Showing posts with label Marketing Management. Show all posts

Tuesday 4 July 2023

IGNOU ASSIGNMENT SOLUTIONS - MCO-06 - MARKETING MANAGEMENT - MCOM - SEMESTER 2

IGNOU ASSIGNMENT SOLUTIONS

MASTER OF COMMERCE (MCOM - SEMESTER 2)

MCO-06 - MARKETING MANAGEMENT

MCO-06/TMA/2022-2023

Please Note:
These assignments are valid for two admission cycles (July 2022 and January 2023). The validity is given below:
1. Those who are enrolled in July 2022, it is valid upto January 2023. (Term End Examinations in December 2022)
2. Those who are enrolled in January 2023, it is valid upto December 2023. (Term End Examinations in June 2023)

Question No. 1
What do you mean by Buyer Behavior? Discuss various social and Cultural factors which influence the buyer behavior? (20 Marks)

Solution:

Buyer Behaviour simply means the decision and acts pursued by any buyer while purchasing any product or service. Another term for buyer behavior that is majorly used in the market of digital monetization is “consumer buying behavior,”.

It is the highlighted driving force behind any marketing campaign. But how it can benefit you or your business or why should you even care what is buyer behavior? The following reasons will make the significance of buyer behavior supremely certain:

Buyer Behaviour helps you understand the dynamics behind any purchase done by the consumer regarding a wide range of products.
It reveals substantial reasons behind the loyalty of consumers, for a specific brand or product.
Also, it helps you in analyzing & predicting the demand of any service or product prior to its launch.
Moreover, is the wizard’s wand when it comes to generating influential marketing campaigns.
In addition to that, it makes your product or services more engaging & relatable to the target audience.

Social Factors affecting the Buyers Behaviour:

The social factors affecting consumer behaviour includes the following components: -

a) Reference Groups

We are social beings, and we always want to be around a group of people. There a few groups of people who are always around us, and they have a direct or indirect influence on our behaviour and attitudes. These are called the Reference Groups.

Don't most of us used to want the bicycle that our friends used to have in our childhood? A few groups like family, friends, colleagues; with whom we interact regularly are called the Primary Groups.

On the other hand, we have few groups with whom we interact less and conversations are required to be formal; these groups are called the Secondary Groups. But how do these groups influence our behaviour as a consumer?

The below mentioned three points will answer this better:

Let's say, most of the times you get to know about the latest cool gadgets from your friends and colleagues only; this means that they expose us to new behaviours and lifestyle.

Now, you also need to have the same product. Hence, they influence our behaviour and self-image.

You want to buy that cool gadget from a few specific brands only; they create a pressure of conformity.

Apart from this, there are also certain groups to which you want to belong to but you are not currently a part of it. Suppose you cannot afford expensive designer clothes today but someday you want then that group which buys premium designer clothes is an Aspirational Group for you. Whereas, the groups whose values and attitudes we reject are called the dissociative groups.

Now, marketers reach and influence these groups through an Opinion leader; he is a person who informs and gives information about various products and brands to his group members. They have a good influence on their group members.

b) Cliques

According to some communication researchers, our society comprises small groups, known as cliques, and their members interact with each other frequents. This scenario can be compared to the different clubs and committees in B-schools, where all the students from different clubs and committees (cliques) interact with each other.
Now, as a promoter of any event of your B-school, you would want cliques to talk more about your event with each other. For that, you will find people who have networks in most of the cliques. These people are known as bridges.
Many companies do pay money to influencers to promote their product in different cliques anonymously. This tactic is known as shill marketing or stealth marketing.
You must have also heard that many of the reviews on digital platforms are being given by the people who are in some financial contract with the company. Another interesting example could be of some comedy shows where there are anonymous people who laugh while sitting in the audience.

c) Family

This is the most important determinant in influencing the buying and deciding characteristics of consumers. We acquire a lot of values, attitudes, beliefs and perspectives from our family.
In most of the Indian families, the women are considered to be the main purchasing member; hence they influence the buying decision the most. The marketers of specific products very cleverly target these women to promote their product.

d) Roles and Status

All of us play multiple roles in lives, the roles that we play influences our behaviour and choices. The role that we play decides our "status". This also influences the kind of products and services that we use. Most of the times, we like those brands and products which relates to our identity that emerges from the kind of roles we play.
You must have observed that people who are fit and muscular generally prefer to buy Royal Enfield among other bikes. This is nothing but a buying behaviour arising out of social factors.

Cultural Factors affecting the buyers behaviour:

Culture includes race and religion, tradition, caste, moral values, etc. Culture also

include sub-cultures such sub-caste, religious Sects, language, etc.

a) Culture:

It influences consumer behaviour to a great extent.
Cultural values and elements are passed from one generation to another through family, educational institutions, religious bodies, social environment, etc. Cultural diversity influences food habits, clothing, customs and traditions, etc.
For instance, consuming alcohol and meat in certain religious communities is not restricted, but in certain communities, consumption of alcohol and meat is prohibited.

b) Sub-Culture:

Each culture consists of smaller sub-cultures that provide specific identity to its members.
Subcultures include sub-caste, religious sects geographic regions as South Indians, North Indians, and based on languages etc.
The behaviour of people belong to various sub-cultures is different. Therefore, marketers may adopt multicultural marketing approach, i.e., designing and marketing goods and services that cater to the tastes and preferences of consumers belonging to different sub-cultures.

Conclusion

Each and every person has his or her own behavior towards the purchasing process , however all of them are influenced by certain factors. Those influences may be environmental, social, personal, or psychological influences. But the cultural values are shared among the people in the society and affect them gradually over time. Besides the society has different impacts on one’s behavior depending on different groups to which it belongs. Each individual has their own effects varying from age or sex or the process of perceiving, motivating and memorizing. Those factors affect the consumer buying behavior so they should be considered. The consumers themselves are the decision makers and so are the most important factors in the consumer market. When a firm wants to enter in to a foreign market then the local customer behavior is probably different from customer behavior that they are dealing with the home country. Therefore it is important for the marketing manager to take all these factors into consideration, and helping them to develop marketing campaign in the international market and to improve the product to fully satisfy the customer which ultimately increase sales and develops in global level.

Question No. 2
What are the objectives of Pricing? Discuss the basic methods of Price Determination. (20 Marks)

Solution:

Pricing is a process of fixing the value that a manufacturer will receive in the exchange of services and goods. Pricing method is exercised to adjust the cost of the producer’s offerings suitable to both the manufacturer and the customer. The pricing depends on the company’s average prices, and the buyer’s perceived value of an item, as compared to the perceived value of competitors product.

Pricing objectives

Firms rely on price to cover the cost of production, to pay expenses, and to provide the profit incentive necessary to continue to operate the business. We might think of these factors as helping organizations to: (a) survive, (b) earn a profit, (c) generate sales, (d) secure an adequate share of the market, and (e) gain an appropriate image

a) Survival: It is apparent that most managers wish to pursue strategies that enable their organizations to continue in operation for the long term. So survival is one major objective pursued by most executives. For a commercial firm, the price paid by the buyer generates the firm’s revenue. If revenue falls below cost for a long period of time, the firm cannot survive.

b) Profit: Survival is closely linked to profitability. Making a USD 500,000 profit during the next year might be a pricing objective for a firm. Anything less will ensure failure. All business enterprises must earn a longterm profit. For many businesses, long-term profitability also allows the business to satisfy their most important constituents–stockholders. Lower-than-expected or no profits will drive down stock prices and may prove disastrous for the company.

c) Sales: Just as survival requires a long-term profit for a business enterprise, profit requires sales. As you will recall from earlier in the text, the task of marketing management relates to managing demand. Demand must be managed in order to regulate exchanges or sales. Thus marketing management’s aim is to alter sales patterns in some desirable way.

d) Market share: If the sales of Safeway Supermarkets in the Dallas-Fort Worth metropolitan area of Texas, USA, account for 30 per cent of all food sales in that area, we say that Safeway has a 30 per cent market share. Management of all firms, large and small, are concerned with maintaining an adequate share of the market so that their sales volume will enable the firm to survive and prosper. Again, pricing strategy is one of the tools that is significant in creating and sustaining market share. Prices must be set to attract the appropriate market segment in significant numbers.

e) Image: Price policies play an important role in affecting a firm’s position of respect and esteem in its community. Price is a highly visible communicator. It must convey the message to the community that the firm offers good value, that it is fair in its dealings with the public, that it is a reliable place to patronize, and that it stands behind its products and services.

Pricing Methods:

Pricing method is a technique that a company apply to evaluate the cost of their products. This process is the most challenging challenge encountered by a company, as the price should match the current market structure and also compliment the expenses of a company and gain profits. Also, it has to take the competitor’s product pricing into consideration so, choosing the correct pricing method is essential.

The pricing method is divided into two parts:

Cost Oriented Pricing Method– It is the base for evaluating the price of the finished goods, and most of the company apply this method to calculate the cost of the product. This method is divided further into the following ways.
- Cost-Plus Pricing- In this pricing, the manufacturer calculates the cost of production sustained and includes a fixed percentage (also known as mark up) to obtain the selling price. The mark up of profit is evaluated on the total cost (fixed and variable cost).
- Markup Pricing- Here, the fixed number or a percentage of the total cost of a product is added to the product’s end price to get the selling price of a product.
- Target-Returning Pricing- The company or a firm fix the cost of the product to achieve the Rate of Return on Investment.
Market-Oriented Pricing Method- Under this category, the is determined on the base of market research
- Perceived-Value Pricing- In this method, the producer establish the cost taking into consideration the customer’s approach towards the goods and services, including other elements such as product quality, advertisement, promotion, distribution, etc. that impacts the customer’s point of view.
- Value pricing- Here, the company produces a product that is high in quality but low in price.
- Going-Rate Pricing- In this method, the company reviews the competitor’s rate as a foundation in deciding the rate of their product. Usually, the cost of the product will be more or less the same as the competitors.
- Auction Type Pricing- With more usage of internet, this contemporary pricing method is blooming day by day. Many online platforms like OLX, Quickr, eBay, etc. use online sites to buy and sell the product to the customer.
- Differential Pricing- This method is applied when the pricing has to be different for different groups or customers. Here, the pricing might differ according to the region, area, product, time etc.

Question No. 3
Write short notes on the following:
(a) Positioning
(b) Warehousing
(c) Personal Selling
(d) Relationship Marketing. (4×5 Marks)

Solution:

(a) Positioning

Positioning refers to the place you want your brand or product to have within a particular target market. More specifically, the process of market positioning and brand positioning involves how you market your brand or product to consumers to achieve that position.

The aim of positioning in marketing is to establish or sway how consumers perceive you to gain a competitive advantage. A great positioning strategy elevates marketing efforts to help consumers move from knowing about a brand to deciding to purchase a product. And as positioning can sometimes be subtle, it’s usually easier to detect when viewing from the same angle as a consumer.

For example, look at Burger King’s brilliant advertisement “Why eat with the clown when you can dine with a king?”. Not only does it suggest that Burger King has a higher class of dining experience than McDonald’s, but it’s also an excellent example of how positioning in marketing operates.

Positioning requires ongoing marketing initiatives for the brand, which must also be maintained over the life of each product. Doing this when running a business also reinforces the target market’s perceptions of both the brand and the product.

Remember that every brand and product has a place somewhere within the market, whether you cultivate your position or not. Once you understand what is positioning in marketing, you can start taking control of your brand’s reputation and product image.

While there are a wide variety of options to consider, positioning strategies are typically broken down into three specific categories. These three types of positioning strategies are known as comparative, differentiation, and segmentation.

1. Comparative

This positioning strategy works by comparing multiple products or brands to create a competitive edge and highlight their individual value.

2. Differentiation

By focusing on any unique features which ideally can’t be duplicated, a differentiation positioning strategy ensures a brand’s products will stand out from the competition.

3. Segmentation

In situations where there are multiple target audiences, a segmentation positioning strategy focuses on the different specific needs of each group.

(b) Warehousing

Warehouse operations are the daily activities that prepare inventory for shipping, inventory tracking, and order fulfillment. Here are four crucial operational components of warehousing:

Pick and Pack: A process of selecting one or more products that was ordered by a customer, checking it, and packaging it for shipping.
Inventory Management: The inventory definition is tracking, measuring, updating, and retrieving products in a storage facility, including minimum and maximum quantities, stock-outs, and service level agreements.
Order Fulfillment: The process of getting an order ready for shipment to a customer, and making sure it is shipped out as soon as possible.
Warehouse Management System (WMS): A software program designed to oversee warehouse operations, inventory storage, demand forecasting, and daily efficiency.

Warehouse management is the process of managing inventory in a warehouse, including tracking quantities, monitoring expiration dates, and organizing products based on customer demand. It also includes managing the process of receiving and storing inventory, and finalizing orders for shipments.

Many retailers and eCommerce businesses choose to outsource their warehouse logistics, which is a smart choice since warehousing is less about transportation and distribution and more about inventory storage. Warehouse management software is an essential component of warehouse operations and warehouse services. It allows you to track stock and create alerts for low inventory levels.

Inventory management can also be done using radio frequency identification (RFID) tags and scanners, which lets you track items in real-time and quickly scan items once they get to the warehouse space.

(c) Personal Selling

Personal selling should be part of a wider sales mix, alongside telesales, email marketing, sales promotion, advertising, and public relations. But personal selling must not be overlooked: it remains an extremely important part of a salesperson’s arsenal and is a skill every good salesperson must master.

Personal selling is a personalised sales method that employs person-to-person interaction between a sales representative and prospective customers to influence the customer’s purchase decision.

Precisely, it’s a promotional technique where a salesperson:

Uses person to person communication: Personal selling involves direct contact of the salesperson and the customer.

To sell an offering: The purpose of personal selling is to motivate and persuade the customer to purchase the intended offering a detailed explanation or demonstration of the product.

Using a personalised sales strategy: This strategy involves the salesperson to understand the needs and wants of the customers, develop personalised connections, communicate the value of the offering in a way that persuades the customer to buy the offering.

Today, personal selling is considered a business-to-business selling technique but is also used in trade and retail sales.

With the advent of the internet and other communications methods, personal sales isn’t limited to just face-to-face meetings. Salespersons now use video calls, phone calls, IM, and even emails, along with in-person interactions to develop a relationship with prospective customers.

Personal selling differentiates itself from other sales and promotional techniques by possessing the following characteristics:

Human contact: It involves person-to-person interaction where a seller interacts directly with the prospective customer and executes a personalised sales strategy according to the customer’s needs, wants, and expectations.
Development of relationship: Personal selling involves developing a relationship between the seller and the buyer where trust is established, and the prospective buyer can rely on the salesperson. Moreover, this technique even results in the salesperson becoming a part of the buying process.
Two-way flow of information: Unlike mass marketing, personal selling is characterised by a two-way flow of information. The prospective buyers get their chance to ask questions and clear their doubts directly from the seller before purchasing.
Quick communication: Since personal selling involves person-to-person interaction, the communication flow is really quick.
Flexibility: It involves the salesperson to tailor the sales pitch according to the prospective audience’s persona and requirements, making this sales tool flexible.
Satisfaction: The process of personal selling requires the salesperson to understand the customer’s needs and satisfy the same by offering the customer the opportunity to buy something he has to offer.
Persuasion: Personal selling isn’t just about informing prospective customers about the company’s offerings. It also involves using the power of persuasion to make customers accept the seller’s point of view or convince the customer to take a particular action.

(d) Relationship Marketing

Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion and information from customers that can generate leads.

Relationship marketing stands in contrast to the more traditional transactional marketing approach, which focuses on increasing the number of individual sales. In the transactional model, the return on customer acquisition cost may be insufficient. A customer may be convinced to select that brand one time, but without a strong relationship marketing strategy, the customer may not come back to that brand in the future.

While organizations combine elements of both relationship and transactional marketing, customer relationship marketing is starting to play a more important role for many companies.

Acquiring new customers can be challenging and costly. Relationship marketing helps retain customers over the long term, which results in customer loyalty rather than customers purchasing once or infrequently.

Relationship marketing is important for its ability to stay in close contact with customers. By understanding how customers use a brand's products and services and observing additional unmet needs, brands can create new features and offerings to meet those needs, further strengthening the relationship.

Relationship marketing is based on the tenets of customer experience management (CEM), which focuses on improving customer interactions to foster better brand loyalty. While these interactions can still occur in person or over the phone, much of relationship marketing and CEM has taken to the web.

With the abundance of information on the web and flourishing use of social media, most consumers expect to have easy, tailored access to details about a brand and even expect the opportunity to influence products and services via social media posts and online reviews. Modern relationship marketing involves creating easy two-way communication between customers and the business, tracking customer activities and providing tailored information to customers based on those activities.

For example, an e-commerce site might track a customer's activity by allowing them to create a user profile so that their information is conveniently saved for future visits and so that the site can push more tailored information to them next time. Site visitors might also be able to sign in through Facebook or another social media channel, allowing them a simpler user experience and automatically connecting them to the brand's social media presence.

This is where CRM and marketing automation software can support a relationship marketing strategy by making it easier to record, track and act on customer information. Social CRM tools go further by helping to extend relationship marketing into the social media sphere, allowing companies to more easily monitor and respond to customer issues on social media channels, which in turn helps maintain a better brand image.

Question No. 4
Differentiate between the following
(a) Consumer goods and Industrial goods
(b) Selective and Intensive Distribution
(c) Advertising and Publicity
(d) Selling and Marketing (4×5 Marks)

Solution:

(a)

Industrial goods are materials used in the production of other goods, while consumer goods are finished products that are sold to and used by consumers. Industrial goods are bought and used for industrial and business use. They are made up of machinery, manufacturing plants, raw materials, and any other good or component used by industries or firms. Consumer goods are ready for the consumption and satisfaction of human wants, such as clothing or food.

Industrial Goods

Industrial goods are based on the demand for the consumer goods they help to produce. Industrial goods are classified as either production goods or support goods. Production goods are used in the production of a final consumer good or product, while support goods help in the production process of consumer goods such as machinery and equipment.

Unlike consumer goods, which are purchased by the general public, there are very specific buyers of industrial goods. They include component part buyers such as car manufacturers, those who purchase and install machinery, and distributors or anyone else who buys for resale.

Characteristics of industrial goods include:

Rational buying power: The decision and drive to buy industrial goods is rational compared to consumer goods, which are primarily purchased because of an emotional need.

Complex product lines: Industrial goods are usually complex in nature because they can be highly technical. Those who use them must be highly skilled.

Higher purchase value: Industrial goods typically come with a higher price tag because of their complex nature and limited target market.

High level of investment: Those who need to will often invest a lot of money to purchase industrial goods.

Companies involved in the industrial goods sector represent a variety of industries including (but not limited to) machinery, construction, defense, aerospace, and housing.

Consumer Goods

Consumer goods are tangible commodities produced and purchased to satisfy the wants of a buyer. That's why these goods are also referred to as final goods or end products. They are goods that consumers can typically find stocked on store shelves. As such, they can be purchased for use at home, school, or work or for recreational or personal use. Consumer goods are divided into three different types: Durable goods, non-durable goods, or consumer services.

Durable goods have a significant lifespan of three or more years. The consumption of a durable good is spread out over the entire life of the good, which causes demand for maintenance and upkeep. Bicycles, furniture, and cars are examples of durable goods.

Non-durable goods are purchased for immediate consumption or use. These goods generally have a lifespan of fewer than three years. Food, beverages, and clothing are examples of non-durable goods.

Consumer services are also intangible products or services produced and consumed at the same time. Haircuts and car washes are typical examples of consumer services.

Because of consumer buying patterns, consumer goods are typically classified into four different categories including convenience, shopping, specialty, and unsought goods.

Convenience goods: These products are ready to be purchased. Milk is one example of a convenience good.

Shopping goods: These goods require more planning and thought during the purchasing process by consumers. This category includes products like electronics and furniture.

Specialty goods: This category, which includes jewelry, is composed of goods that are deemed to be luxuries.

Unsought goods: Unsought goods require a niche market and are typically purchased by only a few members in the market, such as life insurance.

(b)

Intensive Distribution:

Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g., cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to choose from. In other words, if one brand is not available, a customer will simply choose another.

This alternative involves all the possible outlets that can be used to distribute the product. This is particularly useful in products like soft drinks where distribution is a key success factor. Here, soft drink firms distribute their brands through multiple outlets to ensure their easy availability to the customer.

Hence, on the one hand these brands are available in restaurants and five star hotels and on the other hand they are also available through countless soft drink stalls, kiosks, sweetmarts, tea shops, and so on. Any possible outlet where the customer is expected to visit is also an outlet for the soft drink.

Selective Distribution:

Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g., training) on them. Selective distribution works best when consumers are prepared to “shop around” – in other words – they have a preference for a particular brand or price and will search out the outlets that supply.

This alternative is the middle path approach to distribution. Here, the firm selects some outlets to distribute its products. This alternative helps focus the selling effort of manufacturing firms on a few outlets rather than dissipating it over countless marginal ones.

It also enables the firm to establish a good working relationship with channel members. Selective distribution can help the manufacturer gain optimum market coverage and more control but at a lesser cost than intensive distribution. Both existing and new firms are known to use this alternative.

(c)

Advertising is a one-way public communication that conveys a message regarding a product, service or company to the viewers, readers, and listeners. It is the biggest marketing tool used for non-personal promotion of goods and services to the potential customers, however, the most expensive one.

Advertising is a sort of monolog activity done with an aim to induce customers i.e. to grab the attention of the target audience in such a manner that they are ready to buy the advertised product. The basic objective of advertising is to increase the consumption of the product of the sender company.

Most of the company’s use this sales promotional tool because of its reach, a single message can reach millions of people in nanoseconds. It is a paid announcement by sponsors, which can be done with various mediums like radio, television, websites, newspapers, hoardings, magazines, social media like Facebook, etc.

Although, we should not trust the advertisement blindly because some of them are false or misleading one that does not give complete information about the product. It is just a technique of branding whereby a product is highlighted by its few qualities, to leave an impact on the consumer’s mind.

Definition of Publicity

The term publicity is a combination of two words public and visibility. It refers to the flow of information or fact, regarding general awareness about a subject or hot topic or any burning issue. Here the subject may include a person, product, service, business entity and so on. It is used to draw the attention of the people, for any subject with the help of broadcast media, print media or social media. It is not a promotional technique and thus free of cost.

Publicity can be printed or just aired. It is either be positive or negative, but it is true and real as well. It is an entirely unbiased opinion as it comes from an independent source like it can be given by an expert or a common man or mass media. As the third party has nothing to do with the company, their responses and reviews are given high weight.

However, it can be seen many times that rivals use this tool deliberately like they spread false rumors to injure the image of the company and ruin its market position too. Positive publicity boosts the consumption while the negative hampers the same.

Key Differences Between Advertising and Publicity

The following are the differences between advertising and publicity:

Advertising is to advertise a product or service of a company, for commercial purposes. Publicity is to publicize a product, service or company to provide information.

Advertising is what a company says about its own product, but Publicity is what others says about a product.

There is a huge investment to be made for advertising a single product however publicity does not require such kind of investment.

The key persons behind advertising are the company and its representatives. Conversely, Publicity is done by a third party which is not related to any company.

Advertising is under the control of the company which is just opposite in the case of publicity.

Advertising repeatedly occurs to grab the attention of the customers while Publicity is done only one-time act.

Advertising is always customer focused, i.e. the more creative the advertise, the more are the customers attracted to it while publicity is not done keeping such things in mind.

As advertising is done to promote a brand or a product so the credibility and reliability are relatively less in comparison to publicity, where the opinion comes from an independent source.

Advertising always speaks the goodness about a product, to persuade the target audience to buy it. In contrast to publicity, it is unbiased, and so it will speak the reality, no matter whether it is goodness or illness.

(d)

1. Selling :

Selling refers to creating products and selling them to customers. It revolves around the needs and interest of the seller. It is a only an integrated part of the marketing process as its only focus is to manufacture product first and then selling them to customer and it is sales volume oriented not much concern about customer’s satisfaction. It views customer as the last link in business. Selling seeks to convert product into cash. In selling sell is the primary motive and it is more internal company oriented. It is based on inside-out perspective.

2. Marketing :

Marketing refers to finding wants of people/customer and fill them. It revolves around the needs and interest of the consumer. It is a wider term consisting of number of activities like identifying the market first, customer’s needs, product development to meet customer’s need, fixing price and then selling the product to the customer. It views the customer as the very purpose in business. Marketing seeks to convert customer needs into products. In marketing customer satisfaction is the primary motive and it is more external market oriented. It is based on outside-in perspective.

Difference between Selling and Marketing :

S.No.	SELLING	MARKETING
01.	Selling refers to creating products and selling them to customers.	Marketing refers to finding wants of people/customer and fill them.
02.	Selling revolves around the needs and interest of the seller.	Whereas Marketing revolves around the needs and interest of the consumer.
03.	It emphasis more on product or service.	It emphasis more on consumer needs and wants.
04.	Selling is a only an integrated part of the marketing process.	While marketing is a wider term consisting of number of activities.
05.	Selling is based on short term business planning.	Marketing is based on long term business planning.
06.	It manufactures the product first.	It identifies the market first.
07.	It is sales volume oriented.	It is customer satisfaction with profit oriented.
08.	It views business as a goods producing and selling process.	It views business as a consumer satisfying process.
09.	Here seller is considered as king pin of market.	Here consumer is considered as king pin of market.

Question No. 5
Comment briefly on the following statement:
(a) “Rural marketing in India offer huge opportunities and throw challenges to marketers”.
(b) “The basic purpose of marketing research is to facilitate decision making process”.
(c) “The rate of failure of new products is very high”.
(d) “Market Communication plays an important role in a company’s overall marketing program”. (4×5 Marks)

Solution:

Monday 17 October 2022

Question No. 4 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 4.
(a) What do you understand by the term Advertising? Discuss the various types of advertising and the major role that advertising plays in the promotion of a firms offering. Explain by taking one example each from a product and a service of your choice.

In modern times advertising prevails in all walks of human life. It has acquired the distinction of being the most visible and glamorous and impactful method of marketing communication. Advertising is defined as any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. Some of the major marketing and communication functions performed by advertising today include to inform, entertain persuade, influence, remind, reassure and add value to the product or service advertised. While sales promotion being a key element of promotion mix makes use of short term incentives to encourage purchase of product or service. Before going to touch upon the role of advertising and sales promotion and their managerial aspects, let us acquaint ourselves with how advertising and sales promotion works and their dimensions in overall marketing communication.

In order to perform the various marketing and communication functions listed above, according to Paul E.J. Gerhald, advertising moves through the following stages before accomplishing its purpose:

it gets planned and brought into existence
it is reproduced and delivered and exposed to people
it is received and assimilated
it affects ideas, intentions and attitudes
it affects buying and buying process
it responds to time (situation and repeated exposure)
it affects trade effort and supply
it affects product consumption
it changes sales and profits
it changes the market (size, quality mix, intensity competition, trade relations, consumerism etc.)

TYPES OF ADVERTISING

Depending upon the nature of the task involved, type of product represented or the focus of activity transacted, advertising efforts are grouped into various types. Let us take a few examples.
Advertisements for machinery and machine tools form part of industrial advertising, and the ones for footwear, cornflakes or edible oil etc. the consumer advertising.
The advertisements aimed at improving the corporate image are forms of corporate advertising and the ones promoting a company's products, the product advertising.
Likewise, advertisements promoting the consumption of tea or carpets are called primary demand creating advertisements whereas those relating to specific brand such as Brooke Bond's `Tajmahal' or Nescafe', selective brand advertising is appropriate.
Advertisement aimed at effecting immediate sale of the product advertised is called direct advertising, and the ones performing tasks like announcing the launch of the new product, building purchase intentions, creating interest in customers or changing their attitudes towards the product, are termed the indirect action advertising.
The advertisements which are sponsored and paid for by the manufacturers are manufacturer advertising, and such advertisements whose costs are shared by the manufacturer and wholesalers or retailers are co-operative advertising. Co-operative advertisements aim at increasing the demand of a specific product of a manufacturer through a particular wholesaler or retailer.
On the other hand, when a retailer advertises for his shop entirely on his own to attract traffic to his shop it is retail advertising.

In short, the major types of advertising are: industrial and consumer, product and institutional, primary demand and brand-demand, direct (sales) demand and indirect (awareness, intentions and attitudes) action advertising, and manufacturer, co- operative and, retail advertising.

ROLE OF ADVERTISING

In the pursuit of its purpose, the economic and social effects of advertising have become the subjects of continuing debate. A quick flavor of the arguments put forward on both the sides can be had from Table 1. The table presents two viewpoints, one considering advertising as an information disseminating utility function and the other viewing advertising as a source of market power.

On balance, advertising has carved an indispensable place for itself in the marketing mix of a firm. Philip Kotler very aptly refers to the following situations where advertising is likely to make greater contribution. The situations are:

when buyer awareness is minimal
when industry sales are rising rather than remaining stable or declining
when the product has features normally not observable to the buyer
when the opportunities for product differentiation are strong • when primary instead of secondary motives can be tapped.
Are, there some limitations to the role of advertising? The answer obviously is in the. affirmative. Advertising, in the words of Richard H. Stansfield, cannot do the following:
sell a bad product twice
sell an overpriced or otherwise non-competitive product
sell a poorly distributed product
sell a seasonal product during non-season /out of season (significantly)
sell products to persons having no use for them
work overnight
do the selling job alone.

During the late 80’s the usefulness of advertising, which for long been accused as a capitalist tool and a bane of market economy, was realised by planned and communist economies too. While Yugoslavia, USSR, Poland and Hungary shed their hostility to advertising quite a few years ago, China welcomed advertisement propelled marketing and hosted the Third World Advertising Congress in Beijing during June 1987. The Economic Times in its marketing and advertising column reported that China's advertising expenditure in 1985 was around $ 200 million.

Advertising constitutes one of the four components of a firm's promotion mix which in turn forms an integral element of the firm's marketing mix. In order to implement the marketing concept and to achieve the objective of integration among different elements of marketing mix, it is necessary that the advertising function be systematically planned. In particular, the link of advertising with the promotion and marketing objectives of the firm on the one hand, and with factors like product positioning objective, role of sales force, dealer support plan and the buying habits of consumers, on the other hand, must be clearly established. This link helps a firm to achieve the desired push-pull strategy objectives, and enables the product to have a distinct personality. The task involved in advertising is, therefore, complex and its management requires systematic decision-making. Charles Ramond advocates appropriate research to precede each stage of an advertising campaign.

(b) Explain the nature and role of Personal Selling. Discuss the steps involved in the selling process by taking an example of a financial software product for a medium enterprises

Personal selling, as the name implies, is an individual to individual selling. It, therefore, carries the distinctive advantage of flexibility in terms of tailoring the sales presentation/interaction to the needs of the buyer. Another unique advantage comes from its two-way communication, and human interaction thereby providing instant feedback. These two unique advantages make personal selling the most result-oriented promotion method.

Generally speaking, the nature of goods/products marketed, as well as the distribution system adopted; determine the role of personal selling in a firm. Therefore, personal selling is used extensively in the case of industrial goods, where the salesperson performs functions such as assisting the customer in designing the product specifications, product installation, product commissioning, solving technical problems through providing service after sales and helping customer to have optimal utilization of the product. In the case of consumer goods, on the other hand, the role of personal selling gets usually restricted to the dealer/distributor/stockiest level. The scope of the tasks performed include obtaining periodic orders, ensuring supplies, offering tips to dealers on product display and attaining desired levels of stock movement. Similarly, the role played by personal selling is more in a firm which uses door-to-door selling method through its sales force than in the firm which sells through large stockiest, distributors or sole- selling agents.

Notwithstanding the varying role of personal selling in the strategies followed by different companies, the nature of the selling function requires that the following tasks be performed:

sales generation
feedback and market information collection
provision of customer service covering aspects such as delivery of goods, warranty administration, timely availability of repair and spares etc.
performance of sales support activities such as monitoring distribution function, credit collection, improving manufacturer-dealer relations, implementing the promotional programmes, etc.

In practice, the complexity of the selling task actually performed varies from company to company even under the above four categories.

THE SELLING PROCESS

Up to this point we were discussing the role of personal selling and the degree of creativity required in a salesperson to perform his task satisfactorily. Now we will take a look at the selling process followed for completing a sale. Though the steps in the selling process discussed below will be applicable to most of the selling situation. What will differ will be the degree of importance given to each step of the process under different selling situations. The basic steps in the selling process . A salesperson must become accomplished at performing the selling steps. These steps are:

Step 1 Preparation:

Before starting the selling job, a salesperson should make a valuable investment of time and resources to know the products he will be selling, know the customers (i.e. customer types, buying motives and buying process) to whom he will be selling; know the competitors against whom he will be selling, and finally know the philosophy, policies and range of products of his company, In short, he should be well equipped with the fundamentals of selling.

Step 2 Prospecting:

This step of the selling process deals with locating and preparing a list of prospective customers. Prospects can be located through (1) identifying the potential of buying more in the existing customers, (2) recommendations of existing customers, (3) winning back lost customers, (4) attracting competitor' s customers, (5) customers' information request from advertisement, (6) newspaper announcements, (7) public records, (8) directories like telephone, trade association etc., (9) other salesmen, (10) references from friends, neighbours and business associates, and (11) cold canvassing, that is, going from door-to-door.

The located prospects should first he qualified broadly in terms of (i) whether they want the product and how intense their want is (ii) whether they have the adequate purchasing power, and (iii) whether and who possesses the power or authorisation to purchase and spend the required money. The qualifying of prospects is the process of separating the prospects from the suspects. It is worth-mentioning here that the ability to prospect is the most essential ability of a successful salesperson. A good salesperson keeps examining, weeding out the already tapped prospects and updating his lists of prospects, and remains in constant search of new prospects.

Step 3 Pre approach:

The qualifying process of separating prospects from suspects further requires that the salesperson should possess detailed information relating to the prospects in terms of existing products consumed, their scale of operation, product range, their buying size, frequency, budget and the process, etc. In short, obtain customer orientation. The sources of information for the purpose include company annual reports, other salespersons, other suppliers to the prospects, census of manufacturers, professional journals, newspapers and market intelligence, The availability of the above information in a detailed manner as possible will help the salesperson in ranking the prospect in terms of their priority to the company. Good salespersons use the above information in classifying the prospects in A, B and C categories in terms of the immediacy of the attention to be given to them.

Step 4 Approach:

`First impression counts'. As such, this step needs to be carefully planned. This step has two distinct parts. One, of meeting the customer with a positive set of mind, and the second, is make an impact on him. For the former, referrals of reliable persons known to prospects, calling after fixing an appointment, use of door openers, help. For the latter the salesperson should equip himself with the key benefit to be emphasised, samples or new literature to be handed over, etc.

Step 5 Sales Presentation:

Through advance information relating to the prospect every effort should be made to match the product offered to the needs/problems faced by the customer. The sales presentation should generally go according to the AIDA-attention, interest, desire, and action approach. How can this be done? Use of key benefit or a problem solver, or a unique act of the salesperson results in gaining attention. When used attentively this part also provides opportunity to get the main point of the initial statements made by the prospect. The presentation should proceed in a straightforward manner to help the prospect know that you understand his problem and that is the reason of your being there. To convince the prospect as early as possible, the salesperson should offer evidence through demonstration of the product, use of exhibits, models, sharing Of acts, citing examples of its successful applications/usage, showing testimonials, etc. The overall approach should be to build credibility and confidence in the supplying company, its products, and also in its competence to render specialised type of service to the, complete satisfaction of its customers.

The flexibility of the sales presentations can range from the `Canned' or previously prepared presentation, to those allowing the salesperson complete freedom in the ' presentation. Though both the extremes, and even the hybrid of the two, have their own situational suitability, the important point to note is that salesmanship, being a showmanship function, must arouse active participation of the prospect in the presentation process. This can be done by introducing some action which would keep the prospect captivated. One possible way would be a joint review of the problem faced by the prospect. Another is helping the prospect imagine the projected benefits of owning the product.

Step 6 Handling Objections:

It is in the last phase of the sales presentation step that the prospects start expressing doubts, or raising objections whether relating to price, need for more time to think, satisfied with the existing product/supplier or product quality claims. These doubts or objections should be welcome and they should be answered with confidence. There is certainly no doubt that the prospect has to be thoroughly, convinced that the product would satisfy his need. The ability of the salesperson of mind reading of the prospects enables him to anticipate the prospect's objections and reactions. The golden rules for handling objections are: (1) welcome the objection and show respect to the prospect, and (2) do not argue with the prospect. Even when the objections raised are half backed or trivial in nature, the salesperson should handle the situation tactfully. Only in extreme necessity, should a salesperson ask the prospect to adequately explain his problem faced. Even under these circumstances courtesy should not be lost sight of, and while the discussion is on, the salesperson should start recounting the benefits of the product agreed upon, and lead the prospect to make a favourable decision. It should be remembered that handling objections sharpens the selling skills of the salespersons.

Step 7 Closing the Sale:

Closing is that aspect of the selling process in which the salesperson asks the prospect to buy the product. There is a critical point during each presentation when the salesperson should ask for the order. Pending the location of the critical point, as the objections are being met, the salesperson should help reduce the choice of options, summarise the benefits of buying, and the consequences of not buying, and if need be, make use of the big idea appeal of buying `now' at that moment. The salesperson should have the ability of catching the buying signals given by the prospect and should act on them fast. Some such signals are changing the sitting/standing position and moving closer to the product; reading the instructions on the product; perusing the testimonials; showing hesitation in being able to afford; asking for another demonstration, if applicable; checking the warranty or asking questions relating to warranty terms. These signals show that the time is ripe to start taking the order.

Step 8 Post-sale Follow-up:

The selling process does not come to an end by writing the order. A few repetitions reassuring the benefits of the product keep the customer sold. Follow-up provides an opportunity to ensure that the product is being rightly used, and if necessary to re-explain the method of using, handling, and storing of the product when not in use. This builds favourable feelings and nurtures strong buyer- seller relationships. Post-sale follow-up not only reinforces the customer's confidence in the salesperson and his company but also tends to keep competition out. This also helps generate repeat business and valuable word-of-mouth publicity. The follow-up is a good source of feedback too. Let us conclude this section by stating that although the eight steps of the selling process are essential in spirit, these may not always be followed. This could be partly the (1) the selling situation involved (e.g., in the case of insider order-taker or retail salesperson) the first three steps of the selling process are generally not applicable as the customer walks into the store for buying a product, (2) the expertise of the salesperson (such that he can ignore or assume some information), or (3) the seller's market of the product where customers generally queue up for the product.

Question No. 3 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 3.
(a) Discuss the various factors that affect the Pricing decisions in a firm. Explain the three cost oriented pricing approaches that a firm can use in pricing their products/services.

Pricing decisions are usually determined by cost, demand and competition. We shall discuss each of these, factors separately. We take demand first.

Demand

The popular `Law of Demand' states that "higher the price; lower the demand, and vice versa, other things remaining the same''. In season, due to plentiful supplies of certain, agricultural products, the prices are low and because of low prices, the demand for them increases substantially. You can test the validity of this law yourself in your daily life. There is an inverse relationship between price and quantity demanded. If price rises, demand falls and if the price falls, the demand goes up. Of course, the law of demand assumes that there should be no change in the other factors influencing demand except price. If any one or more of the other factors, for instance, income, the price of the substitutes, tastes and preferences of the consumers, advertising, expenditures, etc. vary, the demand may rise in spite of a rise in price, or alternatively, the demand may fall in spite of a fall in price. However, there are important exceptions to the law of demand. There are some goods which are purchased mainly for their `snob appeal'. When prices of such goods rise, their snob appeal increases and they are purchased in larger quantities. On the other hand, as the price of such goods falls, their snob appeal and, therefore, their demand falls. Diamonds provide a good example.

In the speculative market, a rise in prices is frequently followed by larger purchases and a fall in prices by smaller purchases. This is specially applicable to purchases of industrial raw materials. More important than the law of demand is the elasticity of demand. While the law of demand tells us the direction of change in demand, elasticity of demand tells us the extent of change in demand. Elasticity of demand refers to the response of demand to a change in price. It is necessary for the marketer to know what would be the reaction of the consumers to the change he wishes to make in the price. Let us take some examples. Smokers are usually so addicted to smoking that they will not give up smoking even if prices of cigarettes increase. So also the demand for salt or for that matter of wheat is not likely to go down even if the prices increase. Another example of inelastic demand is the demand for technical journals, which are sold mainly to libraries. On the other hand, a reduction in the price of television will bring in more than proportionate increase in demand. Some of the factors determining the price-elasticity of demand are the nature of the commodity, whether it is a necessity or luxury, extent of use, range of substitutes, urgency of demand and frequency of purchase of the product.

The concept of elasticity of demand becomes crucial when a marketer is thinking of lowering his price to increase the demand for his product and to get a larger market share. If the increase in sales is more than proportionate to the decline in price, his total sale proceeds and his profits might be higher. If the increase in sales is less than proportionate, his total sales proceeds will decline and his profits will definitely be less. Thus knowledge of the elasticity of demand for his products will help a marketer to determine whether and to what extent he can cut the prices or pass on the, increase in costs to the consumer. It may also be noted that the price elasticity of demand for a certain commodity and the price elasticity of demand for a certain brand of that commodity may be radically different. For example, while the demand for cigarettes as such, may be highly inelastic, the price elasticity of demand for Four Square or ‘Charms’ may be highly elastic. The reasons for this are weak brand loyalty and the availability of substitutes.

Competition The degree of control over prices which the sellers may exercise varies widely with the competitive situation in which they operate. Sellers operating under conditions of pure competition do not have any control over the prices they receive. A monopolist, on the other hand, may fix prices according to his discretion. Sellers operating under imperfect competition may have some pricing discretion. The marketer, therefore, needs to know the degree of pricing discretion enjoyed by him. Let us take up each of these cases individually.

Perfect competition is said to exist when (i) there are a large number of buyers and sellers, (ii) each purchasing and selling such a small quantity that their withdrawal from the market will not affect the total demand and supply, (iii) the products sold by sellers are homogeneous in nature.

In pure competition, all that the individual seller can do is to accept the price prevailing in the market, i.e. he is in the position of a Price Taker. If he wants to charge a higher price, buyers will purchase from other sellers. And he need not charge less since he can sell his small supply at the going market price, Under monopoly, a single producer has complete control of the entire supply of a certain product/service offering. IRCTC (Indian Railway Catering and Tourism Corporation) and HAL (Hindustan Aeronautics Limited) are examples of monopoly. The main features of monopoly are (i) there is only one seller of a particular good or service and (ii) rivalry from the producers of substitutes is so remote that it is almost insignificant. As a result, the monopolist is in a position to set the price himself. Thus, he is in the position of a Price Setter. However, even in the case of monopoly, there are limits to the extent to which he can increase his prices. Much depends on the elasticity of demand for the product. This, in turn, depends on the extent of availability of substitutes for the product. And in most cases, there is rather an infinite series of closely competing substitutes. Even railways and telephones organisations must take into account potential competition by alternative services-railways may be substituted by motor transport and telephone calls by telegrams during the eighties. Today, it’s SMS on mobile phone and other gadgets. The closer the substitute and greater the elasticity of the demand for a monopolist's product, the less he can raise his price without frightening away his customers. High price of oil has led to development of alternative sources of energy.

Oligopoly is a market situation characterised by a few sellers, each having an appreciable share in the total output of the commodity. Examples of oligopoly are provided by the automobiles, cement, tyre, oil & gas, aluminum & steel, cable TV services, cellular phone services, airline services, cigarettes, and a host of other product/commodities. In each-of these industries, each seller knows his competitors individually in each market. Each oligopolist realises that any change in his price and advertising policy may lead rivals to change their policies. Hence, an individual firm must consider the possible reactions of the other firms to its own policies. The smaller the number of firms, the more interdependent are their policies. In such cases, there is a strong tendency towards close collaboration in policy determination both in regard to production and prices. Thus, oligopolists follow the philosophy of `live and let live'. Two examples of this may be mentioned here. In response to tenders invited by the Director General of Civil Supplies and Disposals, the three principal manufacturers of storage batteries, viz. Chloride India, Standard Batteries and AMCO Batteries, quoted almost identical prices. Oligopolistic industries are usually characterised by what is known as price leadership-a situation where firms fix their prices in a manner dependent upon the price charged by one of the firms in the industry, called the price leader. The price leader has lower costs and adequate financial resources, a substantial share of the market and a reputation for sound pricing decisions. Price leaders with the strongest position in the market may often increase their prices with the hope that competitors will follow suit. Price followers may delay raising their prices in the hope of snatching a part of the market share away from the leader. Duopoly is a form of oligopoly where a market is characterized by two companies trying to dominate the market by competing with each other, thereby reducing the chances of a monopolistic market condition examples of duopolies in Indian market are Zomato vs. Swiggy both are into the business of online food ordering platforms, Ola vs. Uber are cab aggregators offer passenger transportation services and Flipkart vs. Amazon both being e-commerce companies/online stores offering a wide range of merchandise to the customer at their doorstep. Monopolistic competition is a market situation, in which there are many sellers of a particular product, but the product of each seller is in some way differentiated in the minds of consumers from the product of every other seller. None of the sellers is in a position to control a major part of the total supply of the commodity but every seller so differentiates his portion of the supply from the portions sold by others, that buyers hesitate to shift their purchases from his product to that of another in response to price differences. At times, one manufacturer may differentiate his own products. Consumer products, consumer durables, automobiles (both two wheelers & cars) banking and NBFC’s, software development services and telecom services fall under the purview of this category.

Product differentiation is more typical of the present day economic system, than either pure competition or monopoly. And, in most cases, an individual firm has to face monopolistic competition. It tries to maintain its position and promote its sales by either (i) changing its price and indulging in price competition, or (ii) intensifying the differentiation of its product, and/or (iii) increasing its advertisement and sales promotion efforts.

ROLE OF COSTS IN PRICING

There is a popular belief that costs determine price. It is because the cost data constitute the fundamental element in the price setting process. However, their relevance to the pricing decision must neither be underestimated nor exaggerated. For setting prices, apart from costs, a number of other factors have to be taken into consideration. Demand is of equal, and, in some cases, of greater importance than costs. An increase in cost may appear to justify an increase in prices yet the demand situation may not permit such an increase. On the other hand, an increase in demand may make increase in prices possible, even without any increase in costs. Very often, price determines the cost that may be incurred. The product is tailored to the requirements of the potential consumers and their capacity to pay for it. Decades ago when radio manufacturers in India realised that if they have to capture the mass market prevailing in India, they have to price it at low level which could be done only by reducing costs-reducing the number of wave-bands in the radio. And now a single wave radio is available at around Rs. 100. Given the price, we arrive at the cost working backwards from the price consumers can afford to pay. Over a period, cost and quality are adjusted to the given price. If costs were to determine prices, why do so many companies report losses? There are marked differences in costs as between one producer and another. Yet the facts remains that the prices are quite close for a somewhat similar product. This is, if anything, is best evidence of that costs are not the determining factor in pricing.

PRICING METHODS

After discussing the various considerations affecting pricing policies, it would be useful to discuss the alternative pricing methods most commonly used. These methods are:

1. Cost-plus or Full-cost pricing

This is most common method used in pricing. Under this method, the price is set to cover costs (materials, labour and overhead) and a predetermined percentage for profit. The percentage differs strikingly among industries, among members-firms and even among products of the same firm. This may reflect differences in competitive intensity, differences in cost base and differences in the rate of turnover and risk. In fact, it denotes some vague notion of a just profit. What determines the normal profit? Ordinarily margins charged are highly sensitive to the market situation. They may, however, tend to be inflexible in the following cases: (i) they may become merely a matter of common practice, (ii) mark-ups may be determined by trade associations either by means of advisory price lists or by actual lists of mark-ups distributed to members, (iii) profits sanctioned under price control as the maximum profit margins remain the same even after the price control is discontinued. These margins are considered ethical as well as reasonable.

In India, cost-plus method is widely used. There are two special reasons which could explain its wide use in India.

i. The prevalence of sellers' market in India makes it possible for the manufacturers to pass on the increases in costs to the consumers.

ii. Costs plus a reasonable margin of profit are taken into consideration for the purposes of price fixation in the price-controlled industries in India. Thus, this method has the tacit approval of the Government.

iii. To conclude, cost-plus is a pricing convention relying on arbitrary costs and arbitrary mark-ups. It is adopted because it is simpler to apply.

2. Pricing for a rate of return, also called target pricing

An important problem that a firm might have to face is one of adjusting the prices to changes in costs. For this purpose the popular policies that are often followed are as under:

i. Revise prices to maintain a constant percentage mark-up over costs.

ii. Revise prices to maintain profits as a constant percentage of total sales

iii. Revise prices to maintain a constant return on invested capital.

3. Marginal cost pricing

Both under full-cost pricing and the rate-of-return pricing, prices are based on total costs comprising fixed and variable costs. Under marginal cost pricing, fixed costs are ignored and prices are determined on the basis of marginal cost. The firm uses only those costs that are directly attributable to the output of a specific product. With marginal cost pricing, the firm seeks to fix its prices so as to maximise its total contribution to fixed costs and profit. Unless the manufacturer's products are in direct competition with each other, this objective is achieved by considering each product in isolation and fixing its price at a level which is calculated to maximise its total contribution.

4. Going rate pricing

Instead of the cost, the emphasis here is on the market. The firm adjusts its own price policy to the general pricing structure in the industry. Where costs are particularly difficult to measure, this may seem to be the logical first step in a rational pricing policy. Many cases of this type are situations of price leadership. Where price leadership is well established, charging according to what competitors are charging may be the only safe policy. It must be noted that `going-rate pricing' is not quite the same as accepting a price impersonally set by a near perfect market. Rather it would seem that the firm has some power to set its own price and could be a price maker if it chooses to face all the consequences. It prefers, however, to take the safe course and conform to the policy of others.

5. Customary pricing

Prices of certain goods become more or less fixed, not by deliberate action on the sellers' part but as a result of their having prevailed for a considerable period of time. For such goods, changes in costs are usually reflected in changes in quality or quantity. Only when the costs change significantly the customary prices of these goods are changed. Customary prices may be maintained even when products are changed. For example, the new model of an electric fan may be priced at the same level as the discontinued model. This is usually so even in the face of lower costs. A lower price may cause an adverse reaction on the competitors leading to a price war so also on the consumers who may think that the quality of the new model is inferior. Perhaps, going along with the old price is the easiest thing to do. Whatever be the reasons, the maintenance of existing prices as long as possible is a factor in the pricing of many products. If a change in customary prices is intended, the pricing executive must study the pricing policies and practices of competing firms and the behavior and emotional make-up of his opposite number in those firms. Another possible way out, especially when an upward move is sought, is to test the new prices in a limited market to determine the consumer reaction.

(b) Enterprises are sensing the need to become more integrated in their marketing communication efforts. Discuss with an example where you have been a part of the integration process or may have come across the said integration.

In any communication process several elements and steps are involved. In the context of marketing communication, a manufacturer or company or brand is the source (or sender), while prospective or existing consumers are at the receiver of the communication. Message is the product information or details which are to be communicated to the target group in a creative and interesting way. The channel is various media options such as newspapers, TV, radio, magazines, hoardings etc. which can be used to reach the target audience. The success of a marketing communication activity depends on a company’s ability to convey the message effectively in a manner in which the customers should understand and interpret the intended message. A marketing communication is considered effective if it achieves its objectives such as increased sales, improved brand recall, increased awareness etc. This is equivalent to the feedback, as discussed in the process of communication.

Having accepted as one of the important ‘P’s of marketing mix, marketing communication is synonymous to Promotion and the elements include (Advertising, Publicity, Sales Promotion and Personal Selling) which are employed by the firm for the purpose of awareness creation, image building, and for sales all the four methods constitute promotional mix elements. Every one of us does come across various promotional mix elements on a daily basis. When we read newspaper in the morning or watch news channel or watch our favorite TV show or watch music videos on YouTube, or visit a nearby shop or store to buy some product, when we go to a shopping mall for shopping or entertainment, the hoardings on the street, wall paintings, banners, posters while traveling by road; we come across these elements of promotional mix viz. Advertising, Publicity, Public Relations (PR), and Sales Promotion messages etc.

In simple words, Integrated Marketing Communication (IMC) brings together all the tools of marketing communication to direct consistent messages to a firm’s consumers. It is the strategic integration of all the elements of promotional mix and other marketing activities (such as event marketing, sponsorships, BTL activities, digital marketing etc.) to send consistent messages to the buyers of a company’s products or services. According to Smith, Berry and Pulford (1999), IMC is: “The strategic analysis, choice, implementation and control of all elements of marketing communications which efficiently, economically and effectively influence transactions between an organization and its existing and potential customers, consumers and clients.”It is strategic because it is affected by the way in which an organization aims to achieve its long-term goal. An IMC process carefully chooses, execute and manage various elements to influence customers’ buying behavior”. IMC may also be defined as a process that involves planning, conception, integration and implementation of a variety of marketing communication activities to influence the behavior of the target group. Let us understand it with a simple example.

Assume that a company manufactures gearless scooters and has recently launched a new model by the brand name ‘Drivo’. You happen to see their full-page advertisement in the morning newspaper. On your way driving to your office, you notice a big hoarding while waiting at a traffic signal. Further, while surfing your social media account during lunch at office, you come across a pop-up ad of ‘Drivo’. While leaving office for home, you see that a guy is sitting beside a canopy tent which is installed in the parking of your office building. On close observation you find the newly launched ‘Drivo’ inside the canopy tent. Finally, at home, while watching cricket match on TV, you see a 30-sec advertisement of ‘Drivo’ during commercial break. The above is a hypothetical example to explain how a brand makes all attempts to reach their potential market segments with messages and being visible by using all the elements of the promotion mix. This explains clearly what IMC is all about. In this case, the company was using a combination of various tools (Advertising, Digital Marketing, and BTL activity, Outdoor etc.) to communicate to their potential consumers in awareness creation about the brand Drivo and to persuade them to consider purchasing.

Each IMC tool has its own strategic and tactical importance in the whole marketing communication process and promotional efforts pertaining to the firm’s product or service offering. However, when all these tools (as depicted in Table 2) are used in the right combination and proportion, then the impact of the communication will be visible and its effectiveness becomes measurable.

Let us now look at each of the IMC tool and understand their role and importance in brief:

a) Media Advertising is generally best suited for products or services targeted at mass markets and require huge budgets. It is one-sided communication and hence, customer feedback is not received. We regularly come across advertisements in TV, radio, newspapers, magazines etc. which falls under the category of Media Advertising.

b) With the advent of new emerging communication and mobile technologies advertising through modern media viz. internet, social media, mobile etc. is gaining momentum. This falls under the category of Digital Marketing.

c) While you travel by road, then you are bound to come across various hoardings, banners, wall paintings, advertisements on buses or taxies etc. This is another important IMC tool and known as OOH (Out-of-Home). OOH is mainly useful for local or regional brands which intend to promote their offerings and wish to persuade consumers of that town or region to buy them.

d) Further, you must have seen wall hangings, posters, in-store banners while visiting shopping mall, departmental stores. This is another element of IMC tools i.e. Pointof-Sale (POS) Advertising. They are helpful to trigger impulse purchases of the products or services of different brands which are available at the store for sale.

e) As an IMC tool, sales promotion is another important element which is helpful in generating immediate sale. It is defined as ‘short term incentives given to customers and channel partners to boost sales’. Promotional messages related to offers such as Buy 2, Get One Shirt Free, 20% Off on ‘X’ Pizza Brand, Exchange Your Old Watch with New ‘Y’ Watch etc. are some of the examples of sales promotion activities initiated by a company or brand to create desire in the customer’s mind so that he / she buys the product or service.

f) Further, events are great way to socialize and reach to the masses to inform and persuade the target audience. They may be of various types ranging from charity, shows, cultural events, games & sports and corporate events or celebrations etc each of these serves a different goal. Similarly, sponsorship is financial association of a company with other companies or events. It helps to create cross media ties and, in forming and endorsing the brand image and values. For example, MPL Sports is the new kit / apparel sponsor for Indian cricket team.

g) Another IMC tool, personal selling is generally used for selling or promoting technical, industrial and referral products or in an institutional selling scenario.

In short, each IMC tool plays an important role in overall IMC strategy of a company or brand to deliver a unified, consistent message to its target audience. And, in today’s business scenario, IMC is inevitable because no company or brand can survive by using only one or two promotional tools to send consistent communication to prospective or existing customers

Have you tried the magnifying glass and sun experiment in your childhood? When we hold a magnifying glass under the sun, it concentrates the sun's light onto a small area and makes the sun’s heat much stronger. This may make a flammable object burn. This small experiment explains the importance of IMC in a very simple way. In a marketing communication scenario, IMC acts as a magnifying glass which integrates various marketing and promotional tools to ensure synergy and avoid duplication

An IMC strategy integrates various marketing communication tools to maintain communication consistency and ensure resource optimization. There are different online and offline communication tools which make a communication about a product or service to reach out to target group in many ways. In order to ensure clarity of a brand’s message about a product / service, integration of all the tools becomes crucial. The importance of IMC approach is growing continuously consistently both among the large as well as small firms. It’s being adopted among the marketers of both consumer as well as B2B products and service businesses. IMC is really helpful as it makes a firm’s marketing communication program more efficient and effective. An IMC strategy offers several benefits such as it ensures consistent and clear communication, optimizes resource utilization, avoids replication, helps to have competitive edge and consolidates a brand’s image and public perception also.

Oasis Academy of Education

Tuesday 4 July 2023

IGNOU ASSIGNMENT SOLUTIONS - MCO-06 - MARKETING MANAGEMENT - MCOM - SEMESTER 2

IGNOU ASSIGNMENT SOLUTIONS

MASTER OF COMMERCE (MCOM - SEMESTER 2)

MCO-06 - MARKETING MANAGEMENT

MCO-06/TMA/2022-2023

Question No. 1
What do you mean by Buyer Behavior? Discuss various social and Cultural factors which influence the buyer behavior? (20 Marks)

Solution:

Question No. 2
What are the objectives of Pricing? Discuss the basic methods of Price Determination. (20 Marks)

Solution:

Pricing Methods:

Question No. 3
Write short notes on the following:
(a) Positioning
(b) Warehousing
(c) Personal Selling
(d) Relationship Marketing. (4×5 Marks)

Solution:

(a) Positioning

(b) Warehousing

(c) Personal Selling

(d) Relationship Marketing

Question No. 4
Differentiate between the following
(a) Consumer goods and Industrial goods
(b) Selective and Intensive Distribution
(c) Advertising and Publicity
(d) Selling and Marketing (4×5 Marks)

Solution:

Solution:

Monday 17 October 2022

Question No. 4 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 4.
(a) What do you understand by the term Advertising? Discuss the various types of advertising and the major role that advertising plays in the promotion of a firms offering. Explain by taking one example each from a product and a service of your choice.

(b) Explain the nature and role of Personal Selling. Discuss the steps involved in the selling process by taking an example of a financial software product for a medium enterprises

Question No. 3 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 3.
(a) Discuss the various factors that affect the Pricing decisions in a firm. Explain the three cost oriented pricing approaches that a firm can use in pricing their products/services.

(b) Enterprises are sensing the need to become more integrated in their marketing communication efforts. Discuss with an example where you have been a part of the integration process or may have come across the said integration.

IGNOU ASSIGNMENT SOLUTIONS - MCO-04 - Business Environment - MCOM - SEMESTER 1

Search This Blog

About Me

Report Abuse

Tuesday 4 July 2023

IGNOU ASSIGNMENT SOLUTIONS - MCO-06 - MARKETING MANAGEMENT - MCOM - SEMESTER 2

IGNOU ASSIGNMENT SOLUTIONS

MASTER OF COMMERCE (MCOM - SEMESTER 2)

MCO-06 - MARKETING MANAGEMENT

MCO-06/TMA/2022-2023

Question No. 1What do you mean by Buyer Behavior? Discuss various social and Cultural factors which influence the buyer behavior? (20 Marks)

Solution:

Question No. 2What are the objectives of Pricing? Discuss the basic methods of Price Determination. (20 Marks)

Solution:

Pricing Methods:

Question No. 3Write short notes on the following: (a) Positioning (b) Warehousing (c) Personal Selling (d) Relationship Marketing. (4×5 Marks)

Solution:

(a) Positioning

(b) Warehousing

(c) Personal Selling

(d) Relationship Marketing

Question No. 4Differentiate between the following (a) Consumer goods and Industrial goods (b) Selective and Intensive Distribution (c) Advertising and Publicity (d) Selling and Marketing (4×5 Marks)

Solution:

Solution:

Monday 17 October 2022

Question No. 4 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 4. (a) What do you understand by the term Advertising? Discuss the various types of advertising and the major role that advertising plays in the promotion of a firms offering. Explain by taking one example each from a product and a service of your choice.

(b) Explain the nature and role of Personal Selling. Discuss the steps involved in the selling process by taking an example of a financial software product for a medium enterprises

Question No. 3 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

Solutions to Assignments

MBA and MBA (Banking & Finance)

MMPC-006 - Marketing Management

MMPC-006/TMA/JULY/2022

Question No. 3. (a) Discuss the various factors that affect the Pricing decisions in a firm. Explain the three cost oriented pricing approaches that a firm can use in pricing their products/services.

(b) Enterprises are sensing the need to become more integrated in their marketing communication efforts. Discuss with an example where you have been a part of the integration process or may have come across the said integration.

IGNOU ASSIGNMENT SOLUTIONS - MCO-04 - Business Environment - MCOM - SEMESTER 1

Search This Blog

About Me

Report Abuse

Question No. 1
What do you mean by Buyer Behavior? Discuss various social and Cultural factors which influence the buyer behavior? (20 Marks)

Question No. 2
What are the objectives of Pricing? Discuss the basic methods of Price Determination. (20 Marks)

Question No. 3
Write short notes on the following:
(a) Positioning
(b) Warehousing
(c) Personal Selling
(d) Relationship Marketing. (4×5 Marks)

Question No. 4
Differentiate between the following
(a) Consumer goods and Industrial goods
(b) Selective and Intensive Distribution
(c) Advertising and Publicity
(d) Selling and Marketing (4×5 Marks)

Question No. 4.
(a) What do you understand by the term Advertising? Discuss the various types of advertising and the major role that advertising plays in the promotion of a firms offering. Explain by taking one example each from a product and a service of your choice.

Question No. 3.
(a) Discuss the various factors that affect the Pricing decisions in a firm. Explain the three cost oriented pricing approaches that a firm can use in pricing their products/services.