National Institute of Business Management

Chennai - 020

FIRST SEMESTER EMBA/ MBA

Subject : Marketing Management

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words )

1. Write an essay on "Marketing is based on the concept that the customer is the
most important person to the company".
2. Explain why purchasing is regarded as a very important management function in
many organizations.
3. Explain the use of marketing models that has been used in the study of consumer
behaviour.
4. What is the importance of Pricing in a company? Explain.
5. What are the unique characteristics of Service Marketing? Explain.
6. Explain the techniques and methods for designing organisation structure.
ANSWER SHEET

Q 3.Explain the use of marketing models that has been used in the study of
consumer behaviour.
The use of marketing models has been a fairly recent development in
the study of consumer behaviour. They help in organizing and
integrating the various components of information that are known
about consumer behaviour. They also help in research works to make a
deeper study of consumer behaviour.
One commonly used marketing model is discussed below.
The Howard - Sheth model
Howard and Sheth have provided one of the most comprehensive
models of consumer behaviour.This model uses the concept of
stimulus-response with the following four major components
Input variables: These are those that come from the environment.
They are the following three types significance stimuli, symbolic stimuli
and social stimuli.
Output variables: These are those that come from the buyers and
consist of – attention, comprehension, attitude, intention and purchase
behaviour.

Hypothetical constructs: These are variables which can be divided into

two major groups- perceptual constructs and learning constructs.
Exogenous variables: These are external variables that influence buyer
decision. These variables are external to the buyer and are not sharply
defined as other aspects of model.
MARKET SEGMENTATION
Market segmentation is defined as the process of breaking down the
total market for a product or service into distinct subgroups or
segments such that each segment represents a distinct target market
with a distinct marketing mix. The main intention of this is to select
those groups of customers that the company is best able to serve at
minimized competition.
Market segmentation is the first step involved in target marketing. This
is followed by market targeting and product positioning. The stages
involved are discussed in detail below.
Stage one: Market segmentation. The entire market is divided into
distinct groups of buyers depending on the response expected to
different products/services and the marketing mixes offered. The firm
first determines the most appropriate basis for segmentation, identifies
the important characteristics of each market segment, and develops
criteria for evaluating their commercial attractiveness and viability.

Stage two: Market targeting: This is the process by which one of the
previously identified market segments is evaluated and selected. (Note
that market targeting is different from target marketing).
Stage three: Product positioning: This process involves the fitting of
a product or service and the marketing mix elements within a
particular market segment. This is essential in a market with many
competing products.

Since a market comprises of many identifiable groups with similar

wants, purchasing power, geographical location, buying attitudes, or
buying habits segment marketing is beneficial over mass
marketing.This is because the company can create a more fine-tuned
product or service offering and price it
appropriately for the target audience. This also helps in choosing the
distribution and communication channels.

Market segmentation is obtained in the following steps:

1. Survey stage
2. Analysis stage
3. Profiling stage
Marketing segmentation is of the following types:
1. Geographic segmentation
2. Demographic segmentation
3. Psychographic segmentation
4. Behavioural segmentation
5. Multi-attribute segmentation
PRODUCT PLANNING
Each product level (product line or brand) must develop a marketing
plan for achieving its goals. In fact, the product’s marketing plan is one
of the most important outputs of the marketing process and has to
contain the following:

. Executive summary and table of contents: This brief summary of

the plan’s main goals and recommendations permits senior
management to grasp the plan’s major thrusts.
. Current marketing situation: This presents relevant background
data on sales, costs, profits, the market, competitors, distribution, and
the macro environment.
. Opportunity and issue analysis: This process is carried out by the
Product Manager to identify the major SWOT (Strengths, Weakness,
Opportunities, Threats) facing the product line.
. Marketing strategy: The Product Manager arrives at a marketing
strategy after discussions with the purchasing and the manufacturing
people to confirm that they are able to buy enough material and
produce enough units to meet the target sales volume levels.
. Action programs: It focuses to specify the broad marketing
programs for achieving the business

objectives and involves answering the following questions: What

should be done? When should it be done? Who should do it? How much
will it cost?
. Projected profit and loss statement: After the action plan is
decided, a supporting budget is made which shows the forecasted
sales volume in units and average price and costs involved in
production, physical marketing and distribution.
. Controls: This deals with monitoring the marketing plan by spelling-
out goals and budgets for each month or quarter and periodically
reviewing the results.
PRICING
Pricing is essential for the company to cover the costs of separate
elements of its various activities. Pricing plays the following important
roles:
• pricing covers costs included in research and development, raw
materials, labour and administrative costs.
• pricing pays for the marketing costs involved in promoting, selling
and distributing the product.
• pricing generates residual profits to fulfill company objectives.
Since pricing is one of the most flexible elements of the marketing mix,
it can be readily changed to meet the market conditions as and when
required.
The pricing decisions are strategic issues and should have the
following attributes:
1. It should be made in the context of overall marketing objectives and
strategies.
2. It should be related to and be consistent with other elements of the
marketing mix.
3. It should neither become an overriding competitive factor, nor a
routine work of the accounting department.
The following are the considerations to be made in marketing pricing
decisions:
1 Costs – The three measures of the cost structure are: the ratio of
fixed to variable costs, the

relationship between costs and volume, and the cost of the firm
relative to its expenses.
2 Demand – The following two inter related criteria are considered: the
quantity demanded at any
given price and effect of changes in price on sales volume.
3 Company and marketing objectives/resources – This comprises of
selection of market targets, brand
image, pricing policy etc.
4 Social / legal aspects – The legal and social aspects should be
considered as additional inputs in the
pricing decision.
PROMOTION STRATEGY
Promotion includes all those activities the company undertakes to
communicate and promote its
products to the target market. It has to set up communication
programs consisting of advertising, sales
promotion, public relations, and direct and on-line marketing. The
promotional tools are discussed in detail
below.
Advertisements: They are used for building a long-term image for the
product and can effectively
reach geographically dispersed buyers. The main forms of advertising
are- Newspaper ads., TV
ads., Banners, Hoardings etc. and now-a-days even web pages.
Personal selling: It is the most effective tool of the buying process
because of the following qualities
– personal confrontation, immediate response.
Sales promotion: They are used to draw a stronger and quicker buyer
response and use coupons,
contests, premiums etc.
Public relations and publicity: This has the ability to catch the buyer off
guard.
Direct marketing: They include the relatively newer concepts like
telemarketing, Internet marketing
etc.
The factors that set the promotion mix are:
¡ The type of product market: Depending upon the type of market
-Consumer market or business
market – the mix is determined. While consumer market products
require more sales promotion,
business market product relies on personal selling.
¡ The strategy used - Push or pull strategy: Push strategy involves the
manufacturer using sales force
and trade promotion and pull strategy uses advertisements and
consumer promotion.
¡ Buyer-readiness.
¡ Product-life-cycle stage: - For example, in the introduction stage
advertising has the highest cost
effectiveness where as at a decline stage sales promotion should be
given more priority.
¡ Company market rank: - Market leaders derive more benefit from
advertisements where as smaller
competitors require more sales promotions.
DISTRIBUTION PLANNING AND STRATEGY
An efficient distribution plan comprises of well programmed,
professionally managed, vertical
marketing system that meets the needs of both manufacturer and
distributors. The manufacturer establishes
a department within the company called distributor-relations planning,
to identify distributors’ needs and to
build up merchandising programs to enhance the efficiency of each
distributor. This department, along with
the distributors, plans the following:
1. Merchandising goals
2. Inventory levels
3. Space and visual merchandising plans
4. Sales training requirements
5. Promotion plans
The distribution strategy aims at making the following conversions:
. The distributor’s ideology that they make money mainly on the buying
side to an ideology that they
can make more money by concentrating on the selling side.
. The manufacturer’s ideology that distributors and dealers are
customers to an ideology that they
are all working partners.

It is required to periodically evaluate distributor’s performance against

standards of sales-quota,
average inventory levels, customer delivery time etc. and to counsel,
retrain, motivate or terminate under
performers.
The distribution channel arrangements should be periodically reviewed
and modified appropriately.
This mainly depends up on the following stages in the product life
cycle:
. Introductory stage: This should use specialist channels that spot
trends and attract early adopters.
. Rapid growth stage: This stage should use higher-volume channels.
. Maturity stage: At this stage, the company should move their product
into lower-cost channels.
. Decline stage: This stage requires massive discounts and very low

cost channels.