BCOE 141 – PRINCIPLES OF MARKETING

Q - What are the marketing concepts? Explain the process of evolution of these concepts.

Ans. MARKETING CONCEPTS

There are five different marketing concepts under which business enterprises conduct their marketing activity:

· Production concept

· Product concept

· Selling concept

· Marketing concept

· Societal concept

Production Concept

This is probably the oldest concept. Some businessmen believe that the consumers are interested only in low priced, easily
and extensively available goods. The finer points of the product are not very important to them. So the producers believe
they must concentrate only in efficient (economical) and extensive (large scale) production. A company which believes in
this approach concentrates on achieving high production efficiency and wide distribution coverage.

Product Concept
As against the production concept, some organisations believe in product concept. The product concept implies that
consumers favour those products that offer the most quality, performance and features. They also believe that consumers
appreciate quality features and will be willing to pay 'higher price for the 'extra' quality in the product or service made
available. Hence, those companies which believe in this concept concentrate on product and its improvement. While
improving the product they rarely take into consideration the consumers' satisfaction and his multifarious needs. Even
when new products are planned, the producer is concerned more with the product and less with its uses or the consumer
needs. For example, a biscuit manufacturer produced a new brand of biscuits with good ingredients, colour, packaging, etc.,
without taking into account consumer tastes and preferences. This may fail in the market if the biscuit does not taste good
to the ultimate consumer.

Selling Concept

Sometimes the main problem of the enterprise is not more production, but to sell the output. Similarly, a better product may
not assure success in the market. Hence selling assumes greater importance. So some producers believe that aggressive
persuasion and selling is the crux of their business success, and without such aggressive methods they cannot sell and
survive. Therefore, attention is paid to find ways and means to sell. They also believe that customer/consumers left to
themselves, will not buy enough of organisation's products and services, and hence considerable promotional effort is
justified. Thus, the selling concept assumes that consumers on their own will not buy enough of organisation's products,
unless the organisation undertakes aggressive sales and promotional efforts. Many insurance agents, sales persons of
certain electrical gadgets, health drinks, soft drinks, and fund raisers for social or religious causes come under this category.

Marketing Concept

In an evolutionary process, many organisers have come to change their focus and to see their marketing tasks in a broader
perspective. Marketing concept is considered a business philosophy wider in its implications. Under the marketing concept,
the organisation considers the needs and wants of consumers as the guiding spirit and the delivery of such goods and
services which can satisfy the consumer needs more efficiently and effectively than the competitors. It is also said that the
marketing concept is consumer orientation with the objective of achieving long run profits. It is a modern marketing
philosophy for dynamic business growth. In other words, under this concept the task of marketing begins with finding what
the consumer wants, and produce a product which will meet that want and provide maximum satisfaction. Implicitly, the
consumer is the boss or king who dictates. The focus which moved from the product to selling, now rests with the
consumer.

Societal Concept

With the growing awareness of the social relevance of business, there is an attempt to make marketing also relevant to the
society. In a sense, marketing is not a business activity alone but must take into account the social needs. Excessive
exploitation of resources, environmental deterioration and the customer movements in particular have necessitated the
recognition of the relevance of marketing to the society. Marketing then must be a socially responsible or accountable
activity. The societal concept holds that the business organisation must take into account the needs and wants of the
consumers and deliver the goods and services efficiently so as to enhance consumer's satisfaction as well as the society's
well being. The societal concept is an extension of the marketing concept to cover the society in addition to the consumers.

In effect, a company which adopts the societal concept has to balance the company profit, consumer satisfaction and
society’s interests. The problem is almost the same as that of social responsibility of business. What is good for the society is
a question to be decided. A voluntary acceptance of this concept is desirable for the long run survival of private business.
An effective implementation of the societal concept will certainly enhance the goodwill of the business house. The business
enterprises which believe in this concept will produce and market those goods and services which are beneficial to the
society, those that do not pollute the environment, and give full value for the money spent.

Q – State the difference between Selling & Marketing.

Ans.

.N SELLING MARKETING
o.

01. Selling refers to creating products and selling Marketing refers to finding wants of people/customer
them to customers. and fill them.

02. Selling revolves around the needs and Whereas Marketing revolves around the needs and
interest of the seller. interest of the consumer.

03. It emphasis more on product or service. It emphasis more on consumer needs and wants.

04. Selling is a only an integrated part of the While marketing is a wider term consisting of
marketing process. number of activities.

05. Selling is based on short term business Marketing is based on long term business planning.
planning.

06. It manufactures the product first. It identifies the market first.

07. It is sales volume oriented. It is customer satisfaction with profit oriented.

08. It views business as a goods producing and It views business as a consumer satisfying process.
selling process.

09. Here seller is considered as king pin of Here consumer is considered as king pin of market.
market.
Q – What is marketing environment? Describe the macro environment and micro environment of marketing.

Ans. Marketing Environment

Marketing system of every business organisation is influenced by a large number of controllable and uncontrollable factors
that surround the company. So the marketing system of a company must have to operate within the framework of the
environmental forces. According to Philip Kotler, a company's marketing environment consists of the actors and forces
outside of marketing that affect marketing management's ability to develop and maintain successful transactions with its
target consumers. For example, the relevant environment to a car manufactures and buyers, tyre manufacturer may be the
other car manufacturers competitors and the tyre manufacturing technology, the tax structure, imports and export
regulations, the distributors, dealers, competitors, etc.

Micro Environment

Organisation's Internal Environment: Organisations financial, production and human resource capabilities influence its
marketing decisions to a large extent. For instance, while deciding about the sales targets, it is necessary to see whether the
existing production facilities are enough to produce the additional quantities or not. If the existing facilities are not enough
and expansion to plant and machinery is required, it is necessary to think about financial capabilities.

Suppliers: For production of goods or services, you require a variety of inputs. The individuals or firms who supply such
inputs are called suppliers. Success of the marketing organisation depends upon the smooth and continuous supply of
inputs in required quantities on reasonable terms. Hence suppliers assume importance. The timely supply of specified
quality and quantity makes the producer to keep up the delivery schedule and the quality of the final product. The
dependence on the supplier is naturally more when the number of suppliers is more. During periods of shortages, some
suppliers may not supply materials on favourable terms. Each supplier may negotiate his own terms and conditions,
depending upon the competitive position of his firm. Some suppliers, for example, expect payment in advance, and goods
are supplied on the basis of a waiting list, whereas others may be ready to supply on credit basis.

Intermediaries: Normally, it is not possible for all the producers to sell their goods or services directly to the consumers.
Producers use the services of a number of intermediaries to move their products to the consumers. The dealers and
distributors, in other words the marketing intermediaries, may or may not be willing to extend their cooperation. These
persons normally prefer well established brands. Newcomers may find it extremely difficult to find a willing dealer to stock
his goods. From newcomers they may demand favourable terms by way of discount, credit, etc., and the producer may find
it difficult to satisfy them. There are also other intermediaries like transport organisations, warehousing agencies, etc., who
assist in physical distribution. Their cost of service, accessibility, safe and fast delivery, etc. often influence the marketing
activities.

Competitors: Competitors pose competition. Competitors, strategies also affect the marketing decisions. Apart from
competition on the price factor, there are other forms of competition like product differentiation. There are also
competitors who use brand name, dealer network, or close substitute products as the focal point. Their advertising may
present several real or false attributes of their product. If one advertises that his product has an imported technology, the
other may say that he is already exporting his product. Competitor's strategies sometimes may change an opportunity in the
environment into a challenge.

Customers: There are many types of customers. A firm may be selling directly to the ultimate users, (consumers) the
resellers, the industries, the Government or international buyers. It may be selling to any one or all of these customers. Each
type of consumer market has certain unique characteristics and the marketer should be fully acquainted with the art of
persuading and selling to these consumers. The environment presented by customer profile will have a direct influence on
these marketing activities.

Macro Environment

The macro environmental factors that exert influence on an organisation's marketing system are: 1) physical environment,
2) technological environment, 3) political and legal environment, 4) economic environment, 5) demographic environment,
and 6) social-cultural environment.

Let us discuss about these factors in a little more detail.

Physical Environment: The earth's natural renewable resources (e.g. forest, food products from agriculture, etc.) and finite
non-renewable resources (e.g. oil, coal, minerals, etc.), weather (climatic) conditions, land shapes and water resources are
components of an environment which quite often change the level and type of resources available to a marketer for his
production. For example, India does not have enough petroleum resources, and imports petrol and other products. India’s
international relations may facilitate the supply of petrol and diesel. This has lot of implications for the companies
consuming petro-products.

Technological Environment: Technology is shaping the destiny of the people. The revolution in computers, electronics and
communication in general may make one's production out of the tune with the current products and services. For example,
printing technology like laser printing and desk top publishing, has already made the labour-intensive type-set printing
uneconomical. Digital printing is tremendously cutting down the cost of large print jobs. New printing has gone a notch
higher. 3D printing is being used in the clothing industry.

Political and Legal Environment: Political changes bring in new policies and laws relevant to industry. Government
regulation continues with different intensities and the law and the rules framed there under are becoming complex. Many
areas of business are brought under one law or the other, and the marketer cannot escape from the influence of these laws.
The tax laws, the Goods and Services Tax (GST) excise duty, octroi, income-tax, etc., have direct bearing on the costs and
prices of the products and services marketed. So also the policies relating to imports and exports. Since these factors affect
all the units, (they do not affect a single marketer alone), these are considered as the forces in the macro environment.

Economic Environment: The state of the economy measurable in terms of the Gross National Product (GNP) and per capita
income as well as the favourable or unfavourable position of the balance of trade determine the economic environment.
Occurrences of war, famine and per capita income as well as the favourable or unfavourable position of the country. For
example, if the monsoon is good, the agriculture output will be more and the people depend on agriculture get more
income. This enables people to buy more consumer goods. Thus, the demand for consumer goods increases. Similarly, a bad
monsoon will adversely affect the demand for fertiliser. The personal and corporate tax system also determines the
available income for spending on a variety of goods.

Demographic Environment: Marketers are keenly interested in the demographic characteristics such as the size of the
population, its geographical distribution, density, mobility trends, age distribution, birth rate, death rate, the religious
composition, etc. The changing life styles, habits and tastes of the population, have potentials for the marketer to explore.
For example, when both husband and wife go for jobs, the demand for gadgets that make house-keeping easier and the
semi-cooked food products increase.

Socio-Cultural Environment: There are core cultural values which are found stable and deep rooted, and hence change
very little. There are also secondary cultural values which are susceptible to fast changes. Some of them like hair styles,
clothing, etc. just fade. Even in a given culture, the entire population may not adopt the changes. There are different degrees
with which people adopt them. Religion is also an important component of culture which has implications for the marketer.
For example, Hindus worship the cow and do not eat beef. So the products made out of beef meat do not have demand. Thus
the culture of the society influences the consumption pattern to a certain extent also pervades other human activities by
determining their values and beliefs.

Q – Describe the marketing environment in India.

Ans. India is a vast country populated by more than 138 crore people. Its unique feature is its diversity of religions,
languages, social customs, regional characteristics, which is both a boon and a bane for the marketer. Its boon because
there is tremendous scope for a wide variety of products and services to be successfully marketed and a bane because the
marketer often needs to adapt his marketing strategy to suit different tastes and values. There are marketers who may find
that the Indian environment is full of profit potential. It means that there are buyer for anything one may produce and
there is market for everything. There are others who take a somewhat pessimistic view by considering the poverty and
shortages of requisite inputs. However, one can confidently say that the market is vast, quality consciousness among
consumers is increasing, and there is demand for new and improved products and services and these trends may continue
for a long time.

Despite 75 years of Independence, India is still dominated by villages and almost 65 per cent of population is located in the
rural areas. These rural areas are today enjoying the fruits of the Green Revolution and the purchasing power of the rural
population is increasingly demanding attention from the marketer who had so far concentrated only in urban areas. No
doubt the urban areas with their concentration of numbers and market potential are the priority target markets, but a firm
which wants to ensure its future survival must start making inroads into the rural mark well. Government expenditure on
rural development has increased the purchasing power of the rural public. Improvements in transport, communication,
literacy etc have made many new markets accessible. The capacity to see the opportunity and work out an appropriate
marketing strategy can open the doors to the marketers.
There are a large number of companies, public sector undertakings, factories and small-scale units, all of which comprise
the organisational consumers, operating in the country. While the public sector usually follows a bureaucratic long winded
and time consuming procedure for making even the smallest purchase, the private sector decision-making is relatively
quicker and free of procedures. If you are marketing your products/ services to both the public and private sectors, you may
like to think about having separate marketing organisations for them. Another major difference between the public and
private sector is in the timing of the purchase decision. The public sector companies have an annual budget sanctioned to
them by the government and the money from this is used for purchasing a variety of products. The public sector units feel
compelled to use the entire budget amount, because if they do not, they run the risk of having a reduced budget in the
subsequent years. You would find a flurry of purchases during the quarter preceding March when the financial year ends.
So if the public sector companies are your major consumers, you should bear the timing factor in mind. In case of private
sector companies, you would generally not find such a peaking of purchases in any particular month of the year unless it is
linked to seasonality of production or sales.

Q – What is market segmentation? Explain the importance of segmenting markets.

Ans. Lack of homogeneity may be seen in the real world in both supply side and demand side. On the supply side, many
factors, like difference in production equipment and processing techniques, difference in the nature of resources or inputs
available to different manufacturers, progress among the competitors in terms of design and improvement, etc., account for
the heterogeneity. As a result, imperfect markets in which firms lack uniformity in their size and influence) are common.
This problem may be solved to some extent, by market segmentation.

Market segmentation, is the process of dividing the total market into one or more parts (submarkets or segments) each of
which tends to be homogeneous in all significant aspects.

IMPORTANCE OF MARKET SEGMENTATION

In marketing a product is not possible to appeal to all buyers in that market. The buyers are numerous, widely scattered,
and varied in their buying requirements and buying practices. Some competitors may be in a better position to serve a
particular segment of the market. Each company has to identify the most attractive segment of the market which it can
serve effectively. Accordingly, market segmentation has the following advantages:

1) You need not waste your marketing efforts over the entire area. You can concentrate on a specific segment and achieve
better.

2) As you are not treating all customers alike, you can take care of specific requirements of each segment more effectively.

3) It helps to pay proper attention to particular areas.

4) Market segmentation enables you to frame and adopt separate policies to meet the needs of the different buyer groups.
5) You can use the advertising media effectively by developing promotional programmes specifically for each segment.

6) More efficient use of the marketing resources is possible.

7) Each of the 4Ps of the marketing mix-(product, price, promotion and physical distribution) can be designed with the
target market in mind.

Q – Why do new Products Fail in Market?

Ans. Even after thorough screening at each and every stage, all the new products introduced in the market may not
succeed. Many of them fail and are withdrawn from the market. For example, as stated earlier, Hindustan Unilever failed
with their Hima Peas and Fast Foods. Similarly, Parle's hamburger 'Big Bite' was a failure in some markets while successful
in other markets. Thus, every product introduced in the market may not succeed. Now the question is: Why do 32 products
fail in the market? The reasons for product failure are attributed to six factors by Cundiff and Still. They are:

1) Product Problems: The products fail in the market due to certain problems with product itself. For example, as
neglect of market needs or ignorance of market preferences, defects in product function, poor technical design or
external appearance, poor packaging or inappropriate sizes, undependable performance or too high a variation in
quality, etc.

2) Distribution and Channel Problems: Products fail due to certain problems in Distribution such as inappropriate
channels or outlets, lack of co-operation from middlemen, poor system of physical distribution, etc.

3) Promotional Problems: Promotional problems that contribute to the product failure are: inadequate or ineffective
promotion, advertising directed towards wrong market segments, improper use of wrong appeals, failure to co-ordinate
adequately with distribution system, improper training to sales force, etc.

4) Pricing Problems: Pricing problems such as bad forecast of price that buyers would pay, price not on par with
product quality, poor cost estimates caused ‘asking price’ to be too high, inadequate margins for the middlemen, etc. also
responsible sometimes for product failure.

5) Timing Problems: Timing of product introduction is very important. If product is introduced too soon or too late, it
may fail.

6) Competitive Problems: Competitors' aggressive strategies with respect to product distribution, promotion and price
may cause serious setback to the product in the market. The company had to react defensively rather than pursuing
strategies.

The number and variety of the reasons for product failure suggest that success of a new product depends on the skills
and strategies not only in product innovation but in formulating and implementing marketing strategy. Throughout the
product innovation process, management should carefully watch the target market. An appropriate organisation is
required to guide and co-ordinate the product innovation process at each and every stage. Besides introducing the
product at appropriate time components of marketing strategy (product, distribution and marketing channels,
promotion, and price) must be combined in appropriate proportions at each stage of the product life cycle. Skill in
implementing the marketing plan is required and be capable of changing the strategies in accordance with the changing
market and competitive conditions.

Criticism of Packaging

Packaging is also subject to severe criticism because of the following reasons:

1) After consuming the product, consumers throw-away the containers in public places causing environmental
problems. How to dispose of used containers is one of the major problems.

2) Scarce raw materials are consumed for the manufacture of containers. This depletes our natural resources. However,
this criticism is offset as more and more recycled materials are used for packaging.

3) Packaging increases the product cost and this leads to higher prices to consumers. But it is argued that effective
packaging reduces the transport costs and the losses due to spoilage. The benefits so derived may offset the cost of
packaging.

4) Health hazards occur from some forms of plastic packaging and some aerosal cans.

5) It is also felt that sometimes packaging is deceptive. Customers may feel that the product inside is of good quality due
to attractive packaging. Products of poor quality may be packed in attractive containers to catch the attention of
customers.

Q – State the requirement of segmenting a maket.

Ans. REQUIREMENTS FOR SEGMENTING A MARKET

The variable on the basis of which the market is segmented should be capable of measurement and quantification. It
should not be merely a subjective phenomenon. For this measurement, adequate data should be available or be capable
of being collected. If the data is not available and not quantifiable, the segmentation will be difficult or unscientific.

The objective of segmentation is effective direction of marketing efforts to specific segments. Therefore, the segments
themselves should be accessible through various channels of distribution advertising media, sales force, etc. If the
accessibility is difficult, segmentation will become meaningless. The purpose of segmentation is, sometimes, to evolve
separate marketing programmes or develop separate products to cater to the needs of separate segments of consumers.
So the segments should be large enough to warrant such efforts. Otherwise, various diseconomies in production,
marketing, inventory holding, etc., may arise. To be useful, market segments must exhibits the following characteristics:
 Measurability: It is the degree to which the size and purchasing power of the segments can be measured. Certain
segmentation variables are difficult to measure. For instance, it is difficult to measure the size of the segment of teenage
smokers who smoke primarily to rebel against their parents.

Accessibility: It refers to the degree to which the segments can be effectively reached and served. Suppose, a perfume
manufacturing company finds that the regular users of its brands are unmarried men who are out late at night and
frequently visit bars. Unless this group of men lives in a specific locality or do shopping at certain places, for the
company it will be difficult to identify them and reach them. When markets are segmented, each segment should be
accessible and approachable.

Substantiality: The segments should be large enough to make efforts yield enough profits. A segment should be the
largest possible homogeneous group worth going after with a definite 46 marketing programme. For example, for an
automobile manufacturer it may not be profitable to develop cars for a category of persons whose height is more than 7
feet, because the number of such persons will be few.

Actionability : It is the degree to which effective programmes can be formulated for attracting and serving the
segments. A small tourist car operator, for example, identified seven market segments, but its staff was too small to
develop separate marketing programmes for each segment.

Q – Explain product mix. Describe various product line strategies.

Ans. PRODUCT MIX AND PRODUCT LINE STRATEGIES

Product mix of a seller, while giving expression to its current position, is also an indicator of the future. Thus, product
mix is not a static position but a highly dynamic concept. A company may withdraw a product from its existing mix, if
the product is not contributing to the profitability and growth of the company. Similarly, a new product may also be
added to cash on some attractive opportunity that comes its way, Thus, the companies always attempt to maintain an
optimal product mix with a view to maintain a balance between current profitability, and future growth and stability.
For this end, a company alters or modifies the existing product line in any of the following ways:

1) Contraction of the Product Line: When a company finds that some of its products are no more profitable, it may
decide to suspend their production. Similarly, changes in the marketing environment may also necessitate withdrawal of
a product. A product may also be dropped from the product line if it is found that the same resources used for the
production of the product can be put to more profitable use by producing another product. Decisions relating to these
aspects are termed as "Contraction of the Product Line". Thus, thinning out the product mix either by eliminating an
entire line or simplifying the product items within the line is called contraction of product line. This is also called
Contraction of Production Mix or Product Line Simplification. This strategy is adopted mainly to eliminate low-profit
products and to get more profit from fewer products.
2) Expansion of Product Mix: To cash on available opportunities, a company decides to expand its present product line.
It may also increase the number of product lines and/or the depth within a line. Such new lines may be related or
unrelated to the existing product mix. For example, a company dealing in drugs and chemicals may add products in a
relatively new area like Computers.

3) Changes in Quality Standards: When the market expectations undergo a change a firm may have to react by altering
the quality standards of the existing product techniques. Such changes can be brought about through Trading Up and
Trading Down techniques.

· Trading Up: When we add a higher priced prestige product to the existing lowpriced product line, it is termed as
trading up. This strategy is adopted with the hope of increasing the sales volume of the existing low-priced
products. If conditions so demand in future, the company may increase promotional efforts for the new product
and thus add to overall sales volume through the new product, thereby improving profitability of the firm.

· Trading Down: It is the reverse of trading up. When a firm adds low quality products at relatively lower price to
its line of high priced prestige products, it is termed as trading down strategy. It helps in widening the marketing
base and results in expanding overall sales volume. Introduction of moped by a company manufacturing motor
cycles is a case of trading down.

4) Affecting Change in Model/Style of an Existing Product: The desire of the consumer varies with varying times. To
cope with such change in the consumer mood a company can react by offering new models of a product or changing the
style of an existing product.

5) Product Differentiation: Under this strategy, a firm tries to differentiate its products from the competitor's products
or other products within the same product line offered by the company by highlighting quality or design. This strategy is
aimed at avoiding competition on price basis. The competition is then met at non-price front and a pricewar is avoided.
The firm, thus, promotes awareness of the good attributes of the product offering. In view of the fact that this strategy
involves large promotional effort with huge financial outlays, it is also known as promotional strategy.

6) Product Positioning: As an integral part of product segmentation, after the market is segmented, it becomes
necessary to pinpoint the needs of each segment and offer products to satisfy the needs of specific segments. This process
is referred to as product positioning. It includes all activities from identification of a market segment to directing
marketing effort.

7) New Product: In view of increasing competition, scientific advancement, enhanced consumer expectations, it is
necessary that new products are introduced. Such introduction is essential for the survival and growth of an
organisation. The rate of increase in expenditure on Research and Development by many organisations is a clear proof
of the need and realisation to introduce new products.

Q – Describe Packaging strategies.

Ans. Packaging Strategies Product package often plays an important role in implementing sales promotion campaigns.
Promotion is defined as a short-term special measure to boost sale of a specific product. There are several accepted
promotional packaging techniques. Some of these are :

1) Money-off Pack: A 'flash' in distinctive colour is superimposed on the package announcing the special price discount
being offered. This is the most widely used form.

2) Coupon-pack: A coupon of a certain value, either as a part of the package or placed separately in the package, can be
redeemed after the purchase of the product.

3) Pack-in-Premium: A premium, i.e., the gift is packed within the original product package, viz., a handkerchief in a
cosmetic product package.

4) Premium-package: A specially made package having either a re-use or prestige value is referred to as premium
package. Instant coffee packed in glass tumblers having closures is an example of the first type. The set of audio cassettes
presented in a specially designed wooden box is an example of the second type.

5) Self-liquidator: The buyer has to send to the company a number of packages or part thereof as evidence of buying
the product. In return, he may purchase additional quantity of the same product at reduced prices or be rewarded with
a different product. Several companies in India, in the processed foods and beverages industry, occasionally use this
technique.

6) Changing the Package: Introduction of a new package can also be used as a promotional technique. For example
earlier, edible oils were packed in tin cans in India which looked messy and dirty. Most of the larger firms have been
using transparent one litre PET (polyethylene terephthalate) bottles which look gleaming and fresh. The companies are
using this change of packaging quite effectively as an additional element in their advertising campaigns. Initially,
Panama cigarettes were introduced in a soft packet of twenty for the first time in India. The instant popularity of the
brand was substantially due to this novelty. The strategy of package changes is followed either to correct a poor feature
in the existing container or to take advantage of new materials.

7) Odd Size Packaging: Packaging can also be used ingenuously to avoid direct price comparison with the competing
products. This is done by a deliberate choice of odd size, while the competing brands follow a standard size. In India
Maggi Ketchup was introduced in the market in 400 grams bottle, while the industry-wise standard size was 500 grams
bottle.

8) Packaging the Product Line: Packaging can be used to develop a family resemblance in the packaging of its several
products. Identical packages or the packages with some common line. This kind of packaging strategy had the benefits of
family branding. Under this strategy, when new products are added to a line, promotional values associated with old
products extend to the new ones.

9) Multiple Packaging: Placing more than one unit in one container is referred to as multiple packaging. This packaging
strategy increases the sales to a large extent.
 10) Other Applications of Packaging as Marketing Tool: There are several other innovative ways in which the
packaging can be used for achieving higher sales. The area of processed foods the shelf-life of the product is an
important consideration. Any firm which can guarantee a higher shelf-life would be one-up on its competitors. Indian
company, Tasty Bite Eatables which is in the area of frozen and pre-cooked foods, identified the 18 months shelf-life of its
products as the major strength. The increased shelf-life is to a large extent due to better packaging.

Q – Write brief notes on the following:

i) Break-even analysis

ii) Cost-plus pricing

iii) Going-rate pricing

iv) Profit-maximisation objective

v) Survival objective

vi) Perceived-value pricing

Ans. Break-even analysis - Break-even analysis is used regularly to check the progress of manufacturing industry by
comparing the sales achieved for the particular product.

Break even analysis is a simple and effective technique that can be used to evaluate the relationship between sales volume,
product cost and revenue generated.

Cost-plus pricing - Cost-plus Pricing Some firms set the selling price of their products by aggregating all the costs of the
product (including the manufacturing cost, distribution and marketing costs) plus a predetermined margin of profit.

To make this method of cost-plus pricing more realistic, the company must consider the changes that are expected to occur
in these costs as a result of change in the volume of production.

The pricing method enables the firm in covering all the costs and, in addition, to earn the desired margin of profit. Thus, the
method is quite justifiable on grounds of fairness to both the sellers and the buyer. The method is also easy to understand
and implement as there is generally less uncertainty about cost than the demand for the product. The margin of profit to be
added to the cost has to be determined by the company. It can vary from industry to industry and from situation to
situation. Retailers using the cost-plus method of pricing do not necessarily apply the same percentage of mark-up to every
item.
This may also be a safe method in an uncertain market. It can safely be used for pricing the jobs like government contracts
that are difficult to estimate in advance. For fixing prices for services, often cost-plus pricing method is adopted.

Q – State the criticism for packaging.

Ans. Criticism of Packaging

Packaging is also subject to severe criticism because of the following reasons:

1) After consuming the product, consumers throw-away the containers in public places causing environmental problems.
How to dispose of used containers is one of the major problems.

2) Scarce raw materials are consumed for the manufacture of containers. This depletes our natural resources. However, this
criticism is offset as more and more recycled materials are used for packaging.

3) Packaging increases the product cost and this leads to higher prices to consumers. But it is argued that effective
packaging reduces the transport costs and the losses due to spoilage. The benefits so derived may offset the cost of
packaging.

4) Health hazards occur from some forms of plastic packaging and some aerosal cans.

5) It is also felt that sometimes packaging is deceptive. Customers may feel that the product inside is of good quality due to
attractive packaging. Products of poor quality may be packed in attractive containers to catch the attention of customers.

Q – Describe Various Packaging strategies.

Ans. Packaging Strategies

Product package often plays an important role in implementing sales promotion campaigns. Promotion is defined as a
short-term special measure to boost sale of a specific product. There are several accepted promotional packaging
techniques. Some of these are :

1) Money-off Pack: A 'flash' in distinctive colour is superimposed on the package announcing the special price discount
being offered. This is the most widely used form.

2) Coupon-pack: A coupon of a certain value, either as a part of the package or placed separately in the package, can be
redeemed after the purchase of the product.
3) Pack-in-Premium: A premium, i.e., the gift is packed within the original product package, viz., a handkerchief in a
cosmetic product package.

4) Premium-package: A specially made package having either a re-use or prestige value is referred to as premium package.
Instant coffee packed in glass tumblers having closures is an example of the first type. The set of audio cassettes presented
in a specially designed wooden box is an example of the second type.

5) Self-liquidator: The buyer has to send to the company a number of packages or part thereof as evidence of buying the
product. In return, he may purchase additional quantity of the same product at reduced prices or be rewarded with a
different product. Several companies in India, in the processed foods and beverages industry, occasionally use this
technique.

6) Changing the Package: Introduction of a new package can also be used as a promotional technique. For example earlier,
edible oils were packed in tin cans in India which looked messy and dirty. Most of the larger firms have been using
transparent one litre PET (polyethylene terephthalate) bottles which look gleaming and fresh. The companies are using this
change of packaging quite effectively as an additional element in their advertising campaigns. Initially, Panama cigarettes
were introduced in a soft packet of twenty for the first time in India. The instant popularity of the brand was substantially
due to this novelty. The strategy of package changes is followed either to correct a poor feature in the existing
container or to take advantage of new materials.

7) Odd Size Packaging: Packaging can also be used ingenuously to avoid direct price comparison with the competing
products. This is done by a deliberate choice of odd size, while the competing brands follow a standard size. In India Maggi
Ketchup was introduced in the market in 400 grams bottle, while the industry-wise standard size was 500 grams bottle.

8) Packaging the Product Line: Packaging can be used to develop a family resemblance in the packaging of its several
products. Identical packages or the packages with some common line. This kind of packaging strategy had the benefits of
family branding. Under this strategy, when new products are added to a line, promotional values associated with old
products extend to the new ones.

9) Multiple Packaging: Placing more than one unit in one container is referred to as multiple packaging. This packaging
strategy increases the sales to a large extent.

10) Other Applications of Packaging as Marketing Tool: There are several other innovative ways in which the packaging
can be used for achieving higher sales. The area of processed foods the shelf-life of the product is an important
consideration. Any firm which can guarantee a higher shelf-life would be one-up on its competitors. Indian company, Tasty
Bite Eatables which is in the area of frozen and pre-cooked foods, identified the 18 months shelf-life of its products as the
major strength. The increased shelf-life is to a large extent due to better packaging.

Q – State the factors affecting Price determination.

Ans. FACTORS AFFECTING PRICE DETERMINATION

 The major factors affecting the price of product or service are as follows:

1) The value of the product to the buyer

2) Product costs

3) Competition

4) Legal considerations

5) Other elements of marketing.

Let us now discuss these factors in detail.

1. Value of the Product to the Buyer

A person buys a product only when it is of any value to him (i.e., it provides any utility to him) in relation to the price
demanded. Since a man's wants are unlimited and purchasing power is limited, he would buy those products which will
give him the maximum satisfaction in relation to the price paid. Each consumer, in a subjective manner, prepares
priority schedule of goods and services that can be purchased with his entire income. This scheduling is usually done
subconsciously and subjectively. Because of the subjectivity involved, it is difficult to measure the utility provided by a
product to a consumer.

2. Product Costs

It seems more logical to start the process of fixing price with costs. While fixing the price, the questions like: What is the
cost? What profit should be earned on the sale of products? They seem easier to answer than the question. What can
people pay for the product? Yet the third question (i.e., what people pay for the product) is the most important of the
three. Nevertheless, many marketers think in terms of total costs (manufacturing cost + distribution cost +
administering cost) plus a reasonable profit as the proper procedure for fixing the price.

3. Competition

While the upper and lower limits of the price of a product is set by keeping in view the value of the product to the buyer
and the cost of the product to the seller, the actual price to be 12 fixed is influenced greatly by the degree of competition
in the relevant market. If there is no competition or negligible competition in the market, the price will tend to be on the
higher side. On the other hand, a free and healthy competition may result in reduction of the price. The price and
features of the products offered by the competitors will greatly affect the price charged by the company. Moreover, even
the prices of substitute products should also be taken into consideration while fixing the price of the product.
4. Legal Considerations

Pricing is a very sensitive and important decision in marketing. An increase in price often attracts public criticism and
may also attract legal restraint. Suppose an essential commodity, like medicine, costs Rs. 10 per unit, whereas the buyer
is prepared to pay any amount in case of an emergency. In the absence of any competition, the seller will be tempted to
charge a very high price, say Rs. 100 per unit. However, the law can restrain the unscrupulous seller from charging 'what
the traffic will bear’. This can be done by the Government by declaring the said medicine as an ‘essential commodity'
under the Essential Commodities Act, 1955. Then, the seller does not have the freedom to charge above the price level
fixed by the government in accordance with the guidelines laid down in the law. A number of legislations seek to
regulate excessive discriminatory and unreasonable prices. The marketing manager must keep in view the legal
restraints in matters of price fixation.

5. Other Elements of Marketing

The elements of the company’s marketing (or the marketing methods) also have a significant effect on the pricing
decision of a product. The channel of distribution, quality and amount of advertising, efficiency of sales personnel, the
type of product differentiation, credit facility, after sales service, etc. affect the final price charged from the buyer. If the
company is in a strong position in these respects, it gives the company a freedom to charge relatively higher prices. If the
company is lacking or deficient on any of these counts, it may have to keep lower prices. For example, if a company is
providing home delivery or ‘money back’ guarantee or is selling through expensive outlets (like air conditioned
showrooms) the selling prices of its product can be on a higher side.

Q – State the functions of Channels of distribution.

Ans. FUNCTIONS OF CHANNELS OF DISTRIBUTION

The functions performed by distribution channels may be grouped into three categories as follows:

1) Transactional Functions

2) Logistical Functions

3) Facilitating Functions

1) Transactional Functions: Functions necessary to a transaction of the goods are called transactional functions.
Buying, selling and risk bearing functions come under this category. Participants in the channel of distribution
undertake these three functions. Producers sell the goods and intermediaries buy them. Later intermediaries sell the
goods and consumers buy them. Because of this buying and selling by the channel participants, title to goods changes
hands and goods flow from producer to consumer. If there is no willingness for buying and selling, there would be no
transaction. When goods are bought, it involves risk also. For instance, an intermediary bought goods from the producer
with the intention of selling at a profit. But he may incur loss due to fall in price. All the participants in the distribution
channel assume such risk of loss.

2) Logistical Functions: The functions involved in the physical exchange of goods are called logistical functions.
Distribution channel performs some functions like assembling, storage, grading and transportation which are essential
for physical exchange of goods.

Goods are assembled in sufficient quantity to constitute an efficient selling and shipping quantity. Sometimes, it is also
necessary to assemble a variety of goods to provide an assortment of items desired by buyers. Grading and packing of
goods facilitate handling and sale of goods promptly. Proper storage of goods prevents loss or damage as well as helps
regular supply of goods to consumers whenever they want. Transportation makes goods available at places where
buyers are located. In the channel of distribution all these functions are performed so that goods may reach market
place at proper time and may be conveniently sold to the ultimate consumers.

3) Facilitating Functions: These functions facilitate both the transaction as well as physical exchange of goods. These
facilitating functions of the channel include: postpurchase service and maintenance, financing, market information, etc.
Sellers provide necessary information to buyers in addition to after sales services and financial assistance in the form of
sale on credit. Similarly, traders are often guided by producers to help them in selling goods, while the traders also
inform producers about the customers' opinions about the products.

Thus a Channel of distribution performs a variety of functions such as buying, selling, risk bearing, assembling, storage,
grading, transportation, post-purchase service and maintenance, financing, market information, etc. But the relative
importance of storage is more important for perishable goods and bulky material such as coal, petroleum products, iron,
etc. In the case of automobiles and sophisticated electronic goods like computers, after sales service is very important.

Q – State the criticism against packaging.

Ans. Criticism of Packaging Packaging is also subject to severe criticism because of the following reasons:

1) After consuming the product, consumers throw-away the containers in public places causing environmental
problems. How to dispose of used containers is one of the major problems.

2) Scarce raw materials are consumed for the manufacture of containers. This depletes our natural resources. However,
this criticism is offset as more and more recycled materials are used for packaging.

3) Packaging increases the product cost and this leads to higher prices to consumers. But it is argued that effective
packaging reduces the transport costs and the losses due to spoilage. The benefits so derived may offset the cost of
packaging.
 4) Health hazards occur from some forms of plastic packaging and some aerosal cans.

5) It is also felt that sometimes packaging is deceptive. Customers may feel that the product inside is of good quality due
to attractive packaging. Products of poor quality may be packed in attractive containers to catch the attention of
customers.

Q - Write brief notes on the following:

i) Break-even analysis

ii) Cost-plus pricing

iii) Going-rate pricing

iv) Profit-maximisation objective

v) Survival objective

vi) Perceived-value pricing

Ans.

1. Break-even analysis

This pricing method is slightly different from the cost-plus pricing method. Here, the firm wants to determine a price that
will enable it to earn the desired profit. For the purpose, the break-even analysis is used by the firm and the break-even
point is determined.

A break-even analysis relates total cost to total revenue. A break-even point is that level of production at which the
total sales revenue (TR) equals the total cost (TC). In other words, a break-even point is the level of production or
supply where firms neither earns any profit nor suffers any loss. It is represented by the intersection of TC and TR.
There are different break-even points for different selling prices. Any amount of sale above the break-even point gives
profits to the firm. If the amount of sale is below the break-even point the firm will incur loss. The break-even point can be
calculated in the following way:

Break - even Point (In Unit) - Total Fixed Costs / Per unit Contribution

= Total Fixed Costs /Selling price per unit (p) - Average variable costs per unit (p)
or B. E. P = F / P-V

2. Cost-plus Pricing

Some firms set the selling price of their products by aggregating all the costs of the product (including the manufacturing
cost, distribution and marketing costs) plus a predetermined margin of profit.

The pricing method enables the firm in covering all the costs and, in addition, to earn the desired margin of profit. Thus,
the method is quite justifiable on grounds of fairness to both the sellers and the buyer. The method is also easy to
understand and implement as there is generally less uncertainty about cost than the demand for the product. The margin
of profit to be added to the cost has to be determined by the company. It can vary from industry to industry and from
situation to situation. Retailers using the cost-plus method of pricing do not necessarily apply the same percentage of mark-
up to every item.

3. Going Rate Pricing

This is the important method under competition-oriented pricing approach. In this case, the firm does not maintain an
elaborate record of various product costs. The firm also does not try to ascertain the difference in the intensity of demand
or the perceptions of the value of the product in the minds of the buyers. The firm decides the price of its products on the
'goingrate prices’ in the market. The price is not necessarily the same as that charged by the competitors or by the industry
leader, it can be lower or higher. Whenever the industry leader or the trade association increases / decreases the price, the
firm follows them. The practice of fixing the going rate price is quite popular among traders, especially among the retailers.

4. Profit Maximisation:

Profit maximisation is the most common objective of business firms. The firm which aims at maximising profit will charge
heavy margin of profit and, therefore, keep high prices. The major limitation of this objective is that the term profit
maximisation often has an adverse connotation. It suggests profiteering, high prices and consumer exploitation.

If profit maximisation is the objective of the firm, it will estimate the demand and costs at different prices, and select the
price which will bring maximum profits.

The objective of profit maximisation is likely to be far more beneficial to a company and to the public if it is practiced
over the long run. To maximise profits in long run, however, the firms sometimes have to accept short run losses. A
Company entering a new market segment or introducing a new product often fix low prices to attract new buyers.
5. Perceived-value Pricing

Different buyers often have different perceptions of the same product on the basis of its value to them. A cup of tea is
priced differently by hotels and restaurants of different categories, because buyers will assign different value to the same
item. When you follow this ‘perceivedvalue’ method of pricing, you have to ascertain how different buyers perceive the
product in terms of its quality, features and attributes (like colour, size, durability, softness etc.), and how do they perceive
the value of the product in terms of such product differences.

Q – Describe the Communication Process.

Ans. Communication itself may be defined as “the process of influencing others behavior by sharing ideas, information or
feeling with them,” The basic goal of communication is a common understanding of the meaning of the information being
transmitted. In other words, the receiver of the information should understand as closely as possible the meaning intended
by the sender of the message. It is largely the responsibility of the sender to ensure that this purpose is achieved.

Elements of Communication Process

Communication has been described as “who says what to whom through which channels with what effect”. We notice that
the two major parties involved in the process are the sender (who) and the receiver (whom). The tools that senders use to
reach their extended receivers are called messages and channels (media). Thus, communication occurs when : 1) a sender
transmits a message, 2) a receivers received that message, and 3) the sender and the receiver have a shared meaning. The
communication process itself involves the functions of encoding, decoding, response and feedback. Let us understand each
of these elements in communication process:

1. Sender: It is also called the source. Sender is the party who sends the message to another party called the receiver or
destination. The sender is engaged in the mental process of putting thought into a form in which it can be
communicated.

2. Receiver : Person for whom the message is intended and is an active part of the communication process. How meaning
is assigned to a message by the receiver depends upon on the receiver's attitudes, values, previous experience, needs
and the timing of the message.

3. Encoding: It is the process of translating the idea to be communicated into a symbolic message consisting of words,
pictures, numbers, gestures, etc. This step is necessary because there is no way of sending an idea from one person to
another in its raw or pure form.

4. Message: It is a combination of symbols representing objects or experiences that a sender transmits in order to induce a
change in the receiver's behaviour. Since most symbols (words, pictures, numbers, etc.) have more than one meaning,
the symbols selected for the message should be simple and familiar to receivers.
5. Medium: It is a means by which the sender conveys the message to the receiver. Broadly there are two types of media:
1) inter personal media, and 2) mass media. In inter personal medium there is a direct contact between the sender and
receiver. For example, in personal selling salesperson contacts the customers and directly communicates about the
product. Here, communication flows in both directions and the salesperson receives immediate and direct feedback.
This enables the salesperson to have greater control over the communication process. Mass media are non-personal
communication media which provide contact between the sender and a large number of receivers simultaneously.
Newspapers, magazines, television, radio, hoardings, billboards, etc., are examples of mass media.

6. Decoding: Just as the sender encodes the message, the receiver must decode it. Decoding is the process by which the
receiver attempts to convert symbols conveyed by the sender into a message. Receivers may decode or interpret the
message in different ways because of their individual characteristics, experiences and backgrounds. For example, a
famous airline had once advertised “if you fly with us you will never walk again”. Although the airline intended to
convey to the receiver (i.e., potential passengers) that the airline provides such an excellent services that passengers
would always want to fly with this airline, it could be misunderstood by many as a threat or a warning of physical
damage to their limbs.

7. Response: Receiver responds to sender's message by reacting in different ways such as asking questions, buying or not
buying the product or seeking more information, etc. Thus, response is a set of reactions a receiver has after being
exposed to the message.

8. Feedback: It is the communication from a receiver to the sender about how he/she understood the message and reacted
to it. In this reverse flow of communication, receivers encode their messages and send them to the sender. The sender
must then decode the feedback message. The longer it takes the sender to receive and decode the feedback, the less
valuable it becomes. Feedback is more direct, more frequent and more immediate when interpersonal communication
(sales personnel) channels are used e.g. salesperson to prospect. Good salespeople receive feedback directly and
immediately from their prospects and can modify their sales presentations to suite the prospect's requirements.

Q – State the Qualities of a good Sales Person.

Ans. Qualities of a Good Salesperson

Although different types of selling situations require different qualities in salespeople, there are, however, some common
qualities that are needed in all types of sales work. The extent to which each quality is required will vary according to the
type of sales job.

1) Physical Qualities: This relates to the person's health and appearance. As we have seen that most sales jobs involve a lot
of travelling, sometimes under adverse conditions, good health is very important. Good health also has an indirect effect on
the person's mental make-up and general attitude towards work. Physical illness might lead to a state of mental depression
and frustration. A good physical appearance is also necessary. This means a neat, clean and impressive dress. A sales person
should look well groomed.
2) Communication Ability : Creative selling in particular and other types of selling in general, involve a two
communication process. The success of a sales presentation depends a lot on the presentation quality of the salesperson.
This means that the salesperson should have a controlled voice (no speech defects), a good command over the language,
good impression and the ability to listen. A salesperson should be not only a good talker, but also a good listener.

3) Mental Qualities: Characteristics such as analytical ability, intelligence, conceptual skills, etc., are also essential for a
good salesperson. He should be able to apply his mind to various problems of customers.

4) Education and Experience: The Salesperson should have the minimum educational qualifications needed for the job. In
most situations, he has to be at least a graduate, except in cases where sales engineers are required. For jobs requiring
experience, greater emphasis is given to related work experience.

5) Enthusiasm: It is another essential quality required in a salesperson, especially where creative selling is involved. A
salesman should be excited and proud about his product and his company. For this he needs to have a thorough knowledge
of not only his company and product, but also of competitors. Enthusiasm and sincerity can help in gaining the prospect's
attention.

6) Courtesy: Good manners are important to all salespeople including order takers. They must listen to prospects
attentively, speak considerately and differ respectfully.

7) Initiative: Initiative is very crucial in selling. Since most salespeople are very much on their own, they have to be self-
starters. They have to seek out new customers, and find new ways to sell to old customers. For all this, salesperson should
have initiative. +

8) Empathy: This refers to the ability to put one self in the other's shoes. A salesperson should see the sales problem from
the buyer's point of view.

9) Dependability: The salesperson should be able to handle anything not covered in his training. The company should be
able to depend on him for dealing with unfamiliar situations.

10) Integrity and Honesty: Since the salesperson has access to the company's funds, he needs to be totally honest in
handling this responsibility. He should not hide facts or mislead the company even if he loses sales.

Q – State the Features of Rural Market.

Ans. Features of Rural Markets

There are certain specific features of rural market that need to be considered before going for rural marketing. These are as
follows:

1. Population is large and scattered - In India around 65 percent of population lives in rural areas. Rate of increase in
population is also higher. This large population is scattered in over six lakh villages. Although it poses some difficulty to the
marketers but also gives them a huge and promising market.

2. Rising purchasing power- Gone are the days when income level of rural people was low. With the green revolution and
opening up of the economy after 1990, India has seen an overall growth. This has raised the income level of rural
consumers as well. It is needless to mention that higher the income level, higher shall be the purchasing power and
demand.

3. Steady market growth- Rural market is growing steadily over the years. Consumption pattern and preference is also
changing. Unlike the past years, rural market has demand for branded products along with the traditional products such as
bicycles, mopeds and agricultural inputs. IT and media has further increased the awareness amongst the rural consumers
and there is a surge in demand of cosmetics, FMCGs, consumer durables etc. over the years.

4. Development of infrastructure facilities- Infrastructure facilities have developed in the rural areas. This has reduced
the distance of villages to the cities. With the construction of roads and transportation, communication network, rural
electrification and several public service projects run by the government, connectivity of villages to cities has increased.
This has increased the scope of rural marketing.

5. Low standard of living- Although many developments are taking place in rural areas in India, still the fact remains that
the standard of living in villages is relatively lower for people who comes under the second and third groups of consumers
(see section on rural consumers, discussed above in this unit. People who have sizeable land holdings but they are not very
rich farmers (second group) and the people who are daily laborers (third group) who mostly demand the goods and services
which are necessities, in small quantities more frequently.

Q – State the advantages & Disadvantages of Direct Marketing.

Ans. Advantages and Limitations of Direct marketing

Advantages: Direct marketing is quite an established concept. What is important here is to understand the fact that it is
gaining importance in today’s time. It has several benefits. Few of them are listed below:

• It allows the marketers to market the products and services directly to the target customers.

• It enables to measure the customers’ response quickly.

• It reaches the target customers with more personalised messages.

• It enables the marketers to set realistic goals.

• It is less costly. With a lesser cost maximum profit can be earned.

• It establishes proper interaction with the customer and builds and maintains relationship with them.
 • This combined with other loyalty programs may provide better results to the company.

Limitations:

Limitations of direct marketing are as follow:

• People may find direct marketing intrusive and annoying. As not everyone may like to get promotional emails or calls
especially when they are absorbed in their activities.

• Response rate of direct marketing is very low. This means most of the time and efforts are going waste by contacting the
uninterested customers.

• Tools such as telemarketing are costly affair. It may not give the desired return on investment.

• Competition is fierce and it may become difficult for the companies to compete with their competitors’ messages.

Q – State the Objectives of Advertising.

Ans. Generalised Objectives

Typically advertising has one or more of the three fundamental or basic Objectives:

i) To inform target customers. This information essentially deals with areas such as new products introduction,
price changes or product improvement or modifications.

ii) To persuade target audiences, which includes functions such as building brand preference, encourage people to
switch from one brand to the other brand etc.

iii) To remind target audience for keeping the brand name dominant.

Generalised advertising objectives fall under one or more of the following categories:

1) To announce a new product or service: In a saturated market, the introduction of new products and brands can give the
seller a tremendous opportunity for increasing his sales. In the case of innovative products (totally new to the market) such
as 3D printers and Apple Airtags, a great deal of advertising has to be done over an extended period of time to make people
aware of “What the product is” and “What it does” and “How the customer would find it useful”. In addition, the
advertisement also carries information about the availability of the product and facilities for demonstration/trial, etc.
Similarly new brands of existing product categories are also promoted quite aggressively.
2) Expand the market to new buyers: Advertising can be used to tap a new segment of the market. hitherto left unexplored.
For example TV and Video Camera manufacturers who have been concentrating on domestic users and professionals can
direct their advertising to the government institutions and large organisations for closed circuit TV networks, security
systems and educational purposes. Another way of expanding the consumer base is to promote new uses of the product. For
example, Johnson's baby oil and baby cream were originally targeted to mothers.

3) Announce a product modification: For such advertising, generally, the term “new”, “improved” etc. , are used as prefixes
to the brand name. For example, “New turbo power cleaner” gives the impression of a new, although there may be no
tangible difference between the earlier brand and the new one. Sometimes a minor packaging change might be perceived
by the customer as a modified product e.g., “a new refill pack for Nescafe”.

4) To make a special offer : On account of competition, slack season, declining sales, etc., advertising may be used to make a
special offer. For example Buy groceries online and get Rs. 1 deal at Flipkart. We often come-across advertisements
announcing. “Rs. 2 off” on buying various quantities of products such as soaps, toothpastes, etc. Hotels offer special rates
during off season. Similarly many products like room heaters, fans, airconditioners, etc. , offer off season discounts to
promote sales.

5) To announce location of stockists and dealers: To support dealers, to encourage selling of stocks and to urge action on
the part of readers, space may be taken to list the names and addresses of stockist and dealers. Look at Figure 16.4 for the
advertisement which gives the addresses of the dealers.

6) To educate customers: Advertising of this type is “informative” rather than “persuasive”. This technique can be used to
show new users for a well established product. It can also be used to educate the people about an improved product e.g.
Pearl Pet odour free jars and bottles. Sometimes societal advertising is used to educate people on the usefulness or harmful
effects of certain product. For example, government sponsored advertising was directed at promotion consumption of "Eggs
and Milk". Similarly, advertisements discouraging consumption of liquor and drugs.

7) To remind users: This type of advertising is useful for products which have a high rate of “repeat purchase” or those
products which are bought frequently e.g., blades, cigarettes, soft drinks, etc. The advertisement is aimed at reminding the
customer to ask for the same brand again.

8) To please stockists: A successful retail trader depends upon quick turnover so that his capital can be reused as many times
as possible. Dealer support is critical, particularly for those who have limited shelf space for a wide variety of products.
Advertisers send “display” material to dealers for their shops, apart from helping the retailer with local advertising.

9) To create brand preference: This type of advertising does two things: (i) It creates a brand image or character. (ii) It tells
the target audience why is Brand X better than Brand Y. In this type of advertisement the product or band acquires a
‘personality’ associated with the user, which gives the brand a distinctive ‘image’. The second type of advertising also
known as ‘comparative advertising’ takes the form of comparison between two brands and proves why is one brand
superior. Advertisements of “Colgate and Pepsodent, “Reliance Jio and Airtel” are examples.

10) Other objectives: Advertising also helps to boost the morale of sales people in the company. It pleases sales people to see
large advertisements of their company and its products, and they often boast about it. Other uses of advertising could
include recruiting staff and attracting investors through “Public Issue” advertisements announcing the allotment of shares,
etc.

Q – State the meaning & Role of middleman.

Ans. MEANING AND ROLE OF MIDDLEMEN

The term middlemen refer to the business organisations which are the link between producers and consumers of goods,
and render services in connection with the purchase and/or sale of products as they move from producer to the consumers.

Some people often question the wide use of middlemen and feel that it may not only delay the availability of goods but also
add to the cost of distribution and hence, the price charged from customers may be higher. But it is not the case in practise.
In fact, the middlemen play a very useful role in the distribution of goods by providing a variety of functions at reasonable
cost. They undertake all the channel functions (such as assembling, grading, packaging, storing, financing, risk-bearing,
etc.). We may however put them more specifically as follows:

1) Creation of utilities: By performing various functions in the process of distribution middlemen create place utility, time
utility, convenience utility and ownership utility in the goods and services. Thus, the channels greatly help in market by
adding value to the products. In fact, in the case of several consumer products, the value added in distribution is higher
than that added during manufacture/production.

2) Economy in effort: Middlemen greatly increase the efficiency of the exchange process by reducing the amount of effort
on the part of the manufacturers contacting the consumers. This, in turn, reduces the total cost of distribution of the
products. For example, assume that there are five manufacturers and ten customers.

3) Market coverage: With the increasing liberalisation in trade, the products manufactured at one place have to be
distributed throughout the length and breadth of not only one country but many nations of the world. This vast coverage is
possible only through effective management of the distribution channels.

4) Provide local convenience to consumers: Merchant middlemen like retailers are located at convenient shopping
centres. They provide ready delivery of goods to the consumers at the convenient points.

5) Provide field stocks: The agents and wholesalers are spread all over the country. They buy in bulk and keep the goods in
stock. The retailers can approach them any time and buy their requirement. The producers, therefore, need not stock their
goods in different cities which would be quite a cumbersome activity involving huge investment and management
problems.

6) Financing: The agents finance the distribution activity in many ways. They often pay cash for their bulk purchases from
the producers and even advance money to them against their orders. The funding of field stocks is thus fully handled by the
middlemen.
7) Servicing: They arrange for the after sales services and handle all kinds of complaints by the consumers locally. The
manufacturer does not have to open his own service centres at all places.

8) Help in promotion: They also help the sales promotional activity through displays and salesmanship. It is literally
impossible for the producers to organise such activity more effective through any other means. Even otherwise, the
middlemen being local people are more effective.

Q – State the Functions of Retailers.

Ans. Functions

Like the wholesalers, retailers also perform a variety of functions connected with the buying and selling of goods. They, in
brief perform the following functions:

1) Estimating the demand: All retailers - big or small have to make an estimate of the demand for different products and
have to determine the nature of products that consumers need to be supplied.

2) Procurement of goods: Most retailers deal in a variety of products. So they may have to procure goods from different
wholesalers. Besides, they must decide to buy from those wholesalers who supply goods suited to the requirements of
consumers considering the quality and price.

3) Transportation: Usually the retailers are to arrange the transportation of goods procured from the wholesalers' place.
Sometimes delivery is also arranged by the wholesalers on the basis of orders placed with their salesmen.

4) Storing goods: Small-scale retailers have limited space for the goods to be kept in stock. Large retail stores often have
godowns to store different varieties of goods in adequate quantities. But in all cases, goods have to be held in stock so as to
meet the customer’s needs. For this purpose storage of goods must be so arranged that customers may be served without
delay. They must be given an opportunity to select goods of their choice. This is often done by display of goods on shelves
and in show cases.

5) Grading and packaging: Large-scale retailers often have to sort out goods according to the quality and price to be
charged. They also make convenient packages of goods for the benefit of consumers. For instance, fruit vendors purchase
apples in containers (boxes), sort out on the basis of size and charge different rates for different sizes. Spices which are
procured in bags, may be divided into small packets of 100 or 200 grams each.

6) Risk-bearing: Since goods are held in stock, the retailers are to bear the risk of loss on account of deterioration of quality,
fire, theft, etc. Large retail stores are insured to cover the risks of theft or fire. But losses due to damage or deterioration of
quality caused by improper storage cannot be insured.

7) Selling: The main function of retailers is selling the goods to ultimate consumers. They have to satisfy the needs and
preferences of different types of customers and deal with them tactfully and politely so as to make them regular buyers.
Q – State the Advantages & Disadvantages of Departmental stores.

Ans. Advantages:

Departmental stores have the following advantages:

1) Departmental stores make shopping convenient to consumers by providing them a whole range of goods in one building.

2) The central location attracts a large number of customers leading to a large turnover. Thus, they can afford to make large
profits even with smaller margins.

3) Bulk-buying by Departmental stores enables them to obtain heavy discounts from manufacturers, and thus buy at a
cheaper rate. There are savings in freight charges as well.

4) Departmental stores can afford to have effective advertising through press, radio and television and thus they are able to
attract more and more customers.

5) Being large business units, departmental stores can afford to employee skilled and expert staff for all their operations
and thus they are able to achieve a high degree of efficiency in their working.

Disadvantages:

Departmental stores suffer from the following limitations:

1) Experience has shown that operating costs of departmental stores tend to become very high because of the necessity to
run some departments at a loss to attract customers and heavy emphasis in service. As a result, more often, their goods may
be marked at higher prices.

2) Central location also involves higher rents and thus higher overheads. Central location may not be convenient to persons
living in far off places which means that they will make their purchases of articles of everyday use from nearby shops.
However, in recent years, departmental stores have branched themselves out to suburban areas as well to reach the
customers nearer their location.

3) It may not be possible for customers in general to receive personal attention which is possible when they deal with small
retailers.

Q – State the Objectives of physical distribution.

Ans. OBJECTIVES OF PHYSICAL DISTRIBUTION

Determining the objectives is the first step in managing an activity in a planned and systematic way. It is so because the
objectives serve as a guiding force for chalking out the strategy for the successful completion of the task. In the area of
physical distribution too, the strategy will depend upon the objectives sought to be achieved in this regard. Thus, it is
important for the firm to specify the major objectives of the physical distribution system.

The objective of any physical distribution system is to move the goods to the right place at the right time, and at the lowest
cost. Thus, customer service and cost reduction are the two basic objectives of an effective distribution system in an
organisation. However, there may be some more specific objectives in a given marketing situation. Some such objectives are
described in detail below:

Improving Customer Service : As you know, the marketing concept assumes that the sure way to maximise profits in the
long run is through maximising the customer satisfaction. Thus, an important objective of all marketing efforts, including
the physical distribution activities, is to improve the customer service. This in turn, produces better sales and profits.

Reduce Distribution Costs : Another most commonly stated objective is to reduce the cost of physical distribution of the
products. It has already been explained that the cost of physical distribution consists of various elements such as
transportation, warehousing and inventory maintenance, and a reduction in the cost of one of the elements may result in
an increase in the cost of the other elements. Thus, the objective of the firm, should be to reduce the total cost of distribution
and not just the cost incurred on any one element. For this purpose, the total cost of alternative distribution systems should
be analysed and the one which has the minimum total distribution cost should be selected.

Generating Additional Sale : Another important objective of the physical distribution system in a firm is to generate
additional sales. A firm can attract additional customers by offering better services at lower prices through improvements
in the physical distribution of the products. For example, by decentralising its warehousing operations or by using economic
and efficient modes of transportation, a firm can achieve larger market share. Also by arresting the out-of-stock situation,
the loss of loyal customers can be arrested.

Creating Time and Place Utilities : The physical distribution system also aims at creating time and place utilities in the
products. Unless the products are physically moved from the place of their origin to the place where they are required for
consumption, they do not serve any purpose to the users. Similarly, the products have to be made available at the time they
are needed for consumption. Both these purposes can be achieved through the physical distribution system. For example, in
order to create maximum time and place values, the products should be kept in warehouse during the period they are
available in excess till they are in short supply. For this the warehouse should be located at places from where they can be
delivered and sufficient stocks levels should be maintained so as to meet the emergency demands of the customers quickly.

A quicker mode of transport should be selected to move the products from one place to the other in a short time. Thus, time
and place utilities can be created in the products through an efficient system of physical distribution.

Price Stabilisation : Physical distribution may also aim at achieving stabilisation in the prices of the products. It can be
achieved by regulating the flow of the products to the market through a judicious use of available transport facilities and
compatible warehouse operations. For example, in the case of Industries such as cotton textile industry using agricultural
products as raw material, there will be fluctuations in the supply of raw materials. In such cases if the market forces are
allowed to operate freely, the raw material would be very cheap during harvesting season and very dear during off season.
This fluctuation may be stabilised by keeping such raw material in warehouses during the period of excess supply (harvest
season) available during the periods of short supply. Thus, prices can be stabilised with the help of physical distribution
activities.

Q – Describe Integrating Marketing Communicaton.

Ans. INTEGRATED MARKETING COMMUNICATION

As the marketers today use variety of communication channels to reach customers, marketing communication have
assumed a new meaning. Companies invest heavily and use number of promotion tools in order to promote their products
and services. The main problem which arises here is that these different tools are designed by different people and put
forward before customers through different sources. These can result in delivering conflicting, blurred or inconsistent
business messages to the target audience. Marketing communication becomes effective and give the desired results only
when all the communication or promotion tools are integrated and co-ordinated to give a clear and consistent picture of the
company’s products and services. Therefore, Integrated Marketing Communication (IMC) has been gaining popularity in the
21st century.

In the words of Philip Kotler, “carefully integrating and co-ordinating the company’s many communications channels
to deliver a clear, consistent and compelling message about the organization and its products is integrated
marketing communication”.

The idea behind integrated marketing communication is that the marketers need to carefully combine the promotion
elements into a co-ordinated promotion mix.

Q – Describe the Personal Selling Process.

Ans. THE PERSONAL SELLING PROCESS

As you know, the basic objectives of personal selling are:

1) to find prospective customers, 2) to convert these prospective customers into customers, and 3) to keep them (retain
them) as satisfied customers. The importance of each objective to an organisation depends upon the role played by personal
selling in the overall promotion mix.

The personal selling process, also known as the creative selling process or selling dynamics or salesmanship, explains how
do salespeople find prospects, convert customers and keep them as customers. This process involves a series of steps as
follows: 1) prospecting, 2) pre-approach, 3) approach, 4) sales presentation 5) handling objections, 6) closing the sale, and 7)
follow up. Let us study these steps in detail one by one.
Prospecting

The process of searching (locating), identifying and qualifying potential customers is referred to as prospecting. Sales calls
by salespersons to regular customers are only a part of the sales job. In fact new customers also must be sought for the
growth of the business. The first step in this direction is to generate leads. Sales leads are the names of people or
organisations that might have some use for the salesperson’s product. The sources of these leads could be trade journals
and trade directories, advertising inquiries (such as coupons returned to the organisation in response to an advertisement),
business sections of newspapers, trade shows and even present customers.

The Pre-approach

It is part of the salesperson’s home-work before contact with the prospect. It involves gathering more specific information
about the prospect’s background, product needs, personal characteristics, etc. The information could cover a wide range of
areas. For instance in the case of individuals the information may include: the prospect's age, marital status, hobbies,
interests, number of years in business, education, etc. Similarly in the case of companies, information may include:
background of the company, types of products, present suppliers, actual demand, the prospect’s decision-making authority,
people who can influence decisions, etc.

The Approach

It deals with making initial contact and establishing rapport with the prospect. It is the manner chosen by the salesperson to
gain access to the prospect and get the prospect’s attention and interest. The quality of the first impression will determine
whether the salesperson will be able to develop an ongoing relationship-with the prospect.

The Presentation

This is the main phase of the sale. It is an attempt by the salesperson to communicate the product’s benefits and explain
appropriate courses of action to the potential buyer. Miniature models of the product, along with slides, pictures, video
tapes, booklets, flip charts, etc., help to communicate the product’s message to the prospect.

Handling Objections

If the prospect says no, he is interested. Even if the prospect is friendly and interested in the product, he may have
reservations (doubts) about the purchase. Questions or objections are likely to arise. Since objections explain the reason for
resisting or delaying the purchase, the salesperson should listen and learn from them.

Closing the Sale

It has been said that “if a salesperson does not ask for the order and get it, he is not only wasting his time but is working for
the competition”. There comes a point when the presentation must be drawn to its logical conclusion i.e., close the sale
which means ask for the order.

Follow up
 Getting an order is not the end of the selling process. It is in fact the beginning. The salesperson has to follow-up to make
sure that everything was handled as promised, and the order was shipped on time and received on time by the prospect. A
good follow-up is the key to building up loyal customers and increasing business. The customer should be reassured that he
has made the right purchase decision, and the salesperson will always be ready to help in case of any future problem.

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