Chapter-1

MARKETING: Creating, Customer Value and Engagement

MCQ

1: Which of the following statements about market offerings is correct?

(a) Market offerings are limited to services.

(b) Experiences are not a market offering.
(c) Market offerings are limited to products.
(d) Market offerings are a combination of products, services, information, or experiences.
(e) Market offerings are not related to customers' needs and wants.

2: Which core marketing concept is the key building block to develop and manage customer
relationships?

(a) Profits
(b) Market offerings
(c) Needs, wants, and demands
(d) Value and satisfaction
(e) Markets

3: The actual and potential buyers in a market share which of the following characteristics?

(a) They have the same demographic profile.

(b) They have little influence over marketers.
(c) They share a particular need and or want.
(d) They do not engage in marketing.
(e) They rely on marketers to provide product information.

4: The first step to a successful value-driven marketing strategy is to determine whom to serve with
a market offering. To make this decision, marketers engage in which two activities?

(a) Segmenting and customer management

(b) Segmenting and targeting
(c) Targeting and positioning
(d) Segmenting and demand management
(e) Customer management and demand management

5: Which of the following is an accurate statement about building customer relationships in the
modern marketing era?

(a) Even with the new digital technologies available to marketers, consumers still cannot create
personal brand experiences.
(b) At the current time, brands should wait to adopt new digital technologies and social media until
the pace of change slows down.
(c) Consumer-generated marketing is when marketers take an active role in shaping product and
brand content.
(d) Digital technologies and social media have created few opportunities for marketers to engage
their customers and deliver value.
(e) Building relationships through consumer-generated marketing is expensive and time-
consuming.

6: Which of the following is NOT an accurate description of modern marketing?

A) Marketing is the creation of value for customers.

B) Marketing involves managing profitable customer relationships.

C) Marketing emphasizes selling and advertising exclusively.

D) Marketing involves satisfying customers' needs.

E) Marketing is building value-laden exchange relationships with customers.

7: According to management guru Peter Drucker, "The aim of marketing is to

A) maximize profits of the company

B) emphasize customer wants and not customer needs

C) make selling unnecessary

D) fulfill unrealistic customer expectations

E) sell products

8: Customer equity is defined as:

o the total combined customer lifetime values of all the company's customers
o the total combined supplier lifetime values of all the company's suppliers
o the total combined stock value of all the company's warehouses
o all of the above

9: Which of the following is not part of the marketing concept?

o Customer needs
o Integrated marketing
o Profits through customer satisfaction
o Profits through sales volume
10: What does the term NPV stand for?

o Network price value

o Net present value
o Nordic product value
o None of the above

11: The five alternative concepts under which organizations design and carry out their marketing
strategies consists of which of the following?

o The production, selling, marketing, societal marketing concepts, supplier needs

o The production, product, selling, marketing, societal marketing concepts
o Brand extensions, profits through sales volume, supplier needs, product, selling
o None of the above

12: A company can classify customers according to their potential profitability and manage its
relationships with them accordingly.

 True
 False

13: Hennes & Mauritz has become one of the world's leading clothing retailers by focusing on DIY
(Do-It-Yourself) activity.

 True
 False

14: Marketing is the process by which companies create ______ for customers and build strong
customer _______ in order to capture value from customers in return.

o ads, campaigns
o products, discounts
o value, relationships
o none of the above

15: The selling concept consists of which of the following four major elements?

o Factory, existing products, brand extensions, profits through sales volume

o Factory, existing products, selling and promoting, profits through sales volume
o Factory, marketing, societal marketing concepts, supplier needs
o None of the above

16: Customer-centered companies are skilled in

a) Market engineering

b) Product engineering

c) Both a & b

d) None of the above

17: ‘The only value you will ever create is the value that comes from customers, the ones you have
now and the ones you will have in the future,’ is said by

a) Philip Kotler

b) Abraham Koshy

c) Don Peppers and Martha Rogers

d) None of the above.

18: In the modern customer-organization chart, the entity at the top are _________

a) Customers

b) Top management

c) Frontline people

d) None of the above

19: _____________ is the gap between the prospective customer’s assessment of all the advantages
and all the costs of an offering and the perceived options.

a) Customer-perceived value

b) Total customer benefit

c) Total customer cost

d) None of the above

20: ____________ is the apparent monetary value of the bundle of functional, psychological and
economic advantages consumers expect from a given market offering because of the products,
services, personnel and image involved.

a) Customer-perceived value

b) Total customer cost

c) Total customer benefit

d) None of the above

21: ____________ is the perceived package of costs customers anticipate to incur in assessing,
obtaining, utilizing and disposing of the given market offering, including time, monetary, energy and
psychological costs.

a) Customer-perceived value

b) Total customer cost

c) Total customer benefit

d) None of the above

22: A customer adds up all the functional, psychological and economic benefits from
________sources.

a) Products, services, personnel and image

b) Products and services

c) Products and personnel

d) Only personnel

23: Total customer cost is made up of

a) Monetary cost and time cost

b) Energy cost and psychological cost

c) Both a and b

d) None of the above

24: Managers conduct a _________ to know the company’s weakness and strengths relative to
those of various peers.

a) Product value analysis

b) Service value analysis

c) Customer value analysis

d) None of the above

25: The seller must evaluate__________ related with each peer company’s offer in order to know
how their offer rates in the buyer’s mind.

a) Total customer benefit

b) Total customer cost

c) Both a & B

d) None of the above

QUESTIONS

Q1: What Is Marketing?

Ans: Marketing is the process of getting potential clients or customers interested in your products
and services. The keyword in this definition is "process". Marketing involves researching, promoting,
selling, and distributing your products or services.

This discipline centers on the study of market and consumer behaviors and it analyzes the
commercial management of companies in order to attract, acquire, and retain customers by
satisfying their wants and needs and instilling brand loyalty.

Definition of Marketing

The definition of marketing is the action or business of promoting and selling products or services,
including market research and advertising. Today, marketing is something that every company and
organization must implement in its growth strategy. Many companies use marketing techniques to
achieve their goals without even realizing it. Marketing refers to actions a company or organization
takes to promote themselves and increase sales of their product or service. It is one of the key
aspects of business. 

People often do not know exactly what marketing is and, when asked, they define it as selling or
advertising. While these answers are not wrong, they are only a part of marketing. It involves many
other things like product distribution, promotion, designing and creating materials like landing pages
and social media content, building customer experience, doing market research and establishing
target markets, and much more.

Marketing is very broad and encompasses all strategies that help a company, brand, or individual
achieve its objectives.

The 4 Ps of Marketing

According to E. J. McCarthy, the 4 Ps of Marketing are a simple formula for identifying and working
with the essential elements of your marketing strategy.

 Product. Having a product is key and is the root of all things marketing. A product could be

anything that a company offers consumers to satisfy a need. The best thing to do is to decide
on your product or service based both on the needs and motivations of consumers and how
the product would benefit the consumer, rather than on the object’s physical characteristics
or attributes.

 Place. Strategic merchandising locations can be anything from an online store to a channel

of physical stores across multiple towns or countries. The goal of the distribution strategy is
 to enable potential clients to have easy access to your products/services as well as offer a
good experience throughout the purchasing process.  

 Price. How we price our products and services is an extremely important part of

the marketing strategy. This factor affects other factors such as:

o The margin we hope to obtain.

o What target market do we want to present ourselves to and what purchasing power
do our consumers have? Do we want to enter the luxury market or bet on the mass
market?

o The company's financial goals.

o How does the competition price their products and what possible product
substitutes are there?

o Trends and fads.

o Increased price in order to give a better perception of quality.

 Promotion. This refers to all the marketing and communication actions we carry out in order

to diffuse the benefits and characteristics of our product or service within the market. This is
how we increase sales.

What Does Marketing Do for Your Business?

Marketing can help your business in countless ways but lets's take a look at a few of the most
impactful ones.

1. Raising Brand Awareness

This is important because it gets people acquainted with your brand and the products or services
you provide. It also makes you memorable to customers who can begin to trust your brand, become
loyal clients, and tell their network about you.

2. Generating Traffic

Growing the number of visitors to your site means getting more qualified leads and
ultimately increasing your sales. An effective marketing strategy will help you through this process. 

3. Increasing Revenue

Every business want to increase their sales and marketing can help achieve this goal through a
variety of strategies like optimizing your website and SEO, creating email campaigns, performing A/B
tests to pinpoint the best strategy for you, and much more.

 
4. Building Trust in Your Brand

Creating a high level of trust in your brand leads to customer loyalty and repeat purchases. This not
only increases revenue but also leads to great reviews both online and by word of mouth, which is
still one of the most effective types of promotion.

5. Tracking Your Metrics

Metric are incredibly helpful when it comes to creating your marketing strategy. They not only drive
the strategy and help track its progress, but also inform what can be adapted or adjusted to
continually optimize your campaigns. 

Different Marketing Strategies 

Marketing is not just one single strategy, but rather a combination of many different techniques and
tactics. Below we've listed some essential marketing strategies that you should know about. Click on
the red links to learn more about each of these strategies. 

 Marketing Plan: Discover what a marketing plan is, why you need to design one, and the
keys to creating a strong plan. Without a marketing plan, a company or brand can’t reach its
goals.

 Digital Marketing: Digital marketing is the discipline of marketing which focuses on

developing a strategy solely within the digital environment.

 Direct Marketing: Direct marketing is a type of campaign based on direct, two-way

communication that seeks to trigger a result from a specific audience.

 Email Marketing: Email Marketing is one of the most profitable and effective techniques in
terms of return. Naturally, it consists of sending emails to your audience, but make sure to
define your segments well in order to be effective.

 Mobile Marketing: Mobile Marketing is a broad concept which brings together all

marketing campaigns and actions focused exclusively on mobile platforms and
applications (i.e. smartphones and tablets).

 Viral Marketing: Having something go viral is every company’s dream. Viral

Marketing spreads from one person to the next and is capable of going incredibly far
incredibly fast.

 Performance Marketing: Performance Marketing is a methodology which applies various

marketing methods and techniques and guarantees advertisers that they only have to pay
for achieved results.

 Inbound Marketing: This methodology focuses on creating valuable content to attract

qualified traffic and work towards the final sale. 

Don’t forget that the most important step which is starting your own marketing strategy! If you’re
looking to launch (or relaunch) a new product or service, we have much to offer you. We would be
thrilled to be your expert partner and help you attract visits, fully optimize your campaigns, and get
the best ROI!
 

The History of Marketing 

Do you know how marketing has evolved over time?

Not too long ago, marketing mostly consisted of outbound marketing, which meant chasing potential
customers with promotions without really knowing if that person was interested in purchasing.
Thanks to the digital transformation and the rise of new communication channels, marketing has
drastically changed over the years.

To understand how marketing has changed, let’s take a look at this timeline HubSpot has assembled
showcasing the innovations of this industry. 

1450-1900: Printed Advertising 

 1450, Gutenberg invents the printing press. The world of books and mass copies is
revolutionized.

 1730, the magazine emerges as a means of communication.

 1741, the first American magazine is published in Philadelphia.

 1839, posters become so popular that it becomes prohibited to put them in London
properties.

1920-1949: New Media

 1922, radio advertising begins.

 1933, more than half of the population in the United States (55.2%) has a radio in their
home. 

 1941, television advertising begins. The first advertisement was for Bulova watches and
reached 4,000 homes that had television.

 1946, more than 50% of the homes in the United States already had a telephone.

1950-1972: Marketing is Born and Grows

 1954, for the first time revenue from television advertising surpasses revenue from radio
and magazine ads.

 Telemarketing grows as a means of contacting buyers directly. 

 1972, print media suffers an exhaustion of the outbound marketing formula.

1973-1994: The Digital Era Flourishes

 1973, Martin Cooper, a Motorola researcher, makes the first call through a cell phone.

 1981, IBM launches its first personal computer.

  1984, Apple introduces the new Macintosh. 

 1990-1994, major advances in 2G technology, which would lay the foundation for the future
explosion of mobile TV.

 1994, the first case of commercial spam through e-commerce is produced.

1995-2020: The Era of Search Engines and Social Media

 1995, the Yahoo! and Altavista search engines are born. 

 1995-1997, the concept of SEO is born.

 1998, Google and MSN launch new search engines.

 1998, the concept of blogging arises. By mid-2006, there are already 50 million blogs
worldwide.

 2003-2012, the era of inbound marketing begins.

 2003-2004, three social networks are launched: LinkedIn, MySpace and Facebook.

 2005, the first video is posted on YouTube

 2006, Twitter is born.

 2009, Google launches real time searches.

 2010, 90% of all American households have a cell phone. Instagram is created in October 10.

 Young people between the ages of 13 and 24 spend 13.7 hours on the Internet, compared to
13.6 hours watching television.

 2011, Snapchat is created, driving even more young users to their phones and fueling the
social media app craze.

 2012, there are already 54.8 million tablet users.

 2014, the rise of Influencer marketing begins. Users and brands alike begin to realize the
power of social media users with large followings

 2014, for the first time ever mobile usage outweighs desktop usage. More users are checking
social media, reading emails, and making purchases on their phones. 

 2015-2016, big data and marketing automation are explored and used more robustly to
advertise to users. 

 2018, video marketing continues to grow, especially with Instagram’s launch of IGTV. Video
content is no longer just limited to YouTube and Facebook. 

 2019-2020, Move over millennials! Gen Z is the new focus and they have a hot new app:
TikTok. 

It will be interesting to see where marketing continues to grow. With new world events, like the
COVID-19 crisis of 2020 causing millions of people to stay in doors, social media and marketing
trends are sure to change, and we’ll be right here to track them. 

Cyberclick’s View on Marketing 

Marketing is any strategy or action which can help a company achieve their goals, increase their
sales and profits, and/or have  improved brand perception.

Here at Cyberclick, we live and breathe marketing and advertising; it’s in our DNA!

We are experts in attracting users to our clients' websites or landing pages

through marketing acquisition.

Cyberclick is a performance marketing agency. We analyze each new project we get and, if we see it
as viable, we can ensure certain results according to a client’s goals. You might be thinking, “what’s
so special about performance marketing?” The special thing is that a client only pays when results
are achieved!

How Can We Help You?

We will assess how to best optimize your digital marketing strategy and how to best distribute your
budget across all channels.

 We keep track of everything and exceed expectations.

 We have an analytic vision and react in the shortest possible time.

 We are always testing. We guarantee the best impact by thoroughly studying each campaign
and/or ad, carrying out multiple tests in order to find which factors work best, and
continually optimizing your digital marketing plan.

 We will increase the number of users who are happy with both your company and the
experience they have had with you.

 Thanks to technology and artificial intelligence, we continually analyze results in real time.

Q2: What is the first step to understand the marketplace and customers?

Ans: Like most of people, I know the importance of understanding the marketplace and customers. I
think it is part of work of the Department of Consumer and Market Knowledge in manufactures and
the Site Research of retailers. Although I worked on field related to marketplace and consumers in
the past four years, I still need to thoroughly learn about the fundamental definitions of core
marketplace concepts.

"Marketing is all about creating value for customers. So, as the first step in the marketing process,
the company must fully understand consumers and the marketplace in which it operates." (Kotler &
Armstrong, 2012: p. 6) Therefore, we need to examine core customer and marketplace concepts.

1) needs, wants, and demands

"Human needs are states of felt deprivation."   (Kotler & Armstrong, 2012: p. 6)    According
to Maslow's_hierarchy_of_needs, human needs include physiological needs, safety, love/belonging,
esteem, and self-actualization.We have basic physical needs for air, water, food, clothing, warmth,
and safety; social needs for belongings and affection; and individual needs for knowledge and self-
expression. In the marketplace, "marketers cannot create these needs; they are a basic part of the
human makeup." (Kotler & Armstrong, 2012: p. 6)

"Wants are the form human needs take as they are shaped by culture and individual
personality."  (Kotler & Armstrong, 2012: p. 6)

"Human wants become demands when backed by buying power."(Kotler & Armstrong, 2012: p. 6) 
Demands come from wants when we want to buy something in terms of our buying power in the
marketplace.

For example, each person needs food and water to survive in the world. An American wants to have
a Big Mac, french fries, and a bottle of Coco Cola. A Chinese wants to have noodles or rice, fried
vegetables and meat, and a cup of hot tea. "Wants are shaped by one's society and are described in
terms of objects that will satisfy those needs."  (Kotler & Armstrong, 2012: p. 6)  However,
considering our limited buying power in the society or the marketplace, we balance our wants and
resources. Finally, we figure out that  under the condition of  limited resources, we demand products
with most value and satisfaction.

Not only marketers  but also people at all levels--including top management---need to learn about
and understand their customer's needs, wants, and demands. They stay close to customers, read
comments from customers, and even build personal connection with customers and employees, in
order to gain insights into what thy can do to satisfy the needs, wants, and demands of customers.

2) market offerings (products, services, and experiences);

"Market offerings are some combination of products, services, information, or experiences offered
to a market to satisfy a need or want."  (Kotler & Armstrong, 2012: p. 6)  A broad of consumers'
needs and wants can be fulfilled through all kinds of market offerings from physical products to
intangible services.

Now, more and more marketers have realized the importance of  brand experiences  for consumers.
Paying more attention to the specific products than to the benefits and experience produced by
these products, marketers or sellers easily suffer from Marketing Myopia.  They are so obsessed
with their products that focus only on existing wants and lose sight of underlying customer real
needs. 

Marketing Myopia is the mistake of paying more attention to the specific products a company
offers than to the benefits and experiences produced by these products.  (Kotler & Armstrong, 2012:
p. 7)

We always need an oven or something to bake bread but we now really want a user-friendly,
energy-saving, and inexpensive oven that can be arranged in our kitchen with limited room. We do
not like the big oven fueled by gas that used decades ago.
"Smart marketers look beyond the attributes of the products and service they sell.  By
orchestrating several services and products, they create brand experiences for consumers.  For
example, HP recognizes that a personal computer is much more than just a collection of wires and
electrical components. It is an intensely personal user experience."(Kotler & Armstrong, 2012: p. 7)

3) value and satisfaction;

"Customers from expectations about the value and satisfaction that various market offerings will
deliver and buy accordingly. Satisfied customers buy again and tell others about their good
experiences. Dissatisfied customers often switch to competitors and disparage the product to others.
  
  Marketers must be careful to set the right level of expectations. if they set expectations too low,
they may satisfy those who buy but fail to attract enough buyers. If they set expectation too high,
buyers will be disappointed. Customer value and satisfaction are key building blocks for
developing and managing customer relationships."  (Kotler & Armstrong, 2012: p. 7) 

Satisfaction comes when expectations are met.

??? How to set expectations and what factors should be considered in the process of setting
expectations ???
1. From the perspectives of consumers, needs, wants, buying power, and so on.
2. From the ability of companies to deliver the expectations they set.

??? How to convey the expectations set by companies?

???As a consumer, why I usually higher expectations about some products and lower expectations
about other products than those set by companies???  What background information does a
consumer need to have a accurate understanding of expectation. 

4) exchanges and relationships

"Marketing occurs when people decide to satisfy needs and wants through
exchange  relationships.  Exchange is the act of obtaining a desired object from someone by
offering something in return." 
(Kotler & Armstrong, 2012: p. 7)

"Marketers try to bring about a response to some market offerings. The response may be more than
simply buying r trading products and services.  A political candidate, for instance, wants votes, a
church wants membership, an orchestra wants an audience, and a social action group wants idea
acceptance.    Marketing consists of actions taken to build and maintain desirable exchange
relationships with target audiences involving a product, service, idea, or other object. Beyond
simply attracting new consumers and creating transactions, companies want to retain customers
and grow their businesses.

Marketers want to build  strong relationships by consistently delivering superior customer value." 
(Kotler & Armstrong, 2012: p. 7)
??? what is the history of exchange? how many kinds of exchange? What does exchange impact
on???
What is the history about customer relationship? What factors impact on customer
relationships???? Is customer relationships are the same as previous ones after the boom of the
Internet???? Does buying power impact the real customer relationships?

5) markets
"Markets is the set of all actual and potential buyers of a product or service.   The buyers share a
particular need or want that can be satisfied through exchange relationships."  (Kotler & Armstrong,
2012: p. 7) People exchange and response to some market offerings in the markets.

" Marketing also means managing markets to bring about profitable customer
relationships....Sellers search for buyers, identify their needs, design good market offerings, set
prices for them, promote offerings, and store and deliver offerings. Activities such as consumer
research, product development, communication, distribution, pricing, and service are core
marketing activities." (Kotler & Armstrong, 2012: p. 7)

Besides sellers markets, there is consumer market for buyers to carry out marketing. Buyers or
consumers search for products, interact with companies and other consumers or buyers to convey
or obtain information, and make their purchases.

"In fact, today's digital technologies, from web sites and online social networks to cell phones, have
empowered consumers and made marketing a truly interactive affair. Thus, in addition to customer
relationship management, today's marketers must also deal with effectively with customer managed
relationships." (Kotler & Armstrong, 2012: p. 7)

The success at building profitable relationships of companies and customers depends on whether
the entire marketing system can serve the needs of final consumers well. The entire marketing
system includes suppliers, companies and their competitors,  marketing intermediaries, and
consumers, and affected "  by major environmental forces (demographic, economic, natural,
technological, political, and social/cultural)." 

Q3: How to manage customer relationships?

Ans: As business practices adapt, change, and develop over time, new terminology tends to get
added to the standard business lexicon. A relatively recent addition is ‘customer relationship
management’. Of course, the concept is not new; interest in improving business/customer
relationships is as old as the act of doing business. What has changed dramatically in the last two
decades is the technology that supports customer relationships.

A customer relationship management system, or CRM, is the software component that has driven
industry change since the 1990s. While technology has certainly impacted the way business is
conducted, both old and new issues remain. These include:

 How companies can acquire customer data more efficiently;

  Which data is most important, and

 How staff can access data when they need it.

Solving these enduring challenges can help businesses get more value out of a CRM and ensure the
technology meets the expectations of not only on-the-ground sales staff but also top-level
executives.

The Traditional Approach: Understanding Customer Needs

A fundamental tenet of customer service relationship management is understanding the needs of

the customer. While this may seem obvious, a company-first approach can quickly subsume the
idea. The inability to maintain a customer-first approach may result in the development of unwanted
product features or marketing materials that fail to reflect the real-world challenges that customers
face at home or at work.

Frame Benefits for Customer Problems

Every product or service has a certain set of features and presumed benefits. Typically, these
features—especially those that make it into marketing copy or sales conversations—are the ones
that offer the highest value to a customer. How, then, does a company determine which features are
likely to offer the greatest benefit to consumers?

Determining the answer to this question must start with an effort to understand the specific
problem a customer faces. In-depth customer knowledge can help companies more accurately—and
more clearly—articulate the benefits of a product or service.

For example, a faucet may be both easy to install and aesthetically impressive. But the value of those
features may be weighted differently by different buyers. A building contractor seeking a system to
install in dozens of homes may prioritize ease of installation. A single purchaser investing in high-end
kitchen refurbishing may focus more on aesthetics.

A business that knows which customer it’s speaking to—in an email, on the radio, on the phone, or
any other channel—is better positioned to highlight the product features that are persuasive
benefits in the mind of the customer.

Align Marketing Materials and Sales Pitches

Historically, a business’s marketing and sales departments were siloed components. This separation

often resulted in poor data sharing and, in some cases, outright conflict. A modern CRM has the
potential to integrate bits of information gained during the marketing and sales processes to provide
a complete portrait of a customer.

It may be especially valuable for businesses that depend on repeat customers. First, integrated sales
and marketing data can help those businesses drive more recurring sales. Second, a business can
identify certain marketing materials, sales strategies, and customer profiles that are most likely to
generate more repeat business.

This complete portrait of a client—and the expectation of ongoing interactions between a business
and its average customer—is behind the rise of the word ‘relationship’ in customer relationship
management. This wider, more personal lens has shifted how companies develop marketing and
sales materials. It emphasizes the importance of understanding the psychology of managing
customer relationships for new campaigns.
Develop Products Based on Customer Feedback

Even after the sale, customer relationship management and CRMs have an important role to play. An
effort to understand the customer extends beyond the point of purchase to soliciting and
interpreting product feedback. This feedback can help improve an existing product or develop new
products that meet a need defined by the client, not the business.

By inputting this information into a CRM, businesses have the potential to capture more information
about how well a product solves a problem for a certain type of client. For example, the most
satisfied customers may not be those who are most receptive to marketing materials. If the goal is to
build consumer loyalty, materials may need to change to help build long-term relationships.

The Modern Take: Use Technology to Improve Customer Experiences

While CRM data has a significant role in the internal development of marketing materials, sales
processes, and products, it can also have a direct impact on the customer experience. This role
centers on technology’s ability to improve internal and external communication.

For example, a CRM can help streamline the transfer of information throughout an enterprise,
resulting in more efficient communication that can improve productivity and increase the number of
satisfied customers.

Improve Internal Communication

The rise of CRMs has targeted the well-documented gap between sales and marketing teams. It does
so by improving access to data. A salesperson may start with a more robust profile of a prospect by
investigating CRM data about which marketing materials a potential client has already received or
requested.

However, large organizations may also benefit from sharing the data among other parties, such as
call center or live chat representatives. These complex client interactions could span several
communication channels over weeks or months. Keeping client data organized helps prepare each
representative for a client interaction and empowers them to deliver more effective messaging.

This data sharing can also help resolve customer issues more quickly. For instance, a customer
service representative may solve a client’s technical issue more efficiently with access to a full client
history in a well-structured CRM. That information prevents a representative from asking a client to
repeat details from a past issue, which saves both representative and client time.

Reduce Technological Barriers

Many large businesses seek to integrate multiple CRMs that may serve different departments or
have been incorporated as part of legacy systems. Each component may represent an additional
layer of complexity when it comes to providing staff with critical customer information in real-time.

Just as a CRM aggregates customer data, technologies like computer telephony integration (CTI) can
help move data from multiple CRMs to relevant representatives as needed. This ability to route large
amounts of information in real time has become possible with advances in cloud-based systems and
high-speed Internet access.

As part of a broader system, CRM and CTI integration can help remove the technological barriers
between company knowledge and expert customer service. After all, how valuable is customer data
if it’s hard to find?
Offer Multiple Methods of Contact

Modern technologies enable businesses to offer multiple contact channels to clients: print, phone,
email, and live chat, among others. The diversification of communication channels has added to the
technological challenge while increasing flexibility for customers.

Customers may appreciate the ability to reach a company through various channels, but the
companies that benefit most from the multi-channel approach are those that can bring together
data from all interactions into a single system. That way, a phone representative has a recent chat
history on hand, and a sales team member preparing for an in-person meeting already knows which
questions have been answered via email.

Analytics from a CRM may even reveal which communication channels are most valuable for sales,
issue resolution, or retention. That analysis can help a business make more data-backed decisions
when it comes to allocating customer service resources efficiently. It may even help win a larger
budget for high-cost interactions (like around-the-clock phone support) if that channel can be tied to
greater customer retention.

Getting Started with a CRM

Using a CRM does not guarantee that a business will extract all its potential benefits. To get more
from a CRM, businesses must have a strategy to acquire customer data, determine which data is
most valuable, and use that data effectively. This may include assessing how prospective customers
respond to marketing materials or gauging their satisfaction with a product after purchase.

Certainly, technology has made such investigations easier to conduct. However, the guiding
principles of customer relationship management that predate a customer relationship management
system are worth remembering: a business continues to benefit by focusing on the customer’s needs
and desires in product development, marketing and sales materials, as well as customer service.

In the end, those businesses getting the most value out of their CRM are finding ways to deliver
great customer service more efficiently and to continue to learn from their customers—data point
by data point.

Chapter-2

Analysing the market environment

MCQ

1: Type of question in which all possible choices are given in the questionnaire is ________?
A. close-ended question
B. open-ended question
C. Both a and b
D. none of above
2: n the marketing process, the first step is to.
A. develop a research plan
B. define research objectives
C. Both A & B
D. implement a research plan
e. none of the above

3: Changes made in product characteristics such as quality, style, and features are called
A. modifying the raw material schedule
B. modifying marketing mix
C. Both A & B
D. modifying the product
E. modifying the market
F. None of these

4:  ‘non-probability sample’ includes_________?

A. cluster sample
B. stratified random sample
C. Both A & B
D. simple random sample
E. convenience sample
F. None of these

5: In the existing market strategy of introducing a new product is classified as_______.

A. Market penetration
B. Market development
C. Both A & B
D. Product development
E. Diversification
F. None of these

6: logistical network that moves finished product from the company to resellers and so to finish
users are assessed as_______?
A. reverse distribution
B. risk-averse distribution
C. Both A & B
D. inbound distribution
E. outbound distribution
F. None of these
7: analysis that is employed to explain the market potential of any market giving is best classified as
A. exploratory research
B. casual research
C. Both A & B
D. descriptive research
E. both a and c
F. None of these

8: Advertising and personal selling can be referred to as_______ In marketing strategy.

A. Product
B. Place
C. Both A & B
D. Price
E. Promotion
F. None of these

9: ‘Family Dollar’ is evaluating one location out of the many by checking near areas conditions is
associate as______.
A. ethnographic research
B. experimental research
C. Both A & B
D. observational research
E. survey research
F. None of these

10: Arrangement of various market performance measures as a single display to monitor results is
known as as_____.
A. Marketing dashboard
B. Return on investment
C. Both A & B
D. Marketing scorecard
E. Both a and b
F. None of these

11: “________ fever” results from the convergence of a good vary of forces within the marketing
environment—from technological, economic, and demographic forces to cultural, social, and
political ones.
A. Cultural
B. Marketing
C. Both A & B
D. Technographic
E. Millennial
F. None of these
12: The ______________________ consists of the actors and forces outside marketing that have an
effect on marketing management’s ability to develop and maintain palmy relationships with its
target customer.
A. marketing system
B. marketing organization
C. Both A & B
D. marketing network
E. marketing environment
F. None of these

13:  Which of the subsequent terms best describes the environment that includes the forces getting
ready to the corporate that has an effect on its ability to serve its customers—the company,
suppliers, promoting channel companies, client markets, competitors, and publics?
A. macroenvironment
B. microenvironment
C. Both A & B
D. global environment
E. networked environment
F. None of these

14: In a company’s microenvironment all of the following would be considered EXCEPT:

A. political forces.
B. marketing channel firms.
C. Both A & B
D. publics.
E. customer markets.
F. None of these

15: Which of the subsequent BEST describes the environment that contains the larger social group
forces that have an effect on the company-level environment—demographic, economic, natural,
technological, political, and cultural forces?
A. macroenvironment
B. microenvironment
C. Both A & B
D. global environment
E. networked environment
F. None of these

16: In a company’s macro environment all of the following would be considered to be a part EXCEPT:
A. marketing channel forces.
B. demographic forces.
C. Both A & B
D. technological forces.
E. natural forces.
F. None of these

17: Finance, analysis and development, purchasing, and manufacturing are all activities that are a
part of that element of the microenvironment?
A. the suppliers.
B. the company’s internal environment
C. Both A & B
D. the marketing channel firms
E. the publics
F. None of these

18: The company’s mission, objectives, broad strategies, and policies are set by __________
management.
A. Mid-level
B. Top
C. Both A & B
D. Marketing
E. Tactical
F. None of these

19: ________________ are an important link within the company’s overall “value delivery system”
since they supply the resources required by the company to produce its merchandise and service.
A. Competitor networks
B. Marketing intermediaries
C. Both A & B
D. Suppliers
E. Service representatives
F. None of these

20: The type of question in questionnaire in which all possible choices are given is

A. open ended question

B. close ended question

C. Both a and b

D. none of above

21: The first step in marketing process is to

A. define research objectives

B. develop research plan

C. implement research plan

D. none of above

22: The changes made in the product characteristics such as quality, style and features are called

A. modifying marketing mix

B. modifying raw material schedule

C. modifying the product

D. modifying the market

23: : The 'non probability sample' includes

A. stratified random sample

B. cluster sample

C. simple random sample

D. convenience sample

24: The strategy of introducing new product in existing market is classified as

A. Market development

B. Market penetration

C. Product development

D. Diversification

QUESTIONS

Q1: What is Marketing Environment? Explain different type of environments.

Ans: What is Marketing Environment

Marketing Environment concerns the influences or variables of the external and internal
environment of a firm that controls the marketing management’s capability to construct and
preserve the flourishing relationships with the consumer. An assortment of environmental forces
affects a company’s marketing arrangement. A few of them are governable while others are
unmanageable. It is the task of the marketing manager to modify the company’s policies together
with the shifting environment. Macro and micro environment comprise the structure of the
marketing environment.

Definition of Marketing Environment:

According to Philip Kotler,

“A company’s marketing environment consists of the internal factors & forces, which affect the
company’s ability to develop & maintain successful transactions & relationships with the company’s
target customers.”

Overall Market Environment

The overall Marketing environment is the snowballing form of the aspects that encapsulate inside
themselves the capability of a firm to bond with the customers and also, the strength of the product
as a driver of development to the firm. The macro-environment consisting of wider societal
authorities, and the micro-environment which incorporates the influences related to a company,
together form the general marketing environment of a company.

→ Thus, the marketing environment is comprised of the following two key factors-
Micro-factors inside the firm
Macro-factors linked to economic, social, cultural aspects, etc.

Micro Environment in Marketing

Micro-environment elements are close to the firm and incorporate the suppliers, showcasing
delegates, consumer markets, public, competition, and marketing intermediaries. Micro-
environment likewise concerns the inward environment of the organization and influences
marketing as well as all the departments like management, R&D, finance, Human assets, purchasing,
operations, and bookkeeping.

Macro Environment in Marketing

The Macro environment is the uncontrollable factor of the company. For this reason, it has to
structure its policies in the limits set by these factors. Macro-environment on the whole deals with
the demographic, economic, technological, natural, socio-cultural and politico-legal environment
aspects of the markets. Let us now look into these elements in detail.

1. Demography

It is characterized as the factual investigation of the human populace & its dissemination. This is a
standout amongst the most impacting variables because it manages the individuals who structure
the business. An organization ought to study the populace, its conveyance, age structure, and so
forth before choosing its strategy of marketing. Each faction of the populace acts differently, relying
on a range of factors, for example, age, status, and so on. If these variables are measured, a
company can manufacture only those products which suit the necessity of the buyers. In this
respect, it is said that ‘to comprehend the business sector you must comprehend its demography’.

2. Economic Environment

Economic components are general monetary value, investment rates, exchange rates, inflation rate,
fiscal strategies, balance of payments and so forth. An organization can effectively offer its products
just when individuals have enough cash to spend. The financial environment influences a customer’s
buying behavior either by expanding his disposable income or by decreasing it. Eg: During inflation,
the money value decreases. Thus, it is troublesome for them to buy more products. The income of
the customer should likewise be considered. Eg: In a business sector where both wife & husband
work, their acquiring power will be more. Consequently, organizations may offer their products
effortlessly.

3. Physical Environment

These components incorporate the climate, atmosphere, environmental change, accessibility of

water, accessibility of raw materials and so on. A company has to implement its policies contained
by the restrictions set by nature. A man can enhance nature, however, can’t find an option for it.
Nature offers resources, however, in a restricted way. The product manager has to use it
proficiently. Companies must discover the best mix of products for productive usage of the
accessible assets. Else, they may confront intense deficiency of resources.

4. Technological Factors

Technological variables incorporate the innovative work, robotization, development of web and
other communication innovations, innovation inducements and barriers to technology. From the
consumer’s perspective, change in innovation implies a change in the living standard. In this respect,
it is said that ‘Technologies figure a person’s Life’.

Each innovation creates another business & another group of clients. Another innovation enhances
our way of life & in the meantime creates numerous issues. Eg: Invention of different purchaser
comforts like washing machines, blenders, and so forth have brought about enhancement in our way
of lifestyle yet it has made serious issues like shortage of power, similarly, innovation in autos has
enhanced transportation, however, it has brought about the issues like air & noise contamination,
more accidents etc. In plain words, the following are the effects of technological aspects on the
market:

 Creation of new desires

 Creation of new industries

 May wipe out old industries

  May augment the expenditure on R&D.

5. Social & Cultural Factors

The vast majority of us buy in light of the impact of cultural & social elements. The lifestyle, qualities,
convictions, and so on is dead set besides everything else by the society in which we live. Every
society has its own culture. Culture is a blend of different variables which are exchanged from more
established eras & which are gained. Our conduct is guided by our way of life, family, instructive
foundations, dialects, and so on. Social components are the cultural and social viewpoints, which
incorporate health cognizance, the growth rate of population, age distribution, career approach and
the importance of security.

The society is a mix of different groups with diverse cultures & subcultures. Every society has its
conduct. The marketing manager of a company must study the society in which he works. Eg: In
India, we have distinctive cultural groups like Kashmiris, Punjabis, Assamese, and so forth. The
manager of marketing of a company ought to observe these distinctions before finalizing the
marketing schemes.

The detailed scanning of the environment of the business is very important which can be done by
the process of environmental scanning that helps to identify the various opportunities and threats.

Environmental Scanning

The detailed and continuous process by which an organization monitors its internal and external
environment is termed as ‘Environmental Scanning’. The process is aimed at identifying the risks and
opportunities that can affect an organization’s prospect or direction.

Q2: How Changes in The Demographic and Economic Environments Affect Marketing Decisions?

Ans: Demography is the study of human populations in size, locations, gender, race, occupation,
etc. The Demography environment is of major interest because it involves people. People make up
markets since the world is getting crowded and overpopulated, and diversity always leads to
opportunities and challenges.

Changes in the world demographic environment have major implications for business. Thus,
marketers keep a close eye on demographic trends and developments in their markets.

They analyze changing age and family structures, geographic populations shift, education, and
diversity. However, marketers face another reality; the geographic population is shifting more often,
especially in family and structures, a better educated and more white-collars population is increasing
diversity. In other words, the economic environment consists of factors that affect buying power and
patterns. The economic environment is characterized by more consumer concern for value in shifting
consumer spending patterns. Today's squeezed consumers seek greater value -- just the right
combination of good quality and service at a fair price. The distribution of income also is shifting.
Whether you have read on the Bible, the rich have grown richer, and the poor have remained poor
even more. We've seen the middle class has shrunk, leading to a two-tiered market. Many
companies now tailor their marketing offers to two different markets the affluent and the less
affluent.

Secondly, with the population's changing age structure since the birthrates and longer life
expectancy, the population is rapidly getting older. This aging of the population will have a significant
impact on markets and those who service them. If we take the U.S. population, it contains several
generational groups divided into the four largest groups – the baby boomers, Generation X, the
Millennials, and Generation Z and their impact on today’s marketing strategies.

The Baby Boomers. The post-World War II baby boom produced 78 million baby boomers born
between 1946 and 1964. Over the years, the baby boomers have been among the most powerful
forces in the marketing environment.

The Generation X. The boomers were followed by a “birth dearth, creating another generation of 49
million people born between 1965 and 1976. Author Douglas Coupland calls them Generation X
because they lie in the shadow of the boomers. Considerably smaller than the boomer generation
that precedes them and the Millennial who follow, the Generation Xers are a sometimes overlooked
consumer group. Points for marketers observe are:

 Gen Xrers are a sometimes overlooked consumer group;

 Gen Xrers are less materialistic than the other groups;

 Gen Xrers prize experience, not acquisition;

 Gen Xers, who are parents, family comes first rather than a career.

From a marketing standpoint, the Gen Xers are a more skeptical bunch. They tend to research
products before they consider a purchase, prefer quality to quantity, and be less receptive to overt
marketing pitches. They are more likely to be receptive to irreverent ad pitches that make fun of
convention and tradition.

 Gen Xers are the first to grow up in the Internet era, got the benefits of technology. Almost
50% owns smartphones, and over 10% owns tablets. Almost 80% of the Xers use the
internet for banking, over 70% for researching companies and products, and around 80%
have made purchases online. 95% have an active Facebook page. Yep, that's right, pretty
much everybody.

Gen Xers are now approaching middle age; they are displacing the baby boomers' lifestyles, cultures,
and values. They are the most educated generation to date, and they possess hefty annual
purchasing power, but they are spending more carefully.

           The Millennials or Generation Y. born between 1977 and 2000, these children of the baby
boomers number 83 million or more, dwarfing the Gen Xers and becoming larger even the boomers'
segment. Millennials are the most financially strapped generation. Facing higher unemployment and
saddled with more debt, many of these consumers have near-empty piggy banks. Because of their
numbers, the Millennials make up a huge and attractive market, both now and in the future. They
have in common is their comfort with digital technology. They don’t just embrace technology; it’s a
way of life. They are the first generation to grow up in a world filled with computers, mobile phones,
satellite TV, iPods and iPads, and online social media. Consequently, they engage with brands in an
entirely new way, such as mobile or social media. More than sales pitches from marketers, they seek
opportunities to shape their own brand experience and share them with others. The Xennials (also
known as the Oregon Trail Generation and Generation Catalano) are among that class. Xennials is a
neologistic term used to describe people born during the Generation X/Millennial cusp years.

           Generation Z. young people born after 2000. The Gen Zers make up important kids, tweens,
and teen markets. For example, U.S. “Tweens”(age 8 to 12) number 20 million girls and boys who
spend an estimated $43 billion annually of their own money and influence a total of almost $200
billion of their own and parents’ spending. Besides, these young consumers also represent
tomorrow’s markets- they are now forming brand relationships that will affect their buying well into
the future.

           Generation Marketing. Do marketers need to create separate products and marketing

programs for each generation? Some experts warn that marketers need to be careful about turning
off one generation each time they craft a product or message that appeals effectively to another.
Others caution that each generation spans decades of time and many socioeconomic levels.

           Thirdly, the changing American Family as the traditional household consists of a husband,

wife, and children. The two child's historic American ideal, the two-car suburban family, has lately
been losing some of its lusters. US married couples with children represent only 19 percent of
households today, married couples without children represent 28 percent, single parents are
another 18 percent. A full 34 percent are non-family households – singles living alone or unrelated
adults of one or both sexes living together. One in 12 married couples is interracial. Marketers must
consider nontraditional households' special needs because they are now growing more rapidly than
traditional households. Each group has distinctive needs and buying habits. Companies are adapting
their marketing to reflect the changing dynamics of American families.

           Fourthly, Geographic population shifts. This is a period of great migratory movements

between and within countries. Americans are mobile people, with about 12 percent of all US
residents moving each year and 35 percent or more moving every five years. The US population has
shifted toward the Sunbelt states. The West and South have grown. Such population shifts interest
marketers because people in different regions buy differently. For example, people in the Midwest
buy more winter clothing than people in the Southeast.

           Fifthly, a better-educated, more white-collar, and more professional population, the US

population is becoming better educated. In the last 30 years, Americans have earned much more
education. About 88 percent over age 25 had finished high school, and 32 percent had a bachelor’s
degree, compared with 66 percent and 16 percent, respectively. The Workforce also is becoming
more white-collar. Job growth is now strongest for professional workers and weakest for
manufacturing workers. The next decade is projected fastest employment growth, and over half of
them will require post-secondary education. The rising number of educated professionals will affect
not just what people buy but also how they buy.

           Sixth, increasing diversity, countries vary in their ethnic and racial makeup. For example, in
Japan, where almost everyone is Japanese. People from many nations and cultures have melted into
a single, more homogeneous whole in the USA. Marketers now face increasingly diverse markets,
both at home and abroad, as their operations become more international in scope. According to U.S.
Census Bureau, the US population is about 64 percent white, with Hispanics at almost 17 percent
(Hispanics associations defend over 20 percent**) and African American at just 13 percent. Asian
American population now totals more than 5 percent of the total US population, with the remaining
1 percent being Natives (originals Americans). By 2050, Hispanics will be more than 30 percent of the
US population; Afro-Americans will be 15 percent, and Asians 8 percent. **(frightened with the
Census questionnaires, Hispanics have been misleading information about their origins). This
scenario has made large companies target especially designed products, ads, and promotions to one
or more of these groups.

 Economic Environment consists of economic factors that affect consumer purchasing power and
spending pattern. Marketers must pay close attention to major trends and consumer spending
patterns across and within their world markets. Also, nations vary greatly in their levels and
distribution of income. Some countries have industrial economies, which constitute rich markets for
many different kinds of goods. 

           Changes in consumer spending, economic factors affect consumer spending and buying

behavior. Consumers have now adopted a back-to-basics sensibility in their lifestyles and spending
patterns that will likely persist for years to come.

           Income distribution, marketers should pay attention to this subject as well as income levels.
Over the past several decades, the rich have grown richer, the middle class has shrunk, and the poor
have remained poor. The top 5 percent of American earners get over 22 percent of the country’s
adjusted gross income, and the top 20 percent of earners capture 51 percent of all income. In
contrast, the bottom 40 percent of American earners get just 11.5 percent of the total income.
Changes in major economic variables, such as income, cost of living, interest rates, and savings and
borrowing patterns, greatly impact the marketplace. Companies watch these variables by using
economic forecasting. Businesses do not have to be wiped out by an economic downturn or caught
short in a boom. With adequate warning, they can take advantage of changes in the economic
environment.

           In conclusion, marketers must observe the demographic environment, such as the changing
age structure of populations, the population's geographic shifts, and the population's diversity.
When you market a product, you have to market it to the right people and target audience in that
specific area. Indeed marketers must pay close attention to the economic environment, such the
consumer spending, income distribution, because these have a large impact on the marketplace
because of the consumer buying habits. In other words, changes in the demographic and economic
environments definitely affect marketing decisions.

Q3: Discuss THE SOCIAL AND CULTURAL ENVIRONMENT

Ans: The cultural environment consists of the influence of religious, family, educational, and social
systems in the marketing system. Marketers who intend to market their products overseas may be
very sensitive to foreign cultures. While the differences between our cultural background in the
United States and those of foreign nations may seem small, marketers who ignore these differences
risk failure in implementing marketing programs. Failure to consider cultural differences is one of the
primary reasons for marketing failures overseas.

This task is not as easy as it sounds as various features of a culture can create an illusion of similarity.
Even a common language does not guarantee similarity of interpretation. For example, in the US we
purchase “cans” of various grocery products, but the British purchase “tins”. A number of cultural
differences can cause marketers problems in attempting to market their products overseas. These
include: (a) language, (b) color, (c) customs and taboos, (d) values, (e) aesthetics, (f) time, (g)
business norms, (h) religion, and (i) social structures. Each is discussed in the following sections.

Student Example
I travel out of the country to Mexico almost every year. I can see the immense cultural differences
between Mexico and the United States, from the language to colors, to the values, religious beliefs,
and business norms. As soon as I step out of the plane in Mexico, I feel like I am in a different world.
In terms of the language, the primary is obviously Spanish; however, in the past few years, I have
noticed signs in the airport with translations to English and Chinese. In terms of values, they seem to
focus more on survival. For example, marketing food, shelter products, and clothing. Their religious
beliefs are centered around Catholicism.

Elizabeth Garcia

Class of 2020

Language

The importance of language differences cannot be overemphasized, as there are almost 3,000
languages in the world. Language differences cause many problems for marketers in designing
advertising campaigns and product labels. Language problems become even more serious once the
people of a country speak several languages. For example, in Canada, labels must be in both English
and French. In India, there are over 200 different dialects, and a similar situation exists in China.

Student Example

I believe language is very important in marketing, advertising, and product labels. In the United
States, I have noticed that most products have product labels in English and often you can peel off
for a Spanish label under. Although I have heard many people complain about the fact that there are
two languages on every product in America, it is very necessary. In the United States, we have many
individuals who speak Spanish, or a language very similar to that, especially since we are so close to
South America. Companies and organizations have come to terms with the fact that their product
may be in the hands of an individual whose primary language is Spanish; thus, they provide a label in
Spanish to properly cater to their consumers.

Natalie Vazquez-Lopez

Class of 2020

Colors

Colors also have different meanings in different cultures. For example, in Egypt, the country’s
national color of green is considered unacceptable for packaging, because religious leaders once
wore it. In Japan, black and white are colors of mourning and should not be used on a product’s
package. Similarly, purple is unacceptable in Hispanic nations because it is associated with death.

Consider how the following examples could be used in development of international marketing
programs:

 In Russia, it is acceptable for men to greet each other with a kiss, but this custom is not
acceptable in the US.

 Germans prefer their salad dressing in a tube, while Americans prefer it in a bottle.

 In France, wine is served with most meals, but in America, milk, tea, water, and soft drinks
are popular.
McDonalds Corporation has opened 20 restaurants in India. Since 80 percent of Indians are Hindu,
McDonald’s will use a non-beef meat substitute for its traditional hamburger. The likely beef
substitute will be lamb, a very popular meat in India. In anticipation of its restaurant openings,
McDonald’s conducted extensive market research, site selection studies, and developed a
relationship with India’s largest chicken supplier. McDonald’s has opted to market its product in
India, largely because India’s population of more than 900 million represents one-sixth of the world’s
population.

Values

An individual’s values arise from his/her moral or religious beliefs and are learned through
experiences. For example, in America, we place a very high value on material well-being and are
much more likely to purchase status symbols than people in India. Similarly, in India, the Hindu
religion forbids the consumption of beef, and fast-food restaurants such as McDonald’s and Burger
King would encounter tremendous difficulties without product modification. Americans spend large
amounts of money on soap, deodorant, and mouthwash because of the value placed on personal
cleanliness. In Italy, salespeople call on women only if their husbands are at home.

Aesthetics

The term aesthetics is used to refer to the concepts of beauty and good taste. The phrase, “Beauty is
in the eye of the beholder” is a very appropriate description for the differences in aesthetics that
exist between cultures. For example, Americans believe that suntans are attractive, youthful, and
healthy. However, the Japanese do not.

Time

Americans seem to be fanatical about time when compared to other cultures. Punctuality and
deadlines are routine business practices in the US. However, salespeople who set definite
appointments for sales calls in the Middle East and Latin America will have a lot of time on their
hands, as business people from both of these cultures are far less bound by time constraints. To
many of these cultures, setting a deadline such as “I have to know next week” is considered pushy
and rude.

Student Example

While traveling this past summer I was able to spend time in Italy. It took me a while to get used to
having to plan around their typical schedule. During lunch they take what is called a riposo, or an
extended lunch break where they go home to eat and spend time with their families and relax. This
is in direct contrast to the culture in America, where I have on many occasions worked through lunch
breaks. In the world of business, this would be something people would need to be sensitive to so
that there would be no issues with trying to schedule meetings or even work lunches.

Brittney Harvey

Class of 2020

Business Norms

The norms of conducting business also vary from one country to the next. Here are several examples
of foreign business behavior that differ from US business behavior:

 In France, wholesalers do not like to promote products. They are mainly interested in
supplying retailers with the products they need.
  In Russia, plans of any kind must be approved by a seemingly endless string of committees.
As a result, business negotiations may take years.

 South Americans like to talk business “nose to nose”. This desire for close physical proximity
causes American businesspeople to back away from the constantly forward-moving South
Americans.

 In Japan, business people have mastered the tactic of silence in negotiations. Americans are
not prepared for this, and they panic because they think something has gone wrong. The
result is that Americans become impatient, push for a closure, and often make business
concessions they later regret.

These norms are reflected in the difficulty of introducing the Web into Europe.

Religious Beliefs

A person’s religious beliefs can affect shopping patterns and products purchased in addition to
his/her values, as discussed earlier. In the United States and other Christian nations, Christmastime
is a major sales period. But for other religions, religious holidays do not serve as popular times for
purchasing products. Women do not participate in household buying decisions in countries in which
religion serves as opposition to women’s rights movements.

Every culture has a social structure, but some seem less widely defined than others. That is, it is
more difficult to move upward in a social structure that is rigid. For example, in the US, the two-
wage earner family has led to the development of a more affluent set of consumers. But in other
cultures, it is considered unacceptable for women to work outside the home.

Chapter-3

Consumer Markets and buyer Behaviour

MCQ

1: All of the following statements are true, except:

o Consumer buying behavior refers to the buying behavior of final customers.

o Marketers must understand how the stimuli are changed into responses inside the
consumer's black box.
o A buyer's characteristics have no impact on how he or she reacts to the stimuli.
o A buyer's decision process affects outcomes.

2: _______ is the most basic determinant of a person's wants and behavior.

o Social class
o Culture
o Subculture
o Occupation
3: _______ refer to the groups to which people do not belong but would like to.

o Membership groups
o Reference groups
o Aspirational groups
o All of the above

4: The buying process starts from ________.

o information search
o evaluation of alternatives
o purchase decision
o need recognition

5: The set of beliefs held about a particular brand is known as the _______.

o brand recognition
o brand selection
o brand image
o brand preference

6: Prizm is a _________ system that allows researchers to know the mix or density of lifestyle groups
in each of the nation's 36,000 zip code areas.

o demographic
o geodemographic
o psychographic
o geographic

7: ______ refers to distinguishing psychological characteristics that lead to relatively consistent and
enduring responses to the environment.

o Self-image
o Self-concept
o Personality
o Self-esteem

8: __________ is the process by which an individual selects, organizes, and interprets information to
create a meaningful picture of the world.

o Perception
o Motivation
 o Learning
o Beliefs

9: _________ is the tendency to twist information into personal meanings and interpret information
in a way that will fit our preconceptions.

o Selective hearing
o Selective attention
o Selective distortion
o Selective retention

10: Cognitive dissonance is caused by ______ conflict.

o pre-purchase
o during purchase
o post purchase
o information research

11: For what does the acronym VALS stand?

o validity and likeability scale

o vision and landscaping system
o values and lifestyles program
o values loading scales

12: One of the eight American lifestyles is:

o workers.
o achievers.
o believers.
o Motivators

13: The trading of raw material through online sources between buyers and sellers is classified as

A. e-procurement

B. de-procurement

C. online selling

D. direct marketing

14: The kind of reduction made to those buyers who buy large volumes of products is classified as
A. cash discount

B. seasonal discount

C. functional discount

D. quantity discount

15: The pricing issue arise when manufacturer could not force dealers or retailers to charge a specific
price

is classified as

A. deceptive pricing

B. price discrimination

C. resale price maintenance

D. fix quantity pricing

16: The demand which is affected by price changes in short term is

A. elastic demand

B. inelastic demand

C. realistic demand

D. unrealistic demand

17: The product life cycle stages helps in describing

A. product class

B. product form

C. brand

D. all of above

18: • The study of human population in context of gender, race and occupation is called

A. the demographic environment

B. the cultural environment

C. the economic environment

D. the natural environment

19: • The generation born following 'baby boomers' is known as

A. generation X

B. generation Y

C. Both a and b

D. none of above

20: The kind of cost which does not vary with the level of production of company or level of sales is

classified as

A. variable costs

B. fixed costs

C. total costs

D. all of above

21: The Macro environment includes

A. Demographic factors

B. Technological factors

C. The suppliers

D. Both a and b

22: The third step in new product development is

A. product screening

B. business screening

C. systematic screening

D. concept development and testing

QUESTIONS

Q1: Discuss Characteristics Affecting Consumer Behaviour.

Ans: Consumer’s buying behaviour has been comprehensively researched by marketers in order to
understand how, what and why customers buy products and on what are the basis of their
decisions. The fundamental basic approach into analysing consumer buyer behaviour is considered
the Stimulus – Response model developed by Pavlov shown in Figure . In this model consumers are
subject to marketing stimuli as well as other stimuli such as economic, technological, political and
cultural events. These are then evaluated by the customer’s “black box” which is based on personal
buyer characteristics and decision processes, and hence different buyer responses are observed
(Kotler & Armstrong, 2001).

Figure : Model of Buyer Behaviour

Kotler & Armstrong (2001) define the traditional buying decision process in five consequent steps
which consist of:

Problem identification

Information search

Evaluation of Alternatives

Purchasing decision

Post purchase behaviour

The above model implies that the buying process initiates quite before the actual purchase and
continues after. The process starts with the need recognition where the consumer recognizes a
problem or a need, which could be caused by internal or external stimuli. The consumer will hence
start to search and gather information in order to satisfy their needs. Information can be obtained
from a variety of sources such as personal sources, commercial sources, public sources, and
experiential sources. Once the consumer is armed with the required information, the consumer uses
this information to evaluate alternatives in selected the brand. Following the evaluation of the
options available, the consumer is required to make the purchase decision and select which brand to
purchase. The loop doesn’t close with the purchase of the product, but rather post purchase
behaviour recognises whether the product meets the consumer’s expectations. Customer
satisfaction is key because it will result in repeat customers and positive word of mouth.

Characteristics affecting consumer behaviour

Consumer behaviour is highly influenced by external and internal factors. The external factors are
divided into five sectors: Demographics, socio-economics, technology and public policy; culture;
subculture; reference groups; and marketing. The internal factors include a variety of psychological
factors, such as beliefs and attitudes, motivation, perception, learning and self-image (Malcolm,
2001). Studies have shown that these factors and others that fall beyond the marketer’s control
have a significant impact on consumer’s behaviour and purchasing decisions (Dibb, et al., 2001;
Solomon & Stuart, 2003).

Shah (2010) refers to traditional consumer behaviour in purchasing goods and services as the
process of selecting, purchasing and consuming of goods and services that satisfies consumer wants.
Consumers select the product they would like to consume by identifying the good or product that
provides them with the greatest value in return. Hence the consumer will focus on the available
spending power to obtain the commodity. Following the analysis of cost and price of the commodity,
a final decision is taken to select the best option that satisfies the consumer needs. This process does
not occur in vacuum, and is highly influenced by various factors such as social, cultural, personal and
psychological factors.

Although marketers have little or no influence on the mentioned factors, they still have some very
important tools which may affect the buying decision process. The marketing mix, also known as the
4Ps – product, price, place and promotion, is the set of controllable marketing tools that the firm
uses to influence consumers’ behaviour in order to obtain a desired response from the target market
(McCarthy, 1960).

Online Buying Behaviour

Since the expansion of the World Wide Web in the mid-1990s, the Internet has grown to become
one of the most powerful distribution channels with a rapid increase in ecommerce transactions.
This raised the need for marketers to discover the customers’ online behaviour and understand their
decision making process when making purchases online. There are substantial differences between
offline and online consumer behaviour. In his study, Vijayasarathy (2001) tried to clarify consumer
online shopping behaviour by integrating web specific factors into the Theory of Reasoned Action
(TRA). Furthermore Song and Zahedi (2001) examined the effects of website design on the adoption
of internet shopping by developing on the model of the Theory of Planned Behaviour (TPB).

Oppenheim and Ward (2006) argue that consumers are motivated to buy online because of the
convenience provided. The internet provides unlimited opportunities for potential customers to
purchase products at any given time and place. The internet also provides limitless information
about products and services which is easily accessible to online visitors. Furthermore when
comparing online shopping to traditional shopping, there are no waiting lines for shoppers on the
internet and no pressure coming from sales people (Smith & Rupp, 2003). However studies show
that the internet has become a useful tool for comparative shopping, where users browse the web
to search and compare products, whilst making it easy to abandon the purchasing process
(Degeratu, et al., 2000). Furthermore Anfuso’s research (2004) shows that the online search for
information about products drive offline sales. Consumers prefer to search for product information
online since it is much more convenient, and hence purchase the product from a brick and mortar
store.

Different authors have identified various divergent personas describing what the online buyers look
like. Marker (2011) suggests that online buyers tend to exhibit the following psychological
characteristics: egocentric, impatient, impulsive, educated, informed, thrifty, private, cautious,
indecisive and pleasure-driven. In their study Donthu and Garcia (1999) propose that online
shoppers tend to be convenience seekers and tare easily influenced by marketing campaigns.
Furthermore they also put forward that internet users are less price and brand conscious, whilst also
suggesting that these have a higher purchasing power. Other studies show that online customers are
more likely to be of a young age with a high disposable income. It is also propose that they have a
solid level of education especially in computer literacy, as well as being big retail spenders (Allred, et
al., 2006).

As mentioned earlier there are various factors which impact the traditional consumer behaviour.
Liang and Lai (2000) suggest that online consumer behaviour has similarities with the traditional
consumer behaviour, where consumers recognize a need for a product or service, use the internet to
search for information, evaluate alternatives to choose the best solution and finally purchase the
product followed by post purchase evaluation.
However other studies indicate that there exist various factors that differ from the traditional
consumer markets to the online environment. Refernce groups effecting consumer behaviour online
have taken the form of virtual communities, consisting of blogs, forums and other forms of
discussion groups (Huarng & Christopher, 2003). Social influences, such as experiences,
recommendations and tastes of online bloggers have an effect on online consumer buying behaviour
and have a significant impact on the final decision the consumer makes. In their study Hasslinger, et
al., (2007) highlight the fact that cultural differences also highly influece online consumer behaviour,
especially the difference in social class the consumer belongs to. Consumers who form part of a
higher social class have a higher probability of owning a computer with internet access, and thus
they are more likely to purchase online than consumers from lower social classes.

Personal influences effecting online behaviour also relates to the income the consumers earn, since
there exists a positive correlation between households with higher income and computer
possession, internet access and advanced level of education (Monsuwe, et al., 2004). Age was also
recognised as being another determinant for effecting online shopping behaviour (Smith & Rupp,
2003). Younger people are more pertinent in using the internet as a shopping medium compared to
the older generation, since the latter tend to have less technical know-how and are far less inclined
to commit and trust online vendors. Furthermore Smith and Rupp (2003) classify motivation,
perception, personality, attitude and emotions as the set of psychological characteristics influencing
online consumer behaviour.

With the launch of Web 2.0 in 2004, the interaction between online consumers and vendors has
become a reality, which became possible due to evolution of high-speed broadband connections.
Web 2.0 consists of a collection of interactive tools and social communication techniques which are
aimed to increase user participation and engagement online through its virtual word of mouth
(Chaffey, 2011). In their study, Wirtz, et al., (2010), identify social networking and interaction factors
as the two most important factors affecting online consumer behaviour from the Web 2.0 era.
Moreover social networking provides online consumers with enhanced trust factors and helps retain
online customers, which is fundamental for online retailers (Jarvenpaa, et al., 2000).

In their research, Cheung, et al., (2003), analysed 351 publications and classified the theories used to
understand online consumer behaviour. They conclude that the principal models in assessing this
area are the Theory of Reasoned Action (TRA) together with the Technology Acceptance Model
(TAM) and the Theory of Planned Behaviour (TPB). Other theories which have been tested include
The Expectation Confirmation Theory (ECT) and Innovation Diffusion Theory (IDT). Table provides the
list of the most frequently tested theories in the area online consumer behaviour together with their
references.

Cheung, et al., (2003) take a holistic view of the online consumer purchase process, where they
investigate the connection between the intention, adoption and continuance of purchase from
online consumers. Their Model of Intention, Adoption and Continuance (MIAC) recognised that
businesses primarily focused their efforts in attracting online customers. However due to stiff
competition, organisations changed their attention from initial purchase to retaining customers and
building customer loyalty.

Table : References of Online Consumer Behaviour Research

Online marketer’s persuasion tools

Consumers are subject to influences from marketers which might impact their purchasing behaviour.
Marketers provide stimuli to the consumer’s black box in order to try and influence the consumers’
decision prior to making their purchase decision (Kotler & Armstrong, 2001). The set of controllable
(i.e., traditional marketing) and uncontrollable (i.e., environmental factors and personal
characteristics of the consumer) factors between online and traditional markets do not vary
fundamentally, where both markets have factors which are within the influence of marketers and
some factors which fall beyond their reach.

As discussed above, most uncontrollable factors are quite similar for both the traditional and online
markets (Dibb, et al., 2001; Solomon & Stuart, 2003). However a thorough analysis of the online
consumer purchasing decision indicates that the controllable factors influencing the traditional
markets are distinct from those influencing the online market. Although most of the traditional
marketing activities, such as mass advertising and sales promotions, can be applied to the online
market in order to try and influence the online consumer behaviour, they are likely to be futile due
to the changing nature of the online consumer (Urban & Hauser, 2003). Moreover, Constantinides
and Geurts (2005) suggest that traditional marketing tools are ineffective when targeting potential
global online customers dispersed across different geographical regions.

Since most of the interactions between online customers and online vendors occur on the web, a
logical assumption is that the main marketing influences produced from the online vendors are
experienced by customers online. Online marketers can influence the online consumer behaviour
primarily by delivering the proper online experience, more known as the Web Experience. The
virtual marketing elements constructing the online consumers’ Web Experience are under the e-
marketer’s control and can shape or influence the consumer’s behaviour during an online interaction
(Constantinides, 2004; Constantinides & Geurts, 2005).

Forces influencing customer’s purchase intention (Model)

The Web experience is a combination of online functionality, information, cues, stimuli and
products/services (Constantinides, 2004). The company website is primary medium of delivering the
Web experience, which is the gateway between the organisation and the online customers.
Constantinides (2004) explores the idea of introducing the Web experience as one of the
controllable marketing factors influencing the online consumer’s behaviour. Figure illustrates the
controllable and uncontrollable elements influencing the online consumer behaviour.

Q2: What are different types of buying decision behaviours?

Ans:

4 Types of Consumer Behavior

A consumer’s buying decision depends on the type of products that they need to buy. The
behavior of a consumer while buying a coffee is a lot different while buying a car.

Based on observations, it is clear that purchases that are more complex and expensive
involve higher deliberation and many more participants.

Consumer buying behavior is determined by the level of involvement that a consumer shows
towards a purchase decision.  The amount of risk involved in a purchase also determines the buying
behavior. Higher priced goods tend to high higher risk, thereby seeking higher involvement in buying
decisions.

There are four type of consumer buying behavior: 

1. Complex buying behavior

2. Dissonance-reducing buying behavior

3. Habitual buying behavior

4. Variety seeking behavior

1. Complex buying behavior

Complex buying behavior is encountered particularly when consumers are buying an

expensive product. In this infrequent transaction, consumers are highly involved in the purchase
decision. Consumers will research thoroughly before committing to invest.

Consumer behaves very different when buying an expensive product or a product that is
unfamiliar to him. When the risk of buying a product is very high, a consumer consults friends, family
and experts before making the decision.

For example, when a consumer is buying a car for the first time, it’s a big decision as it
involves high economic risk. There is a lot of thought on how it looks, how his friends and family will
react, how will his social status change after buying the car, and so on.

In complex buying behavior, the buyer will pass through a learning process. He will first
develop beliefs about the product, then attitudes, and then making a thoughtful purchase choice. 
 For complex buying behavior customers, marketers should have a deep understanding of the
products. It is expected that they help the consumer to understand about their product. It is
important to create advertising message in a way that influences the buyer’s beliefs and attitudes.

2. Dissonance-reducing buying behavior

In dissonance-reducing buying behavior consumer involvement is very high. This might be

due to high price and infrequent purchase. In addition, there is a low availability of choices with less
significance differences among brands. In this type, a consumer buys a product that is easily
available. 

Consumers will be forced to buy goods that do not have too many choices and therefore
consumers will be left with limited decision making. Based on the products available, time limitation
or the budget limitation, consumers buy certain products without a lot of research.

For example, a consumer who is looking for a new collapsible table that can be taken for a
camping, quickly decides on the product based on few brands available. The main criteria here will
be the use and the feature of the collapsible table and the budget available with him.

Marketers should run after-sale service camps that deliver focused messaging.  These
campaigns should aim to support consumers and convince them to continue with their choice of
their brand. These marketing campaigns should focus on building repeat purchases and referrals by
offering discounts and incentives. 

3. Habitual buying behavior

Habitual Buying Behavior is depicted when a consumer has low involvement in a purchase

decision. In this case the consumer is perceiving only a few significant differences between brands. 

When consumers are buying products that they use for their daily routine, they do not put a
lot of thought. They either buy their favorite brand or the one that they use regularly – or the one
available in the store or the one that costs the least.

For example, while a consumer buys a loaf of bread, he tends to buy the brand that he is
familiar with without actually putting a lot of research and time. Many products fit into this category.
Everyday use products, such as salt, sugar, biscuits, toilet paper, and black pepper all fit into this
product category. 

Consumer just go for it and buy it – there is no brand loyalty. Consumers do not research or
need information regarding purchase of such products.

Habitual buying behavior is influenced by radio, television and print media. Moreover,
consumers are buying based on brand familiarity. Hence marketers must use repetitive
advertisements to build brand familiarity. Further to initiate product trial, marketers should use
tactics like price drop promotions and sales promotions. 

Marketers should attract consumers using visual symbols and imagery in their advertising.
Consumers can easily remember visual advertisements and can associate with a brand.

4. Variety seeking buying behavior

In variety seeking consumer behavior, consumer involvement is low. There are significant
differences between brands. Here consumers often do a lot of brand switching. The cost of switching
products is low, and hence consumers might want to try out new products just out of curiosity or
boredom. Consumers here, generally buy different products not because of dissatisfaction but
mainly with an urge to seek variety.

For example, a consumer likes to buy a cookie and choose a brand without putting much
thought to it. Next time, the same consumer might may choose a different brand out of a wish for a
different taste. Brand switching occurs often and without intention.

Brands have to adopt different strategies for such type of consumer behavior. The market
leader will persuade habitual buying behavior by influencing the shelf space. The shelf will display a
large number of related but different product versions.

Marketers avoid out-of-stock conditions, sponsor frequent advertising, offer lower prices,
discounts, deals, coupons and free samples to attract consumers.

Conclusion

Consumer buying decisions are depended on the consumer behavior. There are great
differences in the consumer behavior while buying a car versus buying chips. Marketers have to
exercise careful judgement in marketing products to different kinds of consumer behavior.

Q2: Explain Buyer’s Decision Process For New Products.

Ans: Buyers may pass quickly or slowly through different stages of buying-decision-process, and
some of those stages may even be reversed. It is much depended on the nature of the buyer, the
product, and the buying situation.

Now we have a look at how buyers approach the a new product till its purchased. A new product can
be a good, service, or an idea that is perceived by some potential customers as new. Marketer’s
main interest is to know that how consumers learn about new products for the first time and make
buying decisions on whether to adapt them. We can also define the adaptation process as a mental
process through which an individual customer passes from the first learning about an innovation of a
product to final adaptation, and adaptation as a decision by an individual to become a regular
customer of the product.

Stages in the Adaptation Process

Buyers go through five stages in this process of adapting for a new product:

1. Awareness: The customer becomes aware of the new products, but lacks in sufficient
information about it.

2. Interest: The consumer seeks information about a new product.

3. Evaluation: The customers consider whether trying the new product makes sense.

4. Trial: The customer tries a new product on a small amount to improve his or her estimate of
its value.

5. Adaption: The customer decides to make regular or full use of the new product.

This process suggests that the new-product marketers must think about how to facilitate their
consumers move through these stages. A manufacturer of HDTVs may discover that many customers
in the interest stage do not go to the trial stage because of uncertainty and the huge investment. If
these same consumers were willing to use HDTVs on a trial basis for a small fee, the manufacturer
could consider offering a trial-use plan with an option to buy.
Individual Differences in Innovativeness

People differ greatly in their willingness to try new goods and services. In each product area, there
are consumption of pioneers and early adapters. Other individuals adapt these new products much
later. The five adapter groups have differing values. Innovators are the adventurous – they try new
product’s ideas at some risk. Early adapters  are usually guided by respect – they are generally
opinion leaders in their communities and they adapt new ideas early but carefully. The early
majority are deliberate – even though they rarely are leaders, they adapt the innovative ideas
before the average person. Late majority are dubious – they adapt an innovative product only after
a majority of people have already tried it. Finally, the laggards are tradition bound – they are
hesitant for changes and adapt the innovative ideas only when it has become something of a
practice itself.

This classification of adapter suggests that an innovating business should research the all
characteristics of the innovators and the early adapters, and they should try direct marketing efforts
towards them. In general, innovators tend to be relatively young, better educated, and higher
income than later adaptors and non-adapters. They are more approachable to new things, more rely
on their own values and beliefs and judgment, and are more willing to take risks. They are fewer
brands loyal and more likely to get advantages of special promotions such as coupons, discounts,
and samples.

Chapter- 4

Business Markets and Business Buyer Behaviour

MCQ

1: The generation born before 1964 and after World War II is classified as

A. generation X

B. generation Y

C. baby boomers

D. both a and b

2: The factors that affect Company's ability to maintain customer relationships are known as

A. Marketing environment

B. Marketing dashboard

C. Marketing plan

D. Both a and b
3: The most successful products are those which are

A. differentiated

B. solve customer problems

C. offering customer value proposition

D. all of above

4: Lexus targets customer regardless of the country in which they lived - the "global elite" segment,
this is called

A. intermarket segmentation

B. intramarket segmentation

C. income segmentation

D. psychographic segmentation

5: • Top management sets the company's

A. Mission

B. Objectives

C. Vision

D. All of above

6: What are the business buyers' three types of buying situations?

o Awareness, evaluation, trial

o Straight rebuys, rebuys for laggards, old task
o Straight rebuys, modified rebuys, new task
o None of the above

7: Which of the following is one of the business roles in the purchase decision process?

o Gatekeeper
o Producer
o Retailer
o None of the above

8: Which of the following statements is true?

o Most manufacturers make all or even a majority of their sales through direct
channels
 o Compared with consumer purchases a business purchase involves more decision
participants
o In the business buying process the buyer and seller are often much less dependent
on each other
o None of the above

9: Which of the following is not a characteristic of business markets?

o Business buyer demand is derived from final consumer demand

o Demand in business markets fluctuates more, and more quickly
o Business buyers usually face less complex buying decisions
o The business buying process is more formalized

10: Supplier search is the first stage of the business buying process.

 True
 False

11: "From a branding perspective, it's very important to protect and develop the qualities of the
Stiga brand, our flagship brand, and that's easy since we are having full control of what's happening
at the retail level."

 True
 False

12: Many business markets have Inelastic demand; the total demand for many business products is
not affected much by price changes, especially in the short run.

 True
 False

13: . The individual responsible for the flow of information is called ______.

a. the gatekeeper

b. the initiator

c. the decider

14: Bribing a foreign buyer is an example of ______.

a. cultural difference in buying

b. political influence
 c. ethical influence

15: A retailer is an example of ______.

a. an institutional buyer

b. a reseller

c. a business and commercial buyer

16: What does OEM stand for?

a. Organisation for Energy Markets

b. Overseas Equipment Markets

c. Original Equipment Manufacturer

17: In the context of ‘consumption in B2B’, what does MRO stand for?

a. Mechanical Reproduction Order

b. Market Research Organisation

c. Maintenance, Repair, Overhaul

18: What is the main definition of a ‘straight rebuy’?

a. re-buying back a previously sold item

b. a situation in which a previous order is simply repeated in its entirety

c. a type of purchase for which previous experience does not exist

19: A buyer who increases the amount of product ordered is making ______.

a. a modified rebuy

b. a straight rebuy

c. a new task buy

20: Which of the following is NOT an item listed in the buy-grid framework?

a. search for and qualification of potential sources

b. evaluation of proposals and selection of suppliers

c. anticipation of order and listing of quantity needed

21: he person who handles initial contacts and controls the team in a team-selling scenario is called
______.

a. the sales representative

b. the key account manager

c. the team leader     

22: A supplier assessment system in which each department is asked to comment on their
experience with the supplier is called ______.

a. a categorical plan

b. a weighted-point plan

c. a cost-ratio plan

QUESTIONS

Q1: Explain Consumer Decision-Making Process.

Ans: 5 steps of the consumer decision making process

1. Problem recognition: Recognizes the need for a service or product

2. Information search: Gathers information

3. Alternatives evaluation: Weighs choices against comparable alternatives

4. Purchase decision: Makes actual purchase

5. Post-purchase evaluation: Reflects on the purchase they made

The consumer decision-making process can seem mysterious, but all consumers go through basic
steps when making a purchase to determine what products and services will best fit their needs. 

Think about your own thought process when buying something––especially when it’s something big,
like a car. You consider what you need, research and compare your options before taking the plunge.
Afterwards, you often wonder if you made the right call. 

If you work in sales or marketing, make more of an impact by putting yourself in the customer’s
shoes and reviewing the steps in the consumer decision-making process.

Steps in the consumer decision process

Generally speaking, the consumer decision-making process involves five basic steps. Start to
understand the unique decision process of your customers with this decision flowchart template.
Overview of the Consumer Decision-Making Process (Click on image to modify online)

1. Problem recognition

The first step of the consumer decision-making  process is recognizing the need for a service or
product. Need recognition, whether prompted internally or externally, results in the same response:
a want. Once consumers recognize a want, they need to gather information to understand how they
can fulfill that want, which leads to step 2.

But how can you influence consumers at this stage? Since internal stimulus comes from within and
includes basic impulses like hunger or a change in lifestyle, focus your sales and marketing efforts on
external stimulus. 

Develop a comprehensive brand campaign to build brand awareness and recognition––you want
consumers to know you and trust you. Most importantly, you want them to feel like they have a
problem only you can solve.

Example: Winter is coming. This particular customer has several light jackets, but she’ll need a
heavy-duty winter coat if she’s going to survive the snow and lower temperatures.

2. Information search
Content Map With Funnel (B2C) Example (Click on image to modify online)

When researching their options, consumers again rely on internal and external factors, as well as
past interactions with a product or brand, both positive and negative. In the information stage, they
may browse through options at a physical location or consult online resources, such as Google or
customer reviews.

Your job as a brand is to give the potential customer access to the information they want, with the
hopes that they decide to purchase your product or service. Create a funnel and plan out the types
of content that people will need. Present yourself as a trustworthy source of knowledge and
information. 

Another important strategy is word of mouth––since consumers trust each other more than they do
businesses, make sure to include consumer-generated content, like customer reviews or video
testimonials, on your website.

Example: The customer searches “women’s winter coats” on Google to see what options are out
there. When she sees someone with a cute coat, she asks them where they bought it and what they
think of that brand.

3. Alternatives evaluation

At this point in the consumer decision-making process, prospective buyers have developed criteria
for what they want in a product. Now they weigh their prospective choices against comparable
alternatives.

Alternatives may present themselves in the form of lower prices, additional product benefits,
product availability, or something as personal as color or style options. Your marketing material
should be geared towards convincing consumers that your product is superior to other alternatives.
Be ready to overcome any objections––e.g., in sales calls, know your competitors so you can answer
questions and compare benefits.

Example: The customer compares a few brands that she likes. She knows that she wants a brightly
colored coat that will complement the rest of her wardrobe, and though she would rather spend less
money, she also wants to find a coat made from sustainable materials.

4. Purchase decision

This is the moment the consumer has been waiting for: the actual purchase. Once they have
gathered all the facts, including feedback from previous customers, consumers should arrive at a
logical conclusion on the product or service to purchase.

If you’ve done your job correctly, the consumer will recognize that your product is the best option
and decide to purchase.

Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming that the
brand uses sustainable materials and asking friends for their feedback, she orders the coat online.

5. Post-purchase evaluation

This part of the consumer decision-making process involves reflection from both the consumer and
the seller. As a seller, you should try to gauge the following:

 Did the purchase meet the need the consumer identified?

 Is the customer happy with the purchase?

 How can you continue to engage with this customer?

Remember, it’s your job to ensure your customer continues to have a positive experience with your
product. Post-purchase engagement could include follow-up emails, discount coupons, and
newsletters to entice the customer to make an additional purchase. You want to gain life-long
customers, and in an age where anyone can leave an online review, it’s more important than ever to
keep customers happy.

Tools to better understand your customer

Putting yourself in the customer’s shoes can help you steer consumers towards your product. Here
are some tools to help you analyze their decision-making process and refine your brand marketing
and sales tactics.

Customer journey map

A customer journey map visualizes a hypothetical customer’s actions. Use it to empathize with your
customers as they go through a specific process or try to complete a purchase. Map out the actions
the customer is likely to take.

Learn how to make a customer journey map to understand the decision-making process for your
product/service.
Customer Journey Map Example (Click on image to modify online)

Empathy map

Empathy maps help teams understand the customer’s mindset when dealing with a product or
service. They can be used for personas or specific customer types. Empathy mapping is often most
helpful at the beginning of a new project. Collaborate as a team to quickly get inside the heads of
your customers during every step of product development, testing, and release.

Learn how empathy maps work so you can understand your customers better and make customer-
oriented decisions.
Basic Empathy Map Example (Click on image to modify online)

User personas

Based on user research or past user interactions, user persona cards construct fictional or composite
personas that break down and organize your data into distinctive types of users. Build a more human
picture of your users and understand your user base better by creating user personas for the various
types of users for your product or service.
Understanding the consumer decision-making process is key if you want to attract more customers
and get them to make that crucial purchase. Use this process and the tools above to tune in to
consumers and genuinely understand how to reach them.

Q2: What is Business Buyer Behaviour?

Ans: Business buyer behaviour is the intent and behaviour shown by companies and employees into
making purchases for the organization. Business buying behaviour is the concept of understanding
the needs and wants of a business and making appropriate purchases, which ultimately help a
company get profits.

Companies have specific roles allotted to employees, who responsible for making business
purchases. This role is often known as business buyer. Business buyer behaviour can be understood
on the basis of the business buying process, which helps companies to get the best raw material &
goods, which can be processed to get maximum output and returns.

Business Buying Process

The above image depicts the buying process which is based on the business buyer behaviour.

Business Buying Behaviour Factors

There are certain factors which influence the buying decision of an organization. Some of them are:

1. Environmental forces

2. Organizational forces- Technical and price related specifications

3. Group forces- preferences of buying centre group

4. Individual forces- individual preferences

5. Factors like supplier of choice, order quantity, delivery, service, payment terms etc

Types of Buying Situations

Broadly there are three types of buying situations in a company

1. New Task- extensive problem-solving stage; focus on product; 2 types- judgemental and strategic

2. Modified Rebuy- limited problem solving; focus on product & vendor; 2 types-simple and comple

3. Straight Rebuy- routine problem solving; focus on vendor; 2 types- casual and routine

Q3: Discuss Major influences on business buyers.

Ans: Business buyers are subject to many influences when they make their buying decisions.
Economy is one of the major influences in some marketers’ perception. They think buyers will favor
the supplier who offers the lowest price rate or the best product or the most service. They focus on
offering strong economic benefits to buyers. However, business buyers actually respond to both
economic and personal factors.

Today, most B-to-B marketers recognize that emotions play a vital role in business buying decisions.
For example, you might expect that an advertisement promoting large trucks to corporate fleet
buyers would stress objective performance, technical, and economic factors. Though, an ad for
Volvo heavy-duty trucks shows two drivers arm-wrestling and claims, “it solves all your fleet
problems, except who gets to drive.”

There are many factors which actually influence on business buyers:

 Environmental Factors

Business buyers are influenced heavily by factors in the current and expected economic
environment, such as the level of primary demand, the economic outlook, and the cost of the
money. When economic uncertainty rises, business buyers cut back their new investment and
attempt to utilize their inventories. There are many other factors includes in environment factors,
these are economic development, supply conditions, technological changes, political and regulatory
developments, competitive development and culture and customs. These have impact on business
market directly or indirectly.

 Organizational Factors

All buying organizations have their own objectives, policies, procedures, structures, and systems.
The business marketers must understand all these factors well because so many queries are
connected to these factors. Like how many people are involved in buying decisions? Who they are?
What are the evaluation criteria? What are the company’s policies and limitation for their buyers?

 Interpersonal Factors

Usually buying center includes many participants, who influence each other. So, interpersonal
factors also influence the business buying process. Though, it is quite difficult to assess such
interpersonal factors and group dynamics. Managers do not wear labels that differentiate them as
important or unimportant buying participants, and powerful influencers are often buried behind the
scene. Interpersonal factors may include authority, status, empathy, and persuasiveness of
participants in business buying process.

 Individual Factors
Individual has a vital role in business buying process. Each participant in the business buying-decision
process brings in personal motives, preferences, and perceptions. But these individual factors are
affected by personal characteristics of each person, such as, age, education, income, professional
identification, their job status, personality, and attitudes towards risk. All buyers have different
buying style.

So these are all the factors that influence business buyers. Marketers have to keep all these factors
in their mind while making marketing plans or products or services.

Chapter- 5

Customer Value- Driven Marketing Strategy

MCQ

1: Companies that targets market very narrowly is called _______________.select the correct
option.
A. micromarketing
B. mass marketing
C. segmented marketing
D. niche marketing
E. All of these
F. Both A and B

2: Toyota Corporation which produces several different brands of cars is an example of

A. segmented marketing
B. niche marketing
C. Mass marketing
D. micromarketing
E. All of these
F. Both A and B

3: Royal Caribbean hotel chain which targets families and high energy couples is an example of
____________.which of the following statement is correct,

A. behavioral segmentation
B. geographic segmentation
C. income segmentation
D. psychographic segmentation
E. All of these
F. Both A and B

4: Countries having industrial economic structure are _______________.select the suitable option.
A. The United States and Japan
B. Saudi Arabia and Chile
C. Brazil and China
D. both a and d
E. All of these
F. Both A and B

5: Segment whose size, the purchasing power of customers and profiles of customers in segments
can be measured in terms of numerical figures is considered as ____________.which of the
following statement is correct,

A. substantial segment
B. attainable segment
C. measurable segment
D. accessible segment
E. All of these
F. Both A and B

6: ‘market segmentation’ includes _______________.select a suitable option.

A. psychographic segmentation
B. geographic segmentation
C. demographic segmentation
D. none of above
E. All of these
F. Both A and B

7: Kind of product mix and marketing mix which appeals a large number of buyers is called
____________.which of the following statement is correct,

A. micromarketing
B. mass marketing
C. segmented marketing
D. niche marketing
E. All of these
F. Both A and B

8: Segment that could be reached easily and well served is considered as ____________.which of
the following option is correct,

A. attainable segment
B. measurable segment
C. accessible segment
D. substantial segment
E. All of these
F. Both A and B
9: Global product strategy in which product to be marketed is changed a little to be adapted in a
foreign market is classified as ____________.which of the following option is correct,
A. communication adaptation
B. product adaptation
C. straight product extension
D. dual adaptation
E. All of these
F. Both A and B

10: Division of market on basis of separate needs and behaviors is called _______________.select
a suitable option.
A. positioning
B. market segmentation
C. targeting
D. differentiation
E. All of these
F. Both A and B

11: Market segmented on basis of ‘loyalty status of customers toward brands’ is best classified as
_______________.select the suitable option.
A. behavioral segmentation
B. geographic segmentation
C. demographic segmentation
D. psychographic segmentation
E. All of these
F. Both A and B

12: A company’s targeting strategy depends on ____________.which of the following option is

correct,
A. the company’s external equity
B. the product life cycle stage
C. the product growth cycle stage
D. a company’s internal equity
E. All of these
F. Both A and B

13: Way of selling goods produced in the home country with little modification or no modification
into the foreign market is classified as ____________.which of the following option is correct,

A. licensing
B. exporting
C. importing
D. joint venturing
E. All of these
F. Both A and B

14:  Strategy which does not after large market to capture smaller share is called
_______________.select the correct option.
A. micromarketing
B. mass marketing
C. segmented marketing
D. niche marketing
E. All of these
F. Both A and B

15: Market divided on basis of social class as ‘lower lowers, upper lowers and middle class’ is an
example of ____________.which of the following option is correct,

A. behavioral segmentation
B. geographic segmentation
C. demographic segmentation
D. psychographic segmentation
E. All of these
F. Both A and B

16: Kind of joint venture in which company signs an agreement with foreign producers to provide
services or manufacture goods is classified as _______________.select the correct option.
A. management contracting
B. investment ownership
C. contract manufacturing
D. joint ownership
E. All of these
F. Both A and B

17: Global communication and product strategy in which communication and product both are
adjusted to fit in a foreign market is classified as ____________.which of the following,

A. communication adaptation option is correct

B. product adaptation
C. straight product extension
D. dual adaptation
E. All of these
F. Both A and B

18: The primary determining factor controlling market segmentation is which of the following?
(A). Whether or not the market segment is profitable

(B). Whether or not the market segment is loyal

(C). Whether or not the market segment is feasible

(D). None of these

19: Which of the following is the rationale behind developing a customer-driven marketing
strategy?

(A).Realizing that a business cannot serve all customers in the same way

(B).Realizing that customers are loyal to businesses that cater to them

(C).Both A and B

(D).Realizing that a business’s profits are reliant on customers

E. None of these

20: While designing a customer-driven marketing strategy, marketers are likely…?

(A). divide the market into smaller segments

(B). Combine the market segments

(C). None of these

21: Market segmentation can be based on all of the following EXCEPT

(A). geographic location

(B). psychographics

(C). demographics

(D). profit

(E). C and D

22: : The firm that operates in more than one country gains production, marketing and financial
advantages that are not available to domestic competitors is called

A. global firm

B. expanding firm

C. premium firm

D. challenger firm
23: • The companies that targets market very narrowly is called

A. mass marketing

B. segmented marketing

C. niche marketing

D. micromarketing

24: Niche marketing helps more in

A. smaller firms

B. larger firms

C. business giants

D. retail store

25: : The Toyota Corporation which produces several different brands of cars is an example of

A. mass marketing

B. segmented marketing

C. niche marketing

D. micromarketing

QUESTIONS

Q1: Discuss Differentiation & Positioning Strategy.

Ans: You’ve probably heard you need to differentiate your firm. How do you do it and is it actually all
that important? Come to think of it, what exactly is brand differentiation?

For professional service organizations, differentiation can mean the difference between swimming in
a sea of sameness or becoming the go-to leader in your field. Some brands are more comfortable
doing things the way they’ve always been done; others say they’re trying to appeal to the largest
possible audience. But if you don’t differentiate yourself from the dozens or even hundreds of others
out there in your profession, you’ll have a hard time gaining the competitive advantage you seek.
Why? Because the buyer needs a reason to choose you over everyone else.

Differentiation & Positioning: What They Are, How They Differ

More than a half century after marketer Jack Trout first introduced brand positioning to the world,
the concept is more relevant than ever to businesses looking to connect with potential clients.
Today’s professional services marketplace is larger, more crowded, and more easily found, with
clients and clients having an enormous array of firms to choose from.
To appeal to a substantial audience within your professional services segment, you have to find ways
to set your firm apart. Differentiation and positioning are about building a unique package of
benefits that appeals to your target audience. Positioning and differentiation are complementary
approaches with slight differences, particularly with respect to professional services businesses.

What is Positioning?

Positioning is the place in the market you want your business to hold, especially in the mind’s eye of
your target audience. It can be subtle and difficult to detect but can be easier to spot if you look at it
from your own position as a consumer. Take cars, for example, where the idea of perception as
reality excels. BMW and Mercedes Benz position themselves as luxury vehicles, Tesla sets itself apart
as a clean energy alternative, and Kia and Hyundai brand themselves as affordable.

What position should your services occupy in your potential client’s mind? How do you want people
to think about you? Influencing perception (who you are, how you help, what you can uniquely do
for a client) are what positioning is all about.

What is Differentiation?

Differentiation relates to positioning in the sense you want to attract the same clients your
competition attracts. If another professional services firm’s offerings overlap with your target
audience, you need to think about how you’ll stand out and be the more attractive option.

A common misconception is that being cheaper than the competition is the best way to differentiate
yourself. We’ll get into that a little more later, but it’s safe to say that’s usually a good way to end up
in a race to the bottom.

To understand why most other successful brands don’t seriously under-price their products or
service, put yourself in the consumer role again. When you’re in the mood for a soft drink, do you
choose Pepsi, Coke, Sprite, or another popular brand? Why do you choose it? Is it for the taste, the
level of caffeine, or is something more intangible like the good memories it evokes? These qualities
are what differentiate one soft drink from the next.

Let’s look at a specific example of Nike’s positioning strategy. Nike provides a commodity item
(shoes) to hundreds of millions of people around the world every year. Nike is horizontally
positioned. Their position is that they believe in ‘celebrating the high performing athlete in you’ –
whether the customer is a real athlete or not, they appeal to that demographic. They back this
position up with ‘products that are strong, flexible and lightweight to help you push further and
faster than ever before to ‘win’. They just happen to make shoes.

Shoes, on the surface, are all much the same. But everyday, thousands of people choose Nike –
because Nike embodies that position in their mind.
The Differentiation/Positioning Connection

Positioning and differentiation connect in important ways. It can be confusing, but a good way to
look at it is:

Positioning is based on the differentiating characteristics or qualities that make your business better
than your competition’s in the mind of your target audience.

Both concepts are strategic actions and are designed to create a desired position for your business in
the market rather than having it be defined by your competitors. The result is your ideal clients have
a compelling reason to choose you.

To illustrate our positioning and differentiation points in this piece, we’ll use an accounting firm as
an example. The concepts covered, though, apply to whichever professional service sector you’re in.

What’s a Differentiation Strategy?

Here’s a fairly simple way to illustrate a differentiation strategy. A professional service organization
such as an accounting firm can have a vertical or horizontal position. What does that mean?

 Vertical segmentation is industry or category specific. You focus on working with clients in a
specific field – such as health care, information technology, or travel companies etc. For
example, an accounting firm might work specifically with clients in the construction industry.

 Horizontal segmentation takes into consideration demographic information or the speciality

you hold. So, one accounting firm might only work with high-worth individuals or families.
Clients may come from many sectors, but they have a particular trait in common.

It’s also possible to combine the two. For example, a forensic accountant (horizontal) only works in
the construction arena (vertical) or an estate and trust accounting firm (horizontal) only works with
individuals bringing in more than a million a year (also horizontal).

Planning Your Differentiation Strategy

To get started strategizing how your firm will differentiate itself, look at how you currently handle
your business model. Does your segment typically bill by the hour? Is the target audience you want
to reach not particularly interested in watching their bill climb with every phone call, email, or other
activity? If so, you might want to design a new business model where you charge a retainer and the
rest is billed as a percentage of results.

Before we move on to the different types of differentiation strategies, let’s recap:

 Positioning is the place you hold in the mind’s eye of your target audience.

 Differentiation is how your firm is different or stands out from your competitors on a non-
price basis.

From a marketing perspective this is important, particularly for professional service businesses
whose average client might not know specifically what the provider does. Put another way, pretty
much everyone knows what an accountant does, but they don’t know the ins and outs of specific
services.

Your ability to connect with an audience rests on positioning and differentiation. If the way you
present yourself and your services relates to people on a one-to-one basis, the more likely it is they’ll
feel emotionally connected with your firm and do business with it.

Types of Differentiation Strategies

A differentiation strategy is multi-pronged but can generally be condensed into three steps:

1. Identifying differentiating competitive advantages.

2. Choosing the competitive advantages that will build the best position.

3. Selecting a global positioning strategy.

Once completed, you must then effectively communicate your chosen position to the market.

The right positioning strategy improves your brand’s visibility both online and in the minds of your
target audience. There are several approaches you can take and, as we mentioned before, rarely if
ever is lowering your price one of them.

Here’s what we recommend instead:

 What features of your service can be highlighted that differentiate you from your
competitors? What do you want to be known for?

 What benefits does your service offer that the competition does not?

 What unique problems does your target audience have that only you can solve?

 How do your services financially benefit clients if they act today?

 Are there additional services or features you can offer such as access to complementary
service firms?

Whatever it takes to make your firm stand out—and as long as it offers real value—is what defines a
good differentiation strategy.

How to Choose a Differentiation Strategy

It often happens you’ll need to choose between two similarly positioned options. That’s where
differentiation helps in the decision-making process. For instance, on the surface the odds are good
that two accounting firms can meet similar needs of a targeted market segment. The differentiation
questions set out above help you drill down to discover why your firm is the one they should choose.

What you’re looking to do is lay out qualitative, focused, and innovative qualities that disrupt or
change the norm of how people do business with your type of professional service.

With product differentiation, it can be easier because manufacturers can come up with special
features that set them apart. With professional services, a lot of the work is done on a one-to-one
basis to meet a client’s needs, so one good way to differentiate is in how you market and “sell” your
services. It’s about providing value before they even become a client.

Case in point:

 A typical digital marketing strategy for accountants and other service providers goes

something like this:  Here’s a list of our services, here is what we offer to address your
problem, would you like to hire us?, please sign on the dotted line.

 You might differentiate yourself by making the process more consultative. For example,
when a potential client first speaks to someone in your organization, that person may walk
them through a unique process to help them understand where they are in their journey,
where they want to be, and the steps your firm is going to take them through to get there.
With this approach, even if the services you provide are exactly what a competing firm
offers, the way you sell them can be a great differentiating strategy to try.

 Or try innovating within the service itself. Can you switch up your business model,
reconfigure the structure you follow, and add in extra services you provide but others don’t?
Explain to potential clients why these services, say like a particular piece of software or
proprietary tech, will speed up the process. Selling that experience  makes your offerings that
much more compelling.

What Makes You So Special?

Do you currently have a differentiation strategy? Is it working? How do you know?

Here’s a few ways you can assess it:

 First and foremost, how laser-focused do you seem from your target audience’s
perspective? Many professional services business owners fall into the predicament of being
too close to the situation. They know all the inner workings of the business, including things
a client never thinks about. You might say you just plain know too much. And knowing too
much can get in your way of connecting with a prospective client. Ask yourself instead, what
does the potential client see when they look into your business?

 What’s the message your professional service organization is putting out there? Is it clear
through your marketing what the vertical, horizontal, or combo position is you hold in the
market? Are you effectively communicating your differentiation via price, quality, and focus?
Is the message being made clear? Is it consistent in every single channel you use, i.e. does
the heading on your website’s home page say the same thing as your firm’s brochure? Is
your core message communicated through all social media platforms? Do the things you
write about on your blog always relate back to your unique position?
In the end, differentiating and positioning yourself in a winning way is about looking at your market
as a whole. To pull out in front of your competitors, put yourself in the shoes of potential clients,
look at what the competition is doing, and devise a list of what you can offer that sets you apart.

Not seeing much to set you firm apart from the others? Here’s the deal, if everyone in your line of
work or niche is offering the exact same things, no one is positioning or differentiating themselves. If
you all have the same service list, if it all seems the same from outside, chances are it is all the same.
So even if you think your services are better, the way you market yourself won’t matter if everyone
else is doing it the exact same way.

Today, most business relationships start online. If a potential client can’t tell from looking at your
website how you’re different or if they can only understand your differentiation by speaking to a
staff member, then it’s not working. clients today don’t want to spend time “getting to know you”
once they’re in your office or on an online consultation. Want to build client satisfaction and loyalty?
Give them everything they need to know about you ahead of time.

One of the biggest payoffs you’ll realize from this approach is that you’ll know you stand a good
chance of retaining the client because they’ve already vetted you. They’re happy because they don’t
waste time finding out you can’t offer them what they need and you’re happy because you haven’t
spent otherwise productive time on a prospective client who’s not a good fit.

One final tip. When defining your differentiators avoid cliché terms and phrases like quality, best
results, and skilled communicators. “We’re super professional” is not the right answer to what
makes you special!

The bottom line: if you can respond “everyone” when asked who you serve, you’re not well-enough
positioned in the market. In fact, you’re not positioned at all. It’s time to get to work building a
differentiation strategy that improves your business’ visibility and gives you the competitive
advantage you deserve.

Q2: What Is Targeting in Marketing?

Ans: Targeting in marketing is a strategy that breaks a large market into smaller segments to
concentrate on a specific group of customers within that audience. It defines a segment of
customers based on their unique characteristics and focuses solely on serving them.

Instead of trying to reach an entire market, a brand uses target marketing to put their energy into
connecting with a specific, defined group within that market.

The four main types of market segmentation are:

 Demographic segmentation: age, gender, education, marital status, race, religion, etc.

 Psychographic segmentation: values, beliefs, interests, personality, lifestyle, etc.

 Behavioral segmentation: purchasing or spending habits, user status, brand interactions, etc.

 Geographic Areas: neighborhood, area code, city, region, country, etc.

A brand might also leverage business segmentation, taking into consideration things like industry,
company size, or annual revenue.
Through market segmentation, brands get more specific about their target market. They can focus
on a small group of customers who will be most likely to benefit from and enjoy their products.

For example, a brand that sells day planners may decide to focus on a smaller, specific target market.
Instead of marketing to the masses, they may focus solely on selling planners to female business
owners. Or they could choose to exclusively market to high school teachers. Both examples are
smaller, more specific segments of the day planner’s potential market.

Why Is Targeting in Marketing So Important?

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It impacts
advertising, as well as customer experience, branding, and business operations. When your company
focuses on target market segmentation, you can do the following:

Speak directly to a defined audience. Marketing messages resonate more deeply with audiences
when readers can relate directly to the information. Brands that have a large, varied market of
customers often struggle with creating marketing campaigns that speak directly to their audience.
Because their viewers are very different, few slogans or stories can resonate with each person on a
personal level. Through target marketing, you can alleviate this problem and focus on crafting
messages for one specific audience.

Attract and convert high-quality leads. When you speak directly to the people you want to target,
you are more likely to attract the right people. Your marketing will more effectively reach the people
most likely to want to do business with you. When you connect with the right people, you are then
more likely to get high-quality, qualified leads that will turn into paying customers.

Differentiate your brand from competitors. When you stop trying to speak to every customer in
your market and start focusing on a smaller segment of that audience, you also start to stand out
from competitors in your industry. When customers can clearly identify with your brand and your
unique selling propositions, they will choose you over a competitor that isn’t specifically speaking to
or targeting them. You can use your positioning in marketing to make your brand more well-known
and unique.

Build deeper customer loyalty. The ability to stand out from competitors by reaching your
customers on a more personal, human level also creates longer-lasting relationships. When
customers identify with your brand and feel like you are an advocate for their specific perspectives
and needs, they will likely be more loyal to your brand and continue to do business with you over a
longer period of time.

Improve products and services. Knowing your customers more intimately also helps you look at
your products and services in a new way. When you have a deep understanding of your target
audience, you can put yourself in their shoes and see how you can improve your offerings. You can
see what features you can add to better serve your customers.

Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to help your
brand and team. Target marketing allows you to get more specific about your marketing strategies,
initiatives, and direction of your brand. It helps you clarify your vision and get everyone in the
organization on the same page. You have more direction when it comes to shaping upcoming plans
for both marketing and the business as a whole. A focused approach helps you fully optimize your
resources, time, and budget.
What You Need Before You Start Target Marketing

Using targeting in marketing serves both customers and brands. It improves product development
and operations, and it allows a brand to differentiate itself, stand out, and make a bigger impact. But
before you start target marketing, you need something important.

The best target marketing plans start with creating a clear and detailed buyer persona.

A buyer persona is a description of a semi-fictional character that represents your ideal customer. It
is a detailed summary of the characteristics, qualities, and habits of a person who is in your target
audience.

Knowing your ideal audience helps you decide which target markets to focus on. When you deeply
know your ideal customer, you can identify ways to segment them into a more defined audience.

To create a buyer persona, you need to imagine your ideal customer and describe their:

 Demographics

 Professional roles

 Values and goals

 Challenges

 Sources of influence

 Buying decisions

For help with creating audience personas, use Alexa’s free buyer persona template to build a
complete description of your ideal customer.  

As you create a buyer persona, don’t guess at the details that describe your ideal target customer.
To be successful at targeting in marketing, use real data and facts to form your buyer persona.
Perform research to learn about your ideal customers.

 Conduct interviews with your former and current customers.

 Talk to your sales team and find out what trends they see and experience.
  Track data on your point of sale systems and web analytics.

 Engage in social listening on social media to see what conversations customers have about
your brand and industry.

To be successful at targeting in marketing, use real data and facts to form your buyer persona.

Another way to learn about your audience is by using Alexa’s research tools.

Use Alexa’s Audience Overlap Tool to see what websites your audience visits. Enter your site or up
to 10 competitors in the Audience Overlap Tool to produce a map of sites that all share a similar
audience. This information allows you see what other websites your target audience visits and helps
you understand where they get information, inspiration, products, and services.

Use Alexa’s Audience Overlap Tool to uncover audience interests. When you know what other sites
your audience visits, you can also learn more about them. You can make educated assumptions
about who they are and what interests they have by looking closely at the other sites they use. For
example, using the similar websites map for daydesigner.com, you can see that audiences also visit
intentionalmoms.com and momssmallvictories.com. Therefore, you can determine that the
audience includes mothers. (This information can also help you identify an opportunity for a target
market: moms who use day planners.)
While using the tool, if you aren’t sure what a website is about based on the URL, click on the site.
From there, you can visit the site or use other Alexa tools to get more information as it relates to the
site’s keywords, backlinks, and traffic.

Use Alexa’s Site Overview Tool to see audience demographics. To get an idea of who is using a
website, enter your site or one of your competitors into the Site Overview Tool. The report will
provide insights into the gender, education, income, age, and ethnicity of the target website’s
audience, helping you identify key characteristics about readers.
How to Identify Target Market Opportunities

A detailed buyer persona is essential for helping you identify ways to use targeting in marketing and
drill down into a more specific niche market. Here are two other tactics that help you identify
opportunities within target markets.

Use Alexa’s Site Keywords Tool to look for trends. Enter your site or a site of a competitor into
Alexa’s Site Keywords Tool to produce a report on the top keywords that send the most search
traffic to the target site. Seeing what terms audiences use can give you inspiration for target
marketing. For example, daydesigner.com might see that many people are searching for “printables”
and “PDF” and then decide to create a niche market for downloadable calendars.

Use Alexa’s Keyword Difficulty Tool to see what industry terms your audience uses. This tool helps
you see what trends are related to your products and offerings. Enter a phrase closely related to
your business into the Keyword Difficulty Tool. Use the report to look for trends that show a need in
the market. Daydesigner.com, for example, could see that people are searching for “academic” and
“teacher” planners and may identify an education market it could tap into.

How to Use Target Marketing to Improve Your Strategy

Now that you know what you need to create a buyer persona and identify opportunities for
targeting in marketing, let’s look at how you can execute strategies based on this information. Here
are a few marketing targeting examples and channels your brand can improve.

Marketing Communication: Improve your marketing messages by using the language your audience
uses. When you intimately know your audience, you know the right ways to write content for a
website, create copy for social media posts, and use words that connect and resonate with your
audience.

Content Marketing: Produce more valuable, targeted content by focusing on your audience’s unique
interests and needs. Instead of creating generic blog posts, e-books, and infographics that your
audience won’t notice, improve your content marketing efforts by developing content that targets
their specific desires, fears, and wants.

SEO: Improve the likelihood your ideal audience will find your brand via search by optimizing your
content for the best keywords your audience searches for. Targeting in marketing helps you identify
the phrases and words your audience uses so you can target those terms and drive traffic back to
your website.

Paid Search: Also drive more traffic to your website by targeting the right keywords through paid
search. Focus on the buyer keywords you have identified through your research to catch your target
audience at the time they are ready to purchase.

Email: Use targeting in marketing to send emails to the right people, at the right time, with the right
content for their stage of the purchase funnel. Using what you know about your customer, outline
their buying decision process, and identify the places where you can use email to guide them
through their journey.
Display Ads: Use your knowledge of your audience to identify sites where you should place display
ads. You can make sure your ads are only in places where your audience will see them by choosing
to advertise on the sites you know they visit.

Guest Blogging:  Also catch attention on other sites by guest posting on sites you know your ideal
audience visits. Use what you know about your audience to find strategic guest blogging
opportunities that will put your brand in front of your target customers.

Improve Your Targeting in Marketing Plans Today

Targeting in marketing serves brands and consumers. It improves marketing strategies and audience
experiences, builds brand awareness and loyalty, and even leads to better products and services.
Plus, target marketing makes it easier for brands to reach audiences in an authentic, more
meaningful and personal way.

So if you’re struggling to stand out in a sea of similar products and services, try using this tactic to
grow your business and connect with more customers.

And get help with launching your target marketing strategies by signing up for a free trial of Alexa’s
Advanced Plan. The plan includes the market and audience research tools mentioned in this post
along with more than a dozen tools to improve your upcoming marketing, SEO, and content plans.

Chapter-6

Products, Services, and Brands: Building Customer Value

MCQ

1: The products that are sold through wide spread distribution network are classified as

A. convenience products

B. shopping products

C. unsought products

D. sought consumer products

2: The 'banking services' and 'hotel services' are examples of

A. products

B. commodities
C. barter system

D. offered services

3: • The product packaging is said to be part of

A. actual product

B. positioning strategy

C. competitive strategy

D. value proposition

4: The products that are bought to be used in conduct of business is called

A. consumer products

B. industrial products

C. augmented products

D. core customer value

5: The BlackBerry specific product design with QWERTY keyboard is an example of

A. product experience

B. intangible products

C. tangible product

D. services

6: We define a ________ as anything that can be offered to a market for attention, acquisition,

use, or consumption and that might satisfy a want or need.

A) private brand

B) service variability

C) service

D) product

E) service encounter

7: ________ are a form of product that consists of activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not result in the ownership of anything.

A) Line extensions

B) Services

C) Brands

D) Consumer products

E) Supplements

8: A product is a key element in the ________. At one extreme, it may consist of pure tangible

goods or at the other extreme, pure services.

A) market offering

B) brand equity

C) brand extension

D) co-branding

E) value chain

9: To differentiate themselves, many companies are going beyond products and services, they

are developing and delivering customer ________.

A) quality

B) experiences

C) brands

D) product lines

E) events

10: Product planners need to consider products and services on three levels. Each level adds more

customer value. The most basic level is the ________, which addresses the question, "What is

the buyer really buying?"

A) actual product

B) augmented product

C) core customer value

D) co-branding

E) exchange
11: The third level of a product that product planners must consider is a(n) ________ around the

core benefit and actual product that offers additional consumer services and benefits.

A) brand equity

B) augmented product

C) brand extension

D) industrial product

E) image

12: Product planners must design the actual product and find ways to ________ it in order to

create the bundle of benefits that will provide the most satisfying customer experience.

A) promote

B) package

C) brand

D) augment

E) present

13: Products and services fall into two broad classifications based on the types of consumers that

use them. Which is one of these broad classes?

A) industrial products

B) specialty products

C) supplies and services

D) materials and parts

E) convenience products

14: ________ are products and services bought by final consumers for personal consumption.

These include convenience products, shopping products, specialty products, and unsought

products.

A) Services

B) Consumer products

C) Line extensions

D) Industrial products
E) Straight extensions

15: ________ are less frequently purchased consumer products and services that customers

compare carefully on suitability, quality, price, and style. Consumers spend much time and effort

in gathering information and making comparisons about these products.

A) Shopping products

B) Convenience products

C) Unsought products

D) Industrial products

E) Line extensions

16: ________ are consumer products and services with unique characteristics or brand

identification for which a significant group of buyers is willing to make a special purchase effort.

A) Shopping products

B) Unsought products

C) Specialty products

D) Industrial products

E) Line extensions

17: ________ are consumer products that the consumer either does not know about or knows

about but does not normally think about buying. These products require a lot of advertising,

personal selling, and other marketing efforts.

A) Specialty products

B) Line extensions

C) Unsought products

D) Shopping products

E) Staples

18: ________ are those products purchased for further processing or for use in conducting a

business.

A) Unsought products
B) Specialty products

C) Shopping products

D) Industrial products

E) Accessories

19: Most manufactured materials and parts are sold directly to ________. Price and service are

the major marketing factors; branding and advertising tend to be less important.

A) consumers

B) industrial users

C) brand extensions

D) co-branders

E) wholesalers

20: ________ are industrial products that aid in the buyer's production or operations, including

installations and accessory equipment.

A) Materials

B) Parts

C) Capital items

D) Specialty items

E) Supplies

21: ________ consists of activities undertaken to create, maintain, or change the attitudes and

behavior of target consumers toward an organization.

A) Person marketing

B) Organization marketing

C) Internal marketing

D) Service variability

E) Intelligence marketing

22: ________ consists of activities undertaken to create, maintain, or change the attitudes and

behavior of target consumers toward an organization.

A) Person marketing

B) Organization marketing

C) Internal marketing

D) Service variability

E) Intelligence marketing

23: ________ involves activities undertaken to create, maintain, or change attitudes toward

particular cities, states, and regions.

A) Idea marketing

B) Place marketing

C) Organization marketing

D) Social marketing

E) Interactive marketing

24: ________ is defined as the use of commercial marketing concepts and tools in programs

designed to influence individuals' behavior to improve their well being and that of society.

A) Unsought product marketing

B) Internal marketing

C) Social marketing

D) Product line

E) Interactive marketing

25: Public health campaigns to reduce alcoholism, drug abuse, smoking, and obesity are all

examples of ________.

A) specialty products

B) social marketing

C) shopping products

D) consumer products

E) responsibility marketing
QUESTIONS

Q1: What Is a Product?

Ans: A product is any good, service, or idea that can be offered to a market to satisfy a want or need.

What Is a Product?

In general, a product is defined as a “thing produced by labor or effort” or the “result of an act or a
process. ” The word “product” stems from the verb “produce”, from the Latin prōdūce(re) “(to) lead
or bring forth. ” Since 1575, the word “product” has referred to anything produced.

In marketing, a product is anything that can be offered to a market that might satisfy a want or need.
In retail, products are called merchandise. In manufacturing, products are purchased as raw
materials and sold as finished goods. Commodities are usually raw materials such as metals and
agricultural products, but the term can also refer to anything widely available in the open market. In
project management, products are the formal definition of the project deliverables that form the
objectives of the project.

Goods, Services, or Ideas

Goods are a physical product capable of being delivered to a purchaser and involve the transfer of
ownership from seller to customer.

A service is a non-material action resulting in a measurable change of state for the purchaser caused
by the provider.

Ideas (intellectual property) are any creation of the intellect that has commercial value, but is sold or
traded only as an idea, and not as a resulting service or good. This includes copyrighted property
such as literary or artistic works, and ideational property, such as patents, appellations of origin,
business methods, and industrial processes.

Product Classification: Tangible or Intangible

A product can be classified as tangible or intangible.

A tangible product is a physical object that can be perceived by touch such as a building, vehicle, or
gadget. Most goods are tangible products. For example, a soccer ball is a tangible product.
Soccer Ball: A soccer ball is an example of a tangible product, specifically a tangible good.

An intangible product is a product that can only be perceived indirectly such as an insurance policy.
Intangible data products can further be classified into virtual digital goods (“VDG”), which are
virtually located on a computer OS and accessible to users as conventional file types, such as JPG and
MP3 files. Virtual digital goods require further application processing or transformational work by
programmers, so their use may be subject to license and or rights of digital transfer. On the other
hand, real digital goods (“RDG”) may exist within the presentational elements of a data program
independent of a conventional file type. Real digital goods are commonly viewed as 3-D objects or
presentational items subject to user control or virtual transfer within the same visual media program
platform. Services or ideas are intangible.

Product Classification: By Use or By Association

In its online product catalog, retailer Sears, Roebuck and Company divides its products into
“departments”, then presents products to potential shoppers according to function or brand. Each
product has a Sears item-number and a manufacturer’s model-number. Sears uses the departments
and product groupings with the intention of helping customers browse products by function or
brand within a traditional department-store structure.

A product line is “a group of products that are closely related, either because they function in a
similar manner, are sold to the same customer groups, are marketed through the same types of
outlets, or fall within given price ranges. ” Many businesses offer a range of product lines which may
be unique to a single organization or may be common across the company’s industry. In 2002 the US
Census compiled revenue figures for the finance and insurance industry by various product lines
such as “accident, health and medical insurance premiums” and “income from secured consumer
loans. ” Within the insurance industry, product lines are indicated by the type of risk coverage, such
as auto insurance, commercial insurance, and life insurance.

Benefits and Solutions

The core benefit is what consumers feel they are getting when they purchase a product.

Benefits & Solutions

The four levels of a product include: core, tangible, augmented, and promised. Core, tangible,
augmented and promised products feature characteristics (i.e., the total product concept or offer),
which includes everything a consumer evaluates before making a purchase. These factors can
include:
Levels of the Product: The four levels of a product include core, tangible, augmented, and promised.

 Price

 Store environment and/or surroundings

 Brand promise/ value

 Advertising and marketing activities

 Buyer’s past experience

 Accessibility or convenience

 Brand reputation

 Packaging

We begin with the notion of the core product, which identifies what the consumers feel they are
getting when they purchase the product. The core benefits derived when an overweight 45-year-old
male purchases a $250 ten-speed bicycle is not transportation–it is the hope for better health and
conditioning. In a similar vein, that same individual may install a $16,000 swimming pool in his
backyard, not to obtain exercise, but to reflect the status he so desperately desires. Both are
legitimate product cores. Because the core product is so individualized, and oftentimes vague, a full-
time task of the marketer is to accurately identify the core product for a particular target market.

Once the core product has been indicated, the tangible product becomes important. This tangibility
is reflected primarily in its quality level, features, brand name, styling, and packaging. Literally every
product contains these components to a greater or lesser degree. Unless the product is one-of-a-
kind (e.g. oil painting), the consumer will use at least some of these tangible characteristics to
evaluate alternatives and make choices. In addition, the importance of each will vary across
products, situations, and individuals. For example, for a 25-year old man, the selection of a particular
brand of new automobile (core product = transportation) was based on tangible elements such as
styling and brand name (choice = Corvette). In contrast, at age 45, the core product remains the
same, but tangible components such as quality level and features become more important (choice =
Mercedes).

The next level is the augmented product. Every product is backed up by a host of supporting
services. The buyer often expects such services, so they will reject the core-tangible product if these
are not available. Examples include restrooms, escalators, and elevators in the case of a department
store, and warranties and return policies in the case of a lawn mower. For example, Dow Chemical
has earned a reputation as a company that will go the distance to service an account. It means that a
Dow sales representative will visit a troubled farmer after-hours in order to solve a serious problem.
This extra service is an integral part of the augmented product and a key to their success. In a world
with many strong competitors and few unique products, the role of the augmented product is clearly
increasing.

The outer ring of the product is referred to as the promised product. Every product has an implied
promise. An implied promise is a characteristic that is attached to the product over time. The car
industry rates brands by their trade-in value. There is no definite promise that a Mercedes-Benz
holds its value better than a BMW. There will always be exceptions. How many parents have
installed a swimming pool based on the implied promise that their two teenagers will stay home
more or that they will entertain friends more often?

Features and Attributes of a Product

The features and attributes of a product are integral to the product design process, which in turn
assists in the creation of new products.

Product Design

This is the process of creating a new product to be sold by a business to its customers. It is the
efficient and effective generation and development of ideas through a process that leads to new
products.

The process of designing a new product (or updating the features of an existing one) is usually
completed by a group of people, designers or field experts in the product they are creating, or
specialists for a specific component of the product. These people would essentially determine all the
features and attributes of the product. The process entails focuses on figuring out what is required,
brainstorming possible ideas, creating mock prototypes, and then generating the product. At this
point, product designers would still need to execute the idea, making it into an actual product and
then evaluating its success and seeing if any improvements are necessary.

Product designers conceptualize and evaluate ideas, turning them into tangible products. Their role
is to combine art, science, and technology to create features and attributes of current or new
products that other people can use. Their evolving role has been facilitated by digital tools that now
give them greater freedom to communicate, visualize, and analyze ideas.

The Design Process

This follows a guideline and involves three main sections: Analysis, Concept, and Synthesis – in a
continuous feedback loop. Attributes and features play a role in all three sections.

Analysis: Here, the designers decide on committing to the project and finding a solution to the
problem. They pool their resources into deciding how to solve the task most efficiently. Everyone in
the team begins research into what the product should look like to satisfy the objective.
Concept: The key issue of the matter is defined. The conditions of the problem become objectives,
and restraints on the situation become the parameters within which the new design must be
constructed. The concept phase is where ideas for new features are considered.

Synthesis: The designers brainstorm different solutions for their design problem. Once they have
narrowed down their ideas to a select few, they can outline their plan to make the product.
Prototypes are built, the plan outlined in the previous step is realized and the product starts to
become an actual object.

In the evaluation stage, the product is tested, and from there, improvements are made. Although
this is the last stage, it does not mean that the process is over. The finished prototype may not work
as well as hoped so new ideas may need to be brainstormed.

It is through this process of analysis, concept and synthesis that products are designed, with specific
features and attributes added in order to maximize the use value and desirability of the product to
the final user.

Feature Creep

The evolution of the Swiss army knife may be seen as a good example of this phenomenon: the
ongoing expansion and addition of new features to a product. Extra features go beyond the basic
function of the product and so can result in over-complication rather than maintaining a simple
design. Viewed over a longer time period, extra or unnecessary features seem to creep into the
system, beyond the initial goals.

The most common cause of feature creep is the desire to provide the consumer with a more useful
or desirable product, in order to increase sales or distribution. However, once the product reaches
the point at which it does everything that it is designed to do, the manufacturer is left with the
choice of adding unneeded features, sometimes at the cost of efficiency, or sticking with the old
version, at the cost of a perceived lack of improvement. While feature creep may have positive
effects, it can also lead to cost overruns and product cancellations as producers lose sight of the
original goal.

Q2: Discuss individual product decision

Ans: A. Individual product decisions

We will focus on the important decisions in the development and marketing of individual products
and services. These decisions are about product attributes, branding, packaging, labeling, and
product support services. Companies have to develop strategies for the items of their product
lines. Marketers make individual product decisions for each product including: product attributes
decisions, brand, packaging, labeling, and product-support services decisions. Product attributes
deliver benefits through tangible aspects of the product including features, and design as well as
through intangible features such as quality and experiential aspects.

A brand is a way to identify and differentiate goods and services through use of a name or distinctive
design element, resulting in long-term value known as brand equity. The product package and
labeling are also important elements in the product decision mix, as they both carry brand equity
through appearance and
affect product performance with functionality. The level of product-support services  provided can
also
have a major effect on the appeal of the product to a potential buyer.

Individual product decisions

a) Product Attributes

Developing a product or service involves defining the benefits that it will offer. These benefits are
communicated to and delivered by product attributes such as quality, features, style and design.

i. Product Quality

Quality is one of the marketer's major positioning tools. Product quality has two dimensions—
level and consistency. In developing a product, the marketer must first choose a quality level  that
will
support the product's position in the target market. Here, product quality means performance
quality—the ability of a product to perform its functions beyond quality level, high quality also can
mean high levels of quality consistency.  Here, product quality means conformance quality—freedom
from defects and consistency  in delivering a targeted level of performance. All companies should
strive for high levels of conformance quality.

ii. Product Features

A product can be offered with varying features. A stripped-down model, one without any extras, is
the starting point. The company can create higher-level models by adding more features. Features
are a competitive tool for differentiating the company's product from competitors' products. Being
the first producer to introduce a needed and valued new feature is one of the most effective ways
to compete.
How can a company identify new features and decide which ones to add to its product? The
company should periodically survey buyers who have used the product and ask these questions:
How do you like the product? Which specific features of the product do you like most? Which
features could we add to improve the product? The answers provide the company with a rich list
of feature ideas. The company can then assess each feature's value  to customers versus its cost  to
the
company. Features that customers value little in relation to costs should be dropped; those that
customers value highly in relation to costs should be added.

iii. Product Style and Design

Another way to add customer value is through distinctive product style and design.  Some companies
have reputations for outstanding style and design. Design is a larger concept than style. Style  simply
describes the appearance of a product. Styles can be eye catching or yawn producing. A sensational
style may grab attention and produce pleasing aesthetics, but it does not necessarily make the
product perform  better. Unlike style, design  is more than skin deep—it goes to the very heart of a
product. Good design contributes to a product's usefulness as well as to its looks.
Good style and design can attract attention, improve product performance, cut production costs,
and give the product a strong competitive advantage in the target market

b) Branding
Perhaps the most distinctive skill of professional marketers is their ability to create, maintain,
protect, and enhance brands of their products and services. A brand is a name, term, sign, symbol,
or design, or a combination of these, that identifies the maker or seller of
a product or service. Consumers view a brand as an important part of a product, and branding can
add value to a product. For example, most
consumers would perceive a bottle of White Linen perfume as a high-quality, expensive product. But
the same perfume in an unmarked bottle would likely be viewed as lower in quality, even if the
fragrance
were identical. Branding has become so strong that today hardly anything goes unbranded. Branding
helps buyers in many ways.
Brand names help consumers identify products that might benefit them. Brands also tell the buyer
something about product quality. Buyers who always buy the same brand know that they will get
the same features, benefits, and quality each time they buy. Branding also gives the seller several
advantages. The brand name becomes the basis on which a whole story can be built about a
product's special qualities. The seller's brand name and trademark provide legal protection for
unique product features that otherwise might be copied by competitors. Branding also helps the
seller to segment markets.

i. Brand:

A brand  is a name, sign, symbol, or design, or a combination of these that identifies the
maker or seller of a product or service.

ii. Brand equity

is the value of a brand, based on the extent to which it has high brand loyalty, name awareness,
perceived quality, strong brand associations, and other assets such as patents, trademarks, and
channel relationships. Powerful brand names command strong consumer preference and are
powerful assets. Perhaps the most distinctive skill of professional marketers is their ability to
create, maintain, protect, and enhance brands. Measuring the actual equity of a brand name is
difficult. However, the advantages of having it include:
1). High consumer awareness and loyalty.
2). Easier to launch brand extensions because of high brand credibility.
3). A good defense against fierce price competition.
4). It is believed to be the company’s most enduring asset. Customer equity tends to aid
marketing planning in assuring loyal customer lifetime value.

iii. Selecting The Brands Name:

Selecting a brand name is an important step. The brand name should be carefully chosen since a
good name can add greatly to a product’s success. Desirable qualities of a good brand name
include:
1). It should suggest something about the product’s benefits and qualities.
2). It should be easy to pronounce, recognize, and remember.
3). It should be distinctive.
4). It should translate easily into foreign languages.
5). It should be capable of registration and legal protection. Once chosen, the brand name
must be protected.

iv. Sponsorship options for Branding:

A manufacturer has four sponsorship options:
1). A manufacturer’s brand (or national brand) is a brand created and owned by the
producer of a product or service (Examples include IBM and Kellogg).
2). A private brand (or middleman, distributor, or store brand) is a brand created and
owned by a reseller of a product or service.
3). A licensed brand (a company sells it’s output under another brand name).
4). Co-branding occurs when two companies go together and manufacture one product
(General Mills and Hershey’s make Reese’s’ Peanut Butter Puffs cereal).
Combined brands create broader customer appeal and greater brand equity.
It may allow a company to expand its existing brand into a category it might otherwise have
difficulty entering alone. But at the same time there are certain disadvantages of combine branding
like:
􀂾 Complex legal contracts and licenses are involved.
􀂾 Coordination efforts are often difficult.
􀂾 Trust is essential between partners. It is often hard to come by.
At one time manufacturer’s brands were the most popular and profitable. Today, however, an
increasing number of private brands are doing well. Though hard to establish and maintain,
private brands  can yield higher profit margins. “The battle of the brands” (the competition
between manufacturer’s and private brands) causes resellers to have advantages, and they charge
manufacturer’s slotting fees  (payments demanded by retailers from producers before they will
accept new products and find “slots” for them on the shelves). As store brands are improving in
quality, they are posing a stronger threat to the manufacturer’s brands. This is especially true in
supermarkets.

v. Branding Strategy:

A company has four choices when it comes to brand strategy. It can:

1). Introduce line extensions. Existing brand names are extended to new forms, sizes, and
flavors of an existing product category. A company might introduce line extensions as a low-cost,
low-risk way of introducing new products in order to:
a). Meet consumer desires for variety.
b). Meet excess manufacturing capacity.
c). simply command more shelf space.
Risks include:
a). An overextended brand might lose its specific meaning.
b). Can cause consumer frustration or confusion.
2). Introduce brand extensions. Existing brand names are extended to new or modified
product categories. Advantages include:
a). Helps a company enter new product categories more easily.
b). Aids in new product recognition.
c). Saves on high advertising cost.
3). Introduce multibrands.  New brand names are introduced in the same product
category. Advantages include:
a). They gain more shelf space.
b). Offering several brands to capture “brand switchers.” The company can establish
flanker or fighter brands to protect its major brand.
c). It helps to develop healthy competition within the organization.
Drawbacks include:
a). Each brand may only obtain a small market share and be unprofitable.
4). Introduce new brands. New brand names in new categories are introduced.
Advantage include:
a). Helps move away from a brand that is failing.
b). Can get new brands in new categories by corporate acquisitions. Some companies
are now pursuing mega brand strategies.
Drawbacks can include:
a). Spreading resources too thin.

c) Packaging

Packaging involves designing and producing the container or wrapper for a product. The package
may include the product's primary container (the tube holding Colgate toothpaste); a secondary
package that is thrown away when the product is about to be used (the cardboard box containing
the tube of Colgate); and the shipping package necessary to store, identify, and ship the product (a
corrugated box carrying six dozen tubes of Colgate toothpaste). Labeling, printed information
appearing on or with the package, is also part of packaging.
Traditionally, the primary function of the package was to contain and protect the product. In
recent times, however, numerous factors have made packaging an important marketing tool.
Increased competition and clutter on retail store shelves means that packages must now perform
many sales tasks—from attracting attention, to describing the product, to making the sale.
Companies are realizing the power of good packaging to create instant consumer recognition of
the company or brand. Developing a good package for a new product requires making many
decisions. First, the company must establish the packaging concept,  which states what the package
should be  or do  for the product. Should it mainly offer product protection, introduce a new
dispensing method, suggest certain qualities about the product, or something else? Decisions then
must be made on specific elements of the package, such as size, shape, materials, color, text, and
brand mark. These elements must work together to support the product's position and marketing
strategy. The package must be consistent with the product's advertising, pricing, and distribution.

d) Labeling

Labels may range from simple tags attached to products to complex graphics that are part of the
package. They perform several functions. At the very least, the label identifies the product or
brand, such as the name Sunkist stamped on oranges. The label might also describe several things
about the product—who made it, where it was made, when it was made, its contents, how it is to
be used, and how to use it safely. Finally, the label might promote the product through attractive
graphics.

e) Product Support Services

Customer service is another element of product strategy. A company's offer to the marketplace
usually includes some services, which can be a minor or a major part of the total offer. Later in the
chapter, we will discuss services as products in themselves. Here, we discuss product support
services—
services that augment actual products. More and more companies are using product support
services as a major tool in gaining competitive advantage.
A company should design its product and support services to profitably meet the needs of target
customers. The first step is to survey customers periodically to assess the value of current services
and to obtain ideas for new ones. For example, Cadillac holds regular focus group interviews with
owners and carefully watches complaints that come into its dealerships. From this careful
monitoring, Cadillac has learned that buyers are very upset by repairs that are not done correctly
the first time.
Once the company has assessed the value of various support services to customers, it must next
assess the costs of providing these services. It can then develop a package of services that will both
delight customers and yield profits to the company.

Q3: How to strengthen your brand with your marketing strategy

Ans: The physical value of your products may be easy to calculate, but your consumers' perceptions
are what really determine the value your brand and products have in the marketplace.

Because of this, your ability to build value into your brand and communicate that value to customers
through your marketing is essential to the long term success of your company.

The benefits of building a good brand

Brand equity is the perception customers have of your products and services based on what they
think of your brand. Apple, Google and Microsoft are all considered to have high brand equity.

It’s difficult to assign a monetary value to a brand, but no matter how intangible brand equity may
seem, a strong brand reaps considerable business benefits from:

 Awareness

 Credibility

 Reputation

 Customer satisfaction

Those benefits serve as tools to marketers in the effort to attract that mindful consumer who wants
to buy from a brand high in value.

The mindful consumer

In his TED talk, 'The post-crisis consumer', John Gerzema asserts that buyers are no longer in retreat
(as they were during the economic crisis), but have become what he refers to as mindful consumers.

The mindful consumer is willing to buy, but craves value. In the search for value, they consider
factors like:

 Research. Sixty seven percent of the buyer’s journey is completed digitally meaning the
mindful consumer wants and has a lot of information on their side about which companies
have what they want.

 Social proof. Having a great product isn’t enough. The mindful consumer looks to online
reviews, peer recommendations and social media profiles for evidence of a well-liked
product.

 Identity and preference. Customers are mindful of a relationship between their purchase

decisions and their identity. They are looking to make a purchase decision which suits their
personal brand.
These factors all play a part in a purchase decision and all are about more than just the product. At
the core of their search, customers are looking to form a bond with a brand they perceive as high in
value.

7 ways to communicate brand value

If ‘brands are created in the mind,’ it’s vital to understand how to market your company to positively
so as to affect the perception leads and customers have of your brand.

1. Work from the inside out

‘The world is full of boring stuff – brown cows – which is why so few people pay attention,’ Seth
Godin writes. ‘Remarkable marketing is the art of building things worth noticing right into your
product or service.’

To be perceived as valuable, your brand has to stand out from the herd -be a purple cow. A strong
brand is about superlatives: the best customer service, most innovative, the happiest employees.

If you want to build a strong brand, marketing can’t be limited to one department. All areas have to
demonstrate value to the customer. The customer experience is the foundation from which you
build the rest of your marketing strategy to strengthen your brand.

2. Target your brand message

‘You have to find a group who really desperately cares about what you have to say,’ according to
Seth Godin in his TED talk How to get your ideas to spread. Godin asserts that building value means
finding the crowd that would find your brand and products valuable in the first place, rather than
just casting a wide net. This means:

 Find the marketing channels your ideal audience is on

 Tailor your brand message to that marketing channel

In the 2014 World Cup, Nike and Adidas, who share a target audience, each created a campaign.
While Adidas went for the ‘win or lose’ sentiment, Nike appealed strictly to football fans with inside
jokes only enthusiasts who follow the sport would understand. Nike’s message was stronger-more
valuable-because it was more specific to its audience.

3. Use a consistent tone of voice (ToV)

‘Brand consistency’ is so important that it’s become a defined phrase in the world of marketing. The
more often your organisation’s personality is presented to potential customers, the more likely they
are to remember you. Ensuring that your output shares the same language, tone and opinions
removes any confusion, allowing your audience to form easy associations with your content.

A formalised set of ToV guidelines will provide the scaffolding within which all future content can be
created, aligning every blog, social post and email to guarantee that you’re speaking with one voice.

4. Maintain high standards for design

Design is visual communication. How you use colour, shapes and font or organise elements on a
website page, email campaign or even a product package will dictate whether or not your brand is
perceived as valuable.
How you package your brand affects how your brand is perceived and interpreted. A ‘strong visual
branding system’ can make a small company seem more powerful or demonstrate a large
company’s strength. Bad design has the adverse effect.

5. Give your brand meaning

In the same way beauty is in the eye of the beholder, all value is perceived value. To give meaning to
your brand:

 Make it a status symbol. In Rory Sutherland’s TED talk, he tells the story of a king who, to
prevent famine, decreed the potato a royal crop and put guards around the fields to make
the previously rejected vegetable desirable. The king changed the perception of the crop's
worth, not the crop itself. He advises that 'anything worth guarding must be worth stealing.'
You may not be able to decree your products or brand a ‘royal crop,’ but you can strive to
create the same kind of perception of your product.

 Make it symbolic. In the same talk, Sutherland notes that during a war, the wealthy in
Prussia were encouraged to give their jewellery to support the war effort. The pieces were
replaced with replicas made out of cast iron. Though they carried decidedly less intrinsic
value, the pieces came to have great symbolic value to the people of Prussia because of the
sacrifice they represented and became desirable during that time period. A modern example
would be TOMS shoes. Their business model, built on symbolic value of a TOMs purchase,
enabled them to grow into an international brand with several product lines

6. Provide thought leadership and valuable information in your content

Content is a prime way to communicate your brand’s value and continuously increase its strength.
Content can demonstrate thought leadership to your audience, helping to build trust, as well as
delight customers into becoming loyal brand advocates.

Content that adds value to your brand must be about quality for your audience, not quantity for
your company. So, how do you keep your content focused on adding value for the customer?

 Buyer personas. These semi-fictional profiles representing your ideal buyers should include
details of your customers' interests, concerns, pain points and other details to guide the
creation of content.

 Buyer stories. Again, to create brand equity, the buyers have to realise the value. So content
can’t correlate to your marketing goals. It must correspond to the content leads and
customers are looking for.

 Plain language. The language you use in the conference room is not appropriate for content
if you expect to add value for the buyer. The writing in your content needs to cater to the
audience to whom you are speaking.

7. Build loyalty

Tailored content is the start of a long term relationship. If you continually produce content that
interests leads and customers, you can keep them coming back to your brand and build loyalty.

 Content on social media is a way to delight customers and put them back into the sales
funnel for future purchases. Learn what channels your customers are on and the type of
content they want to see and then put consistent, tailored content on those channels.
  Map email campaigns according to what products customers are interested in or where
they are in the sales funnel. The more tailored and personalised the content, the greater the
value of the email to the customer.

Customers are your best allies when it comes to strengthening a brand. In a connected world where
perception determines your brand’s value, having customers on your side gets you the
recommendations, reviews and social proof you need.

Strengthen your brand and evolve your marketing strategy

 In the end, brand value comes down to
distinction: your ability to set your brand apart in the industry. You have to be able to tell a better
story and it has to be consistent across all marketing channels to remain strong. To find out more
about how to take a great brand and get people talking about it, check out this massive brand
awareness guide by Typeform.

Once you’ve built value into your brand from the product to the campaigns, it’s important to
understand where your brand falls on the value scale and to continually adapt your marketing
strategy to suit.

Everyone in the company is responsible for developing a strong brand. However, it is your
responsibility as a marketer to communicate that value to the mindful consumer who goes in search
of a strong, high value brand they want to be a part of.

CHAPTER-7

Developing New Products and Managing the Product Life Cycle

MCQ

1: _____ is the development of original products, product improvements,

product          modifications, and new brands through the firm’s own R&D efforts.

   a.         Idea generation

 b.         Concept testing

c.            Test marketing

d.            New product development

2:  All of the following are different ways a firm can obtain new products, except which one?

a.                  By acquiring a whole new company

b.                  A firm can obtain a new product through patents

c.                  A firm can obtain a new product by licensing someone else's new product

d.                  A firm can obtain a new product by using the R&D department of other firms in the
same industry

3: All of the following are accurate descriptions of reasons why new products fail, except which one?

a.                  Although the market size was correctly estimated, the product idea itself was not
good.

b.                  The actual product was not designed as well as it should have been.

c.                  The new product was priced too high.

d.                  The new product was advertised poorly.

4: All of the following are accurate descriptions of ways companies are anxious to learn how to
improve the odds of new-product success, except which one?

a.                  Find out what successful new products have in common.

b.                  To learn lessons from new product failures.

c.                  Companies have to learn to understand their own consumers.

d.                  Do not overly rely on product innovation when you can succeed by copying others.

Answer: (d) Difficulty:

5.                  New-product development starts with _____.

a.                  idea screening

b.                  idea generation

c.                  concept development and testing

d.                  marketing strategy development

Answer: (b) Difficulty

6.                  _____ is the systematic search for new-product ideas.

a.                  Idea generation

b.                  Idea screening

c.                  Concept development and testing

d.                  Marketing strategy development

Answer: (a) Difficulty:

7.                  All of the following are major internal sources of new-product ideas, except which one?

a.                  Picking the brains of company executives, scientists, engineers and salespeople is a good
way to generate ideas.

b.                  Intrapreneurial programs that encourage employees to think and develop new-product

ideas is a good way to generate ideas.

c.                  Some companies employ creative approaches, including both "method and madness" in
helping them to generate new product ideas.

d.                  Good ideas come from watching and listening to customers.

Answer: (d) Difficulty:

8.                  Major sources of new product ideas include _____.

a.                  internal sources, using company R&D

b.                  creative approaches, using both "method and madness" approaches

c.                  watching and listening to customers

d.                  all of the above are sources of new product ideas

Answer: (d) Difficulty:

9.                  All of the following are major external sources of new-product ideas, except which one?

a.                  Companies can conduct surveys or focus groups to learn about consumer needs and
wants.

b.                  Competitors are a good source of new-product ideas.

c.                  Some companies employ creative approaches, including both "method and madness" in
helping them to generate new product ideas.

d.                  Good ideas come from watching and listening to customers.

Answer: (d) Difficulty:

 
10.             All of the following are accurate descriptions of new product ideas, except which one?

a.                  New product development starts with idea generation.

b.                  Some companies use brainstorming exercises that expand people's minds and generate
new ideas around the client's problem.

c.                  At the beginning of the process, carefully scrutinize each idea and throw far-fetched and
impractical ones out the window.

d.                  Customers must be careful not to rely too heavily on customer input when developing
new products.

Answer: (c) Difficulty:

           

11.             Some companies have installed a(n) _____ that directs the flow of new ideas to a central
point where they can be collected, reviewed, and evaluated.

a.                  new-product development team

b.                  idea management system

c.                  computer system

d.                  satellite system

Answer: (b) Difficulty:

12.             In order to install an idea management system, whereby all ideas are directed to a central
point, a company can do any or all of the following:

a.                  Appoint a respected senior person to be the firm's idea manager.

b.                  Create a cross-functional idea management committee comprising of people form R&D,

finance, engineering and operations to meet and evaluate new product ideas.

c.                  Reward employees through formal recognition programs.

d.                  All of the above are legitimate ways to systematically collect ideas.

Answer: (d) Difficulty

13.             The purpose of _____ is to generate a large number of ideas.

a.                  idea screening

b.                  idea generation

c.                  concept development and testing

d.                  marketing strategy development

Answer: (b) Difficulty:

14.             The first idea reducing stage is _____ , which helps spot good ideas and drop poor ones as
soon as possible.

a.                  idea generation

b.                  idea screening

c.                  concept development and testing

d.                  marketing strategy development

Answer: (b) Difficulty:

15.             A _____ is a detailed version of the idea stated in meaningful consumer terms.

a.                  product idea

b.                  product concept

c.                  product image

d.                  test market

Answer: (b) Difficulty:

16.             A _____ is the way consumers perceive an actual or potential product.

a.                  product idea

b.                  product concept

c.                  product image

d.                  test market

Answer: (c) Difficulty:

17.             An attractive idea must be developed into a _____.

a.                  product idea

b.                  product concept

c.                  product image

d.                  test market
Answer: (b) Difficulty:

18.             All of the following are accurate descriptions of activities performed in the idea screening
stage of new product development, except which one?

a.                  Idea screening helps spot good ideas and drop poor ones as soon as possible.

b.                  Companies want to go ahead only with the product ideas that will turn into profitable
products.

c.                  Many companies require their executives to write up new product ideas on a standard
form that can be reviewed by a new-product committee.

d.                  Setting up a toll-free number or Web site for anyone who wants to send a new idea to
the idea manager.

Answer: (d) Difficulty:

19.             _____ calls for testing new-product concepts with groups of target consumers.

a.                  Concept development

b.                  Concept testing

c.                  Idea generation

d.                  Idea screening

Answer: (b) Difficulty:

20.             _____ entails testing new-product concepts with a target group of consumers to find out if
the concepts have strong consumer appeal.

a.                  Concept development

b.                  Concept testing

c.                  Idea generation

d.                  Idea screening

Answer: (b) Difficulty:

21.             Product concepts are presented to consumers during concept testing in any of the
following ways, except which one?

a.                  A word or picture description is presented to consumers.

b.                  A concrete and physical presentation of the concept will increase the reliability of the
concept test.

c.                  Some companies are using virtual reality to test product concepts.

d.                  Companies are reluctant to use the Web to test product concepts.

Answer: (d) Difficulty:

22.             Designing an initial marketing strategy for a new product based on the _____ is called
marketing strategy development.

a.                  new product idea

b.                  product concept

c.                  test market results

d.                  product prototype

Answer: (b) Difficulty:

23.             The marketing strategy statement in new product development consists of three parts:
_____, _____, and _____.

a.                  idea generation; idea screening; concept development

b.                  idea generation; concept development; concept testing

c.                  idea generation; idea screening; idea management

d.                  target market description; planned product positioning; sales, market share, and profit
goals for the first few years.

Answer: (d) Difficulty:

24.             _____ involves a review of the sales, costs, and profit projections for a new product to find
out whether they satisfy the company's objectives.

a.                  Idea generation

b.                  Idea screening

c.                  Business analysis

d.                  Concept development and testing

Answer: (c) Difficulty:

 
25.             If a product concept passes the _____, it moves into _____.

a.                  business analysis test; product development

b.                  concept development stage; product development

c.                  concept testing stage; product development

d.                  idea generation stage; product development

Answer: (a) Difficulty:

26.             Once management has decided on a product concept and marketing strategy, it can next
evaluate the _____ of the proposal.

a.                  product idea portion

b.                  product development part

c.                  business attractiveness

d.                  commercial viability

Answer: (c) Difficulty:

27.             In the product concept stage of new-product development, the product is merely a _____.

a.                  word description

b.                  crude mock-up

c.                  drawing

d.                  all of the above

Answer: (d) Difficulty:

28.             In the _____ of new-product development, often products undergo rigorous tests to make
sure that they perform safely and effectively or that consumers will find value in them.

a.                  business analysis stage

b.                  idea generation

c.                  concept development and testing stage

d.                  product development phase

Answer: (d) Difficulty:

29.             _____ is the stage of new-product development in which the product and marketing
program are tested in more realistic market settings.
a.                  Business analysis

b.                  Idea generation

c.                  Test marketing

d.                  Marketing strategy development

Answer: (c) Difficulty:

30.             All of the following are accurate descriptions of test marketing, except which one?

a.                  Test marketing is the stage at which the product and marketing program are introduced
into realistic market settings.

b.                  Test marketing by consumer-packaged goods firms has been increasing in recent years.

c.                  Test marketing costs can be high, and it takes time that may allow competitors to gain
advantages.

d.                  Companies often do not test market simple line extensions.

Answer: (b) Difficulty:

31.             Introducing a new product into the market is called _____.

a.                  test marketing

b.                  new product development

c.                  experimenting

d.                  commercialization

Answer: (d) Difficulty:

32.             A company getting ready to launch a new product must make several decisions. However,
the company must first decide on _____.

a.                  whether to launch the product in a single location

b.                  whether to launch the product in a region

c.                  whether to launch the product into full national or international distribution

d.                  timing of the new product introduction

Answer: (d) Difficulty

 
33.             _____ is a new-product development approach in which one company department works
to complete its stage of the process before passing the new product along to the next department
and stage.

a.                  Team-based product development

b.                  Simultaneous product development

c.                  Sequential product development

d.                  Product life-cycle analysis

Answer: (c) Difficulty:

34.             In order to get their new products to market more quickly, many companies are adopting
a faster, team-oriented approach called _____.

a.                  sequential product development

b.                  simultaneous product development

c.                  commercialization

d.                  introduction timing

Answer: (b) Difficulty:

35.             All of the following statements are accurate descriptions of the simultaneous product
development approach to new product development, except which one?

a.                  The simultaneous product development approach is also known as collaborative product

development.

b.                  Company departments work closely together through cross-functional teams.

c.                  Companies assemble a team of people from various departments that stay with the new
product from start to finish.

d.                  Companies often pass the new product from department to department in each stage of
the process.

Answer: (d) Difficulty:

36.             All of the following are accurate descriptions of new-product development approaches

used by companies in the commercialization phase of the process, except which one?

a.                  New-product development teams in the simultaneous approach tend to stay with the
new product from start to finish.
b.                  In the simultaneous approach, top management gives the product development team
general strategic direction but no clear-cut product idea or work plan.

c.                  In order to get their new products to market more quickly, many companies are adopting
a faster approach called sequential product development.

d.                  The simultaneous team-based approach can be riskier and more costly than the slower,
more orderly sequential approach.

Answer: (c )

37.             All of the following are limitations of the simultaneous team-based approach to new-
product development, except which one?

a.                  Superfast product development can be riskier and more costly than the slower, more
orderly sequential approach.

b.                  This approach often creates increased organizational tension and confusion.

c.                  The objective of this approach is to ensure that rushing a product to market doesn't
adversely affect its quality.

d.                  Top management gives the product development team a clear-cut product idea or work
plan.

Answer: (d)

38.             All of the following statements accurately reflect the requisites of new-product

success, except which one?

a.                  Thinking of a few good ideas, turning them into products, and finding customers for
them.

b.                  A systematic approach for finding new ways to create value for target consumers, from
generating and screening new-product ideas to creating and rolling out want-satisfying products to
customers.

c.                  New-product success requires a total-company commitment.

d.                  At firms known for their new-product success, their culture does not encourage,
support, and reward innovation. 

Answer: (d)

39.             _____ begins when the company finds and develops a new-product idea. During product
development, sales are zero and the company's investment costs mount.

a.                  Introduction
b.                  Growth

c.                  Maturity

d.                  Product development

Answer: (d)

40.             _____ is a period of slow sales growth as the product is introduced into the market. Profits
are non-existent in this stage because of the heavy expenses of product introduction.

a.                  Growth

b.                  Product development

c.                  Maturity

d.                  Introduction

Answer: (d)

41.             _____ is a period of market acceptance and increasing profits.

a.                  Product development

b.                  Maturity

c.                  Growth

d.                  Introduction

Answer: (c)

QUESTIONS

Q1: Discuss New Product Development Strategy – From Idea to Commercialization.

Ans: When it comes to successful new product development, productivity is key. Entrepreneurs
seeking to remain relevant, efficacious and profitable must continuously conceive and develop new
products that not only make it to the market, but also deliver great value to target audience
members. Namely, it is crucial for businesses to understand what consumers want, whether similar
products already exist on the market and how they can create products superior to those developed
by their competition.

To take great product ideas and translate them into even greater final physical products, a
new  product development strategy  (NPD strategy) is of the essence. Your NPD strategy should be
systemic, customer-driven and sales-goal oriented. When your product management team
collaborates on developing a new product, following these eight stages of the new product
development process will ensure ultimate productivity and drive the product’s overall marketability
upon introduction. Your NPD strategy should therefore be systemic, customer-driven and sales-goal
oriented. Here’s how:
Stage 1: Idea generation

Idea generation  is a continuous, meticulous search for new, viable product development
opportunities. Often, companies employ basic internal and externalSWOT(strengths, weaknesses,
opportunities and threats) analyses and examine market trends to generate hundreds, or even
thousands of potential product ideas. Internal ideas can be sourced through R&D and employee
brainstorming, while external ideas tend to come from studying and communicating with
distributors, suppliers, customers and competitors.

Some methods for generating new ideas include:

 Dimensional analysis– listing all physical characteristics of a product idea and asking
relevant questions to assess its potential for success.

 Scenario analysis – identifying market evolution to capitalize on anticipated consumer

needs.

 Problem analysis– formulating a list of existing consumer problems, pain points and needs
to serve as a basis for new product development ideas.

 Benefit structure analysis– identifying which product benefits and features consumers
desire or would be pleased to have, to determine deficiencies in existing products and
provide the market with enhanced, or totally new solutions.

The goal of the idea generation stage is to come up with an idea that separates your business from
the competition through enhanced affordability and ROI and reduced distribution costs. Multiple
versions of a single idea can be generated, to maximize scalability while minimizing necessary
resources.

Stage 2: Idea screening

Your product management team may come up with many new product development ideas, but few
will likely be great, or even feasible. This second step of new product development involves
screening all newly-generated ideas to sift the good ones from the not-so-good ones – and
discarding the latter, taking into account several factors:

 Your company’s strengths,

 Your company’s weaknesses,

 Customer needs,

 Current market trends,

 Expected/desired ROI,

 Affordability

 What your competitors are producing

 And more.

Attributes belonging to each new idea are compared to these factors, now a standardized checklist,
to weed out poor, unsuitable or less attractive ideas that would otherwise progress through the
stages of new product development.

While the purpose of the idea generation stage of the NPD process was to create a database of as
many new ideas as possible, the purpose of the idea screening stage is to reduce that number,
according the criteria mentioned above, to ensure only profitable ideas are invested in (in time,
money and human resources).  

Stage 3: Concept development & testing

Next in the new product development process isconcept development and testing. In reality, this
stage is two-fold:

Concept development

All ideas passing the screening stage are developed into concepts, which will subsequently be tested
for real-world viability. A product concept is a detailed version or blueprint of your product
development idea, formulated into meaningful, relatable consumer terms so that it is optimally
presentable. For every feasible new product development idea, multiple alternative concepts can be
created, from which your company can select the one most likely to appeal to your target audience.
These alternatives can vary according to several factors, such as quality, price point, features and
comfort/convenience of use.

Concept testing

Once concepts have been developed, each one is tested with sample target consumer groups. The
feedback these focus groups provide is used to further develop the concept to better meet
customers’ needs and demands. After all, you wouldn’t want to launch a product that doesn’t have
strong consumer appeal – and for that you need to test, test, test.

Here’s how the process works:

 A sample group is gathered and presented with the concepts, either physically or using
symbolic information.This helps them visualize the product.

 The group asks representatives of your business questions to better understand the concept
and the solution it aims to provide.
  Your business asks the group members questions about their perception of the concept –
does it fulfill their wants and needs? Is it something they are likely to buy? What is missing
from the product, and more.

The concept testing process therefore enables your business to quickly and economically gauge
initial attitudes towards your new product, before copious amounts of time, money and manpower
is spent on actual prototype development.  

Stage 4: Business strategy analysis & development

Once a promising concept has been selected, it is time to put together aninitial business and
marketing strategy. This requires an in-depth analysis of the methods your product management,
marketing and sales teams will ultimately use to create and sell the product to your target audience.
Necessary strategies, such as product profitability and marketing mix will be determined. To do so,
the following strategic areas must be defined:

 Your target market,

 Your new product’s planned value proposition

 Sales, market share and profit goals for the first few years following your new product’s
launch

 Planned development, marketing, sales and distribution budgets

 Planned long-term product goals

Stage 5: Business & financial analysis

Before diving into the development of your new product, it is important to analyze the remaining
viable new product concepts for business and financial potential and implications. You need to
ensure you can afford to implement the business and marketing strategies you just defined. To do
so, a detailed list of factors such as cost projections, demand projections, relevant competitors,
minimum required investment, profitability and more must be considered and a system of input and
output metrics to monitor progress, such as the average time your team spend in each NPD stage
and the value of launched products, sales data and other valuable feedback information should be
employed.

It is recommended that your team examines the sales history of similar products and surveys the
current market to determine current trends and truths and assess the range of risk involved in your
new product’s development.

The more thorough your analysis processes are, the easier it will be for you to decide which
marketing, branding, and other business strategies you can afford to adopt.

Stage 6: Product development

Following the approval of all relevant business, marketing, financial and de

velopment strategies, the product concept is development into an actualtangible productin this sixth
stage of new product development. The main actions involved in the product development stage
include:

 Product construction

 Usage testing

 Packaging

 Branding

 Product positioning

A physical prototype or limited production model is built and branding (and other strategies) are
tested and applied. This is meant to ensure that the product idea can indeed function as a safe,
effective and workable market offering. As such, it might take your R&D department (or external
firm) days, weeks, months or even years, to complete this NPD stage, depending on the product and
prototype methods used. Often actual consumers are brought in to work with and evaluate
prototypes and pre-release products. They can inject an unbiased perspective to the NPD process,
leading to successful development results.

Stage 7: Test marketing

Unlike concept testing, test marketing involves placing an actual finished product for sale in one or
multiple sample market settings and observing how well (or how poorly) it sells under the pre-
determined marketing plan. Here again, customer feedback is crucial, this time relying on actual
observed customer behavior, as opposed to making inquiries about interest in a proposed concept.
As such, it can be implemented in the form of further suggested changes to the new product, as
required. The goal of the test marketing stage of the NPD process is to validate the entire concept
behind the new product before the full investment is made and ready the product for its imminent
commercial launch. The actual amount of test marketing needed can vary quite substantially with
each new product.

Stage 8: Commercialization
Congratulations! You made it to the commercialization stage of new product development. Your
product and all associated marketing strategies are ready for launch. Now it’s time to implement a
full marketing plan and production process.

Craft is a revolutionary SaaS product management platform that gets teams working together and
collaborating on workflows that meet each project’s individual requirements. The single and agile
place for goal-driven teams to create products together, Craft gives product management teams a
unified place to create and follow through on NPD strategies, manage products, track tasks, collect
market feedback and utilize the best possible software product. That way, they can focus on
achieving their business goals and completing tasks like product management pros.

Q2: Discuss THE NEW PRODUCT DEVELOPMENT PROCESS (NPD)

Ans: In order to stay successful in the face of maturing products, companies have to obtain new ones
by a carefully executed new product development process. But they face a problem: although they
must develop new products, the odds weigh heavily against success. Of thousands of products
entering the process, only a handful reach the market. Therefore, it is of crucial importance to
understand consumers, markets, and competitors in order to develop products that deliver superior
value to customers. In other words, there is no way around a systematic, customer-driven new
product development process for finding and growing new products. We will go into the eight major
steps in the new product development process.

The 8 steps in the New Product Development Process

1. Idea generation – The New Product Development Process

The new product development process starts with idea generation. Idea generation refers to the
systematic search for new-product ideas. Typically, a company generates hundreds of ideas, maybe
even thousands, to find a handful of good ones in the end. Two sources of new ideas can be
identified:
  Internal idea sources: the company finds new ideas internally. That means R&D, but also
contributions from employees.

 External idea sources: the company finds new ideas externally. This refers to all kinds of
external sources, e.g. distributors and suppliers, but also competitors. The most important
external source are customers, because the new product development process should focus
on creating customer value.

2. Idea screening – The New Product Development Process

The next step in the new product development process is idea screening. Idea screening means
nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are
screened to spot good ones and drop poor ones as soon as possible. While the purpose of idea
generation was to create a large number of ideas, the purpose of the succeeding stages is to reduce
that number. The reason is that product development costs rise greatly in later stages. Therefore,
the company would like to go ahead only with those product ideas that will turn into profitable
products. Dropping the poor ideas as soon as possible is, consequently, of crucial importance.

3. Concept development and Testing – The New Product Development Process

To go on in the new product development process, attractive ideas must be developed into a
product concept. A product concept is a detailed version of the new-product idea stated in
meaningful consumer terms. You should distinguish

 A product idea à an idea for a possible product

 A product concept à a detailed version of the idea stated in meaningful consumer terms

 A product image à the way consumers perceive an actual or potential product.

Let’s investigate the two parts of this stage in more detail.

Concept development

Imagine a car manufacturer that has developed an all-electric car. The idea has passed the idea
screening and must now be developed into a concept. The marketer’s task is to develop this new
product into alternative product concepts. Then, the company can find out how attractive each
concept is to customers and choose the best one. Possible product concepts for this electric car
could be:

 Concept 1: an affordably priced mid-size car designed as a second family car to be used
around town for visiting friends and doing shopping.

 Concept 2: a mid-priced sporty compact car appealing to young singles and couples.

 Concept 3: a high-end midsize utility vehicle appealing to those who like the space SUVs
provide but also want an economical car.

As you can see, these concepts need to be quite precise in order to be meaningful. In the next sub-
stage, each concept is tested.

Concept testing

New product concepts, such as those given above, need to be tested with groups of target
consumers. The concepts can be presented to consumers either symbolically or physically. The
question is always: does the particular concept have strong consumer appeal? For some concept
tests, a word or picture description might be sufficient. However, to increase the reliability of the
test, a more concrete and physical presentation of the product concept may be needed. After
exposing the concept to the group of target consumers, they will be asked to answer questions in
order to find out the consumer appeal and customer value of each concept.

4. Marketing strategy development – The New Product Development Process

The next step in the new product development process is the marketing strategy development.
When a promising concept has been developed and tested, it is time to design an initial marketing
strategy for the new product based on the product concept for introducing this new product to the
market.

The marketing strategy statement consists of three parts and should be formulated carefully:

 A description of the target market, the planned value proposition, and the sales, market
share and profit goals for the first few years

 An outline of the product’s planned price, distribution and marketing budget for the first
year

 The planned long-term sales, profit goals and the marketing mix strategy.

5. Business analysis – The New Product Development Process

Once decided upon a product concept and marketing strategy, management can evaluate the
business attractiveness of the proposed new product. The fifth step in the new product development
process involves a review of the sales, costs and profit projections for the new product to find out
whether these factors satisfy the company’s objectives. If they do, the product can be moved on to
the product development stage.

In order to estimate sales, the company could look at the sales history of similar products and
conduct market surveys. Then, it should be able to estimate minimum and maximum sales to assess
the range of risk. When the sales forecast is prepared, the firm can estimate the expected costs and
profits for a product, including marketing, R&D, operations etc. All the sales and costs figures
together can eventually be used to analyse the new product’s financial attractiveness.

6. Product development – The New Product Development Process

The new product development process goes on with the actual product development. Up to this
point, for many new product concepts, there may exist only a word description, a drawing or
perhaps a rough prototype. But if the product concept passes the business test, it must be
developed into a physical product to ensure that the product idea can be turned into a workable
market offering. The problem is, though, that at this stage, R&D and engineering costs cause a huge
jump in investment.

The R&D department will develop and test one or more physical versions of the product concept.
Developing a successful prototype, however, can take days, weeks, months or even years, depending
on the product and prototype methods.

Also, products often undergo tests to make sure they perform safely and effectively. This can be
done by the firm itself or outsourced.
In many cases, marketers involve actual customers in product testing. Consumers can evaluate
prototypes and work with pre-release products. Their experiences may be very useful in the product
development stage.

7. Test marketing – The New Product Development Process

The last stage before commercialisation in the new product development process is test marketing.
In this stage of the new product development process, the product and its proposed marketing
programme are tested in realistic market settings. Therefore, test marketing gives the marketer
experience with marketing the product before going to the great expense of full introduction. In fact,
it allows the company to test the product and its entire marketing programme, including targeting
and positioning strategy, advertising, distributions, packaging etc. before the full investment is
made.

The amount of test marketing necessary varies with each new product. Especially when introducing
a new product requiring a large investment, when the risks are high, or when the firm is not sure of
the product or its marketing programme, a lot of test marketing may be carried out.

8. Commercialisation

Test marketing has given management the information needed to make the final decision: launch or
do not launch the new product. The final stage in the new product development process is
commercialisation. Commercialisation means nothing else than introducing a new product into the
market. At this point, the highest costs are incurred: the company may need to build or rent a
manufacturing facility. Large amounts may be spent on advertising, sales promotion and other
marketing efforts in the first year.

Some factors should be considered before the product is commercialized:

 Introduction timing. For instance, if the economy is down, it might be wise to wait until the
following year to launch the product. However, if competitors are ready to introduce their
own products, the company should push to introduce the new product sooner.

 Introduction place. Where to launch the new product? Should it be launched in a single
location, a region, the national market, or the international market? Normally, companies
don’t have the confidence, capital and capacity to launch new products into full national or
international distribution from the start. Instead, they usually develop a planned market
rollout over time.

In all of these steps of the new product development process, the most important focus is on
creating superior customer value. Only then, the product can become a success in the market. Only
very few products actually get the chance to become a success. The risks and costs are simply too
high to allow every product to pass every stage of the new product development process.
Q3: What Is the Product Life Cycle?

Ans: Whether you're looking through your parent's old VHS tapes or shopping for a new
smartphone, you're participating in and experiencing different stages of the product life cycle, or
PLC.

When a product enters the market, often unbeknownst to the consumer, it has a life cycle that
carries it from being new and useful to eventually being retired out of circulation in the market. This
process happens continually - taking products from their beginning introduction stages all the way
through their decline and eventual retirement. 

But, how does the product life cycle actually work, and how can analyzing it help companies? 

What Is the Product Life Cycle?

The product life cycle is the process a product goes through from when it is first introduced into the
market until it declines or is removed from the market. The life cycle has four stages - introduction,
growth, maturity and decline. 

While some products may stay in a prolonged maturity state, all products eventually phase out of
the market due to several factors including saturation, increased competition, decreased demand
and dropping sales.

Additionally, companies use PLC analysis (examining their product's life cycle) to create strategies to
sustain their product's longevity or change it to meet with market demand or developing
technologies. 

4 Stages of the Product Life Cycle

Generally, there are four stages to the product life cycle, from the product's development to its
decline in value and eventual retirement from the market. 
1. Introduction

Once a product has been developed, the first stage is its introduction stage. In this stage, the
product is being released into the market. When a new product is released, it is often a high-stakes
time in the product's life cycle - although it does not necessarily make or break the product's
eventual success. 

During the introduction stage, marketing and promotion are at a high - and the company often
invests the most in promoting the product and getting it into the hands of consumers. This is
perhaps best showcased in Apple's (AAPL) - Get Report famous launch presentations, which
highlight the new features of their newly (or soon to be released) products. 

It is in this stage that the company is first able to get a sense of how consumers respond to the
product, if they like it and how successful it may be. However, it is also often a heavy-spending
period for the company with no guarantee that the product will pay for itself through sales. 

Costs are generally very high and there is typically little competition. The principle goals of the
introduction stage are to build demand for the product and get it into the hands of consumers,
hoping to later cash in on its growing popularity. 

2. Growth

By the growth stage, consumers are already taking to the product and increasingly buying it. The
product concept is proven and is becoming more popular - and sales are increasing. 

Other companies become aware of the product and its space in the market, which is beginning to
draw attention and increasingly pull in revenue. If competition for the product is especially high, the
company may still heavily invest in advertising and promotion of the product to beat out
competitors. As a result of the product growing, the market itself tends to expand. The product in
the growth stage is typically tweaked to improve functions and features.

As the market expands, more competition often drives prices down to make the specific products
competitive. However, sales are usually increasing in volume and generating revenue. Marketing in
this stage is aimed at increasing the product's market share. 

3. Maturity

When a product reaches maturity, its sales tend to slow or even stop - signaling a largely saturated
market. At this point, sales can even start to drop. Pricing at this stage can tend to get competitive,
signaling margin shrinking as prices begin falling due to the weight of outside pressures like
competition or lower demand. Marketing at this point is targeted at fending off competition, and
companies will often develop new or altered products to reach different market segments.

Given the highly saturated market, it is typically in the maturity stage of a product that less
successful competitors are pushed out of competition - often called the "shake-out point." 

In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating
to maintain or increase their market share, changing or developing their product to meet with new
demographics or developing technologies. 

The maturity stage may last a long time or a short time depending on the product. For some brands,
the maturity stage is very drawn out, like Coca-Cola (KO) -   

4. Decline
Although companies will generally attempt to keep the product alive in the maturity stage as long as
possible, decline for every product is inevitable.

In the decline stage, product sales drop significantly and consumer behavior changes as there is less
demand for the product. The company's product loses more and more market share, and
competition tends to cause sales to deteriorate. 

Marketing in the decline stage is often minimal or targeted at already loyal customers, and prices are
reduced. 

Eventually, the product will be retired out of the market unless it is able to redesign itself to remain
relevant or in-demand. For example, products like typewriters, telegrams and muskets are deep in
their decline stages (and in fact are almost or completely retired from the market). 

Examples of the Product Life Cycle

The life cycle of any product always carries it from its introduction to an inevitable decline, but what
does this cycle practically look like, and what are some examples? 

Typewriter

A classic example of the scope of the product life cycle is the typewriter.

When first introduced in the late 19th century, typewriters grew in popularity as a technology that
improved the ease and efficiency of writing. However, new electronic technology like computers,
laptops and even smartphones have quickly replaced typewriters - causing their revenues and
demand to drop off. 

Overtaken by the likes of companies like Microsoft (MSFT) -  typewriters could be considered at the
very tail end of their decline phase  - with minimal (if existent) sales and drastically decreased
demand. Now, the modern world almost exclusively uses desktop computers, laptops or
smartphones to type - which in turn are experiencing a growth or maturity phase of the product life
cycle. 

VCR

Many of us probably grew up watching or using VCRs (videocassette recorders for any Gen Z
readers), but you would likely be hard pressed to find one in anyone's home these days. 

With the rise of streaming services like Netflix (NFLX) -  and Amazon (AMZN) -   (not to mention the
interlude phase of DVDs), VCRs have been effectively phased out and are deep in their decline stage.

Once groundbreaking technology, VCRs are now in very low demand (if any) and are assuredly not
bringing in the sales they once did. 

Electric Vehicles

The rise of electric vehicles shows more of a growth stage of the product life cycle. Companies like
Tesla (TSLA) - Get Report have been capitalizing on the growing product for years, although recent
challenges may signal changes for the particular company.

Still, while the electric car isn't necessarily new, the innovations that companies like Tesla have made
in recent years are consistently adapting to new changes in the electric car market, signaling its
growth phase.
AI Products

While AI (artificial intelligence) has been in development (and application) for years, it is continually

pushing boundaries and developing new products that are in the introduction stage of the PLC. 

Amid dozens of new products, even AI-infused sex robots or autonomous vehicles are very much in a
developmental (or introductory) stage in the market, as their products are still being tested and
adopted in the market by consumers. 

Uses of PLC Analysis 

Conducting PLC analysis can help companies determine if their products are servicing the market
they target efficiently, and when they might need to shift focus. 

By examining their product in relation to the market on the whole, their competitors, sales and
expenses, companies can better decide how to pivot and develop their product for longevity in the
marketplace. 

Examining their product's life cycle, specifically paying attention to where their products are in the
cycle, can help companies determine if they need to develop new products to continue generating
sales - especially if the majority of their products are in the maturity or decline stages of the product
life cycle.

PLC Strategies

For companies in an introduction stage with their product, there are several pricing models available
to begin generating sales - either price skimming, which sets the price of the product initially high
and lowers it to "skim" groups as the market expands, or price penetration, which sets the initial
price low to penetrate the market more quickly and eventually increases it once demand grows. 

Companies often run into trouble when they don't understand the introduction stage of their
product's life cycle - especially when customers do not respond well to the initial product (either
because of pricing or the inherent value and usefulness of the product). 

It is important to examine product advertising and packaging in addition to pricing. 

Is the product meeting the demands and needs of its target market? If sales are stale, many
companies consider shifting their marketing strategy and focus on marketing to new demographics
to help introduce their product to a potential new revenue stream.

Conducting a PLC analysis can help companies learn when they need to reinvent or pivot their
product in a new direction. For example, online streaming service Netflix pivoted their product by
going from a DVD-delivering service to primarily an online streaming service - which was met with
great success.

By examining where their product is in the product life cycle, companies can continue innovating
alongside new technology to diversify their product, keep up with competition and potentially
elongate their product's life in the market. 
 CHAPTER- 8

Pricing: Understanding and Capturing Customer Value

MCQ

1: ________ are the sum of the ________ and ________ for any given level of production.

Variable costs; fixed; total costs

Fixed costs; total; variable costs

Total costs; fixed; variable costs

Fixed costs; variable; total costs

Break-even costs; fixed; total costs

2: ________ is a company's power to maintain or even raise prices without losing market share.

Fixed cost

Pricing power

Variable cost

Target cost

Unit cost

Question 3. ________ is the amount of money charged for a product or service.

Demand curve

Salary

Experience curve

Price

Wage

Question 4. ________ pricing is product driven. The company designs what it considers to be a good
product, totals the expenses of making the product, and sets a price that covers costs plus a target
profit.

Variable

Cost-based

Fixed cost

Skimming
 Value-based

Question 5. A quantity discount is a price reduction to buyers who purchase ________.

superior merchandise

inferior merchandise

large volumes

close outs

frequently

Question 6. Airlines, hotels, and restaurants call segmented pricing ________.

segmented

time pricing

yield management

location pricing

service pricing

Question 7. All of the following conditions support market-penetration pricing except which one?

The market must be highly price sensitive.

Production and distribution costs must fall as sales volume increases.

The product's quality and image must support the price.

The low price must help keep out the competition.

A low price will produce more market growth.

Question 8. Common ________ objectives include survival, current profit maximization, market
share leadership, and leadership building.

management

pricing

cost-plus pricing

image

marketing mix
Question 9. Companies usually develop ________ rather than single products.

product groupings

product brands

product families

product images

product lines

Question 10. Consumer perceptions of the product's value set the ________ for prices.

floor

variable cost

image

demand curve

ceiling

Question 11. Consumers usually perceive higher-priced products as ________.

being in the introductory stage of the product life cycle

having high profit margins

having high quality

out of reach for most people

having cost-based prices

Question 12. Costs that do not vary with production or sales level are referred to as ________.

variable costs

unit costs

total costs

fixed costs

target costs
Question 13. If demand hardly changes with a small change in price, we say the demand is
________.

at break-even pricing

inelastic

market penetrating

variable

value-based

Question 14. In ________, price is considered along with the other marketing mix variables before
the marketing program is set.

variable costs

price elasticity

value-based pricing

building the marketing mix

target pricing

Question 15. Many producers who use captive-product pricing set the price of the main product
________ and set ________ on the supplies necessary to use the product.

low; low markups

high; high markups

low; high markups

high; low markups

moderately; moderate markups

Question 16. Market-skimming pricing would likely be most effective in selling ________.

an electronic device for which research and development must be recouped

any convenience item

shampoo and bath soap

most items at EDLP retailers such as Wal-Mart

anything easily copied by competitors

Question 17. The New Age Gallery has three admission prices for students, adults, and seniors. All
three groups are entitled to the same services. This form of pricing is called ________.

customer-segment pricing

revenue management pricing

location pricing

generational pricing

time pricing

Question 18. Under ________, the market consists of a few sellers who are highly sensitive to each
other's pricing and marketing strategies.

monopolistic competition

oligopolistic competition

pure competition

pure monopoly

capitalism

Question 19. Under ________, the market consists of many buyers and sellers trading in a uniform
commodity such as wheat, copper, or financial securities.

oligopolistic competition

a pure monopoly

pure competition

monopolistic competition

anti-trust agreements

Question 20. Under-priced products sell very well, but they produce less revenue than they would
have if price were raised to the ________ level.

value-based

demand curve

perceived value

price-floor
 variable

Question 21. Valeo Fashions has just introduced a new line of fashion dresses for teens. They will
initially enter the market at high prices in a ________ pricing strategy.

market-skimming

market-penetration

competitive market

demographic

psychological

Question 22. What type of pricing is being used when a company temporarily prices it product below
the list price or even below cost to create buying excitement and urgency?

psychological pricing

promotional pricing

referent pricing

segmented pricing

dynamic pricing

Question 23. When a competitor cuts its price, a company might decide to ________ if it believes it
will not lose much market share or would lose too much profit by cutting its own price.

reduce its marketing costs

maintain its current price and profit margin

reduce its production costs

increase its production costs to improve the quality of the product

increase its marketing budget to raise the perceived value of its product

Question 24. When amusement parks and cinemas charge admission plus fees for food and other
attractions, they are following a(n) ________ pricing strategy.

skimming

penetration

captive-product

optional-product

by-product
Question 25. When companies set prices, the government and social concerns are two ________
affecting pricing decisions.

temporary influences

economic conditions

external factors

demand curves

internal factors

Question 26. When management at Yamaha Motorcycles makes decisions on which type of
saddlebags, handlebars, and seats for its bikes, they become engaged in ________.

product line pricing

by-product pricing

value-based pricing

captive-product pricing

optional-product pricing

Question 27. When Peugeot-Citroen provides payments or price reductions to its new car dealers as
rewards for participating in advertising and sales support programs, it is granting a(n) ________.

allowance

trade credit

functional discount

trade discount

promotional allowance

Question 28. When setting prices, the company must consider factors in its external environment.
________, including factors such as boom or recession, inflation, and interest rates affecting pricing
decisions, can have a strong impact on the firm's pricing strategies.

Value-based pricing

Demand curve

Target costing

Competitors

Economic conditions
Question 29. Which of the following is not a reason for a company to initiate a price cut?

to boost sales

to obtain prestige

to relieve excess capacity

to influence falling demand

to dominate the market

Question 30. Which of the following is a cost-based approach to pricing?

value-based pricing

break-even pricing

going-rate pricing

good-value pricing

A and C

QUESTIONS

Q1: What is pricing in marketing?

Ans: Definition: Pricing is the method of determining the value a producer will get in the exchange of
goods and services. Simply, pricing method is used to set the price of producer’s offerings relevant to
both the producer and the customer.

Every business operates with the primary objective of earning profits, and the same can be realized
through the Pricing methods adopted by the firms.

While setting the price of a product or service the following points have to be kept in mind:

 Nature of the product/service.

 The price of similar product/service in the market.

 Target audience i.e. for whom the product is manufactured (high, medium or lower class)

 The cost of production viz. Labor cost, raw material cost, machinery cost, inventory cost,
transit cost, etc.

 External factors such as Economy, Government policies, Legal issues, etc.

Pricing Objectives

The objective once set gives the path to the business i.e. in which direction to go. The following are
the pricing objectives that clears the purpose for which the business exists:
1. Survival: The foremost Pricing Objective of any firm is to set the price that is optimum and
help the product or service to survive in the market. Each firm faces the danger of getting
ruled out from the market because of the intense competition, a mature market or change
in customer’s tastes and preferences, etc.Thus, a firm must set the price covering the fixed
and variable cost incurred without adding any profit margin to it. The survival should be the
short term objective once the firm gets a hold in the market it must strive for the additional
profits.The New Firms entering into the market adopts this type of pricing objective.

2. Maximizing the current profits: Many firms try to maximize their current profits by
estimating the Demand and Supply of goods and services in the market. Pricing is done in
line with the product’s demand in the customers and the substitutes available to fulfill that
demand. Higher the demand higher will be the price charged. Seasonal supply and
demand of goods and services are the best examples that can be quoted here.

3. Capturing huge market share: Many firms charge low prices for their offerings to capture
greater market share. The reason for keeping the price low is to have an increased sales
resulting from the Economies of Scale. Higher sales volume lead to lower production cost
and increased profits in the long run.This strategy of keeping the price low is also known
as Market Penetration Pricing. This pricing method is generally used when competition is
intense and customers are price sensitive. FMCG industry is the best example to supplement
this.

4. Market Skimming: Market skimming means charging a high price for the product and
services offered by the firms which are innovative, and uses modern technology. The prices
are comparatively kept high due to the high cost of production incurred because of modern
technology. Mobile phones, Electronic Gadgets are the best examples of skimming pricing
that are launched at a very high cost and gets cheaper with the span of time.
 5. Product –Quality Leadership: Many firms keep the price of their goods and services in
accordance with the Quality Perceived by the customers. Generally, the luxury goods create
their high quality, taste, and status image in the minds of customers for which they are
willing to pay high prices. Luxury cars such as BMW, Mercedes, Jaguar, etc. create the high
quality with high-status image among the customers.

Thus, every firm operates with the ultimate objective of earning profits and, therefore, the price of a
product must be set keeping in mind the cost incurred in its production along with the benefits it
offers for which people are ready to pay extra.

Q2: what are internal and external considerations affecting price decisions?

Ans: The pricing decisions for a product are affected by internal and external factors.

A. Internal Factors:

1. Cost:

While fixing the prices of a product, the firm should consider the cost involved in producing the
product. This cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm
must be able to recover both the variable and fixed costs.

2. The predetermined objectives:

While fixing the prices of the product, the marketer should consider the objectives of the firm. For
instance, if the objective of a firm is to increase return on investment, then it may charge a higher
price, and if the objective is to capture a large market share, then it may charge a lower price.

3. Image of the firm:

ADVERTISEMENTS:

The price of the product may also be determined on the basis of the image of the firm in the market.
For instance, HUL and Procter & Gamble can demand a higher price for their brands, as they enjoy
goodwill in the market.

4. Product life cycle:

The stage at which the product is in its product life cycle also affects its price. For instance, during
the introductory stage the firm may charge lower price to attract the customers, and during the
growth stage, a firm may increase the price.

5. Credit period offered:

The pricing of the product is also affected by the credit period offered by the company. Longer the
credit period, higher may be the price, and shorter the credit period, lower may be the price of the
product.

6. Promotional activity:
The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy
advertising and sales promotion costs, then the pricing of the product shall be kept high in order to
recover the cost.

B. External Factors:

1. Competition:

While fixing the price of the product, the firm needs to study the degree of competition in the
market. If there is high competition, the prices may be kept low to effectively face the competition,
and if competition is low, the prices may be kept high.

2. Consumers:

The marketer should consider various consumer factors while fixing the prices. The consumer factors
that must be considered includes the price sensitivity of the buyer, purchasing power, and so on.

3. Government control:

Government rules and regulation must be considered while fixing the prices. In certain products,
government may announce administered prices, and therefore the marketer has to consider such
regulation while fixing the prices.

4. Economic conditions:

The marketer may also have to consider the economic condition prevailing in the market while fixing
the prices. At the time of recession, the consumer may have less money to spend, so the marketer
may reduce the prices in order to influence the buying decision of the consumers.

5. Channel intermediaries:

The marketer must consider a number of channel intermediaries and their expectations. The longer
the chain of intermediaries, the higher would be the prices of the goods.

CHAPTER- 9

Pricing Strategies: Additional Considerations

MCQ

1: In the personal selling process, the step which consists of identifying potential customers is
classified as

A. presenting quota

B. demonstrating quota

C. prospecting

D. qualifying
2: According to promotional mix, the method which focuses on building relationships with individual
customers to maintain lasting relationship is called

A. sales promotion

B. offline promotion

C. direct channeling

D. direct marketing

3: • A descriptive thought about something held by a person is classified as

A. learning

B. attitudes

C. beliefs

D. perception

4: The Jeep can associated with brand personality trait known as

A. ruggedness

B. competence

C. sophistication

D. excitement

5: The kind of information consumer obtains from advertising campaigns and sales people is
classified as

A. personal sources

B. commercial sources

C. experiential sources

D. all of above

6: The sensitivity of buyers to price changes in terms of the quantities they will buy is referred to as:

elastic demand

inelastic demand

unitary demand

the price elasticity of demand

Question 2.

When small changes in price result in substantial changes in the number of units purchased, demand
is considered to be:

inelastic

elastic

unitary

marginal

Question 3.

Which of the following types of shoppers has the highest price elasticity?

personalizing consumer

status-oriented consumer

economic consumer

convenience-oriented consumer

Question 4.

Status-oriented consumers:

perceive competing retailers as similar to one another and shop around for the lowest
possible prices

look for nearby locations and store hours

perceive competing retailers differently

seek retailers with strong assortments in the product categories under consideration

Question 5.

The Competition Act does not contain governing rules related to:

price fixing

price discrimination

price maximizing
 item price removal

Question 6.

Which of the following statements concerning horizontal price fixing is correct?

Horizontal price fixing refers to the right of manufacturers to control retail prices.

It is not illegal for retailers to reach agreements with one another regarding the use of
coupons.

There is no legal violation if the resultant prices are "reasonable."

Any party found guilty of price fixing under the Competition Act will face heavy fines.

Question 7.

Which of the following statements concerning vertical price fixing is correct?

The practice does not restrict the ability of suppliers to set minimum prices.

The practice is controlled in Canada under the Fair Pricing Act.

The practice does not restrict the ability of suppliers to set maximum prices.

Today, there is no legal way for manufacturers and wholesalers to control retail prices.

Question 8.

Which of the following is a strategy that a manufacturer or wholesaler can use to legally control a
good's final retail selling price?

consignment selling

refusing to sell to retailers that discount prices

meeting with a discounter's competitors to discuss possible actions

 requiring discounting retailers to pay invoices upon delivery of merchandise

Question 9.

Which statement concerning the price discrimination provision of the Competition Act is correct?

Price differences can be justified by differences in costs.

The act limits the powers of small retailers.

All discounts are illegal.

Only sellers' activities are restricted.

Question 10.

Under the price discrimination provision of the Competition Act, a manufacturer can legally practise
price discrimination through:

providing cumulative quantity discounts

selling products that are physically different to different retailers

refusing to sell to retailers that discount prices

providing larger promotional discounts to larger retailers

Question 11.

Loss leaders are prohibited in Canada by:

minimum-price laws

the Robinson Act

vertical price fixing legislation

horizontal price fixing legislation

Question 12.

Unit-pricing laws:

are very stringent in Canada

do not exist at the federal level in Canada

do not exist in the United States

require only the total price of an item be displayed

Question 13.

Grey market goods are products that:

are targeted to senior citizens

use counterfeit labels

are purchased in foreign markets, or goods that have been transshipped from other
retailers

are purchased from bankrupt retailers

Question 14.

The starting point in developing a retail price strategy is:

selecting a broad price policy

choosing specific prices

outlining a retail strategy mix

developing objectives

Question 15.

A pricing approach that is appropriate when a target market is price sensitive is:

market penetration

market skimming

early recovery of cash

 the multistage approach

Question 16.

Prestige pricing is based on:

markup pricing

competition-oriented pricing

cost-oriented pricing

the price-quality association

Question 17.

What is the markup equivalent at cost of a 50 percent markup at retail?

25 percent

50 percent

75 percent

100 percent

Question 18.

Which of the following pricing strategies is usually used for newspapers, candy, vending machine
items, and foods on restaurant menus?

leader pricing

flexible pricing

variable pricing

customary pricing

Question 19. Which of the following pricing strategies is a form of leader pricing?
 early markdowns

fair trade

loss leaders

unit pricing

Question 20. An advantage of a late markdown policy is:

lower markdowns are needed to sell merchandise than with an early markdown policy

greater opportunity is given to sell merchandise at original prices

a retailer's cash flow can be improved

the freeing of selling space for new merchandise

QUESTIONS

Q1: Discuss NEW PRODUCT PRICING.

Ans: Pricing strategies tend to change as a product goes through its product life cycle. One stage is
particularly challenging: the introductory stage. This is called New Product Pricing. When companies
bring out a new product, they face the challenge of setting prices for the very first time. Two new
product pricing strategies are available: Price-Skimming and Market-Penetration Pricing. Let’s learn
more about these two new product pricing strategies.
New Product Pricing Strategies: Price-Skimming and Market-Penetration Pricing

Price-Skimming – New Product Pricing

The first new product pricing strategies is called price-skimming. It is also referred to as market-
skimming pricing. Price-skimming (or market-skimming) calls for setting a high price for a new
product to skim maximum revenues layer by layer from those segments willing to pay the high price.
This means that the company lowers the price stepwise to skim maximum profit from each segment.
As a result of this new product pricing strategy, the company makes fewer but more profitable sales.

Many companies inventing new products set high initial prices in order to skim revenues layer by
layer from the market. An example for a company using this new product pricing strategy is Apple.
When it introduced the first iPhone, its initial price was rather high for a phone. The phones were,
consequently, only purchased by customers who really wanted the new gadget and could afford to
pay a high price for it. After this segment had been skimmed for six months, Apple dropped the price
considerably to attract new buyers. Within a year, prices were dropped again. This way, the
company skimmed off the maximum amount of revenue from the various segments of the market.

However, this new product pricing strategy does not work in all cases. Price-skimming makes sense
only under certain conditions. The product’s quality and image must support the high initial price,
and enough buyers must want the product at that price. Also, the costs of producing smaller must
not be so high that they overshadow the advantage of charging more. And finally, competitors
should not be in sight – if they are able to enter the market easily and undercut the high price, price-
skimming does not work.
New Product Pricing – Price-Skimming vs. Market-Penetration Pricing

Market-Penetration Pricing – New Product Pricing

The opposite new product pricing strategy of price skimming is market-penetration pricing. Instead
of setting a high initial price to skim off each segment, market-penetration pricing refers to setting a
low price for a new product to penetrate the market quickly and deeply. Thereby, a large number of
buyers and a large market share are won, but at the expense of profitability. The high sales volume
leads to falling costs, which allows companies to cut their prices even further.

Market-penetration pricing is also applied by many companies. An example is the giant Swedish
furniture retailer Ikea. By introducing products at very low prices, a large number of buyers is
attracted, making Ikea the biggest furniture retailer worldwide. Although the low prices make each
sale less profitable, the high volume results in lower costs and allows Ikea to maintain a healthy
profit margin.

In order for this new product pricing strategy to work, several conditions must be met. The market
must be highly price sensitive so that a low price generates more market growth and attracts a large
number of buyers. Also, production and distribution costs must decrease as sales volume increases.
In other words, economies of scale must be possible. And finally, the low price must ensure that
competition is kept out of the market, and the company using penetration pricing must maintain its
low-price position. Otherwise, the price advantage will only be of a temporary nature.

Q2: Discuss PRODUCT MIX PRICING STRATEGIES.

Ans: Most products are part of a broader product mix. Consequently, they must be priced
accordingly. Product Mix Pricing Strategies address this issue. We will explain the basic product mix
pricing strategies that change a product’s pricing when it is part of a product mix.
Let’s start with an example: You buy a Gillette Fusion razor. The price is temptingly low, so why not?
But once you bought the razor, you quickly notice that the replacement cartridges needed are not
that cheap. In fact, when you buy the razor, you are a captive customer for the products the brand
makes the real money with – the higher-margin replacement cartridges.

And that counts for every product mix. Products being part of it are all interrelated, their prices
being in conjunction with each other. Therefore, the strategy for setting a product’s price often has
to be changed when the product is part of a product mix. Then, the company looks for a set of prices
that will maximize profits on the total product mix, instead of on the individual product. Since the
various products in the mix have related demand and costs, but face different degrees of
competition, pricing is difficult. Therefore, we will have a close look at the five major product mix
pricing strategies (or situations).

5 Product Mix Pricing Strategies

The 5 product mix pricing strategies (or situations) are depicted in the table below. A detailed
explanation of each follows.

5 Product Mix Pricing Strategies

Product Line Pricing – Product Mix Pricing Strategies

Since firms usually develop product lines rather than single products, product line pricing plays a
decisive role in product mix pricing strategies. For example, when you look at a car brand such as
Audi, you will see a relation between the different series and their prices. The entry model, the Audi
A1, does cost you less than the top-range car A8.

Thus, in product line pricing, the firm must determine the price steps between various products in a
product line based on cost differences between the products, competitors’ prices, and, most
importantly, customer perceptions of the value of different features.

Optional Product Pricing – Product Mix Pricing Strategies

Optional product pricing is the pricing of optional or accessory products along with a main product.
In many cases, you can buy optional or accessory products along with the main product. For
instance, when you order your new Audi car, you may choose to order a GPS system and an
advanced Entertainment system. However, for the company, pricing these options is not easy. They
must decide carefully which items to include in the base price and which to offer as options.

Captive Product Pricing – Product Mix Pricing Strategies

We speak of captive product pricing when companies make product that must be used along with
the main product. On the contrary, in optional product pricing, we should think of products
that can be bought/sold with the main product. Examples for captive product pricing are razor blade
cartridges and printer cartridges. Captive product pricing is an extremely powerful strategy in the set
of product mix pricing strategies. Producers of the main products, e.g. printers and razors, often
price them very low and set high mark-ups on the supplies you need in order to operate the main
products.

However, companies that use this type of product mix pricing must be very careful. The difficulty is
in finding the right balance between the main product and captive product prices. Also, consumers
trapped into buying expensive captive products could resent the brand that ensnared them.

By-product Pricing – Product Mix Pricing Strategies

By-product pricing refers to setting a price for by-products to make the main product’s price more
competitive. It is the result of the fact that producing products and services often generates by-
products. Often, these by-products (as singly sold products) would not have any value and getting rid
of them is costly. This would then increase the price of the main product. But by using by-product
pricing, the company tries to find a market for these by-products to help offset the costs of disposing
of them and make the price of the main product more competitive.

In some cases, the by-products themselves can even turn out to be profitable – that is actually
turning trash into cash. Sly, isn’t it?

Product Bundle Pricing – Product Mix Pricing Strategies

The last one of the product mix pricing strategies is product bundle pricing. Using product bundle
pricing, companies combine several products and offer the bundle at a reduced price. The best
example is probably a menu at McDonald’s: you get a bundle consisting of a burger, fries and a soft
drink at a reduced price. Also, companies such as Sky, Telecom and other telecommunications
companies offer TV, telephone and high-speed internet connections as a bundle at a low combined
price. For the company, product bundle pricing is a very effective product mix pricing strategy: it can
promote the sales of products consumers might not otherwise buy. However, the combined price
must be low enough to get consumers to buy the bundle instead of a selection of single products.

Chapter-10

Marketing Channels: Delivering Customer Value

MCQ

1: . In marketing intermediaries, the way of distribution in which the product is stocked in many
possible

outlets is classified as

A. inclusive distribution

B. exclusive dealing
C. selective distribution

D. intensive distribution

2: • If the cost of product is $30 and the profit margin for each unit is $3 then the price that must be
charged to customers is

A. $30

B. $33

c. $27

D. $34

3: Selection of one or more segments to enter is called

A. Market segmentation

B. Targeting

C. Differentiation

D. Positioning

4: • The kind of channel arrangement which involves one or more than one independent
wholesalers, producers and retailers is classified as

A. vertical marketing system

B. static distribution channel

C. conventional distribution channel

D. horizontal marketing system

5: • The most crucial and first step in marketing process is

A. Designing a marketing strategy

B. Create customer delight

C. Understanding customer needs and wants

D. Capturing value from customers

6: Which of the following is NOT a typical supply chain member?

A) resellers

B) customers

C) intermediaries

D) government agencies

E) raw materials supplie

7: ________ the manufacturer or service provider is the set of firms that supply the raw

materials, components, parts, information, finances, and expertise needed to create a product or

service.

A) Downstream from

B) Upstream from

C) Separated from

D) Congruous to

E) Parallel with

8: Another term for the supply chain that suggests a sense and respond view of the market is

________.

A) supply and demand chain

B) demand chain

C) channel of distribution

D) distribution channel

E) physical distribution

9: When suppliers, distributors, and customers partner with each other to improve the

performance of the entire system, they are participating in a ________.

A) value delivery network

B) channel of distribution

C) supply chain

D) demand chain

E) all of the above

10: Most producers today sell their goods to ________.

A) final users

B) final users and marketing members

C) intermediaries

D) the government at various levels

E) competitors

11: A company's channel decisions directly affect every ________.

A) channel member

B) marketing decision

C) customer's choices

D) employee in the channel

E) competitor's actions

12: Distribution channel decisions often involve ________ with other firms, particularly those that

involve contracts or relationships with channel partners.

A) short-term commitments

B) long-term commitments

C) major problems

D) financial losses

E) disagreements

13: Joe Blanco, like other producers, has discovered that his intermediaries usually offer his firm

more than it can achieve on its own. Which of the following is most likely an advantage that Joe

creates by working with intermediaries?

A) financial support

B) fast service

C) scale of operation

D) working relationships with foreign distributors

E) promotional assistance
14: From the economic system's point of view, the role of marketing intermediaries is to transform

the assortment of products made by producers into the assortment of products wanted by

________.

A) channel members

B) distributors

C) consumers

D) manufacturers

E) marketers

15: Producers benefit from using intermediaries because they ________.

A) offer greater efficiency in making goods available to target markets

B) bring a fresh point of view to strategy development

C) eliminate risk

D) are generally backlogged with orders

E) refuse to store products for longer than a few days

16: Intermediaries play an important role in matching ________.

A) dealer with customer

B) supply and demand

C) product to region

D) manufacturer to product

E) information and promotion

17: Channel members add value by bridging the major gaps of ________ that separate goods and

services from those who would use them.

A) time, place, and form

B) place, possession, and form

C) time, place, and possession

D) place, time, and need

E) place, need, and distribution

18: Which of the following is NOT a key function that intermediaries play in completing

transactions?

A) promotion

B) information

C) matching

D) financing

E) negotiation

19: Which of the following is NOT a key function that intermediaries play in helping to fulfill a

completed transaction?

A) physical distribution

B) promotion

C) financing

D) risk taking

E) storing goods

20: In marketing terms, we say that the number of intermediary levels indicates the ________ of

a channel.

A) depth

B) complexity

C) involvement

D) length

E) width

Questions

Q1: What is Marketing Channels? Nature Importance.

Ans: Marketing channels are the route between producers and users through which goods are
distributed. This route is also known as Distribution Channel, Channel of Distribution or Trade
Channel. In case of services, the distribution channel is direct, since the services are intangible in
nature. A distribution channel generally requires a buyer and seller.

Meaning and Definition of Marketing Channels

According to American Marketing Association___” A channel of distribution or marketing channel is
a structure of the intra-company organization, units, and intra-company agents and dealers,
wholesalers and retailers through which a commodity product or service is marketed“.

According to Philip Kotler___” Every producer seeks to link together the set of marketing
intermediaries that best fulfill the firm’s objectives. This set of marketing intermediaries is called the
marketing channel”.

According to William J Stanton___” A channel of distribution for a product is the route taken by the
title to the goods as they move from the producer to the ultimate consumers or industrial user”.

‘Delivery’ is the main aim of marketing channel. The availability and reachability of all public and
private goods and services to final consumers can be made only through marketing channels.

Successful value creation depends on successful value delivery. Holistic marketers are increasingly
taking a value network view of their business, examining the entire supply chain that links raw
materials, components, and manufactured goods and shows how they move toward the final
consumers.

Nature of Marketing Channels

1. Pathway or Route: Distribution channel is the route through which goods and services are
transmitted from the manufacturers to the consumers.

2. Flow: In a distribution channel, the goods and services flow in a sequential, smooth and
unidirectional manner.

3. Composition: The channel comprises of intermediaries like agents, distributors, retailers,

wholesalers, etc.

4. Function: The functions of distribution channel are performed by intermediaries. They assist

in the transfer of title, ownership, and possession of goods and services between
manufacturers and consumers.

5. Marketing Tool: Distribution channel acts as a medium for screening the external aspects of
the marketing organization and for bridging the physical and non-physical gaps which occur
while transferring goods from the manufacturers to the consumers.

6. Supply-Demand Linkage: It bridges the gap between the manufacturers and consumers by
eliminating all the spatial and temporal discrepancies related to supply and demand.

Importance of Marketing Channels

1. Relive from Marketing Problems: They help the producer in his production function by
relieving him of marketing problems. Thus, the producer can pay his full attention towards
organizing the production function only smoothly to earn a high rate of return.

2. Information to the Producer: The channels of distribution provide information to the

producer regarding the taste and needs of consumers, competition in the market, current
market trend and the product conditions for the increased volume of sales because they
have complete knowledge of the market.

3. Storage of Finished Goods: The channels of distribution keep the producer free from the
problems of storage of finished goods.
 4. Finance the Producer: Channels of distribution finance the producer as well as the
consumer.

5. Fixing the Price: Channels of distribution assist the producer in fixing the price of a product.

Q2: What is Logistics and Supply Chain Management?

Ans: "Logistics typically refers to activities that occur within the boundaries of a single organization
and Supply Chain refers to networks of companies that work together and coordinate their actions
to deliver a product to market. Also, traditional logistics focuses its attention on activities such as
procurement, distribution, maintenance, and inventory management. Supply Chain Management
(SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new
product development, finance, and customer service" - Michael Hugos

What is Logistics?

"Logistics is about getting the right product, to the right customer, in the right quantity, in the right
condition, at the right place, at the right time, and at the right cost (the 7 Rs)" - John J. Coyle et al

In the past, various tasks were under different departments, but now they are under the same
department and report to the same head as below,
What is Logistics Management?

"Logistics Management deals with the efficient and effective management of day-to-day activity in
producing the company's finished goods and services" - Paul Schönsleben

What is Supply Chain?

"Supply Chain is the network of organizations that are involved, through upstream and downstream
linkages, in the different processes and activities that produce value in the form of products and
services in the hands of the ultimate consumer" - Martin Christopher

What is Supply Chain Management?

Each researcher defines supply chain management differently. However, we would like to provide
the simple definition as below,

"Supply Chain Management (SCM) refers to the coordination of production, inventory, location, and
transportation among the participants in a supply chain to achieve the best mix of responsiveness
and efficiency for the market being served" -Michael Hugos
What is the Difference Between Inbound and Outbound Logistics?

"Inbound Logistics refers to movement of goods and raw materials from suppliers to your company.
In contrast, Outbound Logistics refers to movement of finished goods from your company to
customers"

To illustrate this term, we make a small graphic as below,

As you can see, purchasing and warehouse (distribution center) communicates with suppliers and
sometimes called "supplier facing function". Production planning and inventory control function is
the center point of this chart. Customer service and transport function communicates with
customers and sometimes called "customer-facing functions.

What is Transport and Logistics?

"Transport and Logistics refers to 2 types of activities, namely, traditional services such as
air/sea/land transportation, warehousing, customs clearance and value-added services which
including information technology and consulting"

What is International Logistics?

These are one of the most ambiguous groups of terms in international business out there. They are
used interchangeably with international supply chain or international production and transportation
activities. However, the most concise definition is as below,

"International Logistics focuses on how to manage and control overseas activities effectively as a
single business unit. Therefore, companies should try to harness the value of overseas product,
services, marketing, R&D and turn them into competitive advantage"

What is Third Party Logistics or 3PL?

The concept of 3PL appeared on the scene in the 1980s as the way to reduce costs and improve
services which can be defined as below,

"Third Party Logistics or 3PL refers to the outsourcing of activities, ranging from a specific task, such
as trucking or marine cargo transport to broader activities serving the whole supply chain such as
inventory management, order processing and consulting."

In the past, many 3PL providers didn't have adequate expertise to operate in complex supply chain
structure and process. The result was the inception of another concept.

What is Fourth Party Logistics or 4PL?

The 4PL is the concept proposed by Accenture Ltd in 1996 and it was defined as below,

"Fourth Party Logistics or 4PL refers to a party who works on behalf of the client to do contract
negotiations and management of performance of 3PL providers, including the design of the whole
supply chain network and control of day-to-day operations"
You may wonder if a 4PL provider is really needed. According to the research by Nezar Al-Mugren
from the University of Wisconsin-Stout, the top 3 reasons why customers would like to use 4PL
providers are as below,

- Lack of technology to integrate supply chain processes

- The increase in operating complexities

- The sharp increase of the operations in the global supply chains

What is Supply Chain Network?

Many companies have the department that controls supply chain activity so they believe that SCM is
a "function". Some companies think SCM is a kind of management system under IT (information
system or enterprise resource planning.) In fact, SCM is actually a "network" consists of many
players as below,
A generic supply chain structure is as simple as Supplier, Manufacturer, Wholesaler and Retailer (it's
more complex in the real world but a simple illustration serves the purpose.)

The word "management" can be explained briefly as "planning, implementing, controlling". Supply
Chain Management (in supply chain education context) is then the planning, implementing and
controlling the networks.

What is Information Sharing?

Another important attribute of supply chain management is the flow of material, information, and
finance (these are thing that can be found in lean manufacturing and six sigma project too). Even
though there are 3 types of flow, the most important one is information flow aka information
sharing. Let's see the example of this through the simplified version of the bullwhip effect as below,
When customer demand data is not shared, each player in the same supply chain must make some
sort of speculation and this can become the management issues. According to the above graphic, the
retailer has a demand for 100 units, but each player tends to keep stock more and more at every
step of the way. This results in higher costs for everyone in the same supply chain.

When information is shared via demand management from retailer down to supplier, everyone
doesn't have to keep stock that much. The result is a lower cost for everyone. This is sometimes
called the extended supply chain or supply chain visibility.

Information sharing will also reduce the needs to use the digital transformation solution such as
supply chains systems, digital supply chain, predictive analytics or artificial intelligence.

What is Supply Chain Coordination?

Information sharing requires a certain degree of "coordination" (it's also referred to as collaboration
or integration in scholarly articles). Do you wonder when people started working together as a
network? In 1984, companies in the apparel business worked together to reduce overall lead-time.
In 1995, companies in the automotive industry used Electronic Data Interchange to share
information. So, working as a "chain" is the real-world practice.

What are Conflicting Objectives?

Working as a network requires the same objective, but this is often not the case (even with someone
in the same company). "Conflicting Objectives" is the term used to describe the situation when each
function wants something that won't go well together. For example, purchasing people always place
the orders to the cheapest vendors (with a very long lead-time) but production people or project
manager need material more quickly.

To avoid conflicting objectives, you need to decide if you want to adopt a time-based strategy, low-
cost strategy or differentiation strategy. A clear direction is needed so people can make the decisions
accordingly.

What is the Cost/Service Trade-off?

The concept of Cost/Service Trade-off appeared as early as in 1985 but it seems that people really
don't get it.

When you want to improve service, the cost goes up. When you want to cut cost, service suffers. It's
like a "seesaw", the best way you can do is to try to balance both sides.

Real-world example is that a "new boss" ask you to cut costs by 10%, improve service level by 15%,
double inventory turns so the financial statement looks good. If you really understand the
cost/service trade-off concept, you will agree that you can't win them all. The most appropriate way
to handle this is to prioritize your KPIs.

What is Supply Chain Relationship?

To work as the same team, long-term relationship is key. Otherwise, you're just a separate company
with a different strategy/agenda. So academia keeps preaching about the importance of
relationship-building but is not for everyone.

Since there are too many suppliers to deal with, a portfolio matrix is often used to prioritize the
relationship-building to create supply chain partners. Focus your time and energy to create a long-
term relationship with suppliers of key products and items with limited sources of supply (or items
with high supply chain risk.) Because people and human resource are the factors that can make or
break your supply chain.

Chapter-11

Communicating Customer Value: Integrated Marketing Communication Strategy

MCQ

1: A company's total marketing communications mix consists of a special blend of advertising, sales
promotion. public relations. personal selling, and direct-marketing tools that the company uses to
communicate customer value and build customer relationships. This is also called

A) direct marketing

B) integrated marketing

C) the promotion mix

D) competitive marketing

E) target marketing

2: The use of short-term incentives to encourage the purchase or sale of a product or service is
called

A) direct marketing

B) sales promotions

C) personal selling

D) public relations

E) publicity

3: Who suggested product, pricing, place, promotion all these in a company represents “Market
Mix”?

(A) Neil Borden

(B) Neilsen

(C) Philip Kotler

(D) Stephen Morse

Answer: A

2. This P is not a part of the 7Ps of marketing mix?

(A) Promotion

(B) Price

(C) People

(D) Purpose

Answer: D

3. It serves as the most common source of leads generation for any company

(A) Yellow pages

(B) Green pages

(C) White pages

(D) Blue pages

Answer: A

4. Marketing of product and service in which the offer itself is not intended to make any monetary
profit is called

(A) Profit marketing

(B) Virtual marketing

(C) Digital marketing

(D) Non profit marketing

Answer: D

5. USP is defined as

(A) Unique selling price

(B) Unique sales preposition

(C) Unique selling proposition

(D) Unique strategy promotion

Answer: C

6. The process of setting a low initial price for attracting a large number of buyers quickly to cover
a large market share is known as

(A) Going-rate pricing

(B) Market penetration pricing

(C) Value based pricing

(D) Skimming pricing

Answer: B

7. A reduction in price on purchase during a stated period of time is known as.

(A) Sale

(B) Discount

(C) Allowance

(D) None of these

Answer: B

8. Sensitivity of demand to change in price is known as

(1) Cost-plus price

(2) Break-even price

(3) Price elasticity

(4) Inelastic

Answer: C

9. Which among these is concerned with pricing policies for late entrants to a market.

(A) Market penetration

(B) Marketing research

(C) Market skimming

(D) Marketing skills

Answer: A

10. Which among these is not the nature and characteristic of a service.

(A) Intangibility

(B) Durability

(C) Variability

(D) Perishability

Answer: B

11: The advantages of audience selectivity, no ad competition, and personalization apply to which
type of media?

A. Newspapers

B. Television

C. Direct mail
 D. Radio

12. ______________ is short-term incentives to encourage purchase or sales of a product or service.

A. Advertising

B. Sales promotion

C. Online advertising

D. Public relations

13. Which of the following consumer-promotion tools is the most effective, but most expensive, way
to introduce a new product?

A. Coupons

B. Price packs

C. Contests

D. Samples

14. Which type of promotion uses buying allowances, push money, and free goods?

A. consumer promotion

B. trade promotion

C. sales force promotion

D. place promotion

15. Despite its potential strengths, public relations is often described as as:

A. Unethical business.

B. Marketing stepchild.

C. Corrupt practice.

D. Cost drain that is not fruitful.

16. Which tool of the promotional mix consists of short-term incentives to encourage the purchase
or sale of a product or service?

A. Advertising

B. Public relations

C. Direct marketing
 D. Sales promotion

17. The personal presentation by the firm's sales force for the purpose of making sales and building
customer relationships is called:

A. Personal selling.

B. Public relations.

C. Direct marketing.

D. Sales promotion.

18. For many years mass-media advertising was king among promotion variables. today, this form of
advertising appears to be giving way to:

A. Product differentiation.

B. Other elements of the promotion mix.

C. No manipulative variables.

D. A move away from promotion.

19. The concept of ______________ suggests that the company must blend the promotion tools
carefully into a coordinated promotion mix.

A. Public relations

B. Integrated market planning

C. Integrated marketing communications

D. Global cultural imperatives

20. No matter which form of direct marketing might be used by a promotional manager, All of the
forms have several characteristics in common. Which of the following WOULD NOT be among those
characteristics?

A. Nonpublic

B. Immediate

C. Producer controlled

D. Interactive

QUESTIONS

Q1: What is personal selling?

Ans: Personal selling is when a salesperson meets a potential buyer or buyers face-to-face with the
aim of selling a product or service. The most traditional form of sales, many salespeople are lured to
the industry by the adrenaline rush of high-stakes personal selling; picture those whisky-swilling Mad
Men, or the ultra-driven salesmen of Glengarry Glen Ross.

These days, there’s a lot more to sales than attending meetings.

Why? Simply put – the expense.

Think about it: each face-to-face meeting requires significantly more investment – from both sides –
than just contacting a prospect via email or phone. Suddenly, you’ve got travel expenses. And the
time it takes to prepare for, travel to, and take the meeting only adds to the cost. This is why it’s vital
to consider the value and type of product you’re aiming to sell – as well as the likelihood of closing
the deal – before automatically opting for personal selling.

But face-to-face meetings certainly still have their place. Consider this: 68% of B2B customers are
lost due to indifference or perceived apathy rather than mistakes. Attending a sales meeting is a
prime way to combat this issue by showing you care enough to invest time and money in your
prospect on good faith.

Fifty-eight percent of buyers state that sales meetings are not valuable, and that there should be a
greater focus on the value businesses can deliver to them. On the face of it, this doesn’t sound like
great news for salespeople who shine in meetings. But it does mean that over 40% of prospects are
open to sales meetings. The other 60% may just need convincing that a meeting will help you add
real value to their business.

Personal selling techniques

Focus on the right leads

With the extra time and monetary investment required for face-to-face sales meetings, it’s essential
businesses lock down ROI by choosing the right prospects to meet in person through a
comprehensive lead-qualifying process.

Not every meeting will lead to a sale, but you can get yourself closer to hitting those sales stats by
asking yourself:

 What is the value of this potential sale?

 What is the size of the business you’re selling to?

  Is your product or service genuinely going to serve the business well?

 Could building a strong relationship with the DM lead to more business down the line?

 Is a sales meeting actually going to help close the sale? Perhaps the DM is extremely time-
poor and prefers email or telephone communication?

 What value can you add in a sales meeting?

Exceed expectations through preparation

Salespeople who turn up to a meeting without preparing properly are a serious irritant for buyers. In
fact, 82% of B2B buyers think sales reps are unprepared. This suggests that many prospects have
been deterred from sales meetings – which they may consider a waste of time – due to negative past
experiences.

It’s your job to change their mind.

Buyers don’t want to work with pushy salespeople. For buyers, a positive sales experience involves
a sales representative who:

 listens to their needs

 is invested in the success of their business

 provides relevant information

Yet, just 13% of prospects believe a sales rep can understand their needs – suggesting salespeople
have a reputation for not listening properly and just pushing ahead with a boilerplate pitch.

Active listening is of course vital for sales reps – not just in the meeting, but ahead of it. Note down
every piece of information you receive via call or email and use this to your advantage in the
meeting to prove you understand the business’s real needs. And practice active listening outside of
meetings – when your mind is racing, it’s not as easy as it sounds.

Put yourself head and shoulders above the competition by overpreparing. Don’t just research the
company so you can show off by reciting stats or dates in the interview – learn about their pain
points, their budgets, and what they’re trying to achieve. You can then position your product or
service as a solution that helps them achieve their wider goals.

Your presentation should never be boilerplate: use the information you’ve gathered through
research and listening to tailor it specifically to the company’s goals and how your product or service
slots into their strategy.
Add value in the meeting

These days, it’s drummed into sales reps that they must add value in meetings, demonstrating that
they’ll continue to provide useful assistance should the client sign on the dotted line. Doing this
successfully demonstrates that you know what you’re talking about, and also that you care about
working with the company long-term to help them achieve their goals, thereby building trust.

But what are the best techniques for adding value in that initial meeting?

Sixty-nine percent of buyers state that providing primary research data that’s relevant to their
business is the best way for reps to add value. Furthermore, 95% of customers choose to buy from
providers that offer relevant content at every stage of the buying process.

The amount your company is willing to invest in research or content ahead of the meeting will no
doubt vary depending on the size of the potential deal. But there’s always some level of research
salespeople are able to do ahead of the big date.

Use your company’s tools to pull data surrounding the business and its competitors that the
organization hasn’t gathered itself. Give an analysis of the top-level findings in your presentation,
explain how your products and services can help with the challenges you’ve uncovered, and then
send the DM the data and your analysis. Ask your content team to create a bank of assets
surrounding regular FAQs and industry pain points – whether blogs, infographics, videos, or ebooks –
so you’re able to send links to additional helpful information during or after the meeting.

Make it clear you’re in this together

The best-performing sales reps use collaborative words like “we” or “us” instead of words like “I” or
“me.” This is a simple method for making the prospective buyer feel like you’re on their side and
want nothing more than to see their business thrive.

Asking intelligent, in-depth questions surrounding their business challenges, and coming back with
potential solutions related to your products and services, takes this a step further, as does turning up
to the meeting with the research and data outlined above.

However you do it, make sure your client leaves the meeting seeing your relationship as a
partnership.
Tell a story

An important stat to remember when crafting your pitch: following a presentation, 63% of

prospects remember stories, but just 5% remember statistics. Storytelling hooks in prospects
significantly more than a bunch of dry numbers.

Turn how you can add value to your client into a story, with a clear beginning (now), middle (how
you’ll work with them) and end (the results they can expect).

Ensure case studies are told in story form, too. Where relevant, you can also tell the story of your
company to gain buy-in: you’ll be seen less as a faceless entity, and more as a friendly brand.

Personal Selling Examples

An example of the importance of genuinely making your customer feel like you’re on their side and
building trust comes from Andrew Peterson, CEO of Signal Sciences. While at college he worked at
The North Face, and says his favorite customer interactions were always those where he’d
recommend the customer go to another brand to find the product they needed.

Speaking to Inc, he said: “Don’t get me wrong, I loved The North Face and all of their products! But I
was always more intent on getting the customer the best product for what they were looking for.
When that wasn’t something from our company, I’d tell them what they should get instead and
where to get it from. Funny thing was, they always ended up buying at least something from me
because they were so shocked I wasn’t just pushing our products on them. A great lesson I learned
from this is that the best salespeople are the ones you trust.”

When working in sales, Richard Nieset, chief customer officer at Pixlee, found a unique way to tackle
one of his employer’s toughest clients in a brilliant example of personal selling. Having been warned
that the contact was a “pain in the butt” who led on salespeople but never committed, he went to a
meeting armed with a toy gun filled with six bullets.

Q2: What is Public Relations?

Ans: Public relations consists number of programme to protect company’s image and its particular
product image.
Public relation is an important element in the promotion mix. In the era of globalization, the most of
the multinational companies make concrete efforts to manage and maintain its relationships with its
customers. Most of the multinational companies have its public relation department that makes all
effort to monitor the attitude and perceptions of customers.

It is used to distribute and communicate all the necessary information to build up good reputation in
the mind of the public. An efficient and good public relation department use to adopt positive
programs for this purpose and always emphasize to eliminate negative publicity arises due to
questionable practices.

It is used to perform following functions:

(1) Press relations – To put information about organization in a very positive way.

(2) Publicity of Product – It can be done by publicising the events to make publicity of Products.

(3) Effective Communication – It is necessary to create and promote understanding of the

organisation. It can be obtained through internal and external communication.

(4) To Promote Lobbying – It necessary to deal with legislators or government as to encourage or

discourage a particular legislation or regulation.

(5) Counseling – It is to advice the management about public issues, position of the company and
image during the good and bad times.

Public relations are a broad set of communication activities used to create and maintain favourable
relations between the organisation and its publics. Customers, employees, stockholders,
government are officials and society.

Public relations started as publicity, but today its scope has enlarged to an extent that it is being
defined as “helping an organisation and its public adapt mutually to each other”. The focus in this
management function is on mutual accommodation rather than a one sided imposition of a view
point. Perhaps, it’s only because of this reason the scope of the PR has become so broad and wide.
Further, the use of variety of terms as substitutes or euphemisms – such as corporate
communication, corporate affairs, public affairs, has caused confusions about what PR is and what is
not.

Conventionally, Public Relations department was considered to be a small appendage to a large

corporation with four major functional areas; Finance, Operations, Marketing and Personnel or
Human Resource Management. In such corporations, all such activity, as not specifically falling under
the jurisdictions of any functional department was given to the PR department. However, today
there is increasing realisation on “Relations”.

The PR department is in constant interaction with all other functional departments. For example,
financial PR helps in resource mobilisation; labour relations for shop floor productivity; consumer
relations for better understanding of customer needs; and employee relations for morale and team
building. Not only this, today PR helps in strategy formulations and organisational policies as this is
the department which work as the bridge between various publics of the organisations and the
various functional departments.
What is Public Relations – Definitions: Public Association Relations, Chartered Institute of Public
Relations, Edward Barney, Mr. John E. Marston and a Few Others 

Public relations (PR) refer to the variety of activities conducted by a company to promote and
protect the image of the company, its products and policies in the eyes of the public. Thus it aims to
manage public opinion of the organisation.

1. Most organisations either have a separate department or hire services of professional agencies to
manage public relations of the organisation.

2. The public relation department manages PR to generate positive publicity and improve public
image through news, speeches or messages from the top management, organises events like
‘Founder Day’, ‘Sports event’, ‘annual award programme’, charity functions etc. to.

3. They also advise top management to adopt such norms which adds to public image of the
organisation.

4. The events held by PR department aims to strengthen relationships and build reputation amongst
all stakeholders like customers, employees, shareholders, suppliers, investors etc.

5. Public relations involves tactics like offering information to independent media sources and a mix
of promoting specific products, services and events to promote the overall brand of an organisation.

Few definitions of public relations:

“The art and social science of analysing trends, predicting their consequences, counselling
organisational leaders and implementing planned programme of action which will serve both the
organisation and the public interest.” -Public Association Relations

“A strategic management function that adds value to an organisation by helping it to manage its
reputation.” -The Chartered Institute of Public Relations.

Public relations have now become an important marketing function. The total process of building
goodwill towards a business enterprise and securing a bright public image of the company is called
public relations. It creates a favourable atmosphere for conducting business.

According to Edward Barney, “Public relations are the attempt by information, persuasion,
adjustment, to engineer public support for an activity, a cause, movement or an institution.”

Thus, in this sense, Public Relations are a mode of getting public support for an activity or a
movement.

Mr. John E. Marston has developed Public Relations as a management function. According to him,
“Public Relations are the management function which evaluates public attitudes, identifies the
policies and procedures of an organisation with the public interest and executes a programme of
action and communication to earn public understanding and acceptance.”
Thus, Public Relations is a form of communication. Public Relations, as with advertising is carried on
with target groups.

Engel, Warshaw and Kinnear who are marketing communication experts have identified five
significant targets for Public Relations efforts- 1. Customers 2. Employees 3. Suppliers 4. Stock
Holders 5. Community.

Now Public Relations has developed as a profession in India and has contributed a lot for the
development of industrial and social relations. Public Relations techniques are being used to solve
various corporate problems.

The main responsibility of public relations is to communicate the policies, practices, problems and
performances to the public and to feedback public opinions, and suggestions to the top
management so that a mutual understanding may be established between the organisation and its
public, i.e. shareholders, dealers, customers, general public, government employees and the press.

What is Public Relations – 5 Major Objectives

Department of public relations aims to develop the positive image of the company, its products and
policies.

It achieves following objectives for the organisation:

(i) It facilitates smooth functioning of business and achievement of organisational objectives.

(ii) It builds corporate image and creates a favourable impression and creditability of company’s
products.

(iii) It helps in launch of new products and maintain interest and confidence in the existing products.

(iv) It acts as a supplement to advertising in promoting existing and new products. Thus, it helps
business and its associates to sell products easily.

(v) It lowers the promotional cost as it has to simply maintain staff to develop and circulate
information with media or manage events.

What is Public Relations – 5 Important Features: Saturation of Effort, Can be Targeted, Relatively
Low Cost, Relatively Uncontrollable and Credibility

1. Saturation of Effort:

Organisations competing for a finite amount of media attention puts pressure on the public relations
effort to be better than that of competitors. There can be no guarantee that PR activity will have any
impact on the targets at whom it is aimed.

2. Can be Targeted:
To a small specialised audience public relations activities can be targeted assuming if the right media
vehicle is used.

3. Relatively Low Cost:

It is much cheaper, in terms of cost per person reached, than any other type of promotion. Apart
from nominal production costs, much PR activity can be carried out at almost no cost, in marked
contrast to the high cost of buying space or time in the main media.

4. Relatively Uncontrollable:

A company has only a little direct control over the proceedings of public relations activity. If
successful, a press release may be printed in full, although there can be no control over where or
when it is printed. A press release can be misinterpreted and result may be unfavourable news
coverage. This is in contrast to advertising, where an advertiser can exercise considerable control
over the content placing, and timing of an advert.

ADVERTISEMENTS:

5. Credibility:

PR activity results in a high degree of credibility as compared to other promotional sources like
advertising. As the audience may regard such a message as joining from an apparently impartial and
non-commercial source. Where information is presented as news, readers or viewers may be less
critical of it than if it is presented as an advertisement, which they may presume to be biased.

What is Public Relations – Functions: Community Relations, Employee Relations, Customer

Relations, Financial Relations, Crisis Communication and a Few Others

Function # 1. Community Relations:

A business should be seen as a responsible citizen of the community it operates in. A comprehensive
community relation programme should focus on building a respectable image for the company in
the community in the long run. Many organizations implement educational and health related
programmes for improving quality of life of the community members. Such activities help to build
their reputation along with benefiting the society.

Function # 2. Employee Relations:

Employees are the most valuable assets of the company and the organization had to create
employee goodwill for maintaining a loyal workforce. Loyal employees are more productive and
interested in the well-being of the company.

Function # 3. Customer Relations:

The most important component of external public is the customer. The customer is the reason
behind the existence of the organization. Public relations informs the customer about introduction
of new products or changes in existing ones. Public relations plays a crucial role in attracting the
attention of the buyer towards the company’s offerings and helps to differentiate the product from
those of its competitors.

Function # 4. Financial Relations:

A segment of the company’s public consists of those individuals and institutions the company has
financial dealings with. These include the shareholders, creditors, potential investors, banks,
financial analysts, etc.

These parties have to be informed about the company’s finances, plans for expansions, plans to raise
share capital, etc. A well planned financial relations programme is necessary to improve the
organization’s image and increase the value of its stock.

Function # 5. Political and Government Relations:

The Company has to function under the control of government rules and regulations. It has to forge
proper relations with various government officials and political parties to ensure smooth functioning
of the enterprise.

Function # 6. Crisis Communication:

The role of public relations takes on vital significance during crisis situations like an accident,
financial scams, bankruptcies, etc. It is the responsibility of the public relations to give the honest
and accurate information to the concerned publics and assure them of remedial measures taken to
control the crisis.

What is Public Relations – Types: Counseling, Research, Media Relations and Publicity

Public relations encompasses a broad range of activities. The major areas are discussed below, with
particular attention given to those used most frequently in brand communication campaigns.

Type # 1. Counseling:

Public relations managers in the most successful communication programs serve a very important
advisory role to senior management. They make recommendations on policy issues as well as
decisions related specifically to communication.

Type # 2. Research:

Companies practicing either of the two-way models of public relations make extensive use of
research to better understand and influence publics.

Type # 3. Media Relations:

Press coverage is a critically important public relations output. Public relations specialists use
publicity efforts to try to get coverage in the print and broadcast media. They also respond to
requests for information or comment from, journalists working on stories that concern their
company or the company’s products and services. Media relations activities might also include
arranging press tours of manufacturing facilities, press conferences to announce new product
introductions, and coverage of the corporation’s annual stockholders meeting.

Type # 4. Publicity:

Publicity is defined by David Yale as “supplying information that is factual, interesting, and
newsworthy to media not controlled by you”. A critical aspect of marketing public relations, publicity
is described as “the process of planning, executing and evaluating programs that encourage
purchase and consumer satisfaction through credible communication of information and
impressions that identify companies and their products with the needs, wants, concerns and
interests of consumers.”

Marketing public relations involves activities related to persuading customer and prospects to buy
(or continue to buy) the firm’s products and services.

Following are the prominent tools of publicity:

i. Press Releases:

The press release is the basic building block of a publicity program concerned with story placement.
This is where the important information about the product or service is summarized in a way that
will catch the media’s attention. Just as the marketer would customize the advertising message for
each target, he needs to customize press releases for the various media he contacts.

ii. Fact Sheets:

A press release should be written so it can be used without any editing. That means all the relevant
information must be included. Of course, there may be additional important information that
doesn’t really fit into the press release. That’s where the fact sheet comes in. Fact sheets include
more detailed information on the product; its origins, and its particular features. By providing fact
sheets, it is easier for the media to write a story about the product because the fact sheet can help
to clear up misperceptions and answer reporters’ questions, saving them a phone call or e-mail
query.

iii. Press Kits:

The press kit pulls together all the press releases, fact sheets, and accompanying photographs about
the product into one neat package. A comprehensive folder can serve as an attention-getter and
keep the provided materials organized.

iv. Video News Releases:

The video news release (VNR) is the video equivalent of a press release. Prepared for use by
television stations, the typical VNR runs about ninety seconds and can be used to highlight some
important features of the product.

v. Employee/Member Relation:

An organization’s employees are an extremely important internal public. Corporate public relations
people often spend a great deal of time developing employee communication programs, including
regular newsletters, informational bulletin boards, and internet postings. In service organizations in
particular, these kinds of activities can be used to help support brand communication efforts, for
example, using the company newsletter to remind employees about the importance of prompt and
polite customer service.

vi. Community Relations:

It is critical that companies maintain the role of good community citizen within the markets where
they have offices and manufacturing facilities. Many companies actively encourage their employees
to take part in community organizations, and local corporations are often major sponsors of
community events and activities such as arts presentations, blood donation drives, and educational
activities.
vii. Financial Relations:

Because so many major brand marketing organizations are publicly held companies, financial
relations has become a key aspect of public relations activity Downturns in company earnings quickly
lead to declines in stock prices, and, frequently, to top executives losing their jobs. Financial relations
people are responsible for establishing and maintaining relationships with the investment
community, including industry analysts, stockbrokers, and journalists specializing in financial
reporting.

The financial relations specialist has the job of getting maximum press coverage for a company’s
financial successes and putting the best face possible on any financial losses. Financial relations
personnel write the company’s annual report as well as any other communications directed to
stockholders.

viii. Industry Relations:

The primary public that industry relations specialists deal with is other businesses operating within
the same industry, as well as trade associations. The recent travails of the tobacco companies of the
U.S. help to underscore the importance of industry relations – while the various companies are not
in agreement on all issues, they have banded together in many instances to try to influence policy
and legislation, with the thinking that there should be strength in numbers.

ix. Development/Fund-Raising:

This is particularly important area for not-for-profit organizations such as arts organizations,
educational institutions, and community service programs. These types of companies often rely on
donations from the public, government, and other organizations to make up all or part of their
operating budgets. Development specialists identify likely prospects for giving, prepare proposals to
present to those prospects, and work to nurture ongoing relationships.

x. Special Events:

Event marketing is rapidly gaining popularity. The International Events Group estimates that more
than 5,200 companies spent $6-8 billion on event sponsorships in 1998. Of that, about 65 percent
goes to sporting event sponsorships, followed by 11 percent to entertainment tours (such as
concerts and theater performances), and 9 percent to fairs and festivals. Besides linking their brands
to existing events, marketers are also creating events of their own designed to reach specialized
targets.

The event itself can serve as a compelling news angle for related publicity efforts, can be promoted
through advertising, and can serve as a distribution point for sales promotion incentives. With a little
creativity, events can serve as an important point of differentiation from competitors.

What is Public Relations – 4 Major Areas: Media Relations, Editorial and Broadcast Material,
Controlled Communications and Face-to-Face Events

There are four major areas that can be relevant in achieving good public relations.

These are:

i. Media relations
ii. Editorial and broadcast material

iii. Controlled communications

iv. Face-to-face events.

i. Media Relations:

Media relations involve taking news to the editors, taking editors to the news, creating relevant
news stories and managing the news. Building good relationships with the media is obviously a
benefit. The personal contact with editors is covered in the first two tasks above. The other two
relate to the need to produce a regular supply of news items as part of the deliberate, planned and
sustained publicity effort.

ii. Editorial and Broadcast Material:

Editorial and broadcast material is the ‘product’ of public relations. It covers press conferences, news
releases, personal interviews, feature writing, case histories, press visits and journalist briefings.
News releases and press conferences are the most commonly used methods of gaining publicity, but
as you can see, there are many other techniques which can be used –

a. Press Conferences:

A press conference is held in order to brief members of the media about a major news event. You
might be familiar with these conferences being used by a political figure, or maybe by the police
during an enquiry into a serious crime. The technique is equally applicable to PR for a company or
product.

Editors and feature writers receive many invitations to such events. They are, therefore, selective
about which press conferences they choose to attend. The subject has to be particularly interesting
or topical, or maybe the conference/presentation is attractive because it is held in an interesting
location.

The cider makers, H P Bulmer, used to own the steam engine, King George V. They used steam-train
runs as a location for press conferences, and always found a willing audience.

b. News Releases:

A news release is an item circulated to the media in the hope of getting it placed in a publication. It is
the mainstay of publicity and, if published, can be of considerable value. Editorial matter is seen and
read by more people than advertising in the same magazine or newspaper. The contents of an article
also gain credibility by having the implied support of the publication.

Whereas advertisements are seen for what they are, editorial comment is often considered objective
and unbiased. The drawback of relying on publicity is that the editors decide what will be published
and when it will appear. If a news release is set out in a way that is unsuitable for the publication,
then it might be modified before insertion.

This modification could change the balance and meaning of the release. The release could, of course,
be rejected. Rejection is more likely with a major publication which is inundated with releases.
Specialist journals, however, are often pleased to receive items about product successes, new
contracts, innovations, export achievements or people in the industry. In some cases the specialist
journals could be the best media to reach your target.
News releases are a ‘one-way’ communication, which do not give an opportunity for questions. Press
conferences do give an opportunity for ‘two-way’ exchanges but only with the media editors, not
with the eventual target audience. They are often used to support a news release where it is felt the
story could be enhanced by contact.

iii. Controlled Communications:

Controlled communications is the area of publicity material for company use. It includes annual
reports, educational material, leaflets, audio-visual presentations, and any material that could be
successfully placed to support organisational objectives. This low-cost material is a luxury for some
organisations because of the time required to plan and prepare it. The benefits are even more
difficult to measure than advertising or other main media publicity. But such channels should not be
ignored. The less usual ways of reaching consumers could prove effective just because they offer a
different approach.

iv. Face-to-Face Events:

These include other ways of reaching the chosen audience direct. Conferences, exhibitions, lectures,
shopping centre events, demonstrations, open days, public visits and many more are examples of
activities used to facilitate contact. The environment for such contact is a key ingredient. Then the
event has to be structured to give the right level of interest, linked to the communication message,
for the event to be considered worthwhile.

Exhibitions are an excellent way to present an organisation to its customers. They can be expensive,
but can also be a simple, low-cost ‘shell’ construction. Whatever the cost, it is important to ensure
that an exhibition is as effective as possible.

This means being proactive in inviting visitors to your exhibition stand, rather than reactive, waiting
for visitors to appear. The role of PR, as well as direct mail, in attracting visitors must not be ignored.
The cost of such an exercise is only a small proportion of the cost of the exhibition as a whole, and
usually is money well spent.

What is Public Relations – Role: Press Relations, Product Publicity, Corporate Communication,
Lobbying and Counseling 

The public relations department performs following functions: 

(i) Press relations – The public relations department works with the media to present true facts
about the company to ensure that information about the company is presented in a positive
manner.

(ii) Product publicity – The public relations department sponsors events and programmes to
publicise new or existing products. For example, many companies adopt a park, a school, an
orphanage or sponsor sports and cultural events likes seminars, exhibitions, news conferences etc.

(iii) Corporate communication – The company issues newsletters, annual reports, brochures, audio-
visual materials to influence the public and the employees. For example, company’s top leaders may
give a speech or message or give an interview to media.

(iv) Lobbying – The company has to maintain healthy relations with government officials, ministry in
charge of corporate affairs, industry, finance association of commerce and industry etc. The
company also has to take the opinion of shareholders while formulating industrial, taxation policies
etc. to keep them satisfied.

(v) Counseling – The public relations department also advises the management on issues that affect
the image of the company and guide them to involve in various social welfare activities to increase
presence in the public domain and gain confidence of society at large.

What is Public Relations – Tools: News, Speech, Printed Materials, Special Events, Audio – Visual
Materials, Public Services, Institution Identity and Website

In order to promote sales, many functions are performed by Public Relations Department. Different
Public Relations tools are adopted as aids in this process.

These tools are:

1. News:

News is the main tool of public relations. Public Relations Department spreads the news about the
products of the company. Consumers are in a better position to form an opinion about the company
with the help of the news they listen to or read in any publication.

2. Speech:

Speech is also an important tool to propagate about the product and the company. The vital views
concerning the company and its products being expressed by top authorities and the personnel of
the company are published in important newspapers.

The copies of their speeches are distributed among people. All these steps are necessary to project a
better image of the company.

3. Printed Materials:

Printed materials also form important tools of public relations. Usually, all the eminent companies
have their own newsletters, annual reports and regularly published magazines which are distributed
on regular basis among the members of the public.

Companies make available all the vital information pertaining to the functioning of their business,
their turnovers, profits and future plans of development. These publications are usually sent by post
or couriered to clients.

4. Special Events:

Public Relations Department makes publicity about the company. If anything relating to company
transpires, the same is made public to consumers. For example, if a company is being awarded by
the government for its best performance in the field of production or export-earnings, Public
Relations Department takes special pains to publicise this event among people. Such information
creates a better image of the company among people and its goodwill gets a big boost.

5. Audio-Visual Materials:

Public relations work is also undertaken through the medium of audio-visual materials. Audio- video
cassettes help in this connection. These cassettes are shown to public in cinema-houses or at public
places where a larger audience is reached. No doubt, these audio-video cassettes have become an
important tool of advertising in modern times.

6. Public Services:

Companies resort to public welfare activities so as to have better public relations. These public
welfare activities also boost the image of companies. Some of the examples of such activities are
organizing health-camps, free coolie service for aged people, women passengers at railway stations,
etc.

7. Institution Identity:

Some companies get their “Logos” printed to have their clear “Identity” among the masses of the
country. One immediately identifies a company after seeing “Logo” of the company. This is also an
important tool of public relations.

8. Website:

This is the most modern tool of public relations. Companies use their websites to advertise their
products. General public can seek all the vital information about the company after looking at the
particular website of the company.

CHAPTER-12

Direct, Online, Social Media, and Mobile Marketing

MCQ

1: E-Marketing

Unit 3

Multiple Choice Questions with Answer Key

1. Marketing that moves away from a transaction-based effort to a

conversation (i.e. two-way dialogue) and can be described as a

situation or mechanism through which marketers and a customer

(e.g. stakeholders) interact usually in real-time is known as:

a. Digital marketing.

b. Interactive marketing.

c. Direct marketing.

d. Electronic marketing.

Answer: b

2. Which of the following is not a type of digital marketing activity?

a. e-marketing.

b. Social marketing.

c. Print advert.

d. Internet marketing.

Answer: c

3. ________ is the process of marketing accomplished or facilitated

via the use of internet technologies (e.g. web, email, intranet,

extranets).

a. Internet marketing

b. Search marketing

c. e-marketing

d. Mobile marketing

Answer: a

4. This form of advert delivered on social platforms and social

gaming websites and apps, across all device types is known as:

a. mobile marketing

b. social media advertising

c. internet advertising

d. e-marketing

Answer: b

5. The rise of ___________ has led marketing to evolve away from

a hierarchical one-sided mass communication model towards more

participatory technologies (e.g. social channels and online

communities).

a. website

b. social media

c. web 1.0

d. web platform.

Answer: b

6. A form of marketing communications that uses the internet for the

purpose of advertising, aiming to increase website traffic and/or

encourage product trial, purchase, and repeat purchase activity is

called:

a. Search marketing.

b. E-mail marketing.

c. Internet advertising.

d. Social web marketing.

Answer: c

7. An advertising model in which advertisers bid on keywords or

phrases relevant to their target market, with sponsored/paid search

engine listings to drive traffic to a website is called:

a. Search Engine Optimisation (SEO).

b. Contextual Advertising.

c. Digital Asset Optimisation (DAO).

d. Pay Per Click (PPC).

Answer: d

8. A method of marketing by electronic mail wherein the recipient of

the message has consented to receive it is called:

a. Search marketing.

b. Internet advertising.

c. Permission-based email marketing.

d. Social web marketing.

Answer: c

9. ____________ is a form of digital marketing that describes the

use of the social web and social media (e.g. social networks, online

communities, blogs or wikis) or any online collaborative technology

for marketing activities, be it sales, public relations, research,

distribution or customer service.

a. Pay Per Click (PPC)

b. Digital Asset Optimisation (DAO)

c. Social Media Marketing (SMM)

d. Search Engine Optimisation (SEO)

Answer: c

10. ____________ is the set of practices that enables organisations

to communicate and engage interactively with their audiences

through any mobile device or network.

a. Mobile marketing

b. Social web marketing.

c. Internet marketing

d. Social media marketing

Answer: a

11. The process of outsourcing a task or group of tasks to a

generally large group of people is known as:

a. social media marketing

b. internet advertising

c. crowd sourcing

d. e-marketing

Answer: c

12. Current changes in behaviours clearly show that ______ is

taking over more and more of consumer online searches.

a. social media

b. mobile

c. internet

d. blog

Answer: b

13. This is a form of targeted advertising, on websites, with

advertisements selected and served by automated systems based

on the content displayed to the user.

a. Contextual advertising.

b. Interactive marketing.

c. Internet advertising.

d. Direct marketing.

Answer: a
14. Which of the following is not an issue that marketers need to

consider when using digital resources for marketing activities?

a. Jurisdiction.

b. Disclosure.

c. Ownership.

d. Permissions.

Answer: b

15. Which of the following is not one of major considerations when

using internet advertising to increase brand awareness and

encourage click-through to a target site?

a. Cost.

b. Intrusive.

c. Interactivity.

d. Timeliness.

Answer: c

16. Which of the following refers to unsolicited electronic

messages?

a. Opt-in email.

b. Consent marketing.

c. Spam.

d. Opt-out email.

Answer: c

17. A database of information that is maintained by human editors

and lists websites by category and subcategory with categorisation

is known as:

a. A search directory.

b. Automated voice response (AVR).

c. Apps.

d. SEO.

Answer: a

18. ___________ occurs when a website's structure and content is

improved to maximise its listing in organic search engine results

pages using relevant keywords or search phrases.

a. Paid inclusion

b. Site optimisation

c. Contextual search

d. Pay per click

Answer: b

19. Fees paid by advertisers to online companies that refer qualified

potential customers or provide consumer information where the

consumer opts in to being contacted by a marketer. This is referred

to as:

a. lead generation

b. search.

c. rich media.

d. social media marketing.

Answer: a

20. This operates algorithmically or using a mixture of algorithmic

and human input to collect, index, store and retrieve information on

the web (e.g. web pages, images, information and other types of

files). It makes the information available to users in a manageable

and meaningful way in response to a search query. This is referred

to as:

a. Banner ads.

b. Pop-up ads.

c. A search engine.

d. Apps.

Answer: c

21. All of the following are reasons more people don't shop online

except ________.

a. lack of trust in online merchants.

b. lack of convenience.
c. inability to touch and feel the product.

d. fear of misuse of personal information.

Answer: b

22. Paid search marketing (e.g. Google AdWords) is usually

purchased on which basis?

a. Pay Per Click (PPC).

b. Cost per Thousand (CPM).

c. Cost Per Acquisition (CPA).

d. None of the above.

Answer: a

23. What form of marketing is particularly suited to generating

awareness about a brand or promotion?

a. Viral Marketing

b. Affiliate marketing

c. Email marketing

d. None of the above

Answer: a

24. The performance-based affiliate marketing model of paying for

leads or sales is usually charged in which way?

a. Cost per acquisition

b. Earnings per click

c. Pay per click

d. None of the above

Answer: a

25. The online communications technique of search engine

optimisation (SEO) is aimed at achieving/gaining:

a. good ranking in sponsored listings of the search engines.

b. good ranking in the organic or natural listings of search engines.

c. representation on third party websites.

d. All of the above.

Answer: b
26. What concept in paid search advertising Google AdWords refers

to one of the main elements of Quality Score which impacts the

position the ad is displayed?

a. Click-through rate.

b. Maximum Cost Per Click (CPC).

c. Quality Score.

d. None of the above.

Answer: a

27. What concept in paid search advertising Google AdWords refers

to the amount bid by the advertiser?

a. Maximum cost per click (CPC).

b. Click-through rate.

c. Quality Score.

d. None of the above.

Answer: a

28. _____ is an element of online PR that involves regularly

updated posts about company activities in a format similar to online

services such as Blogger and Wordpress.

a. Link building

b. Reputation management

c. Blogging

d. None of the above.

Answer: c

29. Which of the following is not a standard in online advertising?

a. Dynamic banners

b. Referrals links

c. Signal

d. Banner

Answer: c

30. Which of the following are online advertising methods through

which advertisers attempt to drive traffic to Internet sites

a. Banner

b. SEO

c. CPC

d. CPM

Answer: b

31. Paid advertising based on a per-click model is called

a. Search Engine Optimisation

b. ICT indicators

c. Source advertising

d. Sponsored search-engine advertising

Answer: d

32. Internet advertising has some weaknesses because

a. It cannot reach a global audience

b. It does not deliver good targeted reach

c. It is not easy to track

d. It is not emotive

Answer: d

33. Which of the following is not a weakness of using online in the

media plan?

a. It is not emotive

b. It can reach a global and local audience

c. It is subject to high levels of clutter

d. All of the above

Answer: b

34. What is unique about social media marketing?

a. Can combine game and other elements

b. Interactive communication

c. Generates contacts quickly

d. All of the above

Answer: d

35. Online gaming sites are a fast and efficient ways for companies
to promote their products

a. True

b. False

Answer: a

QUESTIONS

Q1: What is direct marketing?

Ans: Direct marketing is a type of advertising campaign that seeks to achieve a specific action in a
selected group of consumers (such as an order, store or website visit, or a request for information) in
response a communication action done by the marketer. This communication can take many
different formats, such as postal mail, telemarketing, point of sale, etc. One of the most interesting
methods is direct email marketing.

An essential aspect of direct marketing is that the consumer response is measurable: for example, if

you offer a discount for an online store, you should include some kind of cookie or pixel to let you
know if the user has used of the code.

Benefits of Direct Marketing

Direct marketing allows you to promote your product or service directly to your target audience
and measure results quickly, but the benefits don't stop there. Here are 6 benefits of digital direct
marketing:
 1. High segmentation and targeting. One of the great advantages of this type of marketing is
that you can reach your specific audience segments with personalized messages. If you want
to succeed, you should invest time to research and identify the consumers most likely to
convert and thus direct your efforts to actions that really work.

2. Optimize your marketing budget. Addressing online direct marketing to a specific audience

allows you to set realistic goals and improve your sales on a tight budget. If you properly
optimize your direct campaign, you will achieve results with only a small percentage of the
cost of traditional advertising.

3. Increase your sales with current and former clients. Digital direct marketing lets you
communicate with your current customers to keep the relationship alive while continuing to
bring value. It also allows you to get back in touch with old customers and generate new
sales opportunities.

4. Upgrade your loyalty strategies. Direct contact with your customers allows you to
customize your promotions, emails, and offers to create an instant bond. To maximize
results, you can combine your direct marketing methods with your loyalty program.

5. Create new business opportunities. Direct marketing allows you to adapt to market

demands at all times and respond more effectively.

6. Tests and analyzes the results. Direct response campaigns give you the opportunity to
directly measure your results. Take the opportunity to squeeze the most of your tests and
make decisions in real time. 

3 Examples of Direct Marketing

The most powerful and innovative direct marketing strategies want to elicit a reaction in the target

audience using content delivered directly to the consumer, both physically and through the email
marketing. A very striking graphic design, a surprising product, or a video that touches the
heartstrings of the listener, can elicit a direct response from the consumer. Below we'll review three
great examples of direct marketing. 

Toyota Corolla

Direct marketing is a great opportunity for businesses, if used in the right way, but it is also a good
way for agencies to show off their chops. If they put all their creativity to the strategy and use really
shocking advertising techniques, the campaign will be long remembered by the public (and attract
potential customers). A great example of this is the below video from Toyota. 

Touch Branding

This is a branding agency that maximizes the potential of their brands. They are in Prague and have
over 15 years of experience in global campaigns. They devised a plan for direct marketing with an
impactful copy "We'll give our blood for good branding" and a graphic design that really was up to
the message. This really is one of the greatest examples of direct marketing that we've ever seen!

For direct mail they attached with letters a "blood bag" (don't worry - it was fake). The design of
the email they sent was in the same line, and the cover photo on their website was a picture with
two doctors who carried the blood bag with copy below. Actually, they matched all season long in
Touch Branding and it was a way to "hook" potential companies to be customers.
 

Canva

The beauty of Canva's emails is in its simplicity. When they create a new design concept, they
advertise it to all of their subscribers and send them an email so that they know and can start
applying the new template in their presentations and infographics. At Cyberclick we are great lovers
of this online marketing tool (so we might be a little biased) and believe that their emails are great
examples of direct marketing.
 

Fire Up Your Direct Email Marketing Campaign

Ready to start? We will explain step by step how to launch a direct mail campaign: 

 Develop your contact list. The first step in developing a direct email marketing campaign is
knowing who you're going to target. In the market you can find many email lists by sector,
but you need to take your customization further and find users who are genuinely interested
in your product. To get leads, you can try an inbound marketing campaign based on content
(such as downloads of an eBook) or lead generation ads on Twitter. Whatever you do, do not
forget that everything you need to segment your list of contacts, for example, how often
they visit your site or products that interest them. 

 Create the ideal mail. Subject, text, icons, and call to action ... Nothing in your email
marketing campaign should be random. Align creativity and segmentation. 

 Enter a code or identification pixel. As mentioned above, one of the keys to direct
marketing is the ability to precisely measure all the results. To do this, you need to include a
pixel code in your emails that identifies users who have come to your site through this
particular campaign.
  Test the campaign. Take advantage of your email campaigns to test A / B test and discover
what really works with your audience. Subject, images, button, time sent ... try all the
possible variants.

 Put an ongoing campaign. Send a test email to make sure everything runs smoothly and
launch your campaign. But beware! As with social networks and other tools of digital
advertising, you must send it at an ideal time and day to avoid idle time if you do not want to
fall into oblivion.

 Consumer responses. Ready! Now you just have to wait to see the reactions of your target.
Leave a window of reasonable time before drawing conclusions, since not everyone looks at
their email instantly.

 Analyze the results of the campaign. Finally, you have to measure how your campaign has
worked. How many people have opened the mail, clicked, or converted? If you've tried
several versions, what has worked best and why? Use these conclusions for the next
campaign and see how quickly you will launch a really effective direct marketing campaign. 

Q2: What Is Mobile Marketing & Why Does it Matter So Much?

Ans: What Is Mobile Marketing?

First, a quick definition: Mobile marketing is the art of marketing your business to appeal to mobile
device users. When done right, mobile marketing provides customers or potential customers using
smartphones with personalized, time- and location-sensitive information so that they can get what
they need exactly when they need it, even if they're on the go.

I would tell you that mobile is the future of marketing, but really the era of mobile has already
arrived. If you're not implementing some kind of mobile marketing strategy, you're already trailing
behind!

As you can see from the graph below, more users are spending larger amounts of time engaged with
mobile devices than ever before. We can expect this trend to continue even further in the future, so
get ready!
Desktop vs. mobile users in millions

How Does Mobile Marketing Work?

Mobile marketing consists of ads that appear on mobile smartphones, tablets, or other mobile
devices. Mobile marketing ad formats, customization, and styles can vary, as many social media
platforms, websites, and mobile apps offer their own unique and tailored mobile ad options.

Why You Need a Mobile Marketing Strategy

Your business needs a mobile marketing strategy for the same reason that you need a computer and
wi-fi access – this is the age in which we live! Walk around any major city and you’ll find more than
just a few folks with faces glued to their smartphone screens. According to recent reports, 40% of
users’ internet time is spent on mobile devices, which means simply ignoring the rise of mobile just
isn’t an option.

Some other interesting mobile marketing statistics:

 80% of mobile device time in spent on apps, with game apps eating up the largest percent of
app time

 People browse 70% more web pages on tablets than smartphones

 Retail conversion rates are 2.2% on tablets, considerably higher than 0.7% on smartphones,
but traditional PC conversion rates are still highest at 3.3%

 Mobile searches have increased 200% year over year in 2012

 Mobile is predicted to surpass desktop in 2014

Mobile is here to stay, and if forecasts are correct, it will soon by eclipsing desktop usage. If you
don’t have a mobile marketing strategy yet, it’s time to get going!

Types of Mobile Marketing Strategies

There’s a healthy variety of mobile marketing strategies to try. The kind that works best for your
business will depend on your industry, target audience, and budget.

App-based marketing: This is mobile advertising involving mobile apps. While 80% of mobile time is
spent engaged with apps, you don’t have to create an app yourself to get in on the action. Services
like Google AdMob help advertisers create mobile ads that appear within third-party mobile apps.

Facebook also allows advertisers to create ads that are integrated into Facebook’s mobile app.
Facebook’s mobile Promoted Post ads integrate so seamlessly with Facebook’s news feed that users
often don’t realize they’re looking at ads.

In-game mobile marketing: In-game mobile marketing refers to mobile ads that appear within
mobile games, like in the example below. In-game ads can appear as banner pop-ups, full-page
image ads or even video ads that appear between loading screens.

Example of an in-game mobile marketing ad

QR codes: QR codes are scanned by users, who are then taken to a specific webpage that the QR
code is attached to. QR codes are often aligned with mobile gamification and have an element of
mystery to them, since users who scan them don’t always know exactly which rabbit hole they’re
jumping down.

Location-based marketing: Location-based mobile ads are ads that appear on mobile devices based
upon a user’s location relative to a specific area or business. For example, some advertisers may only
want their mobile ads to appear when users are within a 1-mile radius of their business.

Mobile search ads: These are basic Google search ads built for mobile, often featuring extra add-on
extensions like click-to-call or maps.

Mobile image ads: Image-based ads designed to appear on mobile devices.

SMS: SMS marketing involves capturing a user’s phone number and sending them text offers. This is
considered somewhat passé. 

If you're ready to dig in and optimize your mobile marketing campaigns, check out our list of 13
mobile marketing tools you need.

Mobile Marketing: Google Ads Enhanced Campaigns

On July 12, Google rolled out Enhanced Campaigns for all Google Ads users, integrating mobile
advertising options with classic online Google Ads advertising (formerly known as Google AdWords).

Enhanced Campaigns allow advertisers to manage their Google Ads bids across various devices in
one single campaign, rather than make separate campaigns for mobile vs. desktop.
Google advertisers can simply take the Google search ads they already use, and then set bids to
adjust for mobile devices. To increase bids for mobile devices, users can set a positive bid
adjustment, such as +20%, and vice versa – a bid adjustment of -10% reduces the bid by 10% for
mobile devices.

Enhanced Campaigns image via  siteproppc.com

It’s in Google’s best interest to make mobile marketing easy for advertisers – Google generates a
hefty amount of revenue from mobile ads.  

Google’s Enhanced Campaigns allow for advertisers to manage bids across devices, locations, and
time with ease. Some advertisers may choose to bid higher for users on mobile devices who are
within a certain range of their store, or may only want to bid on mobile devices during their store’s
open hours, and Enhanced Campaigns make that an easy possibility for advertisers.

Google Mobile Ad Extensions

Creating mobile search ads with Google also lets you take advantage of Google’s nifty mobile ad
extensions, which include features like:

Mobile Site Links: Mobile site links make it easy for mobile users to jump to specific pages of your
site without wandering around. Site links are especially useful in mobile marketing, as it’s much
more convenient for users on mobile devices.

Mobile sitelinks on Google Ads

Click-to-Call Mobile Ad Extension: The click-to-call extension puts a “call” button directly beneath an
ad. Clicking the button automatically generates a business’s phone number on a user’s mobile
device.

While this handy ad extension makes it easy for searchers to get in contact with your business and
drives users down the conversion funnel, it’s best to only have the click-to-call mobile ad extension
appear when your business is open and able to answer the phone.

Google Ads  mobile call extensions

Google Offers for Mobile: The Google Offers mobile ad extension lets advertisers post a discount
offer or coupon beneath their ad. These special offers can capture the attention of users who might
otherwise ignore an ad.

Google offers for mobile

Click-to-Download Ad Extension: The click-to-download ad extension is similar to the click-to-call,

only instead of generating a phone number, clicking the “download” button takes users to the
download page of the advertiser’s pre-selected app.
Click-to-download mobile ad extensions

Local Ad Extensions: Local ad extensions are probably the most important extensions for mobile,
considering that 1 in 3 mobile searches have local intent. Considering how many mobile searches are
questions looking for a local solution, local mobile marketing needs to be a key aspect of your mobile
strategy.

Local mobile marketing extensions often involve a phone number or link to Google Maps.

Local ad extensions on mobile

Mobile Marketing Best Practices

We’re leaving you with some quick mobile marketing tips to make sure you make the most of
mobile.

 Be Clear and Concise: Mobile devices have small screens, which means words should be
used sparingly. Cluttered and crowded ads will just drive users to scroll past. When it comes
to mobile, it’s best to keep things simple.

 Optimize for Local: Be sure to remember that 1 in 3 mobile searches have local intent. Users
often use mobile devices to complement their immediate worldly interactions – where is the
 nearest gas station? Is there a nearby coffee shop that has wi-fi? Optimize for local mobile
marketing to make sure you are aligning with users’ queries.

 Consider Your Audience: The type of audience you’re hoping to reach should influence the
kind of mobile ads you use. Are they gamers? Then try taking advantage of in-game ads. Are
they young and tech-savvy? Mobile Facebook Promoted Posts might be more likely to get
their attention.

 Experiment with Different Strategies: There’s a lot of room for experimentation when it

comes to mobile marketing. Don’t be afraid to test out some ad extensions with your Google
Ads Enhanced Campaigns – try the Google Offers ad extension, or the click-to-call extension,
and see how they work for you.

 Benchmark Your Results: Experimenting is great, but there’s no point in trying new

techniques if you’re not tracking your results to see what works and what doesn’t. Try the
AdWords Grader to see how your mobile PPC ads are performing.