search engine result
integrated into the sup
pages, banner ads intext ads, RichMedia ads, Social network advertising, online classified '
advertising, advertising network and e-mail marketing including e-mail spam. Information technologj
, Q.6.(a) What are channel strategies? Give example to illustrate them.
Where-to-make and ml
Ans. Various types of channel strategy used by marketers.
Aligning overall organi
A marketing manager has two options for distribution of the services product.
It is for long term' and J
Directly reaching customer and reaching custOmer through the middlemen. Hence the
Tactical level
decision relating to distribution mix is to decide whether to go for Dire6t Marketing or "
for Indirect Marketing or both.
Production decisions,
definition.
Indirect will be agood strategy if the following conditions eif:ist:
Inventory decisions, in
Number of buyers is large,
Frequency of purchase is high,
Transportation strateg
Volume per purchase is small, Benchmarking of all 0:
practices throughout tJ
Market is decentralized,
Financial position of manufacturer is not strong,
Focuson customer del
When manufacture would like to share risk, and
Operational level
'Yhen business is to be expanded.
Daily production and d
The Indirct Marketing Strategy involves use ofintermediaries. They help in making
Production scheduling
the product available to consumer through the process of sharing risk and providing
by minute).
financial and information support. For example airlines use indirect marketing through
Inbound operations,
GSA(General Sales Agent), ABA(Authorised BookAgents) and travel agents. According ,
inventory.
to Philip Kotler. 'The case for using middlemen would rest on their supplier efficiency in
the performance of basic marketing tasks and functions. Marketing intermediaries,
Production operations
through their experience, specialization, contacts and scale offer the producing
goods.'
organization more then it can usually achieve on its own."
Outbound operation
Direct Marketing involves directly contacting the customers. transportation to cus
ZC;:""
magemeilt (December-2012) LP. University-BBA-Akash Books 61
formation about the products advertised.
,s of different varieties of the product i's
alogues.
an on sight method of advertising. goods
vs at the shop fronts or at important busy
. The retailers also organize attractive
arming the customers about the types of I
(b) What is Dual Distribution adn why is it used these days?
Ans. A system is known as dual distribution when a company uses two or more
channels to distribute same products , use telemarketirig to reach medium sized
customers,direct mail selling to small customers, retailers sell to personal computers,
and also online selling.
It is used nowadays to:
1. To increase market coverage
to the attention of the public and
I.
he product. Window display acts as sihint
iystematic way and if possible price tags
is better if window displays are changed
iisplays every time they visit the shop.
ness firms offer specialty articles to the
rticles may be diaries, pen holders, desk
:arette cases and calendar. the name and
scribed on the specialty items. They also
articles are of daily use, they have greater
:ld name of the firm offering such articles. i
2. To reduce channel cost.
3. To enable customized selling
Q.7. What are the various activities involved in Logistics and Supply Chain
Management? What is 7R Concept of Logistics?
Ans. Supply chain management is a cross-function approach including managing.
the movement of raw materials into an organization, certain aspects of the internal
processing of materials into finished goods, and the movement of finished goods out of
the organization and toward the end-consumer. The activities are:
Strategic level
Strategic network optiII;1ization, including the number, location, and size of
warehousing, distribution centers, and facilities.
,..
ertising is a form ofpromotion that uses the
lurpose ofdelivering marketing messages to
lal ads that appear on search engine result
Social network advertising, online classified
Iarketing including e-mail spam.
I
Strategic partnerships with suppliers, distributors, and customers.
.' .
Product life cycle management, so that new and existing products can be optimally
integrated into the supply chain and capacity management activities.
Information technology chain operations.
Give example to illustrate them.
Where-to-make and make-buy decisions.
Ised by marketers. Aligning overall organizational strategy with supply strategy.
: for distribution of the services product.
;tomer through the middlemen. Hen'ce the
dde whether to go for Dire6t Marketing or
,gy if the following conditions
It is for long term and needs resource commitment.
Tactical level
Production decisions, including contracting, scheduling and planning process
definition.
Inventory decisions, including quantity, location and quality ofinventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and implementation of best
. practices throughout the enterprise.
not strong,
'e risk, and
Focus on customer demand and Habits.
Operational level
Daily production and distribution planning, including all nodes in the supply chain.
use ofintermediaries. They help in making
the process of sharing risk and providing
pIe airlines use indirect marketing through
I BookAgents) and travel agents. According
en would rest on their supplier efficiency in
and functions. Marketing intermediaries;
contacts and scale offer the producing
ve on its own."
acting the customers.
i
Production scheduling for each manufacturing facility in the supply chain (minute
by minute).
Inbound operations,including transportation from suppliers and receiving
inventory.
Production operations, including the consumption of materials and flow offinished
goods.
Outbound operations, including all fulfIllment activities, warehousing and
transportation to customers.
1
..'fJ
r
,
1.P. Un
!
62, ThirdSemester, MarketingManagement(December-2012)
7Rightsoflogistics:
theRightMaterials/Products
IntheRightQuantity
IntheRightcondition
AttheRighttime
To the;RightPlace
Atthe RightCosts
To theRightCustomers,Associates,suppliersandstockholders
It includesvariousactivites:
1.TransportationlDistribution
Decisiontobetakenregardingthemodeoftransport
Serviceselection
Freightconsolidation
Carrierrouting
_. Vehiclescheduling
Claims processing
Freightrateandqualityof service
Short-termsalesforecasting
Productmixatstockingpoints
Number,sizeandlocationof stockingpoints
.,JustinTime(JIT)orpushorpullstrategies
,
3.Orderprocessing
, informationtransmittalmethods
Orderingintervals
4.Warehousing
Space determination
Stocklayoutanddesign
Stockplacements
5. Materialshandling
Equipmentselection
Equipmentreplacement
6.Packaging
Handling
Storage
Protectionfromlossanddamage .
7.Information
Collection
Dataanalysisandcontrolprocedure
Q.8.Writenotesonthef4
(a) PersonalSelling Pro
-- Ans.Personalsellingisw:
productaftermeetingface-to-f
Thesellerspromotethepr
product Theyaimj
trialtheproduct. -
Agoodexampleof persom
andcosmeticcounters.
Acustomer can getadvice0
Products"lithrelativelyhigh
personalselling. Greatexamp]
manyproductsthataresoldb:
StepsinPersonalSellingPr
1.Pre-salepreparation:'
and motivation ofsalespersOl
product,thefirm,themarketa
aboutthecompetitor's produc
acquaintedwiththemotivesal
2.Prospecting:Itreferst
theneedfortheproductandtl
through observation, enquiry
contacts, businel;1s assoc-iatior
potentialbuyers. .>
0"
3. Approachimr: BeforeCli
theirnumber, Sl
selectingtherightsalesappea
thecustomerina politeanddi
tothecustomer.HeshouldgreE
Heshouldintroducehimself at
verycarefulinhisapproach
4.Presentation:Forthis
describeitsfeaturesinbrief.'!
theprospectsothatthesalesm:
!in product.
S. Demonstration:InOJ
desire,thesales-personmust
theutilityanddistinctivequal
fortheproducttosatisfyhisW:
andshouldavoidcontroversy.
6.Handlingobjections:
tocreatedoubts' andquestion
objections without
Testimonials,money-backgu:
overshesitantbuyers.The
thebestuseofhismoneyby
should- provethesuperiority(
63

lment(December-20l2)
;andstockholders
of transport
gies
1.P. University-BBA-AkashBooks
Q.8. notesonthefollowing:
(a) PersonalSelling Process- stepsinvolved.
,Ans.Personalsellingiswherebusinessesusepeople(the"salesforce")tosellthe
productaftermeetingface-to-facewiththecustomer.
Thesellerspromotetheproductthroughtheirattitude,appearanceandspecialist
productIJi-owledge.Theyaimtoinformandencouragethecustomertobuy,oratleast
,trialtheproduct. ' ,
A goodexampleofpersonalsellingisfoundindepartmentstoresontheperfume
andcosmeticcounters.
A customercangetadviceonhowtoapplytheproduct andcantrydifferentproducts.
Products 'Yith relativelyhighprices,orwith complex features, areoftensold using
personalselling. Greatexamplesincludecars,officeequipment(e.g.photocopiers)and
manyproductsthataresoldbybusinessestootherindustrialcustomers.
StepsinPersonalSellingProcess
1.Pre-salepreparation:Thefirststepinpersonalselling istheselection,training
and motivation ofsalespersons. The salespersons must be fully familiar with the
product,thefirm,themarketandthesellingtechniques.Theyshouldbewell-informed
aboutthecompetitor'sproducts andthe degree ofcompetition. Theyshouldalsobe
acquaintedwiththemotivesandbehaviorof prospectivebuyers.
2.Prospecting:It referstolocating orsearchingoutprospectivebuyerswhohave
theneedfortheproductandtheabilitytobuyit.Potentialcustomersmaybespotted
through observation, enquiry and analysis ofrecords ofexistingcustomers. Social
contacts, business assoc--iations and dealers canbe helpful in the identification of
potentialbuyers. /;'-
, Before callingonthe prospects, thesalesperson should fully
theirnumber,needs,Jiabits,spending etc.Suchknowledgehelpsin
selecting the right sidesappeal. Aftersuchl
e
Fing, the salesperson should approach
thecustomerinapoliteanddignifiedway. introducehimselfandhisproduct
tothecustomer.Heshouldgreetthe asmileandmakehimfeelathome.
Heshouldintroducehimselfandhisproducttothecustomer.Thesalespersonhastobe
verycarefulinhisapproachasthefirstimpressionis thelastimpression.
4.Presentation:Forthispurpose,thesalespersonhastopresenttheproductand
describeitsfeaturesinbrief.Thepresentationshouldbematchedwiththeattitudeof
theprospectsothatthesalesmancan continuouslyholdhisattentionandcreateinterest
!in product. '
5. Demonstration: Inorderto maintaincustomer's interestand to arousehis
desire,thesales-personmustdisplayanddemonstratetheproduct.Hehastoexplain
theutilityanddistinctivequalitiesoftheproductsothattheprospectrealizestheneed
fortheproducttosatisfyhiswants,JIeshouldnotbeinahurrytoimpressthecustomer
andshouldavoidcontroversy. '
6. Handling objections: Presentation anddemonstration ofthe product are likely
tocreatedoubts'andquestionsinhismind. Thesalesmanshouldclearalldoubtsand
objections without enteringinto acontroversy and without losing his temper.
Testimonials,money-backguarantee,tact andpatienceare popular meansof winning
overshesitantbuyers.Thesalesmanshouldconvincethecustomerthatheismaking
thebestuseof hismoneybypurchasingtheproduct. Forthispurpose,thesalesman
shoula'provethesuperiorityofMsproductoverthecompetitiveproducts.
i
r
7. Closing the sale: This is the climax or critical point in the personal selling
process: Completing the sale seems to bean easy task but inappropriate handling of
the customer can result in loss of sale. The salesman should not force the deal but let
the customer feel that he has made the final decision. He should guide the customer in
making the clioice without imposing\his own view. Sales should be closed in a cordial
manner so that the customer feels inclined to visit the shop again. In closing the sale
the article should be packed properly and handed over to the customer with speed and
accuracy. Once the customer has purchased the article, the salesman should show and
suggest an allied product. For instance, he may suggest socks, ties, handkerchiefs,
vests, etc., to a customer purchasing a shirt. This is known as additional sales and
requires great skill and tact.
. 8. Post-sale follow-up: It refers to the activities undertaken to ensure that the
customer is satisfied with the article and the firm. These activities include installation
of the products, checking and ensuring its smooth performance, maintenance and after-
sale service. It helps to secure repeat sales identify additional orospects and to evaluate
salesman's effectiveness.
Q.(b) Factors important in Channel Selection
Ans. The choice of appropriate channels of distribution is not a simple job. While
taking a decision in this regard, management should carefully consider the following
factors:
(a),Market Considerations
(b) Product Consideration
(c)'Company Consideration
(d) Middlemen Consideration
(a) Market Consideration: The nature of market is the key factor influencing the
choice ofchannels ofdistribution.
The following features of the market should analyzed to determine the channels.
1. Consumer or industrial market: If the product is for industrial market or
industrial users, i.e channel of will be a short one. Since industrial users
purcha'se in large quantities, they can purchase directly from the producers or
manufacturers, i.e. there is no need ofretailers. The manufacturer can establish contacts
with the industrial users by sending his agents. But in case of product for the consumer
retailer may have to be included in the channel of distribution.
2. Number of potential customers: A large potential market is likely to put
weigh in favour ofthe use ofmiddlemen. If the number ofcustomers is relatively small,
the manufacturer may be able to sell directly by using his own sales force as customer
haI).dling WQuid not be difficult. . .
3. Size of the order: Direct selling is convenient and economical where customers
place order in- big lots as in case of indtlstrial goods. But where the product is sold in
small quantities, middlemen are used to distribute such products.
4. Buying habits ofcustomer: The customer buying habits like:
- the time he is willing to spend
-the preference for personal attention and
- the preference for one stop shopping affect the choiCe of distribution channels.
For example, cigarette are purchased in one and two and rarely in packets.
LP. 'Uni
5. (}eograpbdcalconcentr
located in a particular geograph
be, ifthe market were spread ove
become essential to sell the pr(
users.
(b) Product Consideratil
number and type of middlemer
factors with regard to the
1. Unit value: ifthe unit va:
channel ofdistribution will be 10l
small accessory equipment are
Product ofhigh value like jewelle
I
2. Product line: a manufa(
I
will sell directly or through ret.
I
only one item may have to use,
3. Standardised.product:
hannels because their brand
unstandardised products can m
4. Technical nature: Ind
conditioners and super compute
The manufacturer of such a pre
product to the potential custom
But consumer products of t
retailers. This is becauseof the
and it is not feasible for the mar
as in case of television sets and
5; Bulk andWeight: bulky
to minimize the physical hand
product involves huge cost.
6. Perishability: the produ
consumers or sell through the
Manufacturer ofnon-perishable I
(c) Company considerat
important impact on the selec
factors are considered:
1. Volume of production
directly to the customers throul
products, he may sell his prod
country. But a small manufactl
sell directly because of his snu
2. Financialtesources: 1
employingits own'sales force ar
which cannot inVest money in d
3. Experience and coml
having sufficient experience an
given tddistribute products diI
often rely heavily on middleml
.65

ement (December-2012)
ritical point in the personal selling
task but inappropriate handling of
Ian should not force the deal but let
on. He should guide the'customer in
r. Sales should be closed in a cordial
t the shop again. In closing the sale
over to the customer with speed and
ticle, the salesman should show and
suggest socks, ties, handkerchiefs,
is is known as additional sales and
lities undertaken to ensure that the
, These activities include installation
performance, maintenance and after-
radditional orospects and to evaluate
:tion
istribution is nota simple job. While
lould carefully consider the following
is the key factor influencing the
lalyzed to detennine the channels.
.e product is for industrial market or
be a short one. Since industrial users
.ase directly from the producers or
Ie manufactm-er can establish contacts
lut in case of product for the consumer
)f distribution.
rge potential market is likely to put
Imber ofcustomers is relatively small,
using his own sales as customer
dent and economical where customers
lods. But where the product is sold in
products.
ler buying habits like:
t the choice of distribution channels.
Ie and two and ra.rely in packets.
J.P.. University-BBA-Akash Books
5. Geographical are
located in a particular geographIcal reglon, direct,sellmg !s more feaSIble than It would
be ifthe market were spread over the whole country. Use ofwholesaler and retailers may
essential to sell the product to the widely dispersed consumers or industrial
users..
(b) product Consideration: The type and nature of the product influences the
number and type of middlemen to be chosen for distributing the product. Important
factors with regard to the product are as follows:
1. Unit value: ifthe unit value ofthe product is lower and the turnover is higher, the
channel of distribution will be longer. For instance product like cosmetics, stationary and
small accessory equipment are distributed through agents, wholesalers and retailers.
Product ofhigh value like jewellery and machines are sold directly to the users.
2. Product line: a manufaCturer manufacturing several products in the same line
will sell directly or through retailers since it is economical. But a manufacturer with
only one item may h'ave to use wholesalers and retailers to sell his product.
3. Standardised.product: Standardised products canbe distributed through longer
hannels because their brand names are very popular. But custom made. and
unstandardised products can more easily be sold directly by the producers to the user.
4. Technical nature: Industrial products which are highly technical, say air
conditioners and super computers, are often distributed directly to the industrial users.
The manufacturer of such a product can appoint sales engineers who can explain the
product to the potential customer .and provide presale and after sale service to them.
But consumer products of technical nature are generally sold direct and through .
retailers. This is because of the. fact that consumer products are sold in large number,:
and it is not feasible for the manufacturerto provide after sale service'to theconsumer
as in case of television sets and refrigerators.
5. Bulk and Weight: bulky and heavy goods are distributed direCt to users in order /
to minimize the physical handling of the product because transportation of such a
product involves hugecosL .
6. Perishability: the producers ofperishable products generally sell directly to. the
consumers or sell through the middlemen who have the special storage facilities.
Manufacturer ofnon-perishable commodities have a wider choice in the channel selection.
(c) Company consideration: The nature. and size of the business finn have an
important impact on the selection of channels of distribution'. Following important
factors are considered: .
I. Volume of production: a big manufacturer may find it more profitable to sell
directly to the customers through his sales force. Ifhe is manufacturing a wide range of
products, he may sell his products by opening retail outlets in different parts of the
country. But a small manufacturer with only a small number of items cannot afford to
sell directly because cifhis small scale operations. .
2. Financial r'esow-ces: a financially strong company can distribute products by
employingits oWllsales force and opening retail outlets. But a financially weakcompany
which cannot inJest money in distribution will have to use middlemento sell its output.
3. Experience and competence ofmanagement: ifa company management is
having sufficient experience and know how to market its products, preference should be
given to"distribute products directly. Acompariy lacking this ability and experience will
often rely heavily on middlemen to do the marketingjob.
4. providedtothecannels:aman'ufacturercan findgoodretailersoriIy
ifthemarketIngdepartthentundertakessufficientadvertising.Somemanufacturerof
technicalproductsundertaketoprovideaftersaleservice.suchmanufacturercanalso
reputedretailersforsellingitsproducts.:
5.Desireforcontrolofchannels:a who wants to control the
distribution ofhisproduct will select ashQrt channelof distribution. He may doso even'
thoughthe distribution cost ishirer if he feelsthat the marketing department can give
i
aggressivepromotiontotheproduct.
I
, (d) MiddlemenConsideration:
I,
1. Availability ofdeltired middlemen: amanufacturer,will rely onthe middlemen
I
iftheyoperate accordirig tohis desire. The marketermay notentrustproducttoa
middlemenwhoIScarryingcompetitiveproducts.Insuchacase,itmayprefertoopen
branchestosellproductsdirectly.
2.Financialability:a'largemanufacturerwillgenerapyselectthosemiddlemen
whoarefinanciallystrong,cl:!-nprovidecreditfacilitiestothecustomers,andpaytheir
billstothemanufacturerregularlyandpromptly.
3.Salespotential:amanufacturer'willgeneralselect achannelofferingthegreatest
potential sales volume over thelong-run thoughitis,very difficultto access which
channelwillgeneratethelargestsa1esvolume. , ,', , '
4'. Cost:the manufactureralso considerthecost ofsellingthroughalternative
channels. it does not mean that amiddlemen charging high cost beexcludedfrom
b
consideration.Amanufacturermayselect6evenahighcostchargingmitldlemenwho
providesmanservicestothecustomerswhicharenotprovidedbyotherJiliddlemen.
Thiswouldprovideaddedvaluetothecustomer. ,
,5.Competitionandlegal cons,traints:many times the manufacturer are
compelled tousethesamechannels ofdistribution whicharebeenusedbythe competitor.
Governmentregulationsalsoaffectthechoiceof middlemen.
, . .
. For instance, apharmaceutical companycan market' its product through licensed
chemistsonly.
I ,
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