All Questions - MCO-23 - Strategic Management - Masters of Commerce (Mcom) - Second Semester 2025

                    IGNOU ASSIGNMENT SOLUTIONS

        MASTER OF COMMERCE (MCOM - SEMESTER 2)

                       MCO-23- Strategic Management

                                        MCO -023 /TMA/2024-25

Question No. 1

a) Explain briefly the five forces framework and use it for analyzing competitive environment of any industry of your choice. 
b) Under what circumstances do organizations pursue stability strategy? What are the different approaches to stability strategy? 

Answer: (a) Part 

Developed by Michael E. Porter in 1979, the Five Forces Framework helps businesses understand the structural drivers of competition within an industry. It assesses the competitive intensity and, therefore, the attractiveness and profitability of a market or sector.

This model is widely used in strategic planning, market analysis, and investment decision-making.

🔷 1. Threat of New Entrants

This force examines how easy or difficult it is for new competitors to enter the industry and erode profits of established companies.

🔑 Key Factors:

• Barriers to Entry: High fixed costs, regulation, patents, economies of scale, or brand loyalty deter new firms.

• Capital Requirements: Industries requiring large investments (e.g., airlines, pharmaceuticals) are harder to enter.

• Access to Distribution Channels: Limited shelf space or partnerships can block new players.

• Customer Loyalty: Strong brands and customer relationships make entry more difficult.

• Switching Costs: If it’s costly for consumers to switch brands, new entrants face hurdles.

🔍 Impact:

• High Threat → More competition, reduced profitability.

• Low Threat → Established firms maintain market share and profit margins.

🔷 2. Bargaining Power of Suppliers

This force analyzes how much control suppliers have over prices, quality, and delivery of inputs (raw materials, labor, components).

🔑 Key Factors:

• Number of Suppliers: Fewer suppliers → Higher power.

• Uniqueness of Supply: Specialized or patented materials increase supplier leverage.

• Switching Costs: High costs of changing suppliers strengthen their power.

• Threat of Forward Integration: If suppliers can start producing finished products themselves, they gain power.

🔍 Impact:

• High Supplier Power → Increases input costs and reduces profitability.

• Low Supplier Power → Firms can negotiate better prices and terms.

🔷 3. Bargaining Power of Buyers

This force studies the influence customers have over pricing, quality, and terms. It indicates how easily buyers can drive prices down.

🔑 Key Factors:

• Number of Buyers: Fewer, larger buyers = more bargaining power.

• Product Differentiation: If products are standardized, buyers can easily switch.

• Price Sensitivity: When buyers are cost-focused, they demand lower prices.

• Threat of Backward Integration: If buyers can make the product themselves, their power rises.

• Volume of Purchase: Large-volume buyers (e.g., Walmart) have more negotiating power.

🔍 Impact:

• High Buyer Power → Firms must reduce prices or improve quality/service.

• Low Buyer Power → Companies have more control over pricing and terms.

🔷 4. Threat of Substitutes

This force looks at alternative products or services that can replace an industry’s offering, fulfilling the same need in a different way.

🔑 Key Factors:

• Availability of Substitutes: More alternatives = higher threat.

• Price-Performance Trade-off: If substitutes offer better value, customers may switch.

• Switching Costs: Low switching costs increase substitution risk.

• Customer Willingness to Switch: If consumers are flexible, threat increases.

🔍 Impact:

• High Threat of Substitutes → Limits pricing power and profitability.

• Low Threat of Substitutes → Industry enjoys pricing freedom and customer loyalty.

🔷 5. Industry Rivalry (Competitive Rivalry)

This is the central force that evaluates the intensity of competition among existing firms in the industry.

🔑 Key Factors:

• Number and Size of Competitors: Many similarly sized firms increase rivalry.

• Industry Growth Rate: Slow growth intensifies competition.

• Product Differentiation: Low differentiation increases price-based competition.

• Excess Capacity and Fixed Costs: High fixed costs force firms to compete aggressively to cover expenses.

• Exit Barriers: Difficulty in leaving the industry (e.g., long-term leases, sunk costs) increases rivalry.

🔍 Impact:

• High Rivalry → Leads to price wars, reduced profits, and aggressive marketing.

• Low Rivalry → Firms enjoy stable pricing and higher margins

🧠 Conclusion

Porter’s Five Forces helps you see beyond just your competitors—it provides a holistic view of the forces shaping your business environment. The ultimate goal is to identify ways to reduce threats and increase your firm's competitive advantage.

✈️ Application: Airline Industry Analysis Using Five Forces

Force	Airline Industry Analysis
1. Threat of New Entrants	Low to Moderate: High capital requirements, regulation, and slot access make entry tough, but budget airlines have increased competition in some regions.
2. Bargaining Power of Suppliers	High: Aircraft manufacturers (like Boeing, Airbus) and fuel suppliers are few, giving them strong leverage.
3. Bargaining Power of Buyers	High: Customers are price-sensitive, can easily compare fares online, and switch airlines for better deals.
4. Threat of Substitutes	Moderate: High-speed trains, buses, and virtual meetings (video conferencing) serve as substitutes, especially for short or business trips.
5. Industry Rivalry	Very High: Intense price wars, low margins, loyalty programs, and similar service offerings make the market highly competitive.

✅ Conclusion

The airline industry is characterized by high competition and pressure on margins, largely due to powerful buyers, strong supplier influence, and intense rivalry. The Five Forces model reveals why sustained profitability is a challenge in this industry.

Answer: (b) Part 

A stability strategy is adopted by organizations that choose to maintain their current business position without significant growth or retrenchment. Rather than aggressively expanding or downsizing, the company focuses on consolidating existing operations, improving efficiency, and maintaining current market share.

✅ Circumstances Under Which Organizations Pursue a Stability Strategy

Organizations may choose a stability strategy under the following conditions:

1. Satisfactory Organizational Performance

When a company is meeting its financial and strategic objectives, there might be no immediate pressure to grow or change. In such cases:

• Sales, profits, and market share are stable.

• The business has a loyal customer base and a consistent revenue stream.

• There's no perceived competitive threat or urgent opportunity requiring rapid change.

Example:
A regional grocery chain with strong community ties, reliable suppliers, and steady profits may choose to maintain its operations as-is rather than risk expansion.

2. Mature or Saturated Market

When the industry has reached a mature stage with low growth potential, opportunities for expansion may be limited:

• All major players have stable market shares.

• Consumer demand has plateaued.

• Technological innovation is minimal.

Pursuing aggressive growth in such a market might lead to wasteful competition, price wars, or reduced margins.

Example:
A telecom company operating in a saturated urban market might focus on maintaining its subscriber base instead of entering new markets.

3. Economic Uncertainty or Unfavorable External Environment

When the external business environment is volatile or unpredictable, companies often adopt a wait-and-see approach. This includes:

• Recessions or inflationary pressures.

• Political instability or regulatory changes.

• Global events like pandemics or trade disruptions.

In such cases, investing in new projects or entering new markets may be too risky.

Example:
During the COVID-19 pandemic, many hospitality and tourism companies paused expansion and focused on sustaining existing operations.

4. Internal Resource Constraints

Even if growth opportunities exist, an organization might be held back by internal limitations, such as:

• Lack of financial capital for expansion or R&D.

• Shortage of skilled personnel or leadership.

• Outdated infrastructure or poor internal processes.

Instead of overextending, the firm might focus on strengthening its internal foundation first.

Example:
A small manufacturer may delay launching a new product line until it upgrades its machinery and hires skilled engineers.

5. Need for Consolidation After Rapid Growth

After a period of rapid expansion, a company might need time to:

• Integrate acquisitions or new branches.

• Standardize processes and maintain quality control.

• Train new staff and align operations with culture and strategy.

This is often referred to as a “pause strategy”—a temporary stability phase before the next growth push.

Example:
A fast-growing ed-tech startup might stabilize operations after a nationwide rollout to ensure delivery standards before international expansion.

6. High Risk Associated with Alternatives

If available alternatives—like growth through diversification or mergers—are too risky, the company may choose to avoid uncertain investments and stick to its core operations:

• Risk of overleveraging.

• Lack of synergy in potential acquisitions.

• Unproven or experimental markets.

This approach minimizes disruption and preserves stakeholder confidence.

Example:
A pharmaceutical firm might delay entry into biotech due to high research costs and uncertain returns, focusing instead on its current drug portfolio.

7. Focus on Operational Efficiency and Incremental Improvements

Sometimes, firms aim to increase profitability without expanding market size, by:

• Improving productivity.

• Cutting costs and wastage.

• Streamlining supply chains or upgrading customer service.

This is more of a refinement strategy than expansion.

Example:
An insurance company might enhance its digital platform to improve customer experience while keeping its product line the same.

8. Organizational Fatigue or Cultural Preference

In some cases, the decision to remain stable is cultural or human-resource driven:

• Employees or leaders are risk-averse.

• The organization prefers a conservative, long-term approach.

• After major changes, the team may experience burnout and need time to adjust.

Example:
A family-owned business might avoid aggressive expansion to preserve work-life balance or ensure generational stability.

📌 Summary Table

Circumstance	Description
Satisfactory Performance	Business is meeting goals; no pressure to change.
Mature/Saturated Market	Little room for growth; stable competition.
Economic Uncertainty	External instability discourages expansion.
Internal Constraints	Lack of funds, talent, or systems to support growth.
Post-Growth Consolidation	Need to stabilize after rapid expansion.
High Risk Alternatives	Growth options are too risky or misaligned.
Focus on Efficiency	Improving profitability through internal improvements.
Organizational Culture	Preference for low-risk, conservative strategies.

🔄 Approaches to Stability Strategy

There are three major approaches or types of stability strategies:

1. No-Change Strategy

Also called status quo strategy, the firm continues exactly as it is—same markets, same products, and same operations.

• Focus: Maintain current profits and efficiency.

• Example: A family-run retail store continuing with its existing customer base and offerings.

2. Profit Strategy

Used when firms face a temporary setback (e.g., economic slowdown) and try to maintain profitability through cost-cutting and efficiency improvements, without altering the core business.

• Focus: Preserve profits by avoiding major new investments.

• Example: A hotel chain reducing promotional costs during an off-season but keeping its services intact.

3. Pause/Proceed with Caution Strategy

A short-term stability approach used as a strategic break after a phase of rapid growth or change. It allows time to reorganize, assess performance, and prepare for the next phase of expansion.

• Focus: Consolidate gains, fix internal inefficiencies.

• Example: A tech startup stabilizing its operations after scaling up rapidly in multiple cities.

🧠 Conclusion

A stability strategy is not passive or weak—it's a conscious decision to preserve current strengths while managing risks. It reflects strategic maturity when firms know when to pause, consolidate, or wait for the right conditions to pursue further growth.

Question No. 2

a) Define Corporate Governance. In the present context what are the major challenges that the corporate sector is facing regarding implementing Corporate Governance. 
b) What is mission? How is it different from purpose? Discuss the essentials of a mission statement. 

Answer: (a) Part 

📘 Definition of Corporate Governance

Corporate Governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It involves balancing the interests of various stakeholders in a company, including:

• Shareholders

• Management

• Customers

• Suppliers

• Financiers

• Government, and

• The community

At its core, corporate governance ensures that companies act in a transparent, ethical, and accountable manner, and that the interests of stakeholders are safeguarded.

🔑 Key Principles of Corporate Governance

1. Transparency – Clear and open disclosure of all relevant information.

2. Accountability – Directors and managers are answerable for their actions.

3. Fairness – Equal treatment of all stakeholders.

4. Responsibility – Ethical and socially responsible conduct.

5. Compliance – Adherence to legal and regulatory frameworks.

---

🏢 Major Challenges in Implementing Corporate Governance (Present Context)

Despite various reforms and increased awareness, many companies still struggle to fully implement corporate governance due to the following challenges:

1. Lack of Board Independence

Many companies struggle to maintain an independent and objective board of directors:

• Independent directors may have personal or business ties to the company.

• Promoter-dominated boards may lead to conflict of interest.

• Lack of diverse expertise limits effective decision-making.

Implication: Decisions may favor controlling shareholders rather than the company’s overall well-being.

2. Weak Regulatory Enforcement

While corporate governance laws and codes exist (e.g., SEBI in India, SOX in the US), implementation and enforcement are often inconsistent:

• Regulatory bodies may lack resources to monitor all companies.

• Penalties for non-compliance may not be strong enough to deter misconduct.

• Legal processes can be slow and inefficient.

Implication: Non-compliant companies may go unchecked, eroding trust in the system.

3. Insider Trading and Market Manipulation

Despite strict laws, insider trading and manipulation of financial results still occur:

• Senior executives may exploit access to confidential information.

• Earnings management to meet targets undermines transparency.

Implication: Erodes investor confidence and damages market integrity.

4. Poor Financial Disclosure and Reporting

Companies sometimes provide incomplete or misleading financial statements:

• Use of creative accounting or window dressing.

• Failure to disclose risks, related party transactions, or contingent liabilities.

Implication: Stakeholders cannot make informed decisions, increasing financial risk.

5. Concentration of Ownership and Promoter Dominance

In many economies, especially in Asia, companies are promoter- or family-controlled:

• Promoters may use company resources for personal benefit.

• Minority shareholders have limited voice or protection.

Implication: Governance becomes a tool to serve the interests of a few.

6. Ethical Dilemmas and Corporate Misconduct

Unethical practices such as bribery, tax evasion, and exploitation of labor persist:

• Companies may ignore environmental and social responsibilities.

• Whistleblower mechanisms may be ineffective or absent.

Implication: Corporate scandals damage reputation and invite legal action.

7. Technological and Cybersecurity Risks

With increasing reliance on technology, companies face new governance challenges:

• Cybersecurity threats can lead to data breaches and financial losses.

• AI and algorithmic decisions may lack transparency or fairness.

Implication: Need for digital governance is rising but often unaddressed.

8. Globalization and Complex Structures

Multinational corporations operate in diverse regulatory and cultural environments:

• Complex cross-border operations make compliance difficult.

• Transfer pricing and offshoring can obscure financial clarity.

Implication: Requires strong oversight across jurisdictions.

9. Ineffective Whistleblower Mechanisms

Many companies do not protect whistleblowers, leading to:

• Suppression of internal complaints.

• Retaliation against those who report wrongdoing.

Implication: Misconduct often goes unreported and unchecked.

10. Short-Termism in Decision-Making

Managers often prioritize short-term financial gains over long-term value creation:

• Focus on quarterly earnings at the expense of sustainability.

• Neglect of R&D, employee welfare, and environmental issues.

Implication: Harms stakeholder trust and long-term competitiveness.

📈 Examples of Corporate Governance Failures

• Enron (USA) – Manipulated financial statements, resulting in one of the largest bankruptcies in history.

• Satyam (India) – A massive accounting fraud in which the chairman confessed to inflating profits.

• Wirecard (Germany) – A tech firm that collapsed after revelations of €1.9 billion in fake assets.

These cases show how governance failure can lead to severe reputational and financial damage.

✅ Conclusion

Corporate governance is the cornerstone of sustainable business performance. While frameworks exist, their effectiveness depends on ethical leadership, transparency, and robust enforcement mechanisms. Overcoming current challenges requires not only stronger laws and monitoring, but also a culture of integrity and responsibility at all levels of the organization.

Answer: (b) Part 

🔷 What is Mission?

A mission is a concise statement that defines the core reason for an organization’s existence, describing:

• What the organization does

• Who it serves

• How it serves them

It reflects the organization’s present focus, guiding internal decision-making and aligning stakeholders toward common objectives.

📌 Example:

Google’s Mission: “To organize the world’s information and make it universally accessible and useful.”

🔁 Difference Between Mission and Purpose

While both are closely related, they are not the same:

Aspect	Mission	Purpose
Time Frame	Present-oriented	Timeless and broader
Focus	What the organization currently does	Why the organization exists at a deeper, philosophical level
Scope	Operational and specific	Inspirational and abstract
Example	“To deliver affordable healthcare services.”	“To improve human health and well-being.”

✅ Summary:

• Mission = What we do

• Purpose = Why we exist

🧩 Essentials of a Good Mission Statement

A mission statement should be clear, focused, and inspiring. Below are its key components:

1. Clarity and Conciseness

• Should be easy to understand and not overloaded with jargon.

• Ideally limited to 1–2 sentences.

2. Defines Target Customers or Stakeholders

• Clearly mentions who the organization serves (e.g., individuals, businesses, communities).

3. Outlines Key Offerings or Services

• Describes what the company does: the core products, services, or value propositions.

4. Reflects Core Values or Philosophy

• Should reflect the company’s values, ethics, and cultural tone.

5. Differentiates from Competitors

• Highlights what makes the organization unique or distinct in its field.

6. Inspires and Motivates

• Encourages commitment from employees, partners, and customers.

• Should evoke a sense of direction and aspiration.

7. Realistic and Achievable

• Should be ambitious, yet grounded in what the organization can actually do.

📘 Examples of Effective Mission Statements

• Tesla: "To accelerate the world’s transition to sustainable energy."

• Amazon: "To be Earth’s most customer-centric company."

• IKEA: "To create a better everyday life for the many people."

Each of these examples clearly states what the organization does, for whom, and with what kind of broader impact in mind.

✅ Conclusion

A well-crafted mission statement is a foundational tool in strategic planning. It aligns employees, guides actions, and communicates an organization’s identity to the world. While purpose reflects the broader philosophy or “why,” the mission describes the “what” and “how” that bring that purpose to life.

Question No. 3

Comment briefly on the following statements:              
a) “Strategy formulation, implementation, evaluation and control are integrated processes”.  
b) “It is necessary for organization to go for social media competitive analysis”. 
c) “Expansion strategy provides a blueprint for business organizations to achieve their long- term growth objectives”. 
d) “Strategy is synonymous with policies”.  

Answer: (a) Part 

Question No. 4

Differentiate between the following: 
a) Vision and Mission 
b) Core purpose and Core value 
c) Canadian model of corporate governance and German model of corporate governance  
d) Concentric diversification and conglomerate diversification

Answer: (a) Part 

Question No. 5

Write Short Notes on the following: 
a) Retrenchment Strategies  
b) Competitive Profile Matrix 
c) Corporate Culture  
d) Strategic intent 

Answer: (a) Part 

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: