Assignment Code: AMK-01 / TMA/2021-22

Course Code: AMK-01

Assignment Name: Marketing

Year: 2021-2022

Verification Status: Verified by Professor

Maximum Marks: 100

Attempt all the questions:

Q1. What is marketing environment? Describe the macro environment and micro environment of marketing. (20)

Ans) As per Philip Kotler, the marketing environment is comprised of external forces that influence marketing management's capacity to build and maintain successful consumer relationships. For a tyre producer, the environment includes automobile manufacturers and buyers, tyre manufacturing technologies, taxation, import and export restrictions, distributors, dealers, competitors, etc. Besides this, the corporation may need to examine its own production technique, finances, and sales force. The environment is significant because it is changing and unknown. Some of these variables are uncontrollable. Changes pose both a hazard and an opportunity.

Macro Environment

The following macroenvironmental elements impact an organization's marketing system:

1. Physical Environment

Changing weather, terrain shape, and water availability are all factors in the environment that affect a marketer's ability to produce. For example, India imports petrol and other goods due to a lack of petroleum resources.

2. Technological Environment

People's fate is shaped by technology. The revolution in computers, electronics, and communication may cause your output to be out of date. Laser and desktop publishing, for example, have made labour-intensive type-set printing uneconomical.

3. Political and Legal Environment

Changes in government bring new industrial policies and rules. Laws and regulations are becoming more complex as government regulation intensifies. Many commercial domains are governed by legislation, and the market cannot avoid their impact. Tax rules, such as sales tax, excise duty, octroi, and income tax, directly affect the costs and pricing of goods and services. So too import and export policies. Because these forces affect all units, they are called macro forces.

4. Economic Environment

The economic environment is determined by the state of the economy as measured by GNP and per capita income, as well as the trade balance. War, hunger, and per capita income, as well as a country's standing. For example, a good monsoon means increased agricultural output and more money for those who depend on agriculture. This increases consumer spending. Thus, consumer demand rises. A bad monsoon will also affect fertiliser demand. Personal and corporate taxation also determines disposable income.

5. Demographic Environment .

Statistics on population, geographical distribution, density, mobility patterns, age distribution, birth and death rates, religious composition, etc. are all important to marketers. Marketers can study shifting consumer lives, habits, and preferences. For example, when both spouses work, the demand for housekeeping aids and semi-cooked foods increases.

6. Socio-Cultural Environment

There are core cultural values which are found stable and deep rooted, and hence change very little. There are also secondary cultural values which are susceptible to fast changes. Some of them like hair styles, clothing, etc. just fade. Even in a given culture, the entire population may not adopt the changes. There are different degrees with which people adopt them. Religion is also an important component of culture which has implications for the marketer.

Micro Environment

Micro environmental factors which influence the marketing decisions of the company are:

1. Organisations Internal Environment

Financial, production, and human resource capabilities influence marketing decisions. For example, deciding whether to generate extra sales volumes. If present facilities are inadequate and plant and machinery growth is required, budgetary considerations must be made.

2. Supplier’s

A variety of inputs are needed to produce commodities or services. Suppliers are persons or firms who provide such inputs. The success of a marketing organisation depends on the smooth and consistent supply of inputs in suitable proportions. So, suppliers are vital. The timely supply of specified quality and quantity allows the producer to maintain delivery schedule and product quality. When there are more suppliers, the supplier dependence increases. During shortages, certain suppliers may refuse to furnish materials. Depending on the supplier's competitive situation, each supplier may negotiate his own terms.

3. Intermediaries

Normally, not all producers can sell directly to customers. Producers utilise several intermediaries to get their goods to consumers. Dealers and distributors, or marketing intermediates, may or may not want to cooperate. They usually select well-known brands. Finding a willing merchant to stock his items may be tough for newcomers. Newcomers may demand favourable terms (discount, credit, etc. ), which the producer may find difficult to meet. Other intermediaries like transport companies and warehouse companies help with physical distribution. Their accessibility, safety, and speed often affect marketing operations.

4. Competitors

Competitors compete. Strategies and competitors influence marketing decisions. Aside from pricing competition, there is product differentiation competition. Competitors may also focus on brand identity, dealer network, or similar products. Their marketing may showcase various true or fraudulent product qualities. If one advertises imported technology, the other may claim to already be exporting. Competitor strategies can turn an opportunity into a challenge.

5. Customers

Customers come in numerous forms. A firm may sell directly to end users, resellers, industries, governments, or foreign purchasers. It may sell to any or all of these clients. Each consumer market has its own features, and the marketer should be well versed in persuading and selling to them.

Q2. What do you understand by the term “discounts and allowances”? Explain various types of discounts and allowances given by the manufacturer to various types of buyers with example. (20)

Ans) Allotments and discounts reduce the base price of products or services. For example, a manufacturer's list price may be modified by a retailer's retail price, which may be modified by a manufacturer's list price (which is quoted to a potential buyer, usually in written form).

Discounting can be used to enhance short-term sales, shift out-of-date stock, reward loyal consumers, motivate distribution channel members to execute a function, or reward other beneficial behaviours. Some rebates and allowances are sales promotions. Many price discrimination mechanisms allow sellers to capture some consumer excess.

Types of Discounts and Allowances

1. Quantity Discount

Selling and distribution costs are directly proportional to sales volume. Buying in bulk saves the seller money on sales and distribution. To encourage buyers to buy in bulk, the vendor often allows a reduction in the product's price. The discount is known as a bulk discount. These discounts are depending on the purchase size, either in product units or dollar value. For example, one banana may cost Rs.0.50, but a dozen may cost Rs.5.00. A kg of rice may cost Rs. 6, but a quintal (100 kg) may cost Rs. 550. In the first scenario, you save Rs. 1.00 on 12 bananas or Rs. 6.00. In the second situation, you get a Rs.50 quantity discount (6.00 for 1.000 kilogramme minus the actual amount charged Ks.5.50).

2. Trade Discount

Retailers and wholesalers receive trade discounts for fulfilling certain services like storing, selling, obtaining information, addressing complaints and customer service. Depending on the functions and services they give to the manufacturer, different middlemen may be allowed different discounts. However, all horizontal intermediaries (e.g., wholesalers) must receive the same trade discount. Otherwise, the behaviour amounts to discriminatory dealing, which may cause ill will among dealers 1 and may be illegal.

The buyer's eagerness to do business may also be reflected. since this is significant if the vendor wants a certain type of buyer volume.

3. Cash Discount

A cash discount is a reduction in the bill amount to promote early payment by the buyer. This is common when selling on credit. The cash discount is based on the list price minus the trade and quantity discounts. A classic example is 2/10, n/30, which signifies that if paid within 10 days, the customer gets a 2% discount.

4. Seasonal Discount

Off-season discounts are sometimes granted. This is done to entice the buyer to buy the goods in the off-season. This is the seasonal discount. For example, refrigerator makers provide discounts during the winter months when demand is lower. Similarly, fan makers provide winter discounts. The seasonal discount encourages buyers to acquire products in off-season and store them well ahead of demand. Allowing seasonal discounts allows the producer to sell products off-season and save inventory expenditures. This discount helps the seller smooth out the product's production and sales patterns. The middlemen can pass on the full or portion of the manufacturer's seasonal discounts to the customers.

5. Promotional Allowance

A promotional allowance or discount is a decrease in a manufacturer's bill to a middleman for performing additional promotional and sales responsibilities. Included in these tasks are local advertising and participation in local shows.

Q3. Write short notes on the following: (4X5)

Q3. (a) Societal Concept

Ans) With an increasing understanding of business's social importance, marketers are attempting to make marketing more socially relevant. In certain ways, marketing is more than just a corporate activity; it must also include societal demands. Excessive resource exploitation, environmental degradation, and, in particular, customer movements have demanded the awareness of marketing's importance in society. As a result, marketing must be a socially responsible or accountable endeavour. According to the social notion, a business organisation must consider the requirements and wants of its customers and supply goods and services efficiently in order to improve customer happiness and society's well-being. The societal notion is a broadening of the marketing concept to include society as well as customers.

Q3. (b) Brand Repositioning

Ans) Several market characteristics may change over the course of a product's life cycle, such as the launch of a competitor product, adjustments in consumer preferences, the identification of new needs, and so on. All of these changes necessitate a reassessment of whether the product's original positioning is still optimal. Stagnant or declining sales indicate that the initial product positioning has to be reconsidered. Thums Up, for example, has moved from the young to the professionals to the kids and back to the young multiple times in recent years.

Q3. (c) Consumer goods

Ans) Consumer goods are products bought for consumption by the average consumer. Alternatively called final goods, consumer goods are the end result of production and manufacturing and are what a consumer will see stocked on the store shelf. Clothing, food, and jewellery are all examples of consumer goods. Basic or raw materials, such as copper, are not considered consumer goods because they must be transformed into usable products.

Consumer goods, or final goods, are goods sold to consumers for their own use or enjoyment and not as means for further economic production activity.

From an economic standpoint, consumer goods can be classified as durable (useful for longer than three years), nondurable (useful for less than three years), or pure services (consumed instantaneously as they are produced).

For marketing purposes, consumer goods can be grouped into different categories based on consumer behaviour, how consumers shop for them, and how frequently consumers shop for them.

Q3. (d) Advertising media

Ans) Advertising media refers to the various media channels through which advertising is done. Advertising media is used for showcasing promotional content which communicated in various forms such as text, speech, images, videos using TV, radio, online, outdoor etc. Basically, they are channels through which companies can advertise their products and services to reach to customers.

Importance of Advertising media

Advertising media plays a pivotal role in business and marketing for companies. There are many companies who offer products and services to customers. However, it is impossible for every customer to know about every brand or product. This is why companies advertise and use advertising media to reach to customers, and to increase their market share. Depending upon the customer demographics, advertising budget, targets of the company, advertising objectives etc., companies can choose the type of media they want, and they can do an advertising campaign. This helps to create a buzz about the brand, showcase the product and service utilities to the customer and build a strong brand.

Q4. Differentiate between the following: (4X5)

Q4. (a) Related and Unrelated product diversification.

Ans) Related Diversification

It is when a business adds or expands its existing product lines or markets. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification.

With a related diversification strategy, you have the advantage of understanding the business and of knowing what the industry opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.

It is usually because the diversification analysis under-estimates the cost of some of the softer issues: change management, integrating two cultures, handling employees. layoffs and terminations, promotions, and even recruitment. And on the other side, the diversification analysis might over-estimate the benefits to be gained in synergies.

Unrelated Diversification

It is when a business adds new, or unrelated, product lines or markets. For example, the same phone company might decide to go into the television business or into the radio business. This is unrelated diversification: there is no direct fit with the existing business.

A company engages in unrelated diversification because there may be cost efficiencies. Or the acquisition might provide an offsetting cash flow during a seasonal lull. The driver for this acquisition decision is profit; it needs to be a low-risk investment, with high potential for return.

Q4. (b) Predatory pricing and Price discrimination

Ans) Predatory Pricing

Predatory pricing is the illegal act of setting prices low to attempt to eliminate the competition. Predatory pricing violates antitrust laws, as it makes markets more vulnerable to a monopoly. However, allegations of this practice can be difficult to prosecute because defendants may argue successfully that lowering prices is part of normal competition, rather than a deliberate attempt to undermine the marketplace. What’s more, predatory pricing doesn’t always succeed in its goal because of the difficulties in recouping lost revenue and successfully eliminating competitors.

Price Discrimination

Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price they will pay. In more common forms of price discrimination, the seller places customers in groups based on certain attributes and charges each group a different price.

Q4. (c) Consumer Markets and Organisational Markets

Ans) Consumer Markets

The consumer market consists of all the individuals and households who buy or acquire goods and services for their own personal or household They buy strictly to satisfy their non-business personal wants.

Organisation Markets

An organizational market refers to the practice by consumers and companies purchase commodities for other purposes rather than personal consumption. These markets have fewer buyers but purchasing in bulk is common in comparison to consumer markets.

Differences

Both individuals and organizations need to purchase items to accomplish their daily tasks. There is a large difference, however, in how and why an organization purchases goods and services versus how an individual shops. Understanding these differences is important if you want to tap into both an organizational and a consumer market.

Organizations often purchase in bulk, whereas consumers typically do not. Consumers typically purchase goods for different reasons than organizations and have more freedom in choosing the items they want. A consumer may purchase a chair so people can sit comfortably in his home. He will be able to choose any chair within his budget that he likes. An organization, on the other hand, may purchase a chair because an administrative assistant needs it to do his job.

Q4. (d) Push and Pull promotion strategies

Ans) Push marketing is a form of a promotional strategy whereby business owners and brands try to take their products and services directly to the customer. Push marketing involves all the tactics that a seller deploys in pushing their goods and services to the potential consumer.

Pull marketing is a marketing tactic whereby you get the customers to come and patronize your products and services. Pull marketing ensures that some conditions are put in place to ensure that customers come looking for your brand. I.e., you attempt to pull customers into making purchases.

Push and pull marketing are the two core principles for guiding your marketing strategy. Before choosing which of the marketing strategies to go for, you have to identify what the long-term and short-term goals of your business are.

Push marketing, or outbound marketing, can lead to quicker sales and is powered by what you push out to your audience via your marketing. Pull marketing, or inbound marketing, starts internally and is focused on building and perfecting a marketable brand to new and existing customers.

Q5. Comment briefly on the following statement: (4X5)

Q5. (a) Skimming price is appropriate for a product that is a real innovation.

Ans) Price skimming is a pricing strategy often related to innovative and high-demand products. Brands set a high price ceiling for new products due to market analysis and consumer demand.

The top layer of loyal customers buy at high prices. A retailer then pivots to accommodate new layers of consumers by slowly lowering the price over time. Retailers continue in skimming pricing until it levels-off at a base price.

Retailers initially set prices high due to demand and then slowly “skim” the price down as the novelty of the product decreases and accessibility to it increases.

Q5. (b) A company tries to stimulate sales during the maturity stage by adopting different modification strategies.

Ans) Modifying the product is a tried-and-tested way for companies to boost the sales of mature products by labelling it "new and improved". Modifying your product means tweaking it to meet changing customer needs. You can do this by improving the product's quality, features, durability, reliability, versatility or safety or by updating the product's name, packaging and style.

Apple Inc. is the master of reinvention. The company "invents" a new iPhone every couple of years by releasing an upgraded model. Customers typically regard the upgrade as a brand-new product offering and are happy to do business with Apple again.

Q5. (c) Buying a product is a process encompassing different stages.

Ans) The process a consumer goes through in making a purchase decision:

1. Need Recognition

The first step of the consumer decision process is recognizing that there is a problem–or unmet need–and that this need warrants some action.

2. Information Search

After recognizing a need, the prospective consumer may seek information to help identify and evaluate alternative products, services, experiences, and outlets that will meet that need.

3. Evaluation of Alternatives

The next step is to evaluate these alternatives and make a choice, assuming a choice is possible that meets the consumer’s financial and psychological requirements. Evaluation criteria vary from consumer to consumer and from purchase to purchase, just as the needs and information sources vary. One consumer may consider price most important while another puts more weight on quality or convenience.

4. The Purchase Decision

After much searching and evaluating (or perhaps very little), consumers at some point have to decide whether they are going to buy. Anything marketers can do to simplify purchasing will be attractive to buyers.

To do a better job of marketing at this stage of the buying process, a seller needs to have answers to questions about consumers’ shopping behaviour. Those answers will increase the likelihood of closing the sale and maximizing value at the moment of purchase.

Q5. (d) A channel of distribution performs a variety of functions such as transactional, logistical and facilitating functions.

Ans) The main functions performed by the distribution channels can be divided into following categories:

1. Transactional Functions

These functions relate to the various transactions performed for moving the goods from one channel end to other. It includes functions like buying, selling and risk bearing. These functions are performed by channel members. The goods are sold by the producer or manufacturer to various intermediaries who in turn sell it to the ultimate consumer. Movement of goods also include change in the title of goods from one to another.

2. Logistical Functions

These include functions like assembling, storage, grading and transportation for physical movement of the goods from one place to another. It is very necessary that the goods are properly assorted and stored at the right place. Channel members have to ensure that stored goods are transported at right time, so that it is made available to the consumers.

3. Facilitating Functions

These functions facilitate the performance of different functions by the channel members. With these functions, activities by the channel members can be performed smoothly. It includes financing, credit facilities, after-sale services, maintenance, etc. Purchase of most of the goods these days are accompanied by various services like loan facility, credit facilities, free servicing, etc. which facilitates the channel members.