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Revision sheet

Dr Nessreen el sharkawey principle of marketing

State whether the following statements are true ( T) or false (F).

1. Internal marketing is marketing by a service firm to train and effectively motivate its
customer-contact employees and all the supporting service people to work as a team to
provide customer satisfaction.T
2. The materials and ingredients used in producing the product are obtained from other
companies who are referred to as distributors.T
3. Resellers may actually take ownership of the product and participate in the marketing,
including the advertising.T
4. The primary purpose of marketing activities is to facilitate and encourage exchange
transactions with potential customers .T
5. Marketing is a social and managerial process by which individuals obtain what they
needs and wants through creating and exchanging products and value with others. ( T )
6. Service can be a part of the product ( T)
7. Learning describes changes in an individual's behavior arising from experience. T
8. Marketers should not be interested in the beliefs that people formulate about their
products due to waste of time and costs .F
9. Marketing Management attempts to increase the quality of life of the people by providing
them better products at reasonable prices. ( T )
10. Marketing Management facilitates production and distribution of a wide variety of
goods and services for the customers. ( T )
11. A greater focus on underlying customer needs than on existing customer wants leads to
marketing myopia. T
12. Dividing a market into several sections of customers is known as target marketing. F
13. A Company marketing position refers to the way in which a product is ranked in the
consumer's mind by the benefits it offers. ( T )
14. Marketing management can be guided by two concepts. ( F )
15. The main goal of the marketing is to understand the needs and wants of specific
markets and to select the markets that they can best serve. ( T )
16. Marketers should be trend tracker for new changes of markets that consist of current and
prospective customers, shareholders and competitors. ( T )
17. De -marketing means to reduce the excessive demand temporarily like the summer
demand in yellow stone natural park in USA. ( T )
18. The products demand comes from new customers, not the existing one. (F )
19. A product includes physical objects, services, persons, places, organizations, ideas, or
mixes of these entities. ( T )
20. A brand's value proposition is the set of benefits or values it promises to deliver to
consumers to satisfy their needs. T
21. When sellers pay less attention to the specific products they offer and more attention to
the benefits and experiences produced by these products, they suffer from marketing
myopia. F
22. A market is a segment of potential consumers who share a common need or want.T
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23. The customer value is the set of benefits a company promises to delivered to satisfy the
customers needs . ( T )
24. Market offerings include entities such as people, places, information, and ideas.
25. The Customer satisfaction depends on a product's perceived performance in delivering
value relative to a buyer's expectations. ( T )
26. There is no differences between needs and wants and demands all of them can satisfy
the customers by determine them in the product marketing plan .F
27. There are no differences between exchange and transaction for the products both of them
creates a value in the customer. ( F )
28. The similarity between the customer relationship and managing demand, is the ability of
retain current customers and build a lasting customer relationships in a distinct way . T
29. The skimming, penetration, bargaining and bundling are decided in the Promotion
Decisions of the Marketing Mix strategy. F
30. A service can be defined as “any activity or benefit that one party can offer another that
is essentially intangible and that does not result in the ownership of anything.” T
31. The intangible nature of many services can create unique challenges for marketers.T
32. The customer compares convenience products on such bases as suitability, quality, price
and style, F
33. Auction sites, such as eBay, QXL are examples of Consumer-to-Consumer (C2C)
channels.T
34. There are five stages involved in the consumer buying / adoption process. T
35. Marketing plan is a Written document that summarizes what the marketers has learned
about the market place, indicates how the firm plans to reach its marketing objectives,
and helps direct and coordinate the marketing effort. ( T )
36. Marketing strategy refers to The marketing logic by which the business unit is
supposed to achieve its marketing objectives . ( T )
37. Marketing implementation is The process that turns marketing strategies and plans into
marketing actions in order to accomplish strategic marketing objectives. ( T )
38. Competitive advantage is any factors that allow an organization to differentiate its
product or service from those of its competitors to increase market share. ( T )
39. Competitive strategy is a strategy that identifies how to build and strengthen the
business's long-term competitive position in the marketplace. ( T )
40. Consumer market is all the individuals and households who buy or acquire goods and
services for production use . ( F )
41. Beliefs are basically assumptions that we make about the world and our values stem
from those beliefs that affects our attitudes .T
42. Consumer buying behavior is The buying behavior of final consumers-individuals and
households who buy goods and services for personal consumption( T )
43. Business market refers to the all the organizations that buy goods and services to use in
the production of other products for a profits. ( T )
44. Business buying process refers to the decision making process by which business
buyers establish the need for purchased product and services and identify , evaluate ,
and choose among alternative brands and suppliers. ( T)
45. New product can be a goods, service, or idea that is perceived by some potential
customers as new. ( T )
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46. Adoption decision process is the mental process through which an individual passes
from first hearing about an innovation to final adoption. ( T )
47. Lifestyle is a person's pattern of living that involves measuring consumers' major AIO
dimensions. ( T )
48. Customer perception processes means the processes by which people select organize,
and interpret information form a meaningful picture of any things world. T
49. Belief is a descriptive thought that a person holds about something , ( T )
50. People use beliefs and values to guide their actions and behavior ( T)
51. Attitudes can affect customer’s favorable or unfavorable evaluations, feelings, and
tendencies toward object or idea. ( T )
52. Pricing is the function to determine product value in monetary terms before it is offered
to the target consumer for sale without questionnaire. ( F )
53. Services refer to any activity or benefit that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. ( T )
54. Accounting, banking, cleaning, consultancy, education, insurance, expertise, medical
treatment, or transportation is intangibles products. ( T )
55. Brand name is any word, name, symbol, or combination to identify goods and
distinguish them from those manufactured or sold by others. ( T )
56. Marketing is a waste function of the business demand. ( F )
57. People with different cultural and sub-cultural characteristics have the same product
and brand preferences. ( F )
58. The buyer's decision process for new products goes, through three stages. ( F )
59. Companies often pay too little attention to their distribution channels. F
60. A distributor is one of the middleman in direct marketing channels between the
manufacturer and retailer ( F )
61. Marketing myopia problem mean that the sales people is focusing only on existing
wants and losing sight of underlying consumer needs ( T )
62. Marketing Mix is the most visible part of the marketing strategy of an organization.T
63. Marketing myopia means that sellers make the mistake of paying more attention to the
specific products they offer than to the benefits and experiences produced by it . T
64. Marketing intelligence", is external data collected by a company or companies, about a
target market which they are either a part of, or wish to enter.( T)
65. We can generate loyalty for the product branding if the performance of the product falls
the buyer expectations. ( F )
66. The customer compares convenience products on such bases as suitability, quality,
price and style such as Lamborghini car. ( F )
67. Convenience products usually have intensive distribution because sales of these
products tend to have a direct relationship to availability. T
68. Red Cross blood donations are considered to be specialty products and, therefore, have a
specialty offer to the consumer. F
69. Resellers may actually take ownership of the product and participate in the marketing,
including the advertising. True
70. eco-friendly goods can satisfy customers environmental needs and are offered in the
market to attract attention, acquisition, use ،or consumption. T
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71. Green marketing is becoming more popular as more people become concerned with
environmental issues. T
72. The packaging concept states what the package should be or do for the product. T
Choose the correct answer

1. Product planners need to think about Actual product

products and services on three levels. Augmented product
Each level adds more customer value. Core benefit
Which one of the following is the
most basic level that addresses the
question, “What is the buyer really
buying?”
2. The mental act, condition or habit of Motive
placing trust or confidence in another Attitude
shows which of the following options? Belief
3. Which one of the following factor Cultural
relates to family that influences Social
consumer behavior? Personal

4. You are planning to install a steel Material and parts

manufacturing plant in your city. For Capital items
that purpose you want to have a Supplies and services
supplier who supplies you the steel in
raw form for manufacturing. Here
supplier supplies you which of the
following form of industrial product?

5. How are you telling consumers in your Product

target group about your product” This Price
question belongs to which marketing Promotion
concept?
6. One of the key tasks of marketers is To promote sales of products
____________ and to create consumer To differentiate their products from
perceptions that the product is worth those of competitors
purchasing To do marketing surveys
7. ________ markets are made up of Consumer
members of the distribution chain. Business-to-business (industrial)
Channel
8. Which of the following is NOT wholesaler
considered a type of reseller? retailer
manufacturer
distributor
9. The promotion “P” of marketing is also Product Differentiation
known as ________. Distribution
Cost
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Marketing Communication
10. When a company distributes its Indirect marketing
products through a channel structure direct marketing
that includes one or more multi-level marketing
11. resellers, this is known as ________.

12. ________ pricing is the approach of Market-skimming

setting a low initial price in order to Value-based
attract a large number of buyers Market-penetration
quickly and win a large market share.

13. When a company distributes its resellers, this is known as

products through a channel structure Indirect marketing
that includes one or more direct marketing
multi-level marketing
14. Marketing is both an “art” and a - creative
“science” there is constant tension - selling
between the formulated side of - management
marketing and the ________ side.

15. The four unique elements to services - Intangibility, inconsistency,

include: inseparability, and inventory
- Intangibility, independence,
inseparability, and inventory
- Independence, intangibility, inventory,
and inception
- Independence, increase, inventory, and
intangibility

16. Change in an individual's behavior - Learning

prompted by information and - Role selection
experience refers to which one of the - Perception
following concept?

17. Holistic marketers achieve profitable - undermining competitive competencies

growth by expanding customer share, - building customer loyalty
________, and capturing customer - milking the market for product desires
lifetime value. the market for product desires

18. When a company distributes its - indirect marketing

products through a channel structure - direct marketing
that includes one or more resellers, - multi-level marketing
this is known as ________. - integrated marketing

If performance meets consumer - delighted

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expectations, the consumer is ________. - satisfied

- disappointed
- surprised.
19. Marketing managers should adapt the - Sales strategies
marketing mix to - Marketing concepts
___________________ and constantly - Cultural values
monitor value changes and differences - Brand images
in both domestic and global markets.

20. Product planners need to think about - Actual product

products and services on three levels. - Augmented product
Each level adds more customer value. - Core benefit
Which one of the following is the
most basic level that addresses the
question, “What is the buyer really
buying?”
21. The mental act, condition or habit of - Motive
placing trust or confidence in another - Attitude
shows which of the following options? - Belief
22. Which one of the following factor - Cultural
relates to family that influences - Social
consumer behavior? - Personal
23. Which one of the following statements - We have organized our business to
by a company chairman BEST reflects satisfy the customer needs
the marketing concept? - We believe that marketing department
must organize to sell what we produce
- We try to produce only high quality,
technically efficient products
24. Which one of the following is a key to - Price of the product
build lasting relationships with - Need recognition
consumers? - Customer satisfaction
25. Salma Nasser called several airlines to - convenience
compare rates and chose a flight on - shopping
British Midland as it had a better - specialty
reputation for service and competitive
prices. The airline ticket is an example
of which type of product?
26. ________ marketing has the aim of - Demand-based
building mutually satisfying long-term - Direct
relations with key parties such as - Relationship
customers, suppliers, distributors, and
other marketing partners in order to
earn and retain their business.
27. One traditional depiction of marketing - product, positioning, place, and price
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activities is in terms of the marketing - product, production, price, and place

mix or four Ps. The four Ps are - product, price, promotion, and place
characterized as being ________.
28. __________ is the single factor that - Time
best indicates social class. - Money
- Occupation
29. Marketing strategies are often - Consumer decision making
designed to influence - Sales strategies
_______________ and lead to - Advertising strategies
profitable exchanges.

30. Which product is MOST likely to be - Television set

purchased through routine decision - Soft drink
making? - Shirt

31. Luxury products, such as Rolex - Shopping product

watches, are also known as: - Convenience product
- Specialty product
32. is defined as the difference between - Customer value
the benefits a customer sees from a - Satisfaction scale
market offering and the costs of - Profit margin
obtaining those benefits.

33. In order for exchange to occur: - organized marketing activities must

also occur.
- a profit-oriented organization must be
involved.
- Each party must have something of
value to the other party.
34. Newsletters, catalogues, and - Pricing
invitations to organization-sponsored - Distribution
events are most closely associated - Promotion
with the marketing mix activity of:

35. Which of the following involves - Labeling

designing and manufacturing the - Packaging
container or wrapper for a product? - Branding
36. If the aim of the promotion to - Advertising
introduce a new consumer product is - Sales promotion
to achieve high awareness levels, the - Personal selling
firm will most likely make heavy use
of _______ in the promotional mix.

37. Advertising appropriations are largest - Industrial products

for which type of product? - Convenience goods
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- Specialty goods
38. Buying and selling of mass consumer - Business markets
goods and services comes under which - Consumer markets
of the following markets? - Government markets
The five-stage model of the consumer buying - problem recognition
process includes all of the following stages - information search
EXCEPT ________. - social interaction
- purchase decision
39. A person’s ________ consist(s) of all - culture
the groups that have a direct (face-to- - subculture
face) or indirect influence on his/her - psychographics
attitudes or behavior - reference groups
- demographics
40. Fine Corp., a consumer electronics - basic relationships
manufacturer, targets a market with
many low-margin customers. Which
of the following types of associations
would be most profitable for the firm
to develop with these customers?
41. ________ refers to a channel - A supply chain
stretching from raw materials to
components to final products that are
carried to final buyers.
42. Selecting particular segments of a - target marketing
population of customers to serve is
called ________.
43. Dividing a market into several - market segmentation
sections of customers is known as
________.
44. Buying goods and services for further - Consumer markets
processing or for use in the production - Government markets
process refers to which of the - Business markets
following markets?
- International markets

45. Marketing managers should adapt the - Sales strategies

marketing mix to - Marketing concepts
___________________ and constantly - Cultural values
monitor value changes and differences - Brand images
in both domestic and global markets.

46. The ________ refers to the various - distribution chain

companies that are involved in moving - network chain
a product from its manufacturer into - supply chain
the hands of its buyer. - promotion network
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47. ________ is the study of how - Target marketing

individuals, groups, and organizations - Psychographic segmentation
select, buy, use, and dispose of goods, - Product Differentiation
services, ideas, or experiences to - Consumer behavior
satisfy their needs and wants.

Questions:-

What is green marketing? with an example

Green marketing (or environmental marketing) is the promotion of environmentally

friendly products, services, and initiatives. More specifically, green marketing refers a
broad range of environmentally friendly practices and strategies
Some green marketing examples include:
1. Creating eco-friendly products
2. Using eco-friendly product packaging made from recycled materials
3. Reducing greenhouse gas emissions from production processes
4. Adopting sustainable business practices
5. Marketing efforts communicating a product's environmental benefits
Investing profits in renewable energy or carbon offset efforts

Draw the figure of Product levels .

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Explain what Markets opportunities analysis means and why.

It’s a tool to identify and assess the attractiveness of business opportunities .
Why? To assess the best opportunities in captured in the marketplace faster than
competitors.
- Explain the famous types of marketing completion .
Types of competition :
1. Competition across industry boundary
2. Competition between competitors (vs competitors)
3. Competition on speed of response
4. New ways to bring value to customers
5. New ways to reconfigure value chains & systems
- What should marketers do to capture opportunities from the market?
1. Marketers must be the trend trackers and opportunity seekers.
2. Every marketer needs to observe the outside environment.
3. They also normally spend more time in the customer and competitor environment
conducting systematic environmental scanning.
4. Marketers are able to revise and adapt their marketing strategies to meet new challenges
and opportunities in the marketplace.

- Explain the Importance of Consumer Behavior… For the company

Understanding consumer behavior is essential for a company to find success for its current
products as well as new product launches.
Every consumer has a different thought process and attitude towards buying a particular
product.
If a company fails to understand the reaction of a consumer towards a product, there are high
chances of product failure.
Changes due to the changing fashion, technology, trends, living style, disposable income, and
similar other factors, consumer behavior also A marketer has to understand the factors that
are changing so that the marketing efforts can be aligned accordingly.

Explain the types of Consumer Products and the Marketing Considerations . Give example
.

A consumer product is a product bought by final consumers for personal consumption.

But not every consumer product is the same. There are four different types of consumer
products. Marketers usually classify consumer products into these 4 types of consumer
products: Products can be classified by how consumers buy them like :
1. Convenience products

2. Shopping products

3. Specialty products
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4. Unsought products
These 4 types of consumer products all have different characteristics and involve a
different consumer purchasing behaviour. Thus, the types of consumer products
differ in the way consumers buy them and, for that reason, in the way they should
be marketed

Convenience products

Among the four types of consumer products, the convenience product is

bought most frequently. A convenience product is a consumer product or
service that customers normally buy frequently, immediately and without
great comparison or buying effort. Examples : soap, candy, and
newspapers , laundry detergents, fast food, sugar and magazines. As you can see, convenience
products are those types of consumer products that are usually low-priced and placed in many
locations to make them readily available when consumers need or want them

Shopping products

Shopping products are a consumer product that the customer usually compares on
attributes such as quality, price and style in the process of selecting and
purchasing. Thus, a difference between the two types of consumer products
presented so far is that the shopping product is usually less frequently purchased
and more carefully compared.

Therefore, consumers spend much more time and effort in gathering information and comparing
alternatives. Types of consumer products that fall within the category of shopping products are:
furniture, clothing, used cars, airline services etc. As a matter of fact marketers usually distribute
these types of consumer products through fewer outlets, but provide deeper sales support in order
to help customers in the comparison effort.

Specialty products

Specialty products are consumer products and services with unique characteristics or brand
identification for which a significant group of consumers is willing to make a special purchase
effort. As you can see, the types of consumer products involve different levels of effort in the
purchasing process: the speciality product requires a special purchase effort, but applies only to
certain consumers.

Examples include specific cars, professional and high-prices photographic

equipment, designer clothes etc. A perfect example for these types of consumer
products is a Lamborghini. In order to buy one, a certain group of buyers would
make a special effort, for instance by travelling great distances to buy one.
However, speciality products are usually less compared against each other.
Rather, the effort must be understood in terms of other factors: Buyers invest for
example the time needed to reach dealers that carry the wanted products. To illustrate this, look
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at the Lamborghini example: the one who wants one is immediately convinced of the choice for
a Lamborghini and would not compare it that much against 10 other brands.

Unsought products

The 4 types of consumer products also include unsought products. Unsought products are those
consumer products that a consumer either does not know about or knows about but does not
consider buying under normal conditions. Thus, these types of consumer products consumers do
not think about normally, at least not until they need them. Most new innovations are unsought
until consumers become aware of them. Other examples of these types of consumer products are
life insurance,

As a consequence of their nature, unsought products require much more advertising, selling and
marketing efforts than other types of consumer products.

Types of Consumer Products

Marketing Types of Consumer Products

consideration
Convenience Shopping Speciality Unsought

Customer buying Frequent Less Strong Little

behaviour purchase, little frequent brand product
effort purchase, preference awareness
(planning, much effort and and
comparison), (planning loyalty, knowledge
low customer and special or little
involvement comparison purchase interest
of brands effort, little
on price, comparison
quality, of brands,
style etc.) low price
sensitivity

Price Low price Higher High price Varies

price

Distribution Widespread Selective Exclusive Varies

distribution, distribution, distribution
convenient fewer in only one
locations outlets or a few
outlets
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Promotion Mass Advertising More Aggressive

promotion and carefully advertising
personal targeted and personal
selling promotion selling

Examples Toothpaste, Television, Luxury Life

magazines, furniture, goods (e.g. insurance or
laundry clothing Rolex pre-planned
detergent watch), funeral
designer service
clothing

Explain the roles of product branding - packaging - labeling – Product Support

Services strategies .

The roles of product branding A brand is a name, term, sign, symbol, or design, or a
combination of these that identifies the maker or seller of a product. It is a seller's promise to
deliver consistently a specific set of features, and is services to buyers. 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.

The roles of Branding strategy :

1. Brand names help consumers identify products that might benefit them. The brand name
becomes the basis on which a whole story can be built about a product's special qualities.
2. Brands also tell the buyer something about product quality.
3. Buyers who always buy the same brand know that they will get the same quality each
time they buy.
4. Branding also gives the seller several advantages.
5. The brand name makes it easier for the seller to process orders and track down problems.
6. The seller's brand name and trademark provide legal protection for unique product
features that otherwise might be copied by competitors.
7. Branding lets the seller attract a loyal and profitable set of customers.
8. Branding distinguish the organization products from the Competitors products

Packaging strategy: Many products offered to the market have to be packaged. Packaging
includes the activities of designing and producing the container or wrapper for a product. The
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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 , In recent times, however, numerous
factors have made packaging an important marketing tool.

The roles of Packaging strategy to designed and achieve the following:

1. Maintain and protect Item.

2. Reduce breakage and damaged.
3. Ease of use Item.
4. Easy identification on the item.
5. Put the cover and labeling so that holds the distinguished name, trademark, or any
commodity-specific data
6. Draw the attention of the buyer and the effects of his desire
7. Increase the value of the item from the buyer's point of view
8. Ad this item ... etc.

Labeling strategy: Labels may range from simple tags attached to complex graphics that are
part of the package they perform several functions ,

The role for Labeling strategy:

- identifies the product or brand

- to write some data on the product to help the buyer to choice of goods
- To explain how to use the goods and how to store it .
- The maintain and components.
- The aim is to provide protection for the consumer and give him the necessary data item
purchased.

Sellers must ensure that their labels contain all the required information.

Product-Support Services strategy: 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. A company should design its product and support services to meet
the needs of target customers profitably.

- The company should periodically survey its customers to assess the value of current
services and to obtain ideas for new ones
- Given the importance of customer service as a marketing tool, many companies have set up
strong customer service operations to handle complaints and adjustments, credit service,
maintenance service, technical service, and consumer information.
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The roles of customer services strategy :

- It can press for needed changes in product . design , quality control, and marketing efforts.
- To coordinates all of the company's services, creates consumer satisfaction and loyalty, to
helps the company find ways to distinguish itself from competitor's.
- Warranty is an obligation of the seller by the buyer implicitly or explicitly in the form of an
oral or written with respect to ensuring the performance of the product or the absence of
defects during a specific time period. .
- Usually, the service is the key element in the competition between the organizations (
competitor advantages)

Compare the Difference between Goods and Services

‘Goods’ are the physical objects while ‘Services’ is an activity of performing work for
others. Companies keep a stock of goods with itself to fulfill an urgent requirement of goods.
It also keeps track of the quantity of goods at the beginning and the end. In contrast to
services are delivered as per the request of the customer itself. In short, the production of
services depends on the customer’s demand. Both are subject to tax like Value Added Tax
(VAT) is levied on goods while service tax on services provided.

Definition of Services

Services are the intangible economic product that is provided by a person on the other person’s
demand. It is an activity carried out for someone else. They can only be delivered at a particular
moment, and hence they are perishable in nature. They lack physical identity. Services cannot
be distinguished from the service provider. The point of sale is the basis for consumption of
services. Services cannot be owned but can only be utilized. You can understand this by an
example: If you buy a ticket for watching a movie at the multiplex, it doesn’t mean that you
purchased the multiplex, but you have paid the price of availing services.

Service receiver should fully participate when the service is provided. Evaluation of services is a
relatively tough task because different service providers offer the same services but charges a
different amount. It may be due to the method they provide services is different or the parameters
they consider in valuing their services vary. Example: Postal services, banking, insurance,
transport, communication, etc.

Definition of Goods

Goods refer to the tangible consumable products, articles, commodities that are offered by the
companies to the customers in exchange for money. They are the items that have physical
characteristics, i.e. shape, appearance, size, weight, etc. It is capable of satisfying human wants
by providing them utility. Some items are made for one-time use by the consumer while some
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can repeatedly be used. Goods are the products which are traded on the market. There is a time
gap in the production, distribution, and consumption of goods. When the buyer purchases goods
and pays the price, the ownership is passed from seller to buyer.

Products are manufactured in batches, which produces identical units. In this way, a particular
product offered by the company will have the same specifications and characteristics all over the
market. Example: Books, pen, bottles, bags, etc.

Comparison Chart
Basis for
Goods Services
Comparison

Goods are the material items that can be Services are amenities, facilities,
Meaning seen, touched or felt and are ready for benefits or help provided by other
sale to the customers. people.

Nature Tangible Intangible

Transfer of
Yes No
ownership

Evaluation Very simple and easy Complicated

Services cannot be returned back

Return Goods can be returned.
once they are provided.

Yes, goods can be separated from the No, services cannot be separated
Separable
seller. from the service provider.

Variability Identical Diversified

Goods can be stored for use in future or

Storage Services cannot be stored.
multiple use.

Production and There is a time lag between production Production and Consumption of
Consumption and consumption of goods. goods occurs simultaneously.

Explain the common Methods/Approaches strategies for pricing the products

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Companies set various prices by selecting the general pricing approach that includes - one or
more of these three sets of factors. The cost-based approach, the buyer-based approach and
the competition-based approach

1) The Cost based pricing: The simplest pricing method is cost-plus pricing adding a
standard markup to the cost of the product.
- Cost-plus pricing: anticipated profit on product being sold is added to cost of production per
unit of the product.
- Break-even Analysis and Target Profit Pricing: This is another cost-oriented pricing approach.
Here the firm tries to determine the price that will produce the profit it is seeking. It is known as
target pricing. Normally some companies keep 10 to 20 percent profit on its investment. Target
pricing uses the concept of break-even chart.
2) Value-Based Pricing Value-based pricing uses buyers perceptions of value, not the
seller's cost, as the key to pricing. Price is considered along with the other marketing-mix
variables before the marketing program is set. Value-based pricing reverses this process. The
company sets its target price based on customer perceptions of the product value. Certain
Companies base their pricing on the product’s perceived value. They see the buyer’s perception
of value, not the seller’s cost, as the key to pricing. Here, seller use non-price variables in the
marketing mix to build up perceived value in the buyer’s minds. For example a cup of coffee in
a self-service restaurant is charged at Rs.5/-, in a restaurant with service at Rs.8/-, in a family
restaurant Rs.12/-, in a posh area a/c room at Rs.15 and in 3 star hotel at Rs.20 and in 5 star
hotel may be Rs.25/-. So each successive restaurant can charge more because of the value added
by the atmosphere.
3) COMPETITION BASED PRICING: Consumers will base their judgments or a
product's value on the prices that competitors charge for similar products. COMPETITION
BASED METHODS Going-rate Pricing: In this case company bases its price largely on
competitors prices, with less attention paid to its own costs or demand. The firm bases its price
on expectations of how competitors will price rather than on a rigid relation to the firm’s costs
or demand. The purpose is to win the contract and therefore pricing, is lower than others.
However firm cannot set the price below a certain level. E.g.: Indian Oil orporation
 18

Cost-based pricing

Product Cost Price Value Customers

Value-based pricing

Customers Value Price Cost Product

Source: Thomas I Nagle and Reed K. Holden, The Strategy and Tactics of Pricing, 2nd ed. (Engle-
wood Cliffs, NJ: Prentice Hall, 1995), p. 5.

FIGURE Cost-based versus value-based pricing

Explain the different common price strategy , Give example :

Price A Product Or Service To Penetrate The Market : Penetration pricing

is a marketing technique in which a company offers a new product at a price
significantly lower than its competitors. Once it has gained a large market share
and customer base, the company begins to increase the price of the product.
Companies sometimes use this technique when offering a new product, such as a new
technology, to encourage customers to try the product. Example : Rich Bake seeks to be the
best in the bakery business in Egypt by offering the best quality and convenient price in the
market: attractively packaged, hygienic and tasty products in an attractive packaging.
Starting with its Petit Pain and Soft Roll products, which offered a new type of bread to the
Egyptian family, to the introduction of Soft Toast Bread, a much-appreciated breakthrough
for the Egyptian consumer, Rich Bake products have met its target of offering innovative
and delicious new types of bread in packaging that ensures freshness and makes sandwich
making easy for the consumer, particularly children. It continues to innovate and introduces
new products.

Wal-Mart as a discount Stores

Discount stores such as Wal-Mart use penetration pricing in two ways.

First, they offer new products through their stores at prices much lower than
other stores, hoping that you will buy more than that one product once you come in the store.
They are willing to lose money on the new product as a way to get more customers through the
door. Also, they use penetration pricing in new geographic markets by underselling their more
well-established competitors. Once they have a loyal customer base, they can begin to gradually
increase prices.
 19

- Skimming price strategy : is the opposite of penetration. This is a high priced model,
sometimes called “ Top pricing “ The idea behind this philosophy is to give you high
profits, even at the cost of losing a large number of potential customers. Typically, when
a company launches a new product, they charge higher prices in the beginning to help
recoup R&D expenditures quickly Pricing
- An example of price skimming is DVD players. Initially in 1990s when DVD players
were launched the price of a DVD player was $500 and $400. By 2001 the prices were
skimmed to less than a $100. By 2004 DVD players were available for as low as $50 or
$60.
- Another example can be picked up from the computer
industry where technology plays a significant role in price
skimming. When a new laptop is introduced with
enhanced and unique features it is priced quite high. The
prices of older laptops now fall as the demand shifts to
laptops showcasing new technology.
- The Loss Leader : Want to kill your competition? The
loss leader is the way to set your prices to get the job
done. No matter the cost! Even at a loss in profits! In its
truest form, this approach has one objective -- ELIMINATE THE COMPETITION! The
consequences of even a slight misjudgment in using this retail pricing strategy could be
devastating to your business.

- Loss leader pricing is a tactical strategy that performs several functions. Use it to get rid
of slow-moving merchandise, attract new
customers, build your brand as the low-cost
provider in your community or tally the amount of
featured loss-leader merchandise sold to see how
your ads are performing. For a loss-leader strategy
to work, the profits made on other merchandise sold
during your loss-leader promotion must cover the
low profits or losses taken on the featured
merchandise.
Example of Tesla Motors Loss leader pricing

they have ignored the profit motive, while implementing the secret master plan. The thinking is
that if you implement the plan well, that profits will take care of themselves. The Roadster
wasn’t supposed to be profitable, it was supposed to introduce a proof-of-concept. The revenues
(not profit) from that were used to raise more capital to fund more development. To develop the
charging network on a global scale. To struggle through various state laws about who is allowed
to sell a car. To test the relationship with Panasonic. To plan the Giga-factory. To find more
investors. To test autonomous driving concepts. To gauge market reaction. To develop a
reputation with consumers and vendors and governments. The
reputation is how they got 400,000 pre-orders for model 3 (and
$400M in cash deposits! That’s a two year interest-free loan). Do
 20

you see on the chart how much $400M is as compared to their history.

6- Compare contrast between the Marketing skimming price strategy and the Marketing -
penetration price strategy.
Companies bringing out an innovative, the challenge of setting prices for the first time. They
can choose between two strategies: market-skimming pricing and market-penetration pricing.
The Advantages of Price Skimming

1. Price skimming helps in recovering the sunk costs.

2. Price skimming helps in segmenting the market. makes maximum profit from each of
them.
3. The high price of the product brings huge benefits for the dealers as well.
4. If the product is positioned well then its buyers are more prestige conscious than price
conscious. Expensive goods easily attain the tag of being luxury items.

Disadvantages of Price Skimming

1. This policy is workable only when the product has an inelastic demand curve.
2. It is difficult to maintain the stock for skimmed products.
3. Skimming attracts competitors. The high margins compel them to enter the market as
soon as possible.
4. The rate of diffusion is slow for skimmed products. The competitors take advantage of
this situation. They either turn copy cats and come out with similar cheaper products or
go one step further and introduce a similar product with enhanced features.
5. Lowering of price should be done at an appropriate time. If lowered too soon the early
customers feel cheated. They feel waiting for some more time before buying the product
would have helped them strike a profitable deal. As a result the company and its brand
name suffer.
6. Inefficiency may creep into the firm. Due to high margins less effort is made to keep a
check on the costs.

Market skimming pricing Market-penetration pricing

 21
Many companies that invent new
products initially set high prices to skim
revenues layer by layer from the
market.
Market-skimming pricing: Setting a
high price for new product to skim
maximum revenues layer by layer from
the segments that are willing to pay the
high price the company makes fewer
but more profitable sales.
- Intel is a prime user of this
strategy, called market-
skimming pricing.
- When Intel first introduces a new
computer chip, it charges the
highest price that it can, given
the benefits
- of the new chip over competing
chips.
- As initial sales slowdown, and as
competitors threaten to
introduce similar chips, Intel
lowers the price to draw in a new
price sensitive layer of
customers.
Penetration pricing is commonly
used by utilities, especially
phone and cable or satellite
services, although it is
sometimes found in competitive
gas and electricity markets as
well. Many home phone,
cellphone, cable and satellite
providers offer a discounted rate
for a period of time, such as your
first six months of service, to get
you to switch to their service.
After your discount period has
ended, the price increases
significantly, but the company
hopes you have become used to
its service and won't go through
the trouble to change to a
different company.
some companies use market-
penetration pricing by Setting a
low initial price in order to
penetrate the market quickly
and deeply to attract a large
number of buyers quickly and
win a large market share.
Market-penetration pricing:
Setting a low price for a new
product in order to attract a
large number of Buyers and a
large market share.
- Wal-Mart, Home Depot,
and other discount
retailers also use
penetration pricing.
They charge low prices
to attract high volume.
 22

The high volume results

in lower costs which, in
turn, let the discounters
keep prices low.

Several conditions favor setting Several conditions favor setting

skimming revenue. a slowing down price.

First, the product's quality and image First, the market must be high
must support its higher price and price sensitive so that a low
enough buyers must want the product at price produces more market
that price. growth. Second, production and
distribution costs must fall as
Second, the costs of producing a smaller sales volume increases.
volume cannot be so high that they
cancel the advantage of charging more. Finally, the low price must help
keep out the competition
Finally, competitors must not be able to otherwise the price advantage
enter the market easily and undercut the may be only temporary.
high price.

Explain what the distribution channel is and mention its objectives . And its function.

Distribution is A set of interdependent organizations involved in the process of making a

product or service available for use or consumption by the consumer or business user.
Distribution is one of the four aspects of marketing. A distributor is the middleman between the
manufacturer and retailer. After a product is manufactured it is typically shipped (and usually
sold) to a distributor. The distributor then sells the product to retailers or customers

The objectives:
- To reconcile the needs of producers and consumers
- to improve efficiency by reducing the number of transactions and creating bulk
 23

- to improve accessibility by powering location and time gaps between producers and
consumers
- improve specialist services to customers

Functions of distribution marketing channels :-

1. Information: gathering and distributing marketing research and intelligence information
about actors and forces in the marketing environment that are needed for planning and
aiding exchange.
2. Promotion: developing and spreading persuasive communications about an offer.
3. Contact: finding and communicating -with prospective buyers.
4. Matching: shaping and fitting the offer to the buyer's needs, including such activities as
manufacturing, grading, assembling, and packaging.
5. Negotiation: reaching an agreement on price and other terms of the offer so that
ownership or possession can be transferred.

Explain the factors that affect the channel strategy decisions effectiveness
Channel strategy involves selection of the most effective distribution
channel most appropriate level of distribution intensity and degree of
channel integration Distribution
- Channel selecting
Market factors Buyer behavior, buyer needs, willingness of
channel intermediaries, location of costumers.
Producer factors Lack of financial resources, product mix, desired degree of control
Product factors direct distribution
Competitive factors Innovative approach, salesforce or producer-owned distribution network,
direct marketing Distribution Strategy
- Distribution Intensity
Intensive Distribution: Aims to achieve saturation coverage of the market by using all available
outlets
Selective Distribution: producer uses a limited number of outlets in a
Geographical area to sell its products
Exclusive Distribution: Only one wholesaler, retailer or industrial distributer is used in a
geographic area.

- Channel Integration
Conventional marketing channels: Hard bargaining and, occasionally, conflict
Franchising: A producer and channel intermediaries agree
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each member‘s rights and obligations

Channel ownership: Total control over distributor activities

Explain the characteristics affecting the consumer buying behavior.

Marketing stimuli consist of the four 4Ps: product, price, place, and promotion. Other stimuli
include major forces and events in the buyer's environment: economic, technological,
political, and cultural. All these inputs enter the buyer's black box, The marketer wants to
understand how to stimuli-responsive are changed into responses inside the consumer's black
box, which has two parts First the buyer's characteristics influence and Second the buyer's
decision process itself affects the buyer's behavior.
Characteristics affecting consumer buying behavior:
Consumer purchases are influenced strongly by cultural, social, personal, and psychological
characteristics, as shown in Figure model of buyer behavior For the most part, marketers
cannot control such factors, but they must take them into account.
Cultural factors exert the broadest and deepest influence on consumer behavior. The
marketer needs to understand the role played by the buyer's culture, subculture, and social
class.
Culture is the learned values, perceptions, wants, and behavior from family and other
important institutions
Subcultures are groups of people within a culture with shared value systems based on
common life experiences and situations
Social classes are society’s relatively permanent and ordered divisions whose members share
similar values, interests, and behaviors . Measured by a combination of occupation, income,
education, wealth, and other variables.
SOCIAL FACTORS : A consumer's behavior is also influenced by social factors, such as the
consumer's small groups, family, and social roles and status.
Groups and Social Networks:
Groups : A person's behavior is influenced by many small groups. Groups that have a direct
influence and to which a person belongs are called membership groups. Some are primary
groups with whom there is regular but informal interaction – such as family, friends,
neighbors, and co-workers. Some are secondary groups, which are more formal and have less
regular interaction. These include organizations like professional associations, and trade
unions. we can find in this group Opinion leaders: People within a reference group who,
because of special skills, knowledge, personality traits, or 'other characteristics, exert
influence on others
word-of-mouth influence and buzz marketing – Opinion leaders are people within a reference
group who exert social influence on others . Also called influential or leading adopters ,
Marketers identify them to use as brand ambassadors
Online Social Networks are online communities where people socialize or exchange
information and opinions Include blogs, social networking sites (facebook), virtual worlds
(second life)
Family members : can strongly influence buyer behavior. The family is the most important
consumer buying organization in society, and it has been researched extensively. Marketers
are interested in the roles and influence of husbands, wife's, and children on the purchase of
 25

different products and services. The groups, family, clubs, and organizations that a person
belongs to define his/her social role and status
Roles and Status: A person belongs to many groups – family, clubs, organizations. The
person's position in each group can be defined in terms of both role and status. A role
consists of the activities that people are expected to perform according to the persons around
them.
The groups, family, clubs, and organizations that a person belongs to define his/her social
role and status .
PERSONAL FACTORS
A buyer's decisions are also influenced by personal characteristics such as the buyer's age
and life-cycle stage, occupation, economic situation, lifestyle, and personality and personality
and self-concept.
Age and Life-Cycle Stage : People change the goods and services that they buy over their
lifetimes cycle .
Occupation : A person's occupation affects the goods and services bought.
Economic Situation: A person's economic situation will affect product choice. by personal
income , savings, interest rate
Lifestyle ; is a person’s pattern of living as expressed in his or her
psychographics , Lifestyle is a person's pattern of living, It involves measuring consumers'
major AIO dimensions-Activities (work, hobbies, shopping, sports, social events), Interests
(food, fashion, family, recreation), and Opinions (about themselves, social issues, business,
products).
Personality and Self-Concept : Each person's distinct personality influences his or her buying
behavior. Personality refers to the unique psychological characteristics that lead to relatively
consistent and lasting responses to one's own environment. Personality and self-concept –
Personality refers to the unique psychological characteristics that lead to consistent and
lasting responses to the consumer’s environment
PSYCHOLOGICAL FACTORS
A person's buying choices are further influenced by four major psychological factors:
motivation, perception, learning, and beliefs and attitudes.
- Motivation : A need becomes a motive when it is aroused to a sufficient level of
intensity. A motive is a need that is sufficiently pressing to direct the person to seek
satisfaction.
Perception: A person's actions are influenced by his or her perception of the situation.
Perception : The process by which people select organize, and interpret information form a
meaningful picture of the world. Perception is the process by which people select, organize,
and interpret information to form a meaningful picture of the world .
Learning : Learning is the change in an individual’s behavior arising from experience and
occurs through interplay of:
Beliefs and Attitudes: Belief : is a descriptive thought that a person has about something
based on: • Knowledge • Opinion • Faith , Through doing and learning, people acquire
beliefs and attitudes. These, in turn, influence their buying behavior. Marketers are
interested in the beliefs that people formulate about specific products and services, because
these beliefs make up product and brand images that affect buying behavior. If some of the
 26

beliefs are wrong and prevent purchase the marketer needs to launch a campaign to correct
them.
Attitude: Attitudes describe a person’s relatively consistent evaluations, feelings, and
tendencies toward an object or idea A person's consistently favorable or unfavorable
evaluations, feelings, and tendencies toward object or idea. Attitudes are difficult to change.
A person's attitudes fit a pattern, and changing one attitude may require difficult adjustments
in many others. Thus, a company should usually try to fit its products to existing attitudes
rather than attempt to change attitudes.
22: Explain the Buyer Decision Process .
1. Need recognition: The first stage of the buyer decision process in which the consumer
recognizes a problem or need. Occurs when the buyer recognizes a problem or need
triggered
2. Information search : The stage of the buyer decision process in which the consumer is
aroused to search for more information the consumer may simply have heightened attention
to information or may go into active information search. Personal sources—family and
friends Commercial sources—advertising, Internet • Public sources—mass media, consumer
organizations, • Experiential sources—handling, examining, using the product.
3. Evaluation Alternative :The stage of the buyer decision process in which the consumer
uses information to evaluate alternative brands in the choice set.
4. Purchase decision :The stage of the buyer decision process in which the consumer
actually buys the product. The act by the consumer to buy the most preferred brand • The
purchase decision can be affected by: – Attitudes of others – Unexpected situational factors
5. Post purchase : behavior The stage of the buyer decision process in which consumers
take further action after purchase, based on their satisfaction or dissatisfaction. The
satisfaction or dissatisfaction that the consumer feels about the purchase • Relationship
between: – Consumer’s expectations , – Product’s perceived performance , • The larger the
gap between expectation and performance, the greater the consumer’s dissatisfaction .
23: Discuss the Buyer Decision Process for new products.
The mental process an individual goes through from first learning about an innovation to
final regular use
Stages in the process include
1. Awareness. The consumer becomes aware of the new product, but lacks information
about it.
2. Interest. The consumer seeks information about the new product.
3. Evaluation. The consumer considers whether trying the new product makes sense.
4. Trial. The consumer tries the new product on a small scale to improve his or her
estimate of its value.
5. Adoption. The consumer decides to make full, regular use of the new product.