Model Question Bank

Marketing Management (MBA – 202)

Q1. Explain the meaning and Scope of Marketing?

Ans. Marketing: the action or business of promoting and selling products or services, including
market research and advertising.
The activities of a company associated with buying and selling a product or services. It includes
advertising, selling and delivering products to people. People who work in marketing
departments of companies try to get attention of target audiences by using slogans, packaging
design, celebrity endorsements and general media exposure. Basically Marketing is all about
product, place, price and promotion (4P’s of Marketing)
Marketing is a process by which companies create customer interest in products or services. It
generates the strategy that underlies sales, techniques, business communication and
development. It is an integrated process through which companies build strong customer
relationships and create value for their customers and for themselves.
SCOPE OF MARKETING:-
(1)   Study of Consumer wants and needs –
Good are produced to satisfy consumer needs and wants therefore study is done to identify
consumer needs and wants. These needs and wants motivate consumers to purchase.

(2)   Study of Consumer Behaviour –

Marketers perform study of consumer behaviour. Analysis of buyer behaviour helps Marketer in
Market Segmentation and Targeting.

(3)   Product Planning and Development –

It includes the activities of Product Research, Market Segmentation, Product Development,
Determination of the attributes, Quality and Quantity of Product.

(4)   Branding –
Branding of product is adopted by man y reputed enterprises to make their products popular
among their customers and for many other benefits.

(5)   Packaging –
Packaging is to provide a container and wrapper to the product for safety, attraction and ease of
use and transportation of the product.

(6)   Channels of Distribution –

Decision regarding selection of most appropriate channels of distribution like whole saling,
distribution and retailing is taken by the Marketing Manager and Sales Manager.

(7)   Pricing Policies –

Marketer has to determine pricing policies for their products. Pricing policies differ from product
to product. It depends on the level of competition product life cycle, Marketing goals and
objectives, etc.

(8)   Sales Management –

 Selling is a part of Marketing. Marketing is concerned about all the selling activities like
customer identification, finding customer needs, persuading customer to buy products, customer
service, etc.

(9)   Promotion –
Promotion includes personal selling, sales promotion and advertisement, right promotion mix is
crusial in accomplishment of marketing goals.
(10)  Finance –Marketing is also concerned about the finance as for every marketing activity be it
packaging, advertising, sales force budget is fixed and all the activities have to be completed
within the limit of the budget.
(11)  After sales service –Marketing covers after sales services given to customers, maintaining good
relationships with customers, attending their queries and solving their problems.
Q2. Explain the different philosophies of Marketing Management? Provide your
justification for the significance or utility of these philosophies in present business
environment?
Ans :- Philosophies refers to the orientation, approaches or concepts that a company focuses and
follows the decisions.
Under the Marketing Management philosophies, we shall study the following concepts:-
a.       Production Concept :-
That company who believes in this philosophy thinks that if the goods/services are cheap and
they can be made available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in
reducing the cost of production and strengthening their distribution system. In order to reduce
the cost of production and to bring it down to the minimum level, these companies indulge in
large scale production. This helps them in effecting the economies of the large scale production.
Consequently, the cost of production per unit is reduced. The utility of this philosophy is
apparent only when demand exceeds supply. Its greatest drawback is that it is not always
necessary that the customer every time purchases the cheap and easily available goods and
services.

b.      Product concept :-

Those companies who believe in this philosophy are of the opinion that if the quality of goods or
services is of good standard, the customer can be easily attracted. The basis of this thinking is
that the customers get attracted towards the products of good quality. On the basis of this
philosophy or idea these companies direct their marketing efforts to increase the quality of their
product.
It is a firm belief of the followers of the product concept that the customers get attracted to the
products of good quality. This is not the absolute truth because it is not the only basis of buying
goods. The customers do take care of the price of the products, its availability, etc. A good
quality product and high price can upset the budget of a customer. Therefore, it can be said that
only the quality of the product is not only way to the success of marketing.

c.       Selling Concept :-

Those companies who believe in this concept think that leaving alone the customers will not
help. Instead there is a need to attract the customers towards them. They think that goods are not
bought but they have to be sold.
 The basis of this thinking is that the customers can be attracted. Keeping in view this concept,
these companies concentrate their marketing efforts towards educating and attracting the
customers. In such a case their main thinking is “selling what you have”.
This concept offers the idea that by repeated efforts one can sell anything to the customers. This
may be right for some time, but you cannot do it for a long time. If you succeed in enticing the
customer once, he cannot be won over every time.
On the contrary, it will work for damaging the reputation. Therefore, it can be asserted that this
philosophy offers only a short term advantage and is not for long term gains.

d.      Marketing Concept :-

Those companies who believe in this concept are of the opinion that success can be achieved
only through consumer satisfaction. The basis of this thinking is that only those goods/services
should be made available which the consumer want or desire and not the things which you can
do.
In other words, they don’t sell what they can make but they make what they can sell. Keeping in
mind this idea, these companies direct their marketing efforts to achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be earned on the
long term basis. The drawback of this concept is that no attention is paid to social welfare.

e.       Societal Marketing Concept :-

This concept stresses not only the customer satisfaction but also gives importance to consumer
welfare/societal welfare. This concept is almost a step further than the marketing concept. Under
this concept, it is believed that mere satisfaction of consumers would not help and the welfare of
the whole society has to be kept in mind.

For example; if a company produces a vehicle which consumes less petrol but spread pollution, it
will result in only consumer satisfaction and not the social welfare. Primarily two elements are
included under social welfare high level of human life and pollution free atmosphere. Therefore,
the companies believing in this concept direct all their marketing efforts towards the
achievement of consumer satisfaction and social welfare. In short, it can be said that this is the
latest concept of marketing. The companies adopting this concept can achieve long term profit.
Q3. What do you mean by Marketing Environment?
Ans:- MARKETING ENVIRONMENT :--
        Businesses do not operate in isolation in the market place.
        There are various factors/forces that directly or indirectly influence the organisation’s business
activities.
        All these factors/forces form the marketing environment of an organisation.
        The company operates in a complex marketing environment, consisting of uncontrollable forces,
to which the company must adapt.
        Marketing is the sum total of trading forces operating in a market place, over which a business
has no control but which shapes the manner in which the business functions and is able to satisfy
its customers.
        A marketing environment is what surrounds and creates impact on business organisations.
        Marketing environment is uncontrollable and ever changing.
 The key elements of Marketing Environment are as follows:-

(1)   Internal Environment :-

o   The internal environment refers to the forces and actions that are within the organisation and
affects its ability to serve its customers.
o   A company’s marketing system is influenced by its capabilities regarding production, financial
and other factors. Hence, the marketing
Management/manager must take into consideration these departments before finalizing
marketing decisions.
o   It includes marketing managers, sales representatives, marketing budget, marketing plans,
procedures, inventory, logistics and anything within the organisation which affects marketing
decisions and its relationships with its customers.
o   The research and development department, the personnel department, the accounting department
also have an impact on the marketing department.
o   It is the responsibility of a manger to company ordinate all departments by setting up unified
objectives.
(2)   External Environment: (A) Micro Environment :-
o   The Micro Environment refers to the forces that are close to the marketing organisation and direct
impact the customer experiences.
o   It includes the organisation itself, its suppliers, marketing intermediaries, customer markets or
segments, competitors and publics.
o   Happening in micro environment is relatively controllable for the marketing organisation.

SOME FACTORS IN MICRO ENVIRONMENT:-

        Suppliers: - Suppliers are the people who provide necessary resources needed to produce goods
and services. Policies of the suppliers have a significant influence over the marketing manager’s
decisions. A company must build cordial and long term relationships with suppliers.
        Marketing Intermediaries: - Marketing intermediaries are the people who assist the flow of
products from the producers to the customers; they include wholesalers, retailers, agents,etc.
These people create place and time utility. A company must select an effective chain of
middlemen, so as to make the goods reach the market in time.
        Consumers: - Consumers are the centre point of all marketing activities. The main aim of
production is to meet the demand of the consumers. Each type of Consumer has a unique feature
which has to be considered by the marketers before taking the decisions.
        Competitors: - A prudent marketing manager has to be in constant touch regarding the
information relating to the competitor’s strategies.
        Public: - A company’s obligations are not only meet the requirements of its customers but also
to satisfy the various groups. A public is defined as “any group that has an actual or potential
ability to achieve its objectives”.\
(B) Macro Environment:-
o   Macro Environment refers to the forces that are part of the larger society and affects the micro
environment.
o   It includes demography, economy, politics, culture, technology and natural forces.
o   These are the factors/forces on which the company has no control. Hence, it has to frame its
policies within the limits set by these factors.

SOME FACTORS IN MACRO ENVIRONMENT :-

        Demography: - Demography is defined as the statistical study of the human population and its
distribution that forms the market. A company should study the population, its distribution, age
composition, status, etc. before deciding the market strategies.
        Economic Environment: - it affects a consumer’s purchasing behaviour either by increasing
his/her disposal income or by reducing it.
        Technological Factor: - Every new invention builds a new market and a new group of
customers. A new technology improves our life style and at the same time creates many
problems.
        Physical Environment or Natural forces: - A company has to adopt its policies within the
limits set by nature. A man can improve the nature but cannot find an alternative for it. Nature
offers resources but in a limited manner.
        Social and cultural factor: - Most of us purchase because of the influence of social and cultural
factors. The life style, values, beliefs, etc. are determined among other things by the society in
which we live.
Q4. Differences Between:- Marketing and Selling Concept :

Marketing concept Selling Concept

Converting customers need into product Converting product into cash

Emphasis on product planning and Emphasis on sale of the product already used
development

Integrated approach to marketing Fragmented approach to selling

Seller beware principle followed Buyer beware principle followed

Customer determine price, price determine Cost determine price

cost

(a)    Industrial Marketing v/s Consumer Marketing :

Basis Industrial Marketing Consumer Marketing

 Market Geographically Geographically
characteristics Concentrated disbursed

Customer size Relatively fewer buyers Mass market

Product specification Technically complex

Products Standard
and Products
variant Tailor made products

Prompt and competent Some what

Service Service required important

Involvement of various Merely involvement of

Buyer behaviour functional areas in both family members or the peer
buyer and the supplier’s firm group

Based on rational and Based on social, culture,

Purchase decision requirement psychological needs

(b)   Needs v/s Wants :

NEEDS: - A need is generally referred to, as something that is extremely necessary for a person
to survive. If a need is not met, it would lead to the onset of disease, the inability to function
effectively and efficiently in society, and even death. Needs are categorized into two groups.
These are the “objective needs” and “subjective needs”.
Objective needs are those that that are met through tangible things or things that could be
measured. Eg. Of these includes food, shelter, air, etc.
Subjective needs are those that are often seen to ensure our mental health. Eg. Of these includes
self esteem, a sense of security and approval.
WANTS: - A want is something that a person desires, either immediately or in the future. Unlike
needs, wants are those that differ from one person to another. For eg. – one person may want to
own a car while other may want to travel to an exotic country. Each person has his/her own lists
of wants, each with a varying level of importance. Furthermore, wants can change over a period
of time. This is in contrast to needs, which remains constant throughout the life time of the
person.

(c)    Goods v/s Services :

 GOODS SERVICES

Tangible Intangible

Homogeneous Heterogeneous

Production and distribution are Production, distribution and consumption

separated from consumption are simultaneously processess

A thing An activity or process

Core value processed in factory Core value produced in the

buyer-seller interactions

Customers don’t participate in Consumer participate in production

the production process

Can be kept in stock Cant be kept in stock

Q5. What do you mean by Segmentation? Define a Segment? What are the characteristics
of a good segment?
Ans. SEGMENTATION: - The process of dividing a market into smaller homogeneous market
with the similar characteristics is called segmentation. Market segmentation is the process of
dividing the total market into relatively distinct homogeneous sub groups of consumers with
similar needs or characteristics that lead with them to respond in similar ways to a particular
marketing programme.
“Market Segmentation is the sub dividing of market into homogeneous sub-sectional of
customers, where any sub section may conceivably be selected as a market target to be reached
with a distinct marketing mix” – Philip Kotler
Market segmentation consist of taking the total heterogeneous market for a product and dividing
it into several sub markets or segments, each of which tends to be homogeneous in all significant
aspects.
SEGMENT: - A Segment/Market Segment is a portion of a larger market in which the
individuals, groups or organizations share one or more characteristics that cause them to have
relatively similar needs. An identifiable group of individuals, families, businesses or
organizations, sharing one or more characteristics or need in an otherwise homogeneous market.
CHARACTERISTICS OF A GOOD SEGMENT:-
There are certain characteristics of a good segment which are as follows:-
(a)    MEASURABLE: - Market segment are usually measured in terms of sales, value of volume
(i.e. the number of customers within the segment). Reliable market research should be able to
identify the size of a market segment to a reasonable degree of accuracy, so the strategists can
then decide whether, how, and to what extent they should focus their efforts on marketing to this
segment.
(b)   SUBSTANTIAL: - Simply put, there would be no point in wasting marketing budget on a
market segment that is insufficiently large, or has negligible spending power. A viable market
segment is usually a homogeneous group with clear defined characteristics such as age group,
socio-economic background and brand perception. Longevity is also important here : No market
segmentation expert would recommend focusing on an unstable customer group that is likely to
disperse or change beyond recognition within a year or two.
(c)    ACCESSIBLE: - When demarcating a market segment, it is important to consider how the group
might be accessed and crucially, whether this falls within the strengths and abilities of the
company’s marketing department. Different segments might respond better to outdoor
advertising, social media campaigns, television infomercials, or any number of other approaches.
(d)   DIFFERENTIABLE: - An ideal market segment should be internally homogeneous (i.e. all the
customers within the segment have similar preferences and characteristics), but externally
heterogeneous. Differences between market segments should be clearly defined, so that the
campaigns, products and marketing tools applied to them can be implemented without overlap.
(e)    ACTIONABLE :- The market segment must be practical value – its characteristics must
provide supporting data for a marketing position or sales approach, and this is in turn must have
outcomes that are easily quantified, ideally in relation to the existing measurements of the market
segment as defined by initial market research.

A good understanding of these principles of marketing segmentation is an important building

block of a company’s marketing strategy – the foundation for an efficient, streamlined and
ultimately successful approach to customers and a means of targeting its products and services
accurately, with the minimum of wastage.
Q6. Discuss the various basis of Segmentation and explain with suitable examples?
Ans. There are majorly four basis of segmentation which are given below:-
(a)    DEMOGRAPHIC SEGMENTATION: - Demographic Segmentation divides the markets into
groups based on variables such as age, gender, family size, income, occupation, education,
religion, race and nationality. Demographic factors are the most popular bases for segmenting
the consumer group. One reason is that consumer needs, wants and usage rates often vary closely
with the demographic variables. Moreover, demographic factors are easier to measure than most
other type of variables.
AGE: McDonald’s targets children, teens, adults and seniors with different ads and media.
Markets that are commonly segmented by age include clothing, toys, music, automobiles, soaps,
shampoos, etc.
GENDER: clothes for men, women and kids. Like Chhabra 555 sales only women ethnic wear.
Cosmetics: different cosmetics for men & women.
Magazines: there are certain magazines which are published for women like women’s era. And
etc.
INCOME: income of a person decides the life style and purchasing power of that person. This
includes housing, furniture, automobile, clothing, alcoholic beverages, food, sporting goods,
luxury goods, financial services and travel.
FAMILY CYCLE: Product needs vary according to age, number of persons in the household,
marital status and number & age of children. These variables can be combined into a single
variable called family life cycle. It includes social class of a family too. Social class is divided
into three categories Upper class, Middle class and Lower class.
(b)   GEOGRAPHIC SEGMENTATION: - It refers to dividing a market into different geographical
units such as nations, states, regions, cities or neighborhood.
For example: Newspapers are published and distributed to different cities in different languages
to cater the needs of the customers.
Geographical variables such as climate, terrain, natural resources and population density also
influence consumer products needs.
Companies may divide markets into regions because the differences in geographic variables can
cause consumers needs and wants to differ from one region to another.
(c)    PSYCHOGRAPHIC SEGMENTATION: - It pertains to life style and personality traits. In the
case of certain products, buying behavior predominantly depends upon life style and personality
characteristics.

PERSONALITY CHARACTERISTICS: It refers to a person’s individual character traits,

attitudes and habits. Here markets are segmented according to competitiveness, introvert,
extrovert, ambitious, aggressiveness, etc. this type of segmentation is used when a product is
similar to many competing products, and consumer needs for products are not affected by other
segmentation variables.
LIFESTYLES: It is the manner in which people live and spend their time and money. Life style
analysis provides marketers with a broad view of consumers because it segments the markets
into groups on the basis of activities, interests, beliefs and opinions. Companies making
cosmetics, alcoholic beverages and furniture’s segment according to the lifestyle.

(d)   BEHAVIOURAL SEGMENTATION: - In this, buyers are divided into groups on the basis of
their knowledge of, attitude towards, use of, or response to a product. Behavioral segmentation
includes segmentation on the basis of occasions, user status, buyer-readiness stage and attitude.
OCCASION: Buyers can be distinguished according to the occasions when they purchase a
product, use a product, or develop a need to use a product. It helps the firm expand the product
usage. For example; Cadbury’s advertising to promote the product during wedding season is an
example of occasion segmentation.
USER STATUS: sometimes the markets are segmented on the basis of user status, that is, on the
basis of non-user, ex-user, potential user, first time user and regular user of the product. Large
companies usually target potential users, whereas smaller firms focus on their current users.
USAGE RATE: Markets can be distinguished on the basis of usage rate, that is, on the basis of
light, medium and heavy users. Heavy users are often a small percentage of the market, but
account for a high percentage of the total consumption. Marketers usually prefer to attract a
heavy user rather than several light users, and vary their promotional efforts accordingly.
LOYALTY STATUS: Buyers can be divided on the basis of their loyalty status – hardcore loyal
(consumer who buy one brand all the time), split loyal (consumers who are loyal to two or three
brands), shifting loyal (consumers who shift from one brand to another), and switchers
(consumers who show no loyalty to any brand).
BUYER READINESS STAGE: The six psychological stages through which a person passes
when deciding to purchase a product. The six stages are awareness of the product, knowledge of
what it does, interest in the product, preference over competing products, conviction of the
product’s suitability and purchase. Marketing campaigns exist in large part to move the target
audience through the buyer readiness stages.
 Q7. What do you mean by Positioning? What are the different strategies adopted by
marketer to position its product?
Ans. Positioning is the act of designing the company’s offering and image to occupy a distinctive
place in the target market’s mind. The end result of positioning is the successful creation of a
market focused value preposition, a cogent reason why the target market should buy the product.
Each company must decide how many differences to promote to its target customer. The position
of a product is the sum of those attributes normally ascribed to it by the consumers- its standing,
its quality, the type of people who use it, its strengths, its weaknesses, any other unusual or
memorable characteristics it may possess, its price and the value it represents. Many marketers
advocate promoting only one central benefit what Rosser Reeves has referred to as Unique
Selling Preposition (USP) number one positioning include “best quality”, “best service”, “lowest
price”, “best value”, “safest”, “more advanced technology” etc.
Positioning is a platform for the brand. It facilitates the brand to get through to the target
consumer. Positioning is the act of fixing the locus of the product offer in the minds of the target
consumers. In positioning, the firm decides how and around what parameters, the product offer
has to be placed before the target consumers. The significance of product positioning can be
easily understood from David Ogilvy’s words: “the results of your campaign depends less on
how we write your advertising than on how your product is positioned”.
Positioning of a product or service is nothing but creating an image in the consumer’s mind.
Consumers generally tend to use images while making a purchase; they buy brand images rather
than the actual products. There are many brands that have a powerful influence on the
consumer’s mind. Just think of Pepsi or Coca Cola in the soft drink market, Maruti and Santro in
the passenger car market, LG or Samsung in the television market and so on. Brand names add to
the offering and create a “meta product”, an emotional loyalty with consumers. Consumer
associate brand names with life styles, social positions, professional roles and these associations
combine to form an image or position. The terms “Position” or “Positioning” are frequently used
to mean ‘image’. To build up a brand image or corporate image a marketer generally used
advertising as a tool.
POSITIONING APPROACHES:
There are several approaches to positioning of products and service offerings:
1.      Positioning by product attributes or customer benefits: This approach to positioning is
probably the most common and involves setting the brand apart from competitors based on
specific brand attributes or the benefits offered. Many products, such as autos, cameras and other
durable product brands offer excellent examples. A product that is well made usually offers more
than one benefit. In case of toothpaste, brands are positioned on cosmetics, medicinal, taste or
economy dimensions. Some brands are using one, two or even three of the above mentioned
dimensions to create dual or triple positioning. Examples: promise is positioned on gum care.
Close-up is positioned on fresh breath and cosmetic benefit. Colgate is positioned on fresh
breath, decay prevention and taste.
2.      Positioning by price-quality: This approach justifies various price-quality categories of the
products. Manufacturers deliberately attempt to offer more in terms of service, features or
performance in case to certain products known as premium products and in return, they charge
higher price, to cover higher costs and partly to communicate the fact that they are of higher
quality.
3.      Positioning by product-user: This deals with positioning a product keeping in mind a specific
user or class of users. For example, cosmetic brands like lakme position themselves targeting
fashion-conscious women.
4.      Positioning by use of application: The idea behind this approach for positioning is to find an
occasion or time of use. For instance, Vicks Vaporub is to be used for a child’s cold at night.
Iodex is for sprain and muscle pains, Burnol ointment is for burns and Dettol antiseptic is for
nicks and cuts. These brands have used this positioning for decades now without any serious
challenge from competitors.
5.      Positioning by corporate category: This positioning is used so that the brand is perceived as
belonging to another product category. This is often a strong positioning strategy when the
existing product category is crowded. The consumers then perceive the brand in different
context. For example, a milk powder, with suitable additions and appropriate packaging, can be
positioned as an ‘energy drink’ for sports people or a health-drink for players or a drink for
growing school going children etc.
6.      Positioning by corporate identity: Companies that become tried and trusted household names,
use their names to imply the competitive superiority of their new brands such as Tata, Sony, etc.
Corporate credentials are added as by a by-line. This offers a strong positioning and is used in
line extensions or brand extensions.
7.      Positioning by Competitors: Positioning by competitors may be used because the competitor
enjoys a well established image in the market. The marketer wants the consumers to believe that
the brand is superior, or at least as good as the brand offered by the competitor. It is like telling
the people that you live next to some famous movie personality in Delhi rather than getting
involved in explaining the locality and streets.
Q8. What is New Product? What is the necessity of developing a new product? Explain the
process of new product development? Why new product does fails?
Ans. New product: Any offer which is different from the existing one. A new product is
manufactured to meet the tastes and preferences of the customers which are changed as the
passage of time and to retain the existing customers to be interested in the company’s product so
companies time to time provide new products to their customers. Businesses focus on designing
the new products and selling these products to customers. The company’s goal with creating new
products involves two parts. The first part consists of finding a product that customers purchase
produce revenue for the business. The second part consists of beating competitors to market. The
first company to offer a product generates the greatest number of repeat customers.
The necessity of developing new product :
New product become necessary for meeting the changes in consumer demands: - Innovation is
the essence of all growth. This is especially true in marketing. In an age of scientific and
technological advancements, change is a natural outcome – change in food habits, change in
social customs, change in expectations and requirements. Any business has to be vigilant to these
changes taking place in its environment. People always seek better products, great convenience,
newer fashion, and more value for money. A business firm has to respond to these dynamic
requirements of its clientele and these responses take the shape of new products and new
services. Through such a response, the firm reaps good deal of benefits.
New product become necessary for making new profits: - New product becomes necessary from
the profit angle too. Products that are already established often have their limitations in
enhancing the profit level of the firm. We sees how profits from products decline as they reach
the maturity stage of their life cycle and how the profits vanish, as they glide into the stage of
 decline. It thus becomes essential for business firms to bring in new products to replace old,
declining and losing products. New products become part and parcel of the growth requirements
of the firm and in many cases, new profits come to the firm only through new products.
New products become necessary for combating environmental threats: - The need for responding
to changes and the need for new profits are not the only factors that persuade business firms to
go for new products. There is more compelled need – the need to combat the threats arising from
the environment. In fact, on the environment front a firm has to combat economic, social, legal,
political and technological threats. These threats make some of their current products highly
vulnerable. And to reduce the vulnerability of their business as a whole, they seek out new
products. Thus for many firms, new product development becomes an avoidable combat against
environmental threats.
Process of New Product Development:
The process of New Product Development consists of certain stages. Each of these stages
involves considerable study and analysis at each stage and these stages are as following:
1.      Idea Generation: - the first stage in the process is to generate the idea. And the idea can be
generated through brain storming, listing attributes, morphological changes (change in size,
packaging, weight, etc.) and forced relationship. New product ideas can also come from market
research studies. Research studies on the consumers, products, competition, etc. will reveal
market gaps by comparing the existing supply of products with the ideal product conceptions of
consumers. But all market gaps cannot lead to commercially viable products. The promising
ideas will have to be chosen for framing new products concepts.

2.      Idea Screening: - Normally, a new product oriented organization will have at any time several
new product ideas with them. The problem lies in identifying which one are promising ideas. In
this stage, the various product ideas are put to rigorous screening by expert product evaluation
committees. They seek answers to basic questions, like :
Is there a felt need for the new product?
Is it an improvement over an existing product?
Is it close to our current line of business?
Or does it take us to a totally new line of business?
Can the existing marketing organization handle the product?
Or does it need extra expertise on the production and marketing front?
The more attractive looking ideas pass on to the next stage.

3.      Concept development and testing: - In this stage, they seek how to produce those ideas which
they adopted in the previous stage. Then they develop concepts for them. They test those ideas
by asking the marketers who are experts in marketing. They graphically design those ideas first
to check how their new product will look in reality.
Virtual form of ideas is developed here.

4.      Marketing Strategy Development: - Plans related with the market is marketing strategy. Here
companies seek :
who will be their target in market? (Which income group will be targeted?)
When and where to position the product?
What will be the profit goals?
What will be the product’s price?
 How this/these product/s will be distributed?
What will be the budget for promotion?

5.      Business Analysis :- In this stage, companies estimates how much expenses will be incurred in
producing this/these product/s. Companies estimates the total cost to be incurred in
manufacturing the product, total sales (estimates) And also estimates how much profit can be
earned by selling this/these product/s. These estimations are made with the help of research &
development, financial analysis and the time to achieve the breakeven point.

6.      Commercialization: - At this stage the company takes the decision to go in for large scale
manufacturing and marketing of the product. It passes on to this stage only when the results of all
the previous steps are found favourable. It is at this stage that the company commits itself to fully
commercialise the new product idea through investment in manufacturing and marketing. The
various marketing strategies are employed by the company at this stage when it resorts to
commercialization of a new product idea. Today, quite a few progressive firms operate separate
new product departments and new product committees to take care of new product development.
New Product Failure: \
New product development is highly expensive, time consuming and risk laden affair. Only those
organisations that have the capacity to absorb the shocks arising out of all these factors can really
go ahead with the task of new product development. Such organisations invest heavily in
research and development and they often have several new product ideas in the queue, each in
different stages of formulation. While such firms remain leaders in their chosen markets, with all
the attendant advantages of being a leader, the vast majority of the companies prefer to be
followers entering with similar products after the pioneer establish his new product. Majority of
the firms shy away from the task of new product development for the following reasons:
-          New product suffers from a high attrition rate. Many new product ideas, after years of caring, do
not reach the market at all. Considerable time, money and effort is thus wasted.
-          New product suffers from a high rate of market failure. That means that even those product
which reach the market after years of preparation and work, often fall miserably in the market.
-          Even in the case of successful new products, success is short lived. Many of them suddenly die
out after the initial boom.
Q9. What do you mean by Product Life Cycle ? Explain its different stages with suitable
diagram?
Ans. PLC: A product passes through certain distinct stages during its life. This cycle of stages
is called the Product Life Cycle (PLC). The PLC is normally presented as a sales curve spanning
the product’s course from introduction to decline, as shown in the figure given below. The utility
of the PLC concept lies in the fact that each stage in the product life cycle is characterized by a
typical market behaviour and consequently each stage lends itself to the application of a certain
specific marketing strategy. Understanding the PLC concept managing it does effectively can
help prolong the profitable phases of the life span of the product.
It is the path/course through which a product gets its sales and profit in its life.
It is the path through which a product passes in its whole life.
It is the sales/profit graph of a product.
There are four stages in PLC, these are :
1. Introduction stage, 2. Growth stage, 3. Maturity stage and 4. Decline stage
        No certainty
        It is no easy to recognize on which stage the product is
        No certain period of stages
        We can only forecast when the product will start facing further new stage

Characteristics Introduction Growth Maturity Decline

Sales Low sales Rapidly rising Peak sales Declining sales

sales
Average cost Low cost per Low cost per
Costs High cost per per customer customer customer
customer

profits Negative Rising profits High profit Declining

Customers Innovators Early adopters Later majority Laggards

Competitors Few/no/ growing Stable number Decline

negligible

Marketing Create product Maximize Maximize profit Reduced

Objectives awareness and market share while defending expenditure and
try market share milk the brand

Marketing Mix Basic product Offer product Diversify brands Phase out waste
offered extension, and models products
service,
warranty

Price Cost + pricing Price to Price to match Cut price

penetrate the best
market competitors
Place/ Selective intensive More intensive Go selective and
distribution distribution phase out
unprofitable
outlets

Advertisement Product To build For brand Reduced level of

awareness awareness and differentiation advertisement to
persuasive in and benefits retain loyal
the mass market sought customers

Sales promotion Heavy sales Reduce to take Increase to Reduce to

promotion advantage of encourage brand minimum level
heavy consumer switching and to
demand defend own
brand

Q10. Explain the different strategies adopted by a marketer to increase the sales of its
product in different stages of Product Life Cycle?
Ans. Product passes through four stages of its life cycle. Every stage poses different
opportunities and challenges to the marketer. Each of stages demands the unique or distinguished
set of marketing strategies. A marketer should watch on its sales and market situations to identify
the stage in which the product is passing through, and accordingly, he should design appropriate
marketing strategies. Here, strategy basically involves four elements – product, price, promotion
and distribution.
By appropriate combination of these four elements, the strategy can be formulated for each
stages of the PLC. Every stage gives varying importance to these elements of marketing mix. Let
us analyze basic strategies used in each of the stages of the PLC, as described by Philip Kotler.
Marketing strategies for Introduction Stage :
Introduction stage is marked with slow growth in sales and a very little or no profit. Note that
product has been newly introduced, and a sales volume is limited; product and distribution are
not given more emphasis. Basic constituents of marketing strategies for the stage include price
and promotion. Price, promotion or both may be kept high or low depending upon market
situation and management approach.
Following are the possible strategies during the first stage :
promotion
high low
high Rapid skimming strategy Slow skimming strategy
low
1. Rapid Rapid penetration strategy Slow penetration strategy
skimming strategy
:- this strategy consists
of introducing a new product at high price and high promotional expenses. The purpose of high
price is to recover profit per unit as much as possible. The high promotional expenses are aimed
at convincing the market the product merits even at a high price. High promotion accelerates the
rate of market penetration, in all; the strategy is preferred to skim the cream (high profits) from
market.
 This strategy makes a sense in following assumptions:
a.       Major part of the market is not aware of the product.
b.      Customers are ready to pay the asking price.
c.       The possibility of competition and the firm wants to build up the brand preference.
d.      Market is limited in size.

2. Slow skimming strategy: - this strategy involves launching a product at a high price and low
promotion. The purpose of high [price is to recover as much as gross profit as possible. And, low
promotion keeps marketing expenses low. This combination enables to skim the maximum profit
from the market.
This strategy can be used under following assumptions:
a.       Market is limited in size.
b.      Most of consumers are aware of product.
c.       Consumers are ready to pay high price.
d.      There is less possibility of competition.

3. Rapid penetration: - the strategy consists of launching a product at a low price and high
promotion. The purpose is the faster market penetration to get larger market share. Marketer tries
to expand market by increasing the number of buyers.
It is based on following assumptions:
a.       Market is large
b.      Most buyers are price-sensitive. They prefer the low-priced products.
c.       There is strong potential for competition.
d.      Market is much aware of the product. They need to be informed and convinced.
e.       Per unit cost can be reduced due to more production, and possibly more profits at low price.

4. Slow penetration :- the strategy consists of introducing a product with low price and low level
promotion. Low price will encourage product acceptance, and low promotion can help
realization of more profits, even at low price.

Assumptions of this strategy:

a.       Market is large.

b.      Market is aware of the product.
c.       Possibility of competition is low.
d.      Buyers are price sensitive or price elastic, and not promotion elastic.

Marketing strategies for growth stage :

This is the stage of rapid market acceptance. The strategies are aimed at sustaining market
growth as long as possible. Here, the aim is not to increase awareness, but to get trial of the
product. Company tries to enter the new segments. Competitors have entered the market. The
company tries to strengthen competitive position in the market. It may forgo maximum current
profits to earn still greater profits in the future.
Several possible strategies for the stage are as under:
a.       Product qualities and features improvement.
b.      Adding new models and improving styling.
c.       Entering new market segments.
d.      Designing, improving and widening distribution network.
e.       Shifting advertising and other promotional efforts from increasing product awareness to product
conviction.
f.       Reducing price at the right time to attract price sensitive consumers.
g.      Preventing competitors to enter the market by low price and high promotional efforts.
Marketing strategies for Maturity stage :
In this stage, competitors have entered the market. There is severe fight among them for more
market share. The company adopts offensive/aggressive marketing strategies to defeat the
competitors.
Following possible strategies are followed:
1.      To do nothing: - to do nothing can be an effective marketing strategy in the maturity stage. New
strategies are not formulated. Company believes it is advisable to do nothing. Earlier or later, the
decline in the sales is certain. Marketer tries to conserve money, which can be later on invested
in new profitable products. It continues only routine efforts and starts planning for new products.
2.      Market modification: - this strategy is aimed at increasing sales by raising the number of brand
users and the usage rate per user. Sales volume is the product (or outcome) of number of users
and usage rate per users. So, sales can be increased either by increasing the number of users or
by increasing the usage rate per user or by both. Number of users can be increased by variety of
ways.
Marketing strategies for Decline stage :
Company formulates various strategies to manage the decline stage. The first important task is to
detect the poor products.
After detecting the poor products, a company should decide whether poor products should be
dropped. Some companies formulate a special committee for the task known as product review
committee. The committee collects data from internal and external sources and evaluates
products. On the basis the report submitted by the committee, suitable decisions are taken.
Company may follow any of the following strategies :
1.      Continue with the original products :
This strategy is followed with the expectations that competitors will leave the market. Selling
and promotional costs are reduced. Many times, a company continues its products only in
effective segments and from remaining segments they are dropped. Such products are continued
as long as they are profitable.
2.      Continue products with improvements :
Qualities and features are improved to accelerate sales. Products undergo minor changes to
attract buyers.
3.      Drop the product :
When it is not possible to continue the products either in original form or with improvement, the
company finally decides to drop the products.

Products may be dropped in following ways:

a.       Sell the production and sales to other companies.
b.      Stop production gradually to divert resources to other products.
c.       Drop products immediately.
Q11. What is Packaging? Explain the objectives of packaging? State the new trends, new
innovation emerging in industry?
 Ans. Packaging: it is the technology of enclosing or protecting products for distribution, storage,
sale and use. Packaging also refers to the process of designing, evaluating and producing
packages. Packaging can be described as a coordination system of preparing goods for transport,
warehousing, logistics, sale and end use. Packaging contains, protects, preserves, transports,
informs and sells. In many countries it is fully integrated into government, business, and
institutional, industrial and personal use.
Objectives of Packaging :
a.       Physical protection: the objects in the package may require protection from, among other things,
shock, vibration, compression, temperature, etc.
b.      Barrier protection: a barrier from oxygen, water vapor, dust, etc., is often required. Package
permeability is a critical factor in design. Some packages contain desiccants or oxygen absorbers
to help extend shelf life. Modified atmospheres or controlled atmospheres are also maintained in
some food packages. Keeping the contents clean, fresh and safe for the intended shelf life is a
primary function.
c.       Containment or Agglomeration: small objects are typically grouped together in one package for
reason of efficiency. For example, a single box of 1000 pencils requires less physical handling
than 1000 single pencils. Liquids, powders.
d.      Information transmission: packages and labels communicate how to use, transport, recycle or
dispose of the package or product. With pharmaceutical, food, medical and chemical products.
Some types of information are required by governments.
e.       Marketing: the packaging and labels can be used by marketers to encourage potential buyers to
purchase the product. Package design has been an important and constantly evolving
phenomenon for dozens of years. Marketing communications and graphic designs are applied to
the surface of the package and the point of sale display.
f.       Security: packaging can play an important role in reducing the security risks of shipment.
Packages can be made with improved tamper resistance to deter tampering and also can have
tamper-evident features to help indicate tampering. Packages can be engineered to help reduce
the risks of package pilferage: some package constructions are more resistant to pilferage and
some have pilfer indicating seals. Packages may include authentication seals to help indicate that
the package and contents are not counterfeit. Packages also can include anti-theft devices, such
as dye-packs, RFID tags or electronic article surveillance tags, that can be activated or detected
by devices at exit points and require specialized tools to deactivate. Using packaging in this way
is a means of loss prevention.
g.      Convenience: packages can have features which add convenience in distribution, handling,
display, sale, opening, reclosing, use and reuse.
h.      Portion control: single serving or single dosage packaging has a precise amount of contents to
control usage. Bulk commodities (such as salt) can be divided into packages that are a more
suitable size for individual households. It is also aids the control of inventory: selling sealed one
liter bottles of milk, rather
Q12. Define Price? Discuss the objectives of Pricing ?
Ans. Price: A value that will purchase a finite quantity, weight, or other measure of a good or
service. It may be fixed by a contract, left to be determined by an agreed upon formula at a future
date, or discovered or negotiated during the course of dealings between the parties involved. In
commerce, price is determined by what (1) a buyer is willing to pay, (2) a seller is willing to
accept and (3) the competition is allowing to be charged. With product, promotion and place of
marketing mix, it is one of the business variables over which organisations can exercise some
 degree of control. It is a criminal offence to manipulate prices in collusion with other suppliers
and to give a misleading indication of price such as charging for items that are reasonably
expected to be included in the advertised, list or quoted price. Also called sale price or selling
price.
Objectives of Pricing :
A firm seeks to meet a number of objectives through pricing. Profit, optimum or maximum, long
term or current, cannot be the only objective of pricing. A multiplicity or mix of objectives is
inevitably involved in pricing. Each firm seeks to meet a community of interests through its price
policy. The interest may be vary from firm to firm. Accordingly, pricing policy may also vary.
But no firm can remain satisfied with a single objective in pricing. The various objectives sought
to be realized through pricing are listed below:
         Profit maximization in the short term
         Profit maximization in the long term
         A minimum return ( or target return) on investment
         A minimum return on sales turnover
         Target sales volume
         Target market share
         Deeper penetration of the market
         Entering new markets
         Target profit on the entire product line irrespective of profit level in individual products
         Keeping competition out, or keeping it under check
         Keeping parity with competition
         Fast turn around and early cash recovery
         Stabilising prices and margins in the market
         Providing commodities at prices affordable by weaker sections
         Providing commodities/services at prices that will stimulate economic development

Of the basket of objectives different permutations apply to different firms :

Obviously, all the objectives of pricing mentioned above may not be relevant in all the cases. For
example, the last two objectives in the list are relevant only to public utility services,
infrastructure items and essential commodities distributed through the public distributed system.
As regards the vast majority of products and services that are produced and marketed by
commercial firms, these considerations enter the pricing decisions only in a subdued manner;
their pricing cannot be principally based on societal consideration.
Q13. Describe various methods and strategies of Pricing?
Ans. The two methods of pricing are as follows:
A.    COST ORIENTED METHOD B. MARKET ORIENTED METHOD
There are several methods of pricing products in the market. While selecting the method of
fixing prices, a marketer must consider the factors affecting pricing. The pricing methods can be
broadly divided into two groups – cost oriented method and market oriented method.
A.    Cost-Oriented Method :
Because cost provides the base for a possible price range, some firms may consider cost-oriented
methods to fix the price.
Cost – oriented methods or pricing are as follows :
1.      Cost plus pricing :
 It involves adding a certain percentage to cost in order to fix the price. For instance, if the cost of
a product is Rs.200 per unit and the marketer expects 10% profit on costs, then the selling price
will be Rs.220. the difference between the selling price and the cost is the profit. This method is
simpler as marketers can easily determine the costs and add a certain percentage to arrive at the
selling price.
2.      Mark-up pricing :
Mark up pricing is a variation of cost pricing. In this case, mark-ups are calculated as a
percentage of the selling price and not as a percentage of the cost price. Firms that use cost-
oriented methods use mark-up pricing.
Since only the cost and the desired percentage markup on the selling price are known, the
following formula is used to determine the selling price:
Average unit cost/selling price
3.      Break –even pricing :
In this case, the firm determines the level of sales needed to cover all the relevant fixed and
variable costs. The break-even price is the price at which the sales revenue is equal to the cost of
goods sold. In other words, there is neither profit nor loss.
For instance, if the fixed cost is Rs. 2,00,000; the variable cost per unit is Rs.10, and the selling
price is Rs.15, then the firm needes to sell 40,000 units to break-even. Therefore, the firm will
plan to sell more than 40,000 units to make a profit. If the firm is not in a position to sell 40,000
limits, then it has to increase the selling price.
The following formula is used to calculate the break-even point :
Contribution = selling price – variable cost per unit

4.      Target return pricing :

In this case, the firm sets prices in order to achieve a particular level of return on investment
(ROI)
The target return price can be calculated by the following formula :
Target return price = total costs + ( desired ROI investment)/total sales in units
For instance, if the total investment is Rs. 10,000; the desired ROI is 20%, the total cost is
Rs.5,000 and the total sales expected are 1,000 units, then the target return price will be Rs.7/
unit as shown below :
5,000 + (20% * 10,000)/7000
Target return price = 7
The limitation of this method (like other cost- oriented methods) is that prices are derived from
costs without considering market factors such as competition, demand and consumers’ perceived
value. However, this method helps to enusre that prices exceed all costs and therefore contribute
to profit.
5.      Early cash recovery pricing :
Some firms may fix a price to realize early recovery of investment involved, when market
forecasts suggest that the life of the market is likely to be short, such as in the case of fashion-
related profucts or technology-sensitive products.
Such pricing can also be used when a firm anticipates that a large firm may enter the market in
the near future with its lower prices, forcing existing firms to exit. In such situations, firms may
fix a price level, which would maximize short term revenues and reduce the firm’s medium term
risk.
B.     Market- oriented methods :
1.      Perceived value pricing :
A good number of firms fix the price of their goods and services on the basis of customer’s
perceived value. They consider customer’s perceived value as the primary factor for fixing prices
and the firm’s costs as the secondary.
The customer’s perception can be influenced by several factors, such as advertising, sales on
techniques, effective sales force and after sale service staff. If customers perceive a higher value,
then the price fixed will be high and vice versa. Market research is needed to establish the
customer’s perceived value as a guide to effective pricing.
2.      Going-rate pricing :
In this case, the benchmark for setting prices is the price set by major competitors. If a major
competitor change its price, then the smaller firms may also change their price, irrespective of
their costs or demand.
The going-rate pricing can be further divided into three sub-methods :
a.      Competitor’s parity method : A firm may set the same price as that of the major competitors.
b.      Premium pricing : A firm may charge a little higher if its products have some additional
special features as compared to major competitors.

c.       Discount pricing : A firm may charge a little lower price if its products lack certain features as
compared to major competitors. The going-rate method is very popular because it tends to reduce
the livelihood of price wars emerging in the market. It also reflects the industry’s coactive
wisdom relating to the price that would generate a fair return.
3.      Sealed-bid pricing :
This pricing is adopted in the case of large orders or contracts, especially those of industrial
buyers or government departments. The firms submit sealed bids fo jobs in response to an
advertisement.
In this case, the buyer expects the lowest possible price and the seller is expected to provide the
best possible quotation or tender. If a firm wants to win a contract, then it has to submit a lower
price bid. For this purpose, the firm has to anticipate the pricing policy of the competitors and
decide the price offer.
4.      Differentiated pricing :
Firms may charge different prices for the same product or service.

The following are some the types of differentiated pricing:

a.      Customer segment pricing :

Here different customer groups are charged different prices for the same product or service
depending on the size of the order, payment terms and so on.
b.      Time pricing :
Here different prices are charged for the same product or service at different timings or season.
It includes off-peak pricing, where low prices are charged during low demand timings or season.
c.       Area pricing :
Here different prices are charged for the same product in different market areas. For instance, a
firm may charge a lower price in a new market to attract customers.
d.      Product form pricing :
 Here different versions of the product are priced differently but not proportionately to their
respective costs. For instance, soft drinks of 200, 300, 500ml, etc., are priced according to this
strategy.
Q 14. What do you mean by Distribution Channel? What are the different types of
Distribution Channel? Explain each with suitable examples?
Ans. Distribution Channel: The path through which goods and services travel from the vendor
to the consumer or payments for those products travel from the consumer to the vendor. A
distribution channel can be as short as a direct transaction from the vendor to the consumer, or
may include several interconnected intermediaries along the way such as wholesalers,
distributors, agents and retailers. Each intermediary receives the item at one pricing point and
movies it to the next higher pricing point until it reaches the final buyer. Coffee does not reach
the consumer before first going through a channel involving the farmer, exporter, importer,
distributor and the retailer.
A distribution channel is the chain of businesses or intermediaries through which a good or
service passes until it reaches the end consumer. A distribution channel can include wholesalers,
retailers, distributors and even the internet. Channels are broken into direct and indirect forms,
with a "direct" channel allowing the consumer to buy the good from the manufacturer and an
"indirect" channel allowing the consumer to buy the good from a wholesaler. Direct channels are
considered "shorter" than "indirect" ones.
Types of Distribution Channel : Distribution channels are the ways that goods and services are
made available for use by the consumers. All goods go through channels of distribution, and
your marketing will depend on the way your goods are distributed. The route that the product
takes on its way from production to the consumer is important because a marketer must decide
which route or channel is best for his particular product.
1.      Manufacturer to Customer :
Manufacturer makes the goods and sells them to the consumer directly with no intermediary,
such as a wholesaler, agent or retailer. Goods come from the manufacturer to the user without an
intermediary. For example, a farmer may sell some produce directly to customers. For example,
a bakery may sell cakes and pies directly to customers. It is also known as direct distribution.
2.      Manufacturer to Retailer to Consumer :
Purchases are made by the retailer from the manufacturer and then the retailer sells the
merchandise to the consumer. This channel is used by manufacturers that specialize in producing
shopping goods. For example, clothes, shoes, furniture and fine china. This merchandise may not
be needed immediately and the consumer may take her time and try on the items before making a
buying decision. Manufacturers that specialize in producing shopping goods prefer this method
of distribution.
3.      Manufacturer to Wholesaler to Customer :
Consumers can buy directly from the wholesaler. The wholesaler breaks down bulk packages for
resale to the consumer. The wholesaler reduces some of the cost to the consumer such as service
cost or sales force cost, which makes the purchase price cheaper for the consumer. For example,
shopping at some of the warehouse clubs, the customer may have to buy a membership in order
to buy directly from the wholesaler.
4.      Manufacturer to Agent to Wholesaler to Retailer to Customer :
Distribution that involves more than one intermediary involves an agent called in to be the
middleman and assist with the sale of the goods. An agent receives a commission from the
producer. Agents are useful when goods need to move quickly into the market soon after the
 order is placed. For example, a fishery makes a large catch of seafood; since fish is perishable it
must be disposed of quickly. It is time consuming for the fishery to contact many wholesalers all
over the country so he contacts an agent. The agent distributes the fish to the wholesalers. The
wholesalers sell to retailers and then retailers sell to consumers.

Q 15. What factors should be considered while selecting a Distribution Channel?

Ans. Some of the factors to consider while selecting channels of distribution are as follows:
1.      Product: Perishable goods need speedy movement and shorter route of distribution. For durable
and standardized goods, longer and diversified channel may be necessary. Whereas, for custom
made product, direct distribution to consumer or industrial user may be desirable.
Also, for technical product requiring specialized selling and serving talent, we have the shortest
channel. Products of high unit value are sold directly by travelling sales force and not through
middlemen.
2.      Market:
(a) For consumer market, retailer is essential whereas in business market we can eliminate
retailing.
(b) For large market size, we have many channels, whereas, for small market size direct selling
may be profitable.
(c) For highly concentrated market, direct selling is preferred whereas for widely scattered and
diffused markets, we have many channels of distribution.
(d) Size and average frequency of customer’s orders also influence the channel decision. In the
sale of food products, we need both wholesaler and retailer.
Customer and dealer analysis will provide information on the number, type, location, buying
habits of consumers and dealers in this case can also influence the choice of channels. For
example, desire for credit, demand for personal service, amount and time and efforts a customer
is willing to spend-are all important factors in channels choice.
3.      Middlemen:
(a) Middlemen who can provide wanted marketing services will be given first preference.
(b) The middlemen who can offer maximum co-operation in promotional services are also
preferred.
(c) The channel generating the largest sales volume at lower unit cost is given top priority.
4.      Company:
(a) The company’s size determines the size of the market, the size of its larger accounts and its
ability to set middlemen’s co-operation. A large company may have shorter channel.
(b) The company’s product-mix influences the pattern of channels. The broader the product- line,
the shorter will be the channel.
If the product-mix has greater specialization, the company can favor selective or exclusive
dealership.
(c) A company with substantial financial resources may not rely on middlemen and can afford to
reduce the levels of distribution. A financially weak company has to depend on middlemen.
(d) New companies rely heavily on middlemen due to lack of experience.
(e) A company desiring to exercise greater control over channel will prefer a shorter channel as it
will facilitate better co-ordination, communication and control.
(f) Heavy advertising and sale promotion can motivate middlemen in the promotional campaign.
In such cases, a longer chain of distribution is profitable.
 Thus, quantity and quality of marketing services provided by the company can influence the
channel choice directly.
5.      Marketing Environment:
During recession or depression, shorter and cheaper channel is preferred. During prosperity, we
have a wider choice of channel alternatives. The distribution of perishable goods even in distant
markets becomes a reality due to cold storage facilities in transport and warehousing. Hence, this
leads to expanded role of intermediaries in the distribution of perishable goods.
6.      Competitors:
Marketers closely watch the channels used by rivals. Many a time, similar channels may be
desirables to bring about distribution of a company’s products. Sometimes, marketers
deliberately avoid channels used by competitors. For example, company may by-pass retail store
channel (used by rivals) and adopt door-to-door sales (where there is no competition).
7.      Customer Characteristics:
This refers to geographical distribution, frequency of purchase, average quantity of purchase and
numbers of prospective customers.
8.      Channel Compensation:
This involves cost-benefit analysis. Major elements of distribution cost apart from channel
compensation are transportation, warehousing, storage insurance, material handling distribution
personnel’s compensation and interest on inventory carried at different selling points.
Distribution Cost Analysis is a fast growing and perhaps the most rewarding area in marketing
cost analysis and control
Q 16. What do you mean by Promotion Mix? Explain the objective of promotion mix.
Discuss the various elements of Promotion Mix?
Ans. A specific combination of promotional methods used for one product or a family of
products. Elements of a promotion mix may include print or broadcast advertising, direct
marketing, personal selling, point of sale displays, and/or merchandising. Promotion is an
important part of marketing mix of a business enterprise. Once a product is developed, its price is
determined the next problem comes to its sale i.e., creating demand for the product. It requires
promotional activities. The activities are technique which brings the special characteristics of the
product and of the producer to the knowledge of prospective customers. Promotion is a process
of communication involving information, persuasion, and influence. The term ‘selling’ is often
used synonymously with promotion. But promotion is wider that selling. Selling is concerned
only with the transfer of title in goods to the purchaser, whereas promotion includes techniques
stimulating demand. These techniques include advertising, salesmanship or personal selling and
other methods of stimulation demand.
Elements of Promotion Mix :There are four elements of promotion mix:
Advertising: Advertising is a non-personal presentation of goods, services or idea. In advertising
existing and prospective customers are communicated the message through impersonal media
like radio, T.V., newspapers and magazine. It involves transmission of standard message
simultaneously to a large number of people. The message transmitted is known as advertising.
Personal Selling : Personal selling is the process of assisting and persuading the existing and
prospective buyer to buy the goods or services in person. It involves direct and personal contact
of the seller or his representative with the buyer.
Publicity : Publicity is a non-personal non-paid stimulation of demand of the product or services
or business unit by planning commercially significant news about the services or business unit by
planning commercially significant news about in the print media or by obtaining a favorable
presentation of it upon radio, television or stage.
Sales promotion: Sales promotion consists of all activities other than advertising, personal
selling and publicity, which help in promoting sales of the product. Such activities are non-
repetitive and one time offers. According to American Marketing Association, sales promotion
include, “those marketing activities other than personal selling, advertising and publicity that
stimulate consumer purchasing and dealer effectiveness, such as point of purchase displays,
shows and exhibitions, demonstrations and various non-recurring selling efforts not in the
ordinary routine.”
The main aim of sales promotion is to increase sales and profits of the firm but it is quite
different from personal selling and advertising. In personal selling, customer is persuaded by a
sales person face to face. Advertising is a non-personal mass communication media. Sales
promotion, on the other hand, is a non-recurring and non-routine method. Its main aim is to
supplement and coordinate the personal selling and advertising. It is a supporting and facilitating
element of promotional strategy. Sales promotion bridges the gap of advertising and personal
selling.
Q 17. Differentiate between Advertising and Publicity. Discuss the role of advertising in
promoting goods and services of a company?
Ans. Publicity and advertising both are popular techniques used for market promotion. The key
difference between the terms has been discussed below;
Publicity:
1. It is not a paid form of communication.
2. Mostly, publicity can be carried via newspapers, magazines, radio or television.
3. Company has no control over publicity in terms of message, time, frequency, and medium.
4. It is undertaken for a wide variety of purposes. They may include promotion of new product,
pollution control efforts, highlighting special achievement of employees, publicizing new
policies, or increasing the sales.
5. It may not be repeated. It takes place only once.
6. It has a high degree of credibility or reliability as it comes from mass media independently.
7. It is in forms of news or reports presented differently than propaganda.
8. Publicity can be done at a much lower cost than advertising.
9. It is not given by company or producer. It is given by the third party whose opinion carries
more reliability.
10. Publicity message is more likely to be read and reacted by audience.
11. It is useful for society. It has social significance.

Advertising:
1. It is paid by the sponsor who wants to advertise the product.
2. A large number of media are used. Based on various factors like cost, type of message,
reliability, etc., media are selected.
3. Company has a complete control over advertising. Company can design its advertising as per
its needs.
4. Sales expansion and promotion of a new product are immediate and direct objectives of
advertising.
5. Its frequency or repetition depends on company’s need. It can be repeated if company wants.
6. Advertising has less credibility. It is considered as company’s efforts to increase sales.
7. It is in forms of propaganda and it is presented more artificially and attractive manner as per
producer’s plan.
8. Advertising is the most expensive promotional tool.
9. It is always sponsored by company or its representatives.
10. Most of the advertising messages are not given more attention.
11. It is exclusively useful for company and its dealers. To some extent, it may be useful to
customers.
Role of Advertising in Promoting goods/services of a company :
The promotional mix is the blend of methods used by a company to deliver company, brand and
product messages to target customers. Advertising, public relations, direct marketing and selling
are common components of a complete promotional mix. Advertising is generally one of the
most important promotion methods and the one with the largest budget.
Control
One of the strongest distinctions between advertising and other forms of promotion is that you
pay for ad messages, buying time or space on a particular medium. Paying for placement gives
you greater control over the design, timing and location of your message. In public relations, you
can have some influence, but media reporters can write negative stories just as easily as they can
positive ones.
Brand Management
Much of advertising centers on the development and maintenance of a brand image. Building a
brand image is an important first step for a successful business. Your messages convey what
makes your company, products or service distinct from competitors. However, some brand
messages are more intangible, emphasizing qualities such as luxury, sophistication, class, social
belonging, relaxation and fun.
Create Value Proposition
Your value proposition is the mix of product or service benefits and price that you offer a
particular target customer group. You can base your value on top quality, elite service, organic
materials or ingredients, environmentally-responsible behavior, low price or unique designs.
Since you control ad messages, you have a greater ability to set out for customers why your
brand has superior value. PR includes dealing with negative issues and sales doesn't allow for
preplanned message strategies and development.
Passive Communication
Unlike direct marketing and selling, advertising is a one-way, passive form of promotion. You
deliver a commercial or print ad and must research or watch business results to find out whether
the message affected customers. For this reason, much of advertising is intended to promote
brand recall or to persuade customers to buy. If your business sells complex or expensive goods,
you often need sales staff at the point-of-sale to interact with customers and overcome their
concerns or objections.
Q18. Explain the process of Personal Selling?
Ans. There are six stages in the process of Personal Selling which are as following below :
1. Prospecting:
Searching for prospects is prospecting. Here, prospect is a person or an institution who is likely
to be benefited by the product the salesman wants to sell and can afford to buy it.
Prospecting is the work of collecting the names and addresses or persons who are likely to buy
the firm’s products and services. Provide encompasses even the discovery of special needs and
multiplying the sales with existing clientele.
While collecting the details, ‘suspects’ must be separated from ‘prospects’ to avoid or reduce
waste of time, treasure and talent. There are definite methods of prospecting.
The most popular ones are:
1. Endless chain method,
2. Centre of influence method,
3. Personal observation method,
4. Spotter’s method,
5. Cold-canvas method;
6. Direct mail and
7. Telephone method.
2. Pre-approach:
Pre-approach is to get more detailed facts about a specific individual to have effective sales
appeals on him or her. It is a record round effort to get details regarding the prospect such as his
ability, need, authority, accessibility to buy; it is a closer look of prospects, likes and dislikes,
tastes, habits, financial status, social esteem, material status, family background and the like.
The objectives of pre-approach are to providing additional qualifying information; to design an
effective approach strategy; to better the planning information; to avoid serious errors and to
build-up confidence.
The sources of information are his fellow salesmen, customers, local newspapers, special
investigators, sales office, directories, observation and the prospect.
3. Approach:
Approach means the meeting of the prospect in person by the salesman where he makes face to
face contact with prospects to understand them better. Approach is such a delicate and critical
stage of the sales process that the sales are either won or lost.
Approach is stepping stone for sales presentation. It is because of this delicacy that sales are
likened to a chain where break of one link will break it into useless lump of hooks.
Success follows the salesman who possesses courage, courtesy and confidence. The objectives of
approach are: To help the salesman to make a favourable impression; to amplify the detailed
information obtained by the salesman at pre-approach level; to convert the favourable attention
of the prospect easily and smoothly into the sales proposition.
4. Presentation and demonstration:
Presentation implies an array and decoration of articles in the shop. It is the heart of selling
process. Effective presentation has the capacity to convince the customer of his sales proposition.
It creates and holds the interest of customers towards the products. It would be wrong to assume
that all those who enter the shop do buy the products.
Normally, most of the prospects visit the shop to see prior to their decision to buy. This casual
visit can be a commitment visit provided products are displayed, presented and demonstrated by
the salesmen in an appealing manner. Demonstration is a part of presentation because, more
description is not enough.
Demonstration is the crucial task of providing the proofs and providing the statements about
quality, utility, performance and service of a product by evidences of experiment, operation or a
test.
The significance of demonstration lies in reducing the sales talk, facilitating the comparison,
appealing to senses, fortifying the sales talks and convincing the fastidious customers. Here, A-I-
D-A approach works wonders.
5. Overcoming objections:
For a creative and persuasive salesman, the process of selling really starts when the prospect
raises objections. In absence of sales resistance the salesman is merely an order booking clerk.
For every action of salesman there is prospect’s pro-action or reaction that is, approval or
disapproval.
Each salesman should understand the reasons as to why prospects raise objections because; each
objection has its roots in the buying decision. An objection is the expression of disapproval of an
action taken by salesman; it is an adverse reason or an argument indicating clearly that the
prospect is not yet ready to buy.
These objections may be genuine or mere excuses. Overcoming objections is really a delicate
stage that makes or mars the unbroken chain of selling process.
Being a very crucial aspect, the experts have a set procedure for overcoming the objections
namely, listen to the prospect cushion the jolt anticipate the objections and prevent their
occurrence. It is the creative task of bringing the customer to the sales track once again.
6. Closing:
All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation and
handling the objections have been designed to induce the prospect to make decision to buy so
that a sale can be concluded.
The success in earlier stages will lead to the last stage of closing the sale and clinch the deal.
Here, ‘close’ means the act of actually getting the prospect’s assent to the sales proposal or he
gets an order.
The underlying point of closing sale is to persuade the prospect to act right now than postponing
or delaying the action. It is here that the prospect is turned into a customer desire into demand.
Though it sounds very easy, it is the most difficult task. It is the positive attitude and self-
confidence that plays a decisive role in converting wish into desire and desire into demand. A
poor closer is a poor salesman and salesman who cannot close well will have to close the line.