Summer 2011- May drive

Master of Business Administration MBA Semester 2

MB0046 Marketing Management - 4 Credits (Book ID: B1135) Assignment Set- 1 60 Marks

Note: Each question carries 10 Marks. Answer all the questions. Q.1 Discuss the different marketing concepts with its merits and drawbacks. [10 marks]
1. Needs and Wants The marketers task lies in satisfying human needs and wants through the exchange process. It is alleged that marketing creates needs and makes people buy things they do not actually need. In reality, marketing or marketers do not create needs, but they create wants. Some needs are the basic human requirements of food, clothing, shelter, water and air. There are other needs such as social needs, esteem needs etc. When we desire certain specific objects or items to fulfill these needs, they are called wants. This difference between wants and needs is not the same as understood in the subject matter of economics. The marketer identifies the need which may lie unexpressed by the customer.

2. Demand Human wants are unlimited, but their resources are limited. When a want for an object is backed or supported by buying ability, willingness to spend and desire to acquire a product / service, it becomes a potential demand. The task of assessing or estimating demand is very crucial for a marketer. He should understand the relationship of the demand for his product with its price. Demand forecasting is essential for allocation of resources in a company. This is the reason why marketers segment consumers on the basis of their earning capacity. The income of the consumer indicates the potential to buy. 3. Product and Services Product is a generic term used to describe what is being offered by a seller or marketer. It may be a good, a service or idea, which can be marketed by offering a set of benefits it offers to customers to satisfy their needs. A product can be defined as anything that can be offered to market to satisfy a need or want. Today, many types of entities such as goods, services, experiences, events, persons, places and ideas are being marketed. 4. Target Market Very few products can satisfy everyone in the market. Therefore, marketers divide the market into distinct groups of buyers who have similar preferences. These groups are called segments with their own specific demographic, psychographic and behavioral characteristics. The marketer decides as to which of these segment or segments offer highest opportunity for his company. For each of these target markets, the firm develops a product / service suited to their needs. TATA group has recently designed an economy car called NANO which is priced around Rs. 1 Lakh. The target market for this car is all aspirants who dream of owning a car but cannot afford cars, which are currently available for minimum Rs. 2.5 Lakh. A Target Market is the group of people at whom a marketer targets his marketing efforts to sell his goods and services. 5. Marketing Management

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Marketing Management which is also the title of this course refers to all the activities which the marketing managers, executives and personnel have to undertake to carry out the marketing function of the firm. It involves (i) analyzing the market opportunities by undertaking consumer needs and changes taking place in the marketing environment, (ii) planning the marketing activities, and (iii) implementing marketing plans and settings control mechanism to ensure smooth and successful accomplishment of the organizations goals. Marketing Management is a critical function, especially in highly competitive markets. It provides competitive edge to an organization through strategic analysis and planning. 6. Values and Satisfaction Value is primarily a function of quality, service and cost. Value increases with increase in quality and service and decreases with increase in cost. Value is an important marketing concept and the task of marketing is to identify, create, communicate, deliver and monitor customer value. Customers generally experience satisfaction when the performance level meets minimum performance expectations of a product or service. When the performance as perceived exceeds the expected performance level, the customer will be not just satisfied, but delighted. Thus customer satisfaction or delight with respect to a product or service encourages customers to come back and repurchase the product or service in future. Satisfied customers can be an asset to the marketing company over a period of time, as they will spread favorable word-of-mouth information or opinions.

Q.2 a) What are the features and objectives of marketing research? [5 marks] b) Give a note on psychoanalytic model of consumer behaviour. [5 marks]
Answer :- Features of Marketing Research 1. It is a systematic process It has to be carried out in a stepwise and systematic manner and the whole process needs to be planned with a clear objective. 2. It should be objective It is important that the methods employed and interpretations are objective. The research should not be carried out to establish an opinion nor should it be intentionally suited towards predetermined results. 3. It is multi-disciplinary Marketing Research draws concepts from other disciplines such as Statistics for obtaining reliable data and from Economics, Psychology and sociology for better understanding of buyers. Objectives of Marketing Research Marketing Research may be conducted for different purposes. Based on how organizations use Marketing Research, objectives of Marketing Research can be summarized as follows: 1. To understand why customers buy a product 2. To forecast the probable volume of future sales or expected market share 3. To assess competitive strengths and strategies 4. To evaluate the effectiveness of marketing action already taken 5. To assess customer satisfaction of companys products/services The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology. According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior. According to this theory, the mental framework of a human being is composed of three elements, namely,

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1. The id or the instinctive, pleasure-seeking element. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive and sexual impulses of man. 2. The superego or the internal filter that presents to the individual the behavioral expectations of society. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is characteristic of man. It represents the moral and ethical elements, the conscience. 3. The ego or the control device that maintains a balance between the id and the superego. It is the most superficial portion of the id. It is modified by the influence of the outside world. Its processes are entirely conscious because it is concerned with the perception of the outside world. The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. Consequently, such unsatisfied needs create tension within an individual which have to be repressed. Such repressed tension is always said to exist in the sub-conscious and continues to influence consumer behavior.

Q. 3 Silver Line Manufacturers produce several varieties of automobile components. They have 3 to 5 suppliers who supply materials regularly. Recently, procurement manager of Silver Line discussed in the meeting that they have to look out for new suppliers since they would be expanding their business operations to many places. How do you think Silver Line have to go about this situation? [10 marks]
Answer : Silver line manufacturers expanding their business operation to many places and they looking for new suppliers. Following are given below the criteria for new supplier: Supplier Selection Strategies and Criteria Supplier selection criteria for a product or service category should be defined by a crossfunctional team of representatives from different sectors of your organization. In a manufacturing company, members of the team typically would include representatives from purchasing, quality, engineering and production. Team members should include personnel with technical/applications knowledge of the product or service to be purchased, as well as members of the department that uses the purchased item. Supplier selection criteria: Previous experience and past performance with the product/service to be purchased. Relative level of sophistication of the quality system, including meeting regulatory requirements or mandated quality system registration (for example, ISO 9001, QS-9000). Ability to meet current and potential capacity requirements, and do so on the desired delivery schedule. Financial stability. Technical support availability and willingness to participate as a partner in developing and optimizing design and a long-term relationship. Total cost of dealing with the supplier (including material cost, communications methods, inventory requirements and incoming verification required). The suppliers track record for business-performance improvement. Total cost assessment. Methods for determining how well a potential supplier fits the criteria: Obtaining a Dun & Bradstreet or other publicly available financial report. Requesting a formal quote, which includes providing the supplier with specifications and other requirements (for example, testing). Visits to the supplier by management and/or the selection team. Confirmation of quality system status either by on-site assessment, a written survey or request for a certificate of quality system registration. Discussions with other customers served by the supplier.

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Review of databases or industry sources for the product line and supplier. Evaluation (SUCH AS prototyping, lab tests, OR validation testing) of samples obtained from the supplier.

Q.4 Briefly explain the bases for segmenting consumer markets along with examples. Do you think these bases are required for market segmentation? Why? [10 marks]
Answer :The bases for segmenting consumer markets:

Geographic bases allow us to segment a market that is spread over a large geographic area into sub-markets that cover smaller geographic areas. Geographic segmentation usually involves dividing up geographic markets by using existing political boundaries, natural climatic zones, or population boundaries. For example, Bennett, Coleman and Co. Ltd divided markets according to geographical units for their tabloids. In Bangalore, the tabloid is known as Bangalore Mirror where as it is Mumbai Mirror in Mumbai. Demographic segmentation occurs when one or more demographic traits are employed to divide a market. Typical demographic traits that are used include age, gender, race, ethnicity, marital status, family size and stage of the family life cycle. a) Age and Life-Cycle Stage: Consumers wants and abilities change with age. On the basis of age, a market can be divided into four parts viz., children, young, adults and old. For the consumers belonging to the different age groups, different types of products are produced. For instance, different types of ready-made garments are produced for consumers of different age groups. A successful marketing manager should understand the age group for which the product would be most suited and determine a suitable marketing policy, pricing policy, advertising policy etc
For example, HUL launched Pepsodent kids toothpaste for small children. b) Gender: Gender segmentation has long been applied in clothing, hairstyling, cosmetics and magazines. For example, Emami segmented its personal care products on the basis of gender i.e. Emami Naturally Fair for women and Fair and Handsome for men. c) Income: Segmentation based on Income is a traditional practice followed in product categories such as automobiles, clothing, cosmetics and travel. However, income does not always determine the best customers for a given product. For example, Baja Auto limited, a leading automobile company, manufactures different bikes for different commuters on the basis of the Income levels. For entry level (income less than Rs 35000) it is Bajaj CT 100, for mid segment (income greater than Rs 35000 but less than Rs. 60000) it is Pulsar and for the upper segment (income greater than Rs 60000) Avenger and Eliminator are positioned respectively.

Social class segmentation employs a combination of demographic traits that are commonly believed to reflect membership in different social class strata. Occupation, education, and income are the primary demographic traits that reflect social class membership. Psychographic segmentation bases divide markets based on differences in
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lifestyles or differences in personality traits. Lifestyle segmentation is one of the most popular and effective ways to create segments for consumer products.b) Personality: When Marketers use personality variables to segment the markets, they endow their products with brand personality that corresponds to consumer personalities. For example, Raymond advertises its fabrics with the tag The Complete Man.
c) Social Class: It has a strong influence on the consumer preferences and the products they buy or consume. For example, when buying cars, clothing, home furnishings, leisure activities, reading habits etc., Social class becomes the key factor. Many companies design products and services for specific social classes. For example, TATA Nano was introduced in the market as a One-Lakh Car that could be affordable by middle and lower income groups.

Consumer shopping behavior patterns include such things as the type of store shopped in, timing of purchases (i.e. time of day, week, or year), how much of a product is purchased on a given visit to the store, and how often the individual frequents a particular type of retail establishment or shopping mall. Product consumption behaviors include product consumption or usage rates base (as discussed earlier). Other segmentation bases included in this category are product usage occasion, product use versus non-use, and loyalties to specific brands.a) Occasions: According to the occasions, buyers develop a need, purchase a product or use a product. It can help firms expand product usage. A company can consider critical life events to see whether they are accompanied by certain needs. For example, Tanishq a TATA enterprise offers gold schemes and promotions for Akshaya Thrutiya (auspicious day to purchase jewellery)
b) Benefits: Buyers can be classified according to the benefits they seek from the products. For example, Peter England, a Madhura garment brand positioned its wrinkle free trousers on the basis of benefits. c) User Status: Markets can be segmented into non-users, potential users, first time users and regular users of a product. Each market segment requires a different marketing strategy. The companys market position will also influence its focus. Market leaders will focus on attracting potential users, whereas smaller firms will try to attract current users away from the market leader. For example, Kishkinda resort near Hampi classifies its customers according to this characteristic. Resort believes that locals falls into non- user category, affluent class come to Hampi as potential users, foreigners as first time users, rich people near Hampi who frequently come there as regular users. d) Usage Rate: Markets can be segmented into light, medium and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. Marketers prefer to attract one heavy user rather than several light users and so, they vary their promotional efforts accordingly. For example, Alan Paine textile brand, offered 4 cotton trousers for Rs. 999. Here, the Company is interested in getting profits from sales volume rather than its selling price. e) Loyal Status: Consumers have varying degrees of loyalty to specific brands, stores and other entities. Buyers can be divided into four groups according to brand loyalty status. a) Hard-core Loyals: Consumers who buy one brand all the time. For example, customer may be using only BSNL cellular services though there are different options available.

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b) Split Loyals: Consumers who are loyal to two or three brands. For example, consumer may go for tax savings schemes of post offices and Life Insurance Corporation of India c) Shifting Loyals: Consumers who shift from one brand to another. For example, consumer who used Nokia cell phones starts buying Sony- Ericsson mobiles.

Segmenting markets according to consumer predispositions essentially entails creating segments based on differences in consumers wants, needs, and attitudes. We talked at length about creating market segments based on differences in consumers wants and needs (i.e. creating benefit segments). Sometimes it is useful to segment markets based on how knowledgeable people are of a particular product category, or whether theyve experienced problems with specific products or brands. And, finally, we also include consumers media viewing habits in this category. When segmenting markets using this latter base, we are looking for differences in the types of media consumers prefer i.e. preferences for specific television shows, radio stations, magazines, newspapers, and the like.

Q.5 Mention the forces in micro and macro environment that are likely to influence an organisations working and functions. Is environmental scanning necessary for all organisations? [10 marks]
The Company: Safe Express, a leader in the supply chain management solution wants to hold its number one position in the US $ 90 billion Indian logistics market. The company plans to expand its service areas in the coming months. To meet the targets of the marketing plan, other departments of safe express also expanding their horizon. The above example shows that the companys marketing plan should be supported by the other functional departments also. Intermediaries: Marketing intermediaries: These are firms which distribute and sell the goods of the company to the consumer. Marketing intermediaries play an important role in the distribution, selling and promoting the goods and services. Retailers, wholesalers, agents, brokers, jobbers and carry forward agents are few of the intermediaries. Retailers are final link between the company and the customers. Publics: These are microenvironment groups, which help a company to generate the financial resources, creating the image, examining the companies policy and developing the attitude towards the product. We can identify six types of publics Financial publics Media publics General publics Internal publics Advertisement regulation agencies, TRAI, & IRDA of the government Citizen action groups Competitors A company should monitor its immediate competitors as its sale will be affected by the nature and intensity of the competitors. The sale of Coca cola will be affected by Pepsi cola, or Britannia cheese by Amul cheese.

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Suppliers: There are many kinds of suppliers to an enterprise or an institution. There are typically, raw material suppliers, energy and fuel suppliers, labour suppliers, office item suppliers and so on. Suppliers are the first link in the entire supply chain of the company. Customers: A company may sell their products directly to the customer or use marketing intermediaries to reach them. Direct or indirect marketing depends on what type of markets Company serves. Forces in the macro environment Demographic Environment: The study of population characteristics like size, density, location, gender composition, age structure, occupation and religion. Demography statistics helps companies to forecast demand. Demographic environment is analyzed on the basis of the following factors. Age structure of the population Marital status of the population Geographic distribution of the population Education level Migration Occupation. Political and Legal Environment Government policies, legislations, regulations, and stability will directly affect the business. Therefore it is inevitable for the firm to closely monitor this environment. The political and legal forces are grouped into the following four categories. Monetary and fiscal policies: These policies regulate government spending, money supply and tax legislations. Social legislations and regulations Legislations, Policies and regulations relating to industries Legislations related to manufacturing, trading, marketing etc Economic, Monetary and Natural Environment The economic environment includes consumption patterns, productivity patterns, spending patterns, and sectored growth and so on. The monetary environment consists of inflation, interest rate, exchange rate, money supply etc. These provide vital clues for marketers to decide on product offering, incentive offerings, promotional decisions and pricing decisions. Natural Environment: Environmental concerns are growing over the years. Governments are bringing in stringent regulations to conserve and manage natural resources. Marketers should beware of such trends in the environment. Some of the aspects/factors on which organizations should keep a vigil are; Inadequate raw materials arising out of strict mining regulations Global warming and pollution levels which have ushered in new legislations Social and cultural environment Growing urbanization, increasing participation of women in livelihood activities, advent of global cultural practices, greater exposure to life styles practiced world wide etc has altered marketing efforts remarkably. A club house and a swimming pool is an essential part of purchase decision for a flat in a metro. Marketers have encased this trend during the nineteen nineties and later too. Companies like Hindustan Lever have successfully marketed their low priced offerings of toiletries and cosmetics in the rural areas. Technological environment There are several tumultuous changes being wrought in the technological from which is transforming the way business is conducted. The changes are so rapid and sweeping those enterprises have found it difficult to keep pace. Several have fallen by the wayside for failing to keep with the changes. Major public sector undertakings in India which did not upgrade in time and closed their shutters are, ITI, HMT, and HTIF. On the other hand in the private sector, Hindustan Motors, LML etc are examples who were known as flag bearers, collapsed once they fell behind in the race for technology. Environmental scanning

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Environmental scanning refers to assessing the various aspects of the external and internal environment such that the knowledge may provide information with which to make some predictions for the future. If a mobile service provider is aware that the government is opening up the 3G spectrum it would be able to make a forecast on the demand for cell phones with these facilities. Need for environmental scanning: It helps in Identifying the opportunities that company has in immediate future. Identifying the threats faced by the company. Demand forecasting Developing appropriate business plans. Adjusting the company strategy in changing competitive environment.

Q.6 Consider the company, MaruthiUdyog Limited. Elaborate on the companys marketing mix and give examples related to the 4 Ps. [10 marks]
Answer : MUL was a joint venture created in February 1981 between Japans Suzuki Motor Company and the Indian Government when the latter decided to produce small, economical cars for the masses. The intention from the beginning was to produce a peoples car. To get the project off the ground MUL took over the assets of the erstwhile Maruti Ltd., which was set up in 1971 and closed in 1978. Market The Indian car market is one of Asias largest and most competitive. Over 1,030,068 passenger cars, multi and sports utility vehicles were sold during 2003/04, growing the market by 32% With models in every segment of the automobile market, Maruti Udyog Limited (MUL), is well positioned to see how demand is shifting. Due to drop in prices and low interest rates there has been a sharp migration of car buyers to the compact car or B segmentfrom the entry-level A segment. This segment now accounts for 52% of the total passenger car market (excluding MUVs/SUVs). Compact car sales have raced ahead in January 2004 by 82% to touch 40,649 units. This is more than 22,297 units sold in December 2003. These segments are two of the success stories for the car industry. Maruti Udyog Limited Companys marketing mix Product MUL manufactures leading models in all segments of the car market. Maruti 800 rules the A1 segment. In the A2 segment, it has the Zen, WagonR and Alto, whose combined sales rose to 176,132 units in 2003/04, up 46% as compared to 2002/03. In the A3 segment, it offers the Esteem and Baleno, while Omni and Versa stake out MULs presence in the MUV market. The Gypsy King marks Maruti Suzukis presence in the rough-terrain sector, and up a couple of notches in the luxury SUV market is the Grand Vitara. Pricing The price of the Maruti car is between Rs. 210000 to Rs. 1500000. Maruti 800 is the lowest price car of this company. Alto, Omni, Wagonr, are also the low price car of the company. Zen and Esteem are the mid price car of the company. But Grand Vitrara is the high price model of the company. The price of car is decided according to its product Varity, quality, design etc. Place The place of the car is in the whole world. Maruti udyog Limited decides its distribution channels for selling car, like use some time on level or some time two level marketing channels. They decide areas in which they deal with customers. They show the permanent location for selling the car. They provide the many useful inventories. They define the transport facility of the company for company to market and market to consumers. Many showroom of Maruti Udyog limited is in our India. Promotion

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MUL strongly believes in attribute-oriented advertising. In an attempt to reposition M800 as a choice for those upgrading from a two-wheeler, MULs campaign of a child playing with a toy M800 drives home the fuel-efficiency factor: the car never stops because the fuel never finishes. The future communication strategy that MUL has envisioned for M800 is a snap of a typical middleclass family commuting on their two-wheeler. Next to them is another family except that this one is comfortably ensconced in a Maruti 800. One of MULs most ambitious television campaigns launched the Zen Predator. Positioning it as strong, sleek and sexy, the commercial showcases the variants new styling through the theme of predator and prey in the context of a modern jungle. The theme is one of a chase that ends in willing surrender, brought home in the baseline: Surrender to the new Zen. The Zen Predator is being aggressively promoted in print. MUL bought the entire advertising space on The Weeks first issue of 2004. Additionally, MUL is the first Indian automobile corporate to utilise the internet for a complete branding exercise, using interactive and page domination techniques. Recently, MUL has turned its marketing focus to corporate TV commercials to promote its entire range of vehicles. The company has rolled out a new corporate TV campaign, featuring the Maruti Puttar. The rationale behind a second TVC featuring the same child model as the M800 campaign is to leverage the brand recall of the earlier commercial, driving home the point that A Maruti Suzuki family is a happy family. MUL is involved in a wide range of sponsorship activities, placing particular emphasis on motor sports. It was the founding sponsor of Raid De Himalaya, and in its fifth year continues to be closely involved with it. The company regularly holds car rallies for amateur drivers and aspiring rallyists. MUL now has plans to host golf and polo events. Brand Values In 1983, Brand Maruti Suzuki was defined as the peoples car. These values have remained consistent ever since. Over the years, MUL has set the stage for the successful launch of Suzukis international range in the Indian market, all backed by the inherent value proposition of high quality, fuel efficiency and, compared with competition, low price. This formula has been largely responsible for a new generation of Indian car users swearing by the Maruti Suzuki brand name.

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Master of Business Administration MBA Semester 2

MB0046 Marketing Management - 4 Credits (Book ID: B1135) Assignment Set- 2 60 Marks

Note: Each question carries 10 Marks. Answer all the questions. Q.1 Explain the following: a) Product mix dimensions b) Product line strategies [10 marks]
Answer: Product mix dimensions:The number of product lines and items offered by marketer to the consumers. A companys product mix has four different dimensions. They are product mix width, product mix length, and product mix depth and product mix consistency. Product mix width: The total number of product lines that company offers to the consumers. Product mix length: The total number of items that company carries within its product line. Product line depth: The number of versions offered of each product in the line. Product mix consistency: If companys product lines usage, production and marketing are related, then product mix is consistent, else it is unrelated. Product Line Strategies Product line: The group of related products which uses same marketing efforts to reach the consumer. The product line identifies profitable and unprofitable products and helps in allocation of resources according to that. The product line understanding helps the marketer to take line extension, line pruning and line filling strategies of the company. Pidilite Industries, the adhesives and chemical company, have the following group of related products (or product lines) in consumer and business markets. Consumer market. 1. Adhesives and sealants. 2. Art materials and stationeries. 3. Construction chemicals. 4. Automotive chemicals 5. Fabric care Business market 1. Industrial adhesives. 2. Textile chemicals. 3. Organic pigment powders. 4. Industrial resins and 5. Leather chemicals. Product Line Decisions: The major product line decisions are a. Product line length b. Product line stretching c. Product line filling d. Product line pruning a. Product line length: The number of items in the product line is called the product line length. Company should decide whether it requires longer chain or shorter length. The decision depends upon the objective of the company, competitive environment and profitability. If the chain is short company can add new products and if it is lengthy company can reduce the number of products.

1. 2. 3. 4.

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For example, Pidilites adhesives and sealants line has following 11 items in the product line. Hence the length of product line is 11 b. Product line 1. White Glue 2. Paper Glue stretching: Compa 3. Glue Stick 4. Instant Adhesive ny lengthens its 5. Epoxy Putty 6. Epoxy Adhesive product line either 7. PVC Insulation Tape 8. Silicone Sealants by stretching 9. Contact Glue 10. All Purpose Glue upwards or 11. Maintenance Spray downwards or both ways. Line stretching decision depends on three situations i. Company which operates in high end market may come up with mid class or low class targeted products. ii. The company which operates in lower end of market may come up with high end market products. iii. If the company operates in mid segment and comes out with low end product as well as high end product then it is stretching both ways. c. Product line filling: Adding more items in the present product line. For example, in the year 2000 Maruti Suzuki launched Alto. This product was between Maruti 800 and Maruti Zen. Here company was trying to fill the gap existing in the segment by introducing ALTO, i.e. line filling. d. Product line pruning: Removing the unprofitable products form the product line. Toyota Kirloskar phased out their well known brand Quails when they thought the brand was not adding value to the product line.

Q.2 a) Assess the factors that are involved in setting up a distribution channel. [6 marks] b) Give a note on Retailing. [4 marks]
Answer: Assess the factors that are involved in setting up a distribution channel:Marketers should consider various factors before deciding the particular type of channel. It may be organizational or competitive factors. The type of goods to be transported and stored will decide the length and intensity of channel. To decide on the particular channels, marketer will have to take into account the following factors. 1. Understanding the customer profile: Purchasing habits differ from individual to individual. Individuals who face shortage of time would like to purchase on the net (direct channel) and those who have abundant time would like to go through the shopping experience. Some of them would like to have variety of goods, while others want unique or specialized products. Hence marketers should understand who are his customers? How do they purchase and how often they purchase? For example, customers dont like to travel half a kilometre to purchase a shampoo sachet, but they dont mind travelling two kilometres while purchasing durable goods. 2. Determine the objectives on which channel is to be developed. a. Reach: Company would like to make the goods available in most of the retail outlets. So it, will adopt intensive distribution channel. b. Profitability: Company wants to reduce the cost in the channels and enhance their profitability. It will restructure the channel to optimum level so that it can reduce the cost and increase the profit. c. Differentiation: Company positions their products differently. When most of the industry players follow conventional system, company goes with new format of channels. For example, all computer manufacturers were adopting dealer-retailer channel to sell their products, but Dell started selling its product on the internet.

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3. Identify type of channel members: Once the objectives are set on the basis of companys policies, it will analyze which types of channels are most suitable. Merchants, agents and resellers are some intermediaries involved in the distribution. Merchants are those who buy the product, take title and resell the merchandise. Agents will find the customers, negotiate with them, but do not take the title of the product. Facilitators are the people who aid the distribution but do not negotiate or take the title of the product. 4. Determining intensity of distribution: Intensity of distribution means how many middlemen will be used at the wholesale and retail levels in a particular territory. If the number of intermediaries is more, then the cost of the channel will increase. However, if the number of intermediaries is less, then company will not be able to meet all target customers. Therefore company should adopt optimum number of intermediaries. On the basis of how many intermediaries are required, company can adopt any one of the following strategies. a. Intensive distribution: A strategy in which company stocks goods in more number of outlets. The intention is to make the goods available near to the customer. For example, you can find Parle-G glucose biscuits available in almost all the retail outlets in rural and urban areas. b. Selective distribution: A strategy in which company stocks goods in limited number of retail outlets. For example, televisions are sold only in selected retail outlets. TVs cannot be sold like toothpaste. Onida TVs are available in electronic retail shops like Viveks, Girias, Next, E-zone etc c. Exclusive distribution: In this type of channel format, marketer gives only a limited number of dealers the exclusive right to distribute its products in their territories. For example, a Kaya skin care solution of Marico is marketed through exclusive distribution. 5. Assigning the responsibilities to channel members. Company should define the territory in which the channel member should operate, at what price he should sell, services he should perform, and how he should sell. 6. Selecting the criteria to evaluate the channel member: Company may have different types of channel alternatives. It would like to choose any one of the alternatives, which meets its objectives. Channels can be evaluated in the design phase by the method called SCPCA. a. Sales(S): The ability of each channel member to generate the sales for company in a given period. b. Cost(C): How much cost each channel alternative incurs? Which one of the alternatives provides the optimum solution? c. Profitability (P): Various channel alternatives available to the company and their profitability shall be compared. Channel with better profitability shall be selected. d. Control (C): Every company would like to have better control over its channel members. Alternative channels can be evaluated on the basis of how much control each channel member desires. And how much control the company is willing to provide. e. Adaptability (A): Marketing is a dynamic world. Competition exerts pressure on companies to relook at their practices and supply chain continuously. The channel alternatives should be flexible enough to meet the changing requirements. Whichever channel alternative meets such objectives shall be selected.

Give a note on Retailing:- Retail sector has witnessed tremendous growth in the last few years. The major factors which drive the retail boom are change in consumer profile and demographics, increase in the number of international brands available in the Indian market, economic implications of the government, increasing urbanization, credit availability, improvement in the infrastructure, increasing investments in technology and real estate. The Indian retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Simultaneously, organized retail which presently accounts for 4 per cent of the total market is likely to increase its share to 22 per cent by 2010. As per Associated Chambers of Commerce and Industry of India (ASSOCHAM), the overall retail market is expected to grow by 36%. The organized sector is expected to register growth

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amounting to Rs 150 billion by 2008. Retail is amongst the fastest growing sectors in the country and India ranks 1st, ahead of Russia, in terms of emerging markets potential in retail. Characteristics of retailing i. Direct interaction with customers. Retailer is the final link between company and customer. Retailer understands the need of the customer and provides the proper solution to him. For example, neighbourhood grocery store person knows his customer profile better. He reminds the customer of what to purchase and provides credit. ii. Purchased in small quantity: Customer purchases small quantity of merchandise at the retail store. Even if customer purchases less quantity he will purchase it frequently. This has led to better relationship between customer and retailer. iii. Tool of marketing communication: Companies use retailer location for point of purchase displays. They also encourage retailer to promote the products through word of mouth communication. Functions of retailing i. Sorting: Retailers arrange the items in proper order so that customer can easily identify the goods or services that he needs. ii. Breaking bulk: The process of unpacking big packets into small packets. Retailer will perform this function as customer may not be able to purchase large quantity of goods and services. iii. Holding stock: Retailer works as storage facility to organizations. Retailer holds inventory to meet the day to day needs of consumer. iv. Channels of communication: Retailer promotes the company product through word of mouth communication. The retailer location is also used for point of purchase display. v. Transportation: Retailer undertakes door delivery order in case of durable goods. This feature is now adopted by the small grocery stores also. Type of retailing A. Store retailing: The mode of retailing where a store is essential in a particular location to do business. Store retailing can be performed in different formats. They are 1) Specialty store: The stores carry large amount of merchandise but in limited product lines like Textile store or furniture store. For example, Tanishq, jewelery retail store. 2) Department store: In this retail format, apparel, home furnishing and consumables goods and services are sold. Each of the formats is considered as a different department and managed in the retail store. For example, Shoppers Stop of Raheja group. 3) Supermarkets: According to Philip Kotler supermarkets are a relatively large, low cost, low margin, high volume, self service operation designed to serve the consumers total needs for food and household products. For example, Food World of RPG group. 4) Convenience store: These stores are very near to customer residence; usually carry or hold day to day products of high turnover at premium price. For example, Reliance Fresh 5) Discount store: These stores sell products at low prices with low margin. The store achieves their profit by generating high volumes. Subhiksha, a south India based retailer follows this format. 6) Off price retailers: This type of retailer buys the goods at less than wholesale prices. These products are sold at lesser than retail prices. For example, factory outlets in Marathahalli, Bangalore. 7) Super stores: These are very large stores where customer can purchase food and non food products. The super store includes category killers that carry large merchandise in a particular category. For example, Nalli sarees which carries a large variety of sarees in their stores. Another type of super store format which exists in India is Hypermarkets. These retail outlets have huge space and carry large merchandise. For example, Reliance Mart in Ahmadabad. B. Non store retailing: The mode of retailing where a company uses electronic media or direct selling medium to sell their products. For example, direct selling, Telemarketing, Automatic vending, online retailing and direct marketing.

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Summer 2011- May drive Q. 3 Geo Ad Agency has many corporates as their clients. Due to lack of resources, it is planning to cut down work and reject certain clients. Further, they want to establish a concrete system in communication development and ad structure. What would be your advice to Geo Ad agency in this aspect? [10 marks]
Answer: Geo Ad Agency can follow following points to establish a concrete system in communication development .These points also help Geo Ad agency to sustain their clients:Preparing target customer profile Effective communication starts with identifying the target customer to whom the communication is developed. In this stage company prepares target customer profile. Identifying promotion objectives Target customer profile provides inputs about his/her readiness to purchase the product. Customer may be in any of the six stages of hierarchy of effects. The six stages are awareness, knowledge, liking, preference, conviction and purchase. Every company will like to bring their customers to the purchase stage from other five stages. Therefore it creates different promotion program at different stage. To make it clearer, Company first creates awareness about the product, educate them about the advantages, induce them to choose the brand, stimulates and monitors that customer purchases the product. Designing a message After deciding the communication objectives, Marketer turns to develop right message which should create attention, interest, desire or action (AIDA) by the customer. Before deciding what should be there in the message, we will have to understand AIDA model in detail. The main objective of any message is to meet the AIDA model although the message framed will be subject to product type/category, ad budget and creativity skills of individuals. I. AIDA model: Attention: The marketing communication should generate attention towards the product. In this stage customer is having the need; organization should provide solution from their communication. For example, when advertisers use a popular film star or a celebrity to promote a perfume brand or even a soap or a toothpaste, it will immediately catch the audiences attention. Interest: Once the customer provides enough attention towards the communication, organization should stimulate it to create interest. For example, if celebrities are used to endorse products, audience must be curious enough to know what they are saying about that particular product. Desire: The interest created should be forced in the customer mind so that he will develop desire towards the product. For example, when people have seen the ad and show interest, next thing would be to create a desire for that product. People should have the willingness to buy the product and unless they dont desire it, they will not be eager to buy the same. Action: Strong desires should be turned into action. Hence company should provide the advantages of purchasing of the product in their communication messages. For example, it is very difficult for the Insurance companies to grab the attention of people towards insurance products, create interest and desire as to make a person buy the same. So, its a challenge to the marketer to develop such a message that immediately gets the attention and make a person to go for it. For example, it is easy to catch peoples attention towards ice-creams so that they will have interest and desire to taste it and eventually buy it. II. Deciding the message content. Message content must have any one of the following appeals Emotional appeal: Positive emotional appeal or negative emotional appeals are strong tools used to intensify the purchasing activity of the customer. Positive emotions like love, pride, joy and humour are used in the message The negative emotions like fear guilt and shame are also used in the advertisement to attract the customer. Rational appeals highlight on the desired benefits about the products. They highlight quality, economy value or performance of the product. Moral appeal: These are concerned towards public health or environment or social responsibility. For example, Shell lubricants show its commitment towards environment in their advertisements.

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III. Message format: The Right Message Format for the Right Marketing Strategy should follow. Depending on message marketing is naturally going to have to change. Shorter messages require different types of advertisements than longer ones.
Selecting the channels of communications The communicator may use company sales people, reference groups, blogs, RSS, webinar, online communities and social networking sites to promote their products. These media are called as personal communication channels. The word of mouth campaigns buzz marketing and viral marketing are some examples of personal communication channels. Selecting the message source Messages communicated by the celebrities and proper sources have high credibility among the target consumers. Many companies use well known actors and actresses, cricket players, and even cartoon characters to promote their advertisements. Target Customer Feedback The communicator collects the feedback on the promotion campaign to assess how many of target customers are able to see, hear or read the message. This stage helps communicator to understand how many of target customers actually able to recall the message? And among them how many of them really purchased it. Some companies go further and ask the customer to provide suggestion to improve the promotion campaign.

Q.4 Discuss the objectives of training and training programme along with its significance. [10 marks]
Answer: Training Training is a continuation of selection. Having selected the salesmen, there are two options. They can be sent to the field directly with samples, order books etc., and/or they can be sent for training programme. Some people think that salesmanship is born, but there are no born salesmen like there are no born doctors, lawyer, engineers, teachers etc. However, all these people need training to call them qualified, and so also is the case with salespersons. A person may have interest in the profession. Thiess interest can be fully developed, through proper training. One attains perfection, self-development etc., through training. Training means the process of perfecting the salespersons for their work. Training programmes are organized procedures or methods through which knowledge as well as skill, for a definite purpose, is acquired. By training, one can increase knowledge in a particular field. The salesmanship is not born but can be made effective through training. Significance of Training: The present era of marketing world is full of stiff and cut-throat competition. The world is dynamic and not static. Customers are more benefit-oriented. Producers, in order to meet the ever-changing demands of the consumers, produce new products, new devices, and products with multiple uses and so on. Thus, training or repeated training is essential to keep the salesmen, with up-to-date knowledge, in respect of new or developed goods. Training gives scope for improvement. Objectives of Training: The objectives are summed up below: 1. To facilitate the salespersons to acquire the techniques and principles of salesmanship, process of sales, canvassing etc. 2. To bring down the labor turnover in the sales force. 3. To facilitate better sales performance. 4. To improve the relations with the customers. 5. To increase the efficiency of sales personnel.

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6. To keep the salesperson informed about the products, market, competitors etc., to face different situations. 7. To lower the selling expense so as to increase the profits. 8. To maintain sound relations between employer and employee. 9. To develop better knowledge, and the ways and means to resist all undesirable situations. Training Programme A firm should chalk out a programme for sales training. The training is based on the nature of the job and the products to be sold. A planned training programme should function with the following ideas or principles, often referred to as ACMEE. A: Aim of Training C: Content of Training M: Method of Training E: Execution of Training E: Evaluation. 1. Aim of Training: The whole idea behind the training is to make a recruit a good salesperson. 2. Content of Training: No hard and fast rules can be laid down as to the contents of training. The content of the training programme relates to the subject-matter of training. 3. Method of Training For imparting training to the salespersons, different methods are being used. Broadly, these methods may be divided into two: 4. Execution of Training Once sales person done with training he/she should send to actual market to sale the project. A periodic evolution is required to observe of sales persons performance, based on that it can be decided if sales parson needs more training. 5. Evaluation of Training Having trained the salespersons, the marketing manager must evaluate the usefulness or effectiveness of training, individually and collectively on the basis of the performance of the sales personnel. Money, effort and time have been spent on training. Therefore, it is natural to expect returns. Evaluation can be made on the basis of performance of sales executive in terms of sales volume, sales profitability, order-size, expenses etc., between, before and after training periods.

Q.5 Management of Sai Systems Pvt. Ltd. has decided to enter international marketing scenario. What methods are applicable to the company to enter international markets and what should be the approach? [10 marks]
Answer: Sai Systems Pvt. Ltd. should follow an International Market Entry Strategies:To enter international marketing Sai Systems Pvt. Ltd. know the answers for some basic questions like a. In how many countries would the company like to operate? b. What are the types of countries it plans to enter? Thats why companies evaluate each country against the market size, market growth, and cost of doing business, competitive advantage and risk level. Once the market is found to be attractive, Sai Systems Pvt. Ltd. should decide how to enter this market. Sai Systems Pvt. Ltd. can enter the international market by adopting any one of the following strategies. They are a. Exporting b. Licensing c. Contract manufacturing d. Management contract e. Joint ownership f. Direct investment

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Exporting is the technique of selling the goods produced in the domestic country in a foreign country with some modifications. For example, Gokaldas textiles export the cloth to different countries from India. Exporting may be indirect or direct. In case of indirect exporting, company works with independent international marketing intermediaries. This is cost effective and less risky too. Direct exporting is the technique in which organization exports the goods on its own by taking all the risks. Maruti Udyog Limited, Indias leading car manufacturer exports its cars on its own. Company can also set up overseas branches to sell their products. Adani Exports, another leading exporter from India has international office in Singapore. Licensing: According to Philip Kotler, licensing is a method of entering a foreign market in which the company enters into an agreement with a license in the foreign market, offering the right to use a manufacturing process, trademark, patent, or other item of value for a fee or royalty. For example, Torrent Pharmaceuticals has license to sell the cardiovascular drugs of Chinese manufacturer Tasly. Licensing may cause some problems to the parent company. Licensee may violate the agreement and can use the technology of the parent company. Contract manufacturing: Company enters the international market with a tie up between manufacturer to produce the product or the service. For example, Gigabyte Technology has contract manufacturing agreement with D- link India to produce and sell their mother boards. Management contracting: In this case, a company enters the international market by providing the knowhow of the product to the domestic manufacturer. The capital, marketing and other activities are carried out by the local manufacturer. Joint ownership: A form of joint venture in which an international company invests equally with a domestic manufacturer. Therefore it also has equal right in the controlling operations. For example, Barbara, a lingerie manufacturer has joint venture with Gokaldas Images in India. Direct Investment: In this method of international market entry, Company invests in manufacturing or assembling. The company may enjoy the low cost advantages of that country. Many manufacturing firms invested directly in the Chinese market to get its low cost advantage. Some governments provide incentives and tax benefits to the company which manufactures the product in their country. Approaches to International Marketing The three common approaches used in the international market are a. Domestic market extension approach. b. Multi domestic market orientation. c. Global market orientation. Domestic market extension approach: Companies that adopt this strategy think international markets are secondary to its domestic markets. For example, HSBC advertises its banking services with a tag line the worlds local bank. Multi domestic market orientation: In the international market each country has its uniqueness. Their preference varies. The consumer profile is different from domestic operation. Companies develop different market plans for such markets. For example, in France, men use more cosmetics than the women, whereas in India women use more cosmetics than men. A cosmetics company should change the product positioning differently. Global market orientation: In this approach, company thinks that products needs are universal in nature irrespective of country where they work. Here company tries to standardize their products or services. For example, Sony Walkman is same across the world. The product information brochure contains explanation in different languages of different countries. The final product is same in all the countries.

Q.6 a) Give a note on Product mix pricing strategies. [5 marks] b) What is Brand development? How is it done? [5 marks]
Answer: Note on Product mix pricing strategies

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The product mix is the collection of products and services that a company chooses to offer its market. When the product is a part of product-mix, there are five kinds of strategies involved 1. Product Line pricing: Strategy of setting the price for entire product line. Marketer differentiates the price according to the range of products, i.e. suppose the company is having three products in low, middle and high end segment and prices the three products say at Rs 10 Rs 20 and Rs 30 respectively. The three levels of differentiation create three price points in the mind of consumer. The task of marketer is to establish the perceived quality among the three segments. If the customers do not find much difference between the three brands, he/she may opt for low end products. 2. Optional Product pricing: this strategy is used to set the price of optional or accessory products along with a main product. Organizations separate these products from main product so that customer should not perceive products are costly. Once the customer comes to the show room, organization explains the advantages of buying these accessory products. 3. Captive product pricing: Setting a price for a product that must be used along with a main product. For example, Gillette sells low priced razors but make money on the replacement cartridges. 4. By-product pricing: It is determining the price for by-products in order to make the main products price more attractive. For example, L.T. Overseas, manufacturers of Dawaat basmati rice, found that processing of rice results in two by-products i.e. rice husk and rice brain oil. If the company sells husk and brain oil to other consumers, then company is adopting by-product pricing. 5. Product bundle pricing: It is offering companies several products together as a bundle at the reduced price. This strategy helps companies to generate more volume, get rid of the unused products and attract the price conscious consumer. This also helps in locking the customer from purchasing the competitors products. For example, Anchor toothpaste and brush are offered together at lower prices. Brand development Company can develop the brand on the basis of product category and brand name. Some of the different strategies adopted by companies to develop the brands are as follows: 1. Line extension: Company uses its well known brand name to introduce additional items in a given product category such as new forms, flavours, ingredients or package sizes. For example, Karnataka Milk Federation, uses its top brand name Nandini, to introduce new items like toned milk, full cream milk , curd and milk powder. It is less risky and requires fewer investments to introduce the product. In the above example Nandini used the extension to meet the excess capacity that it has. The milk procurement was more than the demand from the customer. Hence it started producing the milk powder. But all the products introduced need not to be successful in the market. In case of KMF, Nandini ice creams didnt click in the market. Another risk of line extension is brand cannibalization, i.e. companys brand/items compete with each other. 2. Brand extension: A strategy in which company uses one of its familiar brand names for new product categorys items. For example, United Breweries (UB) Limited group used its flagship brand Kingfisher to different categories. Kingfisher was originally a beer brand extended to airlines. Brand extension gives instant recognition to the brand. In the above example, people required very little time to know Kingfisher airline brand, because parent brand was very well known. Brand extension may hurt the parent brand reputation in the market if it fails. 3. Multi brands: The technique of introducing the product or items in existing product category with a new brand name. For example, Hindustan Unilever uses different brand names for their home and personal care category. The above example shows us that HUL have Breeze, Dove, Liril, Lux, Lifebuoy and Pears in the bath soap segment itself. It helps the company to come out with new features in the product or product category. Organizations adopt this strategy to avoid brand cannibalization in

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the given category. The major disadvantage of this strategy is that none of the brands will enjoy major market share and result in lesser profitability. 4. New brands: The strategy indicates coming out with new brands for new category products. In this strategy, company believes that existing brands cannot be extended to the new category. The new brand strategy requires huge resources to build it. The new category, if it already has some brands of other companies, investment requirement will go up. For example, Hindustan Unilever launched Pure-It in the water purifier category. The category and brand are new to the company.

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