Marketing Management BBA 205

8/13/2019 Marketing Management BBA 205

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THIR SEMESTERMARKETING MANAGEMENT (BBA-205),END-TERM EXAMINATION (2009)Time: 3 Hours. M. M : 75

Q.l. a) Define the modern concept of marketing. Distinguish betweenmarketing and selling. (8), Sol. The Marketing Concept-Consumer oriented marketing has given rise to a

n ~ w philosophy in business known as 'marketing concept'. The marketing conceptemphasizes the determination of the requirements of potential customers andsupplying products to satisfy their requirements. Determination of wants of thecustomers takes precedence over production. The marketers following consumerorientation regard the creation of customer and satisfaction of his wants as thejustification of business. Thus marketing concept is based on the following fourfundamental 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 ofsales.i i i) All marketing activities in a firm should be organizationally coordinated.iv) A company must define its t ~ t markets carefully.

Distinguish between Marketing and sellingMarketing activities indude consumer research (to identify the needs of thecustomers), product develoPIPent (designing innovative products to meet existing orlatent needs), advertising the products to raise awareness and build the brand. Thetypical goal of marketing is to generate interest in the product and create leads orprospects.On the ather hand, sales activities are focused on converting prospects to actualpaying 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 largeset of people) whereas sales tends t focus on individuals or a small group of prospects.

, Basis Marketing SellingApproach Customer orientation - Listens to andeventual accommodation of thetarget market and determine future

needsOne to manyGenerate leads - fulfill customer'swants and needs thru products andor s r v i ~ s the company can offer

Customer orientation makescustomer demand' match theproducts the companycurrently offersUsually one to oneGenerate purchases/orders, -fulfill sales volume objectivesShort termOnce a product has beencreated for a customer need,persuade the customer topurchase'the product to fulfIllher needsP\lsh 'Sales is a narrower concept '

ProcessFocus

Horizon Longer termIden tifying customer needs(research), creating products to meetthos,e needs, promotions to advertisesaid products.Pull 'Marketing is a wider conceot

Scope

StrategvConcept


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2 Third Semester Marketing Management-2009 (BBA)b) Explain the nature and importance of marketing. (7)

Sol. Marketing is an ancient art & is everywhere. Formally or informally, people& organizations engage in a vast numbers of activities that could be called marketing.Good marketing has become an increasingly vital ingredient for busjness success. tis embedded in everything we do- from the clothes we wear, to the web s i t ~ s we click" on, to the ads we see. Marketing deals with identifying & meeting human & socialneeds or it can be defined as "meeting needs profitably"The American Marketing Association has defined marketing as "an organizationalfunction & a set of processes for creating, communicating & delivering value to thecustomers & for managing customer's relations in ways that benefit the organization& the stake holders. .

Or. .Marketing management is the art & science of choosing target markets" & getting,keeping & growing customers through creating, delivering & communicating superiorcustomer value.Or"Delivering a higher standard.ofliving" "

For a managerial definition, marketing has been defined" as "the art of sellingproducts" but people are surprised when they hear that the most important part ofmarketing is not selling. Selling is only the tip of marketing iceberg.

t ~ r Drucker says it this way that the aim of marketing is to know & understandthe customer so well that the product or service fits him & sells itself. All that shouldbe needed is to make the product or the service available. Eg. The success of Indica,the first indigenously designed car by Tata Motors. Backed by strong ,customersdelight, the company designed a vehicle with luggage space & legroom & offered it aprice easily available & affordable to middle class.(2) Gillette launched its March III razor.

, Marketing people are involved in marketing 10 types of entities: goods services,events, experiences, persons, places, properties, organizations, information & ideas..Therefore ideal marketing should result in a custom,er who is ready to buy.Importance of Marketing: Financial success of any organization depends upon

marketing ability qfthatorganization.There should be sufficient demand, for products& services S6 the company can make profit. Therefore many' companies created chiefmarketing officer (CMO) position to put marketing on a mo.re- equal footing with othere-Ievel executives. Marketing is tricky & large well known business such as Levi's,Kodak, Xerox etc. had to rethink theirbusiness models, Even Microsoft, Wal-Mart,Nike who are market leaderl;l cannot relax.Thus, we can say that making the right decision is not easy & marketing managersmust take major decisions about the features of the product prices & design o theproduct, where to sell products & expenditure on sales & advertising. Good marketingis no accident but a result of careful planning & execution. Marketing practices arecontinuously being refined t increase the chances of success. But marketing excellenceis rare & difficult to achieve & is anever ending task.E.g. NIRMA - The brand icon of the young girl has adorned the package of Nirmawashing powder. The jingle has become one of the, ~ n u r i n g times in Indian advertising.

Q. 2. a) Describe the marketing environmental factors that affect thecompany's ability to serve its customers. (8)Sol. The marketing environment consists of the following factors: i) Demographic: Demographic is a major element to be studied in environment

analysis. Several factors relating to population, such as size, growth. rate, agedistribution, religious composition, need to be studied. Aspects such as composition

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I.PUniversity-AkashBooks 3ofworkforce,householdpatterns,regionalcharacteristics,populationshiftsetc.alsqneedtobestudiedastheyareapartofdemographicenvironment ..

i i ) Socio-culturalEnvironment:Socio-culturalenvironment is ap.otherimportantcomponentof the environment.Culture, traditions, beliefs, vaiues &.lifestylesofthepeopleinagivensocietyconstitutethesocioculturalenvironment.Culture:Culture is the combined result offactors like religion, language,education&upbringing.

SocialClass:Socialclassisoneimportantconceptinsocioculturalenvironment.Asocialclassisdeterminedbyincome,occupation,location,ofresidenceetc. i i i ) EconomicEnvironment:The factors tobeconsideredundereconomicenvironmentare:-

GeneralEconomicconditions . . Economicconditionsof differentsegmentsofthepopulation,theirdisposable

income,purchasingpoweretc. Rate of growth of the economy, rate ofgrowthof each sectorof the economy Income,prices&consumptionexpenditure Creditavailability& ,interestrates Inflationrate Foreignexchangereserves Exchangerates Taxrates Behaviorofcapital a r k e ~ 0

iv) PoliticalEnvironment:Economic environment is a by- productofthepoliticalenvironment,sinceeconomic&industrialpoliciesfollowedbyanationgreatlydependsonits political environment. Politicalenvironmerit has several aspects;industrialgrowthdependstoa greatextentonthepoliticalenvironment.Legislationregulatingbusinessesarealsoaproductofthepoliticalconfiguration.

. v) NaturalEnvironment: NaturalResQurces:Businessfirmsdependonnaturalresources.Raw

material is one majorpart ofthese resources & firmsare concerned withtheiravailability;theyneedtoknowwhethertherewillbeashortageinanyof thecriticalrawmaterials,theyalsoneedtoknowthetrendsgoverningtheircost. Ecology: Issues like environmental pollution, protection ofwild life & wealtharethefactorsconcernedwith ecology&govt. Climate:Firmswithproductswhosedemanddependsonclimate&firmsdependingonclimatedependentrawmaterialswillbeparticularlyconcernedwith this factor.These firmshave tostudy the-climate in depth& decide theirproductionlocation&marketingterritoriesrespectively

(vi)TechnologyEnvironment:Fora firm technologyaffectsnotonlyitsfinal .productsbutalso itsrawmaterialprocesses&operations aswell as its customersegmentse.g.ITIndustry,Telecomindustry. OptionsAvailablein Technology:Afirmhastoassesstherelativemerits& costseffeC,tiveness ofalternatetechndlogies. It has to analyzetechnologicalchangestakingplaceintheindustry. Govt'sApproachin Respectof T ~ c h n o l o g y Regulationsbythegovt.inmattersrelatingtotechnologyrestrictthe freedomofoperationofbusiness.firm. . TechnologySelection:Firmshaveto scanthetechnologyenVironment&


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4 Third Semester Marketing Management-2009 (BBA)- market situation. They have to forecast technological trends, assess current& emergency techniques. ad

vi i ) Legal Environment - Business have to operate within the framework of yoprevailing legal environment. They have to understand all legal provisions. Legalenvironment depends on: -a) Corporate affairsb) Consumers protection

. c) Employee protectiond) Sectoral protectione) Corporate protectionif) Protection of societyg) Regulations on products, prices distribution'h) Control on trade practicesi) Protecting national finus against foreign firms

Q. b) \What is product positioning? Explain stages involved in productpositionirtg process. . (7). Sol. The process of creating an image ofa product in the ~ i n s o ~ theconsumers is called as positioning. Positioning helps to create first ImpreSSIOn ofbrands in the minds of target audience. In simpler words positioning helps in creatinga p e r ~ e p t i o n ?f a product or serVice amongst the consumers.

Example:The brand "Bisleri" stands for purity.The brand "Ceat Tyre" stands for better grip.Steps'to product PositioningMarketers with the o ~ t o n n process try to create a unique identity ora product suiamongst the customers.1. Know your target audience well: t s essential for the marketers to firstidentify the target audience and then understand their needs and preferences. Every , maindividual has varied interests, needs and preferences. No tw


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5.P. University-Akash BooksCommunicate the USPs to the target audience through effectiye ways ofadvertising.Usebanners, slogans,inserts and hoardings.Let individuals knowwhatyourbrand offersforthem todecidewhat is best forthem.4.Know your competitors

A marketer must beaware ofthe competitor'sofferings.Let the individualsknowhowyour product is better than the competitors? Never underestimate your competitors. Let the target audienceknowhowyour product is better than others. Themarketers must alwaysstrivehard to have an edgeovertheir competitors.

5.Ways to promote brands Choosethe right theme forthe advertisement. Usecatchytaglines. The advertisementmust not confusepeople. The marketer must highlight the benefitsof the products.

6.Maintain the position ofthe brand " For an effectivepositioningit is essential forthe marketers to continue toliveup tothe expectationsof the end - users Never compromiseon quality. Don'tdrastically reducethe priceof your products. A Mercedescar wouldnot be the same if its priceis reducedbelowacertain

level. A Rado watCh would loseits charm if its priceis equal to aSonata or a MaximaWatch.Q.3. a) What are the bases for market segmentation? What should be thesuitable basis for market segmentation in case ofTV? (8)Sol. Market can be segnlentedusing severalrelevant bases they are: i) Geographic -Segmentation: Geographicsegnlentation callsfordividingthe

market into different geographicalunits such as nations, regions,countries, citesor'neighborhood.One of the !llajorge0/p"aphicsegnlentation in India is the division ofrural &urban areas. The need to s ~ t the market geographicallybecomesclearerwhen welookat someof the charact\ristics of the market. In India, there are morethan 5000 towns & over6, 38,000villages:'Nearly 87% of these villages have apopulationofless than 2000people.Thisvariation in population is important fOf themarketer whileformulating.marketing strategy &plans.

i i) Demographic Segmentation: IIidemographicsegmentation, the market isdividedinto groupson the basis of variablessuch as age,familysize,familylife'cycle,gender,incomeoccupation,education religion,race generation, nationality & socialclass., ,

Age & Life Cycle Stage: Consumer wants & abilitieschange with age. E.g.:Hindustan Uni Level introduced Pears soap in pink color especially for 'children.Johnson &Johnson Baby Powder&TalcumPowderare classicexamples of productsforinfants ; children.Televisionchannels in India Indicate the'segmentation basedonage&lifecycle.There are channels likeAastha &Sanskaar target which towardsthe oldgeneration,cartoonnetwork,Disneyare channels forchildrenetc.

Gender: Men & women have different behavioral orientation. Genderdifferentiation has been longappliedto productcategoriessuch as clothing,cosmetics&magazines.Eg:Axedeodorant is positioned s masculine product.Park AvenuefromRaymond is positionec;las masculinebrand. Bajajwaveis a brand' specifically


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Third e m e s ~ r Marketing Management-2009 (BBA)Income: Income segmentation is a long standing practice in a variety of productsservices is a basic segmentation variable. E.g.: Nirma Washing Powder was

launched as the lowest priced detergent in India primarily targeted at middle incomegroup. Markets for many consumers products in India are showing-rapid growth dueto low unit price packaging.Social Class: Social class has a strong influence on preference in, cars, clothing,

home, furnishings, leisure activities, reading habits, retailers etc.i i i ) Psychographic Segmentation: In psychographic segmentation, elementslike personality traits, attitude lifestyle value system form the base. The strict

norms that consumers follow with respect to good habits or dress codes arerepresentative exarr.ples. E.g.: Mr. Donald's changed their menu in fndia to adapt toconsumer preference. Titan watches have a wide range of sub brands such as Raga,_fast track, edge etc. or instant noodle markers, fast to cook food brands such as Maggi,Top Ramen or Femina,

( iv) Behavioral Segmentation: Markets can be segmented on the basis of buyerbehavior as well. The primary idea in buyer behavior is tPat different customer groupsexpect different benefits from the same product accordingly they will be different intheir motives _n owning it. In buyer behavior based segmentation also, several subfactors form the basis. E.g.: Purchase occasion can be one base, buyer can be segmentedon the basis 01whether they are regular buyers or special occasion buyers. Degree ofuse can be another base, they can be segmented on the basis of whether they are light,medium or heavy users of the product or whether they are enthusiastic or indifferentor negative towards the product. _ Market Segmentation of TV _Geographic segmentation and demographic segmentation can be used as basesfor selling TV In geographic segmentation market is divided by location. Marketershave observed divergent consumer purchasing patterns among urban, sub-urban and- rural areas. While demographic segmentation is the process of segmenting the marketon demographic characteristics. Age, sex, marital status, income, occupation andeducation are most often used as the basis for demographic s e g m ~ n t a t i o n

(b) What is target market? Explain the Philip Kotler s five steps which areinvolved in target market selection. . (7)SoL A target market is a group of customers -that the business has decided to

aim its marketing efforts and ultimately its merchandise towardsPl A well-definedtarget market is the first element to a marketing strategy. The target market andthe marketing mix variables of product, place(distribution), promotion and price arethe four elements of a marketing mix strategy that determine the success of a productin the marketplace.

Philip Kotler's five steps which are involved in target market selection(i) Undifferentiated Matketing- Using an undifferentiated marketing (or massmarketing) strategy, a firm might decide to ignore market segment differencesand target the whole market with one offer. This mass marketi.p.g strategyfocuses on what is common in the needs ofconsumers rather than on what is

- -different. The company designs a product and a marketing program that willappeal to the largest number f b u y e r s ~ (ii) Differentiated Marketing- Using a differentiated marketing (or segmented

marketing) strategy, a firm decides to target several market segments anddesigns separate offers for each. General motors tries to produce a car forevery "purse, purpose, and personality.". While Hindustan Unilever marketseight variants of soaps

(i i i) Concentrated Marketing- Using a concentrated marketing (or nichemarketing) strategy, instead,of going after a small share of a large market,


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7.P University-AkashBooksthe firmgoesafter alarge share ofoneor afewsmaller segments or niches.Yetthe smaller,upscaleretailer is growingfaster and more profitablythanits giant rivals.Through concentrated marketing, the firm achievesastrongmarket positionbecause of its greater knowledgeof consumer needs in thenichesit serves and the specialreputation it acquires. For example,Nirmastarted as anicheI',sellingonlylow- priceddetergents torural and semi-urbanconsumers. Today,it isoneof the biggestdetergent brands in India.

(iv) Micro marketing- It is the practice of tailoring products and marketingprograms to suit the tastes of specificindividualsand locations.Rather thanseeing acustomer in everyindividual,micromarketers seethe individual ineverycustomer.

(v) LocalMarkettng- It involvestailoring brands and promotionstothe needsand wants oflocal customergroups- cities, e i g h b o u r h o ~ d s and even specificstores.For example, Walmart customizesits merchandise store by store tomeet the needs oflocal shoppers.

Q.4.(a) What do you mean by product development? What are the stagesinvolved inth process of developing anew product? (7)

Sol. The overallprocessof strategy,organization,conceptgeneration,productandmarketing plan creation and evaluation, and commercialization of a new product.In business and engineering,newproductdevelopment(NPD) is the completeprocessofbringing anew product tomarket. Aproductisaset of benefitsofferedforexchangeand can betangible (that is, something physicalyou'can,touch) or intangible (likeaservice,experience,or belief).There are twoparallelpaths involvedin the NPDprocess:oneinvolves the idea generation, product designand detail engineering; the otherinvolvesmarket e ~ e r h and marketing analysis.Companiestypicallyseenewproductdevelopmentas the firststage in generating and commercializingnew product withinthe overallstrategic processof productlifecyclemanagement used tomaintain or growtheir market share.

The sevenstages orprocessor steps involvedin the developmentof anew productare listed as follows:

1. Idea generation.2. Idea screening.3. Concept testing.4. Business an;ilysis.5. Product development.6. Test marketing7. Commercialization

Nowlet'sdiscusseach stage in the processofanew-productdevelopment.'1. Idea generation: The firststep in new-productdevelopmentisidea generation.Newideas can be generated by:

Conducting marketing research tofindout the consumers' needs and wants. inviting suggestions fromconsumers. Inviting suggestions fromemployees. Brainstorming suggestions fornew-productideas. Searching in differentmarkets viz.-, national and international-markets for

new-product ideas. Getting feedbackfromagents or dealersaboutservicesofferedby competitors.


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8 Third Semester Marketing Management-2009 (BBA)2. Idea screening: Most companies have a Idea Committee." This committeeI studies all the ideas very carefully. They select the good ideas and reject the bad ideas.Before selecting or rejecting an idea, the following questions are considered or asked:

I 1. Is it necessary to introduce a new product?2. Can the existing plant and machinery produce h ~ new product?3. Can the existing marketing network sell the new product?4. When can the new product break even?

If the answers to these questions are positive, then the idea of l new-productdevelopment is selected else it is rejected. This step is necessary to avoid productfailure.3. Concept testing: Concept testing is done after idea screening. t is differentfrom test marketing. Inthis stage of concept testing, the company finds out: .1. Whether the consumers understand the product idea or not?2. Whether the consumers I}eed the new product or not?3. Whether the consumers will accept the product or not?Here, a small group of consumers iSSEflected. They are given full information about.the new product. Then they are asked what they feel about the new product. They are

asked whether they like the new product or not. So, concept testing is done to find outthe consumers' reactions towards the new product. If most of the consumers like theproduct, then business analysis is done. .

li. Business analysis: Business analysis is a very important step in new-productdevelopment. Here, a detailed -business analysis is done. The company finds outwhether the new product is commercially profitable or not. So, the company studiesthe new product from the business point of view. If the new product is profitable, itwill be accepted.else it will be rejected. .

5. Product development: At this stage, the company has decided to introducethe new product in the market. t will take all necessary steps to produce anddistribute the new product. The production department will make plans to producethe product. The marketing department will make plims to distribute the product.The finance departPlent l l provide the finance for introducing the new product. Theadvertising department will plan the advertisements for the new product. However,all this is done as a small scale for Test Marketing.6. Test marketing: Test marketing means to introduce the new product on a verysmall scale in a very small market. f the new product is successful in this market,then it is introduced on a large scale. However, if the product fails in the test market,then the company finds out the reasons for its failure. It ~ e s necessary changes inthe new product and introduces it again in a small market. f the new product failsagain the company will reject it:. Test marketing reduces the risk of large-scalemarketing. t is a safety device. t is very time-consuming. t must be done especiallyfor costly products.7. COJQmercialization: f the test marketing is successful, then the companyintroduces the new product on a large scale, say all over the country. The companymakes a large investment in the new product. t produces and i s t r i ~ t e s the newproduct on a huge scale. t advertises the new: product on the mass media like TVRadio, Newspapers and Magazines, etc. .

b) Explain the concept of product life cycle. Suggest appropriatemarke ting strategies for each stage of the product life cycle. (8)Sol. Product i f e ~ l e management (or PLCM) is the succession of strategies usedby business management as a product goes through i ts life.cycle. The condition in whicha product is sold (advertising, saturation) changes over time and must be managedas it moves through its su,ccession of stages. he concept of. product life cycle (PLC)concerns the life of a product in the market with respect to business/commercial costs


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9.P. University-AkashBooksand salesmeasures.The productlifecycleproceeds through multiplephases,involvesmany professional disciplines, and requires many skills,tools and processes. PLCmanagement makes the followingthree,assumptions: '

Productshave alimitedlifeand thus everyproducthas lifecycle. Productsalespassthrough distinctstages,eachposingdifferentchallenges,opportunities,and problemstothe seller. Productsrequiredifferentmarketing,financing,manufacturing,purchasing,and human resourcestrategies in eachlifecyclestage.

Strategies used at different stages of PLCIntroduction stage of PLC: The need for immediate profitis not a pressure:Theproductispromotedto createawareness. f the producthas nooi fewcompetitors,a skimming pricestrategy isemployed.Limitednumbers of product are available infewchannelsofdistribution.Advertisingdifferentiatesthe product.Growth stage of PLC: Competitors are attracted into the market with verysimilarofferings.Productsbecomemoreprofitableand companiesformalliances,jointventuresand take eachother over.Advertisingspendishighand focusesuponbuildingbrand.Market share tends tost&bilize.Advertisingestablishesparticipation with themarketplace.Maturity stage of PLC: Thoseproductsthat survivethe earlier stages tend tospend longest in this phase. Sales grow at a decreasing rate and then stabilize.Producersattempt to differentiateproductsand brands are key to this. Price warsand intense competition occur. At this point the market reaches saturation.Producersbeginto-leavethe market due to poormargins. Promotionbecomesmore

widespreadand uses a greater variety f media.Advertisingputs priceahead ofthecompetition.Decline st&ge of PLC: At this point there isa downturn in the market. Forexamplemoreinnovativeproductsare introducedor consumer tastes have changed.There is intense price cutting and many more products are withdrawn from themarket. Profitscan be improvedbyreducingmarketing spend and costcuttingQ.5.a) Det1ne the term price. Describe the various internal and externalforces that influence the pricing t r a t e g y of a firm. __ 8)Sol. Theterm priceisthe quantity ofpaymentorcompensationgivenbyonepartytoanother in return forgoodsorservices.Avaluethat willpurchaseadefinitequantity,

w e ~ g h t orother measure ofagood


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10 Third Semester Marketmg Management-2009 (BBA)Internal Factors

(1) Marketing Objectives: Before ~ e t t i n g price, the company must decide onits strategy for the product. f the company has selected its target marketand positioning carefully, then its marketing mix strategy, including price,will be fairly straightforward. For example, if General Motors decides toproduce a new sports car to compete with European sports cars in the highincome segment, this suggests charging a high price. At the same time, thecompany may seek 'additional objectives. The clearer a firm is about itsobjectives, the easier it is to set price. Examples of common objectivesare survival currentprofit maximization market share leadership and productquality leadership.

(2) Marketing Mix Strategy: Price is only one ofthe marketing mix tools thata company uses to achieve its marketing objectives. Price decisions must becoordinated with product design, distribution, and promotion decisions toform a consIstent and effective marketing program. Decisions made for othermarketing mix variables may affect pricing decisions.

(3) Costs: Costs set the floor for the price that the company can charge for itsproduct. The company wants to charge a price that both covers all its costsfor producing, distributing, and selling the product and dellvers a fair rate ofreturn for its effort and risk Acompany's costs may be an important elementin its pricing strategy. .(4) Organizational Considerations: Managementmust decide who within theorganization should set prices. Companies handle pricing in a variety ofways.

In small companies, prices are often set by top management ratherthan bythe marketing or s'ales departments. In large companies, pricing is typicallyhandled by divisional or product line managers.

External Factors(1) The Market and Demand: Whereas costs set the lower limit of prices, themarket and demand set the upper limit. Both consumer and industrial buyersbahince the price of a product or service againstgthe benefits of owning it.

Thus, before setting prices, the marketer must understand the relationship . between price and demand for itfi product. .(2) Competitors'Costs, Prices, and Offers: Another external factor affecting

the company's pricing decisions is competitors' costs and prices and possiblecompetitor reactions to the company's own pricing moves. A consumer who isconsidering the purchase ofa Canon camera will evaluate Canon's price andvalue against the prices and values of comparable products made by Nikon,Minolta, Pentax, and others. .(3) Economic conditions: Economic Conditions can have a strong impact onthe firm's pricing strategies. Economic factors such as boom or recession,inflation, and interest rates affect pricing deCisions because they affect both

the costs of producing a product and consumer perceptions of the product'sprice and value. .(4) The government: t is another important external influence on pricingdecisions; .(5) Social concerns: In setting prices, a company's short-term sales, marketshare, and profit goals may have to be tempered by broader societalconsiaerations. . i

b) What is consumer adoption? Explain the steps which are involved inconsumer adoption process. (7)Sol. Refer End Term Q.3(a) 2011


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J.P. University-Akash Books 11Q. 6. a) Explain the factors that should be considered in the selection ofdistribution channels. (7)Sol. Factors in choice of Distribution Channels'A Product,Consideration: The type and the nature of products manufacturedis one of the important eiements in choosing the distribution channel. The majorproduct related factors are:

Products of low unit value and of common use are generally sold throughmiddlemen. Whereas, expensive consumer goods and industrial products aresold directly by the producer himself. ' I erishable products; products subjected to frequent changes in fashion orstyle as well as heavy and bulky products follow relat ively shorter routesand are generally distributed directly to minimize costs.

, . Industrial products requiring demonstration, installation and after saleservice are often sold directly to the consumers. While the consumer productsoftechnical nature are generally sold through retailers. An entrepreneur producing a wide range of products may find it economicalto set up his own retail outlets and sell directly to the consumers. On theother hand, firms producing a narrow range of products may their products

d i ~ t r i u t e through wholesalers and retailers. ' A new product needs greater promotional efforts in the initial stages andhence few middlemen may be required.

(B) Market Consideration:- Another important factor influencing the choice ofdistribution channel is the nature of the target market. SOme of the important featuresin this respect are:

If the market for the product is meant for industrial users, the channel ofdistribution will not need any middlemen because they buy the product inlarge quantities. short one and may as they buy in a large quantity. While inthe case of the goods meant for domestic consumers, middlemen may have tobe involved.

If the number ofprospective customers is small or the market for the productis geographically located in a limited areii, direct selling is more suitable.While in case of a large number of potential customers, use of middlemenbecomes necessary.

If.the customers place order for the product in big lots, direct selling ispreferred. But,ifthe product is sold in small quantities, middlemen are usedto distribute such products.(C) Other Considerations:- There are several other factors that an entrepreneurmust take into account while choosing a distribution channel. Some of these are asfollows:

A new business firm may need to involve one or more middlemen in order topromote its product, while a well established firm with ii good market standingmay sell its product directly to the consumers. A small firm which cannot invest in setting up iJs own distribution networkhas to depend on middlemen for selling its product. On the other hand, a largefirm can establish its own retail outlets. If the demand for the product is high, more ~ m e r ofchannels may be uselitf) profitably !listribute the product to maximum number ofcustomers. But,if the e ~ n is low only a few channels would be sufficient.

All these factors or considerations affecting the choice of a distribution channelare inter-related and interdependent.


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13P. University-Akash BooksDisadvantages

(i) Therailwayrequiresalargeinvestmentof capital.The costof construction,maintenance and overheadexpensesare veryhigh as comparedtoothermodesof transport.(ii) Another disadvantage of railwaytransport is its inflexibility. t routesand,

timingscannot beadjusted toindividualrequirements.... (iii) Railtransport cannotprovidedoortodoorserviceas it istiedtoaparticulartrack. ' .

(iv) As r i l w ~ y s require hugecapital outlay,they may give rise tomonopoliesand workagainst publicinterest at large.(v) Railwaytransport isunsuitable and uneconomicalforshort distancesand

s ~ l l trafficof goods. .(vi) It involvesmuch time and laborin bookingand taking deliveryofgoodsthrough railwaysascompat:edtomotortransport.

(vii) Because of huge capital requirements and traffic, railways cannot beoperatedeconomicallyin rural areas.Thus,largerural areas havenorailwayeventoday. This causesmuch iriconveniencetothe peoplelivingin ruralareas. ' .dvantages and disadvantages of Road transportRoadsare the means that connectoneplacetoanother on the' surfaceoftheland.You must have seen roads in yourvillage, in townsand cities.Not all of them lookalike.Someofthem are made of sand and somemay be of chipsand cementor coaltar.You finddifferentvehiclesplyingonroadslikebullockcarts,cycles,motorcycles,cars,truck,buses,etc.Allof these constitutedifferentmeans of roadtransport. The meansof roadtransport may be dividedintothree types:

(i) Man driven;(ii) i}nimaldriven;and

(iii) Motordriven.Advantages:

(i) It isarelativelycheaper modeof transport as comparedto other modes.(ii) Perishable goodscanbetransported at afaster speedby road carriers overa

short distance. ' .(iii) It isaflexiblemodeof transport as loadingand unloadingispossibleat anydestination. t providesdoor-to-doorservice. .(iv) t helps peopleto travel and carry goodsfromoneplaceto another,in placeswhichare not connectedby other means of transport like hilly areas.

Disadvantages of Road transport .. (i) u ~ to limited carrying capacityroad transport is not economicalforlongdistancetransportation of goods.

(ii) Transp'ortationofheavygoodsor goodsin bulk by roadinvolveshighcost.(iii) It isaffectedby adverseweather conditions.Floods,rain, landslide,etc.,sometimescreate obstru


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14 Third Semester Marketing Management-2009 (BBA)A good example of personal selling is found in department stores on the perfumeand cosmetic counters. .A customer can get advice on how to apply the product and can try differentproducts. Products with relatively high prices, or with complex features, are oftensold using personal selling. Great examples include cars, office equipment (e.g.photocopiers) and many products that are sold by businesses to other industrialcustomers.

Steps in personal Selling process1. Pre-sale preparation: The first step in personal selling is the selection,

training and motivation of salespersons. The salespersons must be fully familiar withthe product, the firm, the market and the selling techniques. They should be wellinformed about the competitor's products and the degree of competition. They shouldalso be acquainted' with the motives and behavior of prospective buyers . .2. Prospecting: t refers to locating or searching out prospective buyers who have

the need for the product and the ability to buy it. Potential customers may be spottedthrough observation, enquiry and analysis of records of existing customers. Socialcontacts, business associations arid dealers can be helpful in the identification ofpotential buyers'.

3. Approaching: Before calling on the prospects, the salesperson should fully learntheir number, needs, habits, spending capaCity, motives, etc. Such knowledge helps inselecting the right sales appeal. Mter such learning, the salesperson should approachthe customer in a polite and dignified way. He should introduce himself and his product.to the customer. He should greet the customer with a smile and make him feel athome. He should introduce himself and his product to the customer. The salespersonhas to be very careful in his approach as the first impression is the last impression.4. Presentation: For this' purpose, the salesperson has to present the productand describe its features' in brief. The presentation should be matched with theattitude ofthe prospect so that the salesman cancontinuollsly hold his attention andcreate interest in the product. .

5. Demonstration: In .order to maintain customer's interest arid to arouse hisdesire, the salescperson must display and demonstrate the product. He has to explainthe utility and distinctive qualities of the product so that the prospect realizes theneed for the product to satisfy his wants. He should not be in a hurry to impress the.customer and should avoid controversy.6. Handling objections: Presentation and demonstration of the product are likelyto create doubts and questions in his mind. The salesman'should clear all doubtsand objections without entering into a controversy and without losing his temper.Testimonials, money-back guarantee, tact and patience are popular means of winningover s hesitant buyers. The salesman should convince the customer that he is makingthe best use of his money by purchasing the product. For this purpose, the salesmanshould prove the superiority of his product over the competitive products.7. Closing the sale: This is the climax or critical point in the personal sellingprocess. Completing the sale seems to be an easy task but inappropriate. handling of

the customercan result in loss of sale. The salesman should not force the deal but letthe customer feel that he has made the final decision. He should guide the customer'in making the choice 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 aver to the customer with speedand accuracy. Once the customer has purchased the article, the salesman should showand suggest an allied product. For instance, he may suggest socks, ties, handkerchiefs,vests, etc., to a customer purchasing a s ~ r t This is known as additional sales andrequires r ~ t skill and tact..

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15J.P. University-Akash Books, 8. Post-sale follow-up: t refers t the activities undertaken to ensure that the1customer 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. t helps to secure repeat sales identify additional 'Jrospects. and toevaluate 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 needsto perform to get the product to the customer. This may involve setting up distributionchannels and persuading middle men and retailers to stock your product. The pushtechnique can work-particularly well for lower value items such as fast movingconsumer goods (FMCGs), when customers are standing at the shelf ready to drop anitem into their baskets and are ready to make their decision on the spot. This termnow broadly encompasses most direct promotional techniques such as encouragirigretailers to stock your product, designing point of sale materials or even selling faceto 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, thiscan 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 ahighly visible brand which can be developed through mass media advertising or similartactics. 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 thesupply channels will almost look after themselves. Some industrial goods companiesuse only push strategies; some direct-marketing companies use only pull. However,most large companies use some combination of both. For example, Amul uses massmedia advertising and consumer promotions to pull its products and a large salesforce 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 . Advertisingis the main form o f ~ o v e the line promotion .Advertising presents or promotes the product to the target audience through avariety of media such as TV, radio, cinema, online and magazines to encourage themto buy.Advertising is a fOrIn of communication for marketing and used to encourage orpersuade an audience (viewers, readers or listeners; sometimes a specific group) tocontinue or take some new action.The main advantages and disadvantages of advertising as method of promotionare:

Advantages DisadvantagesWide coverage

,Control of message being promotedRepetition means that the messagecan be communicated effectivelyCan be used to build brand loyalty

Often expensiveImpersonalOne way communication Lacks flexibilityLimited ability to close a sale


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16 Third Sem'ester Marketing Management-2009 (BBA)Various advertising media

,1. Television advertising: The TV commercial is generally considered the mosteffective mass-market advertising format, as is reflected by the high prices TVnetworks charge for commercial airt ime during popular TV events. The annual SuperBowl football game iI). the United States is known as the most prominent advertisingevent on television. The average cost of a single thirty-second TV spot during thisgame has reached US$3.5 million (as of 2012). Some television commercials featurea song or jingle that listeners soon relate to theproduct

2. Radio advertising: It is a form of advertising via the medium of radio. Radio "advertisements are broadcast as radio waves to the air from a transmitter to anantenna and a thus to a receiving device. Airtime is purchased from a station or 'network in exchange for airing the commercials. While radio has the limitation ofbeing restricted to souml, proponents of radio advertising often cite this as an 'advantage. Radio is an expanding medium that can be found not only on aii , but alsoonline. '

3. Online advertising: Online advertising is a form of promotion that 'uses theInternet and World Wide Web for the expressed purpose of delivering marketing ;messages to attract customers. Online ads are delivered by an ad server. Examples of,online advertising include contextual ads that appear on search engine results pages, ,:banner ads, in text ads, Rich Media Ads, Social network advertising, online classified;advertising, advertising networks and e-mail marketing, including e-mail spam.4. Press advertising: Press advertising describes advertising in a printed mediumsuch as a newspaper, magazine, or trade journal. This encompasses everything from '

media with a very broad readership base, such as a major national newspaper or ,magazine, to more narrowly targeted media such 'as local newspapers and trade;journals on very specialized topics. A form of r e s s a d v e r t i s i ~ g is classified advertising,;)which allows private individuals or companies to purchase a small, narrowly targeted'!ad for a low fee advertising a product or service. Another form of press advertising is jthe Display Ad, which is a larger ad (can include art) that typically run in an article :;section of a newspaper. ,\

\ . 5. Billboard advertising: Billboards are large structures located in public places.which display advertisements to passing pedestrians and motorists. Most often, they ,are located on main roads with a large amount of passing motor, and pedestrian traffic.6. In-store advertising: In-store advertising is any advertisement placed in aretail store. It'includes placement of a product in visible locations in a store, such as

at eye level, at the ends of aisles and near checkout counters (aka POP-Point OfPurchase display), eye-catching displays promoting a specific product, andadvertisements in such places as shopping carts and n ~ s t o r e video displays. "

7. Street advertising:'This type of advertising first came to prominence in the ,"UK by Street Advertising Services to create outdoor advertising on street' furniture ','and pavements. Working with products such as Reverse Graffiti, air dancer's and D . ~ pavement advertising" the media became an, affordable and effective tool for gettingbrand messages out into public spaces. :

8. Celebrity branding: This type ofadvertising focuses upon using celebrity power,;fame, money, popularity to gain recognition for their products and promote specific \stores or products. Advertisers often advertise their products, for example, when)celebrities share their favorite products or wear clothes by specific brands or designers.Celebrities are often involved in advertising campaigns such as television or printadverts to advertise specific or general products. Celebrities such as Britney Spearshave advertised for multiple products including Pepsi, Candies from Kohl's, Twister,NASCAR, Toyota and many more.


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THIR SEMESTERMARKETING ~ N G M N T (BBA-205)END-TERM EXAMINATION (2010)

Time: 3 Hours. M. M : 75Q.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 needsof the u ~ t o m e r s 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 productand create leads or prospects.

On the other hand, sales a ~ t i v i t i e s are focused on converting prospects toactual paying customers, Sales involve directly interacting with the prospectsto 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 outto the right target audience, consistently and over, time, WILL eventuallycreate the top of mind" awareness for your product or service that turns aprospect into a customer. Recognition and awareness for your company alsomake it mUCh, easier for your sales' staff to get someone on the phone orschedule an appointment. Companies like to do business with companies theyknow and have positive perceptions of. Likewise, investors like to buy

recognized companies. 'B) Preferred brands command a premium price - short and longterm:' Go through a process of determining your companis unique value

proposition, and then start purposefully communicating that to them a r k e t p l a c e p r o m o t i o ~ . This is the only way you will create a point ofdifferentiation between you and your competitors. As your customers .and theindustries you sell to begin to recognize your company (brand) as the preferredchoice for a certain product or service, it allows you to charge premium pricing.

(C) Happy customers not only send referrals, they create perceived


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18 Third Semester Marketing Managemen,t-2010 (BBA)industrial world. A good percentage of Manufacturers new business comesthrough referrals from satisfied customers. It also takes a marketing strategy 1.that positions your company (in the minds of your target audience) as the rmarket leader in o v e r ~ l i customer satisfaction and i ~ t i m c y Its par t of theimage you build around your brand - it's the magic result of well executedrbrand development and marketing communications. .1'

(D) Repeat revenue streams ensure a profit now and later: ThIs:lreally falls more into the other marketing functions than that of Icommunications, but a smart marketing strategy not only focuses on a :company's core market and value proposition, it also finds ways to build1multiple channels for recurring revenue. Smart marketers (and business iowners) 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: market ing has to be a long-term'investme.nt: Consistent and persistent messaging, going to an integrated mixof contact points with your customers and prospects, is an investment in yourcompany's o n ~ t r m 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 n t to create a powerful image and value proposition for your business, the first group of people you have t0 5convince are your own employees. An employee that feels aJ>preciated andfairly compensated (and that doesn't' always equate to their salary) is muchmore 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 MarketingPhilip 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.. ,. t 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 assumptIon is that customer favors' "


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LP. University-Akash Books . 19quality, performance, innovative features, etc. It means if products are of good

.quality and reasonably priced then consumer does not have much say, onlythe product matters.

(C) Selling Concept: The selling concept holds that customers, if left'alone, will not buy enough (jfthe products of an organization. The organization, must undertake an aggressive selling and promotion effort. Under selling, a

company uses various selling methods to persuade custoqlers to buy itsproducts. The selling concept is also practiced in the NGO's, college admissions,offices, political parties.

(D) The Marketing Concept: Consumer oriented marketing has given"rise to a new philosophy in business, known as 'marketing concept'. Themarketing concept emphasizes the determination of the requirements ,ofpotential customers and supplying products to satisfy their requirements.Determination of wants of the customers takes precedence over production.

(E) The Societal Marketing Concept: It is aimed at generatingcustomer's satisfaction and long term consumer and public welfare as a key

,to satisfying organizational geals and responsibilities. For ex, consumers prefeJ;.soft drinks in tetra packs (e.g. frooti) or plastic bottles (e.g. Coke, Pepsi). Butempty tetra packs plastic bottles create environmental hazards. This is why,experts have suggested humanistic or societal marketing concept which holdst h ~ t the firm's task is to determine the needs, wants interests of targetmarkets to deliver desired satisfactions in such a way that preserves orenhances the consumer's the society's well being.

Q.2. a) ,What are the bases of market segmentation in case offollowing? (7.5)

i) Watches, .i i ) Toothpaste .i i i ) Washing Machineiv) Shoes

Sol. i) WatchesFour Major Market Segments:-Mass Market Watches (Less than Rs 2500)Sub-segments Fun Fashion Watches Sports Watches Character and Sports Logo Watches-Middle Market Watches (Rs 2500- Rs 15000)' -Upper Midd.le r ~ e t Watches (Rs 15000-Rs 50000)-LuXury and High Luxury MarketeRs 50000-Rs 250000 or More)


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20 Third Semester Marketing Management-2010 (BBA)i i ) Toothpaste: A mix of demographic, benefit, behavioral and;

psychographic segmentation is generally used to segment markets forl itoothpaste. For ex, '

Principal Benefit Flavor, product appearance Brightness of teethBehavioral characteristics Users of spearmint flavor SmokersDemographics Children Teens, young adultsPsychographies High-selfinvolvement High sociability

(iii) Washing Machine: The washing machine market can be segmentedin the following ways: '

Density: Urban and Suburban Economy: Middle and upper income group Benefits: Automatic, Semi-automatic, etc.

iv) Shoes: In the sport shoe industry, a firm can either offer ageneral(purpose cross-trainer shoe or a running shoe and a basketball shoe. A crossl .trainer shoe has wide appeal for all consumers but satisfies no consumer's needs _in p.articular, while the specific shoes each satisfy the needs of a particularsegment ofconsumers but-have little appeal fQr the other segment. On the otherhand, the firm can offer both a running shoe and a basketball shoe.

b) What .are the various ways of posit ioning? In what waypositioning differ in case of FMCG and SMCG? Give x ~ p l s toillustrate your answer. " (7.5)!

Sol. The various ways that can be used for positioning'the product a re : , ; Posi t ioning by at tr ibutes , features or customer benefits / ,

Marketers, while using this approach, place emphasis on the e n e f i t ~ ,of the particular features or attributes ofthe offering. r :- 'S Positioning by price value: Value for money can be utilized fo, positioning the offering effectively. . Positioning by use of application: Service offering is positione.on the basis ofthe reason for its use. For ex; Hotel Inter-Continental ,New Delhi positions itself to the meeting market with "the meetin :place" & promises one-stop meeting solutions, consistent standards,'iattention to detail and personalized service.

Positioning according to users or class ofusers: This relates tconsumer segments using a service offering. Airlines target th'executive class, the frequent fliers and the tourists.

Position with respectj;o product class: The positioning could h ,:based on functional benefits as well as symbolic & emotional benefit ;

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I.P. University-Akash Books 21For ex; Thailand 'Iburism positions as holding a convention in Thailandis " smooth as sill\. where sky is the limit"

Positioning against competition: This positioning approach is usedto meet the competition "HEAD-ON" to bring out differences betweendestinations. This form of positioning had been responsible for manyadvertising wars in the market place.

Marketing Management BBA 205

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