List of exam questions and answers on Marketing Management! This will help you to learn about the frequently asked exam questions on marketing especially compiled for school and college, MBA and BBA students. This article will also help you to crack the interview of various competitive examinations.

Exam Question  # Q.1. What are the features of a good brand name?

Ans. Brand names should be chosen carefully since the name conveys a lot of information to a customer.

The following list contains considerations that should be made before making a choice of brand name:

(i) Evoke positive associations


(ii) Be easy to pronounce and remember

(iii) Suggest product benefits

(iv) Be distinctive

(v) Use numerals when emphasizing technological features


(vi) Not infringe existing registered brand name.

Exam Question  # Q.2. Explain the importance of CRM.

Ans. The importance of CRM is mentioned in the following points:

i. Increasing Customer Satisfaction – It refers to fulfilling the desires of customers by providing customized products to maintain the loyalty of customers.

ii. Helping in Customer Selection and Retention – It refers to finding out profitable customers and making reward programs to retain the customers for a longer period of time.


iii. Providing Customer Service – It refers to exploring the scope of enhancing the service delivery system of the organization.

iv. Facilitating Sales Force Automation (SFA) – It refers to automating the sales functions and sales force management of the organization.

Exam Question  # Q.3. What are the benefits of franchising?

Ans. For the franchiser, franchising is beneficial as discussed below:

(i) It allows the franchiser to expand the distribution system in the shortest possible time.


(ii) The franchiser is able to expand the business with little extra cost since the franchisee provides the capital for the outlet. The franchisee also pays a lump sum to the franchiser.

(iii) It enables the franchiser to increase his goodwill and reputation by expanding his network. The franchisees have a large financial stake in the business as they have invested huge amounts for the retail outlet and licence fee. This ensures the survival and success of the business and popularity of the franchiser’s name.

(iv) The franchiser gains wider acceptance of its brand name through the franchisees.

(v) The franchiser gets feedback about the product popularity and specific needs and preferences of the local customers from the franchisees.


The benefits of franchising to the franchisee are as follows:

(i) The franchisee can use the name and trade mark of the franchiser for attracting customers and increase his sales.

(ii) The franchisee can get advice and assistance of the franchiser in training his staff, store layout, publicity, etc.

(iii) The franchiser ensures a high degree of quality control. This helps the franchisee to satisfy his customers by offering quality products.


(iv) The franchiser makes huge investments in product innovation and research and development. The benefits of these investments are passed on to the franchisee in the form of improved products.

(v) The products are well advertised in various media and are known to the people. It is easier for the franchisee to promote the sale of such products.

(vi) There are greater chances of success of the franchisee because the brand of the franchiser is well known.

Exam Question # Q.4. Explain the functions of retailers.

Ans. Retail stores or retailers have strategic importance as a channel of distribution.


They perform the following functions:

1. Retailers purchase and assemble goods from a large number of wholesalers and manufacturers to meet the needs of the ultimate consumers.

2. Retailers keep a large number of products of different varieties in stock to sell them to the customers whenever they require. Thus, they create time utility.

3. Retailers perform transportation function by carrying the goods from the wholesalers and handing them over to the ultimate consumers. Sometimes, they also provide free home delivery of products to the customers. Retailers sell the goods on credit to the customers and they increase their short-term) purchasing power. In this process, they undertake the risk of bad debts.

4. Retailers educate the customers by informing them about the availability and diverseness of new products.

5. Retailers act as agents of customers. They communicate the needs or demands of their customers to the wholesalers and manufacturers. Thus, they help the customers in getting the want-satisfying products and help the manufacturers in purchasing the products which are desired by the customers.

Exam Question  # Q.5. What are the advantages of E-Commerce?


Ans. (i) It is easy to purchase products from home. It saves time and introduces consumers to a larger selection of merchandise.

(ii) Access new markets and extend service offerings to customers.

(iii) Business can be extended across the boundaries of one country.

(iv) Reduce the cost of marketing and promotion.

(v) Improve customer service.

(vi) Strengthen relationships with stake holders and suppliers.


(vii) Streamline business processes and administrative functions.

(viii) Customers can compare products and prices easily by browsing through mail catalogs and on-line shopping services, then order goods for themselves or others.

(ix) Business customers also benefit by learning about available products and services without tying up time meeting with salespeople.

(x) Direct marketing can also be timed to reach prospects at the right moment. The material sent by direct marketers receives higher leadership because it is sent to more interested prospects.

Exam Question # Q.6. Differentiate between price and non-price competition.

Ans. The marketing strategy of an organization is influenced by competition to a great extent. The pricing of a product is affected by the competitive situation present in the business environment.

Price Competition:


It exists when marketers compete on the basis of price. In price competition, the marketers develop different price strategies to beat the competition. They generally set a same or low price of a product than that of the competitors to gain the market share.

Generally, the prices are changed to cover the costs or increase the demand. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars. The major disadvantage of price competition is that the competitors have flexibility to change the prices of products.

Non-Price Competition:

It focuses on the factors other than the price of the product. In non-price competition, customers cannot be easily lured by lower prices as their preferences are focused on various factors, such as features, quality, service, and promotion.

Thus, the marketers focus on these factors to increase the sale of products. For instance, customers prefer buying expensive luxury products for gaining status in the society. The demand for these products does not shift even if their prices increase.

Thus, in case of non-price competition, the marketers try to promote the product by exhibiting its distinguishing features. However, a marketer who is competing on non-price basis cannot ignore the prices set by the competitors as price remains a significant marketing element.

Exam Question  # Q.7. Explain the meaning of green marketing.


Ans. Green marketing is the marketing of products that are presumed to be environmentally safe. It incorporates a broad range of activities, including product modification, changes to the production process, sustainable packaging as well as modifying advertising.

It simply consists of marketing goods and services based on factors or awareness. Organisations involved in green marketing make decisions relating to the entire process of the organisation’s products like methods of processing, packaging and distribution.

It simply means the process of selling products or services based on their environmental benefits. Such a good or service may be environmentally friendly in itself or produced in an environmentally friendly way.

Green marketing is the marketing of environmentally friendly products and services. It is becoming more popular as more people are now concerned with environmental issues and decide that they want to spend their money in a way that is friendly to the planet.

Green marketing is becoming popular because of the following reasons:

(i) Opportunities – Business firms perceive green marketing to be the opportunity that can be used to achieve their objectives, for example – Xerox introduced a quality recycled photocopier in order to satisfy the demand for less environmentally harmful products.


(ii) Social responsibility – Environmental issues are being integrated into the corporate culture.

(iii) Government pressure – Regulations are being made so as to control hazardous waste produced by industry, trying to make business firms more responsible towards environment.

(iv) Competitive advantage – Firms can create a brand image for being environmental friendly and have a competitive edge over others.

(v) Cost factor – Firms also use green marketing to reduce costs. For becoming environment friendly, they need to shift towards superior technology which is quicker and better.

(vi) Cost Saving – Firms save a lot of money by green marketing effort, for example, huge departmental stores and supermarkets have stopped giving polybags as a part of green marketing initiatives and thus saving a lot.

Green Marketing focuses on the following issues:

(i) Eliminate the concept of waste – Waste and pollution arises usually from inefficiency. Thus instead of dealing with waste, try avoiding wastage of products.

(ii) Reinvest the concept of product – Products should be either consumables, which should either be consumed by the consumer or recycled by him, or they should be durables which after utilization should be returned to the manufacturer for recycling.

(iii) Make price reflect the cost – Every product should have a cost inclusive of the cost of air, water and soil apart from the direct cost of production.

(iv) Making environmentalism profitable – Companies can create their USP by encashing their environment friendly attitude.

Exam Question  # Q.8. What is the difference between product differentiation and market segmentation?

Ans. Product differentiation and Marketing segmentation are two different approaches leading towards the satisfaction of a company’s objectives. Both the approaches are related to each other but the process of their application is different.

Product Differentiation:

In this process, the company has a highly developed R&D team which works on innovative products, taking care of the future needs of customers. The company then makes the marketing mix and then creates its target market. Thus, the need of customers is created. It is the latent need which is being recognized by the marketers.

Market Segmentation Approach:

Herein, the market research department is very strong. The market is first segmented on various attributes. Target segment is decided, marketing mix is strategized and then finally the product offering is made. This process focusses on the current needs of the market and by satisfying these needs the company can earn maximum profit.

Exam Question  # Q.9. What is social marketing? What are the types and characteristics of social marketing?

Ans. Social marketing is an approach used to develop activities aimed at changing or maintaining people’s behaviour for the benefit of individuals and society as a whole. Social marketing is defined as the application of commercial marketing techniques to social problems.

It means to take the same principles used in selling goods. It means the use of commercial marketing principles and techniques to improve the welfare of people and the physical, social and economic environment in which they live.

It is a carefully planned, long-term approach to changing human behaviour. It is the design, implementation and control of programmes seeking to increase the acceptability of social ideas, cause or practice among a target group.

For example – campaigns like AIDS control, Family planning, Consumer protection etc. Social marketing means application of commercial marketing concepts, knowledge and techniques to non-commercial ends for the purpose of society’s welfare. Social marketing is generally done by organisations like Government departments, Autonomous institutions, Religious groups, Business houses, NGOs etc.

Social Marketing Campaigns may have objectives related to changing people’s cognitions, values, actions or behaviour.

Types of Social Marketing:

Types of Social Marketing behaviour may be classified as:

(i) Organisational – Universities, Government and non-Government organisations, Cooperative bodies are some of the organisations engaged in Social Marketing. The Central Government markets defence, civil and postal services.

Universities, Colleges and Government Schools market educational services. Non-government organizations like Indian Cancer Society, Sulabh Toilets, and FICCI etc. market ideas and charitable causes.

(ii) People Based – Individuals such as political candidates seek votes, volunteers seek donations etc.

(iii) Place Based – Convention Centers, Industrial sites, etc.

(iv) Idea Based – Family Planning, AIDS Control, No Smoking, etc.

(v) Service Based – Education, Child-care, Community Services, etc.

Characteristics of Social Marketing:

(i) Criteria which can be applied to judge the efficiency of Social Marketing are number of clients served, quality of service, benefits provided, etc. Social marketing cannot be measured in financial terms.

(ii) In case of Social Marketing payment may or may not be involved. The exchange may or may not be monetary.

(iii) Objectives of Social Marketing are purely non-financial.

Profit-Oriented Pricing Strategy:

It involves setting prices for your products that will guarantee you’ll make money on each sale. You determine your cost for manufacturing each product, then add a percentage for profit.

There are some strategies and issues you should review before setting prices in this manner. While profits are the goal of any business, setting prices based on profit goals can present some problems for your business.

Exam Question  # Q.10. Define E-Tailers. What are the advantages and disadvantages of E-Tailing?

Ans. They are the stores which sell their products online via the internet. They maintain a website on which products, their pictures, features, price, etc., are displayed. The buyers can log on to site, select the good, place the order and make payment all through the internet.

Their goods get delivered at their home. E-tailers have become very popular due to convenience and wide variety they offer. For example – Ebay, Snapdeal, Amazon, Jabong, etc.

Advantages of E-Tailing:

(i) Cost – The price comparison section allows consumers to quickly compare prices from a number of different e-tailers offering the same product/services such that consumer can compare different prices and pick the best option.

(ii) Access (no physical location) – The consumer does not have to travel or go anywhere to see the products/services of online retailers.

(iii) Inventory – Larger number and variety of inventory, both products and services can be placed online without worrying about limited space and product placement on shelves.

(iv) Flexible time – From the comfort of one’s home, individuals can access the E-tailing sites 24/7 and even shop in the middle of the night.

Disadvantages of E-Tailing:

(i) Cost for website maintenance – Having an online retailing business is an added cost including maintenance, updates, server fees and other such fees.

(ii) Fulfillment problems – Slow delivery time is the concern mentioned by most online shoppers. Even though payments are made right away, the product takes approximately 5-7 days to reach the customer.

(iii) Payment and security concerns – With major problems like credit card frauds and scams, people are worried that their private information will be used and abused if it is given online.

(iv) Technological issues – Some entrepreneurs feel helpless, as they have to be dependent on others to run their online retailing sites. They feel technologically behind and not able to run the company like they run their retail stores.

Exam Question # Q.11. Differentiate between sales promotion and advertising.

Ans. Sales Promotion:

Sales promotion, in a specific sense, refers to those sales activities that supplement both personal selling and advertising and co-ordinate them and help to make them effective, such as displays, shows and expositions and other non-recurrent selling efforts not in the ordinary routine.

The American Marketing Association offers the following definition of sales promotion.

“The main objective of sales promotion is to attract the prospective buyer towards the product, and induce him to buy the product at the point of purchase.”


Advertising has a longer time-orientation than Sales promotion. Advertising generates interest and builds reputation of a product and its manufacturer. On the other hand, Sales promotion helps to increase immediate sales.

Advertising and Sales promotion are, however complementary to each other. Advertising facilitates Sales promotion by making potential buyers aware of the sales promotion activities of an enterprise. Sales promotion supplements Advertising by converting potential demand into sales.

Personal selling is the only tool of promotion that does a complete selling job. Advertising and Sales promotion can only attract and bring customers to the seller.

Therefore, Advertising and Sales promotion are complementary to personal selling. Advertising prepares ground for personal selling by informing consumers on a mass scale. A customer who has read or seen the advertisement carefully can be handled more easily because he is well-informed. The time and effort of a salesman are saved. Similarly, Sales promotion helps to increase immediate sales by persuading customers and dealers.

Exam Question # Q.12. Explain the concept of mass marketing.

Ans. Mass marketing strategy is the opposite of market segmentation strategy. Here all the buyers are considered as having homogeneous wants as against the market segmentation strategy which looks for the differences in the wants of the buyers. Under mass marketing, single product with single marketing mix and marketing program is used to reach the customers. The entire market is conside­red similar and single marketing mix is used to reach the market.

This strategy is useful as it is cost effective. Dealing in a single product reduces the cost of production, transportation cost and inventory carrying cost. It also provides administrative ease and convenience, as there is a single marketing program. However, in present day market conditions, where customers are very choosy, each going for different attribute of a product, this strategy is not very effective and is not used by organisations as such.

As against mass marketing, segmentation strategy aims at the differences in the wants of the buyers. No two buyers are having similar wants and therefore to serve them with single product is not correct. This strategy aims at dividing the market into various segments and sub-segments on the basis of customer wants and interest.

Markets are divided into groups having similar wants and interest; and different products and marketing mix is used to reach to the customers in different segments and groups. This strategy is beneficial as it meets the different needs of the customers. Organisation can serve the markets more effectively.

Exam Question # Q.13. What is market Segmentation? Explain its benefits.

Ans. A market segment is group of buyers having similar wants. Market segmen­tation is a process of dividing the entire heterogeneous market into similar homogeneous ones on the basis of different customer characteristics.

According to Philip Kotler, Market segmenta­tion “is the sub-dividing of a market into homoge­neous sub sets of customers where any sub set may conceivably be selected as a market to be reached with distinct marketing mix.”

According to Prof. William J. Stanton, “Market segmentation consists of taking the total heteroge­neous market for a product and dividing it into several sub markets or segments each of which tends to be homogeneous in all significant aspects.”

Benefits of Market Segmentation:

Market consists of various sub-segments and it is not possible to appeal to all segments. Therefore profitable segments have to be identified by the firm which it can serve effectively and efficiently. Proper use of market segmentation strategy benefits both the organisations and customers.

The benefits of market segmentation are as follows:

1. It helps in better understanding of market, i.e. knowing what customer wants and why they buy or do not buy a product.

2. A better understanding of the market helps in developing an effective marketing program to meet the wants of the customers.

3. An effective marketing program leads to greater customer satisfaction.

4. By concentrating on a few segments only, better utilisation of resources can be ensured.

5. Market segmentation helps in better assessment of the competitors position. Here the firm can avoid those segments where competitors are strong.

Exam Question # Q.14. Explain the basis for segmenting organizational markets.

Ans. Organisational products are the products which are used for further production and are not meant for final consumption. Organisational market is very large and can be segmented on the similar bases as consumer market.

However, there are some more bases on which organisational markets may be segmented.

1. Type of Customer:

A common way to segment organisational market is by end user. Different end user seeks different benefits and therefore can be approached with different marketing mix.

On this basis organisational market is classified into nine segments termed as Standard Industrial Classification (SIC) Code, which are as follows:

(a) Agriculture, forestry and fisheries.

(b) Mining.

(c) Manufacturing.

(d) Construction.

(e) Transportation.

(f) Communication.

(g) Public utilities.

(h) Banking, finance and insurance.

(i) Services.

2. Kind of Business:

When an enterprise produces or provides a number of products or services, the market can be segmented on the basis of kind of business. For example, the business of an insurance company can be divided as fire insurance and general insurance.

3. Size of Buyer:

Organisational market can also be segmented on the basis of size of the buyer as large buyers and small buyers. The needs and attitude of these buyers are different. Big business houses categories their buyers as Major accounts and Dealer accounts. Accounts of large and reputed companies come under major accounts. Such account is handled by national accounts manager. Small accounts are categorised as dealers’ accounts which are handled by field personal working with the dealer to sell the product.

4. Buying Situations:

Buyers respond differently in different buying situations. Separate strategies should be adopted to deal with buyers in different buying situations.

These buying situations may be:

(a) New buy/first time purchase.

(b) Modified buy.

(c) Repeat buy.

The first time purchase or new buy is very important as it helps in winning the customers confidence and loyalty for long term relationship. Modified buy signifies a repeat purchase but with modification in purchase requirements. Under repeat buy the purchase requirement is same but another order is placed.

Once the market has been segmented the firm is required to select its target market. A firm selects its target market in light of various factors such as its objectives, resources, size of the segment, degree of risk, profitability of that segment, etc. Here it may go for a single segment, few selected segments or full market coverage. Thereafter, it has to position its product in required market segment through suitable marketing mix.

Exam Question # Q.15. Explain the uses of marketing research.

Ans. For taking numerous marketing decisions a lot of information is required and that can be obtained with the help of marketing research.

Marketing Research is useful to the marketer in providing the following information:

1. Information about the Market:

(i) Analysis of Consumer behaviour (their attitude and preferences)

(ii) Analysis of competitor behaviour and performance

(iii) Analysis of market share

(iv) Analysis of the market potential for existing products (e.g. market size, growth, changing sales trends)

(v) Forecasting future demand for existing products

(vi) Assessing the potential for new products

(vii) Study of market trends

2. Information about Products:

(i) New product development

(ii) Comparison of existing products in the market (e.g. price, features, costs, distribution)

(iii) Likely customer acceptance (or rejection) of new products

(iv) Latest product technology that may threaten existing products

(v) Forecasting new uses for existing products.

3. Information about Pricing in the Market:

(i) Analysis of customer’s real purchasing power

(ii) Estimates and testing of price elasticity

(iii) Analysis of pricing strategies of Competitor

(iv) Analysis of revenues, margins and profit

(v) Customer perceptions of fair pricing.

4. Information about Promotion in the Market:

(i) Advertising effectiveness

(ii) Effectiveness of sales force (personal selling)

(iii) Extent and effectiveness and other sales promotional tools.

Exam Question # Q.16. Explain the meaning and process of market targeting.

Ans. With an objective of maximizing profits, a company targets one or more market segments. In the target market selection process, the company evaluates the market opportunity with the understanding of the customer and analyses the competition. It also checks out its ability to reach the customers in the segment and the costs involved in reaching them. The level of customers’ satisfaction with competitors’ products and services are also important.

If there are a lot of customers, who are dissatisfied, then the chances of success become brighter; as it happened in the case of Ginger Hotels. Then the barriers to entry, potential profitability and growth forecast should also be taken into consideration in target market selection. As it builds the foundation for the product or service or sometimes a company, extreme care is required in target market selection.

In the process of market targeting, a company can choose the following market patterns:

1. Single Segment Concentration:

In the detergent cake and powder segment, Nirma, 555, Ghari Detergent cater to the lower segment of the customers with their cheaper products. As the company is fully dependent on that product, it involves marketing risks.

2. Multi Segment Specialisation:

A company can also go for multiple segments. A media company like UTV produces and distributes Films under two entities – UTV Motion Pictures and UTV Spot Boy- Under UTV Motion Pictures, it produces main stream commercial movies with big budgets like Jodha Akbar, Delhi 6, Main Aur Mrs Khanna, Kaminey under UTV Motion Pictures and small budget movies like Aamir, Dev D and Welcome to Sajjanpur under UTV Spot Boy.

3. Product Specialisation:

In product specialization, the company becomes product specific. For example – Carl Zeiss, the world’s leading lens manufacturer with its tagline ‘We make it visible’; produces lenses for cameras, binoculars, spectacles, microscopes, mobile video and industrial metrology.

4. Market Specialisation:

When a company specialises in serving the same market with different needs, then the company is following market specialization. In the university laboratory market, a company can sell all the products required in a lab.

5. Full Market Coverage:

Large companies generally go for full market coverage with all the products and services, the customers might need. LG, Samsung, HUL, ITC, Pepsi, Colgate, Maruti Suzuki, General Motors, Hero Honda, Bajaj Auto etc. are the companies, who look after the complete spectrum of customer needs through their different product offerings. That’s why Maruti Suzuki sells 13 different Cars – Maruti 800, Omni, Alto, Zen Estilo, A-Star, Ritz, Swift, Wagon R, Versa, Swift DZire, Gypsy, SX4 and Grand Vitara; between the price range of Rs. 2 Lacs to Rs. 16 Lacs.

Similarly, Hero Honda sells 15 different bikes – CD Dawn, CD Deluxe, Splendor+, Splendor NXG, Passion Pro, Passion Plus, Super Splendor, Glamour, Glamour PG Fi, Achiever, CBZ X-Treme, Hunk, Karizma, Karizma ZMR and Pleasure scooters between the price range of Rs. 32000/- to Rs. 91000/-. It’s not that only automobile companies are having many choices for the customers.

Even in FMCG products, a company like HUL offers 8 types of personal soaps – Breeze, Lux, Lifebuoy, Liril, Hamam, Dove, Pears, Rexona and Dove; 4 types of detergent powders – Surf Excel, Rin, Wheel and Sunlight; 4 types of skin care – Fair & Lovely, Pond’s, Vaseline and Aviance; and 2 types of toothpastes – Pepsodent and Close Up.

Exam Question # Q.17. Discuss the concept of market positioning.

Ans. Once the market segment is identified by the company to be targeted, it needs to be positioned in the mind of the prospective customer. Positioning is creating an identity in the minds of the target market. Positioning as a concept, in marketing was popularised by advertising professionals Al Ries and Jack Trout through their bestseller book “Positioning – a battle for your mind”. This concept was first published in 1969 by Jack Trout in the paper ‘Positioning is a game people play in today’s me-too market place’ in Industrial Marketing.

Al Ries and Jack Trout said that ‘Positioning starts with a product. A piece of merchandise, a service, a company, an institution or even a person…………… But positioning is not what you do to a product. Positioning is what you do the mind of the prospect. That is, you position the product in the mind of the prospect.’

Positioning is all about how does the customer perceive your product? For example, when Tata launched their first car – Indica, their tagline was ‘More car, per car’ and Tata Motors tried to give more value to the consumers through lower price, more space, more features and more comfort. Following this tradition they launched Tata Indigo and then through a modifications, Tata Indigo CS, the cheapest sedan in the world.

Going further, they launched Tata Nano, the cheapest car in the world. Again they came up with Tata Indigo Manza with all the creature comforts in C segment at a price, which is too competitive to be true.

Now they have launched Bolt and Zest to compete with the cars in the hatchback segment like Swift, Grand i10, Sail, Brio to sedans like Swift Dzire, Mahindra Logan, Ford Fiesta, Fiat Linea and Honda Amaze, which costs between Rs. 4.6 Lacs to Rs. 8 Lacs. Similarly Maruti Suzuki says ‘Count on Us’. And millions of customers are counting on Maruti Suzuki by buying different cars from the Maruti stable.

The success of the positioning strategy lies in making one or two characteristics of the product or service stand out in the minds of the consumers. Positioning also takes the form of taglines or slogans that gets attached in the minds of the consumers. Amul’s ‘Utterly, Butterly Delicious’, Nokia’s ‘Connecting People’, Nike’s ‘Just do it’, LG’s ‘Life is good’, Aaj Tak’s ‘Sabse Tej’, ICICI Prudential’s ‘Jeetey Raho’ are few of the popular taglines that is engraved in the consumers mind.

Fevicol has been very successful in positioning the brand through its engaging television commercials (TVC); whereas the character zoozoo has become a rage in India through its Vodafone TVCs. Thus, Positioning helps in differentiating the products from the competition and also leads to top of the mind recall.

Exam Question # Q.18. Discuss the methods used for brand testing.

Ans. Most of the consumer products are sold due to the brand name associated with them. Branding is done to enhance the saleability of the product. Therefore, it is essential for a marketer to know before launching his product in the market whether it will succeed or not. For this purpose brand testing is done by the manufacturer.

Different methods of brand testing are:

(a) Memory Test:

Under this method, a group of selected persons are asked to remember certain names or symbols. After sometime, they are asked to tell those names. If most of them remember particular symbol or name, that brand is said to be good. With this study selection process of brand name or symbol can be made easily.

(b) Preference Test:

In this method, selected group of persons are given a list of symbols or names and are asked to rank or rearrange them in order of their preference. The name or symbol which is mostly preferred is selected as brand name or symbol.

(c) Learning Test:

A list of names or symbols is given to a selected group under this method. Then they are asked to pronounce the names or draw the symbols. The name which is pronounced easily and written correctly is selected as brand name.

(d) Association Test:

Under this method certain names are read out before a selected group of people. Then they are asked to write names which they easily remember. The name which scores first position and is written by majority of selected people is selected as brand name.

Exam Question # Q.19. Discuss the significance of pricing.

Ans. Pricing the products and services is an important task of marketers, pricing depends on various factors in external and internal environment of business. Marketing manager should have sufficient knowledge of market variables and skills to fix suitable price of products and services.

Adopting the right pricing strategy helps a company achieve its objectives. However, ineffective pricing causes significant damage to the company’s growth and image. Thus, pricing is very important to a marketer to sustain in the competitive market. Sales target set by company are based on price of product, pricing is the biggest challenge that a company face.

Today’s customer is well aware about prices of competitive products, therefore prices should be competitive. Other business factors like taxation, export import policy and technological changes can impact prices of products. The sales of a product have an impact on the pricing mechanism. However, sales of a product can increase because it has been priced too low and not because it has been priced right. Setting the right price can have an extensive impact on the profits of the firm.

Pricing is a very important aspect of the firm’s survival, firm’s expansion and diversification programmes depends on revenue earned and it is decided by sales. Firms must develop proper pricing strategies and convert them into effective competitive advantages. Firms future prospects depends on estimation of sales and profit as pricing strategies and corporate strategies are interrelated, wrong pricing policies can have negative impact on future planning of an organization.

Pricing policy is a strong tool to gain competitive advantage in the market. Setting the prices of products should be a coordinated among the various departments of an organization it is a joint task of production and marketing department. Therefore we can conclude pricing is an important decision related to the profitability and to fulfill objectives of an organization.

Exam Question # Q.20. Explain the effect of pricing policy on marketing mix.

Ans. Price is an important element in the marketing mix of firms and affects the other Components of marketing mix. Price helps to determine the sales volume and profit margins.

Price structure affects the competitive position. We can say that without pricing, there can be no marketing. Pricing policies have a direct impact on other elements of promotion mix., For example – if a firm decides to add new improved products to its existing line, arrange for wider distribution channels and undertake massive promotions, then this will all increase the price of the products.

There are many methods by which marketers price their products and services.

The two widespread methods are:

1. Cost-based pricing, and

2. Value-based pricing.

1. Cost-Based Pricing:

It uses production or manufacturing costs as its base for pricing. Companies are following this approach by using their costs to fix a price ceiling and price floor. The floor is the minimum and the ceiling is the maximum price for a particular product or service. Ideally, the companies price their products anywhere in between the floor and the ceiling. This is popularly applied in companies that produce food products, textiles and building materials.

2. Value-Based Pricing:

It uses the value of its product or service as the base for pricing. For this, the company finds out how much money or value will be generated by its product or service for the customer. This value could derive from factors such as happiness, increased efficiency or stability. This is popularly applied in companies that produce chemicals, medications, art work and computer software.

Exam Question # Q.21. What are the advantages of studying consumer behaviour?

Ans. i. Protect from Product Failures:

Chances of product failure can be reduced by proper study of consumer behaviour it is more important for multinational and global companies where socio-culture environment differ from one country to other.

ii. Helpful in Making Marketing Strategies:

Marketing strategy of a company depends on buying pattern and demand potential in market, therefore analysis of consumer behaviour is a prerequisite of and effective marketing strategy.

iii. Segmentation of the Market:

By studying the consumer behaviour, the marketer comes to know about the factors which motivate a consumer to purchase a product or service. Needs and requirement of each segment is different this can be identified by the study of consumer behaviour. For example social need of upper class in society is different from lower class.

iv. Helpful in Advertisement Planning:

Advertisements are planned according to target audience, the copy and message of any advertisement depends on characteristics of target segment and consumer behaviour belongs to that segment. Advertisements are helpful in motivation and in flow of information from producers to customers.

v. Development of New Products:

Business firms can develop their products according to changing behaviour of customers; by the help of post purchase behaviour of customers they can modify their products and services for high consumer satisfaction and retention.

vi. Helps in Sales-Promotion:

After studying the behaviour of consumer, the marketer becomes able to know the factors which influence the buying behaviour of the consumer. Accordingly he will be able to shape the company’s sales promotion campaign.

Exam Question # Q.22. Explain the meaning of differentiated pricing. What are its types? 

Ans. Differentiated pricing simply means different prices for the same product in different situations. It is the strategy of selling the same product to different customers at a different price. Differentiated pricing enables companies to profit from their customers’ unique valuations by offering different prices for the same product.

Such a pricing strategy is also called discriminatory pricing or multiple pricing. The prices under this method are based on the type of customer, quantity ordered, payment terms, delivery time etc. Under this strategy certain customers pay less for the same product than what others pay.

Differentiated pricing can be of the following types:

(i) Customer segment pricing – Different customer groups pay different prices for the same product or service, for example – entry fee of various i monuments is low for students.

(ii) Product form pricing – A product can be sold in various forms and styles and designs and accordingly prices are changed, for example – a half sleeves- shirt can cost from Rs.99 to Rs.999 depending on its style, design and fabric.

(iii) Image pricing – Some companies price the same product at two different levels based on image differences, e.g., Levis normal jeans are priced higher vis-a-vis Denizen jeans, which is a cheaper version of the same.

(iv) Channel pricing – Prices vary depending on the place where we buy the product. If a mineral water bottle is purchased in a five star hotel it will cost more.

(v) Location pricing – The same product is priced differently at different locations even though the cost of offering it at each location is the same. For example, breads cost less in Delhi rather than other states.

(vi) Time pricing – Prices are varied by season, day or hour. For example, restaurants introduce happy hours for customers at lower rates.

(vii) Other discriminations – Prices may vary depending on demand and volume of purchase, for example, vegetable vendors often have separate prices for 250 grams and 2 Kgs of vegetables.

Exam Question # Q.23. Explain the meaning and stages of product life cycle.

Ans. Every product passes through a number of stages, namely, introduction, growth, maturity, decline and abandonment. These stages are collectively referred to as Product Life Cycle.

Product, like people, have a certain length of life, during which they pass through different stages. For some the life cycle may be as short as a month, while for others it may last for quite a sufficiently long period. The examples may be of a trendy dress or an electrical appliance.

From the time the product idea is born, during its development, and up to the time it is launched in the market, a product goes through the various phases of its development. Its life begins with its market introduction; next it goes through a period during which its market grows rapidly. Ultimately, it reaches maturity stage after which its market declines and finally the product dies.

The product life-cycle may move through the following five stages:

1. Introductory, pioneering or development stage.

2. Growth or the market acceptance stage.

3. Maturity stage.

4. Decline stage.

5. Abandonment stage.

It is worth noting that the duration of each stage is different among products. Some products take years to pass through the introductory stage, while others may be accepted in the market in a few weeks. Further, not all products pass through all stages, some fail in the initial stages, others may reach the maturity stage after a long time.

In virtually all cases decline and possible abandonment are inevitable because (i) the need for the product disappears; (ii) a better or less expensive product is developed to fill the same need; or (ii) a competitor does a superior marketing job.

Exam Question # Q.24. Explain the significance of pricing strategy.

Ans. Pricing decisions are very important for the marketing organisations because of the following reasons:

1. Pricing Decisions are Crucial in Nature:

Improper pricing analysis and strategic evaluation can lead to revenue loss for a marketing organisation. Prices set too low may mean the company is missing out on additional profits that could be earned, if the target market is willing to spend more to acquire the product.

Additionally, attempts to raise an initially low-priced product to a higher price may be met by customer resistance. Prices set too high may also have an impact on revenue as it hinders the customer interest to buy the product. Thus, setting the right price needs a lot of market knowledge and testing of different pricing options.

2. Price Triggers the First Impressions:

Often consumer perception of a product is formed as soon as they come to know of its price. It is more important to know if the customers are more likely to reject a product when they know about its price, i.e., customers are avoiding learning more about the product (full offering) if they find the price to be too high.

3. Important Part of Sales Promotion:

Many a time price adjustments are a part of sales promotion like lowering the price for a short-term to stimulate interest in the product. However, marketers must be careful against the temptation to adjust the price too frequently since it can make the customers conditioned to anticipate price reduction. For example – the months of February and August are off-season months for sales for most brands, thus, people tend to shift their purchase decisions to sale seasons.

Exam Question # Q.25. How is understanding of Product Life Cycle (PLC) useful to a marketer?

Ans. The complete understanding of the Product Life Cycle (PLC) is very useful to a market as it primarily helps in forecasting the success of a product.

Understanding of PLC is necessary because:

(i) It is a useful framework for describing the typical evolution of marketing strategies over the stages of PLC.

(ii) This allows a marketer to take sound decisions at different stages of the PLC.

(iii) It helps in taking preventive and corrective steps whenever required during the whole life of a product.

(iv) It facilitates the preparation of effective product plans.

(v) It allows carrying out expansion drives.

(vi) It helps in adoption of latest technological changes to improve the products.

(vii) It helps in timely abandoning of failing products.

Yes, PLC to a large extent is universal in its application but it also has certain exceptions. It is generally noted that all products do not pass through each and every stage. Some meet failure in the initial stages while others are able to reach the maturity stage only and a few go beyond the growth stage. Therefore, it depends upon nature of the product being offered.

Exam Question # Q.26. Discuss the meaning of Marketing Information System (MIS).

Ans. Marketing Information System can be described as an internal arrange­ment which helps the management in decision making. It is concerned with pro­viding information to the management about the current state of affairs in the market and the responses of the customer and competitors to company’s action.

It is a structure consisting of people and well-designed procedure to gather infor­mation from the internal and external sources, classify, analyse and interpret it, so that it can be used for managerial decision making in the area of marketing. Through marketing information system, firm tries to keep itself abreast with the changes around it and accordingly adapt itself to the changes.

Marketing infor­mation system has been defined by Prof. Alder Lee as:

“An interacting, continuing, future oriented structure of people, equipment and procedure designed to generate and process an information flow which can aid business executives in the management of their marketing programmes.”

Marketing Information System, is thus, an organised future oriented struc­ture consisting of people, equipment and procedure, which is used for generat­ing and processing information helpful in making critical decisions in the area of marketing.

Based on the above definition following are the features of Market­ing Information System:

1. It is a future oriented structure, aiming towards future policies and strategies of the firm.

2. It is on-going structure which keeps on working, as the market keeps on changing and these changes will always be there, which have to be incorporated.

3. It consists of people, machines and procedure. For carrying out various activities, people are required, who collect the data from various sources, analyse and interpret it, utilise the services of machines for various purposes and through set procedures use it for effective decision making.

4. MIS is used for the purpose of generating and processing of the information.

5. The above information is used by executives in taking decisions for various activities.

6. The decisions relate to the area of marketing.

Exam Question # Q.27. Highlight the between concept testing and market testing.

Ans. Concept Testing:

(i) It is concerned with measuring consumer reactions to the idea or concept of the product.

(ii) Testing is done before any money, time or labour is invested in a product.

(iii) It is the third stage of new product development.

Market Testing:

(i) It is concerned with measuring trial, first repeat, adoption and purchase frequency of product in real marketing conditions.

(ii) Testing is done with the product in hand using advertising, sales force etc.and money is involved in it.

(iii) It is the second last stage of new product development. 

Exam Question # Q.28. Explain the reasons for product failure.

Ans. There are various reasons of product failure:

(i) Inadequate Market Analysis – Biased information and improper analysis will yield only wrong data. Acting on such data leads to product failure.

(ii) Product Defects – Technical flaws in the process of product development.

(iii) Higher Cost – Higher cost than anticipated at the time of production will lead to wrong pricing strategies and cost and profit estimates.

(iv) Poor Timing – Appropriate time of launch of a product is essential. Opening a jewellery line at the time of ‘Shradhs’ in India is useless.

(v) Competition – Major giants already operational in a specific industry can act as tough competitors.

(vi) Inefficient Marketing Effort – Proper advertising, sales promotion, distri­bution network etc., should support the product.

(vii) Inadequate Sales Force – Non-availability of sales force or unattended customers can obviously lead to a product’s failure.

All these problems can be solved by timely action of the management.

Product failure can be prevented by using the following precautions:

(i) A forecast of market demand – How large is the market and for how long will it last?

(ii) A description of market profile – Analysing the target customers, their patterns of purchase, demographics etc.

(iii) Designing an efficient organisational structure for the distribution of products.

(iv) Undertaking consumer tests – On the basis of results obtained, the entire process to be rescheduled, if necessary.

Exam Question # Q.29. Explain the characteristics of good marketing research.

Ans. A good marketing research should have following characteristics:

1. Application of scientific method for collection analysis and interpretation of data should be there.

2. It should suggest suitable measures to minimise or avoid the problems.

3. It should create additional facts or develop the innovative ways to solve the problems.

4. The cost of marketing research must not exceed the benefits derived out of the findings.

5. A good marketing research should supply statistical methods and modes to derive fruitful and purposive research.

6. A good marketing research finds out several alternative courses of action, out of which the best course of action is applied to attain the target.

7. Sound marketing research uses the services of specialist, who may be from within the organisation or outside the organisation.

8. A good marketing researcher avoids own bias in interpreting the data and should never ask for irrelevant information.

Exam Question # Q.30. Discuss the limitations of product life cycle.

Ans. (i) Product Life Cycle patterns are too variable in shape and duration to be generalised. A Product Life Cycle is not applicable in all product categories.

(ii) Marketers can rarely tell which stage their product is in.

(iii) For specific products, the length of each Product Life Cycle stage is unpredictable.

(iv) A product may appear to be mature when it has actually reached a plateau prior to another upsurge.

(v) A Product Life Cycle assumes no reversion to earlier consumer preferences.

(vi) Strategic decisions can change the life cycle.

(vii) It can become a self-fulfilling prophecy.

Exam Question # Q.31. Discuss the factors that affect pricing.

Ans. Price is a critically important element of the choices available to businesses in trying to attract demand for their products. These factors can be divided into two parts–  factors within the control of a business and factors outside the control of a business.

Factors within a businesses’ control include:

(i) Production cost

(ii) Product research and development

(iii) Advertising and sales promotion budget

(iv) Effectiveness of distribution (e.g. access to retail outlets; trained distributor agents)

(v) Marketing skills

(vi) Control on marketing expenditure

(vii) Objectives of firm

Factors outside the control of business include:

(i) The price of substitute goods and services

(ii) The price of complementary goods and services

(iii) Prices of raw material

(iv) Customer’s income

(v) Government policies

(vi) Taxation

(vii) Level of competition

Exam Question # Q.32. List out some examples of pricing strategies.

Ans. (i) Competitive pricing.

(ii) Discriminatory pricing.

(iii) Psychological pricing.

(i) Competitive Pricing:

Under this strategy the price of the product is fixed at the competitive conditions. This method is used when the market is highly competitive and product is not differentiated significantly from the competitive products. It is also used when customary price level exists, as in the case of cold drinks.

(ii) Discriminatory Pricing:

It is also called dual pricing. Under this strategy, different prices are charged for the same product from different customers according to their ability to pay. It is usually followed in legal and medical services. It is possible to sell the same product at different prices in different market segments.

(iii) Psychological Pricing:

Here prices are fixed in a manner that they have i some kind of psychological influence on buyers. Odd pricing is used where prices are fixed as Rs.19, Rs.99, Rs.999, etc. Another example is price fixing where some product is offered at three different prices indicating about its quality variation.