List of Question and Answers on Marketing!
100+ Question and Answers on Marketing Management
1.What is the importance of marketing management?
Ans. Marketing management occupies the most important place in any business organization. Its main reason is that the ultimate aim of every business unit is to earn profit by selling goods and services to the customers. And the main function of marketing management is to obtain customers for the business.
It provides the necessary incentive to business to produce goods. It helps is matching the markets with products of good quality.
In order words, matching products with market means determining the wants and needs of potential customers and supplying products which meet those demands.
Thus, marketing management helps not only to the producers but to the customers and society also. Businessmen have very aptly remarked – “Nothing happens is our economy until somebody sells something”.
Q2.What is the role of advertising?
Ans. Generally speaking, advertising is a relatively low-cost way of conveying selling messages to numerous prospects, and is important in most marketing programmes. It is used not only to stimulate demand but for many other purposes. It can secure leads for salesmen and middlemen by convincing readers to request more .information and by identifying outlets handling the product.
It can force middle men to stock the product by building consumer interest. It can help train dealers salesmen in product uses and applications. And it can build dealer and consumer confidence in the company and its products by building familiarity.
The marketing management’s most frequent assignment in advertising is to stimulate market demand. By using advertising to “pre-sell” customers that is, to arouse and intensify their buying interest in advance the management hopes to facilitate the salesmen’s selling task. While sometimes advertising alone may succeed in achieving buyer acceptance, preference, or even demand for the product, it is seldom that it can be solely relied upon.
Usually, advertising is most efficiently used with at least one other sales method, such as personal selling or point-of-purchase display, which is generally more effective in directly moving customers to buying action. Effective advertising by a manufacturer often arouses a consumer’s interest, but it will rarely send him to retail stores actively seeking the product.
However, when, in a store, an alert salesman or an attractive display calls his attention to the manufacturer’s product, the impact of previous advertising often helps in persuading ‘ him to buy.
Ans. A product is any want-satisfying attribute a consumer receives in exchange. Product is a broad term, and includes goods, services, experiences, events, persons, places, properties, organisations, information and ideas. Basically, a product is a problem-solver – it solves the customer’s problems. A product is defined in terms of customer benefits – a drill machine’s job is to make holes.
Thus, a customer is buying a device to make holes. Another device tomorrow may replace the drill machine, say a pocket laser. The product benefits could be physical as well as psychological.
Formerly, products were what the factories made. These days products are what the consumer wants. The marketers are engineering-oriented and neglect the psychological benefits the product offers.
Ans. Buyers are forgetful of erratically appearing ads. Often due to a clutter of larger number of advertising messages, they overlook several of them. It is, therefore, better to approach them in the form of a campaign which is a sustained advertising effort.
Part of our advertising effort goes waste at any given point of time, since some buyers are not real prospects at a point of time when the advertisement appears. New prospects emerge over a period of time. Campaigns force us to look on the advertising effort retrospectively so as to improve it.
Coordination, balance, timing, continuity and performance — all favour for an advertising campaign.
Ans. A product consists of five levels, and each level adds to the value of the product. The layers thus constitute a hierarchy of value. The most basic level is the core benefit. A customer buys shelter to rest and sleep while hiring a room of a hotel. A vacationer buyers fun and recreation.
The hotel room which gives the core benefit of rest and sleep’ can be converted into a room with further amenities like bed, bathroom and linen. At the third level, a desired product can be created, say a room with room service, welcome drink, airport transfer, fresh towels, tea/coffee making machine, refrigerator, wardrobe, safe and good ambience.
The next level of augmented product goes beyond customer’s expectations. It is that level which distinguishes a marketer’s product from that of his competitors. Augmentation considers the total consumption system of the buyer, e.g. computer hardware is sold with training packages of software, maintenance services and customised software.
All these augmentations add to the cost. As these costs are recovered from the customer, we have to analyse what the customer actually wants. There are many customers who need budget hotels, and many who require five-star comforts. There are executives and businessmen who require office services, telecom services, internet, and travel planners. They need business hotels. There are tourists who require resort hotels or heritage hotels.
The last level is that of potential product which indicates all the augmentations and transformations a product may undergo in future. It is an exploration on the part of the marketer to find new and better ways of satisfying customers and make their products stand out. Thus, there are service apartment hotels and under-the-sea hotel rooms.
Q.6.What is meant by product hierarchy?
Ans. Products are related to each other. A product hierarchy ranges from a core need to a specific product item. Let us take the example of Honda Activa scooter to understand this concept.
The basic need to be satisfied is transport. Product family consists of all two, three and four-wheelers motorised and non-motorised vehicles. Product class is a group within the product family having functional harmony, e.g., motorised two- wheelers. Product line is a broad group products. Within a product class that are closely related, cater to the same market segment and distributed through the same marketing channel, e.g., scooters.
Product type are items within the product-line, e.g., non-geared automatic scooters. Product brand is a name assigned to a group of items in the product-line, e.g., Honda Activa. Product item is a disk net unit within a brand or product-line that differentiates it in terms of quality, price, appearance, size or some such attribute e.g., Honda Activa Model II.
A product class of medicines has a product-line of tonics. One product type in tonics is iron tonics called hematinic. One brand of such hematinic is Tonoferros. The basic need that is satisfied is health.
Generally, one more term is widely used – product mix. It is an assortment of products-lines. It is a full set of products offered for sale by the marketer to the buyer. The more the product-lines being marketed, the more is the breadth of the product mix. Product mix also has depth which is given by models, colours, sizes available in each individual product-line.
Each company has a range of products in its existing product-line. Line stretching occurs when this range is lengthened. The stretch can be an upward or downward stretch. By upward stretch the company proposes to enter the higher end.
Many companies start with high-end products, but later stretch downwards by adding low priced products. Several companies operate in mid-end market and can stretch the product-line in both the directions. It is called two-way stretch.
Ans. “Price is the only element in the marketing mix that creates sales revenue the other elements as costs”. – Philip Kotler
Price is the value offered in exchange of products in terms of money. Prices cover costs of manufacturing a product, cost of distribution and cost of promotion. It also includes a mark-up over costs called profit. Price is used as a promotional tool in a price sensitive market like India. Price and quality are inter-related.
A premium product is high priced and a high quality product. Pricing strategies can be skimming or penetrative. In skimming strategy, we charge a high price initially to cover our product development costs. Once the competition enters the market, the price is reduced. In penetrative strategy, we charge a lower price initially to penetrate the market deeply.
Ad copies do mention prices. High prices are used to create an exclusive image. Lower prices are used to show good value for money.
Ans. Advertising has changed in terms of technology, media options, and target audience. Advertisers use segmentation techniques and micro-marketing techniques to target their messages. Point-of-sale terminals and databases provide detailed information about the consumers and their preferences.
Globalisation has led to international advertising messages, with some adaptation to local conditions. Technology has been employed to break the clutter. There is little distinction between advertising and entertainment. Technology has advanced to the extent of personalizing an individual message in the name of the reader.
New media options have become available, e.g., in-store ads, in-flight ads, PCs, cell phones etc. Advertising has to deliver. It has to fulfill its objectives. Advertising creativity is not totally free. It is tied to the achievement of the objectives set.
According to Ajai Jhalo, CEO, BBDO, Indian advertising scenario could be divided into cycles. Every decade or two, there is a new cycle. The first cycle was cinema-led mainly by Lintas which created iconic brand characters like Chaplin for Cherry Blossom and the Liril girl. These were cinematic, aspirational and larger than life.
The second wave was on television and led by O&M. It was more intimate, home-spun and earthy. Consider the work on Fevicol and Asian Paints. That is the job of television. It is a member of the family. The third wave is about interactivity. Communication is not restricted to product benefits. Consumers are no longer passive and want to interact. The nature of ideas will change.
The array of products and services we use are being marketed. Marketing is the process that brings the products and consumers in touch with one another. Marketing is facilitated by promotional methods, a part of which is advertising.
Q.9.What is the meaning of industrial goods?
Ans. Industrial or business goods are distinguished by their nature or by the use to which they are put.
American Marketing Association defined industrial goods as “all products which are destined to be sold primarily for use in producing other goods or rendering services as contrasted with goods destined to be sold primarily for consumption to the ultimate consumer.” Goods used in the home and for personal satisfaction are, of course, consumer goods.
Industrial products are all goods and services sold to business and institutional buyers and which are used by the purchasers in their own manufacturing or other business activities- i.e., they are reprocessed and absorbed into or used by purchasers’ products or services. Industrial goods are also called producers’ goods, i.e., produced means of production. Industrial goods are products used for further production of other goods—industrial goods or consumer goods.
The distinction between consumer goods and industrial goods is based on their ultimate use. If a product is to be used in making other products or for the operation of an enterprise, it is called an industrial product. Thus, industrial users are the buyers in an industrial market. If a product is meant for ultimate consumption by a consumer, it is naturally a consumer product and it is sold in a consumer market.
Ans. The movement of products from the producer to the customer is called distribution. Distribution is made possible by using a marketing channel say, a product produced by a manufacturer is sold to the wholesaler who in turn sells it to the retailer who ultimately sells it to the customer. Physical distribution involves transportation, warehousing and inventory management.
Advertising mentions where the product is available, especially when a new product is launched. All advertising decisions are coordinated with distribution decisions, because advertising creates demand and if the product is not available, it is a wastage of advertising budget.
Distribution also creates an image that is consistent with the image created consciously by promotion. Thus, Fire and Ice is a premium perfume and is available at select outlets like Akbarally’s and Shoppers’ Stop. Such selective distribution adds to its premium-ness.
Ans. Advertising can be classified depending on its objectives. Product advertising aims to stimulate the sale of products. It also includes services such as banking, transportation and telecommunication. Non-product advertising aims to create a favourable image of the organisation as a whole. It is alternatively known as institutional or corporate advertising.
Advertising can be used for non-business purposes. We can promote social issues like anti-dowry campaign in India. We can also promote public services like soliciting donations for a charitable cause.
When a completely new product is launched, it is necessary first to create a demand for the product category and not for an individual brand. Associations also resort to such advertising to promote a product category. Thus, we find advertising for promotion of the consumption of eggs by National Eggs Coordination Committee.
After establishing the primary demand for a product category, we can then promote individual brands within that product category which is called selective demand advertising.
Citibank asks those who are interested in buying its credit cards to dial a toll-free number any time of the day all year round. It is a direct-action advertising. Advertisers can insert a coupon or make a time bound offer to create direct action advertising. The redemption of rate of coupons also provides an indication to the advertisers as to the effectiveness of such advertising.
Advertising by and large just tries to build an awareness of the product in the target audiences and get it interested in the product to make it desirable. It is thus, short of the final action that is buying. Such advertising that works indirectly by making the prospects favourably inclined to the products is indirect-action advertising. Its effects on sales are seen in the long-term.
Q.12.Define organised market!
Ans. The organised market represents a public market mechanism or organisation consisting of buyers, sellers, producers, processors, dealers etc., dealing in one or more commodities which constitute the articles of trade in the market.
It is a private voluntary association of dealers and professional traders of one or more commodities. It is a central convenient market place where members meet and conduct buying/selling operations on the trading floor/pit/ring on behalf of their clients.
The exchange for commodity is not for making money or profit, not for fixing prices (except under emergencies) nor for making transactions or dealings. It only provides an open platform or forum for the interaction of free play of the forces of demand and supply.
It only registers the prices, reflecting minute forces of demand and supply. The prices are determined by free competition between the forces or demand and supply. Members, i.e. dealers, act on their own responsibility.
The business of buying and selling, trading practices, trading operations and actual working of the organised market are governed by a comprehensive code of rules and regulations or bylaws (formal or even unwritten) and these can ensure fair dealings, equity, justice and fair prices.
Ans. Promotion, as we are aware, is a technique of communication. Advertising is used along with personal selling, public relations, direct marketing, and sales promotion. Personal selling is a face-to-face communication.
Here, a salesman tries to persuade a prospect to buy a product. Public relations is the relationship between an organisation and its public like employees, shareholders, customers, distributors, media and the community at large.
Direct marketing is selling directly to the customer either by direct mail or telephone or TV ads. Sales promotion is the direct inducements offered to the customers like free gifts and price offs to move the products rapidly. Sales promotion can also be used at the level of dealers and sales representatives.
Ans. The modern Marketing manager has to discharge his function for attaining the following objectives:
(a) Creation of demand for new products.
(b) Identify market potential for existing products.
(c) Develop latent potential and revitalize marketing effort.
(d) Smooth out uneven demand by adopting suitable marketing strategies.
(e) Meeting the excess demand situation.
(f) Correlating the product demand with production capacity and reduce excess demand.
Q.15.What are the features of convenience goods?
Ans. 1. Standardised and branded goods,
2. Non-durable goods,
3. Daily necessaries of life,
4. Conventional and numerous outlets,
5. Minimum shopping effort,
6. Repeat purchases at frequent intervals,
7. Low-priced and light-weight goods,
8. Mass-production and mass-distribution through usual wholesaler-retailer channels.
9. Very keen competition in sales demanding considerable promotion,
10. No postponement in purchasing.
Q.16.What are the functions of advertising?
Ans. Advertising has to perform a number of functions.
Some of these are:
1. Advertising informs the buyers about the existence of the product, its features, its benefits, and its availability.
2. Advertising offers an incentive to buy by making several direct offers like price-offs or exchange of an old TV on buying a new TV.
3. Advertising provokes us to try the product and once tried reminds us about its benefits so that we can buy it time and again.
4. Advertising builds brands, gives an image and personality to the brand and distinguishes them from competitive brands. Over a period of time, it works along with other elements of marketing mix to create brand equity.
5. Advertising helps us to choose out of several brands available. It provides us reasons to buy a particular brand. It thus contributes to our brand preference and brand loyalty.
6. Advertising, being mass communication, is the most cost-effective way to reach our consumers. In absolute terms, the cost of a full page ad in a magazine is very high. But when we divide the cost by the number of readers reached the per reader cost is very low. It is hardly a few paise. Advertising thus, reduces selling costs.
7. Advertising persuades people to act. JFK (jr.) once joked that an advertisement line ‘just do it’, finally persuaded him to take the plunge and get married.
Ans. Advertising world consists of organisations who put the advertising messages through advertising agencies in different media. The organisations who advertise are called advertisers.
They have their own advertising departments who interact with the advertising agencies which conceives and executes a campaign on their behalf. The advertising agency’s creative department prepares the ad in collaboration with the production department.
The production department may be provided different services by outsiders – freelance individuals or supplier firms. They provide services like video production, photography and print production.
The advertising agencies get their compensation from the media – generally 15 per cent of the billing. Media has two broad categories – print media and electronic media. These are supported by POP- Point of Purchase materials, sales displays, outdoor hoardings, etc.
Q.18.What are the features of shopping goods?
Ans. 1. Durable and high-priced goods,
2. Shopping around, search efforts and special visits to central markets necessary,
3. Comparison and evaluation necessary to secure best quality, price and performance,
4. Considerable time and effort necessary in their purchases,
5. Occasional purchases,
6. Fewer retail outlets,
7. Branding unimportant in shopping goods,
8. Purchases can be postponed,
9. Every retailer not keeping all rival shopping goods.
Q.19.What are the benefits of an ad message?
Ans. An ad message creates awareness, conveys information about benefits, attributes or features, builds a brand image and personality, vests the brand with certain feelings, links the brand with group norms and peers/experts and induces purchase behaviour.
Exposure to an ad can initiate any of these processes. These five effects create an attitude in us towards the brand, which if favourable leads to a purchasing action. In addition, certain ads just remind us about the product or brand or lead an assault on those reasons which prevent a consumer from buying or using the brand. It is a direct inducement to action.
Q.20.Why buyers buy?
Ans. Marketers secure satisfactory answer to this question with the help of buying motives and buying habits.
Buying motives are those influences or considerations which induce or compel the purchase of certain goods from particular firms. Buying habits refer to how, when and where consumers buy. Buying motives explain why they buy. Buying habits are the basis for classification of goods into three categories- convenience, shopping and specialty goods (indicating how, when and where they buy.
Q.21.What are the features of specialty goods?
Ans. 1. Occasional purchases,
2. High-priced articles,
3. Special effort to visit certain shop dealing in that article,
4. Article of unique characteristics or article enjoying brand loyalty,
5. No shopping around necessary
6. Product differentiation maximum through branding and advertising,
7. Well-informed buyers.
Q.22.What are the characteristics of manufactured consumer goods market?
Ans. Manufactured consumer goods market has special characteristics. We have variety of marketing problems and many problems are very difficult when a manufacturer has to sell consumer goods meant for ultimate consumption and satisfaction of numerous, varied and ever changing consumer wants.
All people in the country are consumers in the national market. They are spread over throughout the length and breadth of the country. They purchase frequently and in small quantities. The buyer behaviour is influenced by economic, social and psychological factors. The buyer preferences, attitudes and perceptions are ever-changing, uncertain and unpredictable. Average consumers are amateur buyers.
The manufacturers in a wider market have no direct or personal interaction with their numerous customers and mostly the consumers are unknown to the manufacturer embarking upon mass production in anticipation of demand. Many a time, there is a communication gap between manufacturers and consumers—due to very large number of buyers and long distances between manufacturers and their markets. Let us now point out the most important characteristics of the consumer goods market.
Q.23.What is meant by buying habits?
Ans. Marketers must know their customers’ buying motives as well as buying habits. Consumer buying habits indicate how, when and where consumers buy. Marketers should consider the buying problem from buyer’s point of view and on the basis of this knowledge of buying habits, they should prepare their process of marketing and distribution. This will also honour the modern marketing concept, viz., customer-oriented marketing approach and it will offer adequate consumer satisfaction.
Q.24.What is the meaning of storage?
Ans. Storage, like transport, is a very important function of physical distribution. Storage is the process of holding and preserving goods from the time of production to the time of use or consumption.
If transport and communication define the length and breadth of the market area (i.e. place-wise distribution), then storage and its accompanying function of finance give depth (i.e. time-wise distribution) to the market—depth is understood in terms of time through which goods are carried prior to sale or consumption. Thus storage creates time utility, whereas transport creates place utility. Both are related to physical distribution of goods.
Q.25.What is meant by warehousing system?
Ans. The word storage means holding the stock of goods for a longer period as the goods are not immediately in demand. Warehousing involves more than storage. Warehouses perform many functions of wholesalers, e.g., breaking of bulk, dispatch of small parcels to retailers, holding stocks for retailers, regulating the flow of goods to retailers, providing market information and many other merchandising services.
A full-service warehouse is called distribution centre (warehouse). Distribution centre as a full service warehouse was introduced as an innovation or new idea after 1945. It stresses movement of goods rather than their storage.
Warehousing is the means or medium of storage. It is an advanced stage indicating commercial storage. In other words, warehousing means specialised process of storing of surplus goods for use or consumption in the near future.
At present, warehouses stress product flow rather than dead storage. At one time, warehouses were primarily storage centres. Today, they still act as storage centres but for the shortest possible period. At present, emphasis is given on prompt order processing. Storage means idle inventory. Order fulfillment means profitable inventory investment.
The new trend is in favour of distribution warehouses or distribution centres located near about the market. A distribution centre links the supplier and customer. It assures speedy execution of orders. It is a convenient place where orders are directly received. It is a place where products are stored for a temporary period. Orders are processed and goods are dispatched to the customer directly on the receipt of orders.
Q.26.What are the conditions required for success of marketing co-operatives?
Ans. 1. Producing areas should be away from their major markets. This will compel farmers to co-operate primarily for securing advantages of large-scale transport and marketing facilities.
2. The marketing co-operative should also take more interesting grading and processing of agricultural produce in order to secure better and remunerative prices for agricultural produce. The distant markets create the need for grading and processing. Better returns are possible only when farm products are sold in a distant market—graded and processed products.
3. The range and variety of products to be sold should be limited. This would give lower handling costs and improve sales returns through joint action. Marketing economies can also be secured.
4. Members, who are farmers, must have the control of the organisation in their hands as they are selling their produce through it only.
5. Loyalty of members to the organisation must be demonstrated in practice in the sale of agricultural produce only through it.
6. Expenses of marketing and profits earned, by the organisation must be distributed in a fair and equitable manner.
Q.27.What are the conditions that give rise to storage?
Ans. The conditions that give rise to storage are:
(1) Seasonal production and uniform consumption;
(2) Uniform production and seasonal consumption;
(3) Need for protection or preservation of goods; and
(4) The inability to maintain balance between supply and demand as goods are produced on a large scale and in anticipation of demand.
Both manufacturers and resellers require storage facilities:
1. To eliminate discrepancy between supply and demand,
2. To facilitate production of finished goods (storage of raw materials),
3. To permit smooth marketing of finished goods,
4. To establish storage centres close to large markets and offer quick delivery to customers, and
5. To facilitate assortment of all products desired by assembling a complete line of merchandise at one point nearer the market.
Receiving, transferring, assembling, processing, and forwarding or dispatch of goods are the storage activities. A warehouse offers all these storage activities.
Q.28.What is meant by standardisation and grading?
Ans. These are inseparable and closely inter-dependent marketing functions always going hand-in-hand.
Mere standardisation becomes useless when it is not followed by grading. Grading without standardisation is impossible. Standardisation is the basis for grading and it must precede grading and make grading stable (till the standards have to be modified or revised).
Basic limits to an article for the purpose of classification or assortment are set by standardisation and standardisation is merely a mental process. In the light of prescribed norms or standards, classification or sorting, i.e., grading can take place. Hence, grading is a mental process or action.
Based on such factors, such as weight per bushel (a measure of capacity), percentage of damaged kernells, colour, moisture contents, and percentage of foreign matter, each major kind of wheat in U.S.A. is divided into five main grades or classes.
Q.29.Define marketing co-operatives!
Ans. An agricultural co-operative marketing society is a form of business organisation (run on co-operative principles) set up for the purpose of selling the agricultural produce and returning to the farmer members their full share of the money paid for the products by consumers. Farmers come together and form co-operative marketing organisations chiefly to get more for their produce than they are paid by private buyers such as traders, dealers and mercantile agents—buying for resale at a profit.
In India, farmers are usually indebted to traders-cum-money- lenders who control production, finance, marketing, transport and storage. The cooperative structure must replace these existing monopolists in agricultural marketing and perform all their functions more economically and efficiently. Integrated co-operation is the best solution to our agricultural problems.
Q.30.What are the devices used in grading?
Ans. Both manual and mechanical or even electronic devices are used in the process of sorting or grading. In the retail shop, eggs are usually ‘candled’ by hand. In contrast, a large wholesaler of oranges or grape fruits will use a machine which grades his fruits according to size. Butter fat in milk and cream can be measured by special devices. Electronic machine is used to measure the staple length of cotton in the U.S.A. It is both more accurate and faster.
Mechanical grading reduces the element of human error. The most important standards in marketing are- (1) Quantity; (2) Quality; (3) Size; and (4) Measurement. However, quality standards are very difficult, particularly in the case of consumer goods.
Q.31.What are the bases for standards?
Ans. We have four bases for determination of standards – 1. Quantity, 2. measurement, 3. size, and 4. quality. Standardised weights (kilogram and litre) and measures (metre) determine quantity. They ensure smooth marketing operations. Then we have size standards. Bolts, nuts, screws, lumber, ready-made garments, shoes are sold in size standards. Many products require quality standards. However, it is difficult to prescribe quality standards as consumers and users have different quality standard in their evaluation process.
Branding and product differentiation techniques are used by manufacturers to solve the problem of quality. Grading device is used to solve the problem of quality in agricultural produce.
Standardisation protects and benefits consumers by assuring them of articles that are pure and uniform in quality and performance, and often lower in price.
Universally accepted standards of quality (by standardisation) will make marketing more efficient and less costly. Every advance which increases the ease with which buyers can determine quality is bound to increase the speed of the marketing process, and ultimately the cost of marketing also can be reduced.
To the consumer, standardisation means better quality, greater safety and lower prices. It gives basis for comparing products. It means greater availability, more convenience in their use and easier repair.
Q.32.What is standardisation?
Ans. To standardise is to determine basic limits to classes of products. Standardisation is a marketing function. It is the process of setting up or prescribing certain standards or specifications of a product and maintaining those standards during the period for which they are effective. It is based on the consolidated results of science, technology and experience.
Q.33.What are the features of spot or cash markets?
Ans. When goods are produced for exchange, we must have a systematic arrangement for its disposal. The physical or cash markets provide such convenient centres for exchange or disposal.
The following are the distinguishing features of all physical or spot markets:
(1) A spot market provides a convenient market place for meeting of all buyers and sellers. They quite often meet face to face.
(2) In this market, actual commodity is bought and sold on a negotiated basis. We may also have auction sale.
(3) In all cases, agreements between buyers and sellers call for the transfer of a specific lot of a special grade of a commodity.
(4) Quality is determined on the basis of inspection of sample or grade and sometimes even the inspection of the entire stock. Samples play a more important role in physical markets.
(5) Delivery is usually given on the spot as goods are in a deliverable condition. It may also be ‘forward’ delivery.
(6) The contract of sale represents an ordinary commercial transaction. It indicates the transfer of ownership and risk from the seller to the buyer, whether we have spot or forward delivery. The contract can be cancelled only by an agreement between the two contracting parties.
(7) Settlement of the sale contract is invariably through giving and taking of delivery and payment of price in full. In other words, the seller must deliver a specific quality of goods to the buyer and the buyer must pay the agreed price.
Physical markets are mainly of two types- primary or local markets and central or terminal markets. The collecting traders operate in the local markets situated in bigger villages or towns. They are responsible for collecting the produce from farmers and forward it with or without processing to the central or terminal markets, which are situated in bigger towns and cities or port towns such as Bombay, Calcutta, etc. The central markets are also called wholesale markets or mandies.
Q.34.What is grading?
Ans. On the basis of prescribed standards or norms of physical and other qualities of products, the stock of a commodity can be divided or sorted out into a number of lots or groups and each lot or a group represents one grade. In each grade or a group, we have goods having uniform or common qualities.
Grading is the process of dividing goods into lots which have same or similar characteristics as to type, size, shape, weight, quality, performance etc. A grade indicates a certain standard of quality or performance.
Q.35.Explain the development and division of organised markets!
Ans. Modern commodity markets were developed in the 18th and 19th centuries after the decline in economic importance of the fairs in Europe and England. Initially, they were general market places for many kinds of commodities. In due course, as economic conditions improved, specialised organised markets were established for particular staples like cotton, tobacco, wheat, corn, etc.
In the beginning, produce exchanges and such organised commodity markets which were evolved as centres for specialised trading, concentrated only on spot contracts. In other words, they acted as organised cash or spot or physical markets for buying and selling of commodities on a wholesale basis. In due course, futures trading was developed and organised as an auxiliary or supplementary activity side by side with spot dealings.
In the organised markets, we have two distinct divisions:
(i) Cash, spot, physical or current market for actual buying and selling of goods entering the circle of exchange.
(ii) Futures trading or exchange trading as a fine insurance device in our modern economic life. It is essentially a speculative market.
Speculators act as insurers against risk of loss due to adverse change in prices. Exchange trading was an American development. Of course, not all commodity markets have commodity exchanges dealing in futures contracts.
Q.36.What is the meaning of sales promotion?
Ans. Sales promotion is an important instrument in marketing to lubricate the marketing efforts. Today, sales promotion is a necessity and not merely a luxury or a fashion. It is not an expenditure, it is an investment which can pay rich dividends. It is an integral part of the marketing effort.
Sales promotion is referred to activities other than personal salesmanship, advertising and publicity, which stimulate consumer purchasing and dealer effectiveness, e.g., displays, exhibitions and showrooms, demonstrations, free samples, coupons, premiums and various other non-recurrent selling efforts not in the ordinary routine. It is a plus ingredient in the marketing mix, whereas advertising and personal salesmanship are essential and basic ingredients in the marketing mix.
In short, sales promotion is a bridge or a connecting link covering the gap between advertising and personal salesmanship— the two wings of promotion.
The manufacturer or wholesaler may have a good product, reasonable price, attractive package, etc. He may have a good sales force. He may have spent a lot on advertising. Even then he knows that the product may not sell by itself. He can get orders from dealers or retailers.
But many more things than orders are required to be achieved. The sale of the product has to be promoted through a number of influences at the place where retailers and prospective buyers meet face to face, i.e., at the point of purpose.
In short, all prospective buyers must be attracted, urged and even persuaded to buy your product. Sales promotion is a vital link between advertising and field-selling. It aims at stimulating consumer purchasing at the point of sale and dealers’ effectiveness at the retail channel of distribution, particularly because retailing is a highly competitive field.
Q.37.What are the advantages of market segmentation?
Ans. Following are the advantages of market segmentation:
(a) Helps in better understanding of the customers’ needs and wants.
(b) Better targeting and position of the product.
(c) Encourages two-way communication among the potential buyer and the organization.
(d) Maintaining effective relationship with the customers.
(e) Retaining the existing customers and attracting new ones.
(f) Improving service delivery standards.
(g) Reducing cost/expenses on various marketing activities and increases market share; resulting in higher profits.
Q.38.Define marketing planning!
Ans. Marketing planning represents functional planning activity in the area of marketing. Naturally a marketing plan is based upon the overall corporate or master plan and marketing budget is a part of the corporate or master budget. Similarly, marketing objectives will be the means to achieve overall corporate objectives for the entire enterprise.
All functional plans, such as production plan, fin- plan and marketing plan must be co-ordinated and integrated with one another and with the overall master plan of the entire corporation.
Marketing planning involves two steps:
1. The selection of particular markets, i.e., identification of customers and customer needs to be met) in those markets. This is done through market segmentation or subdivision on the basis of age, sex, education, income, location, social class, life style, and so on. The most favourable market segment will be approached with tailor-made marketing-mix.
2. Evolution of right marketing-mix or blending of the marketing ingredients in such a way that we can meet fully the customer needs and desires of a particular market segment or subdivision. For each market segment, we will have an appropriate marketing-mix.
Q.39.Define local marketing!
Ans. Tailoring brands and promotions to the needs and wants of local customer group’s viz. cities, neighbourhoods, and even specific stores is called as local marketing. In local marketing, though both traditional and web-based marketing strategies can be used, the main objective is to attract local customers to brick and mortar business or stores.
The local market customers are located within the region where the products or services are being offered. Local market is being given importance today since companies have realized that products which are successful at one place might be a complete disaster in some other markets due difference in taste and preferences.
In local marketing, not only the products and services are localized but promotional activities are also designed by taking the local customers into consideration. Local marketing is gaining momentum since it is felt that nationalized marketing does not fulfill the needs of the markets at grassroots level. Local marketing is also called as grassroots marketing.
Q.40.Define market segmentation!
Ans. Segmentation means subdivision of the entire market. Each segment consists of a group of buyers who have identical or similar unmet wants and needs. Thus emphasis is given on the demand side of the market. Segmentation is an answer to the question, “To whom should we sell our products, and what should we sell them?” It is a plan to do right things and not to do things rightly.
Segmentation implies bending of supply to the will or trend of consumer demand as far as feasible and desirable. It recognises that there are several demand schedules and not necessarily a single demand schedule or curve. For instance, we have a youth market, an adult market, children’s market, and so on.
This is a segmentation based on age. Similarly, we can subdivide the market on the basis of income, sex, education, social class, etc. For each demand schedule representing a group of buyers with similar needs and characteristics, we can prepare a unique or precise market offering or marketing-mix.
When the market is identified in terms of customer needs, and when marketers have fully understood customer needs, they can effectively formulate and implement marketing programmes which are tuned exactly with the market demand. In short, a key idea in search of the best match between the product (supply) and consumer needs and wants (demand) is that of market segmentation.
Q.41.Define niche marketing!
Ans. Niche is created by dividing a segment further to cater to the needs and preferences of a small group. It is a smaller sub-segment of market which if targeted in a focused manner results in higher profits. Niche may be defined as “a narrowly defined group of customers seeking a distinctive mix of benefits.”
Niche market customers have a distinct set of needs and they are willing to pay premium price for the same. Niche marketer gains certain economies through specialization. Although niche market is fairly small, it has a size, is profitable, and has growth potential. Niche markets are unattractive to the competitors. Eg. Ayurvedic medicines.
Markets created for those customers who consider themselves a class apart and who like to distinguish themselves from others can also be called as niche markets. Eg. Giordio Armani and Audi cars. Niche market becomes profitable with increase in marketing efficiency.
Low cost for setting up virtual shops have attracted many companies to go for niche markets; wherein they go for selling hard-to-find products where customers do not need to feel the product by touching it.
Q.42.What are the advantages of market segmentation for a firm?
Ans. Over the years, many companies have realized the importance of segmentation as the consumers are becoming increasingly aware of their needs and are demanding products that match their needs exactly. In automobile industry, consumers are showing their interest in fuel efficient and eco-friendly vehicles.
The companies started providing a vehicle or mode of transportation with higher fuel-efficiency, power, style, design, and such many other attributes. The increased preferences of customers paved the way for flooding the market with many different varieties and brands of vehicles catering to the needs of different segments.
Market segmentation looks at markets consisting of customers who differ in their wants and needs. Some firms adopt market segmentation because they lack the ability and competitiveness to cater to the mass market. But of late, market segmentation is being suggested as the best strategy for targeting the markets. Now companies are having their product line to satisfy various needs of different segments in market.
Q.43.Define mass marketing!
Ans. Mass marketing focuses on high sales and low prices. According to Kotler, in mass marketing, the seller engages himself in the mass production, mass distribution, and mass promotion of a single product for all buyers. It creates largest potential market leading to lowest costs and thus higher margins. However, due to loss of focus, many of the customers can remain unsatisfied.
In mass marketing the firm ignores differences in tastes and preferences of consumers in the market; instead it comes up with single offer or single marketing strategy for the whole market. The main concept behind this is to ensure that the message communicated reaches large number of customers thus resulting in maximum exposure of the product. Usually, traditional media such as radio, television, and newspapers are used by the marketer in order to reach large number of audience.
Q.44.What are the characteristics of niche marketing?
Ans. An attractive niche will have the following characteristics:
i. Customers of niche markets have distinct set of needs.
ii. They are willing to pay a premium price to the firms that best satisfies their needs.
iii. The niche is not attractive to competitors.
iv. The niche marketer gains more economies of scale through specialization.
v. The niche has adequate size, profitability, and growth potential.
Q.45.What are the advantages of mass marketing?
Ans. i. Wide audience – Due to large target audience, number of hits are high despite of low turn up.
ii. Less risky – If the offering leads to failure still then the eventual losses will be less as compared to a loss in the focused area approach.
iii. Low production cost – Since a single production is run for homogeneous product the production cost per unit decreases.
iv. Relatively lower market research cost and advertising cost.
v. Higher sales volume potential.
Ans. The concept of meta-marketing has considerably helped to develop new insights into the field of marketing. The literal meaning of the term ‘meta’ is “more comprehensive” and is “used with the name of a discipline to designation a new but related discipline designed to deal critically with the original one. In marketing, Kelly originally coined this term while discussing the issues of ethics and science of marketing.
According to him, Meta-marketing is to designate a new, although related discipline which deals critically with marketing as a discipline. To him, “the concern of scientific, social, ethical and managerial experience has to bear on marketing. Philips Kotler broadened the application of marketing notion to non-business organizations, persons, causes etc. He used the term meta-marketing to describe the processes involved in attempting to develop or maintain exchange relations involving products/ services organizations, persons or causes.
Q.47.Define integrated marketing!
Ans. Marketing is considered a total integrated process rather than a fragmented assortment of various elements like product, price, place and promotion. Every marketer should develop an integrated marketing program that will actually deliver the intended value to the target customers. Such a program uses the tools of marketing mix, known as 4Ps, namely, product, price, place and promotion.
These tools are used in an integrated manner. To start with, product is designed to cater to the needs and wants of target customers. Product may be differentiated to cater to the requirements of different segments of the market. Price of the product is determined keeping into account the cost of production, prices of competitive products, buying capacity of the target customers, etc.
After this, product features are communicated to the target customers through advertising, publicity, sales promotion, etc. And lastly, for making the product available to the target customers, the marketers take care of the distribution and logistics issues. In fact, all the four Ps, namely, product, price, promotion and place are properly integrated to deliver value to the customers.
Q.48.What are the various forms of advocacy advertising?
Ans. Advocacy advertising consists of following forms:
i. Ideological advertisement which is principle-oriented and attempts to highlight the ethics of an institution.
ii. Defense advertisement which argues to protect the image of the institution against contemporary controversies.
iii. Reply bound advertisements seeking responses to the issues highlighted in the advertisement.
iv. Position taking advertisement emphasizing the viewpoint of an institute of issue thereof with strong argument to seek public acceptance or referendum.
v. All recruitment advertisement asking interested persons to present their views in support of the ethics of institutions in view to strengthen its logic prior to their joining position in the institute.
Advocacy advertising has an advantage of exhibiting message under controlled situation of advertiser which helps in dealing with complex issues through corporate focus. An institution can plan a series of advertisements as campaign supporting its views and building image simultaneously among the clientele group. Institutional advertisements are generally released on multi-media and cover substantially larger segment of target audience.
Q.49.What are the requirements for effective market segmentation?
Ans. There are several factors that are considered before a particular segmentation strategy is adopted.
Following are the requirements that are to be fulfilled for segmentation:
It signifies the importance of the number of people in a particular segment. If the number of people is less in a segment then it would not be economical to select that particular segment as a target segment. Thus, a selected segment should be large enough to gain profit.
It measures the market segment in terms of size, requirement, income level, and the purchasing power of customers. The data for measuring the market segment can be obtained by various techniques, such as customer surveys and interviews.
It implies that the target segment should be easily reachable. The selected mode of communication should be cost effective and message should be delivered on time to the targeted customers.
It deals with understanding the need of distinctiveness between two segments. The segmentation cannot be effective if there are dissimilarities in the needs and wants of customers within the same segment. Different marketing strategies are applied according to the differences in the segmentation.
For example, a different strategy needs to be developed for a customer who needs a mobile with higher battery life as compared to a customer who needs music and video streaming features in the mobile.
Q.50.What is the objective of pricing?
Ans. Pricing is a very critical decision that needs to be taken in marketing management. The main objective of the firm, that is, to earn a profit very much depends upon the correct price decision. After meeting all the costs involved, the sales revenue generated must yield a surplus before there can be profits.
Ans. This is adopted by advertisers when the merchandise or service has to be ‘gatecrashed’ in the market and marketed with horizontal expansion policy. Campaign advertising is primarily concerned with achieving quick sales response in target markets through clearance advertising and regular price-line advertising.
Such campaigns are of short duration but possess similarity in copy writing and continuity in releasing exposures. Hence, campaign is a series of advertisements exposed in a given time at regular intervals in the same media, or medium. The advertising campaigns are of natural and local level and have institutional patronage. The advertising campaigns are planned in advance and are orderly set.
This approach is beneficial to gain regular consumers as well as occasional buyers, as a series of advertisements leave an impression on the consumers and are identifiable early. It is observed that such advertising campaigns not only build consumer strength but also bring prestige to retail sales, institution and advertising agency.
However, in planning advertising campaigns and putting it through media care should be taken in its continuity, message dissemination and periodicity as in absence of such regulation, the impact of campaign may not be achieved to the mark.
Ans. The two types of manufacturer’s branch houses are stock-carrying and non-stock-carrying. As a general rule, goods are shipped to the stock- carrying branch in carload or truckload lots, thus permitting lower car-lot or truck-lot freight rates over the longer portion of the trip to market.
They are then fanned out from the branch in smaller shipping lots to users or, in some cases, to distributors. This arrangement allows the manufacturer to enjoy a favorable combination of freight rates and to render a speedy and reasonably sure delivery service to his customers.
The non-stock-carrying branch house is primarily a sales headquarters. It usually consists merely of an office from which operate the salesmen who travel the branch territory. Its chief function is usually to afford a convenient organizational unit through which to manage the sales activities of the company.
Q.53.Explain institutional advertising!
Ans. It is a form of public relations performed through communicating message to the target audience directly related with the institution. It is not necessary that an institution developing advertising message should strictly be of commercial nature. The strategy for institutional advertising needs to be selected matching the objective of institution and clientele.
For example, a business company may develop institutional advertisement for distributors in the employees of a company, an association of medicos may release message of social health awareness; government can do so for generating awareness of franchise during elections and so on. Institutional advertising involves non-personal mass-media communication by an identified institution to accomplish its goals.
There are various type of institutional advertising practices observed, of which some major kinds are released through the following messages:
i. Social awareness about civil rights, health, population, etc.
ii. Promotion of a public service.
iii. Generating awareness about innovation, achievement, new facts of development.
iv. Improved or added market value of products.
v. Employees welfare and image of institution.
vi. Placement advertisements with profile of company’s achievements.
vii. Opening debate on controversial issues.
Institutional advertising thus, can be of commercial and non-commercial nature. Functionally, institutional advertising can be classified into two categories: image advertising and advocacy advertising. Image advertising is designed to mobilize opinion about the institution and create an image through its merits. So it can be stated that image advertising exhibits the human face of an advertiser.
Ans. Campaigns are of varied length — say a seasonal campaign of cough syrup or Vicks VapoRub or woolen garments or it may last the whole year. The logic behind yearly campaigns is that they coincide with accounting year, at the end of which sales and profits are computed. There are several advertisers who keep a campaign running without any change for two or even for three years.
All of you are familiar with the Lux soap campaign where it is promoted as a beauty soap of cinema stars, and coheres the present queen bee of Hindi films. The factors which affect the duration of campaign are the type of product offered, the nature of advertiser’s marketing programme, seasonality of sales, media policies and the competitor’s advertising.
‘A diamond is forever’ is one of the longest running campaigns in the world of advertising. ‘Forever’ is repeated as an invaluable benefit. In a sense, any rock is ‘forever’, including the diamond. Though not rational, the campaign has a strong hold on our emotional subconscious mind.
Q.55.What are the different types of image advertising?
Ans. Image advertising is done in four types and they are:
i. Institution identification advertisements.
ii. Goodwill advertisements.
iii. Civil rights and responsibilities advertisements.
iv. Public service advertisements.
Such advertisements are non-argumentative and non-controversial as most of the themes are of public interest such as, population control, crime prevention, water, food and energy conservation, campaign against drug abuse and the like. On the contrary, advocacy advertising attempts to highlight contemporary arguments directed either at specific general clients like political activists, consumer groups, media and government agencies.
Ans. Sometimes, a company may also need to change its positioning, if it is not working or if the market scenario has changed. In this case, it may need to reposition itself. Repositioning involves changing the positioning platform to suit the identity of the product in the marketing environment against the competition.
Q.57.Which trades use branches?
Ans. Manufacturer’s branch houses and distributors are the two chief channels through which industrial goods flow to market. Their relative importance in different trades varies considerably.
For example, of the total 1967 volume of industrial chemicals sold to industrial users by distributors, manufacturer’s branches, and agents, 15 percent was handled by distributors, 80 percent by branches, and about 5 percent by agents.
On the other hand, 80 percent of the construction machinery volume was handled by distributors, 16 percent by branches, and about 4 percent by agents. For construction materials, the figures were: distributors 48 percent; branches 45 percent; agents 7 percent.
In general, supplies manufacturers seem to lean heavily on distributors to move their goods to market. Highly technical products, such as bulk chemicals and electrical apparatus, and bulky materials, such as metals, are marketed largely through manufacturer’s sales branches. Logically, all machinery might be expected to be sold direct or through branches, but construction machinery and metalworking machinery are exceptions.
The casebooks are replete with examples of relatively small firms making specialized types of equipment that market either through distributors or agents. In no small percentage of the cases, the reason is probably an engineering or production-minded management that prefers to settle the troublesome marketing problems by turning them over to specialists. Financial considerations may also be influential in this decision.
Ans. An ad agency can be a one man show or a partnership of just a handful of creative persons and visualizers. An ad agency can be a full-fledged agency offering all services and having various departments. We have mega agencies doing business all over the world. Agencies, do differ in size and services offered.
Full service advertising agency provides all services of advertising to its clients. It conceives and develops advertisements and puts them in a suitable media. These agencies can have some limited specialisation but mostly they cater to consumer goods industry. These days many new services are being added to the traditional services like public relations, sales promotions and direct marketing.
The agency creates integrated marketing communications for the client. Limited service agency, as the name itself indicates concentrates on some select services. Here, the client chooses an agency depending upon the type of service he desires. Creative Boutique is one type of limited service agency.
It concentrates on innovations in message development and design. Media buying service is another type of limited service agency. It concentrates on media planning, buying and scheduling.
Specialized agencies concentrate on a specific audience or market. They are full service agencies but operate only in their limited field. Financial advertising in India is handled by specialised agencies.
Ans. Advertising appropriation is an essential management approach to control the advertising expenditure and gain optimum response at reasonable level of investment. The common method of appropriation will be on the basis of the net sales per annum. The advertising appropriation can also be done on the change of turnover of the company over the previous year.
This method is also known as returns on investment of the company in a given time. The advertising activity can be appropriated on the basis of developing an advertisement, campaign, direct advertising, buyer-seller relationship and image building. The advertising budget, which is the principal tool of appropriation, consists of the expenditure related to the selected category of goods and services and media for advertising.
The advertising expenditure needs to be appropriated also in reference to different sales regions as emphasis on advertising in respect of goods and services, media and consumer preference. The expenditure variable in production of advertising include the insertion charges of the commissioned media, art work, mechanical production, talent, non-media promotion expenditure like point of purchase sale promotion, displays, exhibits, etc. Besides the client service charges of the advertising agency, administrative costs and overheads also need to be considered in advertising appropriation.
Q.60.What is meant by brand houses?
Ans. Makers of industrial goods probably make less use of the manufacturer’s branch house as a channel of marketing than do consumer goods producers. The firm that makes equipment to specification has little, if any, need for stock-carrying branches, except perhaps to maintain inventories of parts at points convenient to users; practically all its shipments must be made direct to the customer.
The limited area within which an article that has a vertical demand can usually be sold, because of the tendency of firms in any one buying industry to locate near one another, restricts the need another fairly large group of industrial goods manufacturers has for branch houses.
The large quantities in which the biggest volume of many industrial goods is bought tend to favor shipments direct from factory to user as against distribution through branch houses.
These factors tend to limit the number of industrial goods firms that use branch houses, and to reduce the number operated by firms that do market through them. In spite of these limiting forces, however, the branch house occupies a significant position in the marketing system for industrial goods.
Ans. The success of the marketing strategy depends a lot on the marketing research. It deals with specific issues relating to marketing product and services.
According to American Marketing Association- ‘Marketing Research is the function that links the consumer, customer, and public to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.’
The term marketing research is commonly interchanged with market research. Market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.
Whether you are developing a new product like Tata Nano or Maruti Suzuki Swift or developing an idea to be propagated or launching a new service; you need to understand the market and its customers. Most of the time companies are engaged in meeting the existing demand of a product. These companies try to fulfill the same need in a better, cheaper and user friendly way.
But Business is not only about marketing. It’s also about innovation. Many companies who are pioneer in innovation are also the companies which are respected a lot; are also the companies who are leaders in their respective business segment. Intel, Microsoft, Sony, Apple, Mahindra, Tata, PVR, Maruti Suzuki etc. are the companies; which try to sense the customers and deliver whatever they want. The foundation of these innovations and their marketing successes is none other than marketing research.
Ans. On the other hand, sometimes a company may go for de-positioning to change the identity of competing products, relative to the identity of your own product, in the minds of the customers. Tata Motors generally compare its cars with the leading player in the segment like Vista with Swift and now Manza with Amaze.
In the ad, Tata Manza is trying to compete head on with Honda’s bestseller Amaze, by talking about its big space with ‘Bigger is better’ headline.
To break the growing clout of low cost carriers in India especially Indigo, Kingfisher ran an ad campaign with tagline, ‘Why fly low cost carriers, Fly Kingfisher’.
In airlines industry in India, the cut throat competition has taken the airlines companies far in their advertisement. Few years back, with the Kingfisher airlines hogging the space for being a five star airlines through its advertisements, Jet Airways came out with a campaign called ‘We have changed’.
To counter this, Kingfisher came up with an advertising campaign – ‘We made them change’. Taking it far, Go Air came out with the campaign ‘We have not changed; we are still the smartest way to fly’.
Q.63.What are the functions of an advertising manager?
1. He plans the advertising campaign and prepares an advertising budget.
2. In smaller organisations, he creates and produces advertisements. In larger organisations, he interacts with the account executive of an advertising agency. He also prepares sales promotional materials.
3. He handles administration of his department.
4. He coordinates with operations and the marketing department to facilitate the working of the sales department.
5. He has to carry-out promotional efforts in such a way that they further the goals of the organisation as a whole. He supervises the promotional activity and evaluates the results.
Q.64.Why market segmentation?
Ans. Market segmentations offers innumerable benefits to a firm:
(I) It is able to find out and compare the market potential of its products in various market segments.
(II)The firm can carry out a SWOT analysis, find its own strengths in comparison to others in each segment.
(III) By focusing sharply on each of the different customer groups within a market, market segmentation would make the marketing effort more economical.
(IV) The firm can explore and create new markets for its products.
(V) Segmentation forces rivals to face each other head on: offer their best products to customer at competitive prices and innovate continually to stay in the business.
Q.65.How to segment a market?
Ans. Segmentation can be done using several bases.
In consumer marketing, there are four major segmentation variables:
1. Geographic Segmentation,
2. Demographic Segmentation,
3. Psychographic Segmentation and
4. Benefit Segmentation.
1. Geographic Segmentation:
In geographic segmentation, the market is divided into different geographical units such as nations, states, regions, cities etc. Fast food restaurants such as McDonald’s and Burger King use information on population size and population density to help them select restaurant locations.
2. Demographic Segmentation:
In demographic segmentation, the market is classified into groups based on age, sex, family size, income, education, occupation, religion, race and nationality. In fact many products are designed for groups based on the basis of sex (clothes, cosmetics); age (toys) or income (automobiles).
3. Psychographic Segmentation:
In psychographic segmentation, the market is divided into different groups based on social class, life style or personality characteristics.
4. Benefit Segmentation:
In benefit segmentation, consumers are grouped into markets on the basis of different benefits sought from the product. For example, the toothpaste market can be divided into four groups, based on benefit segmentation. The sensory segment would require flavour, product appearance (children demanding spearmint toothpaste). The sociable segment would need bright, sparking teeth (outgoing, active youth market), the worrier segment would demand decay prevention (large families using toothpaste heavily); and the independent segment would require low prices and usually prefer sale brands (R.I. Haley).
Q.66.What are the functions of ad agencies?
(i) Agencies understand the product to be advertised in and out. They understand the technology used to produce it and the market for which it is meant.
(ii) Agencies understand the methods of distribution and selling.
(ill) Agencies have to assess the different media for conveying the message.
(iv) Agencies prepare an advertising plan in the light of the above information. Agencies have to carry- out this plan. They create the ads in their creative department with inputs provided by the production department. They buy either space or time in media. When the ads are run, they check whether they are run as per schedule. They bill the client for services and media charges.
(v) Agencies and advertisers work in a mutually beneficial partnership. It requires an interface with the marketing and sales department of the client organisation.
The above functions are carried out with the help of an expert staff grouped into account management, creative services, media department, supporting services and administrative services. Though these are all separate departments, their work is carried out in close cooperation and coordination.
Ans. Market targeting is the act of selecting one of more market segments to enter.
While doing so, the firm should look into three things:
(a) Segment size and growth,
(b) Segment structural attractiveness and
(c) Firms objectives and resources
(a) Segment Size and Growth:
Segment size and its growth potential may not always be the criterion, especially in the case of smaller firms not having requisite funds. Again, such fastest-growing segments may be highly competitive. Hence, such firms may go after smaller segments and serve the same with a unique marketing mix. However, if the firm has a competitive advantage that cannot be easily copied, it will always try to exploit the larger market segments successfully.
(b) Segment Structural Attractiveness:
The firm also needs to examine the structural factors that affect long-term profit potential of the segments. This, according to porter, depends on: whether there are strong and aggressive competitors; whether there are entry barriers to new players; availability of substitute products, presence of powerful buyers who will try to force prices down and the existence of powerful suppliers who can join hands to reduce price/quality/demand collectively,
(c) Firms Objectives and Resources:
Again, the selection of target markets has a lot to do with the firm’s objectives and capabilities. Generally speaking a firm should enter segments only in which it can offer superior value and gain competitive advantage over competitors.
Ans. Consumers have always been the centre of any country’s economy. In recent marketing trends, consumers have been given the top priority. Consumerism is a social force that safeguards consumers from unfair businesses in the marketplace. According to Peter Drucker, “Consumerism means that the consumer looks upon the manufacturer as somebody who is interested but who really does not know what the consumer’s realties are. He regards the manufacturer as somebody who has not made the effort to find out, who does not understand the world which the consumer likes, and who expects the consumer to be able to make”.
In today’s world, consumerism encompasses many things, such as protection against environment pollution.
The needs of consumer protection are increased due to several reasons, which are as follows:
i. Illiteracy – Refers to the complete lack of education, which is prevalent in the most parts of India. The illiterate people are unaware and wrongly informed about their rights. These people also face linguistic difficulties.
ii. Manufacturers’ Malpractices – Refer to the misconduct of manufacturers, which creates problems for the customers.
iii. Complexity – Refers to the difficulty in selecting a product out of many. The advancement in the field of science and technology has made the selection of products more complex due to the availability of many identical products.
iv. Advertising – Deceives customers by making false promises. It entices customers to use products whose qualities are not known. Consumerism saves customers from using wrong products.
Through consumerism, customers get prevention from ruthless exploitation by organizations. Consumerism can effectively be implemented by the support of concerned.
Ans. There are two approaches to segmentation — divide the total market into homogeneous subgroups called segments. It is a breaking down of an entire market. Alternatively, the second segmentation approach starts with individual customers. Then, the potential customers are identified with similar characteristics.
When sufficient number of such customers are identified, we have built-up a segment. It should be appreciated that though segmentation divides the market in segments, in reality, it is a consolidation process in which potential customers are put together on the basis of their common characteristics.
Ans. Information technology has transformed business processes. The revolutionary changes being- processing, networking and integrating business system. Internet has become an important medium for doing global business based on the state of the art technology. The internet is a worldwide, self-governed network connecting millions of network of computers and people.
New information technology modes include, e-mail, SMS, video conferencing and fax. (E-Commerce) electronic commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks including the internet.
It has two major aspects- economical and technological. E-Commerce is the buying and selling of goods and services via the communications capabilities of computer networks including the internet. It is the need of global business. It provides information necessary to stay competitive. Almost all big organizations are having web portal which provide necessary information to people.
The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.
Q.71.What is cause-related marketing?
Ans. Cause-related marketing involves the social welfare activities carried out by an organization. It is also known as cause marketing and can be done in both profit and non-profit organizations. In cause-related marketing, at least one objective of the organization should be non-economical in nature. The activities of cause-related marketing help the society at large. Charity and corporate giving are tax deductible; whereas, cause-marketing is not tax deductible.
Cause-related marketing is a promotional strategy of an organization. It is linked to the sales of products and services of the organization as customers prefer to contribute for social welfare by purchasing cause-related; products. A fixed percentage of sales revenue is spent for social cause, such as awareness campaign and medical treatment for the poor.
Cause-related marketing may receive favorable result in the sales volume of the organization. For example, American Express, a U.S.based organization, used cause-related marketing in 1980s for the first time to restore the Statue of Liberty. It donated one cent for the every use of its card. This resulted in 45% increase in the total number of cardholders and 28% increase in the usage rate.
Several organizations, such as CRY, P&G, and Hindustan Unilever Ltd. have made cause-related marketing the cornerstone of their marketing plans. The program called Desh ko Arpan by Tata Chemicals Ltd. donated 10 paise for every kilogram of salt sold in the market. Nike and Cadbury also used cause-related marketing to differentiate their images from their respective competitors.
The cause-related marketing efforts provide tangible benefits, which are as follows:
i. Increase in Sales – Refers to the purchase of a product by new customers.
ii. Increase in Customer Loyalty – Indicates the association of customers with the brand.
iii. Enhance the Organization’s Image – Refers to the improved perception of customers about the brand due to cause-related marketing.
Q.72.What is the concept of marketing myopia?
Ans. This term is coined by Professor Theodore Levitt. Myopia means shortsightedness. Marketing myopia can be defined as the inability of companies to define their businesses, predict the future growth based on the customer needs and preferences, and their failure to adapt accordingly. Levitt was of the opinion that most of the companies fail because of their shortsightedness and not due to low market demand or market saturation.
Such companies are so obsessed about their products that they almost neglect the fact that the product is merely a means for satisfying a particular need of the customers. This results in myopia. Those companies which pursue any approach other than the marketing concepts suffer from marketing myopia.
Excessive attention to either production, or product, or selling; at the cost of the customer and his actual needs, will drive the firm towards marketing myopia. While defining business; the marketers focus should be on the basic human needs (which is satisfied by the product), and not on the product itself.
This is important since over time the products can become obsolete yielding place to new ones and business may decline; however the fundamental human needs will always be satisfied by the new products or businesses which are present at that given point of time. The marketers should view, understand, and define their business in a broader perspective and in terms of the basic human need which their present products fulfill.
When the time comes for the companies to meet needs of the customer through other means, then the companies could adapt themselves and move over to new products and new means of providing that satisfaction. They themselves would find newer ways of meeting the needs of the customers instead of helplessly watching some newcomers or some other existing players taking away their business.
Q.73.What are the functions of NPO?
Ans. NPOs perform various functions, which are as follows:
a. Facilitation of Social and Political Integration – Refers to integrate social problems with political actions. There are social problems, such as poverty and illiteracy that need to be addressed by the government.
b. Representation of Interests of Community Groups – Refers to demonstrate the interests of social group related to any communal cause.
c. Delivery of Basic Products and Public Services – Refers, to distribute products and services to people in need. NPOs provide several basic products, such as food and clothes as well as public services, including medication, education, and transportation to concerned people.
NPOs contribute to the society to a great extent by implementing various educational plans and making people aware about social issues.
Q.74.What are the causes of marketing myopia?
Ans. (i) Wrong understanding and definition of one’s business
(ii) At times companies are so over-obsessed with product development, manufacturing, and selling that they forget to understand customers’ needs, due to which they fail.
(iii) Some companies falsely believe that there is no substitute to their product in the market and thus no competition. Over-obsession with one’s product leads to market failure.
Ans. Products have many tangible elements that exist in both time and space. In the context of a specific product and market segment we can identify 4Ps of marketing viz. product, price, place and promotion as summarized below-
Product – Stands for the firm’s tangible offer to the market, including the product quality, design, features, branding and packaging.
Price – The amount of money that customers have to pay for the product.
Place – Stands for the various activities the company undertakes to make the product accessible and available to target customers.
Promotion – Stands for the various activities the company undertakes to communicate and promote its products to the target market.
A differential advantage can be achieved by manipulating one or more elements of the marketing mix.
This mix consists of the functional elements of marketing which are often referred to as four ‘Ps’ as listed below:
(a) The product stands for the firm’s tangible offer to the market, including:
i. Product quality
ii. Product design
iii. Product features
(b) The price of a product is a crucial marketing-mix tool, since price is the amount of money that the customers have to pay for the product.
i. Pricing strategies
iii. Pricing objectives
(c) The place is another key marketing-mix tool, stands for various activities the company undertakes to make the product accessible and available to target customers.
i. Channels of distribution
ii. Logistics/Physical distribution
iii. Customer service
iv. Marketing research
v. Market intelligence
(d) The promotion of product stands for the various activities the company undertakes to communicate and promote its products to the target market.
ii. Sales promotion
iii. Public relations
iv. Personal selling
Q.76.What are the reasons for inaccuracy of marketing cost?
Ans. Much of the cost data for marketing cost analysis is inaccurate for the following reasons as:
(a) Marketing costs may be allocated to individual products, sales areas, customer groups etc. on the basis of sales value or sales volume, but this involves circular reasoning. Costs should be allocated in relation to causal factors, and it is marketing expenditures that cause sales to be made.
(b) General overheads and administrative costs are arbitrarily (and erroneously) allocated to segments on the basis of sales volume.
(c) Many marketing costs are not allocated at all as marketing costs as they are not identified as such but are classified as manufacturing, general or administrative costs instead.
(d) If costs are inappropriately allocated to products, then some products will be overpriced and some underpriced.
(e) Some important marketing costs are hidden in manufacturing costs or in general and administrative costs, including finished goods inventory costs in the former and order-processing costs in the latter.
(f) Useful computations of marketing costs and profit contribution in the multi-product company require the adoption of analytical techniques that are not difficult in principle but which are not widely adopted in accounting.
(g) Marketing budgets for individual products are too small and increasing returns would result from an increase in expenditure.
(h) The marketing mix is inefficient, with an incorrect balance and incorrect amounts being spent on the constituent elements such as too much on advertising and insufficient on direct selling activities.
Ans. There are basically two approaches adopted in practice:
1. Full-Cost Approach:
In this approach, all costs are allocated to products, customers, or other categories, including fixed and common costs. With all costs allocated, profitability can be easily determined by subtracting costs from sales. This assumes that costs have been allocated correctly. However, the allocation of marketing costs is not an easy task in practice.
2. Contribution-Margin Approach:
In this approach, not all costs are allocated in all situations. This approach focuses on variable costs and allocates them, leaving fixed costs unallocated. It helps managers avoid conflict over the allocation of fixed costs.
Q.78.What are the integration of the marketing function?
Ans. If the top management of a business has accepted the marketing concept, its implementation for maximum success results from the integration of the marketing function. By integration is meant the combining of all activities related to the effective carrying out of the marketing function under the responsibility and authority of a single executive.
Typically, such activities include:
1. Field sales and sales management.
2. Product service.
3. Sales administration (order handling and so on).
4. Marketing personnel (recruiting, sales training).
5. Marketing research.
6. Advertising and promotion.
7. Product planning.
8. Dealer relations and distribution planning.
9. Customer or consumer relations.
10. Public relations.
11. Production scheduling.
Q.79.What are the advantages of total marketing concept?
Ans. Adoption of the total marketing concept can have a fundamental effect on the course of business as follows:
1. The executives and key personnel have a much better team attitude and understanding of the importance of marketing to the entire business.
2. There is a broader orientation to customer wants throughout the organisation, including the Board of Directors.
3. Decisions are made more promptly, and there are fewer costly errors since the application of marketing concept throughout the business.
4. Product and profit planning is vastly improved.
5. A better balance to marketing programme can be set up. It becomes easier to determine the proper roles (and budgets) for selling, advertising and promotion, market research, and physical distribution as well as customer service.
6. With the adoption of marketing concept a tremendous improvement can be made in the way the product is introduced to the market.
7. The marketing concept helps the entire executive group to understand the need for good planning, and the elimination of snap judgments which very often prove very costly.
Despite so many benefits which follow the adoption of marketing concept, it should not be regarded as a panacea for all corporate problems. Yet, when applied in conjunction with other good management principles and techniques, it can be a force of great benefit to both the short and long-term success of a business.
Ans. Positioned between advertiser and media, advertising agencies are hired by advertisers on commission or fee basis to plan and execute successful advertising for the product.
Agencies develop advertising messages, negotiate with media for the purpose of buying media time and space and also offer some specialized supporting services concerning market research and other marketing and advertising decisions. Advertising agencies perform various functions pertaining to planning, preparing, and placement of advertisement where the range and depth of these functions vary considerably from agency to agency.
The various functions which an advertising agency performs either entirely or partially in the advertising process relate to:
i. Undertaking of various types of researches.
ii. Creation of advertisements.
iii. Media buying and placement of ad.
iv. Providing ad-on- services.
Q.81.Explain the concept of distribution channels?
Ans. The movement of goods and services between the point of production and the point of consumption through organisation that performs a variety of marketing activities is called as the marketing distribution channel. The major participants in the distribution channel are the producers, the intermediaries and the consumers.
Distribution channel or marketing channel or trade channel is the path between producers and users that goods & services follow. For marketing of services the channel is direct as they are intangible. A marketing channel therefore requires minimum a seller and a buyer.
The buyer may be an ultimate consumer or an industrial consumer. Typically, a marketing channel includes, besides buyers and sellers, various middlemen. Middlemen may be wholesalers, dealers, distributors or retailers.
Ans. The value and usefulness of the gathered marketing information will depend on the extent to which it possesses the essential characteristics of good marketing information,
A fairly exhaustive list of such characteristics is given below:
i. Relevance (for decision making)
v. Precision, economy
vi. Reliability (from genuine source)
viii. timeliness, objectivity
x. Strategic value
Q.83.What is the role of marketing information?
Ans. Good marketing decisions are not made in a vacuum. They are made with a full awareness of market conditions, competition, and above all with adequate knowledge of market demand, i.e., consumer needs and desires. Marketing decisions can be no better than the facts upon which they are based. If the information is better, more complete, more reliable, understandable and timely, it is easier for the marketer to make a sound decision.
Marketing information includes all facts, estimates, opinions and other information used in making decisions that affect the marketing of goods and services. Marketers need essential information regarding products, prices, market conditions of demand and supply, consumer needs and desires, market competition, middleman, selling methods, information regarding physical flow of goods (transportation, warehousing and inventory) and information regarding other elements of marketing mix.
To manage a business well is to manage its future; and to manage future is to manage information—internal information, external information and information provided by marketing research on specific marketing problems in any area of marketing.
Ans. The role of the marketing research executive is not an easy one, for he must often present findings and recommendations which are contrary to management’s own experience, opinions or beliefs. Lack of knowledge and, in some cases, suspicion and misunderstanding of research techniques inhibit acceptance of research findings, particularly in firms where marketing research is an innovation.
The effective use of marketing research is only possible in an atmosphere of mutual co-operation and understanding between top management and the marketing research department. Top management must put itself out to give marketing research a chance to prove its value. It should divest itself of any prejudices and preconceptions, and approach research with open- mindedness. It should clearly define the problems on which it expects research help and guidance and pinpoint the information needed to take decisions.
At the same time, marketing research managers and executives have responsibilities towards top management. They must ‘sell’ management on the value and uses of research in dealing with problems of immediate concern to management, e.g., keeping in touch with its markets, reducing waste in marketing methods, developing new sources of company growth and profits through new products, new uses for existing products and new markets, insuring against unexpected changes in the market and against product obsolescence.
Q.85.What is packaging?
Ans. Package means a case, container, wrapper or other receptacle for packing goods. It can be made of metals, plastics, wood, paper, glass, laminates, polyester or HDPE.
Packaging is the designing and producing of the container or wrapper for a product in order to prepare the goods for transport, sale, and usage.
There are two parts of this definition:
(i) Physical transportation and sale for ultimate usage of the product and
(ii) The science and technology as well as art part of the package.
The science and technology refers to functional part of the product. For example, Dettol liquid comes in a package that facilitates easy pressing of the top portion by thumb and ultimate release of the liquid. If this function cannot be performed, the package would be useless for the consumer. Thus, properly designed package would enhance the value of the product contained in it.
It is important to note the difference between packing and packaging. Packing is the process of covering the goods with a wrapper (or some other material) or putting the goods in some container. It is done for convenient delivery of the product to the customer. But packaging is a very broad process which involves designing and producing the container or wrapper for a product. Packaging is a part of product planning intended to satisfy the needs of customers.
Q.86.What are the advantages of packaging?
Ans. 1. It protects the commodity from losses, damages and deterioration in quality due to exposure.
2. It keeps the contents pure and clean. Goods may be packed mechanically and untouched by unclean hands.
3. It reduces chances of breakage, shrinkage and pilferage in transit.
4. Adulteration of goods become impossible.
5. Pre-packed goods ensure correct weight, quality and price as these are indicated on the package.
6. Packaging helps widening of the market due to necessary protection and ease in handling and convenience to all.
7. Packaging helps branding and advertising and point of purchase display.
Ans. The “AIDAS” formula denotes five essential factors to be considered while taking packaging decisions. “A” stands for attention, for interest, “D” for desire and “S” for satisfaction. In simple terms, the idea behind this formula is that the marketer, while designing the packages, should adopt the AIDAS formula for getting “Attention”, Holding “Interest”, creating “Desire”, compelling “Action” and giving full customer “Satisfaction”. The competitors’ strategy can be considered with regard to packaging decisions.
Any product which does not live up to the expectations of the consumer is said to be a failed product, meaning that the product is not moving or not making profit at the level expected by the marketer.
According to William J. Stanton, following are the reasons for product failure:
a. Poor marketing research.
b. Poor performance of the product due to technological problems and product design.
c. Improper timing of product introduction.
d. High cost of production and distribution.
e. Poor marketing management, and,
f. Competition from competitors.
Ans. 1. The product should satisfy one or more market needs. For example- Daiken air conditioners have some more additional features than existing products in the market.
2. It should be technologically superior and should enjoy a competitive cost advantage. For example- Kenstar states that its water purifiers are cheaper and technologically superior as compared to Aqua guard water purifiers.
3. The product should be suited to the internal organizational arrangement of the firm, such as production, distribution, etc. For example- MTR ice – creams became an instant success, since they perfectly suited the production and distribution network of other food products from MTR.
4. The management should make a long term commitment to the new product. They should take all possible steps to capture the market. For example- when Milkmaid introduced its Kulfi readymade mix, they gave free samples to promote the product. Similarly, lucky draws and other contests are also done to promote the product in its initial stages.
5. A well-defined product strategy is essential. For example- Deccan Herald always does road shows for better circulation. Similarly, for fairs, tests, seminars and conferences they distribute free copies of the newspaper.
6. Finally, an effective and efficient organizational structure is essential for product success.
Q.89.What is physical distribution management?
Ans. Physical Distribution Management (PDM) is concerned with ensuring that the individual efforts that go to make up the distributive function are optimized so that a common objective is realized. This is called the ‘systems approach’ to distribution management and a major feature of PDM is that these functions be integrated.
There are two central themes that should be taken into account:
(i) The success of an efficient distribution system relies on integration of effort. An overall service objective can be achieved, even though it may appear that some individual components of the system are not performing at maximum efficiency.
(ii) It is never possible to provide maximum service at a minimum cost. The higher the level of service required by the customer, the higher the cost. Having decided on the necessary level of service, a company must then consider ways of minimizing costs, which should never be at the expense of or result in, a reduction of the predetermined service level.
Q.90.What are the alternative structures of industrial channels?
Ans. The industrial goods have more or less fixed pattern. Naturally the channels available are also less complicated.
Major channels recognized in industrial markets are:
(a) Producer-Industrial User:
This is the most commonly used channel, manufacturers of machinery prefer to adopt this channel to avoid unnecessary expenditure or transportation.
(b) Producer-Industrial Distributor Users:
This channel is used in the distribution of accessory equipment which is required by users. The user cannot always approach the manufacturers for their requirements.
(c) Producer-Agent User:
Small sized manufacturers who do not have their own marketing departments find it convenient to have agents at different selling points.
(d) Producer-Agent Industrial Distributor User:
It is a combination of the above two channels adapted to suit varying conditions on the basis of geographical factors.
Q.91.What are the importance of packaging?
Ans. Packaging is a major aid to successful marketing. It acts as a multipurpose arrangement. It distinguishes the product, making it easily identifiable. It protects the product. It is convenient to the customer. It helps easier handling and transport. It contributes to good display and advertising purposes.
It acts as a silent and colourful salesman. Branding without packaging is not possible. Trans- parent packaging made self-service stores and supermarkets very popular. It plays a unique role as a medium of publicity and for impulse buying.
Q.92.What are the consumer problems in packaging?
Ans. 1. Buyers cannot judge the contents by appearance. If the package label is silent on quality information, a buyer has to buy the product almost blindly.
2. There is no feasible way to check weight and volume of inner contents before opening the package.
3. Design and size of a package may inflate the contents.
4. If a consumer wants a specific quantity, he may not have that amount when goods are sold in packages.
5. Deceptive and misleading packages have several roommates in unfair trade practices. They are hidden declaration of contents, fine prints, glorified illustrations, unexplainable fractions (3—5/8 kilograms) etc. Consumers think that they are getting more when in fact they may be getting less due to the cunning package design.
6. Packages are same, contents are reduced and apparently same prices are charged. This method is popular in a period of rising prices.
7. Packages may create health hazards for consumers. Certain plastic food packaging has been shown to cause cancer (vinyl chloride inhaled by humans). Packages stored in godowns are susceptible to infection (rodents and insects nesting in packages).
Q.93.What are the types of business intermediaries?
Ans. Marketing intermediaries, also known as middlemen or distribution intermediaries are an important part of the product distribution channel. Intermediaries are individuals or businesses that make it possible for the product to make it from the manufacturer to the end user, essentially facilitating the sales process.
According to Business Dictionary, the four basic types of marketing intermediaries are:
The agent as a marketing intermediary is an independent individual or company whose main function is to act as the primary selling arm of the producer and represent the producer to users.
Agents take possession of products but do not actually own them. Agents usually make profits from commissions or fees paid for the services they provide to the producer and users.
Wholesalers are independently owned firms that take title to the merchandise they handle. In other words, the wholesalers own the products they sell. Wholesalers purchase product in bulk and store it until they can resell it. Wholesalers generally sell the products they have purchased to other intermediaries, usually retailers, for a profit.
Distributors are similar to wholesalers but with one key difference. Wholesalers will carry a variety of competing products, for instance Pepsi and Coke products, whereas distributors only carry complementary product lines, either Pepsi or Coke products.
Distributors usually maintain close relationships with their suppliers and customers. Distributors will take title to products and store them until they are sold.
A retailer takes title to or purchases, products from other market intermediaries. Retailers can be independently owned and operated, like small “mom and pop” stores, or they can be part of a large chain, like Wal-Mart. The retailer will sell the products it has purchased directly to the end user for a profit.
Q.94.What are the merits and demerits of packaging?
1. Packaging helps in protecting and preserving the product from possible damages and loss in volume.
2. Packaging contains attractive pictures, colours and graphics and therefore attracts the customers.
3. It helps in more convenient use of the product by consumers, distributors, and manufacturers.
4. It provides detailed information about the product to the customers.
5. Unique packaging of the product in terms of style, shape, colour etc., helps the consumer in selecting the product from the shop.
1. Packages like broken bottles, plastic bags and crushed cartoons pollute the environment.
2. Consumers many times pay higher prices not for the quality of the product but for attractive package.
3. The inner product is not visible to the customer, unless the package is transparent, therefore customers cannot judge the quality of the product.
4. Some packaging materials are not healthy and may cause health problems.
5. Marketer may reduce the quality of the product, once the customer become loyal to a particular package.
Q.95.What are the types of packaging?
Ans. Packaging is of two types:
a. Transport Packaging:
The product entering into the trade need to be packed well enough to protect against loss damage during handling, transport and storage. Example – fiberboard, wooden crate etc. Transport needs to be matched to its logistics system. Packages designed for controlled shipments of uniform pallet loads may not be suited to mixed shipments with express carriers. It is also known as distribution package can be the shipping container used to ship, store, and handle the product or inner packages.
b. Consumer Packing:
This packaging holds the required volume of the product for ultimate consumption and is more relevant in marketing. A consumer package is one which is directed towards a consumer or household.
Q.96.What are the levels of packaging?
Ans. There are three levels of packaging:
1. Primary Package:
It refers to the immediate container or package of a product. It remains with the product until it is used. For example, toothpaste tube, shaving gel, match box, etc. Similarly, a bottle containing medicine is a primary package. Primary package is essential to hold the core product.
2. Secondary Package:
It is an additional package which gives additional protection to the product. For example, a bottle of medicine contained in a cardboard box to hold the bottle. Generally consumers throw away the secondary package when they start using the product. For example, card paper box package of the toothpaste tube is thrown away.
3. Shipping or Transport Package:
The shipping package is the bulk packaging necessary to store, identify, and ship the product. In other words, shipping package holds secondary packages for storing and shipments. This is also known as ‘tertiary packaging.’
A big cardboard box in which several hard-paper-boxes containing separate shaving cream tubes are packed, is the shipping packages. Such packaging gives protection to goods, and facilitate their transportation. For example, corrugated boxes are used to transport Kurkure, Lays, Uncle Chips, etc.
Q.97.What are the elements of promotion mix?
Ans. 1. Advertising:
Good for building awareness.
Effective at reaching a wide audience.
Repetition of main brand and product positioning helps build customer trust.
2. Personal Selling:
Highly interactive – lots of communication between the buyer and seller.
Excellent for communicating complex/ detailed product information and features.
Relationships can be built up – important if closing the sale make take a long time.
3. Sales Promotion:
Can stimulate quick increase in sales by targeting promotional incentives on particular products.
Good short term tactical tool.
4. Public Relation:
Often seen as more “credible” – since the message seems to be coming from a third party (e.g. magazine, newspaper).
Cheap way of reaching many customers – if the publicity is achieved through the right media.
Q.98. What are the objectives of promotion mix?
Ans. Promotion is multi-dimensional in nature. It is intended to accomplish the following objectives:
(i) Provision of Product Information:
The main purpose of promotional activities is to inform the prospective customers about the availability, characteristics and use of a particular product.
(ii) Stimulation of Demand:
Promotional activities create awareness and build people interest in new products and new technology.
(iii) Product Differentiation:
Promotion helps in differentiating the products or a firm from the competing products of other. A business firm can supply data revealing how its product compares with other products.
(iv) Highlighting Product Utility:
Promotion helps in letting the people know the utility of the new product. It also tells them how the concerned product will be helpful in satisfying their specific demands.
(v) Stabilisation of Sales:
In the modern age of competition it is an important purpose of promotional activities to help in stabilising sales volume by reassuring the customers about the quality and price of the product. It is possible that a customer using a particular brand of a product may buy another one next time because the other brand is advertised heavily.
(vi) Image Building:
Promotional activities such as public relations, advertising and sale promotion may be used to build a favourable public image of the company and its products/brands.
Q.99.What are the features of departmental store?
Ans. a. It is generally located at the main commercial centres of the cities and towns, so that, customers from different localities can easily come to buy goods as per their convenience.
b. The size of the store is very large and divided into many departments or counters.
c. Each department deals with particular type of goods, say, one department sells electronic goods, another sells ready-made garments, a third keeps food items, and so on.
d. The management and control of all departments is centralised.
e. The Departmental Store allows customers to enjoy shopping. It enables the customers to buy everything under one roof.
f. Facilities such as restaurant, rest rooms, telephone, ATM (Automated Teller Machine), etc. are also made available to customers inside the store.
g. It allows the customers to buy goods against a credit card.
h. Customers may also avail of free home delivery facilities from these stores.
Q.100.What are the features of multiple shops?
Ans. a. To make our concept clear about this type of retail selling let us learn various features of multiple shops.
b. Under the same management and ownership these shops are operated at different places near the customers.
c. All shops are decorated in the same manner to facilitate easy recognition by customers.
d. Multiple shops deal with similar types of goods mostly of everyday use e.g., shoes, textiles, watches, automobile products, etc.
e. The price is uniform in all the shops for similar items. The head office fixes the price. This practice avoids bargaining and cheating.
f. All multiple shops are controlled and managed from the head office.
g. All multiple shops generally sell goods on cash basis. Credit facility is not available to the customers.
h. The goods are purchased or produced at a central place and then supplied to different branches for sale.
Q.101.What are the characteristics of departmental stores?
Ans. (i) Wide Range of Goods:
In a departmental store, a consumer can get most of his/her daily needs except for some highly specialised items.
The working of the store is organized on the department basis, i.e. departments are established to deal with different items. There is an individual manger to supervise the department.
(iii) Centralized Management and Control:
Notwithstanding the fact that each department is independent in its day-to-day working, all the departments are owned, managed and controlled centrally.
(iv) Large Size:
The departmental store is large in size. It is centrally located and is capable of attractions to a large number of customers.
(v) Convenient Services:
Services towards customers including recreational facilities, free home delivery, post and telegraph, etc. are provided conveniently in a departmental store.
(vi) Central Location:
A departmental store is usually located at a central place. This is perhaps the most important element that decides its successful existence. Being a large-scale institution, its profits depend upon the large turnover.
Therefore it is necessary that there is a flow of customers, which can happen only if the location is freely accessible. The building must be capable of providing car parking, recreational and other facilities.
Q.102.What are the important characteristics of chain store?
Ans. (i) Similar product- each such shop deals in the same type of products.
(ii) Articles of daily use- the products dealt in are generally those of daily use.
(iii) Uniform policies- all shops are managed and controlled by the head office, viz. all policies are decided by the head office and carried out by the shops. Thus, there are uniform policies.
(iv) Same style- each shop is decorated in the same setting and style. a high degree of standardization and uniformity is achieved in the interior layout of stores, window dressing and outward appearance.