MARKETING MANAGEMENT

ADL-02
ASSIGNMENT – A

Q1. Define Marketing. Distinguish between Selling and Marketing. What are the four Components of
Marketing Mix? Briefly explain.

Ans1. Marketing must be understood not in the sold sense of making a sale – “selling” – but in the new
sense of satisfying customer needs.

We define Marketing as a social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging products and value with others. To
explain this definition, we examine the following important terms: needs, wants, and demands;
products; value and satisfaction; exchange; transactions, and relationships; and markets.

Difference – Selling and Marketing

SELLING MARKETING
Selling starts with the seller, and is Marketing starts with the buyer and focuses
preoccupied all the time with the needs of constantly on the needs of the buyer.
the seller.
Seller is the center of the business world. Buyer is the center of the business world.
Emphasis is on the saleable surplus Emphasis is on the identification of the
available with the concern. market opportunity.
Seeks to quickly convert product into cash. Seeks to convert customer’s needs into
product.
Concerns itself with the trick and Emphasizes on fulfilling the needs of the
techniques of getting the customer to part customer.
with their cash for the product available
with the salesman.
View business as a good producing View business as a customer satisfaction
process. process.
Overemphasizes the exchange aspect Concerns itself primarily and truly with the
without caring for the values satisfaction value satisfaction that should flow to the
inherent in the exchange. customer from the exchange.
Sellers’ preference dominates the Buyer determines the shape Marketing Mix
formulation of the Marketing Mix. should take.
Emphasis is on ‘somehow selling’; there is Emphasis is on the integrated marketing; an
no coordination between the different integrated strategy covering the product,
functions of the total marketing task. promotion, pricing, and distribution.
The firm makes the product first and then The firm makes total product offering that
figures out how to sell it and make profit. will match and satisfy the identified needs
of the customer.
MARKETING MIX

The four elements – product, distribution, promotion, and pricing – constitute the marketing mix of the
firm. The marketing mix is the sole vehicle for creating and delivering customer value.
It can be easily seen that all activities and programs, which a marketer designs and carries out
in his effort at winning customers, relate to one or the other of the above four elements – product,
distribution, promotion and pricing. It can also be seen that in each of these elements, there are several
sub-elements. For example, packaging is one of the sub-elements of product and warehousing is one of
the sub-elements of distribution.

The Four Ps of Marketing

It was James Culliton, a noted marketing expert, who coined the expression marketing mix and
described the marketing manager as a mixer of ingredients. To quote him, ‘The marketing man is a
decider and an artist – a mixer of ingredients, who, sometimes follows a recipe developed by others
and sometimes prepares his own recipe. And, sometimes he adapts his recipe to the ingredients that are
readily available and sometimes invents some new ingredients, or, experiment with ingredients as no
one else has tried before.’

Marketing Mix/Four Ps of Marketing

 Product:
Product design, features, brand name, models, style, appearance.
Product quality.
Warranty.
Package: Design type, material, size, appearance and labeling.
Service: Pre-sale and after-sale, service standards, service charges.

 Place:
Channels of distribution: Channel design, types of intermediaries, location of outlets, channel
remuneration, dealer-principal relations, etc.
Physical distribution: Transportation, warehousing, inventory levels, order processing, etc.

 Price:
Pricing policies, margins, discounts and rebates.
Terms of delivery, payment terms, credit terms and installment purchase facilities.
Resale price maintenance.

 Promotion:
Personal selling: Selling expertise, size of sales force and quality of sales force.
Advertising: Media mix, vehicles, programmes.
Sales promotion.
Publicity and public relations.
Q2. How would you price a new product (say a Mixi)? What options would you employ to generate
quick revenue?

Ans2. As there are no precedents for new products, there are no trends to indicate how the market will
react to different levels of pricing. Even in the matter of demand, often only some sketchy information
is available in respect of new products.
There are two broad methods of pricing – demand-based and competition-based pricing.
Neither of them suits a new product. Demand-based pricing is out of question for such products, as
adequate data is not available in respect of these products. Competition-based pricing is also out of
question, because the product is pioneer and competition will only be a later phenomenon, when ‘me-
too’ products enter the scene. The next alternative to be considered is cost plus pricing. Here too, there
is difficulty in respect of new products. In several cases, the actual costs of new products are difficult
to measure. Allocation of overheads to the new product, for example, is done usually on the basis of
untested assumptions. Similarly, R&D expenses would have been shared by several new product ideas
and apportioning it to a particular product may become difficult. Even if the cost of the new product
can be accurately measured, cost plus pricing or breakeven pricing cannot be straightaway adopted
because no information is available regarding the marketability/possible sales volume of the product.
In fact, such imponderables have prompted marketing experts to comment that new product pricing has
to be done in a vacuum.

Obviously, new product pricing cannot be a matter of formula. The subject needs a special approach.
Basically, the pricing here should evolve out of:
1. The firm’s requirements in going for the new product
2. The extent of newness of the product (i.e. the nature of the product)

Firm’s Requirements in Pursuing the New Product

The firm’s requirement in going for new products can be one of the following:
 To be a real innovator and to earn the rewards associated with innovation
 To exploit a market need that is coming to the fore
 To expand the product mix to ensure steady growth over the long term

There are companies the have a thirst for innovation. Usually, they are also very ambitious in the
matter of rewards. They are prepared to shoulder the risks associated with product innovations, as they
know that without undertaking such risks, they cannot gain big rewards. New product development is
second nature of such companies and they are constantly at this game.
The second category of companies goes in for a new product, when they spotted a felt need for
it in the market.
In the third category, the compulsion for going in for a new product comes out of the
company’s desire to keep expanding its product mix. The company does not want to limit itself with
existing product/product lines. Such a company will nurture a new product idea that fits in with the
basic requirement of product mix expansion. Such companies are generally more conservative in their
approach to new product development relative to the other two categories. Their policy is one of
‘limited risk’. They will take up only those product ideas that, in their estimate, are sure to fetch
commercial success.

Extent of Newness of the Product

The extent of newness and the nature of the new product is the second major feature that will influence
the pricing strategy. We can think of several types of new products. Given below is a sample list of the
possibilities:
 A totally new item (new to the world)
 A new item to a particular society
 A new item to the particular firm
 A new item to the particular firm, in the particular market segment
 A low value item for the customer
 A high value item for the customer
 A low priority item for the customer
 A high priority item for the customer
 A luxury product
 A convenience product
 A product that can meet a currently felt need
 A product that will serve a created desire

The nature of the product combined with the firm’s requirement in going for the product should guide
the pricing strategy. For example, when a company in the category of innovators and leaders brings out
a new luxury product, intended for the affluent consumer, serving a created desire, it can fix the price
quite high. The company knows that its product is not very price sensitive. On the other extreme, if a
company with the compulsion of expanding its product mix goes in for a new product, say a
convenience product meant for the medium class consumer, it will do well to keep the price low, with
the goal of attracting trial purchase and gradually building up the market for the product. It may take
care to see that the costs are covered, but it is not eager to take home a big profit from the new product
through a high price. It may opt to earn the required profit through bigger volumes at lower prices.
This leads us to the two broad strategy alternatives available in new product pricing. They are:
 Skimming pricing
 Penetration pricing

Skimming pricing

In skimming pricing, the new product is priced high and the cream of the market is skimmed by
concentrating on those segments that are not price sensitive. Such high prices will fetch the firm
substantial initial incomes, which it can plough for the further market development and promotion.
Through this method, the firm also recovers a substantial portion of its development cost. Later on, the
firm may bring down the prices, when it enters mass markets, which are more price sensitive.
Skimming pricing, however, cannot be employed if the product cannot command the patronage of an
affluent, non-price sensitive, market segment.
The skimming strategy can prove ideal for really new and distinctive products on account of
the following factors:
The quantity of the product that can be sold is less affected by price in the early stages,
especially when the product has some novelty.
In skimming, the product is tapping only segments, which in case, do not bother much about
price. And, such tapping will not be possible at a later stage in the life cycle.
By skimming, the product is fetching big funds, which could be used for market development.
The skimming pricing can be a way to feel and figure out the demand for the product. And, by
starting at a high price, it is always possible to come down later, when the situation warrants.

Penetration Pricing
 The skimming strategy cannot suit all new product contexts. When the new product is likely to
be highly price sensitive and when there is no elite market for it, penetration pricing will be the option.
As the very name implies, the intention in this strategy is to penetrate a broad market through low
prices. The income is generated by sales spread over large markets; the large volume facilitates
substantial economies in unit cost of production and marketing; and the cycle can continue. The
strategy helps to establish the product in the market.
In brief, penetration pricing becomes the choice for the new product, when the product-market
characteristics are:

The quantity of product that can be sold is highly sensitive to price, even in the early stages of
introduction.
There is no elite market for the product; there is no such segment, which is willing to pay any
price to possess the product.
The product is likely to encounter heavy competition immediately after introduction.
Large volume of sales is required even in the initial stages to ensure economy in production and
distribution.

Between these two divergent price options, there will obviously be several intermediate
positions depending on the firm’s compulsions and the new product’s characteristics discussed earlier.

Cost Data in Respect of New Products

An understanding of new product costing is essential at this juncture. Whether the new product
pricing is done on cost plus basis or not, it is essential for the firm to have relevant data about the costs
of the new product. Quite often, companies mess up the cost working in respect of new products
because such costs are often difficult to estimate. Costing of a new product is a particularly tricky
affair for an ongoing multi-product company. The company has to use judgment more than techniques
in allocating the overheads.

Q3. Define Consumer Behavior and describe its relation in purchase decision-making.

Ans3. Consumer behavior: To understand the buyer behavior and to create a consumer out of him,
through this understanding, is the purpose of buyer behavior study. Marketing scholars and
practitioners have spent enormous time and effort on this subject though the subject has been analyzed
from different angles and under different premises it still remains a complex one.
All major sciences like economics, psychology, sociology, anthropology etc have influenced buyer
behavior studies.

Influence on the buyer behavior:

• Economic environment: - Economics describe man as a rational buyer and view the market as a
collection of homogeneous buyers. Under the given set of conditions, all buyers behave in the
similar fashions and every buying decision is a logical process with the ultimate intention of
obtaining the optimum value for the memory spent. Price is regarded as a strongest motivation for
the economic man. The economic man’s behavior in short is a rational one.

• Demographic Environment- The following demographic head put its impact on marketing strategy
and consumer behavior –

a. Size & growth rate of population

 b. Age distribution
c. Education Level
d. Household Patterns
e. Regional Characteristic
f. g. Mexico is a country with a very young population and rapid population growth. Japan on
other hand having world oldest population so in these countries importance of high production
is given to product like milk, diapers, and schools supplies, toys in Mexico and adult product in
Japan.

• Cultural environment: - Every culture, every religion and every language group dictates its own
unique pattern of social conduct. Within each religion, there may be orthodox groups and
cosmopolitan groups. In dress, food habits or marriage – in almost all matters of the individual life
– religion and culture exercise an influence on the individual, though the intensity may vary from
society to society. The do’s and don’ts listed by the religion and culture impacts the individual
lifestyle and buying behavior.

Q4. Marketing is a process; explain with suitable examples and a flow chart the concept of Marketing
process.

Ans4. Marketing process: Marketing process consists of: -

1. Analyzing marketing opportunities.
2. Developing marketing strategies.
3. Planning marketing programs

The strategic plan defines the overall mission and objectives. Within each business unit,
marketing plays an important role in helping to accomplish the overall strategic objective. Marketing
strategy is the complete and unbeatable plan, designed specifically for attaining the marketing
objective of the firm wants to achieve; the marketing strategy provides a design for achieving them.

Marketing process includes:

1. What product to serve: Before entering into the field of marketing one has to decide what product it
has to offer to the customer. On the basis of this only further marketing strategies will be based
upon.

2. What market segments to serve: The business unit has to clarify that what market segments it will
serve and what product offers it will make. In other words it has to state its product market scope.
Strategy should decide whom to serve and whom to exclude.
E.g. when ICICI bank commenced its activities, it decided to serve exclusively the urban markets
of India. It sets up offices in the major cities of India. It also decided to offer value added banking
products. Its target market consisted of corporate and High Net Worth Individuals. It chooses not to
target the rural market.

3. Whom to compete and whom to avoid: The firm has to reckon who the major players in the
industry
Are & and against whom and in what segment it will compete. It also has to decide which players it
would choose to ignore.
 e.g. when the US car major Ford, entered in the Indian car market, Maruti was the dominant player
here, with its Maruti 800 model holding a 70% share. Ford decided to cultivate a higher priced,
semi luxury segments, with models like Ford Ikon. Ford was thus opting to compete with the
players like GM. GM was operating in the semi luxury segments like Opel Astra & Opel Corsa.
Ford chose not to compete with Maruti in the small compact car segments. So whom to compete
with and whom to avoid is vital pat of marketing process.

4. On what differentiation strength to compete: The next issue is: On what distinctive capability
will the firm compete in its industry? This involves determining the price strategy, product quality;
development of the product superiority, making the product accessible by the target customer at the
right time and at the right place. Whenever the product is needed it should be readily available. In the
absence of such strategy the product will loose its market.

5. Create customer awareness: This is another important step of marketing process whereby a customer
should me made aware about the use of the product. This is important for the customer to know
because if a customer uses a product for which it is not meant for, he will never be satisfied. A
customer should be educated for the same.

• e.g. Maruti 800 is a small segment car of MARUTI UDYOG, which is holding a sort of monopoly
in the Indian Auto Industry. A customer purchases the mentioned model of Maruti and instead of
using the car for transporting the passengers, he used as a carriage vehicle and with in 3 months he
came complaining about the product performance, and then he was told that this car is a passenger
car & it is not supposed to be used for the purpose of transporting the luggage.

6. Transfer Of Ownership : Marketing is not complete without any sale, i.e. transfer of ownership.
Once an ownership is transferred then the process is complete. The customer will not realize the
taste of using the goods until and unless the owner ship of the product is transferred to him.

7. Follow up & Feedback : once a product is put to use the, and the customer was told the use of the
product properly. Then it becomes necessary to take a regular feedback and make a regular follow
up with the customer . This will help the concern to make the necessary improvements in the
product, as suggested by the customer to suit the requirements of the consumer. Also this technique
will help the concern the process of relationship maintenance of the concern with the prospective
buyers. Here if the consumer is satisfied, his references will fetch more business for the concern,
which may result in the volume of sales.

Q5. Write Short Notes:

1. Marketing Concept.
2. Consumer Buying Motives.
3. Marker up price.

Ans5.

1. The Marketing Concept: The foregoing discussions on the difference between selling and
marketing, leads us to the marketing concept. The marketing concept was born out of the awareness
that a business should with the determination of consumer wants and end with satisfaction of those
wants. The concept puts the consumer at both the beginning and the end of the business cycle. It
stipulates that any business should be organized around marketing function and its task should be one
of anticipating, stipulating and meeting consumers’ requirements. The customer, not the corporation,
has to be the center of the business universe. A business cannot succeed by supplying products and
services that are not designed to serve the needs of the customers. As Drucker says, ‘the essence here is
that the entire business has to be seen from the point of view of the customer.’ In a company practicing
this concept, all departments will recognize that their actions have a profound impact on the company’s
ability to create and retain a customer. Every department and every worker and manager will think
customer and act customer.
A Shift in Orientation
In short, the marketing concept essentially represents a shift in orientation:

 From production orientation to marketing orientation

 From product orientation to customer orientation
 From supply orientation to demand orientation
 From sales orientation to satisfaction orientation
 From internal orientation to external orientation

It is obvious that the marketing concept represents a radically distinct approach to

business. It is the most advanced of all ideas on marketing that have emerged through
the years. Only the marketing concept is capable of keeping the organization free from
‘marketing myopia’; all other ideas guiding marketing, viz., the exchange concept, the
product concept and sales concept give rise marketing myopia of one form or the other.

2. Consumer Buying Motives: Buying motive is all the induced desires and considerations, which
include a buyer to purchase a given product. To a great extent the buying motive of a customer
depends upon the purchasing power of the customer.
3. Marker up price: Mark-up pricing refers to the pricing method in which the selling price of the
product is fixed by adding a margin to its cost price. The mark-ups may vary depending on the nature
of the product and the market. Usually, the higher the value of the product (unit cost of the product) the
larger is the mark-up and vice-versa. Again, the slower the turn around of the product, the larger is the
mark-up and vice-versa.
Mark-up pricing proceeds on the assumption that demand cannot be known accurately, but
costs are known. A reasonable mark-up is added to the costs. And the price as well as the mark-up is
adjusted by trial and error. The objective is to maximize profits in the short and medium run without
sales being sacrificed due to excessive price. Usually, distributive trade and marketing firms, who do
not have any manufacturing of their own, prefer this pricing method.
 ASSIGNMENT B

Q1. It is often said that middlemen are unnecessary, they cause price inflation. Do you agree to this
statement, explain with suitable examples.

Ans1. Manufacturers normally use intermediaries for taking their products to the users. The
intermediaries bear a variety of names. List below presents a list of the commonly used names:

Types of Marketing Intermediaries

 Sole-selling agent
 Marketer
 C&F agents (CFAs)
 Redistribution stockist
 Stockist/Distributor/Wholesaler
 Semi-wholesaler
 Retailer/dealer
 Broker
 Franchisees
 Authorized representatives
 Commission agents
 Jobbers

All such intermediaries constitute the marketing channel. The manufacturer’s branch offices,
depots, warehouses and showrooms too form part of the marketing channel. Where the firm uses
institutional channels like chain stores, super markets, etc., they too form part of the marketing channel
of the firm.
Channels play a pivotal role in marketing; they perform a number of vital distribution
functions. Their importance emanates from the functions performed by them.
Firms rely on the marketing channels for generating customer satisfaction and for achieving
differentiation over competitors. Channels are thus a vital source of competitive advantage for the firm.

Channels Acquire Their Importance by Their Functions

The foregoing elaborations not only explain the importance of marketing channels, but also
clarify the fact that the channels acquire their importance by virtue of the functions they perform.

Channel Functions cannot be Eliminated

Sometimes, firms tend to think that channels could be easily dispensed with and that the firm
would be better off doing so. The firms assume that by eliminating the channels, they can eliminate the
channel costs. This is erroneous thinking. The inherent assumption in this thinking is that by
eliminating the channels, they can escape the functions that the channels perform. The fact is that even
where channels are eliminated, the channel functions as such are not eliminated; they are merely
transferred from the channels to the manufacturer; and the costs thereof are also just transferred, not
eliminated.
Sometimes, the firms assume that while channels as a whole cannot be eliminated, a particular
tier in the channel can be readily eliminated and the firm would be ipso facto better off with such
elimination. Here too, if the assumption is based on the logic that with the elimination of the particular
tier, the functions performed by that tier can be eliminated, then the firm will soon realize that it has
committed a mistake. For here too, the alternative arrangement may not eliminate the functions
performed by that particular tier. What is likely to happen is a transfer of the functions from the given
tier to another one in the channel, backward or forward. So, it will be wrong to assume that the
elimination of the tier will ipso facto result in savings to the firm. It depends on the circumstances.
Channels/middlemen are no parasites: The problem arises due to confusion in thinking. The
firms concerned might be viewing channels as mere ‘middlemen’, with a negative connotation attached
to the term. And, they might consider the channels as parasites. No wonder then, they think that they
would be better off by dispensing with the channel, in part or full. It needs to be emphasized that
channels/middlemen are no parasites. They are an essential and valuable part of the firm’s marketing
activity. Manufacturers use them as there is economic sense in doing so, and all things considered,
using them improves distribution efficiency.
There is not to suggest that under no circumstances can a tier in the channel be eliminated and
that there would be no advantage at all in doing so. In some cases, it certainly is sensible to eliminate
one particular tier in the channel and the firm might be better off doing so. It has to be conceded that
there are always alternative methods of performing a set of channel functions and a firm may be better
off by following one method in preference to another. But, it depends on the circumstances of the case.
The firm has to analyze and find out whether the concerned distribution functions are performed more
cost-effectively by eliminating the tier and shifting the functions backward or forward to another tier in
the channel, or by keeping the tier alive. As a general rule, it can be said that where the number of tiers
are far too many, the elimination of a tier would be advantageous.
The test question: The test question is: Are the functions duplicated in wasteful manner?
Sometimes, duplication of channel functions does take place in a channel system; the same function
being performed by more than one tier. Firms often presume that in such cases, it is beneficial to
dispense with one of the tiers. This is again incorrect thinking. Duplication of functions by different
tiers need not automatically imply inefficiency, or waste. In many cases, such duplication may be
essential for achieving the desired service level in distribution. For example, inventories may have to
be kept at different levels/tiers of the channel so that the flow of products is smooth and customers get
the products at the time and place of their choice. In such cases, duplication is essential and beneficial.
The firm, therefore, has to find out whether duplication is wasteful. If it serves the interests of the firm,
it is not wasteful. So based on the facts of the case, the firm should find out how costs are reduced,
efficiency increased and waste eliminated.

Q2. Define Promotion; explain with suitable examples the 4 type of promotions adopted by consumer
product industry.

Ans2. Sales Promotion is another important component of the marketing communications mix. It is
essentially a direct and immediate inducement. It adds extra value to the product and hence prompts
the dealer/consumer to buy the product.
The Committee on Definitions of the American Marketing Association defines Sales Promotion
as:
‘In a specific sense, Sales Promotion includes those sales activities that supplement both
personal selling and advertising, and coordinate them and make them effective, such as displays,
shows, demonstrations and other non-recurrent selling efforts not in the ordinary routine.’
IMPORTANCE OF SALES PROMOTION

In a competitive market, sales promotion comes handy to a marketer, to solve several of his short-term
hurdles. Short term because, the impact sales promotion measures are not that durable and lasting like
the results obtained through advertising and personal selling. Sales promotion, by and large, is
understood and practiced as a catalyst, and a supporting facility to advertising and personal selling.

Types of promotions adopted by consumer product industry:

Premiums and Free Offers

Aristocrat luggage: Aristocrat molded luggage gave an attractive offer. It ran a nationwide campaign
to publicize the offer. Aristocrat announced:
If you buy an Aristocrat within the next week, you get a Philips 2 Band transistor worth Rs 266
free !

And the advertisement set the time limit for the offer:
It’s only for a week, starting today.

Discounts, Price Off

Hawkins: Hawkins pressure cookers have come up with several sales promotion programmes during
the last few years. In one of their programmes, Hawkins announced an attractive price reduction:
Up to Rs 150 off on a new Hawkins in exchange for any old pressure cooker.
And the advertisement specified that the offer was open only up to a particular date.

Installment Offers

Washotex: Washotex washing machines came up with ‘pay 20 percent now, take home Washotex’
scheme. The consumers were offered the facility of paying the balance in 24 equal monthly
installments.

Exchange Schemes, Money Back Offers

Akai exchange scheme: India’s No. 1 CTV Akai 53 cm Is Now Available For A Shocking Rs. 5900.
Here’s how:
Bring in your old 51 cm color TV (in proper working condition) with remote.
Take home the Akai: For Rs 5900 in exchange.

Q3. The right marketing mix can be adopted only after segmentation. Elucidate with examples the
basis of segmentation as applied in Television Marketing.

Ans3.
Market Segmentation
The division of a market into different homogeneous groups of consumers is known as market
segmentation. Rather than offer the same marketing mix to vastly different customers, market
segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus
better satisfying customer needs. Not all elements of the marketing mix are necessarily changed from
one segment to the next. For example, in some cases only the promotional campaigns would differ.
A market segment should be: measurable, accessible by communication and distribution channels
different in its response to a marketing mix durable (not changing too quickly) substantial enough to be
profitable. A market can be segmented by various bases, and industrial markets are segmented
somewhat differently from consumer markets, as described below.

Consumer Market Segmentation

A basis for segmentation is a factor that varies among groups within a market, but that is consistent
within groups. One can identify four primary bases on which to segment a consumer market:
Geographic segmentation is based on regional variables such as region, climate, population density,
and population growth rate.
Demographic segmentation is based on variables such as age, gender, ethnicity, education, occupation,
income, and family status.
Psycho graphic segmentation is based on variables such as values, attitudes, and lifestyle.
Behavioral segmentation is based on variables such as usage rate and patterns, price sensitivity, brand
loyalty, and benefits sought.
The optimal bases on which to segment the market depend on the particular situation and are
determined by marketing research, market trends, and managerial judgment.

Business Market Segmentation

While many of the consumer market segmentation bases can be applied to businesses and
organizations, the different nature of business markets often leads to segmentation on the following
bases:
Geographic segmentation - based on regional variables such as customer concentration, regional
industrial growth rate, and international macroeconomic factors.
Customer type - based on factors such as the size of the organization, its industry, position in the value
chain, etc.
Buyer behavior - based on factors such as loyalty to suppliers, usage patterns, and order size.

Profiling the Segments

The identified market segments are summarized by profiles, often given a descriptive name. From
these profiles, the attractiveness of each segment can be evaluated and a target market segment
selected.

Q4. What do you understand by branding? Is quality important than branding?

Ans4. A brand is defined as a ‘name, term, symbol, design, or a combination of them, which is
intended to identify the goods and services of one seller and to differentiate them from those of
competitors.’ A trademark is a brand that has been given legal protection, thus ensuring its use
exclusively by one seller. Trademark is a legal term, while brand is a marketing term.
In marketing, the brand name is a major selling tool and one of the most important components
of the ‘total product personality.’ We are, in fact, living in an age of brands. The intensive brand
promotion undertaken by marketers of various products have made consumers extremely brand-
conscious. These days no consumer asks for just toothpaste. He specifically asks for Colgate, or Close-
Up, or some other brand. No woman asks for bath soap, she wants her brand. Similarly, a woman who
wants a steel cupboard may ask for Godrej, without even thinking about several other brands of
cupboards that are available. The brand name is the mantle the product puts on. The brand image,
developed through advertising and other promotional measures, creates strong brand awareness and
loyalty among consumers. Corporations spend long years, lot of money and effort to build brands. A
good brand is an invaluable asset for the owner.

It is an accepted fact that a firm cannot attain a good and lasting reputation through ‘marketing flair’
alone, only through quality products, can it attain such reputation. Product quality is a vital area as it
decides the fate of the firm in the marketplace. Several firms have established themselves as business
leaders through the quality of their products. Strict control on product quality and insistence on zero-
defect products have made their products globally accepted.
A successful product strategy will undoubtedly need reliable, well-engineered quality products.
Marketing has to set the quality standards for the firm’s products. Constantly verifying these standards
and upgrading them in tune with the needs and growing sophistication of the market is a crucial task in
product management.
In fact, product quality has become a very significant plank for product differentiation.

List below explain the basic do’s an organization has to follow in order to ensure product quality:
 The firm should have a policy on ‘quality’. It should make clear to every level in the
organization its aims and objectives on the quality front.
 Honda of Japan writes down its policy thus: ‘Buy no bad parts, make no bad parts, ship no bad
parts.’
 The firm should develop the product design that can deliver an error-free product.
 It should identify the competitors’ standards of quality and aim at excelling them.
 The international specifications on quality for the given product have to be reckoned with.
 The firm should find out the customer’s tolerance level on the quality front.
 Keeping these factors in view, the firm has to decide its quality standards, develop detailed
product specifications and made these standards known to design, production, engineering,
quality control and marketing groups.
 It should enforce these standards.
 While launching new products, the firm has to ensure that they are not rushed to the market
without proper quality tests. MRF claims its tyres are tested under the tough Himalyan terrains
as well as in the worst rural tracks of India.
 In the case of durables, samples under use for a long time should be studied; used samples
throw light on the quality/operational problems the product has undergone.
 Independent quality assurance groups should oversee the design, engineering and production
and testing stages.
 The firm should also ensure vendor quality. Since raw materials, accessories and components
decide the ultimate quality of a finished product, quality control has to be ensured at vendor
level.

Quality has a cost; but it pays back: Many progressive firms have moved up to the ‘zero defect’
level in their products because they know that the rewards coming through the quality route are lasting
and substantial. At the other extreme, there are many companies who believe that the cost of ensuring
quality is too high and they allow wide relaxations on the quality front. Lessons from the market reveal
that these companies base their arguments on the wrong economics. Quality assurance has a cost, but it
is a cost that can be realized back in terms of long-term business prosperity and goodwill.

Q5. How will you go about describing a Marketing Plan for a consumer product? Explain with the help
of Marketing Plan Process.
Ans5.
Marketing Plan Outline

I. Executive Summary
A high-level summary of the marketing plan.

II. The Challenge

Brief description of product to be marketed and associated goals, such as sales figures and strategic
goals.

III. Situation Analysis

Company Analysis
Goals
Focus
Culture
Strengths
Weaknesses
Market share
Customer Analysis
Number
Type
Value drivers
Decision process
Concentration of customer base for particular products
Competitor Analysis
Market position
Strengths
Weaknesses
Market shares
Collaborators
Subsidiaries, joint ventures, and distributors, etc.
Climate
Macro-environmental PEST analysis:
Political and legal environment
Economic environment
Social and cultural environment
Technological environment
SWOT Analysis
A SWOT analysis of the business environment can be performed by organizing the environmental
factors as follows:
The firm's internal attributes can be classed as strengths and weaknesses.
The external environment presents opportunities and threats.

IV. Market Segmentation

Present a description of the market segmentation as follows:
Segment 1

Description
Percent of sales
What they want
How they use product
Support requirements
 How to reach them
Price sensitivity

V. Alternative Marketing Strategies

List and discuss the alternatives that were considered before arriving at the recommended strategy.
Alternatives might include discontinuing a product, re-branding, positioning as a premium or value
product, etc.

VI. Selected Marketing Strategy

Discuss why the strategy was selected, then the marketing mix decisions (4 P's) of product, price, place
(distribution), and promotion.
Product
The product decisions should consider the product's advantages and how they will be leveraged.
Product decisions should include:
Brand name
Quality
Scope of product line
Warranty
Packaging
Price
Discuss pricing strategy, expected volume, and decisions for the following pricing variables:
List price
Discounts
Bundling
Payment terms and financing options
Leasing options
Distribution (Place)
Decision variables include:
Distribution channels, such as direct, retail, distributors & intermediates

Motivating the channel - for example, distributor margins

Criteria for evaluating distributors

Locations
Logistics, including transportation, warehousing, and order fulfillment
Promotion
Advertising, including how much and which media.
Public relations
Promotional programs
Budget; determine break-even point for any additional spending
Projected results of the promotional programs

VII. Short & Long-Term Projections

The selected strategy's immediate effects, expected long-term results, and any special actions required
to achieve them. This section may include forecasts of revenues and expenses as well as the results of a
break-even analysis.

Case study
Q1. Critically evaluate the communication strategy of Good Knight with reference to the facts given in
the case.

Ans1. The common Strategy followed by the company is very aggressive and appealing. The brand
name of chosen by the company reflects the product benefit. The product name “good night”
verbalizes the reason to buy the product to the consumer. This name not only tells the benefits of
product, but also this name is commonly practice in most Indian language. The word good night is
commonly spoken in all Indian family so it’s mass appealing. The company chooses the daily
newspaper to show their ads. The ads were printed on newspaper like The Tomes of India, Malayalam
Manorama Sunday Mid–day etc. Which were biggest and best selling newspaper in India In this way
their ads reach to the target audience very rapidly and quickly. So we can conclude that there common
strategy was very aggressive and mass appealing.

Q2. At the time of this case preparation, Good Knight was probably the only product in the EMD with
mat category. As new international competition, with known brands entering the market, what
changes, if any, would you suggest in the marketing communication strategy of Good Knight?

Ans2. As new international competition has come into the market, I would like to give some
suggestion to the company in order to boost sales and increase the profit and market share. Following
are the few suggestion: -

1. In order to capture larger market share, the company should incase ads promotion on T.V, Radio
and Newspapers etc.

2. Nation wide promotion of the product should be done in order to get larger target audience.

3. Rural marketing should be done because now many if the villages get the electricity.

4. As marketing is a creative field, so company should keep changing their ads and bring more
creative touch in ads. This will keep the consumer interest alive.

5. Company should offer more discount scheme to the customer like replacement of the old/non-
working EMD machine.

ASSIGNMENT – C

Q1. d. Understanding the needs of consumers and delivering them.

Q2. b. Selling at break even cost.
Q3. d. Idea generation.
Q4. c. Synergistically related activities which must be closely coordinated.
Q5. a. Maximizing customer satisfaction.
Q6. a. Is one who is user of product.
Q7. a. Product differentiation.
Q8. a. Product lives around the 4 stages of cycle.
Q9. b. The opinion of experts is sought.
Q10. b. Setting a price above competitive price.
Q11. True
Q12. False
Q13. False
Q14. False
Q15. True
Q16. False
Q17. True
Q18. True
Q19. False
Q20. True

Q21. List 5 stages in consumer decision-making process.

Ans21. Researchers have identified eight stages in consumer decision-making process:

 Problem Recognition (Need Recognition)
 Awareness
 Comprehension (Evaluation)
 Attitude
 Legitimization
 Trial
 Adoption
 Post-Purchase Behavior

Q22. Write a simple definition for marketing and selling.

Ans22. Marketing refers to understanding the needs of the consumer and delivering them. Marketing
views the entire business as consisting of a tightly integrated effort to discover, create, arouse and
satisfy customer needs.
Selling merely concerns itself with the tricks and techniques of getting the customers to
exchange their cash for the company’s products; it does not bother about the value satisfaction that the
exchange is all about.

Q23. List out 5 benefits of advertising a product.

Ans23. Benefits of advertising:

 Generating awareness
 Reminding buyers to buy
 Changing attitudes about the use of the product form
 Changing perceptions about the importance of brand attributes
 Changing beliefs about brands
 Reinforcing attitudes
 Building corporate and product-line image
 Obtaining a direct response

Q24. Give 5 examples (each) of consumer, consumer durables and industrial products.

Ans24.
Consumers:
 Innovators
 Early adopters
 Early majority
  Late majority
 Laggards
Consumer durables:
 Television
 Refrigerator
 Air conditioner
 Washing machine
 VCD Player

Industrial products:
 Petrol
 Diesel
 Kerosene
 Explosives
 Certain industrial chemicals

Q25. List out 5 functions performed by whole sellers in consumer product industry.

Ans25. A wholesaler buys the product in large quantities, and resells the goods in sizable lots to other
intermediaries down the line, such as semi-wholesalers and retailers. Normally a wholesaler does not
sell directly to consumers, the exception being institutional buyers who prefer their requirements from
wholesalers rather than retailers. In fact, the distinguishing feature of wholesalers is that they do not
sell to the ultimate consumers for personal consumption. Even when they sell to institutional buyers
who are the ultimate consumers, the sale is not for personal consumption of an individual/household
consumer.
Wholesalers generally specialize: some specialize by type of product, some by industry and some by
markets. The rationale for their existence is their cost-effective operation in buying goods in large
quantities and reselling them to other intermediaries in smaller, yet sizable lots.
Wholesalers add value by performing a number of vital marketing functions. Stock holding and sub-
distribution are the main functions of the wholesaler. They also perform functions like promotion,
financing, and collection of accounts receivables and provision of market feedback. They serve
principals as well as retailers under them. In some cases, they also assume a part of the risk associated
with product failures, price changes and bad debts.
Wholesalers basically belong to two types: agent wholesalers and merchant wholesalers. Usually
merchant wholesalers participate in all the flows that characterize the distribution process while agent
wholesalers do so only in some of the flows.

Q27. Give 5 examples of Family brands in consumer products.

Ans27. Surf, Ponds, Lux, Taj Mahal tea, Colgate.

Q28. List out the 5 stages in new product development.

Ans28. Stages in new product development:

 Generating new product idea
 Idea screening
 Concept testing
 Business/market analysis
 Actual product development
 Market test
  Commercialization

Q29. Give 5 reasons why new products fail.

Ans29. Reasons for product failure: -

1: - Faulty product Idea.
2: - Distribution Problem.
3: - Unrealistic pricing.
4: - Week promotional activity.
5: - Poor quality Product.
6: - Strong designed strategy of the competitor.

Q30. What are the four stages in Product Life Cycle?

Ans30. Four stages in Product Life Cycle:

 Market pioneering stage
 Market growth stage
 Market maturity stage
 Market decline stage

Differentiate between the following:

Q31. Product diversification and Product differentiation

Ans31. Product Diversification: Product Diversification means increasing the product line length.
Most firms start with just one product line and one or two products in that line. Over the years, the line
grows, as the firm keeps adding more and more products/brands to the line to capture new marketing
opportunities. More product lines also enter the scene, as the firm decides to expand to more new
businesses. It is a direct outcome of the long-term corporate growth strategy of the firm handled at the
corporate level. Line stretching is a measure firms undertake frequently in product management. The
aim is to enter a new price slot and a new market segment, which is not covered by the existing offers
of the firm.

Product Differentiation: The differentiation route to strategy revolves around aspects other than
price. It works on the principle that a firm can make its own offer distinctive from all competing offers
and win through the distinctiveness. And, a firm adopting such route can price its product on the
perceived value of the attributes of the offer and not necessarily on competition-parity basis. The
differentiation route is a more dynamic and powerful route in competitive strategy. Most business
battles are fought on the strength of differentiation rather than price. The major temptation as well as
benefit in differentiation strategy is that it allows a firm to move away from the disadvantages of a
wholly price-based fight. In other words, differentiation allows a firm the flexibility for fighting on the
non-price front, on the other strength of the uniqueness and specialty of its offer. Differentiation,
therefore, is a crucial option for a firm in its search for a rewarding competitive strategy.

Q32. Marketing and Selling.

Ans32.

SELLING MARKETING
Selling starts with the seller, and is Marketing starts with the buyer and focuses
preoccupied all the time with the needs of constantly on the needs of the buyer.
the seller.
Seller is the center of the business world. Buyer is the center of the business world.
Emphasis is on the saleable surplus Emphasis is on the identification of the
available with the concern. market opportunity.
Seeks to quickly convert product into cash. Seeks to convert customer’s needs into
product.
Concerns itself with the trick and Emphasizes on fulfilling the needs of the
techniques of getting the customer to part customer.
with their cash for the product available
with the salesman.
View business as a good producing View business as a customer satisfaction
process. process.
Overemphasizes the exchange aspect Concerns itself primarily and truly with the
without caring for the values satisfaction value satisfaction that should flow to the
inherent in the exchange. customer from the exchange.
Sellers’ preference dominates the Buyer determines the shape Marketing Mix
formulation of the Marketing Mix. should take.
Emphasis is on ‘somehow selling’; there is Emphasis is on the integrated marketing; an
no coordination between the different integrated strategy covering the product,
functions of the total marketing task. promotion, pricing, and distribution.
The firm makes the product first and then The firm makes total product offering that
figures out how to sell it and make profit. will match and satisfy the identified needs
of the customer.

Q33. Penetration Price and Skimming Price.

Ans33. Skimming Price: In skimming pricing, the new product is priced high and the cream of the
market is skimmed by concentrating on those segments that are not price sensitive. Such high price
will fetch the firm substantial initial incomes, which it can plough in for further market development
and promotion. Through this method, the firm also recovers a substantial potion of its development
cost. Later on, the firm may bring down the prices, when it enters mass markets, which are more price-
sensitive. Skimming pricing, however, cannot be employed if the product cannot command the
patronage of an affluent, non-price sensitive, market-segment.

Penetration Price: The skimming strategy cannot suit all new product contexts. When the new
product is likely to be highly price sensitive and when there is no elite market for it, penetration pricing
will be the option. As the very name implies, the intention in this strategy is to penetrate a broad
market through low prices. The income is generated by sales spread over large markets; the large
volumes facilitate substantial economies in unit cost of production and marketing; and the cycle can
continue. The strategy helps to establish the product in the market.

Q34. Individual Consumer and Industrial Consumer.

Ans34. Individual Consumer: Individual consumer buys things for his own personal and family
consumption.

Industrial Consumer: Industrial buyer is a commercial buyer who buys things for manufacturing
other products, or for reselling, or for use in the running of his enterprise.

Q35. Vertical Marketing and Horizontal Marketing.

Ans35.
Horizontal Marketing
Definition: When two companies producing different products jointly market their products.
Sometimes horizontal marketing is referred to as symbiotic marketing.

Vertical Marketing
Vertical marketing focuses on developing solutions to user problems within specific industries. In
contrast, horizontal marketing provides generic “one-size-fits-all” offerings.

Q36. Packaging and Packing.

Ans36. Packaging: The package is another important component of total product personality,
especially in consumer products. The package performs two essential roles: (i) Giving protection to the
product, (ii) Adding to its aesthetic and sales appeal.
Traditionally, packaging was intended to protect the product – to prevent deterioration enroute, and to
facilitate handling at the various points of distribution. In later years, packaging also became a major
tool in the promotion of the product. The material of the package, the color, the shape and size of the
package, its finish, the labeling on it, the possibilities of reuse, etc., came to be utilized in building the
total sales appeal of the product. The power off good packaging in promoting on-the-spot purchases is
found to be very substantial.

Q37. Individual Brand and Family Brand.

Ans37. Individual Brand: In Individual Branding each product of the company is given an
independent brand name.

Criteria for selecting a brand name:

INDIVIDUAL BRANDING

1. The brand name selected should be easy to pronounce.

2. It should be easy to read and understand.
3. Appropriate for the product: Most companies select the brand name, which communicate the
functions\some key attributes of the product. To cite a few examples,
When Wipro Systems offered a software program on astrology, the name chosen was Jyotishi.
Shinex was the name chosen for an instant polish.
The paint for the wooden furniture was given the name as Touchwood.
The first portable music player was given the name as Walkman.
4. The brand name so allotted to the product should be easy to remember so that it remains in the
mind of the customer while making the purchase.
5. The brand name selected should be most descriptive in nature. Many a times the manufacturer
tries to choose a brand name that communicate the specialty of the product.
E.g. GM’s Opel, Ford’s Ikon, Suzuki Zen are the names to communicate the specialty of the
respective brands.
The name TAJ given to the Hotel chain of Indian Hotels is an attempt to recapture and reflect
the Mughal Splendor.

Family Brand: When a group of products are given the same brand name, it becomes a case of family
brand. Family brand does not mean that entire product mix of the company should go under a single
brand name. A company may resort to different branding approaches for different product lines.

Criteria for selecting a brand name:

FAMILY BRAND

1. Different products of the companies marketed under one brand name are given a family or
umbrella brand.
2. This sort of brand does not mean the entire product mix of the company should go under the
single brand name.
3. A company may approach to different branding approach to different product lines. When a
group of products are given the same brand name, it becomes a case of Family brand or
Umbrella brand.
4. E.g. AMUL – it is an umbrella / family brand name for one line of product for the company.
5. DHARA – is an umbrella brand for the seven types of oil marketed by the a company: Dhara
Mustard oil, Dhara groundnut oil, Dhara sunflower oil etc.

Q38. Personal Selling and Missionary Selling.

Ans38. Personal Selling: Personal selling is unique as it is a face-to-face transaction between a

salesman and a prospective customer. Evidently, a well-trained and competitive spirited salesman can
be an effective communication medium. His knowledge about the product, the degree of his familiarity
with the customer, whether he is handling a new customer or an established customer, the degree of his
involvement in the company he is representing, the level of his motivation and his own convictions
about the quality and performance standards of the product will be the determining factors in his role
as a communicator.

Q40. Full Cost Pricing and Marginal Cost Pricing.

Ans40. Full Cost Pricing: Absorption cost pricing or full cost pricing rests on the estimate unit cost of
the product at the normal level of production and sales. The method uses standard costing techniques
and works out the variable and fixed costs involved in manufacturing, selling and administering the
product. By adding the cost of these three operations, we get the total cost. Adding the required margin
towards profit to such total costs arrives at the selling price of the product. This method is also known
as full cost pricing since it envisages the realization of full costs from each unit sold.

Marginal Cost Pricing: Marginal cost pricing aims at maximizing the contribution towards fixed
costs. Marginal costs include all the direct variable costs of the product. In marginal cost pricing, these
direct variable costs are fully realized. In addition, a portion of the fixed costs is also realized. The
main difference between absorption cost pricing and marginal cost pricing is that the latter gives the
flexibility not to cover a portion of the fixed costs depending on the market situation. It also gives the
flexibility to recover a larger share of the fixed costs from certain customers, or a certain segment of
the business and a smaller share from the others.