Question No. 2 - MMPC-007 - Business communication - MBA and MBA (Banking & Finance)

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                            MBA and MBA (Banking & Finance)

MMPC-007 - Business communication

MMPC-007/TMA/JULY/2022

Question No. 2                                     
Discuss the benefits of effective communication at workplace.

Effective communication in the workplace is an integral part of an efficient and successful business. It ensures everyone understands their duties and responsibilities, helps build quality client and employee relationships and keeps employees engaged and productive. Business owners should prioritize effective communication in their organization if they want to ensure employee satisfaction and promote high performance.

Effective communication in the workplace is when the exchanging of information and ideas is done so in an efficient and effective manner. While information and ideas are frequently exchanged in a workplace setting, they aren't also sent and received in an accurate way. Good communication involves not just relaying information but being able to explain it in a way that ensures the recipient understands you.

Communication at work includes several different methods of transmitting and receiving information. The most common forms of communication in the workplace include:

• Written communication, such as memos and emails
• Oral communication, such as speaking to another person
• Nonverbal communication, such as nodding to show understanding
• Listening skills, including active listening

Additionally, an important component of workplace communication is that employees feel understood and heard by management. Employees who feel comfortable communication with their supervisors and managers are more likely to understand what's expected of them and remain productive throughout the day.

Benefits of effective workplace communication

There are several benefits that effective workplace communication provides an organization. These benefits include:

1. Mitigated conflict

Effective workplace communication can help reduce conflict or tension at work. Most conflicts arise due to ineffective communication tactics which lead to individuals misunderstanding what's being communicated. Misunderstandings can result in employees or other members of an organization feeling not understood, disrespected, disregarded or simply not performing in an expected manner.

For example, if one team member is told to make 25 calls a day and another member of the same team in the same position is told to make 50 calls a day, the employee with the most calls may feel taken advantage of. However, if the team leader holds a meeting to clarify how many calls are supposed to be made by each employee, all employees receive the same information and there is less of a chance for conflict or tension to arise.

2. Increased employee engagement

Effective communication does more than just ensure information is accurately received. It also works to connect others and keep open lines of communication between employees and other members of the organization. This ultimately works to create better engagement between employees, which can lead to increased employee satisfaction and healthier company culture.

Ways that communication improves employee engagement include that it:

• Helps management better understand the goals and needs of employees and what motivates them
• Ensures employees' skills and talents are recognized and utilized when possible
• Improves the connection between employees for a more enjoyable work environment
• Creates better relationships between employees and management as well as between management and C-level employees of the organization

3. Improved productivity

Employees who feel connected to their work and have a clear understanding of what's expected of them are more likely to be productive and perform efficiently. When employees don't understand their role or expectations in a position or have limited resources to perform their duties, they often feel confused or as if they aren't able to perform their job to the best of their ability. Ensuring information is readily available and communicated in an effective manner allows employees to accurately perform their duties and can increase productivity throughout the organization.

4. Improved client relations

Good communication in the workplace isn't just relevant to employees of the organization. Effective communication also directly affects client relations. Organizations that communicate well with their customers or clients are more likely to build solid relationships and retain clients versus companies that don't prioritize client communication. Customers look for companies that value their relationship and keep them up-to-date on changes and are more loyal when they feel connected to these companies.

5. Healthy workplace culture

Effective communication plays an important part in maintaining a healthy workplace culture. Many workplaces employ people of all different cultures, races and beliefs, and conflict will naturally arise when so many differences are present. A culture of open communication fosters a healthy and accepting environment where all employees feel equal and understood.

6. Improved direction for employees

Open communication in the workplace ensures employees understand their part in the company and have a clear direction in terms of what's expected of them. This empowers employees to take the appropriate steps needed to complete their duties and contribute to the organization as a whole.

7. Boosted employee job satisfaction

Employees who are part of an organization that practices good communication in the workplace are more likely to experience increased job satisfaction. A transparent and trustworthy environment supports employee satisfaction by creating a harmonious workplace that is enjoyable to work in and keeps employees engaged in their positions.

8. Increased innovation

Workplaces that encourage employees to communicate their opinions and ideas tend to foster more innovation than those that don't. Employees who feel empowered to speak up and think in different ways often contribute meaningful ideas and strategies that help not only the employees but the organization as a whole.

9. Strengthened team building

In order to work effectively together, team members must know they can trust the other members of their team. Communication is a major component of trust and ensures everyone is of the same understanding in terms of the expectations and duties of the team. Clear guidelines that are communicated effectively help team members know how to behave as part of the team and ultimately bring team members closer to each other for a more synchronized work effort.

10. Improved public impression

Companies that have a good reputation in terms of communicating both internally and with clients often have a strong and positive public impression. This helps attract talent to the company and can even increase interest from investors and banks.

Question No. 1 - MMPC-007 - Business communication - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC-007 - Business communication

MMPC-007/TMA/JULY/2022

Question No. 1                                  
Explain the two-way process of communication. Illustrate your answer with the help of examples. 

Communication is now viewed as a two-way process in later conceptualizations of the process. The receiver also serves as the sender of feedback to the transmitter to complete the communication cycle (sender). As in telemarketing or call centre communication, both the sender and the recipient play a reciprocal and reversible role. The two-way approach is more modern. It views communication as primarily a reciprocal process involving the exchange of messages. Because the sender (source) and receiver (receiver) are often the same individual, there is no clear separation between the two positions.

The sender is considered as the determiner of the message's meaning in the previous linear perspective. The two-way notion incorporates the receiver as an active participant in the message's development and interpretation. The message is how the recipient interprets it based on his or her own experiences, beliefs, and feelings. People who have worked together and formed common attitudes and perspectives with regard to the organisation they work in or the community they live in may have common interpretations of circumstances, ideas, strategies, and events. Transactional communication is another name for two-way communication. We will also study the transaction model in detail in unit 6. The flow of two-way communication is depicted in Figure

Two-way communication is a conversation between two people. Typically, both parties involved transfer information between one another. There are four main components of the two-way communication model. These include the:

• Sender
• Receiver
• Message
• Response

Effective communication between two people is when a sender and receiver deliver information over verbal or written communication, listen to each other, gather their thoughts and provide feedback or answers relating to the conversation. 

Systems involved with two-way communication

There are a variety of ways professionals can use two-way communication to create a conversation between colleagues or their clients. This includes both oral and written systems that allow for effective communication. Below are several systems that can be used to facilitate two-way communication:

• Phone: Professionals can use a mobile or office phone to communicate between two parties. A phone allows both parties to call each other, so they can communicate with each other remotely to provide project ideas, ask questions or provide feedback for an existing project.
• Video conference: More often, professionals are conducting calls using video networking software. Video conferencing is a diverse and customizable method of arranging meetings with coworkers and clients.
• Dispatch system: Professionals that communicate through software programs often use a dispatch system to deliver messages. For example, first responders use a dispatch system to receive incoming messages from a dispatcher.
• Instant messaging: This is a written form of two-way communication that's done over the internet through a Wi-Fi connection. It can allow professionals to answer questions quickly, provide product information or respond to company inquiries while at work
• In-person communication: This direct form of communication allows professionals to answer questions fast without having to type any written form of communication. Face-to-face communication allows others to read their body language and facial expressions, which can help to decipher when a person needs help or when they may not understand what the other person is saying.

Examples of two-way communication

There are many types of interactions that involve two-way communication among people. Each form of communication allows individuals to interact with each other efficiently and effectively. Here are four examples of two-way communication:

1. Conversing between two people

One type of two-way communication is a basic conversation between two parties. For example, this may include two colleagues discussing the plans they have to complete a project. Their conversation might involve planning goals and milestones, assigning tasks among team members or reviewing any risks that may arise while they're working on a project. After the initial conversation, employees may check in on each other throughout the project via a company-wide instant messaging system, in person or over the phone.

2. Giving advice

Professionals can benefit from two-way communication by providing others with advice, which may relate to a variety of topics. For example, a coach may take part in an in-person conversation with an athlete that's underperforming. Their advice may include expressing ways the athlete can improve while asking them for feedback or if they may require help while on the field.

3. Answering and asking questions

Another example of two-way communication may include a teacher asking their class questions regarding a recent book they read and expecting the class to answer accordingly. When the teacher asks a question, it can allow them to converse with their students, which can help them learn more effectively than if they were to provide one-way communication through a lecture. This allows students to follow up with an answer or ask the teacher clarifying questions.

4. Negotiating terms

Professionals can benefit from using two-way communication when they're negotiating the terms of a contract. For example, car sales associates can converse with their customers when they're trying to negotiate a deal that can help them make money. This process may start at the beginning of the sales process and run throughout final negotiations. By effectively communicating with a customer, a sales representative can use informative and persuasive language to get their customer to complete a purchase. This form of communication is typically over the phone or in person.

MMPC-007 - Business communication - MBA and MBA (Banking & Finance)

Solutions to Assignments

                            MBA and MBA (Banking & Finance)

MMPC-007 - Business communication

MMPC-007/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

Explain the two-way process of communication. Illustrate your answer with the help of examples.            

Question No. 2                                      CLICK HERE

Discuss the benefits of effective communication at workplace. 

Question No. 3                                      CLICK HERE

List and explain various steps involved in the preparation of meetings. 

Question No. 4                                     CLICK HERE

Elaborate on the need and importance of a business correspondence at workplace. 

Question No. 5                                     CLICK HERE

Discuss the Hofstede’s cultural dimension model with respect to cross cultural communication.

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.