Assignment Code: AMK-01/TMA/2020-2021

Course Code: AMK-01

Assignment Name: Marketing

Year: 2020-2021

Verification Status: Verified by Professor

Valid Until: December 31, 2021

Q1) What is marketing mix? Explain the components of marketing mix with examples.

Ans) Marketing requires several activities to be done. To begin with, a company may choose to enter one or more segments of a market-since it may not be possible to cover the entire market. The manufacturer of a bathing soap, for example, may aim at the working class in the middle or lower income groups as his target consumers. Once the target market is decided, the product is positioned in that market by providing the appropriate product qualities, price, distribution and advertising efforts.

These and other relevant marketing functions are to be combined or mixed in an effective proportion so as to achieve the marketing goal. In order to appreciate this process, it is easier to divided the marketing activities into four basic elements which are together referred to as the marketing mix.

These four basic elements are:

1. product,

2. price,

3. promotion, and

4. physical distribution.

As all these four start with the letter 'P', they are referred to as the four Ps of the marketing mix or the four Ps in marketing. Thus, marketing mix may be defined as the set of controllable marketing variables/activities that the firm blends to produce the response it wants in the target markets. Let us study the four Ps in details.

The word product stands for the goods or services offered by the organisation. Once the needs are identified, it is necessary to plan the product and after that keep on analysing whether the product still satisfies the needs which were originally planned for, and if not, to determine the necessary changes.

Price is the money that the consumer has to pay. Price must be considered as worth the value of the product to become an effective marketing tool. The product has to be reasonably priced. The manufacturer has to trike into account cost factors, profit margin, the possibility of sales at different price levels and the concept of the right price.

Promotion is the aspect of selling and advertising or communicating the benefits of the product ar service ta the target customers or the market segment in order to persuade them to purchase such products or services. It includes selling through advertising as well as the sales force. Besides, a certain amount of promotion is also dove through special seasonal discounts, competitions, special price reductions, etc.

Physical distribution refers to the aspect of the channels of distribution through which the product has to move before it reaches the consumer. It also includes the logistic aspects of distribution such as warehousing, transportation, etc., needed for geographical distribution of products. It is also concerned with the selection of distribution channels. The organisation must decide whether it should sell through wholesalers and then to retailers, or whether directly to the consumers. There are many ways in which a product can be moved from the producer to the consumer. The optimum method has to be determined in terms of bath consumer satisfaction and profitability to the organisation, or optimum use of the organisation's resources.

The manufacturer most design the most effective combination of these four basic factors as well the expenditure he would like to incur on them. The variables that are relevant in the marketing mix vary from company to company. These variables are not independent in their effect on the marketing effort. One variable may influence the other. Apart from the expenditure involved, these decisions are influenced by the company's market positioning decision. Look at the below Figure carefully. It summarises all the components of marketing mix.

Q2) What is market segmentation? Examine the different basis for segmenting market, particularly industrial market

Ans) Lack of homogeneity may be seen in the real world in both supply side and demand side. On the supply side, many factors, like difference in production equipment and processing techniques, difference in the nature of resources or inputs available to different manufacturers, progress among the competitors in terms of design and improvement, etc., account for the heterogeneity. As a result, imperfect markets (in which firms lack uniformity in their size and influence) are common. This problem may be solved to some extent, by market segmentation.

Now the question is, what is market segmentation? As you know, a market refers to a set of all actual and potential buyers of a product. It means that buyers in the same market seek products for broadly the same function. But different buyers have different evaluative criteria about what constitutes the right product for performing the &me function. For example, take the case of scooter market. Some buyers prefer Bajaj scooter, some prefer LML and others like Kinetic Honda. Thus, within the +me market there are submarkets that differ significantly from one another. This lack of homogeneity within the same market may be due to the differences in buying habits, the ways in which the product k used, motives for buying, etc. Therefore, it is necessary to divide the market into homogeneous submarkets for successfully marketing the product. Market segmentation, the, is the process of dividing the to market into one or more parts (submarket or segments) each of which tends to be homogenous in all significant aspects.

Based on the above discussion, now we can say that a market segment refers to a submarket (a part) of the market which is homogeneous in all significant aspects. The strategy of market segmentation involves the development of two or more different marketing programmes for a giver! product or service. with each marketing programme aimed at a different market segment.

Organisational markets can be segmented with many of the same variables used in segmenting the consumer goods markets. Organisational markets can be segmented geographically and by several behaviouristic variables, benefits sought, user status, usage rate, loyalty status, and attitudes. In particular, there are three commonly used bases : 1) type of customer 2) size of customer, and 3) type of buying situations.

Type of Customer

A common way to segment industrial markets is by end users. Different end users often seek different benefits and can be approached with different marketing mixes. As explained earlier, major types of industrial markets are: i) agriculture. forestry and fisheries, 2) mining, 3) manufacturing. 4) construction. 5 ) transportation. 6)communication, 7) public utilities. 8) banking. finance and insurance. and 9) services. This is an accepted classification known as Standard Industrial Classification (SIC) Code. Each of this type is further divided upto very minute levels and, accordingly, directories of industries are published.

Customer Size

Customer size is another variable used for segmenting organisational markets. Many companies set up separate systems for dealing with major and minor customers. For example. Steelcase. a major manufacturer of office furniture, divides its customers into two groups as major accounts and dealer accounts. Accounts of large and reputed companies come under major accounts. Such accounts are handled by national account managers working with district field managers. Smaller accounts are categorised as dealer accounts. These accounts are handled by the field personnel working with franchised dealers who sell Steelcase products.

Type of Buying Situations

We have already identified three types of buying situations: 1) new buy. 2) modified buy. and 3) straight re-buy. These buying situations, as you know, are different from each other in a significant way. An industrial seller can segment his market on this basis of buying situations and adopt marketing strategies accordingly.

Q3) a) Write short notes on the following: Product innovation

Ans) To innovate means to introduce something new - to introduce novelties or to make changes. When we apply this meaning to a product, an innovated product may be construed as an entirely new product or an existing product being offered with some change or modification. A new product is, therefore, defined as a product that opens up an entirely new market, replaces an existing product or significantly broadens the market for an existing product.

Need for an entirely new or an innovated existing product is obvious. No company can completely rely on the same product mix indefinitely. Competitors are always keen to grab-a share on others' market. It is for this reason that developing new products is considered to be one of the most important activities of any business. Normally companies keep on introducing new products, each promising some additional benefits to the consumers. As a matter offact the very justification of the existence of a business is its ability to satisfy the customers. A business is, therefore, responsible to provide much needed satisfaction to the customers through the medium of its products and services, and innovation u the Keynote of this process.

Similarly, ineffective use of manpower. If products arc not planned properly and fail afrcr their introduction in the market, all human efforts go waste. Yet we find that :i large number of products meet this fate, hence a word of caution. It is important to assess the needs of the prospective customers and then the organisation should make use of appropriate technology to satisfy that need by matching it with an appropriate product or service.

A company can survive and grow only if it increases its profitability. This can be achieved through designing new products and then backing it up with a suitable marketing programme. It may, however, be recognised that adding a new product involves lots of expenditure. Unless it is properly researched and monitored, the new addition to product/mix may not bring the desired results. It may lead to product failure and results in loss to the company.

Q3) b) Product life cycle

Ans) Like human beings, products also have a distinct life cycle. A product generally- passes through four stages during its entire life from birth to death. These stages are: 1) introduction, 2) growth, 3) maturity, and 4) decline or obsolescence. Thus, product life cycle refers to the stages a product goes through from its introduction, through its growth and maturity, to its eventual decline and death (withdrawal from the market)

All products enter the decline and possible abandonment phase. This could be because of any of the following three reasons. Firstly, the need for the product is, not there. Secondly, a better or less expensive product came into the market. Thirdly, a competitor, with a better marketing effort, forces the company product out of the market arena.

Here are the stages of a new product life cycle:

Introductory Stage:

During this stage arrangements for full scale production are made, a marketing programme is Bnaliscd, and the product is offered to the market. From Figure 6.2 you can assess that the sales volume shows an upward trend, but the rate of growth is quite slow. A t this stage, the product being new and has been first made available for purchase in the market, it may not face competition in the market.

Growth Stage:

After the product gains acceptance in the market i.e., accepted by the consumers as well as trade, it enters into the growth stage. Now the demand of the product, grows rapidly, generally outpacing supply. In the light of increased sales volume. the company profits also increase. Effective distribution and promotional efforts are considered key factors during this stage, so as to cash on the rising trend of demand . The company considers increased sales volume as a top priority.

Maturity Stage:

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'.

Decline or Obsolescence Stage

This is the stage where the profits drop rapidly and ultimately the last stage emerges. Retaining such a product after this stage may be risky, and certainly not profitable to the organisation. Thus, a firm has to finally choose between a total abandonment of the product or continue it in a specialised limited market. The decision will be based on the level of remainirg opportunity and ability of the management in this regard.

Q3) c) Factors influencing price of products and services

Ans) The major factors affecting the price of product or service are as follows :

Value of the product to the buyerA person buys a product only if it is of value to him in relation to the price demanded. Since a mans wants are unlimited and purchasing power is limited, he would buy the products which will give him the maximum satisfaction in relation to the price paid.

Cost is undoubtedly an important consideration in price determination. In order to , survive and grew, a company must recover all the costs and earn some amount of profit. For a limited period, as in the case of introductory stage of a new product or while entering a new market, a company can afford to sell the product at a loss. However. in the long run all the costs must be recovered.

Product Costs

It seems more logical to start the process of fixing price with costs. While fixing the price, the questions like: What is the cost? What profit should be earned on the sale of products? They seem easier to answer than the question: What can peopIe pay for the product? Yet the third question (i.e., what people pay for the product) is the most important of the three. Nevertheless. many marketers think in terms of total costs (manufacturing cost + distribution cost + administering cost) plus a reasonable profit as proper procedure for fixing the price.

Competition

While the upper and lower limits of the price of a product is set by keeping in view the value of the product to the buyer and the cost of the product to the seller, the actual price to be fixed is influenced greatly by the degree of competition in the relevant market. If there is no competition or negligible competition in the market, the price will tend to be on the higher side. On the other hand, a free and healthy competition may result in reduction of the price.

Legal Considerations

Pricing is a very sensitive and important decision in marketing. An increase in price often attracts public criticism and may also attract legal restraint. Suppose an essential commodity, like medicine, costs Rs. 10 per unit, whereas the buyer is prepared to pay any amount in case of an emergency. In the absence of any competition, the seller will be tempted to charge a very high price, say Rs. 100 per unit. However, the law can restrain the unscrupulous seller from charging 'what the traffic will bear'. This can be done by the Government by declaring the said medicine as an 'essential commodity' under the Essential Commodities Act, 1955.

Q3) d) Publicity

Ans) Publicity is the non-personal stimulation of demand for a product, service or business unit by planting commercially significant news about it in a published medium or obtaining favourable presentation of it upon radio, television or stage that is not paid for by the sponsor.

Salient features of the definition are as follows: .

1. Non-personal / mass media: Like advertising, publicity also reaches a very large number of people at the same time (hence non-personal) through mass media such as newspapers, magazines, radio, TV, etc.

2. Commercially significant news: This is one of the features that distinguishes publicity from advertising. When information about a product or company is considered newsworthy, mass media tend to communicate that information free of cost. Since most publicity appears in the form of news items or articles originating from the media, rather than the advertiser, it has higher credibility (believability).

3. No Sponsor: Since the information originates from the media, there is no sponsor, that means the messages are unsigned. This is another point of difference between advertising and publicity.

4. Not Paid for: Since publicity is not identified by a sponsor and the information is not, disseminated at his behest, he does not pay for it. This, is the third feature that differentiates publicity from advertising.

5. Purpose(demand stimulation): In some situations, where publicity is properly leading to increased demand for the product.

Q4) Differentiate between the following:

a) Marketing concept and Societal concept

Ans) Marketing Concept:

In an evolutionary process, pang organisers have come to change their focus and to see their marketing tasks in a broader perspective. Marketing concept is considered a business philosophy wider in its implications. Under the marketing concept, the organisation considers the needs and wants of consumers as the guiding spirit and the delivery of such goods and services which can satisfy the consumer needs more 'efficiently and effectively than the competitors. It is also said that the marketing concept is consumer orientation with the objective of achieving long run profits. It is a modem marketing philosophy for dynamic business growth. In other words, under this concept the task of marketing begins with finding what the consumer wants, and produce a product which will meet that want and provide maximum satisfaction. Implicitly, the consumer is the boss or king who dictates. The focus which moved from the product to selling, now rests with the consumer.

Societal Concept:

With the growing awareness of the social relevance of business, there is an attempt to make marketing also relevant to the society. In a sense, marketing is not a business activity alone but must take into account the social needs. Excessive exploitation of resources, environmental deterioration and the customer movements in particular have necessitated the recognition sf the relevance of marketing to the society. Marketing then must be a socially responsible or accountable activity. The societal concept holds that the business organisation must take into account the  needs and wants of the consumers and deliver the goods and services efficiently to enhance consumer's satisfaction as well as the society's well-being. The societal concept is an extension of the marketing concept to cover the society.

In effect, a company which adopts the societal concept has to balance the company profit, consumer satisfaction and society interests.

Q4) b) Consumer markets and Organisational markets

Ans) Consumer Markets:

Here consumers mean all the individuals and households who buy goods and

services for personal or household consumption. Thus, the consumer market consists . of all the individuals and households who buy or acquire goods and services for their own personal or household use. They buy strictly to satisfy their non-business personal wants. For instance, a person purchases items such as toothpaste, soap, biscuits, sweets, etc., for his/ her personal consumption or family consumption. But when an individual buys goods for resale or for further production, such an individual is not treated as belonging to the consumer market.

These ultimate consumers are large in numbers and spread throughout the country. They also vary tremendously in age, income. educational level, tastes, preferences, etc. Consumer purchases are influenced by cultural, social, personal, economic and psychological characteristics of the buyer. Buying decision process of consumers involves five stages: I) problem recogniton. 2) information search. 3) evaluation of alternatives, 4) purchase decision, and 5) post-purchase behaviour.

Organisational Markets:

There are three types of organisational markets:

Industrial market: It consists of all the individuals and organisations that buy or acquire goods and services that enter into the production of other products and services that are sold, rented or supplied to others. For example, a furniture manufacturing firm purchases raw materials such as wood, iron tubes, cushions, cloth, etc., manufactures furniture, and sell it. Here the firm purchased required raw material to use in the manufacture of furniture which is meant for sale. The major types of industries comprising industrial markets are: I) agriculture, forestry, and fisheries, 2) mining. 3) manufacturing, 4)construction, 5) transportation, 6) communication, 7) public utilities, 8)banking, finance and insurance, and 9) services.

Reseller Market: It consists of individuals and organisations who acquire goods purchased by others and resell them either to industrial consumers or ultimate consumers. In the case of the sellers like small wholesale and retail organisations, buying is done by one or a few individuals. In large scale reselling organisations, buying is done by an entire purchasing department When the resellers buy new items, they go through a buying process similar to the one shown for industrial buyers, which we will discuss later in this unit. Similarly, in the case of standard items, the buying process consists of routines for reordering and renegotiating contracts.

Government Market: It consist of government agencies (central, state and local bodies) who purchase goods for meeting the requirements of government. Government agencies buy an extensive range of products and services. Each product that the government buys require specific decisions related to how much to buy, where to buy, how much to pay, what services ?re required, etc. Normally, government buyers call for quotations/ tenders and favour the lowest cost bidder who can meet the stated specifications.

Q4) c) Product line and product mix

Ans) Product Line:

A product line is an expression generally used to describe a group of closely related products. A group of products may be referred to as a product line either because they cater to the needs of a particular group of buyers, or they function in similar manner or they are sold through identical marketing facilities or fall within the same price range. The crux of the situation is that such reasoning may be consistently used for referring to a product group as a product line. A seller may identify a number of product lines to be offered to buyers by keeping in view the buyer's considerations, economy of production, distribution, etc.

Product Mix:

The expression product mix refers to all the products offered by a particular seller. Product mix has three components, viz., breadth, depth and consistency. The breadth (or width) of the product mix indicates as to how many product lines are offered by a seller. For example, Bajaj Electricals offers a variety of electrical appliances such as fans, mixers, lamps, geysers, etc. The term depth refers to the assortment of sizes, colours, and models offered within each product line. For example, Palmolive Soap is offered in three different types to cater to different types of skin of the consumers.

Q4) d) Direct channel and Indirect channel of distribution

Ans) Direct Channels

When the producers sell their goods directly to the consumers, it is called a direct channel. No middleman is present between the producer and the consumer. For direct selling, the first option involves supplying the product to the customer using your own salesmen and arranging your own deliveries. The second option is using the medium of post office. You obtain orders from your customers by mail or telephone to your advertisements or to letters mailed directly to their houses. YOU deliver your products to them through mail or through some other canier. The next alternative is to establish your own retail stores. Bata Ltd., for example, has established its own retail stores throughout the country. This practice has also been adopted on a smaller scale by a number of textile mills which have their own retail shops like Calico Mills, Raymonds, etc. DCM has franchised a number of retailers to sell their products to the consumers.

Indirect Channels:

In the case of other products it is not possible for the manufacturer to supply goods directly to the consumers. So middlemen like wholesaler, retailer and mercantile agents may be engaged in the channel of distribution. When the middlemen are engaged in the distribution channel, it is called an indirect channel. The manufacturer may supply goods directly to retail traders. In this case the producer ascertains the requirements of retailers at periodical intervals and foods are supplied accordingly. As and when required, the retailer may also procure good from the producers godown located in that region.

Q5) a) Comment briefly on the following statement: The MRTP Act intends to control concentration of economic power.

Ans) The provisions relating to the regulation of trade practices also cover pricing practices indulged In by the sellers who include wholesalers, manufacturers and the retailers who rend to manipulate prices. The practices which regulated under this Act are : resale price maintenance, price discrimination, collective price fixing, predatory pricing, bargain and deceptive pricing, and charging of unreasonably high price. Let us discuss these aspects in detail.

Resale Price Maintenance

With a view to exercise control over the price to be charged on the re-sale of his products, a manufacturer often stipulates the price to be charged by the dealers. Such a stipulation may be either through suggested re-sale price or fixed re-sale price. insistence by the manufacturer that his product should not be sold below the price indicated by him, may eliminate competition among the distributors of the product. This my tend to keep the price paid by the consumer at a level higher than what it would have been otherwise. Thus, the practice of re-sale price maintenance may benefit the manufacturer and the dealers.

Price Discrimination .

When a manufacturer or supplier of goods charge, for the same or similar product, a higher price from one dealer and a lower price from another, the practice is referred to as discrimination. The discrimination in price can be made either through fixing and charging different prices from different buyers or by granting discount, commission, allowance or rebate at different rates40 different buyers.

Collective Price Fixing

Collusive Tendering : It is a practice whereby sellers (or buyers) of goods or services secretly agree on the prices, or other terms or conditions of sale or purchase, to be quoted in response to a tender. They would quote such rates and terms as would make the offer of only the pre-decided tenderer acceptable. This practice results in unduly high prices of products or services offered for supply. The opposite will be the situation when the tenders invited are for the 'disposal of any product. In that case the rates quoted will be too low.

Collusive Bidding : Collusive bidding is the counterpart of collusive tendering in situations where the goods are sought to be disposed of through auction. The system is prevalent among certain organisations which dispose of surplus goods through- auction with a view to get the highest possible price.

Predatory Pricing

One way to eliminate or reduce competition in the market is to charge a slashed- down price which can be even below the cost incurred by the manufacturer or supplier of the product. This is often done with the intention of driving out ,a smaller competitor and eventually making profit by the monopoly situation so created. Such a trade practice is often referred to as predatory pricing.

Q5) b) Consumer behaviour is influenced by social factors such as reference group, family, social roles, social status and opinion leaders

Ans) Consumer behaviour is also influenced by social factors such aa reference groups, family, social roles. social status and opinion leaders.

Reference Group

As a consumer, your decision to purchase and uee certain products and services, is influenced by the people around you with whom you interact and the various social groups to which you belong. The groups with whom you interact directly or indirectly influence your purchase decisions.

There may be indirect reference groups and direct reference groups. Indirect. reference groups comprise those individuals or groups with whom an individual docs not have any direct face-to-face contact such as filmstars, TV stars, sportsmen, politicians, etc.. Hidden in this appeal is the subtle inducement to the customer to identify himself with the user of the product in question.

Family

The family is the most important of all reference groups and we shall discuss it in detail. The family, as a unit, is an important consumer for &any products which are purchased for consumption by all family members. It is a source of major influence on the individual member's buying behaviour. It is from parents that we imbibe most of our values, attitudes, beliefs and purchase behaviour patterns. Long after an individual bas ceased to live with his parents, their influence on the sub-conscious mind still continues to be great

Roles

An individual may participate in many groups. His position within each group can be defined in terms of the activities he is expected to perform. You are probably a manager, and when you are in a work situation you play that role. However, at home you play the role of spouse and parent. Thus in different social positions you play different roles. Each of these roles influences your purchase decisions.

Social Status

Each role that a person plays has status, which is relative prestige accorded by society. Status is often measured by the degree of influence an individual exerts on the behaviour and attitude of others. People buy and use products which reflect their status. The managing director of a company, for instance, may drive a Mercedes to communicate his status in society. He may go to Europe or USA for a holiday. rather than going to Mussoorie or Ooty.

Opinion Leaders

A consumer is also influenced by the advice he receives from his friends, neighbours, relatives and colleagues about what products and services he should buy. This process of influencing is known as the opinion leadership process and is described as the process by which one person informally influences the actions or attitudes of others

Q5) c) A seller adopts product diversification by adding a new product to the existing product line or product mix.

Ans) A single product company can hardly expect to provide satisfaction to many consumers for a long time. On the other hand, a multi-product company can offer an alternative product to meet the changing needs and tastes of the consumers. It is for this reason that most companies, as a matter of policy, offer a variety of products in the product-mix. This phenomenon is called product diversification. The firm would strive to add something new, it may be a new product or it may be entry into a new market or it may be inducting some new technology. For example, Brooke Bond have diversified from Tea coffee market into the business of selling spices. Hindustan Machine Tools Ltd (HMT) started with machine tools but later on diversified into such areas as watches, tractors, printing machinery and electric bulbs. Thus, product diversification means adding a new product to the existing product line or product mix. Product diversification is applicable not only to production, but to selling or distribution as well. A seller dealing in watches may diversify by selling toys. Generally, diversification is categorised in to two types :I) related diversification and 2) unrelated diversification.

Related Diversification

Where the new products introduced in the product mix are similar to the existing products, it is described as 'related diversification'. Related diversification is the most common form of diversification, inexpensive and easier. For example, Hindustan Lever offers a variety of toilet soaps such as Lifebuoy, Lux, Pears, etc., and also other brands of soaps or cleaning materials such as Vim, Surf or Rin as part of related diversification strategy. So far, the relatedness of the products is quite clear. However, this relatedness is sometimes stretched to include other similar Items. For example, in case of Hindustan Lever, toiletries would also be included under related diversification.

Unrelated Diversification

When the new products offered or introduced are quite different front the existing ones, the company is said to have adopted the strategy of unrelated diversification. For example, if a manufacturer of consumer products diversifies into the manufacture of raw materials such as chemicals or industrial products, such diversification is described as unrelated diversification. This naturally involves heavier costs and managerial challenges. This is the reason why related diversification is more popular.

Q5) d) Every product introduced in the market may not succeed.

Ans) The reasons for product failure are attributed to six factors by Cundiff and Still. They

1. Product Problems :The products fail in the market due to certain problems with the product itself as neglect of market needs or ignorance of market preferences, defects in product function, poor technical design or external appearance, pool packaging or inappropriate sizes, undependable performance or too high a variation in quality, etc.

2. Distribution and Channel Problems : Products fail due to certain problems in distribution such as inappropriate channels or outlets, lack of co-operation from middlemen, poor system of physical distribution, etc.

3. Promotional Problems : Promotional problems that contribute to the product failure are : inadequate or ineffective promotion, advertising directed towards wrong market segments, use of wrong appeals, failure to co-ordinate adequately with distribution system, improper training to sales force, etc.

4. Pricing Problems : Pricing problems such as bad forecast of price that buyers would pay, price not on par with product quality, poor cost estimates caused 'asking price' to be too inadequate margins for the middlemen, etc., also responsible for sometimes for product failure.

5. Competitive Problems : Competitors' aggressive strategies with respect to product, distribution, promotion and price may cause serious setback to the product in the market. The company had to react defensively rather than pursuing aggressive strategies.