Running Head: Major Assignment II 1

An Assignment on Marketing Management

Question and Answer

Nabina Khatri

Lc00016000035

Semester-V

Nepal Business College

Author Note

This assignment was assigned by Mrs. Jyoti Kothari, who was faculty initiator of
Marketing Management, BBA-3733.
Major Assignment II 2
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1. What is IMC? Explain its importance.(2.5)

Ans. Integrated marketing communications is an approach to planning communications that

gives your small business the potential to get better results from your campaigns and reduce
marketing costs. The importances of IMC are:

Creative Consistency

In an integrated campaign, the different tools feature the same creative treatment. By
repeating the headlines, key phrases and images in each communication, you ensure that
prospects and customers receive consistent messages each time they see one of the elements
of the campaign..

Cost Savings

Creative consistency in your integrated campaigns can also save you money. By using the
same images and adapting the same copy for different media, you reduce copy-writing,
design and photography costs.

Customer Preference

An integrated campaign helps you provide customers with information in the format they
prefer. Consumers and business customers can specify if they want to receive product
information via email, direct mail, text message or telephone. Integration ensures they
receive the same information in all communications.

2. Explain Strategic Business Unit (SBU) model.(2.5)

Ans. A strategic business unit, popularly known as SBU, is a fully-functional unit of a

business that has its own vision and direction. Typically, a strategic business unit operates as
a separate unit, but it is also an important part of the company. It reports to the headquarters
about its operational status.

A strategic business unit or SBU operates as an independent entity, but it has to report
directly to the headquarters of the organization about the status of its operation. It operates
independently and is focused on a target market. It is big enough to have its own support
functions such as HR, training departments etc. There are several benefits of having an SBU.
This principle works best for organizations which have multiple product structure. The best
examples of SBU are companies like Proctor and Gamble, LG etc. These companies have
different product categories under one roof.

3. What are the different types of competition? Explain different types of

competition.(5)

Ans. The different types of competition are:

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Perfect Competition

Perfect competition is a market system characterized by many different buyers and sellers. In
the classic theoretical definition of perfect competition, there are an infinite number of buyers
and sellers. With so many market players, it is impossible for any one participant to alter the
prevailing price in the market. If they attempt to do so, buyers and sellers have infinite
alternatives to pursue.

Monopoly

A monopoly is the exact opposite form of market system as perfect competition. In a pure
monopoly, there is only one producer of a particular good or service, and generally no
reasonable substitute. In such a market system, the monopolist is able to charge whatever
price they wish due to the absence of competition, but their overall revenue will be limited by
the ability or willingness of customers to pay their price.

Oligopoly

An oligopoly is similar in many ways to a monopoly. The primary difference is that rather
than having only one producer of a good or service, there are a handful of producers, or at
least a handful of producers that make up a dominant majority of the production in the
market system. While oligopolists do not have the same pricing power as monopolists, it is
possible, without diligent government regulation, that oligopolists will collude with one
another to set prices in the same way a monopolist would.

Monopolistic Competition

Monopolistic competition is a type of market system combining elements of a monopoly and

perfect competition.. The difference is that each competitor is sufficiently differentiated from
the others that some can charge greater prices than a perfectly competitive firm. An example
of monopolistic competition is the market for music. While there are many artists, each artist
is different and is not perfectly substitutable with another artist.

4. Explain the competitive strategies for market followers?(5)

Ans. There are 4 strategies of Market followers.

1) Adapter

Adapter is white collared market follower strategy. Automobiles use the adaptation form of
market follower strategy. Cars like Maruti 800, Alto, Zen, brio, etc are all adapters and they
adapt the best qualities from each other by changing the style of the automobile. Similarly,
there are technology adapters like the Dell laptop and Sony Vaio laptop. These market
followers have similar products but they try to adapt from their closest competition. Adapters
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can soon become leaders as well because they can adapt, learn and make a
better product than the higher competition.

2) Imitation

Imitation is the best form of flattery. But such a flattery can cause a huge dent in your profit
margins if you are a product manufacturer. Imitators make use of your hard
earned brand equity and give a product which has the same characteristics as yours, albeit at
a lower price..

3) Cloner

There is a silver lining between an imitator and a cloner. An imitator might copy some of
your product qualities, but it maintains its own product qualities as well. For example –
timesjobs.com is an imitator of naukri.com, but then times jobs has its own unique product
characteristics as well.

4) Counterfeiter

The best example of counterfeiting is selling the originals via piracy. Where cloning involves
manufacturing of slightly altered products, counterfeiting involves thieving and is a black
market follower strategy. The best example is pirated DVDs and CDs of movies and music.

5. Explain the various differences strategy followed by an organization.(5)

Ans. An organizational strategy is the sum of the actions a company intends to take to
achieve long-term goals. Together, these actions make up a company’s strategic plan.
Strategic plans take at least a year to complete, requiring involvement from all company
levels. Top management creates the larger organizational strategy, while middle and lower
management adopt goals and plans to fulfill the overall strategy step by step. This unified
effort to can be likened to a journey.

Mission and Vision

Organizational strategy must arise from a company's mission, which explains why a
company is in business. Every activity in the company should seek to fill this purpose, the
mission thus guiding all strategic decisions. A company's vision describes what the company
will have achieved in fulfilling its mission. From the vision follows the long-term goals of an
organizational strategy.
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Business and Functional Objectives

For a strategy to work, it must be converted into smaller, shorter-term goals and plans.
Middle management adopts goals and creates plans to compete in the marketplace. These
tactical objectives take less than a year to complete, becoming the building blocks of a
successful organizational strategy.

Considerations

Elements important to organizational strategy include resources, scope and the company’s
core competency. Because resources are finite, allocating them -- people, facilities,
equipment and so on -- often means diverting them from somewhere else in the organization.
Quantifying a strategy’s scope -- for instance, becoming No. 1 in North American sales --
makes for more focused plans. Finally, competitive advantage refers to what a business is
best at -- its core competency -- along with the sum of what it knows through experience,
talent and research.

Grand Strategies

Organizational strategy falls into categories referred to as grand strategies. Grand strategies
include growth, diversification, and integration, retrenching and stabilizing. A growth grand
strategy refers to high levels of growth achieved, for instance, by adding new locations.
Diversification means expanding into new markets or adding dissimilar product lines.
Controlling supply or distribution channels instead of relying on outside companies is
vertical integration..

6. Explain in details channel design decisions.(5)

Ans. Channel design is presented as a decision faced by the marketer, and it includes either
setting up channels from scratch or modifying existing channels. This is sometimes referred
to as reengineering the channel and in practice is more common than setting up channels
from scratch. The channel design decision can be broken down into seven phases or steps.
These are:

Phase 1: Recognizing the Need for a Channel Design Decision

Many situations can indicate the need for a channel design decision. Among them are: 1.
Developing a new product or product line 2. Aiming an existing product to a new target
market 3. Making a major change in some other component of the marketing mix 4.
Establishing a new firm 5. Adapting to changing intermediary policies 6. Dealing with
changes in availability of particular kinds of intermediaries 7. Opening up new geographic
marketing areas 8. Facing the occurrence of major environmental changes 9. Meeting the
challenge of conflict or other behavioral problems 10. Reviewing and evaluating
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Phase 2: Setting and Coordinating Distribution Objectives

In order to set distribution objectives that are well coordinated with other marketing and firm
objectives and strategies, the channel manager needs to perform three tasks: 1. become
familiar with the objectives and strategies in the other marketing mix areas and any other
relevant objectives and strategies of the firm. 2. Set distribution objectives and state them
explicitly. 3. Check to see if the distribution objectives set are congruent with marketing and
the other general objectives and strategies of the firm.

Phase 3: Specifying the Distribution Tasks

The job of the channel manager in outlining distribution functions or tasks is a much more
specific and situational dependent one. The kinds of tasks required to meet specific
distribution objectives must be precisely stated. In specifying distribution tasks, it is
especially important not to underestimate what is involved in making products and services
conveniently available to final consumers.

Phase 4: Developing Possible Alternative Channel Structures

The channel manager should consider alternative ways of allocating distribution objectives
to achieve their distribution tasks. Often, the channel manager will choose more than one
channel structure in order to reach the target markets effectively and efficiently.

Phase 5: Evaluating the Variables Affecting Channel Structure

Having laid out alternative channel structures, the channel manager should then evaluate a
number of variables to determine how they are likely to influence various channel structures.
These six basic categories are most important: 1. Market variables 2. Product variables 3.
Company variables 4. Intermediary variables 5. Environmental variables 6. Behavioral
variables

Phase 6: Choosing the “Best” Channel Structure

In theory, the channel manager should choose an optimal structure that would offer the
desired level of effectiveness in performing the distribution tasks at the lowest possible cost.
In reality, choosing an optimal structure is not possible. Why? First, as we pointed out in the
section on Phase 4, management is not capable of knowing all of the possible alternatives
available to them. Second, even it were possible to specify all possible channel structures,
precise methods do not exist for calculating the exact payoffs associated with each
alternative.
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7. What are the requirements for effective evaluation of marketing programs?(5)

Ans. Marketing plans serve as the blueprints for your company's sales strategy. They lay out
every detail of what's to come over the next year and may be subject to alteration or
evaluation because of changes in the market.

Return on Investment

Return on investment is always a major concern when it comes to marketing or any other
business expense. The idea is to check whether the money you put into your marketing plan
has resulted in a profit.

Sales Numbers

Reading the numbers can be the fastest and most basic way to determine whether your plan is
working. For example, if your overall sales for last year from June 1 to September 1 totaled
$100,000 and your total sales for this year totaled $150,000, you can deduce that your current
marketing plan is having some sort of positive effect.

Customer Response

Customer response in all its varied forms can help you to determine what type of reactions
your marketing creates. Surveys online and in person, general customer service feedback and
online commentary can all reveal what your customers think of your marketing and which
campaigns have the greatest impact. Simple questions like "How did you find out about our
seasonal sale?" can reveal which initiatives are reaching the customer and which market
segments are making purchases.

Expansion

If your marketing reach is expanding, the effectiveness of your plan is the probable cause.
Marketing that makes its way into new regions either by customer recommendation or
natural growth indicates both a successful and popular product or experience and an effective
marketing message. The expansion of your marketing budget is another sign that your plan is
working well and has gained more support from the company.

Partner Response

Your marketing partners will offer feedback about whether your marketing plan is working.
Partner feedback reveals the effectiveness of your efforts in relation to associated brands,
suppliers and vendors. These outside members of the team might feel the effects of a
successful campaign before you do because they are often on the front lines and might have
more direct customer interaction.

Salespeople
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Outside salespeople are a great barometer for the measurement of marketing effectiveness.
Ask for feedback from your soldiers in the field to determine whether the message you are
providing and the ways you are providing it are effective.

Competitor Response

The actions of your competitors can often be very telling when it comes to the success or
failure of your marketing plan. If competitors rush to copy what you've done or try their best
to one-up your initiatives, the plan is working.

8. Describe the marketing practice following E-commerce.(5)

Ans. E-commerce is a challenging industry; a saturated market and mass availability of goods to
consumers means that successfully capturing customers has become less about the products you
offer and more about the experience you deliver to each user. Some of the practices of marketing
that should be followed by ecommerce are:

1. Artwork to make an emotional connection with new visitors on the homepage

Creative imagery is a powerful tool for making an emotional connection with your visitors.
However, you should be discerning in your use of imagery throughout your e-commerce funnel,
since images can have a significant impact (both positive and negative) on key conversion rates.

2. Experiment with the best email capture methods

Capturing visitor email is a powerful method for driving engagement and purchases with website
visitors. Many e-commerce websites are testing out popup modals, or lightboxes, that ask a
visitor to share their email address, often in exchange for an initial discount.

3. Don’t just redesign; iterate and test

“Redesign” is a word that carries enormous weight, loaded with both optimism for a better user
experience and increased conversions, as well as a tremendous investment of resources.

4. Test when visitors need to register

An email address, as mentioned in best practice number 2, is key to extending the customer
relationship beyond the time on your website or mobile app, be it through remarketing when a
shopper abandons their cart or emailing a promotional offer to bring them back to your site.

5. Pay-per click advertising / Google AdWords

Paid advertising is not always the first option for new businesses as it requires cash (rather than
good old-fashioned hard work). But, if you have the funds, it can be a great way to generate
sales.

6. Affiliate Marketing
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Affiliate marketing is when you let other people market your products in return for a percentage
of sales that you generate as a result of their efforts.

9. What is role of marketing information system in marketing decision making?(5)

Ans. The role of the MIS in an organization can be compared to the role of heart in the body. The
information is the blood and MIS is the heart. In the body the heart plays the role of supplying
pure blood to all the elements of the body including the brain. The heart work faster and supplies
more blood when needed. It regulates and controls the incoming impure blood, processed it and
sends it to the destination in the quantity needed. It fulfills the needs of blood supply to human
body in normal course and also in crisis.

The MIS plays exactly the same role in the organization. The system ensures that an appropriate
data is collected from the various sources, processed and send further to all the needy
destinations. The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and top management.

Here are some of the important roles of the MIS:

i. The MIS satisfies the diverse needs through variety of systems such as query system, analysis
system, modeling system and decision support system.

iii. The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control , and helps them further in decision-making at the operation
level to correct an out of control situation.

iii. The MIS helps the middle management in short term planning, target setting and controlling
the business functions. It is supported by the use of the management tools of planning and
control.

iv. The MIS helps the top level management in goal setting, strategic planning and evolving the
business plans and their implementation.

10. Explain in details how an organization set price (method).(10)

Ans. Historically, price has been the major factor affecting buyer choice. This is still true in
poorer nations, among poorer groups and with commodity products. However, non-price factors
have become more important in buyer-choice behavior in recent decades.

Price is also one of the most flexible elements of the marketing mix. Unlike product features and
channel commitments, price can be changed very quickly. At the same time, pricing and price
competition is the number-one problem facing many marketers.
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SETTING THE PRICE

A firm must set a price for the first time when it develops a new product, when it introduces its
regular product into a new distribution channel or geographical area, and when it enter bids on
new contract work. Is setting prices easy? It involves making a number of guesses about the
future. You would want to know how; an organization should proceed as follows:

Identify the target market segment for the product or service, and decide what share of it is
desired and how quickly.

An organization goes through the following steps in setting its pricing policy

Now let us discuss the process in detail

1) Selecting the pricing Objective – You would agree that the foremost step is
identifying pricing objectives. The company first decides where it wants to position its
marketing offering. The clearer a firm’s objectives, the easier it is to set price. What are
pricing objectives? A company can pursue any of five major objectives through pricing:
survival, maximum current profit, maximum market share, maximum market skimming,
or product-quality leadership.

Companies pursue survival, as their major objective if they are plagued with overcapacity
intense competition, or changing consumer wants. As long as prices cover variable costs
and some fixed costs, the company stays in business. Survival is a short-run objective: in
the long run, the firm must learn how to add value or face extinction.
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Many companies try to set a price that will maximize current profits. They estimate the
demand and costs associated with alternative prices and choose the price that produces
maximum current profit, cash flow or rate of return on investment. This strategy assumes
that the firm has knowledge of its demand and cost functions; in reality these are difficult
to estimate.

Some companies want to maximize their market share. They believe that a higher sales
volume will lead to lower unit costs and higher long-run profit. They set the lowest price,
assuming the market is price sensitive. The following conditions favor setting a low
price. The market is highly price sensitive, and a low price stimulates market growth.
Production and distribution costs fall with accumulated production experience; A low
price discourages actual and potential competition Companies unveiling a new
technology favor setting high prices to “skim” the market. Sony is a frequent practitioner
of market skimming pricing.

Whatever the specific objective, businesses that use price as a strategic tool will profit
more than those who simply let costs or the market determine their pricing

2) Determining the demand – Following the identification of objectives, the firm needs
to determine demand. Each price will lead to a different level of demand and therefore
have a different impact on a company’s marketing objectives. In the normal case, demand
and price are inversely related: the higher the price, the lower the demand .In the case of
prestige goods, the demand curve sometimes slopes upward. E.g. Perfume Company
raised its price and sold more perfume rather
than less! Some consumers take the higher price to signify a better product. However if
the price is too high, the level of demand may fall.

The process of estimating demand therefore leads to

i. Estimating Price sensitivity of market
ii. Estimating and analyzing demand curve
iii. Determining price elasticity of demand.

3. Estimating Costs – Demand sets a ceiling on the price the company can charge for its
product. Can you discuss this statement in detail? Costs set the floor. The company wants
to charge a price that covers its cost of producing, distribution and selling the product,
including a fair return for its effort and risk.

Fixed costs (also known as overhead) are costs that do not vary with production or sales
revenue. A company must pay bills each month for rent heat, interest, salaries and so on. ,
Regardless of output. Variable costs vary directly with the level of production. These
costs tend to be constant per unit produced. They are called variable because their total
varies with the number of units produced. Total costs consists have the sum of the fixed
Major Assignment II 13

and variable costs for any given level of production. Average cost is the cost per unit at
the level of production; it is equal to total costs divided by production.

To price intelligently, management needs to know how its costs vary with different levels
of production.

The Japanese Method – TARGET COSTING – Costs change as a result of a concentrated

effort by designers, engineers and purchasing agents to reduce them. The Japanese use a
method called target costing. They use market research to establish a new product’s
desired functions. Then they determine the price at which the product will sell, given its
appeal and competitor’s prices. They deduct the desired profit margin from this price, and
this leaves the target cost they must achieve.

4. Analyzing competitor’s costs, prices and offers – You would agree that analyzing
competitor’s costs, prices and offers is also important factor in setting prices. Within the
range of possible prices determined by market demand and company costs, the firm must
take the competitor’s costs, prices and possible price reactions into account.

While demand sets a ceiling and costs set a floor to pricing, competitors’ prices provide
an in between point you must consider in setting prices. Learn the price and quality of
each competitor’s product or service by sending out comparison shoppers to price and
compare. Acquire competitors’ price lists and buy competitors’ products and analyze
them. Also ask customers how they perceive the price and quality of each competitor’s
product or service. If your product or service is similar to a major competitor’s product or
service, then you will have to price close to the competitor or lose sales. If your product
or service is inferior, you will not be able to charge as much as the competitor. Be aware
that competitors might even change their prices in response to your price.

5. Selecting a pricing method –

There are three pricing methods that can be employed by a firm:

1. Cost Oriented Pricing
2. Competitor Oriented Pricing
3. Marketing Oriented Pricing

Cost Oriented Pricing

Companies often use cost oriented pricing methods when setting prices. Two methods are
normally used

Full cost pricing – Here the firm determines the direct and fixed costs for each unit of
product. The first problem with Full-cost pricing is that it leads to an increase in price as
sales fall. The process is illogical also because to arrive at a cost per unit the firm must
anticipate how many products they are going to sell.
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Direct (or marginal) Cost Pricing –This involves the calculation of only those costs,
which are likely to increase as output increases. Indirect or fixed costs (plant, machinery
etc) will remain unaffected whether one unit or one thousand units are produced. Like
full cost pricing, this method will include a profit margin in the final price. Direct cost
approach is useful when pricing services for example. Consider aircraft seats; if they are
unused on a flight then the revenue is lost. These remaining seats may be offered at a
discount so that some contribution is made to the flight expenses.

Competition-based approach

Going-Rate Pricing – In going-rate pricing, the firm bases its price largely on
competitors’ prices, with less attention paid to its own costs or to demand. The firm
might charge the same, more, or less than its major competitors. Where the products
offered by firms in a certain industry are very similar the public often finds difficulty in
perceiving which firm meets their needs best. In cases like this (for example in financial
services and delivery services) the firm may attempt to differentiate on delivery or
service quality in an attempt to justify a higher selling price.

Competitive Bidding

Many contracts are won or lost on the basis of competitive bidding. The most usual
process is the drawing up of detailed specifications for a product and putting the contract
out for tender. Potential suppliers quote a price, which is confidential to themselves and
the buyer. In sealed-bid pricing (i.e. only known to client and not to the other parties
tendering for the service), firms bid for jobs, with the firms basing the price on what it
thinks other firms will be bidding rather than on its own costs or demand. All other things
being equal the buyer will select the supplier that offers the lowest price.

Marketing Oriented Pricing

The price of a product should be set in line with the marketing strategy. The danger is
that if price is viewed in isolation (as would be the case with full cost pricing) with no
reference to other marketing decisions such as positioning, strategic objectives, and
promotion, distribution and product benefits. The way around this problem is to
recognize that the pricing decision is dependent on other earlier decisions in the
marketing planning process. For new products, price will depend upon positioning,
strategy, and for existing products price will be affected by strategic objectives.

6. Selecting the final Price – Pricing methods narrow the range from which the company
must select its final price. In selecting that price, the company must consider additional
factors, including psychological pricing, gain and risk pricing, the influence of other
marketing -mix elements on price, company -pricing policies, and the impact of price on
other parties.