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Marketing ManagementMBA Degree Examination April2010

PartI1. What is customization? Explain with an example.Ans: customize means to build, fit, or alter according to individual specifications. Customization

as ...producing in response to a particular customers desires. Customization is intended to addincreased customer perceived value to a product, since a customized product compared to amass produced productincreasingly fulfills the need of the customer.Product customization can be defined as producing a physical good or a service that is tailored toa particular customers requirements. In this context, customer involvement is an importantissue, because customers dictate what the enterprise has to produce. In the case of physicalgoods, product customization can occur ex post after manufacturing by the retailer or thecustomers themselves.

The internet has greatly increased the possibilities for mass customization. For example, Dell, acomputer company, established its leadership of the PC market by allowing customers more or

less to assemble their own PCs online. The company put together the components as requested atthe last minute before delivery. Ford likewise allows its customers to build a vehicle from apalette of online options.

2. Describe the use of Marketing Information System.Ans: A marketing information system (MkIS) consists of people, equipment and procedures togather, sort, analyze, evaluate and distribute needed, timely and accurate information to themarketing decision makers.

Role of MkIS:

To assess the managers information need

To develop the needed information To distribute the information in a timely fashion.

The components of MkIS are

Internal records system Marketing intelligence activities Marketing research system Marketing decision support system (MDSS)

I. Internal record system:Important opportunities and problems can be spotted by analyzing internal reports on orders,

sales, prices, costs, inventory levels, receivables, payables etc.a. The order to payment cycle: This is the core of the internal record system. Orders are

dispatched to the firm. The sales department prepares the invoice and sends to variousdepartments. Out of stock items are back ordered. Shipped items are accompanied byshipping and billing documents that are sent to various departments.

b. Sales information system: Marketing managers need up to the minute report on currentsales. Sales representatives have to access information about prospects and customers &

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provide immediate feedback & sales reports. New software for sales force automationcalled sales CTRL is helping a lot.

3. Describe the basis for marketing segmentation.Ans: It is the process of disaggregating the total market for a given product into a number of

sub-markets. The heterogeneous market is broken up in the process into a number of relativelyhomogeneous markets..Benefits of market segmentation:

Market segmentation helps the marketing man to distinguish one customer group fromanother in the given market.

It enables him to decide which segment of the market should form his target market. It helps to develop the marketing program on a predictable and reliable basis. The product mix, the distribution mix, the promotion mix and the pricing policy that suits

the particular customer group can be easily achieved.

Marketing efforts become more efficient and economical. It helps to assess how far the existing offers in the market from competitors match the

need of the customer segment. It helps in spotting out relatively less satisfied segments and uncovered segments.

Bases of market segmentation:Markets can be segmented using several relevant bases. They can be based on the variouscharacteristics of the customers such as age, sex, education and geographical aspects etc.Usually, the variables are divided into two broad categories:a. Consumer characteristicsgeographic, demographic, psychographic etcb. Consumer responses ( behavioral )benefits sought, use occasions or brandsGeographic segmentation: Segmentation is based on region, country, state, district, urban, ruraland climatic characteristics of the area. The company can operate in one or few or all geographicareas but pay attention to local variations.

Region:City or metro size - based on population size it can be divided into different classesDensity: urban, suburban, ruralClimate: northern, southern etcDemographic segmentation: Segmentation is based on the following parameters* Ageunder 6, 611, 1219 etc* Family size1 -2, 3-4, 5 + etc* Gendermale, female* Incomehigh income group, middle income group, low income group.* Occupationprofessional, technical, managerial, proprietor, clerical etc* Educationunder school, metric, +2, degree, etc

* ReligionHindu, Muslim, Christian, Sikh, Buddhist, Jain etc* NationalityIndian, African, European, American etc* Social classhigh, middle, lowPsychographic segmentation: (Lifestyles and attitudes)Variables such as personality types, lifestyles and value systems form the basis of psychographicsegmentation. It facilitates the selection of people who en masse react in a particular manner to aparticular emotional appeal & share common behavioral patterns or buyers.* Lifestyle

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* Personality - compulsive, gregarious, authoritarian, ambitiousBehavioral segmentation: The basis for this segmentation is that different customer groupsexpect different benefits from the same product and as such their motivation in owning it andtheir behavior in buying it will be different. The variables in this are* Occasionregular, special

* Benefitsquality, economy, service, speed* User statusnon user, ex user, potential user, first time user, regular user.* Usage ratelight, medium, heavy* Loyalty statusnone, medium, strong, absolute* Readiness stageunaware, aware, informed, interested, desirous, intending to buy* Attitude towards the productenthusiastic, positive, indifferent, hostileVolume segmentation: The quantity or the potential quantity of purchase is the base forsegmentation. The variables are bulk buyers, small scale buyers, regular buyers, one timebuyers.Multi attribute segmentation (Geo clustering):

Marketers these days combine several variables in an effort to identify smaller, better defined

target groups. One of the developments in this area is called geo clustering and it yields richerdescription of consumers and neighborhoods than traditional demographics.

4. Packaging is a silent promotion of FMCG products-Discuss.Ans: PACKAGING:A package is the actual container or wrapper. Packaging is a business function. It includes theactivities of designing and producing container for a product.Purpose/Importance of packaging:

To protect the product on its way to the consumer. Provide protection after the product is purchased to the time it is consumed. Be part of the companys trade marketing program to meet the needs of wholesalers

and retailers. Be part of a companys consumer marketing program for identification by consumers. To face competition. To act as a five second commercial for the product. Retailers prefer products with attractive package. Rising consumer affluence is making people willing to pay extra for convenience,

appearance and dependability of the package.

Helps in building company and brand image. Innovation opportunity in packaging brings benefits to customers and profits to

producers.

Packaging strategies:a. Packaging the product line: A company has to decide whether to develop a family

resemblance when packaging related products. Family packaging uses either highlysimilar packaging for all products or packages with a common and clearly noticeablefeature.

b. Multiple packaging: This is the practice of placing several units of the same product inone container. It also helps in increasing the sale. E.g towels, toffees etc

c. Changing the packaging: This may be done in order to

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- correct a poor feature in an existing package- take advantage of a new development in packaging- less expensive to design an attractive package than going for heavy advertising campaign.Criticism of packaging:

Packaging depletes natural resourcesif it is not recycled or biodegraded Packaging is too expensive Some forms of plastic packaging & aerosol cans are causing health hazards. Packaging is deceptive Used and discarded packaging contributes significantly to solid waste problem.

Recent developments in Packaging:

1. Aseptic container made of lamination of paper, aluminum foils and plastic ( tetra pack ).Keep perishables fresh up to 5 months without refrigeration. It costs about of that ofcans and 1/3 of bottles. It is not bio degradable.

2. Sachet PackagingPackaging is a silent promotion of FMCG products Because of the increase in self-service

retail outlets the packaging now had to do much of the work of selling your brand against a largenumber of competitors with similar products. While this adds to the pressure on packagingdesign to perform, it cannot be expected to sell what is not there the product itself must meetcustomers expectations. Contemporary packaging design is now the crucial brand personality

vehicle for most FMCG brands, particularly if they cannot support a TV campaign. The packdesign and graphics can help to create what Paul Southgate, of Brand House, calls totalbranding, where all the elements work to actively express the brand personality. Active

branding is designing each element to add meaning to the brand personality, while passivebranding relies on the meaning being added from external sources. Passive branding is thereforeless controllable in terms of what the perception of the brand is, and usually takes longer to buildover time. The first step of any new pack design is to decide whether it is a repositioning of an

old brand pack or a new product development task.

5. Explain the functions of Marketing Channels.Ans: A marketing channel is a set of interdependent organizations involved in the process ofmaking a product or service available for use or consumption.Objectives of distribution management:

Convenience of consumers to get the product Choice of selection of goods Minimum incidence of breakage or damage during transportation Optimal distribution cost Effective and sincere promotional activity. Effective display and storage of goods Effective location of godown and warehouses

Functions

Transactional Function - -Buying. Purchasing products for resale or as an agent for supply of a product-Selling. Contracting potential customers, promoting products, and soliciting orders-Risk Taking. Assuming business risks in the ownership of inventory that can become obsoleteor deteriorate.

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Logistical Function

-Assorting. Creating product assortments from several sources to serve customers-Storing. Assembling and protecting products at a convenient location to offer better customerservice.-Sorting. Purchasing in large quantities and breaking into smaller amounts desired by customers.

-Transporting. Physically moving a product to customers.

Facilitating Function

-Financing. Extending credit to customers-Grading. Inspecting, testing, or judging products, and assigning them quality grades-Marketing information and research. Providing information to customers and suppliers,including competitive conditions and trends

6. Explain HMS and MMSAns:HMS

A merger of firms on the same level in order to pursue marketing opportunities. The firmscombine their resources such as production capabilities and distribution in order to maximizetheir earnings potential. For example, a soft drink company may combine with a chips producerand the two products are marketing and distributed together.Joining of two or more corporations on the same level for the purposes of pursuing a newmarketing opportunity. Usually a horizontal marketing system is established so that theindividual members can combine resources to make the most out of the marketing situation.Products from each member can be marketed and/or distributed together, such as a bottlemanufacturer combining with a producer of dehydrated salad dressing preparations. The twoproducts are marketed together, allowing the two companies to combine their marketingresources and accomplish much more than either one might accomplish alone. Corporations in ahorizontal marketing system also have the option of combining their capital and productioncapabilities, in addition to their marketing and distribution resources, to produce synergisticbenefits for all members.A distribution channel arrangement whereby two or more organizations at the same level jointogether for marketing purposes to capitalize on a new opportunity. For example: a bank and asupermarket agree to have the banks ATMs located at the supermarkets locations, two

manufacturers combining to achieve economies of scale, otherwise not possible with each actingalone, in meeting the needs and demands of a very large retailer, or two wholesalers joiningtogether to serve a particular region at a certain time of year.

MMSA multichannel marketing system is an approach to marketing that uses a variety of media tocommunicate with customers and prospects. You can use media such as websites, printedpublications, advertising, email, mobile communications and social networking sites tocommunicate marketing messages, build customer relationships or sell products and services.The key to successful multichannel marketing is selecting the channels that customers prefer touse and ensuring that your messages are consistent across every channel.

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A system in which a producer uses more that one channel of distribution, commonly, producerswho use multichannel marketing systems operate their own retail stores as well as sell throughother wholesalers and retailers, multichannel retailers are also called merchandisingconglomeratesMultichannel marketing is marketing using many different marketing channels to reach a

customer. In this sense, a channel might be a retail store, a web site, a mail order catalogue, ordirect personal communications by letter, email or text message. The objective of the companiesdoing the marketing is to make it easy for a consumer to buy from them in whatever way is mostappropriate. To be effective multichannel marketing needs to be supported by good supply chainmanagement systems, so that the details and prices of goods on offer are consistent across thedifferent channels. It might also be supported by detailed analysis of the return on investmentfrom each different channel, measured in terms of customer response and conversion of sales.Some companies target certain channels at different demographic segments of the market or atdifferent socio-economic groups of consumers. Multi Channel marketing allows the retailmerchant to reach its prospective or current customer in a channel of his/ her liking.

7. Explain the merits and demerits of Telemarketing.Ans:Advantages of Telemarketing:

1. Provides a venue where you can easily interact with the prospect, answering any questions orconcerns they may have about your product or service.2. its easy to prospect and find the right person to talk to.3. Its cost-effective compared to direct sales.4. Results are highly measurable.5. You can get a lot of information across if your script is properly structured.6. If outsourcing, set-up cost is minimal7. Increased efficiency since you can reach many more prospects by phone than you can with in-person sales calls.8. Great tool to improve relationship and maintain contact with existing customers, as well as tointroduce new products to the9. Makes it easy to expand sales territory as the phone allows you to call local, national and evenglobal prospects.

Disadvantages of Telemarketing:

1. An increasing number of people have become averse to telemarketing.2. More people are using technology to screen out unwanted callers, particularly telemarketers3. Government is implementing tougher measures to curb unscrupulous telemarketers4. Lots of businesses use telemarketing.5. If hiring an outside firm to do telemarketing, there is lesser control in the process given thatthe people doing the calls are not your employees6. May need to hire a professional to prepare a well-crafted and effective script7. It can be extremely expensive, particularly if the telemarketing is outsourced to an outsidefirm8. It is most appropriate for high-ticket retail items or professional services.

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Understanding the Advantage with its availability and commitment, telemarketing providesclient with direct response and essential information that can be promptly scrutinized.Telemarketing is definitely flexible, definitely practical because it provides you with never-ending opportunities and possibilities to increase and enhance your business. Having these

advantages proves that telemarketing is truly an ultimate marketing instrument

8. Explain the importance of Sales Promotion.Ans:The importance of sales promotion is the unique role it plays in the marketing mix. In particular,it enables the marketer to add time urgency and other behavioral influences to the promotioncampaign. Along with advertising, public relations and personal selling, sales promotion is oneof four key tools for marketing communication.

The business world today is a world of competition. A business cannot survive if its products donot sell in the market. Thus, all marketing activities are undertaken to increase sales. Producers

may spend a lot on advertising and personal selling. Still the product may not sell. SoincentivesBusiness Studies need to be offered to attract customers to buy the product. Thus, salespromotion is important to increase the sale of any product.

From the point of view of manufacturersSales promotion is important for manufacturers becausei. it helps to increase sales in a competitive market and thus, increases profits;ii. It helps to introduce new products in the market by drawing the attention of potentialcustomers;iii. When a new product is introduced or there is a change of fashion or taste of consumers,existing stocks can be quickly disposed off;iv. It stabilizes sales volume by keeping its customers with them. In the age of competition it isquite much possible that a customer may change his/her mind and try other brands. Variousincentives under sales promotion schemes help to retain the customers.

From the point of view of consumersSales promotion is important for consumers becausei. the consumer gets the product at a cheaper rate;ii. It gives financial benefit to the customers by way of providing prizes and sending them to visitdifferent places;iii. The consumer gets all information about the quality, features and uses of different products;iv. Certain schemes like money back offer creates confidence in the mind of customers about thequality of goods; andV. it helps to raise the standard of living of people. By exchanging their old items they can uselatest items available in the market. Use of such goods improves their image in society

9. Explain CRMAns:CRM is an acronym that stands for Customer Relationship Management. It describes the strategythat a company uses to handle customer interactions. One example of a common CRM strategy is

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the rewards card program offered by many supermarkets. The store gives its customers a freecard that gives them access to special deals and discounts when they swipe the card duringcheckout. But that card also tracks everything the customer buys and allows the store to create anextremely detailed customer profile based on his or her purchasing habits. Armed with thatinformation, the store can then offer its customers targeted coupons and other programs that will

motivate its customers to buy more products from that store.

Customer relationship management (CRM) is a widely implemented model for managing acompanys interactions with customers, clients, and sales prospects. It involves using technology

to organize, automate, and synchronize business processesprincipally sales activities, but alsothose for marketing, customer service, and technical support. The overall goals are to find,attract, and win new clients, service and retain those the company already has, entice formerclients to return, and reduce the costs of marketing and client service. Customer relationshipmanagement describes a company-wide business strategy including customer-interfacedepartments as well as other departments. Measuring and valuing customer relationships iscritical to implementing this strategy.

10. What is data warehousing?Ans:Data WarehousingData warehousing is a collection of methods, techniques, and tools used to support knowledgeworkerssenior managers, directors, managers, and analyststo conduct data analyses that helpwith performing decision-making processes and improving information resources.

A fundamental concept of a data warehouse is the distinction between data and information.Data is composed of observable and recordable facts that are often found in operational ortransactional systems. At Rutgers, these systems include the registrars data on students (widely

known as the SRDB), human resource and payroll databases, course scheduling data, and data onfinancial aid. In a data warehouse environment, data only comes to have value to end-userswhen it is organized and presented as information. Information is an integrated collection offacts and is used as the basis for decision making. For example, an academic unit needs to havediachronic information about its extent of instructional output of its different faculty members togauge if it is becoming more or less reliant on part-time faculty.

The Data Warehousing ProcessDetermine Informational Requirements Identify and analyze existing informational capabilities.

Identify from key users the significant business questions and key metrics that the target usergroup regards as their most important requirements for information. Decompose these metrics into their component parts with specific definitions. Map the component parts to the informational model and systems of record.

PartB11. Explain the stages in new product development.Every company must develop new products. New produc t development shapes the companysfuture. Booz, Allen and Hamilton identified 6 categories of new products.

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(a)New to the world product(b)New product line: product is new for the company but an established market is there(c)Addition to existing product line: products that supplement a companys existing product

line.(d)Improvements and revision for existing product: provide improved performance or

greater perceived value.(e)Repositioning: existing products targeted to new market segments(f) Cost reduction : provide similar performance at lower price/cost.

Steps in new product development:

1. Idea generation: New product development starts with new ideas. A system must bedesigned for stimulating new ideas within the organization and acknowledging andreviewing them properly and promptly. The sources for new ideas can be companyemployees, customers, suppliers, universities, inventors, advertising or market researchagencies etc.

2. Idea screening: New product ideas are evaluated to determine which one wants furtherstudy. The ideas are sorted out into three categories promising, marginal and rejects.

Care must be taken to avoid the following two types of errors: Go error permitting apoor idea to further processing and Drop error dropping an otherwise good idea.3. Concept development and testing: Attractive ideas must be refined into testable product

concepts. A product concept is an elaborated version of the idea expressed in meaningfulconsumer terms. Concept testing involves presenting the product concept to appropriatetarget consumers and getting their reactions. Conjoint analysis is a method for derivingthe utility values that consumers attach to varying levels of product attributes. It is used tomeasure consumer preferences for alternative product concepts.

4. Marketing strategy development: After testing, the new product manager must developa preliminary market strategy for introducing the new product which should includethetarget market size, structure, behavior, planned product positioning, price, distributionstrategy and marketing budget etc for the first year.

5. Business analysis: To evaluate the proposals business attractiveness, the companyshould know the sales, cost and profit projections. They do this by

- Estimating total sales = first time sales + replacement sales + repeat sales. This in turn dependsupon whether the product is a one time purchase or infrequently purchases or frequentlypurchased.- Estimating cost and profits6. Product development: If the product concept passes the business test, it moves to R&D orengineering department to be developed into a physical product. The target customerrequirements is translated into a working prototype by a set of methods known as QFD orQuality Function Deployment wherein the list of customer attributes are converted intoengineering attributes. Along with the products functional characteristics the lab scientists must

also communicate the products psychological aspects through physical cues.Testing of the products:There are two types of tests

a. Alpha testingdone within the firm to see how it performsb. Beta testingtesting is done with a set of customers & their feedback taken.

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7. Market testing: After the management becomes satisfied with the functional andpsychological performance of the product, the product is decorated with a brand name andpackaging, it goes for market testing. This is once again divided into two categories -a. Consumer goods market testingcan be done by# Sales wave researchinitial trial is provided for free of cost and later the same product along

with competitors product is provided at a reduced price to see how many purchase this brand.# Simulated test marketing30 to 40 qualified shoppers are invited to a shop for purchasing anygoods after showing them the screening of ads which contains the ad for the new product also.Those who dont buy the new product are given free samples and feedback taken.# Controlled test marketing: a market research agency conducts the test marketing for theproduct in selected cities.# Test marketing: full blown test marketing is conducted in selected cities.b. Business goods market testing this also undergoes Alpha testing and Beta testing. Othermethods are introducing the new product at a trade show or testing by means of displaying at thedistributor or dealers display room.8. Commercialization:

The factors that are to be considered for commercialization areWhen or timing - here they can adopt the following strategiesa. First entryentering before competitorsb. Parallel entryentering along with competitorsc. Late enteringentering after the competitors

Where or geographic strategy: the company must decide whether to launch the product in asingle locality, a region, several regions or the national market.To whom or target market prospect: the company must target its product to early adopters,opinion leaders, heavy users and those who can be reached at a low cost.How or introductory market strategy: to coordinate the many activities included in a new productlaunch, management can use network planning technique such as critical path scheduling i.e.developing a master chart showing the simultaneous and sequential activities that must takeplace to launch the product and the estimated time for each activity.

12. Explain various pricing strategies with a suitable example.Ans:Different pricing policies:

1. Cost based pricing: In this method, the price is determined on the basis of cost ofproduction plus an additional margin of cost. E.g. mark up pricing, target rate of return oninvestment pricing

2. Demand based pricing: the price is fixed on the basis of demand. If the demand is high,price will be high. If the demand is low, the price is low. E.g. Perceived value pricing

3. Cost and demand based pricing: this takes into consideration both the demand factor aswell as the cost of production. E.g. Value pricing

4. Competitor based pricing: Here the pricing is based on what the competitor is pricingor is expected to price. E.g Going rate pricing, Sealed bid pricing

Different types of pricing method:

1. Mark up pricing:In this method, a standard mark up is added to the products cost.

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E.g. suppose for a pen manufacturerVariable cost per unit = Rs 10/-Fixed cost per unit = Rs 3, 00,000/-Expected unit sales = 50, 000Manufacturers unit cost = variable cost + fixed cost

Unit sales= 10 + 3,00,00050,000

= Rs 16/-suppose mark up is 20%then mark up price = unit cost

1desired return on sales= 1610.2

= Rs 20/-Profit per unit = 2016

= Rs 4/-Mark ups are higher on seasonal items, specialty items, slow moving items, items with highstorage and handling costs.

2. Target return pricing:The firm determines the price that would yield its target rate of return on investment ( ROI ).Suppose the pen manufacturer has invested 1 million rupees and wants to earn a 20% rate ofreturn. Then:Target return price = unit cost + desired return * invested capital

Unit sales= 16 + 0.2 * 1,000,000

50,000= Rs 20/-

this target will be realized only if the sales reach 50,000 units.

3. Perceived value pricing:The price is based on the perception of the value not the seller cost, as the key to price. They useother marketing mix elements such as advertising and sales promotion activities to create anenhanced image of the product. E.g. gift articles.

4. Value pricing:Here a fairly low price is charged for a high quality offering. Value pricing says that the priceshould represent a high value offer to the customer.Value pricing is not about lowering the price but reengineering the companys operation to

become a low cost producer without sacrificing quality or profit.

5. Going rate pricing:The firm bases its price on the competitors. In industries like steel, paper etc where the product isstandardized, usually the leader sets the price and accordingly others also set. The individualfirms do not charge on the basis of their cost or their demand.

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6. Sealed bid pricing:

The firm bases its price on the expectation of how competitors will price rather than on a rigidrelation to their firms cost or demand. The firm wants to win a contract and that normallyrequires submitting a lower price bid at the same time price cannot be set lower than the cost.

Pricing strategies:

a. Geographical pricing: Here different prices are set for different markets situated atdifferent locations based on the transportation and shipping costs. The mode of paymentmay be Barter exchange of goods of equal worth or compensation part payment incash and part payment in the form of goods or buy back arrangement i.e. if thecompany is supplying technical know how to one country, it accepts the goods backproduced in that company or offset entire payment in cash but a part of the payment hasto be spent in that country itself.

b. Promotional pricing: Loss leader pricing: the prices of well known brands are lowered to stimulate store

traffic. Special event pricing: establish special prices during special season like Deepawali

etc

Cash rebates: some discounts are given if the product is purchased during a specifiedtime period.

Low interest financing: e.g. automobiles arrange for low interest financing so thatpeople do not have to take the botheration of arranging loans etc.

Longer payment terms: helps in lowering monthly installments, thus lowering themonthly expense for people.

Psychological discounting: set an artificial high price, then sell at a lower price.E.g.500 => 350/-

c. Discriminatory pricing: this is the practice of selling the same product to differentcustomers at different prices. The discrimination can be on the following bases: Customer segment pricing: different customer groups charged differently. E.g.children charged half in buses, museums, train etc Product form pricing: different versions of the product are priced differently.E.g. liquid soap or bar soap. Image pricing: same product priced differently on the basis of difference inpricing. E.g. perfumes Location pricing: e.g.. theatres Time pricing: e.g hotels, airlines etc.

d. Product mix pricing: following are the different ways of product mix pricing: Product line pricing: the companies usually produce a product range not a single

product and thus have the same product in a range. E.g. shirt costing from 800/- to1500/- from the same manufacturer. Optional feature pricing: many companies offer a basic product and otheroptional features for which the customer has to pay extra for only those featureswhich the customers are opting.

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Captive product pricing: some products require the use of ancillary or captiveproducts. The main or basic product will cost less, the captive product will costmore. E.g. camera, razors. Two part pricing: it consists of a fixed fee + variable fee depending on usage.E.g. telephone connection.

By product pricing: the production of certain products like petroleum leads toproduction of by products like Vaseline. In such cases, the by products should bepriced on their value. Product bundling pricing: sellers often bundle their product and features at a setprice.

13. explain the selection and training process of marketing channel membersAns: Managing the sales force includes the following: Recruiting and selecting Training Supervising

MotivatingRecruiting and selecting

To select a good sales force, first the company must develop the selection criteria, that is whatare the traits that must be looked in a sales candidate:Following are the traits identified by many people:

1. According to a survey of customers, successful sales representatives have the followingquality- honest, reliable, knowledgeable and helpful.

2. According to a study by Charles Garfield about superacheivers, following are thequalities in super achievers risk taking, powerful sense of mission, problem solvingbent, care for the customer, and careful call planners.

3. Robert McMurry added the following traits high level of energy, abounding selfconfidence, a chronic hunger for money, a well established habit of the industry and astate of mind that regards each obstacle, objection or resistance as a challenge.

After the management develops the selection criteria, it must recruit.The sources for right candidates can be educational institutions, own employees, placing jobads or using employment agencies.Selection procedure may include

Written test Interview Group discussion Medical tests Reference Interview of spouse.

Training sales representatives :

It is necessary to provide the new sales representatives with enough training before they go to thefield so that they are well prepared in handling the customers.The Training Program goals are

Sales representatives should know and identify the company. Sales representatives should know the company products.

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Sales representatives should know customer and competitor characteristics. Sales representatives should know to make effective presentations. Sales representatives should understand field procedures and responsibilities.

The techniques or methods used for training areLecturing, role playing, sensitivity training, cassette tapes, video tapes, CD ROMS,

programmed learning and films on selling.Supervising sales representatives: This is done by establishing norms for customer calls, normsfor prospect calls and to see whether the sales time is used efficiently.Motivating sales representatives:

Churchill, Ford and Walker gave a model which says that the higher the sales personnelsmotivation, the greater his/her efforts. Greater efforts will lead to greater performance, greaterperformance will lead to greater rewards, greater rewards will lead to greater satisfaction andgreater satisfaction will reinforce motivation. This model thus implies the following:

Sales managers must be able to convince sales personnel that they can sell more byworking harder or by training them to work smarter.

Sales managers must be able to convince sales personnel that the rewards for betterperformance are worth the extra efforts.

The importance of various rewards with respect to motivation follows the following order highest is pay, followed by promotion, personal growth and sense of accomplishment.Sales quotas:

Sales quotas prescribe what the sales representative must or should sell during the year. It can beset on rupee value, unit volume, margin, selling effort or activity and product type.Compensation is often tied to the degree of quota fulfillment.On the basis of sales forecast, sales quotas are set which will usually be higher than sales forecastto encourage managers and sales personnel to perform at their best level.There are three schools of quota setting:

a. High quota school: Quotas are set more than what most of the reps achieve but that areattainable. It assumes that high quotas spur extra efforts.

b. Modest quota school: Set quotas that majority of the sales force can achieve. It assumesthat sales force will accept the quota as fair, achieve them and gain confidence.

c. Variable quota school: it says that individual differences among sales representativeswarrant high quota for some & modest quota for others.

Supplementary motivators:Periodic sales meetings provide a social occasion, a break form routine, a chance to meet andtalk with other company employees and a chance to put forth the feelings. Sales meetings are animportant tool for communication, education and motivation.Sales contests spur the sales force to a special selling effort above than the average or what isnormally expected. The contest period should not be announced in advance otherwise sometimes

sales people defer their regular selling activities.

14. Explain the growth and benefits of direct marketing.Ans: According to the official definition of the Direct Marketing Association (DMA), directmarketing is an "interactive system of marketing which uses one or more advertising media toaffect a measurable response and/or transaction at any location."

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The notion of interactivity, or one-to-one communication between the marketer and the prospector customer, is one factor that distinguishes direct marketing keting from general advertising andother types of marketing. Direct marketing makes an offer and asks for a response. Bydeveloping a history of offers and responses, direct marketers acquire knowledge of theirprospects and customers, resulting in more effective targeting.

Measurability also sets direct marketing apart from general advertising and other forms ofmarketing. Direct marketers can measure the response to any offer. Measurability allows directmarketers to test a variety of lists, offers, mediavirtually any aspect of a campaignin order toallocate marketing resources to the most effective combination of elements.

Direct marketing uses a variety of media, including mail, magazine ads, newspaper ads,television and radio spots, infomercials (also television but longer format), free standing inserts(FSIs), and card decks. This flexibility allows direct marketing to provide interactivity andmeasurability and still take advantage of new technologies. By being adaptable to virtually anymedia, direct marketing will lead marketers into the twenty-first century as interactive television,

the information superhighway, and other new technologies become a reality.

Finally, in direct marketing, the transaction may take place at any location and is not limited toretail stores or fixed places of business. The transaction may take place in the consumer's homeor office via mail, over the phone, on the Internet, or through interactive television. It may alsooccur away from the home or office, as at a kiosk, for example.

It is necessary to distinguish direct marketing from direct mail or mail-order businesses, althoughdirect marketing encompasses those two concepts. Direct mail is an advertising medium, one ofseveral media that direct marketers utilize. Mail order is a distribution channel, as are retailoutlets and personal selling.

GROWTH OF DIRECT MARKETING

Direct marketing extends this convenience beyond mail-order shopping to consumers receivingall kinds of offers in the homevia mail or commercial television, as is common today, or viahome-shopping networks, interactive TV, and the Internet.

Another factor contributing to the growth of direct marketing was the increased cost associatedwith personal sales calls. By the end of the 1970s, the average cost of a single sales call wasestimated to be about $137. By the end of the 1980s, the cost had risen to more than $250 percall. An interesting application of direct marketing now is to generate qualified sales leads thatcan be followed up with a personal sales call. Thus direct marketing can make personal sellingmore cost-effective.

The growth of technology in general, and of computer-based technologies in particular, has alsoplayed an important role in many areas of direct marketing. New computer technologies haveallowed direct marketers to be more precise in the analysis of results, in the targeting ofmessages based on more complex psychographics and demographics, in developing more

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sophisticated customer and prospect databases, and even in the creative execution of direct mailpackages.

Increased consumer acceptance of the telephone as a way to place orders has also helped directmarketing achieve phenomenal growth. Coupled with telephone-based ordering are faster order

fulfillment and the elimination of delays previously associated with mail order. Today, placingan order by phone offers almost the same "instant gratification" as picking up a piece ofmerchandise at the store. The same is rapidly becoming true of purchases made over the Internet,although some consumers still balk at the perceived security risks of transmitting personal andfinancial data online.

Other socioeconomic factors contributing to the growth and acceptance of direct marketinginclude a population growing older, rising discretionary income, more single households, and theemergence of the "me" generation. External factors include the rising cost of gasoline (at-homeshoppers use less gasoline and reduce environmental pollution), the availability of toll-freetelephone numbers, the expanded use of credit cards, the low cost of data processing, and the

widespread availability of mailing lists.

Benefits

Direct marketing is attractive to many marketers because its positive results can be measureddirectly. For example, if a marketer sends out 1,000 solicitations by mail and 100 respond to thepromotion, the marketer can say with confidence that campaign led directly to 10% directresponses. This metric is known as the 'response rate,' and it is one of many clearly quantifiablesuccess metrics employed by direct marketers. In contrast, general advertising uses indirectmeasurements, such as awareness or engagement, since there is no direct response from aconsumer.Measurement of results is a fundamental element in successful direct marketing. The Internet hasmade it easier for marketing managers to measure the results of a campaign. This is oftenachieved by using a specific website landing page directly relating to the promotional material. Acall to action will ask the customer to visit the landing page, and the effectiveness of thecampaign can be measured by taking the number of promotional messages distributed (e.g.,1,000) and dividing it by the number of responses (people visiting the unique website page).Another way to measure the results is to compare the projected sales or generated leads for agiven term with the actual sales or leads after a direct advertising campaign.

15. Explain the strategies for leaders, challengers, followers with eg.MARKET LEADER STRATEGIES:

Market leader:

Has the largest market share Leads the other firms in price changes, New product developments, distribution coverage

and promotional intensity.Broadly speaking, the market leader has to adopt the following three strategies

Expand the total market demand Defend its current market share Increase its market share

a. Expand the total market demand

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When the total market expands, the market leader stands to gain the maximum. The market canbe expanded by looking for new users, new uses and more usage of its products.New users: the potential buyers who are unaware of the product or are not buying because ofprice or lack of certain features.The new users can be from market penetration strategy, new market segment strategy or

geographical expansion strategy.New uses: the market can also be expanded by discovering and promoting new uses for theproduct. E.g. cold drinks being promoted as a drink for guests too.More usage: the third strategy is to convince the people to use the product more per use occasion.E.g. shampoo.

b. Defend its current market share:Even when the leader is trying to expand, it should continuously keep on defending its currentmarket share against rival businesses. Sometimes the competitor is domestic, sometimes it isforeign. E.g. Ambassador vs Maruti.The constructive response is continuous innovation developing new products and customerservices, distribution effectiveness and cost cutting. This increases the companys strength and

value to customers. Following can be the defensive strategies: Position defense: this is the basic defense strategy building a concrete wall around

ones current position. But it does not mean leaders should put all their resources in

protecting the current product alone.

Flank defense: the market leader should also defend its weak front or possibly make itan invasion base for counterattack.

Preemptive defense: here the leader attacks even before the enemy start its offense. Itcan start attacking many competitors at a time or develop its market in a grand manner ordecrease its price.

Mobile defense: here the leader enters new territories that can serve as future centers fordefense and offense. The leader can adopt the strategy of market broadening i.e shifting

the focus from the current product to underlying generic need. Else the leader can adoptthe strategy of market diversification i.e. entering into unrelated industry.

Contraction defense: if the situation becomes such that it is no longer possible for thecompany to defend all its territories, it starts planned contraction or strategic withdrawal.It means giving up weaker territories & assigning the resources to strong territories.

c. Expanding market share:Market leaders can improve their profitability by increasing their market share. The companyshould consider three factors before pursuing increased market share strategy in order to ensurethat increase in market share results in corresponding increase in profitability:

It should not provoke antitrust action by the competitors. It should watch the cost incurred in increasing the market share. The company should not use the wrong marketing mix strategy in order to increase theirmarket share.

MARKET CHALLENGER STRATEGIES:

The firms that occupy second, third or lower ranks are the challengers. They are large enough inthemselves & they can adopt any one of the following two strategies attack the leader (challenger) or follow the leader (follower)Defining the strategic objective & opponents:

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The main objective behind attacking another firm is to increase ones own market share. The

challenger must decide whom to attack:

It can attack the market leader: it involves high risk but potentially high pay off strategyand makes good sense if the leader is not serving the market well.

It can attack firms of its own size that are not doing the job properly and areunderfinanced: these firms may have aging products, prices will be high & the customerwill not be satisfied.

It can attack small, local & regional firms:Choosing the general attack strategy:

a. Frontal attack: the attacker matches the opponents product, advertising, price anddistribution. E.g Pepsi and Coke. Modified frontal attack: cutting the price vis--vis thecompetitors. It works well if the market leader does not retaliate by cutting the price.

b. Flank attack: this means attacking the weak front because the opponents defense willbe the strongest at its strong point. When the challenger attacks the leader at its strongpoint, all the resources of the leader are deployed there and then the challenger canlaunch the real attack at the side or rear.

A flank attack can also be directed along two strategic dimensions geographicand segmental. In geographic, the challenger spots areas where the leader is underperforming. Another flanking strategy is to serve uncovered market needs. Flanking strategy also identifies shift in market segments that develop gaps thenrushing in to fill in the gap and develop them into strong segments.

c. Encirclement attack: here the attacker launches a grand offensive on several fronts. It isappropriate provided the challenger commands superior resources and believes a swiftencirclement will break the opponents will.

d. Bypass attack: this is an indirect assault strategy. It means by passing the enemy andattacking easier markets to broaden ones resource base. The following three approaches

can be there (i) diversifying into unrelated products, (ii) diversifying into newgeographic markets, (iii) or leapfrogging into new technologies to supplant existingproducts.

e. Guerilla attack: it consists of waging small, intermittent attacks to harass & demoralizethe opponent and eventually secure permanent footholds. The attacks can be in the formof price cuts, intense promotional blitzes and occasional legal actions. Normally it ispracticed by smaller firms.

Choosing a specific attack strategy:

(i) Price discount the company offers a lower price than the leader provided thecompany is able to convince the customers that the products and/or services arecomparable, the buyers are price sensitive and the leader will not cut the price.

(ii) Cheaper goods average or low quality products are provided at a lower price.(iii) Prestige goods higher quality products are provided at a higher price.(iv) Product proliferation provide a larger product variety.(v) Product innovation provide product improvements or breakthroughs.(vi) Improved services(vii) Distribution innovation(viii) Manufacturing cost reduction(ix) Intensive advertising promotion.

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MARKET FOLLOWER STRATEGIES:

The market leader goes for product innovation and bears the expense of developing a newproduct, educating the market and distributing the product. The returns for all this expense arethe market leadership.

The follower usually imitates the product or improves on the existing product. It cannot overtakethe market leader by doing this but it can make substantial profit since it did not bear any of theinnovation expense.Following are the strategies followed by a market follower:

Counterfeiter:they duplicate the leaders product and packaging and sell it on the blackmarket through disreputable dealers.

Cloner: here they copy the leaders product, name and packaging with slight variations.E.g. SafariSafar

Imitator: they copy something from the leader but maintain differentiation in terms ofpackaging, advertising, pricing and so on.

Adaptor: the adaptor takes the leaders product and adapts or improves them. Theadaptor may choose to sell to different markets but they often grow into futurechallengers.

MARKET NICHER STRATEGIES:

Instead of being a follower in a large market, some companies prefer to be a leader in a smallmarket. They are called nichers. These firms have low market share of the total market but arehighly profitable through smart niching. Such companies offer high value, charge a premiumprice, achieve lower manufacturing costs and shape a strong corporate culture and vision.Following specialization roles can be played by the nicher:

End user specialistserving one type of end user segment. Vertical level specialist Customer size specialist usually they serve small size customers who are ignored bythe majors. Specific customer specialistselling to one or very few customers. Geographic specialistselling only in a certain locality, region or area. Product or product line specialist produces and carries only one product or product

line.

Product feature specialistspecialize in producing a certain type of product feature. Job shop specialistcustomizes the product for individual customer. Quality price specialist these firms operate either at the low end or high end of

quality.

Service specialistoffer services that other firms do not. Channel specialist

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Marketing ManagementMBA Degree Examination April2011

PartI1. Explain Personal sellingAns:

The principles of personal selling are professionalism, negotiation and relationship network.I. Professionalism:Companies are concentrating more and more in conducting sales training program so that thesales personnel transforms from a passive order taker to an active order getter. For this there aretwo basic approaches:

a. Sales oriented approach: trains the person in age old high pressure techniques.b. Customer oriented approach: trains sales personnel in problem solving of the customer.

The person learns how to listen and question in order to identify customer needs andcome up with sound product solutions.

The major steps involved in any effective sales process are as follows:Prospecting and qualifying

|Pre approach

|

Approach

|

Presentation and demonstration

|

Overcoming objections

|

Closing

|

Follow up and maintenance

Major steps in effective selling

1. Prospecting and qualifying:The first step in selling is to identify and qualify prospects. Previously this was the job of thesales personnel but now mostly the companies do it and pass on to sales personnel. The source ofidentifying prospects are

Examining data sources ( CD- ROMS, newspaper, directories ) in search of names Putting up a booth at tradeshows to encourage drop bys Inviting current customers to suggest names of prospects Cultivating other referral sources like suppliers, dealers etc Contacting organizations and associations to which prospects belong Using telephone, internet, mail etcThese sources are then qualified by contacting them by mail or phone to assess their level of

interest and financial capacity. The leads are categorized as hot prospects and warm prospectsand cool prospects. Hot prospects are turned over to sales personnel and warm prospects totelemarketing units.

2. Pre approach:The sales personnel should learn as much as possible about the prospects. The sales personnelshould set call objectives liketo qualify the prospects, to gather information and making an

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immediate sales. Sales personnel should also decide on the best approachpersonal visit or aphone call or a letter and the best timing. The sales personnel has to plan an overall sales strategyfor the account.

3. Approach:The sales personnel should know how to greet the customers, show courtesy and attention to

buyers and avoid distracting mannerisms. The opening line should be positive followed by keyquestions and active listening to understand the buyers need.4. Presentation and demonstration:

The sales personnel details the product to the buyer following the AIDA formula of Attention,Interest, Desire and Action.The sales personnel uses Features, Advantages, Benefits and Value ( FABV ) approach.Features: describes the physical characteristics.Advantages : describe why the features provide advantages.Benefits : describe the economic, technical, service and social benefits delivered by the offeringValue : describes the summative worth of the offeringCompanies have developed three different styles of sales presentation.:

a.

Canned approach: a memorized sales talk covering the main points. It is based on thestimulusresponse thinking that the buyer is passive and can be moved to purchase bythe use of right stimulus, words, pictures, terms and actions.

b. Formulated approach: also based on stimulusresponse thinking but first identifies thebuyers needs and buyers buying style and then uses a formulated approach for this typeof buyer.

c. Need satisfaction approach: starts with the search of a customers real need byencouraging the customer to do most of the talking.

Presentation can be improved by using aids such as demonstration aids, booklets, flip charts,slides, movies, audio and video cassettes, product samples and computer based simulations.

5. Overcoming objections:Customers pose objections and show the following resistance:

a. Psychological resistance: resistance to interference, preference for established sources orbrands, apathy, reluctance to give up something, unpleasant associations created by thesales personnel, pre determined ideas, dislike of making decisions and neurotic attitudetowards money.

b. Logical resistance: objections to the price, delivery schedule, certain product or companycharacteristics.

To handle these objectionssales personnel has to maintain a positive approach, ask the buyerto clarify their objections, deny the validity of the objection or turn the objection into a reason forbuying.

6. Closing:Sales personnel can use one of the several closing techniques

Can ask for order Recapitulate the points of agreement Offer to help the secretary write up the order Ask whether the buyer wants A or B. Indicate what the buyer will loose if order is not placed now. Offer specific inducements such as special price, an extra quantity or a token gift.7. Follow up and maintenance:

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This is necessary if the sales personnel wants to ensure customer satisfaction & repeat business.Immediately after the closing, the sales personnel should inform the customer about necessarydetails on delivery time, purchase terms and other matters that are important to the customers.The sales personnel should make a follow up call when the initial order is received to make surethere is proper installation, instruction and servicing.

II. Negotiation:Marketing is concerned with exchange of activities & the manner in which the terms of exchangeare established. The two parties need to reach agreement on the price and the other terms of sale.Sales personnel need to win the order without making deep concessions that will hurtprofitability.Formulating a negotiation strategy:

A negotiation strategy is a commitment to an overall approach that has a good chance ofachieving the negotiators objectives.The principled Negotiation approach to bargaining:

a. Separate the people from the problem: each party must understand the other sidesviewpoint and the level of emotion with which they hold it. Active listening to opposing

arguments and addressing the problems in response improve the chance of reaching asatisfactory conclusion.b. Focus on interest, not position:by focusing on interests, the negotiators are more likely to

find a mutually agreeable means of achieving common interests.c. Invent options for mutual gains:Looking for options that offer mutual gains help identify

shared interests.d. Insist on objective criteria:insist that the agreement reach fair objective criteria

independent of either sides position. This approach avoids a situation in which one sidemust yield to the position of the other.

2. Discuss about product diversification.Ans: Differentiation:

It is the act of designing a set of meaningful differences to distinguish the companys offering

from the competitors offering.

Following can be the basis for differentiation:

a. Product Differentiation:Product can be differentiated on the following aspects

(i) Form: e.g. Aspirindosage, size, shape, coating etc, i.e, the product is differentiated onthe basis of difference in shape, size etc

(ii) Features: the company can offer varying features, characteristics that supplement the basicproduct like automobiles. The customer has to pay extra for each additional feature opted for.

(iii) Performance quality: the level at which the products primary characteristics operate, i.e.,

high, low, average or superior

(iv) Conformance quality: this tells the degree to which all the products are identical & meetthe promised specification.

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(v) Durability: this is the measure of the products expected operating life under stressful

or natural conditions.

(vi) Reliability: this is the measure of the probability that product will not malfunction orfail within a specified time period.

(vii) Repair ability: this is the measure of the ease of fixing a product when it malfunctions orfails.

(viii) Style: this tells about the products look and feel to the buyer. The customers areusually ready to pay extra for a stylish looking product.

(ix) Design: According to Prof. Robert of Harvard, 15 years back, the competition wason price, today its on quality and tomorrow it will be on design. To the company a well designedproduct is the one that is easy to manufacture and distribute. To the customer it is the one that ispleasant to look at and easy to open, install, use, repair and dispose of. The designer has to takeinto account all these factors.

3. What are the various types of salesman?Ans:Transactional

Transactional salespeople are those that simply wait for the transaction to make their sale. Theseare the salespeople that you might refer to as the order-takers because they passively sit bywaiting for the sale to come to them. They may still be quite successful in what they do, despitetheir passive attitude, because they may become adept at positioning themselves in the rightplace at the right time to get the sale. However, most of these salespeople are better off workingin a retail environment where the primary job of the salesperson is to help the buyer find theproduct she is already looking for and then ring it up.

RelationalThe relational salesperson thrives off of the customer-salesperson relationship. This type ofsalesperson is good at quickly building rapport with the customer and often gets sales becausethe buyer likes her enough that she becomes the deciding factor in the sales process. Thesesalespeople also establish the long-term relationship with a customer that brings the customerback around for repeat business. These types of salespeople tend to excel in industries likeadvertising or any type of sales where established accounts selling is important.

Closers

A large portion of the sales force in many different industries is made up of closers or those whoare always trying to close the deal on a sale. These are what many people think of when they

think of the used car salesman. This type of salesperson is constantly inching the customertoward the goal of closing the deal. While relationships with customers may still be important forfuture sales with this type of salesperson, they are usually secondary to the immediate goal ofgoing for the close.

Consultants

Consultants are probably the best-rounded of the different types of salespeople. These are peoplepersons who know how to close a deal and build relationships at the same time. Consultants

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genuinely thrive off of the problem-solving aspect of their job, listening to customer needs andhelping them find a solution to their problem. Consultants have superior listening skills and tendto be patient with customers when necessary, but aggressive when necessary also.

4. Explain product planning process.

Ans:Product Planning The Product Planning Process Identify Opportunities Evaluate and Prioritize Projects Allocate Resources and Plan Timing Complete Pre-Project Planning

5. Role and importance of brandingAns:

Branding is a key concept in marketing circles, as it is the pivotal springboard that can thrust

your business forward, and give you a competitive edge. A well-defined and strong brand will

drive sales, build customer loyalty, create brand value, and most of all, it will be the catalyst for

business growth, as consumers will be motivated to buy your product.

A brand is usually associated with the logo, sign, name, or other image that consumers associate

with your company and product. But in fact, brand also incorporates other factors, and

encompasses those unique characteristics that distinguish your product, and sets it apart from the

competition. It also relates to the quality of your product, the way you do business, and how you

are perceived by others.

Business branding is therefore important to every business regardless of the size, because itcommunicates information about your business and product to the market. It will influence the

cost of your product, packaging, marketing and advertising strategies, distribution channels, and

more. Branding is all about establishing an identity, and becoming recognized for it.

There is no denying the importance of branding, especially for the small business. Consumers

are always willing to buy products they know and trust. A strong, well defined brand, gives you

a competitive advantage in the market. It allows you to charge more for your product, knowing

that consumers will remain loyal, and buy it at the higher cost. That is the result of consistent

reinforcing of the brand, which enables positive responses from the consumer.

Branding is one way to attract new customers. When a customer comes to you because of all

they have heard about your product and business, then you can be certain that they are serious

about buying. When you run marketing campaigns, you are simply throwing out a wide net to

attract a large number of customers. From there your marketing guys spend time with those

leads to find out who is really serious. That takes a lot of time and money, and in the end, you

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are not sure that those customers will buy. On the other hand, branding puts you in a position to

attract serious buyers first off.

Those leads might have been generated because of satisfied customers, who are happy to spread

the word. Or, they might have been the result of persistent market reinforcement. However the

key is, they came about due to a branding strategy that effectively communicated the solutionthe customer was looking for.

Branding puts you in touch with customers who know your business and your product before

they even step inside your place of business, or buy your product off the shelf. They know about

you because of your brand, and the value that goes with it.

As we have seen, branding is an effective way to facilitate the growth of your business. When

successfully implemented, branding can give you a strategic position in the market, and

eventually lead to increased profit. This is achieved as a result of the influx of new customers,

and the continuing support of existing ones. Branding builds brand loyalty and value, attractsnew customers, and makes you stand out from the competition.

6. Sales promotional strategies roles in consumer durables

To increase the sale of any product manufactures or producers adopt different measures likesample, gift, bonus, and many more. These are known as tools or techniques or methods of salespromotion. Let us know more about some of the commonly used tools of sales promotion.

(i) Free samples: You might have received free samples of shampoo, washing powder, coffeepowder, etc. while purchasing various items from the market. Sometimes these free samples arealso distributed by the shopkeeper even without purchasing any item from his shop. These aredistributed to attract consumers to try out a new product and thereby create new customers. Somebusinessmen distribute samples among selected persons in order to popularize the product. Forexample, in the case of medicine free samples are distributed among physicians, in the case oftextbooks, specimen copies are distributed among teachers.

(ii) Premium or Bonus offer: A milk shaker along with Nescafe, mug with Bournvita, toothbrushwith 500 grams of toothpaste, 30% extra in a pack of one kg. are the examples of premium orbonus given free with the purchase of a product. They are effective in inducing consumers to buya particular product. This is also useful for encouraging and rewarding existing customers.

(iii) Exchange schemes: It refers to offering exchange of old product for a new product at a price

less than the original price of the product. This is useful for drawing attention to productimprovement. Bring your old mixer-cum-juicer and exchange it for a new one just by payingRs.500 or exchange your black and white television with a colour television are variouspopular examples of exchange scheme.

(iv) Price-off offer: Under this offer, products are sold at a price lower than the original price.

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Rs. 2 off on purchase of a lifebouy soap, Rs. 15 off on a pack of 250 grams of Taj Mahal tea,

Rs. 1000 off on cooler etc. are some of the common schemes. This type of scheme is designedto boost up sales in off-season and sometimes while introducing a new product in the market.

(v) Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a product

or through an advertisement printed in the newspaper or magazine or through mail. Thesecoupons can be presented to the retailer while buying the product. The holder of the coupon getsthe product at a discount. For example, you might have come across coupons like, show this andget Rs. 15 off on purchase of 5 kg. of Annapurna Atta. The reduced price under this scheme

attracts the attention of the prospective customers towards new or improved products.

(vi) Fairs and Exhibitions: Fairs and exhibitions may be organised at local, regional, national orinternational level to introduce new products, demonstrate the products and to explain specialfeatures and usefulness of the products. Goods are displayed and demonstrated and their sale isalso conducted at a reasonable discount. International Trade Fair in NewSales Promotion

(vii) Trading stamps: In case of some specific products trading stamps are distributed among thecustomers according to the value of their purchase. The customers are required to collect thesestamps of sufficient value within a particular period in order to avail of some benefits. This toolinduces customers to buy that product more frequently to collect the stamps of required value.

(viii) Scratch and win offer: To induce the customer to buy a particular product scratch and winscheme is also offered. Under this scheme a customer scratch a specific marked area on thepackage of the product and gets the benefit according to the message written there. In this waycustomers may get some item free as mentioned on the marked area or may avail of price-off, orsometimes visit different places on special tour arranged by the manufacturers.

(ix) Money Back offer: Under this scheme customers are given assurance that full value of theproduct will be returned to them if they are not satisfied after using the product. This createsconfidence among the customers with regard to the quality of the product. This technique isparticularly useful while introducing new products in the market.

7. Differentiate advertising with Publicity.

Ans:

Advertising is the process of letting the public knows of the new product or service or of any

alterations to the existing one with the main aim of offering it for sale to gain profit. Advertising

can be done through all sorts of media.

Publicity is informing the world about news events or ground breaking developments in the

company through radio, television, magazines, pamphlets, or newspapers. The publicity is

usually picked up by news or industry related media and is not a paid advertisement.

Difference between Advertising and Publicity:

1. Advertising is paid form of ideas, goods and services while publicity is not paid by

the sponsor.

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2. Advertising comes from an identified sponsor while publicity comes from a neutral and

impartial source.

3. Advertising is controllable by the organization while publicity is not controllable because it

comes from a neutral source.

4. Advertising is less credible in comparison to publicity while publicity is more credible

because it comes from an impartial source.

5. Advertising is what you or your organization says and promotes about you or your

organization but publicity is what others say for you or your organization.

6. In advertising same content is repeated by the sponsor while in publicity it is not generally

possible.

7. Advertising always carries a positive message about your organization because it is the

content you pay for but publicity can be positive or negative because it comes from an

impartial source.

8. In advertising you have full chance to show your creativity but in publicity creativity

is limited because it comes from non paid source.9. Advertising is targeted to the particular audiences by the sponsor while in publicity it is not

focused.

10. Most of the times in advertising social responsibility is ignored while in publicity special

focus is given on social responsibility.

8. Explain the various techniques involved in marketing for retaining customers.

Ans:

1. Offer payment plans.2. Conduct customer satisfaction surveys.3. Develop a system to track your customers.4. Ask all customers how they heard of your business.5. Identify a market you may have overlooked.6. Return all telephone calls.7. Ask your customers to come back again.8. Offer incentives.9. Learn customer names.10.Keep track of customer comments.11.Make follow-up calls to customers.12.Provide regular customers with discounts.

The lifetime value of the consumer concept is based on the fact that it is much more cost

effective to keep a good consumer than to attract a new one. For large ticket items (automobiles)

or items that require frequent purchase over time (breakfast cereals), the lifetime value of a

consumer can be very high. So, encourage young customers to buy your products and

services. This will help your business to remain healthy over time and to create a longer lifetime

value of the customer.

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Techniques for keeping good consumers include the following:

database marketing,

special services,

product customization,

personal touches, legendary service,

communication that reinforces previously made purchases (especially to overcome post

purchase anxiety and doubts for large ticket items),

programs that reward loyalty and heavy brand consumption, and avoiding programs that encourage brand switching.

9. Define strategic marketing planning.

Ans:

The extent to which each part of the above process needs to be carried out depends on the size

and complexity of the business.In a small or undiversified business, where senior management have a strong knowledge and

detailed understanding of the overall business, it may not be necessary to formalise the

marketing planning process.

By contrast, in a highly diversified business, top level management will not have knowledge and

expertise that matches subordinate management. In this situation, it makes sense to put formal

marketing planning procedures in place throughout the organisation.

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Component of the plan Description

Mission statement A meaningful statement of the purpose and direction of the

business

Corporate objectives The overall business objectives that shape the marketing plan

Marketing audit The way the information for marketing planning is organised.

Assesses the situation of marketing in the business the products,

resources, distribution methods, market shares, competitors etc

Market analysis The markets the business is in (and targeting) size , structure,

growth etc

SWOT analysis An assessment of the firms current position, showing the strengths

& weaknesses (internal factors) and opportunities and threats

(external factors)

Marketing objectives and

strategies

What the marketing function wants to achieve (consistent with

corporate objectives) and how it intends to do it (e.g. Ansoff,

Porter)

Marketing budget Usually a detailed budget for the next year and an outline budget

for the next 2-3 years

Action plan The detailed implementation plan

PART -B

10. Define packaging and explain its importance.

PACKAGING:

A package is the actual container or wrapper. Packaging is a business function. It includes the

activities of designing and producing container for a product.

Purpose/Importance of packaging:

To protect the product on its way to the consumer. Provide protection after the product is purchased to the time it is consumed. Be part of the companys trade marketing program to meet the needs of wholesalers

and retailers.

Be part of a companys consumer marketing program for identification by consumers. To face competition. To act as a five second commercial for the product.

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Retailers prefer products with attractive package. Rising consumer affluence is making people willing to pay extra for convenience,

appearance and dependability of the package.

Helps in building company and brand image. Innovation opportunity in packaging brings benefits to customers and profits to

producers.

11. Explain the importance of branding.

Ans: A brand is a name, term, sign or symbol or a combination of them intended to identify the

goods or services of one seller or group of sellers to differentiate them from those of competitors.

Reasons for branding:

Easy to identify goods and services. Assurance that a minimum level of quality will be provided Reduces price comparison Adds prestige to otherwise ordinary commodities.

Reasons for not branding:

Responsibility attached with branding to promote and maintain consistent quality ofoutput.

Difficulty to differentiatee.g. nails, raw materialsEssential/desirable characteristics of a brand name:

Should suggest something about the product, particularly benefits & uses. Easy to pronounce, spell and remember. Distinctive Should be adaptable to new products when they may be added to product line. Capable of registration & legal protection.

Challenges to branding:

To decide whether to brand or not Selecting a good brand name as more and more new products are coming but the words

available are fixed.

To see whether the brand name chosen already exists or resembles some existing ones.Brand Equity:

It denotes the value a brand name adds to the product. E.g. Sony, Reebok etc

Brand name decision:

a. Individual names: It means individual name for all the products. Benefits: if one of the product fails, it will not affect other products. If the company wants to introduce low quality products, its overall image will not

be tarnished

The firm can search the best name for each product.b. Blanket family name: All the products carry the same name. E.g. Maggi, Bajaj etc

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Benefits: Development cost is less as no money needs to be spent on name researchor for heavy advertising for brand recognition.

Initial awareness is easily achieved due to manufacturers imagec. Separate family name for all product lines: Different family names are invented for

different quality lines within the same product class. E.g. Lakme, Elle

d. Company trade name combined with individual product name: Some manufacturerstie their company name to an individual brand name for each product. The company

name legitimizes and the individual name individualizes the product.

Brand strategy decision:

A company can choose the following five strategies:

1. Line extension: Existing brand name extended to new sizes or flavors in the existing product

category. Companies may also introduce brand variants which are specific brand lines supplied

to specific retailers or distribution channels.

2. Brand extension: Using the existing brand name to launch new products in other categories.

E.g. Tata, Honda etc3. Multi Brands: A company can also introduce additional brands in the same category. The

company may be trying to establish different features or appeals to different buying motives.

4. New brand: If none of the existing brand names suit a new product, the company can come

up with a new brand name.

5. Co Brand: Two or more well known brands are combined in an offer. E.g. Bajaj Kawasaki,

Kinetic Honda, Kotak Mahindra

11. Differentiate standardization Vs adaptation.

Ans:

When planning to enter (a) foreign market(s), you need to consider whether or not your current

products will meet the needs of the foreign target market. After all, this market is likely to have a

totally different environment that you will need to come to terms with. As we have mentioned

before, this environment may have socio-cultural, legal, economic, technical and even

geographic differences from the domestic market that you are familiar with. The market research

investigations that you have undertaken should provide you with a good idea as to what product

strategy you need to follow.

Technically, there are essentially three product strategies at your disposal. These are:

1. Sell the same product as you are currently selling in the domestic market, to all of yourforeign target markets - product standardisation

2. Modify the product to meet the needs of the foreign environment - product adaptation3. Invest in and develop a totally new product for the export market - new product

development

Given the limited resources and competitive strengths of most companies, it is unlikely that your

company would be able to tackle both a new market and invest in new product development

simultaneously. It is also very seldom that companies can enter a foreign market without

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adapting their product at all (this is commonly referred to as product standardisation) - usually

some form of product modification is necessary (if only very minor - this is referred to as

product adaptation or product differentiation). The realistic choice at your disposal is therefore:

Make only the minimum of changes to your product to meet the needs of the foreignmarketplace; or

Make significant changes to your product in order to meet the needs of the foreignmarketplace

In choosing a particular product strategy, you need to compare the likely improvement in sales

turnover and profit levels with the additional costs involved in, for example, product

modifications, new market research, additional product R&D, and shorter production runs.

However, the firm would first have to assess:

How much is already known about the customer requirements in the various markets The extent to which these requirements differ Whether the various requirements could be met through superficial changes to the

product (e.g. packaging) or whether the product will have to be completely redesigned The extent to which customers in different markets could, as a result of various

promotional messages, be persuaded to accept a product which will have less than ideal

characteristics, but would nevertheless be cheaper, rather than one which has been

completely adapted to their needs but which will ultimately be more expensive

The size of the market, as this would determine whether or not product modificationwould, in fact, be profitable

It should not be forgotten that the product is more than just a physical item - it is a bundle of

utilities that the buyer receives. These utilities include the product's form, taste, colour, odour,

texture, its packaging, labelling, warranty, service requirements, etc., as well as the actual

functioning of the product. In short, the market will react to a product in the light of its ownvalues and customs.

The company which applies a standardisation policy to its product offers a unique version of a

product (the product sold in the domestic market) in all of its foreign markets.

In its profitability study (which depends jointly on costs and sales) the company which opts for

standardisation of the supply will prefer a strategy ofcost minimisation. Standardising a product

can be can be done for many of its components : for example, on the level of product designor

itspackaging(ex : multilingual packaging).

Product standardisation can adjust itself with standardised or adaptedcommunication:

a standardised product and communication corresponds to the supply of a perfectlyidentical product (example : Coca-Cola). It is the simplest strategy for an exporting

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company which therefore offers the same products to all its foreign markets with the

same communication campaigns and promotional arguments which they use in the

domestic market ;

a standardised product and adapted communication corresponds to the discovery ofnew uses for the product (example : packet soups sold as soups in Europe and as sauces

in the United