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.  

Question No. 2 - 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. 2.                                                                              
(a) Discuss the product line decisions that a firm should consider to pursue and consolidate its position in the face of competition. 

Product line decisions involve identifying specific products a company wishes to offer and very often a product manager is appointed to look after a product line/s. She/he is responsible for maximising market share and to ensure sustained growth in terms of sales revenue and sales volume resulting in higher margins. The product line decisions are taken as to how long or short the line should be. A product line is often meant to cater to requirements of various customer segments of the target market. These decisions are based on the objectives of the company, availability of various resources and the profit potential of the proposed product lines. 

For example, Marico Industries, manufacturer of edible oils offers various products under its flagship brand ‘Saffola’ to cater to the needs of various customer segments.

Product-Line Analysis 

In offering a product line, companies generally develop a basic platform and then modules that can be added to meet different customer requirements. Product line managers need to know the sales and profits of each product item in the product line in order to determine which product items to build, maintain, harvest, or divest. They also need to know each product line’s market profile. 

Product-Line Length

The following objectives of a company determine the product line length. One objective is to create a product to induce up-selling. For example Tata motors introduced Tata Indigo to move customers up from Tata Indica. Another objective is to create a product that facilitates cross-selling. HP sells printers as well as PCs/laptops. Yet another objective could be to create a product line to protect against cyclic economic ups and downs. Samsung offers white goods such as refrigerators, washing machines, televisions, micro wave ovens, and air conditioners under different brand names to cater to entry level, mid-level and premium segments. Companies who seek high market share and market growth generally carry longer product lines while companies that lay emphasis on higher profits generally carry shorter product lines.

Product lines tend to lengthen over time. It may be due to the following:

- Pressure due to excess production capacity.

- Pressure from sales-force and/or distributors to offer a more complete line as a result of customer/market demand.

However, as more product items are added costs rise substantially; such as design and engineering costs, inventory costs, manufacturing changeover costs, order processing costs, transportation costs and the new promotion costs. Thus, decisions regarding lengthening the products are reviewed periodically and may sometimes call for pruning the non-profitable product lines.

A company can lengthen its product line in two ways:

i. Line stretching 

Line stretching occurs when a company lengthens its product line beyond its current range. This can be accomplished in following ways: 

a. Down-Market stretch 

Down-Market stretch is undertaken when a company that has positioned itself in the middle market may like to introduce a lower-priced product. It may be due to any of the reasons mentioned below: 

- It notices strong growth potential as mass retailer 

- It may wish to tie up lower end competitors who might otherwise try to move up-market 

- It may find that the mid-market is stagnating or declining 

However, the company faces challenges in naming the brands while moving down-market. Further, there are risks involved in moving down-market related to positioning and pricing decisions. 

b. Up-Market stretch 

Up-Market stretch is undertaken when companies wish to enter the high end of the market for more growth, higher margins or simply to position themselves as full-line manufacturers. For example, car manufacturers such as Toyota introduce high end luxury cars (Lexus).

c. Two-way stretch 

In Two way stretch, companies operating in the middle market may decide to stretch their line in both directions. The objective is to seek leadership position in the given market.

ii. Line filling 

A product line may also be lengthened by adding more product items with in the current range. The motives of line filling may include reaching for incremental profits, trying to satisfy dealers who complain about lost sales because of missing items in the product line, trying to utilize excess capacity, trying to be a leading full line company and trying to fill gaps to keep out competitors etc. If over done, line filling may lead to cannibalization and consumer confusion as the company needs to differentiate the product item in the mind of the consumer.

A company needs to continuously modernize, rationalize and improve its product line by undertaking ‘New Product Development Programme (NPD) from time to time. 

(b) Discuss the concept of Product Life Cycle. Elaborate the various stages by taking the example of a shaving cream brand of your choice. What alternatives will you suggest for the brand during its decline stage and why? Offer your reasons. 

A company which introduces a new product naturally hopes that the product will contribute to the profits and provide consumer satisfaction for a long period of time. This however, does not always happen in practice. So, progressive organizations try to remain aware of what is happening throughout the life of the product in terms of the sales and the resultant profits.

The Introduction Stage

Let us start thinking from the very beginning about what happens when a new product is introduced in the market. Figure I give three optimistic alternatives as to the likely sales trend. If the product is well – designed, the sales would not increase slowly but would shoot up after some time as in (b). Rarely would there be a case where they would shoot up as in (c). Poorly designed product may experience a slow take off as shown in (a). Thus (b) represents a suitable sales trend for a new product. This stage is called the ‘introduction’ or ‘innovation’ stage in the life cycle of a product. Since the product has been just introduced and it is natural to expect that it will take some time before the sales pick up. There are some prerequisites for that too. The product must be brought to the notice of the customer. It must be available at the distribution/retail outlets and all this takes some time. Therefore, a likely picture of the sales trend in this stage would be (b) as given in Figure I.

In the introductory stage, there is likely to be no profits or more likely a loss. This loss may continue for some time depending on the market factors. Thus, the correct answer could have been either (iii) or (iv). It is because at this stage, considerable amount of funds are being devoted to promotional expenses with a view to generate sales while the volume of the sales is low (as already seen in the Figure I). Thus in the beginning, there is likely to be a loss and later on, as the sales grow the profit might accrue. 

The Growth Stage 

In case the product launched is successful, the sales must start picking up or rise more rapidly. The next stage is then reached which is known as the ‘growth stage’. Here the sales would climb up fast and profit picture will also improve considerably. This is because the cost of distribution and promotion is now spread over a larger volume of sales. As the volume of production is increased, the manufacturing cost per unit tends to decline. Thus, from the point of view of product strategy, this is a very critical stage.

The Maturity Stage 

It is too optimistic to think that sales will keep shooting up. At this stage, it is more likely that the competitors become more active. In case your product is a novel one, by now competition would have come out with a similar product in the market to compete with yours. Therefore, the sales are likely to be pushed downwards by the competitors while your promotional efforts would have to be increased to try and sustain the sales. Thus the sales reach a plateau. This is called the ‘maturity stage’ or ‘saturation’. At this point it is difficult to push sales up. With regard to the ‘profit’ picture, the profits are likely to stabilize or start declining as more promotional effort has to be made now in order to meet competition. Unless of course, you have the largest market share with your product and it needs no extra push in the market.

The Decline or Obsolescence Stage 

Thereafter the sales are likely to decline and the product could reach the `obsolescence' stage. Steps should be taken to prevent this obsolescence and avoid the decline. This decline that generally follows could be due to several reasons such as consumer tastes and preferences, improvement in technology and introduction of better substitutes. This is the stage where the profits drop rapidly and ultimately the last stage emerges. Retaining such a profit after this stage may be risky, and certainly not profitable to the organisation. 

POSSIBLE ALTERNATIVES IN DECLINE STAGE

Having considered the product life cycle and the inevitability of product decline, the question which comes to one's mind is what should be done to avoid or postpone this decline. Consider some of the following points to avoid decline, 

1). improve product quality 

2). add new product features resulting in extra benefits 

3). penetrate new market segments 

4). give incentives to distribution channels 

5). expand the number of your distribution channels 

6). Improve advertising and sales effort 

Perhaps, the answer lies in the word `innovation'. That is why it is sometimes said that innovation is the life-blood of marketing. Innovation can be in any of the 4 Ps of marketing. In connection with the product, it would mean quality improvement or improvement in features (e.g. automatic passenger car models) or even style improvements like in case of clothes where collars are changed from time to time because of the fashion life cycle. Ultimately a time may come when the product will have to be removed from the product mix. 

In practice, there is often a reluctance to do this, particularly from the senior members in the management hierarchy, who may have got very much attached to such products. This emotional approach has to be avoided while taking final decision. The product life cycle concept, therefore, emphasises that there should be a periodical review of the products. The profitability and financial viability of the product must be assessed constantly. Products which are difficult to sell affect even the morale of the salesmen, as well as the distribution outlets. The only excuse for retaining such products is when the unprofitable product is required to complete the product line to enable distributors to meet competition. Unless there is some strong reason, unprofitable products should be removed from the product mix of the organisation. Now let us consider the time period of this product life cycle. In case of some products, it is extremely short, whereas in others, it is very long. In case of fads, the life cycle is very brief. For example, in India the hula hoop'(is twirled around the waist, limbs or neck. They have been used by children and adults. The new plastic version was popularized in 1958 by the Wham-O toy company and became a fad) completed the cycle within a few months. As against this, the horse carriage is still running in cities like Mumbai, Kolkatta, and Mysore and in smaller cities of Bihar, U.P etc to a small extent, despite its being substituted with more sophisticated and better means of transportation. 

Question No. 1 - 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. 1.                                                                                
(a) Define and discuss the term “Marketing”. Elaborate its scope and significance in an enterprise. 

Needs, Wants and Demands are always the starting point for marketing activities. Explain with a suitable example. 

Marketing is a very exciting and highly challenging field. It requires individual interest with a flair for creativity for success. Congratulations! You have embarked on the study of an exciting subject, which will boost your creativity and imagination in every given marketing situation in your career down the line.

Marketing is everywhere most of the tasks we do and most of the things we handle are linked to marketing. Marketing is an activity. Marketing activities and strategies result in making products available that satisfy customers while making profits for the companies that offer the products. Your morning tea, the newspaper, your breakfast, the dress you put on for the day, the vehicle you drive, the mobile in your pocket, the quick lunch you have at the fast food joint, the PC at your desk, your internet service provider, your e-mail ID almost everything that you use and everything that is around you, has been touched by marketing. Marketing has its imprint on them all depending on the product and the context/experience the imprint may be visible or subtle. But it is very much there. Marketing permeates most of your daily activities. Marketing is an omnipresent entity.

Marketing refers to the process of ascertaining consumer needs, converting them into products and services, and then moving the product or service to the final consumer segment with emphasis on profitability and customer satisfaction, and ensuring the optimum use of the resources available to the organization.

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational objectives. According to Philip Kotler, marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. The author has considered marketing as a social process where interaction of people is an essential component of it. Through this interaction the persuasion for selling the products or services begins. Thus marketing is purely purchase decision of the customer but through continuous marketing initiatives at different stages. Marketing starts before the production of the goods and continues even after the selling of the products. Thus it is assumed marketing is a continuous process. While the activities pertaining to identification of the needs, wants and demands of the customer, then designing of a suitable product to meet the needs, giving name to the product and converting it to a brand by communicating it to the customers.

The American Marketing Association defines marketing as follows: “Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user”.

Later on the American Marketing Association revised its definition of marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” This definition attempted to highlight the importance of exchange processes that occur between the seller and the buyer. As we move on to discuss about the subject matter of marketing, we would understand the meaning of this definition better

Exchange Process: Let’s first look into the meaning and importance in marketing management. Primarily the term exchange means “giving or receiving something in return for something else” i.e. in marketing parlance an individual or a customer will simply obtain the firms product or service offering to satisfy his need or want in exchange of money thus leading to exchange process between two entities. For example if a person hires a Uber service for his travel from destination x to y and the money paid as fare in lieu of the trip is an exchange process. This exchange process can extend into strong relationship marketing and we enter into exchange relationships all the time. Through relationship marketing we build a long-term association with the customer. In the above example of Uber, if the customer is satisfied by the service then we may plan to use the same services in future as well and intend to become a loyal customer with Uber. While Uber by way of delivering value to customers, a relationship with customers is developed. Thus marketing is earning profit by building relationship with customer through satisfying their needs and wants. The same explanation is applicable for a product as well.

We can see that marketing, as per this definition, starts with a ‘Product’. This is very common idea among many people, for example, in advertising agencies, as they normally are required to advertise to sell a product, which already exists. Similarly, salesmen are also given ‘products’ and asked to sell them. Therefore, to them marketing often, starts with a product. However, this is only a narrow view of the concept of marketing.

the definition of Marketing in the words of Philip Kotler. According to him, marketing management is: The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. The definition focuses “superior customer value.” Customer Value primarily is the incremental benefit which a customer derives from consuming a product after paying in return. The term value signifies the benefit that a customer gets from a product. It is the difference between the benefits (sum of tangible and intangible benefits) and the cost. Customer value is dependent on the three factors – Quality, Service and Price. The value of a product increases with its quality and service, as the benefits increase. On the other hand, the value decreases with increase in price because of the increase in costs increase in this case.

As “superior customer value” is the created when customers are willing to pay more for your product or service than competitor or when they prefer your version of a product or service to all others because it meets their needs better and maybe even exceeds their expectations. As a marketer you should view marketing both from social and managerial dimensions. The social aspect of marketing was put forth by Paul Mazur. He defined marketing as the creation and delivery of a standard of living to society. The standard of living suggests the level of wealth, comfort, material goods, and necessities available to a certain socio-economic class or geographical region. Thus the products and services offered by organisations (both commercial, and non-commercial) have a direct or indirect bearing on people’s standard of living. We are also aware of the fact how products/services such as sanitary napkins, electric bulbs, telephone, cars, tractors, aero planes, cinema, antibiotics, anesthesia, and birth control pill enriched human life over the period of time in terms of improved standard of living.

Philip Kotler whose seminal text Marketing Management was first published in 1967 beautifully described the meaning of marketing in three words as “meeting needs profitably.” Thus the most fundamental concept, which must be realised as being the basis of all marketing activities, is the existence of human needs. It is these human needs which form the starting point for all marketing activities. Today, if you look around, Start-ups are the order of the day. The young and progressive entrepreneurs are jumping on to this bandwagon by every passing day. You must remember that if you are an entrepreneur who wants to start a new business, you should have a product or an idea in your mind. In fact you have to decide what product/service you should manufacture and sell. How do you decide this? The answer to this question lies with you i.e. the entrepreneur has to first decide what product he should select. This is possible only if one can identify the needs, and wants which require satisfaction among human beings. Once he has identified the need of a group of human beings (called market segment), he can determine the product, which can help to satisfy that need. This is a part of the modern philosophy of marketing or the marketing concept.

SCOPE & SIGNIFICANCE OF MARKETING

Do you think that the firms while carrying out their marketing efforts involve in offering only the physical products such as toothpaste or a detergent powder? In case your answer is ‘yes’ that would be a narrow view of the ‘offerings’ or ‘entities’ being marketed by them. In fact, organisations offer a wide range of ‘products’ or entities. They include goods, services, events, experiences, persons, places, properties, organisations, information, and ideas. Let us have a quick glance at each these entities.

1. Goods: Physical goods include agricultural commodities, fish, eggs, newspapers, chocolates, laptops, televisions and furniture.
2. Services: Services sector is the largest sector in the world and over 63% of the total global wealth comes from the services sector. This sector accounts for over 53% of India’s GVA. Services include tourism, travel, hospitality, healthcare, education, banking and insurance.
3. Events: Marketers promote time-based events ranging from local events (e.g. Hornbill Festival in Nagaland, and Kerala Boat Festival) to national events (e.g. 150 Years of Celebrating the Mahatma) and international events (e.g. India International Trade Fair, and the Tokyo Olympics 2021).
4. Experiences: A firm can market personalised or customised experiences such as Ramoji Film City Star Experience, Climbing up the Mount Everest, and a weekend with stalwarts of cricket. Personalisation can be a huge boon for retailers and consumers. 
5. Persons: Many companies are using personal marketing for promoting their brands. Renowned personalities market themselves as well as different products or services. Cristiano Ronaldo, the renowned football player endorsing Clear Shampoo and Nike sports shoes; famous film personalities Aishwarya Rai Bachchan endorsing L’Oreal Shampoo and Salman Khan serving as a brand ambassador of Pepsi are a few examples. Self-branding became an emerging area.  
6. Places: Nations, regions, states, and cities compete for investments, tourists, and companies. Some of the place marketers are governments, real estate agents, and investors. Singapore’s New Asia, India’s Incredible India, and Mumbai’s City of Dreams are a few examples of how branding is done with logo, slogan and so on.
7. Properties: They are either real estate or financial assets which are bought and sold. Godrej Properties and Oberoi Realty in the real estate sector, and ICICI Direct and HDFC Securities among Demat service providers are some examples. 
8. Organisations: Museums (e.g. National Museum in New Delhi and Salar Jung Museum in Hyderabad), non-profit organisations (e.g. HelpAge India and Smile Foundation), performing arts organisations (e.g. Inspire India Programme by Shankar Mahadevan Academy, Music awards by Sangeet Natak Akademi), and corporations (e.g. Tata Motors’ corporate brand promise – ‘Connecting Aspirations’) aim for enhancing their organisational image through systematic marketing efforts. 
9. Information: Google became part of everybody’s life as we depend on its Search for information. Google’s mission is “to organize the world’s information and make it universally accessible and useful.” There are many such marketers like publishers, educational institutions, and newspapers which offer ‘information’ as their product. 
10. Ideas: Social marketers are engaged in idea marketing. This is also known as social marketing. It is an approach used to develop activities aimed at changing or maintaining people’s behaviour for the benefit of individuals and society as a whole. Swachh Bharat Abhiyan or Clean India mission is a country-wide initiative taken by the Government of India in 2014 to eliminate open defecation and improve solid waste management. The governments and health organisations all over the world tried to convince the people about wearing face masks appropriately, maintaining physical distance, and washing one’s hands frequently to combat the Coronavirus is another example.  

NEEDS WANTS AND DEMANDS

Lets us now try to understand Marketing Concepts that are a part of the definitions: Need(s), Want(s) and Demand(s) 

Need(s) 

Needs are the state of being deprived of something. Needs can be grouped into five categories as detailed below. Needs are not invented by marketer rather the widely known academic model of needs was proposed by psychologist Abraham Maslow. Although this model is predominantly used in motivational studies but is also applied for studying customers’ needs.

The Maslow’s theory of hierarchy categorises human needs into five levels. Abraham Maslow pursued to explain why people are driven by particular need at a particular time. According to his theory, human needs are arranged in a hierarchy from most to least pressing. These include physiological needs, safety needs, social needs, esteem needs, and self-actualisation needs. Marketers need to know which specific need their brand is targeted to. Let us illustrate with some of the brands that are targeting these five levels of customer needs:

a) Physiological needs: Food, water, shelter – All food items from liquids to solids etc. Amul, Aashirvaad atta, Britannia, Vimal, State housing board properties fall under the purview of this category. 

b) Safety needs: Security, protection - Insurance, Banking products, sanitizer, OTC products Vaccination and Immunization programs by the state. 

c) Social needs: Sense of belonging, love - Bharat Matrimony, Social media, Netflix India etc. fall under this category. 

d) Esteem needs: Self-esteem, recognition, status – Premium niche brands of all product categories and services, Allen Solly, iPhone, Dior, Jaguar Cars, International travel and recreation.etc. 

e) Self-actualisation: Self-development and realisation - Teach for India, Azim Premji Foundation etc. 

From the customer perspective consumer’s needs can be categorized as follows: 

1. Stated needs: Here the customer explicitly states what they want. For example, Ms Divya wants to open a bank account. 

2. Real needs: This is more specific. Ms Divya wants to open a Savings Bank account with a nearby public sector bank in her residential locality. 

3. Unstated needs: Ms Divya anticipates the bank to give her an International Debit Card along with a cheque book facility. 

4. Delight needs: Ms Divya like the premises of the bank for its upkeep and neatness where the employees and fellow customers exhibit the most appropriate and decent behaviors. 

5. Secret needs: Ms Divya is reluctant to confess that she has a negative attitude towards Netbanking facility. 

Want(s) 

Wants are the form taken by human needs as they are shaped by culture and individual personality. These are essentially dependent upon needs. For example, a person in North India would satisfy his hunger with rajma and chawal while a person from South India would like to have fish curry and rice. This clearly explains their want(s) backed by culture and their social environment. 

Demand(s) 

You may want to watch the final IPL match being played abroad. The big question is do you have money and time to travel abroad to watch the match? If yes, then it’s a demand. Wants backed by willingness and purchasing power is known as demand. By and large all marketing companies from FMCG, consumer durables, to service firms firstly do try to recognize the needs and want of customers, conduct market research, obtain regular feedback and market intelligence with the help of the sales force in ascertaining the unmet customer needs and then only it will be possible to fulfill needs so identified. For example the floor managers at Big Bazaar retail outlets do mingle and interact regularly with customers to try and keep them happy. 

Question No. 1 

(b) Discuss the various stages involved in the consumer buying process with reference to buying a smart phone brand of your choice. 

Even buying decision involves an element of active reasoning. The manner in which this active reasoning manifests itself is illustrated in Figure I. In making a buying decision the consumer goes through the five stages of: 

i) problem recognition, 

ii) pre-purchase information search, 

iii) evaluation of alternatives, 

iv) purchase decision, and 

v) post purchase behaviour

However, in case of routine purchases, the consumer may skip the second and third stages and straight away go to the stage of purchase decision. But in case of purchase decision involving extensive problem solving, the consumer is likely to go through all the five stages in the specified sequence. The important point to note is that the buying process starts much before the actual purchase and has implications even after the purchase has been made. This should give ideas to the marketer as to how he has to start designing his marketing strategy in order to achieve his specified marketing objectives.

 Let us understand the stages in decision-making process with the help of a Mr. Rao's specific decision to purchase a briefcase.

i) Problem Recognition: The buying process starts with the buyer recognising a need or problem. Lets come back to Mr. Rao he feels very uncomfortable carrying his papers, files and lunch packet in his hand or in a plastic bag to his work place. Sometimes, the papers and even files from his hand and get spoiled Mr. Rao feels the need for a suitable holder to carry papers to and fro from his office and has identified a briefcase as the solution to his problem. 

ii) Pre-Purchase Information Search: In response to the stimuli provided by the need for a briefcase, Mr. Rao starts searching for information on the kinds of briefcases available in the market. Search can be of two types: internal and external. Internal search refers to recalling relevant information stored in the memory. For instance, Mr. Rao may recall having seen the different kinds of briefcases used by his colleagues. Or he may recall having seen some advertisements for briefcases on the television or in some magazines and newspapers. External search refers to the deliberate and voluntary seeking of new information regarding the product/brand under consideration. Mr. Rao can seek information from the following three sources: 

- Personal sources: family, friends, colleagues, neighbours. 

- Commercial sources: advertisements, retailers, salesmen. 

- Public sources: seeing others, consumer information centres.

By tapping all these sources of information, Mr. Rao is able to identify the different types of briefcase on the basis of material, branded versus unbranded, high-medium low priced. A wide variety of materials are used for making briefcases ranging from the best leather to rexine to plastic. There are branded briefcases available and Mr. Rao can choose from the well known VIP, Safari and Aristocrat and some less known local brands, or he can choose to buy an unbranded briefcase. The price range varies according to the size the material that has gone into its make of the briefcase etc. Also, there are a number of other features which can influence the choice, such as type of lock, and number of partitions and pockets for keeping different documents. By the end of this stage, Mr. Rao has gathered enough information about different kinds of briefcases available and has narrowed down his alternatives to moulded plastic, branded briefcase. Within this broad range there are various brands and price ranges to make the final choice from.

iii) Evaluation of Alternatives: Mr. Rao will make his final decision using certain evaluative criteria. The most commonly used criteria are: (i) product attribute, (ii) the relative importance of each attribute to the consumer, (iii) brand image, (iv) attitudes towards the different brands or alternatives under considerations. For instance, the product attributes of the (Plastic branded briefcase) alternatives identified by Mr. Rao are: unbreakable, lightweight, spaciousness, reliability of locking system, colour, and price. Mr. Rao attaches maximum importance to the product attributes of light weight and spaciousness as compared to other attributes. He already has some kind of attitude towards the various brands developed in the stage of information search which will affect his final decision. This stage of the buying decision process gives the marketer a chance to modify his product offering in keeping with the relative importance attached to each attribute by various consumer segments, altering beliefs and attitudes about his own brand, and calling attention to neglected product attributes,

iv) Purchase Decision: In the evaluation stage, Mr. Rao has ranked the various brands in terms of his first, second and third preference. In short, he has made up his mind about which brand he wants to buy. However, Mr. Rao may finally end up buying a brand which is not his most preferred. This may happen because attitudes of others and ''situational factors. For instance, when Mr. Rao goes to the shop to make his purchase, the shopkeeper's negative remarks about his (Mr. Rao's) most preferred brand may make him change his mind. Also, it is possible that Mr. Rao's preferred brand is not available, or there is a very attractive price discount on the brand ranked third by him which eventually makes him change his mind.

v) Post Purchase Behaviour: After purchasing the briefcase, if Mr. Rao finds that its performance or utility matches up to his expectation, Mr. Rao will feel satisfied with his purchase. The satisfaction will reinforce Mr. Rao's perceived favourable image of the brand, which is likely to be extended to the entire range of products manufactured by the Company. Also, Mr. Rao is likely to strongly recommend the brand when his friends ask his advice for buying a new briefcase. A satisfied customer is thus a very powerful source of influence for potential customers. However, if Mr. Rao feels that the briefcase which he has purchased is not up to his expectation, then he is likely to feel dissatisfied. The gap between expected (or perceived) and the actual performances cause discomfort or dissonance to the buyer. As a result of this, Mr. Rao may decide to stop buying other products sold by the same company and also warn his friends about the poor utility of his briefcase. To reduce his own state of discomfort or dissonance arising from the feeling that he has not made the right choice, Mr. Rao can: (i) reevaluate the unchosen brands and downgrade their desirability by identifying some negative features, and (ii) search for information to confirm his choice.

 

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

Note: Attempt all the questions and submit this assignment to the coordinator of your study centre. (Last date of submission for July 2022 session is 31st October, 2022 and for January 2023 session is 30th April, 2023).

Question No. 1.                                                                                 CLICK HERE

(a) Define and discuss the term “Marketing”. Elaborate its scope and significance in an enterprise. Needs, Wants and Demands are always the starting point for marketing activities. Explain with a suitable example. 

(b) Discuss the various stages involved in the consumer buying process with reference to buying a smart phone brand of your choice. 

Question No. 2.                                                                                CLICK HERE

(a) Discuss the product line decisions that a firm should consider to pursue and consolidate its position in the face of competition. 

(b) Discuss the concept of Product Life Cycle. Elaborate the various stages by taking the example of a shaving cream brand of your choice. What alternatives will you suggest for the brand during its decline stage and why? Offer your reasons. 

Question No. 3.                                                                               CLICK HERE

(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. 

Question No. 4.                                                                                CLICK HERE

(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