List of questions and answers on Marketing!
List of 82 Most Important Question and Answers on Marketing
Marketing Question and Answer:- 1. What is meant by market?
Ans. In common parlance, a market is a place which allows the purchaser and the seller to invent and gather information and lets them carry out exchange of various products and services. In other words the meaning of Market refers to a place where the trading of goods and services takes place.
In a broader sense marketing covers from everything to anything that enables or facilitates the smooth exchange of goods and services and concepts or ideas between the seller and purchaser.
It can be stock market, TV market, cell phone market, rural market, bank marketing, insurance marketing, country-wide market, global market etc. The concept of market is very important in marketing.
The American Marketing Association defines a market “as the aggregate demand of the potential buyers for a product/service” Philip Kotler “defines a market as “an area of potential exchange.”
Thus, a market is a group of buyers and sellers interested in negotiating the terms of purchase/sale of goods/services.
The negotiation work may be conducted face to face at a certain place, e.g., a village mandi, or it may be done through other means of communication such as correspondence, phone or cable, internet or it may be done through business middlemen, e.g., brokers and commission agents.
A market consists of the forces of supply (sellers) and demand (buyers) facilitating an exchange process between sellers and buyers. Exchange is the pivot of commerce or marketing. Exchange takes place between two or more parties, each has something and desires to exchange for something else. Exchange may take place with or without money. As a medium of exchange, money facilitates trading. It may also be facilitated through middlemen in commerce, e.g., trader or agent.
Marketing Question and Answer:- Q. 2. What is meant marketing?
Ans. Marketing is the act or process of selling or purchasing in a market. It is the process or technique of promoting, selling, and distributing a product or service to the potential customers.
In other words marketing is an aggregate of functions involved in moving goods and delivering services from producer/service provider to consumer. It is the process of communicating the value of a product or service to customers, for the purpose of selling the product or service. It is a critical business function for attracting customers.
Marketing as a ‘Science’:
Ans. It is essential for being called marketing that there be some of the rules or principles of its own and in it the scientific practices are followed. Marketing proves to be the most effective in the form of a science since it has some of its own principles and rules, and in it are used the scientific methods like those of other social sciences.
Today, before undertaking the manufacturing of a product, the producer tries to collect various kinds of researches and knowledge for instance, marketing research, purchaser-behavior research, etc. All these facts prove the marketing to be a science.
Marketing as an ‘Art’:
Along with a special qualification and ability, if some work is undertaken, it is known as ‘art’. Within the marketing itself, is covered the salesmanship. On the basis of salesmanship, some of the shopkeepers extend their sales too much in comparison to that of their other contemporary sellers.
Marketing too is an art which is acquired by studies and ability and by the proper training this art is led to perfection. The various problems of marketing are solved by a special art only.
After studying both the above, it might be said that marketing is both an art and a science, since in it the scientific techniques and art are used, and thereafter various decisions undertaken.
Marketing Question and Answer:- Q. 4. What can be marketed?
Ans. i. Goods
ii. Physical Products
Ans. A person whose duties include the identification of the goods and services desired by a set of consumers, as well as the marketing of those goods and services on behalf of a company.
Someone who promotes or exchanges goods or services for money.
One that sells goods or services in or to a market, especially one that markets a specified commodity.
Marketing Question and Answer:- Q. 6. What are the functions of selling?
Ans. It is a process, whereby goods and services flow finally to the consumers.
Selling function involves:
1. Plan to produce the goods of need.
2. Discovery of market and buyers for goods.
3. Salesmanship, advertising and sales promotion for creating demand.
4. Determining sales terms i.e., price, quantity, quality, nature of packing and delivery etc.
5. Transfer of title and possession of goods. Selling creates demand for products.
Under the modern approach to marketing, the focus is on ‘selling satisfaction’ rather than on ‘selling a product’. For example, Hindustan Unilever Limited seeks to sell ‘Cleanliness and beauty’ rather than ‘detergent and toiletry’. In the modern approach marketing begins before production.
Marketing Question and Answer:- Q. 7. What is meant by marketing environment?
Ans. Marketing environment is one of the important terms of marketing management. It refers to a multitude of internal and external factors that have a bearing on the growth and success of marketing. It is external to marketing management and is uncontrollable and ever changing.
It consists of:
1. Intra-organizational environment
2. Micro environment
3. Macro environment
4. Global environment
The market environment is a marketing term and refers to factors and forces that affect a firm’s ability to build and maintain successful relationships with customers. Encompasses the marketing team within an organization and includes all of the outside factors of marketing the affect the team’s ability to develop and maintain successful customer relationships with their targeted customer group. The marketing environment surrounds and impacts upon the organization.
Marketing Question and Answer:- Q. 8. What are the techniques of business analysis?
Ans. 1. PESTLE Analysis:
This is used to perform an external environmental analysis by examining the many different external factors affecting an organization.
The six attributes of Pestle:
i. Political (current and potential influences from political pressures)
ii. Economic (the local, national and world economy impact)
iii. Sociological (the ways in which a society can affect an organization)
iv. Technological (the effect of new and emerging technology)
v. Legal (the effect of national and world legislation)
vi. Environmental (the local, national and world environmental issues)
2. HEPTALYSIS Analysis:
This is used to perform an in-depth analysis of early stage businesses/ventures on seven important categories:
i. Market opportunity
iii. Execution plan
iv. Financial engine
v. Human capital
vi. Potential return
vii. Margin of safety
3. MOST Analysis:
This is used to perform an internal environmental analysis by defining the attributes of MOST to ensure that the project you are working on is aligned to each of the four attributes.
The four attributes of Most are:
i. Mission (where the business intends to go)
ii. Objectives (the key goals which will help achieve the mission)
iii. Strategies (options for moving forward)
iv. Tactics (how strategies are put into action)
4. Swot Analysis:
This is used to help focus activities into areas of strength and where the greatest opportunities lie. This is used to identify the dangers that take the form of weaknesses and both internal and external threats.
The four attributes of Swot analysis:
i. Strengths – What are the advantages? What is currently done well? (e.g. key area of best-performing activities of your company)
ii. Weaknesses – What could be improved? What is done badly? (e.g. key area where you are performing poorly)
iii. Opportunities – What good opportunities face the organization? (e.g. key area where your competitors are performing poorly)
iv. Threats – What obstacles does the organization face? (e.g. key area where your competitor will perform well.
Marketing Question and Answer:- Q. 9. What is meant by consumer behaviour?
Ans. The most crucial issue for the marketers is to identify the needs of the consumers. Only the identification of needs is of no value unless and until this is transformed into meaningful and appropriate satisfiers. For this whole process of converting needs into actual satisfaction one needs to understand the complete make up of consumer’s mind, and this process is known as consumer behaviour.
On the basis of above definitions, it can be concluded that consumer behaviour is the study of consumers regarding what they buy, when do they buy, from where they buy, how frequently they buy, and how they use certain products. But the study does not stop here as it also goes further to study the post purchase and evaluations of the consumers. So, it addresses all the issues related from pre-purchase to post purchase behaviour of the consumers.
The study regarding consumer behaviour can be divided into two parts i.e. consumer buying dynamics and dynamics of business buyers.
Marketing Question and Answer:- Q. 10. What is the importance of consumer buying behavior?
Ans. In olden days, the importance of consumers’ behavior was not realized because it was seller’s market. But modern marketing is customer-oriented.
Therefore, the study of customers’ behavior is vital in framing:
1. Production Policies
2. Price Policies
3. Decision Regarding Channels of Distribution
4. Decision Regarding Sales Promotion
5. Exploiting Marketing Opportunities
6. Consumers do not always Act or React Predictably
7. Consumer Preferences are Changing and becoming Highly Diversified
8. Rapid Introduction of New Products
9. Implementing the “Marketing Concept”
Marketing Question and Answer:- Q. 11. What is the objective of black box model?
Ans. The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people).
The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer.
The marketing stimuli are planned and processed by the companies, whereas the environmental stimuli are given by social factors, based on the economic, political and cultural circumstances of a society. The buyers’ black box contains the buyer characteristics and the decision process, which determines the buyers response.
The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer.
Marketing Question and Answer:- Q. 12. What is the meaning of market segmentation?
Ans. a. Market segmentation is a marketing concept, which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference.
b. A market segment is a small unit within a large market comprising of like-minded individuals.
c. One market segment is totally distinct from the other segment.
d. A market segment comprises of individuals who think on the same lines and have similar interests.
e. The individuals from the same segment respond in a similar way to the fluctuations in the market.
Marketing Question and Answer:- Q. 13. What are the bases for market segmentation?
Ans. The first step in developing a segmentation strategy is to select the most appropriate bases on which to segment the market. Five major categories of consumer characteristics provide the most popular bases for market segmentation. They include geographic factors, demographic factors, psychological factors, socio-cultural variables, and use related factors etc.
Let’s discus these factors in brief:
(a) Geographical Segmentation:
Factors like climatic zone, region, state, district, rural and urban areas etc. constitute geographic segmentation. These factors have an important bearing upon the segmentation of the market.
(b) Demographic Segmentation:
Demographic characteristic, such as age, sex, marital status, income, occupation, religion, community, social status, culture and education are most often used as the basis for market segmentation.
(c) Psychological/Psychographic Segmentation:
Psychological characteristics refer to the inner or intrinsic qualities covering personality traits, attitudes, perception, learning, life styles and value system of the individual consumer. Consumer segmentation strategies are often based on specific psychological variables.
(d) Socio-Cultural Segmentation:
Sociology and anthropological variables- that is, socio-cultural variables- provide further bases for market segmentation. For example, consumer markets have been successfully subdivided into segments on the basis of stage in the family life cycle, social class, core cultural values, sub- cultural memberships, and cross-cultural affiliation.
(e) Use-Related Segmentation:
It is an extremely popular and effective form of segmentation categories of consumers in terms of product, service, or brand usage characteristics, such as usage rate, awareness status, and degree of brand loyalty.
Marketing Question and Answer:- Q. 14. What are the factors influencing consumer behaviour?
Ans. The behaviour of a consumer is influenced or affected by the social, cultural, political, economic environment in which he/she lives.
There are intra-personal, inter-personal and many other environmental variables that affect consumer’s decision making process.
The interpersonal influences include family, social class, reference group, cultural and financial status of an individual.
The intra-personal variables include some of the important characteristics of the customer.
They are as follows:
The major factors influencing consumer buying decisions are as follows:
1. Cultural factors
2. Social factors
3. Personal factors
4. Psychological factors.
Ans. Once a firm understands its markets and the appropriate bases for segmenting those markets, it must choose an approach for selecting its target markets. There are three different approaches for selecting target markets – the undifferentiated approach, the concentration approach, and the multi segment approach.
In the undifferentiated (or total-market) approach, a company develops a single marketing mix and directs it at the entire market for a particular product. This approach is used when an organisation defines the total market for a particular product as its target market.
When an organisation directs its marketing efforts toward a single market segment through a single marketing mix, it is using a concentration approach. A major advantage of the concentration approach is that it allows a company to focus all its marketing efforts on a single segment.
An organisation using the multi-segment approach directs its marketing efforts at two or more segments by developing a marketing mix for each segment.
Ans. Market segmentation strategy and marketing positioning strategy are like two sides of a coin. Once a firm has decided which segments (niches), of a market it will enter, it must decide what position(s) it wants to occupy in those segments. Marketer’s ability to bring attention to a product and to differentiate it in a favourable way from similar products goes a long way towards determining that product’s revenues and the company’s profits. Thus, marketing managers need to engage themselves in market positioning.
Positioning is the act of designing the company’s image and value offer so that the segment’s customers understand and appreciate what the company stands for in relation to its competitors. Positioning is what we do to the mind of the prospect. These definitions give emphasis to the activities taken by the company to create an image of the company in the segment.
Ans. Product positioning is an important element of a marketing plan. Product positioning is the process marketers use to determine how to best communicate their products’ attributes to their target customers based on customer needs, competitive pressures, available communication channels and carefully crafted key messages. Effective product positioning ensures that marketing messages resonate with target consumers and compel them to take action.
i. Positioning is the single greatest influence on a customer’s buying decision.
ii. Each customer evaluates products in the market according to their mental map of the market.
iii. Positioning exists in customers’ minds, not in positioning statements.
iv. People do not easily or willingly change their minds about a product’s positioning.
v. Positioning must first demonstrate a product’s relevance, using supportable, credible, and factual terms.
vi. Making the product easier to buy through effective positioning makes the product easier to sell.
The product positioning process involves:
i. Defining the market in which the product or brand will compete (who the relevant buyers are)
ii. Identifying the attributes (also called dimensions) that define the product ‘space’
iii. Collecting information from a sample of customers about their perceptions of each product on the relevant attributes
iv. Determine each product’s share of mind
v. Determine each product’s current location in the product space
vi. Determine the target market’s preferred combination of attributes (referred to as an ideal vector)
vii. Examine the fit between the product and the market.
Marketing Question and Answer:- Q. 18. What are the objectives of sales forecasting?
Ans. The objectives of sales forecasting may be studied under the following two major heads:
I. Short Term Objectives:
Short term demand in sales forecasting mostly covers the period ranging from one week to six months.
The short term objectives of the sales forecast can be summarised as follows:
i. To establish sales quotas and targets for different market segments.
ii. To formulate the suitable production policy so as to meet the demand as per the sales forecast.
iii. To make the optimum utilisation of the resources on the basis of sales forecast.
iv. To determine an appropriate price policy for a given period.
v. To make provision for the regular supply of raw material etc. for the production on the basis of sales forecast.
vi. To estimate stock requirements for unfinished, semi-finished and finished products for a specified period of time.
vii. To ensure the regular supply of labour force as per the sales forecast,
viii. To estimate and provide the requisite working capital on the basis of sales forecasting.
II. Long Term Objectives:
In this type of demand/sales forecast, the period of forecasting ranges from one year to five years.
The long run objectives of sales/demand forecasting may be summarised as follows:
i. To plan for the acquisition of raw materials so as to meet the future demand
ii. To make provision for capital expenditure.
iii. To estimate the future profits of the organisation
iv. To estimate cash inflow from sales
v. To plan for plant capacity so as to meet rising future demand
vi. To reduce selling costs and thereby reducing the final cost of the product
vii. To determine the dividend policy
viii. To do manpower planning so that production and sales distribution may not suffer
ix. To facilitate budgeting and budgetary control
x. To establish co-ordination between various functions of an organisation.
Marketing Question and Answer:- Q. 19. What are the factors influencing sales forecasting?
Ans. The following factors are to be considered while going for demand forecasting:
1. Purchasing power of customers
4. Replacement demand
5. Credit conditions
6. Conditions within the industry
7. Socio-economic conditions
Ans. Many ways exist for positioning a product or service (or even an organisation). The following illustrate some of these approaches. It should be noted that combinations of these approaches are also possible.
a. Position on Product Features
b. Position on Benefits
c. Position on Usage
d. Position on User
e. Position against Competition
Marketing Question and Answer:- Q. 21. What are the benefits of sales forecasting?
Ans. Sales forecasting is very essential in the course of decision-making.
Its significance or uses can be traced as under:
i. To Produce the Required Quantity
ii. To Assess Probable Demand
iii. Sales Forecasting
iv. Control of Business
v. Inventory Control
vii. To Plan Investment and Employment
viii. To Call for Team Work
ix. To Help the Government to Plan Import or Export Policies
x. Manpower Planning
Marketing Question and Answer:- Q. 22. What is the procedure of sales forecasting?
Ans. Demand or sales forecasting process vary from company to company, as the nature of business and of the product with market conditions are not similar for each type of product. Hence, it is not possible to lay down a standardised process for each type of product as well as for the company.
STEP-I – Determining the objectives and the purpose for which the forecasts are to be used
STEP-II – Determining the relative importance of the factors, which affect sales of each product
STEP-III – Selecting the appropriate forecasting method
STEP-IV – Collecting and analysing the data
STEP-V – Making specific forecast relating to the pro-ducts and territories involved
STEP-Vl – Periodically reviewing and revising the forecast
Marketing Question and Answer:- Q. 23. Define product.
Ans. A product is anything that can be offered to a market to satisfy a want or need. In other words a product is “a set of tangible and intangible attributes, including packaging, colour, price, manufacturer’s prestige, retailer’s prestige, manufacturer’s and retailer’s services, which the buyer may accept as offering satisfaction of wants or needs.
Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
Marketing Question and Answer:- Q. 24. What is Product Life Cycle (PLC)?
Ans. The idea of a product life cycle (PLC) is central to product strategy. It is based on the premise that a new product enters a ‘life cycle’ once it is launched in the market. The product has a ‘birth’ and a ‘death’ – its introduction and decline. The intervening period is characterized by growth and maturity.
Marketing Question and Answer:- Q. 25. What are the elements of product?
Ans. i. Goods
Marketing Question and Answer:- Q. 26. Define branding.
Ans. A Brand is a name, term, symbol or design to identify the goods or services and to differentiate them from those of the competitors. A Brand identifies the product for the buyer. A seller can earn the goodwill and has the patronage established. In other word, naming product, like naming a baby, is known as branding.
A brand is the idea or image of a specific product or service that consumers connect with, by identifying the name, logo, slogan, or design of the company who owns the idea or image. Branding is when that idea or image is marketed so that it is recognizable by more and more people, and identified with a certain service or product when there are many other companies offering the same service or product.
Advertising professionals work on branding not only to build brand recognition, but also to build good reputations and a set of standards to which the company should strive to maintain or surpass.
Marketing Question and Answer:- Q. 27. What are the limitations of sales forecasting?
Ans. Sales forecasts may not turn to be accurate because of several limitations. The sales manager should try to analyze and understand these limitations.
Following are the main limitations of sales forecasting:
i. Changes in Consumer Behavior
ii. Non-Availability Accurate Data
iii. Inefficient and Inexperienced Sales Forecasters
iv. Difficulty in Anticipating Plans of Competitors
v. Dependence on One Method Only
vi. Biasness of Experts
vii. Sudden Change in Government Policy
viii. Change in Economic Conditions
ix. Fashion and Fads
Marketing Question and Answer:- Q. 28. What a brand communicates?
Ans. i. Attributes – Mercedes bring to mind expensive, well built, well-engineered, durable, high prestige automobiles.
ii. Benefits – The attributes ‘durable’ could translate into the functional benefits and the attributes ‘expensive’ translates into emotional benefits.
iii. Values – Mercedes stands for high performance, safety and prestige.
iv. Culture – Mercedes represents German Culture; organized efficient and high quality.
v. Personality – Mercedes may suggest a no nonsense boss (person), a reigning lion (animal) or an austere palace (object).
vi. Target User – Suggest the kind of consumer who buys or uses the product. A top executive behind the wheel of a Mercedes and not a young secretary.
Marketing Question and Answer:- Q. 29. What are the advantages of branding?
Ans. Advantage to Producers:
a. Easy to Advertise
b. Easy to identify the Products
c. Creation of separate market
d. To get more price
e. Easy to expand the Product Mix
f. Personal contacts with consumers
Advantages to Middleman:
a. Easy to understand needs and wants of consumers
b. Less risk
c. No need of Advertisement and sales promotion
d. Increase in sales
e. Increase in profits
Advantages to Consumers:
a. Easy to recognise
b. Availability of quality products
c. Minimum fluctuation in price
d. Improved Packing
e. Mental satisfaction
Marketing Question and Answer:- Q. 30. What are the types of brands?
Ans. There are four types of brands:
1. Manufacturer Brand or National Brand:
When we design the product ourselves and sale the product on our own name then the brand will be national or manufacturer brand, for example- Nokia, IBM and Sony etc.
2. Private Brand or Retail Brand:
This kind of brand manufactured by another but sold in the name of other brand means the producer and seller are not the same company the brand will be called retail brand, for example- Levi’s.
3. Licensed Brand:
This brand involves issuing license to other for example we are a medical company and have license to produce medical goods we issue this license to produce our copy right items to other medical company.
When a product is produced by 2 companies combine then the brand will be co brand as its name shows CO means together.
Marketing Question and Answer:- Q. 31. Define packaging. What are the objectives of packaging?
Ans. Packaging is the method of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use.
Packaging contains, protects, preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, and institutional, industrial, and personal use.
Objectives of Packaging:
a. Identify the brand
b. Convey descriptive and persuasive information
c. Facilitate product transportation and protection
d. Assist at-home storage
e. Aid product consumption
Marketing Question and Answer:- Q. 32. What is the criteria for effective sales forecasting?
Ans. The effectiveness of forecasting depends on factors like accuracy, plausibility, durability, flexibility, organizational participation and the key factors influencing the growth of the industry.
On the basis of nature, packaging is categorised into:
i. Family Packaging – The products of a particular manufacturer when packed in an identical manner are known as family packaging. The shape, colour, size etc. of packaging will be similar for all his products.
ii. Re-use Packaging – Package that could be re-used for some other purpose after the packed goods have been consumed is known as re-use packaging. This aspect increases the sale value of the product considerably.
iii. Multiple Packaging – It is the practice of placing several units in one container.
Packaging Laws and Regulations in India:
The link between food packaging and consumer protection is of high significance. A package is a vehicle of safety and achieves the objective of delivering safe, wholesome, nutritious food to the consumer. To safeguard the interests of the consumer and the society at large, Packaging Laws and Regulations have been introduced by the Government.
The Indian Regulatory System falls under the category of compulsory legislations formulated by the various ministries and voluntary standards framed by various organisations to serve the country.
The Packaging Laws and Regulations for food products are mainly covered under:
1. The Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (SWMA).
2. The Prevention of Food Adulteration Act, 1954 and the Prevention of Food Adulteration Rules, 1955 and its first amendment, 2003 (PFA).
3. The Fruit Products Order, 1955 (FPO)
4. The Meat Food Products Order, 1973 (MFPO)
5. The Edible Oil Packaging Order, 1998
6. The Agmark Rules
Packaging is being recognised as a major industry in all developing countries. This is not surprising as all the products manufactured or processed are packed in some way or the other, so as to safeguard the interests of the consumer and the society. The laws and regulations that apply to these products are very critical. These laws act as a measure of protection and self-satisfaction for the customers in terms of quality and quantity.
Marketing Question and Answer:- Q. 33. What is meant by labelling? What are its functions?
Ans. A label is an item used to identify something or someone, as a small piece of paper or cloth attached to an article to designate its origin, owner, contents, use, or destination. Package labeling or labeling is any written, electronic, or graphic communications on the package or on a separate but associated label. In other words label is a carrier of information about the product.
Labels are attached on the product package to provide information about the product such as manufacturer of the product, date of manufacture, date of expiry, its ingredients, how to use product and its handling.
Functions of Labeling:
i. It enables the producer to give a clear instruction about the users of product.
ii. Price variation caused by middlemen’s are avoided because of price is maintained and printed
iii. Manufacturer buyer relation is established.
iv. It encourages producer to make only standard products.
v. Buyers can easily identify the products.
Marketing Question and Answer:- Q. 34. Give the classification of labels!
Ans. 1. Brand Labels – These labels are exclusively meant for popularizing the brand name of the product, Example: Soaps, Cigarettes (LUX, DOVE, Gold Flake).
2. Grade Labels – Grade label shows the grade of the product. It shows the quality of products by words, letters, or figure. A, B, C, D grade can be put on peas packed into cans. Similarly, grade label can be mentioned as 1, 2, 3, 4 grades for packed wheat, some firms may use labels as good, better, best etc. on their products.
3. Descriptive Labels – Descriptive label gives information about the feature, using instruction, handling, security etc. of the products. Descriptive label is used for the products whose grade cannot be differentiated.
4. Promotional Labels – These labels aim at attaching the attention, arousing desire and creating among the consumers to buy the product
Ans. Every product has a price. Determining the price of a product, at which it should be sold in the market, is a rudimentary feature of marketing management. Price decision is left to market when there are number of competitors and the products are undifferentiated.
On the other hand, when a firm has developed strategic marketing programme and thus has gained some degree of market power, setting the price is a key decision which conditions the success of its strategy, to a large extent.
Price may be defined as the exchange of goods or services in terms of money. Without price, there is no marketing in the society. If money is not there, exchange of goods can be undertaken, but without price, there is no exchange value of product or service agreed upon a market transaction. Hence, pricing is the key factor which affects the sales operation.
Pricing is a fundamental aspect of financial modeling and is one of the four Ps of the marketing mix. The other three aspects are product, promotion, and place. Price is the only revenue generating element amongst the four Ps, the rest being cost centers.
Marketing Question and Answer:- Q. 36. What is the purpose of packaging?
Ans. a. Physical protection
b. Barrier protection
c. Containment or agglomeration
d. Information transmission
g. Anti-counterfeiting Packaging
i. Portion control
Ans. a. Cost Plus Pricing – Set the price at the production cost adding a certain profit margin.
b. Target Return Pricing – Set the price to achieve a target return on investment.
c. Value Base Pricing – Base the price on the effective value to the customers which is relative to the alternative product.
d. Psychological Pricing – Base the price on psychological factors of the customer
Ans. 1. A well-chosen price should do three things- a. achieve the financial goals of the company (i.e. profitability) b. fit the realities of the marketplace c. support a product’s positioning and be consistent with the other variables in the marketing mix.
2. Price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product
3. Price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns
4. A low cost price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors
5. From the marketer’s point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus to the producer.
6. A good pricing strategy would be the one which could balance between the price floor (the price below which the organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no-demand situation).
Ans. The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors.
Production Oriented – The focus of the business is not the needs of the customer, but of reducing costs by mass production. By reaching economies of scale the business will maximize profits by reducing costs.
Sales Orientation – The focus here is to make the product, and then try to sell it to the target market. It is basically a push concept of marketing concerned with selling the produced products and making profits, without caring what the customer needs are.
Market Orientation – In this case the customer is at the heart of the business. The organization tries to understand the needs of the customers by using appropriate research methods, processes and developing products to satisfy their needs. In essence all activities in the organisation are based around the customer. The customer is the truly king. In the present competitive world putting the customer at the heart of the operation is strategically important. Market orientation approach is highly relevant and successful one in the current scenario.
Apart from these there can be many concepts of marketing like societal concept, product concept, branding concept, etc.
Ans. 1. The Source- a marketing company, a sender of message.
2. The Message- the commercial idea, sales story, the copy theme.
3. The Channel- the vehicle carrying the message, a salesman, an advertising medium, sales literature sent through the mail. Telephone, postcard, radio or television, newspaper, etc., can also act as the channels of communication.
4. The Receiver- a person or a group of persons; the receiver is a potential customer, purchase influencer or a reseller.
5. The Feedback- a response, a reaction or a message sent back by a customer to the marketer. The feedback improves the effectiveness of communication.
6. Distortion and Noise- Noise creates many obstacles reducing effectiveness of the communication process. Noise is anything that distorts the message. Examples- (a) Clutter- A newspaper has several advertisements; (b) A Street has a large number of bill boards, (c) The receiver does not understand the message, (d) The receiver dislikes the advertisement or is offended by the Advt.
In marketing management, the source or communicator is the marketer who desires to promote his product. He attempts to deliver a message to a receiver. The receiver or audience is the target market segment, i.e., the group of consumers for whom the message is sent. Message is received and interpreted by consumers and if their predisposition becomes favourable, they decide to purchase. Feedback is the reverse flow of communication from the consumer to the marketer.
When the message is transmitted through personal salesmanship, the seller may have prompt feedback from the receiver. The sender can find out how the message is being received as we have face-to-face direct communication through sales talk and conversation. The salesman can balance the message on the basis of feedback from the buyer.
This is the real advantage of personal selling. Personal interaction is the most efficient form of communication. Under mass communication or advertising, mass sellers must rely for information feedback (returned message from buyer) on dealers, consumerism and complaints from consumers, marketing research or total sales results given through sales analysis.
Mass communication is essentially one way communication. Feedback is difficult and usually delayed. Consumer surveys, electronic devices, and other types of marketing research are used to get the feedback. However, this feedback is delayed and it is of no use in altering a message already sent. Of course, it is useful in altering the future advertising messages.
Marketing Question and Answer:- Q. 41. What are the advantages of advertising?
Ans. In modern business, large companies have to produce goods on a large scale to stay in business. Mass production demands mass consumption which necessitates use of mass media i.e., advertising to provide information about the products to the consumers, i.e., right up to the very homes of the target group so as to elicit their desired response. Advertising is a potential marketing tool and it has revolutionised the life of consumers in their selection of goods and services in the market place.
The major advantages of advertising are as follows:
1. Advertising generates income and employment in advertising and media industries
2. It helps in building the image of the product, brand and the company.
3. It makes the work of sales force easy and helps them to establish more stable relationships with customers.
4. Advertising creates mass markets and helps the manufacturers to derive production economies, reduce costs of production and provide products to the customers at cheaper prices.
5. Advertising makes the market more competitive, competition leads to enhancement of quality and product value.
6. It helps to increase sales, market share and profits.
7. It helps furthering social and environmental causes.
8. It establishes direct contact between the producer and the consumer.
9. It creates awareness among customers of products especially new products and innovations resulting in better choice and improved standards of living and leading to attitude change.
Marketing Question and Answer:- Q. 42. Give the classification of advertising media.
Ans. The method or means adopted to communicate the message of an advertisement is known as the medium of advertising.
On the basis of their distinguishing features, the media may be divided into the following categories:
A. Indoor Advertising Media:
Broad Casting Media-
b. Magazines & Journals
B. Outdoor Advertising Media:
b. Posters and Banners
c. Travelling displays
d. Sky Writing
e. Painted displays
C. Direct Advertising Media:
a. Envelop enclosure
f. Sales Letters
g. Gift Novelties
h. Package inserts
i. Booklets and Catalogs
j. Broad sides
k. Store publications
D. Entertaining Advertising:
d. Educational Programmes
e. Music Concerts
E. Miscellaneous Advertising:
a. Counter display
b. Window display
e. Past Customers
It is usual practice now with the manufacturers to provide free of cost various articles of low value to the existing and prospective customers such as diaries, calendars, ball pens, match boxes, key rings etc. These are called advertising specialties. These are given to consumer as gifts. The name and address of the advertiser, his phone number, and a short sales message are imprinted on these items. As these are consumer’s items, they will always remind the consumers about the advertisers.
Marketing Question and Answer:- Q. 43. What are the objectives of sales promotion?
Ans. Promotional activities serve the following purposes:
i. Providing Information – Sales promotion activities are undertaken to inform the potential buyers about the quality, features, uses and availability of the product. Thus it provides support to promotional activities undertaken by enterprises to popularize the product.
ii. Increase in Sales – The main purpose of all promotional activities is to increase the sales of the products of the company. Promotional activities increase the sales by changing the elasticity of demand of the product through various techniques, i.e., by distributing samples, free gifts, purchase premiums, discounts, etc. Such activities make the product popular.
iii. Reducing Seasonal Decline – In slack season, the promotional activities help in maintaining the sales of the product. Customers and middlemen are offered attractive discounts and free gifts along with their products to induce the persons to purchase their products.
iv. Create Product Identity – One of the objectives of the sales promotion is to keep the memory of the product alive in the minds of the present customers. Though this work is done by advertisement but other promotional activities help achieve this objective.
v. To Induce Middlemen to Purchase More – The middlemen— wholesalers and retailers — are induced to purchase mere stock by offering more facilities such as credit facilities, higher trade and cash discount and free gifts etc.
The other objectives of sales promotion are:
a. To face the competition successfully.
b. To change the marketing strategies and policies keeping in view the strategies and policies of the competitors.
Marketing Question and Answer:- Q. 44. What is meant by personal selling?
Ans. Personal selling is an approach to selling that involves the individual efforts of a salesperson to establish and grow rapport with a specific customer. Sometimes referred to as personalized selling, the idea is to get to know the customer, assess his or her needs, then tailor the sales process so that the customer’s specific needs are addressed.
The idea behind this approach is to present the sale as a means of helping the customer achieve his or her goals with the use of the products or services that the salesperson has to offer. In the words of Philip Kotler, Personal Selling is “a face to face interaction with one or more prospective purchasers for the purpose of making the sales.”
Marketing Question and Answer:- Q. 45. What are the disadvantages of personal selling?
Ans. a. High cost
b. Labour intensive
d. Can only reach a limited number of customers
Marketing Question and Answer:- Q. 46. Define the term middlemen.
Ans. A middleman is, in simple term, a trader who buys from producers and sells to retailers or consumers. A middleman is an intermediary within a channel of distribution used to transfer products from the manufacturer to the end user. Those who actually take title to the products and resell them are merchant middlemen. Those who act as brokers but do not take title are agent middlemen. Merchant middlemen include wholesalers and retailers.
Agent middlemen include manufacturer’s representatives, brokers, and sales agents. Middlemen expand the capacity of the manufacturer to distribute products to the end user, transfer title between channel levels, collect payments from middlemen and end users, and communicate product information to all channel participants. When the financial and expert resources are available in-house, manufacturers can increase their profit margins by reducing the involvement of middlemen.
Marketing Question and Answer:- Q. 47. What is the role of middlemen in the channels of distribution?
Ans. Wholesaler may be defined as the middlemen who operate between the producers (from whom they purchase goods) and the retailers (to whom they sell goods). The first important function of wholesale distributor is that they eliminate the need for a separate distribution channel by the producers themselves.
It makes the producers just focus on their other operations and processes. Wholesalers, being the nerve of the market, help producers know how to adjust their production capacity with the changing demands of the market.
Wholesalers sometimes purchase huge inventory that transfers the risk of selling the products. This frees a lot of working capital for the producer, ensuring smooth flow of the processes carried out by the producer.
As directly interacting with retailers, the wholesaler exactly knows about the customer view on each product. A close tie with the wholesaler will help producer know his customers better. Wholesalers not only help in stock buffering, but also deliver the products as and when demanded.
Marketing Question and Answer:- Q. 48. What are the advantages of personal selling?
Ans. a. High customer attention
b. Message is customised
d. Persuasive impact
e. Potential for development of relationship
g. Opportunity to close the sale
Marketing Question and Answer:- Q. 49. What is the role of sales department?
Ans. Sales Department is considered to be the most important department in a commercial organisation. The efficiency of a business firm is primarily measured by the volume of sales turned out in a given period. Sales or turnover of goods is the barometer of business profits and reputation. Goods are produced or purchased in anticipation of demand.
It is the job of the Sales Department to promote the sales and maintain it and further increase the turnover. It is the embodiment of various activities and efforts undertaken to boost the sale of goods in question.
Marketing Question and Answer:- Q. 50. What is the role of retailers?
Ans. Retailers buy goods from wholesalers and sell them directly to consumers. Thus he acts as a direct link between the wholesaler and consumers. He caters to the needs of the consumers by offering a wide variety of goods and services from different sources and stocks different varieties of products. By providing uninterrupted and fresh supply of goods, he saves consumers from the botheration of buying goods in bulk and storing them.
Sometimes retailers provide free home delivery services to their consumers. The retailers may also provide credit facility to their consumers. A retailer brings new products to the notice of customers and educates them in their uses. Thus they act as friend and guide to their customers.
Marketing Question and Answer:- Q. 51. Define marketing mix.
Ans. The marketing mix refers to the set of actions or tactics that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place. Apart from these 4Ps, there are several other Ps come under the periphery of marketing mix. They are Packaging, Positioning, People and even Politics as vital mix elements.
The term marketing mix was coined in an article written by Neil Borden called “The Concept of the Marketing Mix”. In the words of Philip Kotler, “A Marketing mix is the mixture of controllable marketing variables that the firm uses to pursue the sought level of sales in the target market.”
Marketing Question and Answer:- Q. 52. What are the functions of sales department?
Ans. The main functions of the sales department are given below:
(i) To inquire into the needs, tastes and buying habits of different classes of consumers in the market;
(ii) To measure the strength of the competitors in a particular line of business;
(iii) To look out for new and profitable markets;
(iv) To organize advertisement campaigns and other sales promotion activities in order to create, maintain and extend the demand for goods;
(v) To collect order from customers directly or through salesmen or agents;
(vi) To execute orders by timely dispatch of well-packed goods;
(vii) To determine the most appropriate and economical method of selling goods;
(viii) To frame policies related to price, credit and discount; and
(ix) To arrange for after sale services and render other services to customers for gaining their goodwill.
Marketing Question and Answer:- Q. 53. Give the classification of services.
Ans. The services offered by a company may be classified broadly into nine categories. The services in each category have different attributes and delivery pattern. The classification services are helpful in deriving appropriate marketing-mix decisions. The convenience services are provided frequently at low or customized price and are positioned intensively in the area of operation of the company.
These services are in the mass market used by the people who have marginal to medium level purchasing power in the given region. The convenience services also generate impulse-buying due the me too and esteem behavior of service users. Services in this category may include newspaper and magazine vending, tailoring, auto workshops, etc. In addition, routine medical and dental clinics may also be that part of convenience services.
The shopping services are purchased less often than convenience services and the decisions are generally made using an attribute-based decision-making process. The quality and brand associated with the service is more important than the price of services in this category. The legal, accounting and medical services may be cited as examples explaining the attributes of shopping services.
In addition the prime business centre providing variety of service at one place like health diagnostic laboratory, dispensing of medicines, consultant services, ambulance services, referral services, surgery, etc., may be termed as delivering the shopping services. Core services are the basic services and the activities supporting them may be defined as the supplementary services.
The haircut may be the basic service for customer while cutting the nails may be the supplementary service provided to him. The tangible services will have the physical evidence and the intangible services may have more creative inputs to be observed by the service user. The business-to-business services are provided to support the industrial houses in carrying out all operations.
These services include industrial consultation and alliances on technology, human resources and delivery strategies. These categories of services are largely customized and client- oriented. The services rendered to the buyers and companies engaged in international marketing are also of a specific category and provide diversified service of high quality. These services are customized to a large extent and backed by the strong brand image of the organization. The other category of services includes hoc services which are of famine, war, etc.
Ans. Traditionally, products can be classified on the basis of durability and tangibility and use.
On the basis of durability and tangibility, products can be classified into three groups:
1. Non-Durable Goods:
Non-durable goods are most of the fast moving consumer goods, which is consumed in one or few uses like a shampoo or a chocolate. The company needs to have a large footprint its distribution network to have more and more customers.
It also needs to advertise more on Television, as it influences the customers in a passive way. Clinic Plus, Happydent, Lux, Colgate are examples of few of the non-durable goods.
2. Durable Goods:
Durable goods stay a lot longer than the non-durable goods. TV, Refrigerator, Clothing and Apparels are all durable goods. The company needs to promote its brand effectively in the market with a good service back.
Services are nonphysical and intangible in nature and can satisfy a need. Banking, Couriers, Hotels, Airlines, Multiplexes, Trains, Doctors, Lawyers, Management Consultants are all examples of services. In the era of cut throat competition in the market, the services should not only satisfy, but delight the customer.
On the basis of the use, the goods can be classified into Consumer goods and Business Goods or Industrial Good:
A. Consumer Goods Classification:
On the basis of shopping habits, consumer goods can be classified into convenience, shopping, specialty and unsought goods.
(a) Convenience Goods:
Convenience Goods are bought frequently by the consumers like Salt, Soap, Potato Chips, and Chocolates etc. It can further be classified into Staple, Impulse and Emergency Goods. Staple goods are bought on a routine basis like toothpaste, shampoo, soap etc.
Impulse goods are bought on impulse, without any deliberation like Chlor-mint, Lay’s Potato Chips and Cadbury Chocolates. Emergency goods are purchased in case of an urgent need like N95 swine flu protection mask. It also happens with the seasonal goods like Umbrella and rain coat in a rainy season and a body warmer in the winter season.
(b) Shopping Goods:
Shopping Goods include electronic appliances, clothing, furniture etc., which require a deliberate decision to buy the product on the various attributes, the product can offer.
(c) Specialty Goods:
Reid & Taylor Suits, Reebok shoes, Apple iPods, Bose Sound Systems are examples of specialty goods. Brand plays an important role in making these goods unique to the customers.
(d) Unsought Goods:
Many other products are also useful to the customers, but they may not be aware or they will generally not think about buying it. Security systems, fire extinguishers, smoke detectors, insurance, encyclopedias are examples of unsought goods, which needs a direct marketing and personal selling approach to influence the customers to buy the product.
B. Industrial Goods Classification:
Industrial Goods include Material and Parts, Capital Items and Supplies and Business Services. Material and Parts include raw material and manufactured material and parts, Maruti Suzuki requires steel, paint, tyre, steering wheel and several other material and parts for producing its cars.
ITC requires farm products like wheat as the raw material for its Aashirvaad Atta; while Tata steel requires a natural product like Iron ore for producing Steel. Manufactured material can further be classified into Component material like cement, wire, TMT bars and component parts like bearing, steering and tyres. In both the cases, price and service play a crucial role.
Capital items include installations like factories and offices and equipments like generators, assembly unit like Tata Motors’s Tata Nano plant /in Sanand in Gujtrat, after the fiasco in Singur.
Supplies include Maintenance and repair items like screws, nails, paint and operating supplies like stationery, lubricants, coal etc. Collectively it is known as MRO goods. Business Services include maintenance and repair services for office equipments, housekeeping and business advisory services like Human Resources services, Legal services, consulting services and advertising services.
Ans. When an existing brand is extended to introduce additional items in the same product category, then it is known as Line Extension. For example, Lux launched two fruit extract soaps called Lux Strawberry & Cream and Lux Peach & Cream in March, 2008 under the line extension. In this case, the brand name remains the same, but a new flavour, package size or different form can be introduced by the company.
Under the brand extension, the same brand name is used in a new product category. In 1995, HUL launched Dove brand in the premium personal wash category in India. Now the brand has been extended to shampoos, conditioners and hair oil.
In the existing product category, an additional brand may be introduced. It is a part of multi brand strategy by many FMCG companies. Ghari Detergent launched MR2 detergent powder for its premium customers, besides having Ghari Detergent powder at the lower end.
The company may also go for new brand in a new product category. It becomes a part of the company’s diversification strategy. ITC was earlier into Cigarettes. Now it has expanded into food products, lifestyle retailing, personal products, agarbattis, safety matches and stationery with various brands under its belt.
In the food category, it has got ready to eat products under the brand ‘Kitchens of India’, staples like Atta, Salt, Spices and Instant Mixes under the brand ‘Aashivaad’, snack food like Biscuits under brand ‘Sunfeast’, potato chips and finger snacks under the brand name ‘Bingo!’ and confectionery under the brand ‘Mint-O’ and ‘Candyman’.
In the case of Lifestyle Retailing, it markets the apparels under ‘Wills Lifestyle’, ‘John Players’ and ‘Miss Players’. In the personal product category, it has got ‘Essenza Di Wills’, ‘Fiama Di Wills’, ‘Vivel’, ‘Vivel Ultar Pro’, ‘Vivel Di Wills’ and ‘Superia’. In the incense stick category, it has ‘Mangaldeep’ Agarbatti and ‘Expressions’ aromatic candles. In the safety matches, it has ‘Mangaldeep’, ‘Aim’, ‘Aim Mega’ and ‘Aim Metro’. In the stationery category, it markets the products under ‘Classmate’ and ‘Papercraft’ Brand.
Besides these FMCG products, ITC is also into the business of Paperboards and Packaging and Agri-Business, besides hotels under the brand of ‘ITC-Welcome Group’ and Information Technology under ‘ITC Infotech’.
Ans. Generally every organization’s promotional campaign includes a combination of two or more promotional methods, to accomplish promotional and marketing objectives. Personal selling is the only method which can go for an effective sale without other promotional support. But it is very expensive one. Non-personal methods for example advertising needs support of personal selling for effective sales.
Therefore, it is necessary to determine which combination will suit to organization. However, it is very difficult task for marketing manager to determine optimum promotion-mix, as there is no ideal promotion-mix that fits it all situations.
The marketing manager must take following factors into consideration before determining a promotional-mix for the organization:
1. Nature of Product:
Nature of product is most important factor determining promotion mix of an organization. Consumer goods generally need advertising and sales promotion method, as they are low priced and did not require any specific service. However, in case of industrial goods like machinery personal selling and advertising are suitable; as they require technical as well as after sale service information.
2. Life Cycle Stage of Product:
Another factor determining promotion-mix of the organization is the stage of life cycle of the product. In the initial stage advertising and personal selling are useful in stimulating primary demand for the product. In the stage of growth and maturity advertising and sales promotion plays a vital role in increasing sales and avoiding competition; as product in this stage is already known to customers.
3. Nature of Market:
Market characteristic also affect promotion-mix. A firm operating in small or local market can opt personal selling. However, if the firm operates at national level it has to depend upon advertising and sales promotion for increasing its sales.
4. Nature of Competition:
Promotion-mix of a firm also depends upon the competitive situation prevailing in the market. Most of the firm opt those methods which were not adopted by their rivals.
5. Nature of Customers:
Certain consumer characteristics like – age; sex; income; place of residence; education status etc. also determine a firm’s promotion-mix. For example – A marketer may take help of advertisement and publicity for potential educated customers. While in other case he may go for personal selling and sales promotion to enhance its sales.
6. Availability of Fund:
Promotion-mix and its efficiency much more depend upon the availability of the fund for promotion. Personal selling is most expensive method and sales promotion also costs more to organization. Firm facing lack of fund cannot adopt these methods for promoting their product.
Marketing Question and Answer:- Q. 57. Explain trade promotion!
Ans. Many sales promotion activities are directed at the consumers. If such activities are directed at trade partners or channel members like distributors, wholesalers or retailers, they are termed as trade promotion.
The basic purpose of trade promotion is to build ‘push’ in the channels so that they sell the manufacturer’s products with great enthusiasm. Trade promotion activities stimulate the wholesalers and retailers to carry the manufacturer’s brand and promote it by giving it adequate shelf space and persuading the customers to buy it.
Trade promotion is carried out by the manufacturing by providing various incentives to trade partners or intermediaries to make them work for the success of a brand.
Marketing Question and Answer:- Q. 58. What are the methods of framing advertising budget?
Ans. Actually there is no one scientific method available which can be used in determining the amount of advertising fund. However, there are several approaches which serve as guide in determining advertising budget.
The following are the popular methods for framing advertising budget:
1. Affordable Method:
One of the easiest methods of framing the advertising budget of an organisation is affordable method. In this method, the budget is determined on the basis of company’s resources and expenses which it can afford to bear. This method is generally used by those companies which have limited resources. Under this method, usually advertiser does not spend too heavily on advertising.
2. Percentage of Sales Method:
Under this method, the advertising budget is arrived at by multiplying the value of past year’s sales or projected sales for given period with predetermined percentage. Symbolically –
Advertising Budget = Past Sales × Percentage.
Generally in this method the percentage is determined on the basis of management experience and judgments or industry practice.
3. Competitive Parity Method:
In this method, the advertising budget of the company is determined in such a way that there is parity between the company’s advertising budget and competitor’s advertising budget. Generally every advertiser wants to spend as much as their competitors’, so that they are not placed at any disadvantages. For being successful the company has to collect relevant data about competitor’s advertising budget, for example, previous year’s absolute expenditure, advertising/sales ratio, etc.
4. Objective and Task Method:
This method of framing advertising budget is considered to be the most desirable and realistic method. It envisages appropriation of advertising funds on the basis of the objectives to be achieved and the tasks involved therein.
This method includes:
(a) Defining advertising objective as far as possible in quantitative terms.
(b) Outlining and listing the tasks to be performed to achieve these objectives.
(c) Estimating the cost of performing these tasks; and
(d) Making adequate funds available according to the estimates.
5. Judgment Method:
Judgment method of framing an advertising budget is based on the judgments of experienced managers of the organisation. This method is also referred as “arbitrary method”, because it is based on the arbitrary thinking of some experienced managers only. This method involves statistical or field work. It is solely based upon the judgments of old and experienced managers.
6. Fixed Sum per Unit Method:
This method is similar to the percentage of sales method except that a specific amount per unit is appropriated rather than percentage value of sales. The advertising budget may be based on number of units sold in previous year or number of units to be sold in future. This method is suitable for industrial and consumer durable products.
Marketing Question and Answer:- Q. 59. Why prices of certain products are high?
Ans. Prices may be very high due to two definite reasons:
1. Internal Company Reasons (Susceptible of Variation):
i. Incorrect imputation of the components that make up the exporting product. The company wrongly includes some components within the international price. It may include items that do not correspond to the exported product price or, just the opposite, essential costs may be disregarded.
ii. Certain components carry a high cost or incidence upon the product final price (packing, containers, inputs, etc.).
2. External Company Reasons, that is, Causes Related to its Environment and upon which the Company has Little Control:
i. Existence of strong taxation, social security and energy loads that negatively influence competitive price fixation. A country generally is asymmetric compared with others. An entrepreneur is going to be affected by his or her country’s asymmetry compared with others at the international level.
Asymmetries are competition differences among the different countries, due to existing legal differences among them. It is a relative concept, and competition difference among different countries may be based on specific legislations in force in them (exchange, taxation, energy, work, industry).
Due to the fact that the production and enforcement of different legislations (laws, decrees, resolutions, etc.) is in each of the different national bodies power, (parliaments, ministries, etc.), the legal environment that differentiates a country from other may negatively affect entrepreneurs’ costs.
An example may be a country with a legal policy of workers’ social security which is taxed to entrepreneurs with higher retirement and health insurance contributions as compared to other countries.
Supposing that these high “taxes to work” existing in this first country were higher than the ones in force in a second country which possessed a more permissive legislation and lower labour cost; this situation might contribute the first country to be less competitive as regards prices as compared to the second, especially on exports that take intensive labour force.
A more obvious aspect as regards asymmetries comes with exchange rate policies within an economic plan. Certain countries affect exchange rate through national currency devaluation (with the objective of impoverishing the neighbouring country) to make exports more competitive in price issues relative to the international market.
In some cases, a conjunction of several regulations issued by different national governmental environments is produced. These norms may affect a series of operations and steps that the exporter has to perform obligatorily. This intricate net of legal requisites and steps (authorizations, controls, presentation of papers) constitutes a highly bureaucratic national environment with an anti-exporting bias.
ii. Inexistence of an adequate national infrastructure that may have a positive effect on price calculation. International marketing infrastructure comprises every kind of systems that facilitate exports, directly or indirectly (as, for example, bridges, airports, ports, warehouses and warrants, free trade areas, waterways, bioceanic corridors, etc.).
If the infrastructure existing in a country or region were efficient, it would allow cost and time savings in international operations development. The development of this infrastructure ought to be within the main functions of the State, as part of a national support policy and country’s international marketing promotion.
However, States usually go to the private sector in order to get contributions in the development of certain infrastructural systems.
Marketing Question and Answer:- Q. 60. Explain the differential issues between final and entrepreneurial consumption products.
Ans. In the end use and organizational consumption classification of products, differences are established on who the user or consumer of the product is as well as on how the process is performed. Organizations have a more rational and planned purchasing process, according to a purchasing budget.
In some cases, they stipulate standards or requirements that products must have, and give importance to some aspects of the amplified product such as- post marketing services, use instructions and warranty. The purchasing process can be produced in the enterprise or the seller’s address.
On the other hand, end use product purchasing behaviour process is less rational, more emotional, less restricted to a purchasing plan, with the exception of economic recession times, during which consumers’ purchasing power is greatly affected. Presentation (packaging, design, colours) and point of sale features (decoration, distribution, access inside the shop) are very important. For these products, the purchasing process is produced in the point of sale visited by the buyer.
Ans. Product lifecycle is not the same as product international marketing lifecycle. In order to explain the second cycle, we have to consider that there exist two groups of countries in the international environment: the ones that generate knowledge or ideas and commercialize them, and the ones that commercialize products.
This international cycle consists of a first stage in which the country, generally developed and with a big internal market that acts as a testing field, introduces a new product in the market as a consequence of great R+D (Research and Development) investment. In this first stage, this country monopolizes exports of the innovating product to the other countries.
Other countries start to manufacture the product in a second stage, as a consequence of licenses granted by the country that originally developed it, or as a consequence of disloyal commercial actions, such as forgery. As a result, exports from the first country decrease, because the product is not imported by those second countries that produce it internationally.
In a third stage, these countries generate economies of scale and, as they use intensively abundant resources in their local markets in the productive process (for example, low cost labour force), they get very competitive final prices. In this way, they start to export and this is why external sales decrease even more, because there are new competitors in the different export markets.
In the fourth stage the product is imported from the countries incorporated after, by the country that developed it in the first place so, this country introduces a new product to the international market, and a new cycle with its stages is started for this new product.
It is clear that certain countries concentrate technological development and innovations in a first stage and then, in subsequent stages, they start to disseminate them in other countries. These countries manufacture the product and market it more efficiently than the innovating country, which impels this country to constantly create different innovations.
Ans. A container can be defined as one of the components of product international policy that has to meet the following features:
i. Protective- It makes sure the product keeps its quality level for use.
ii. Containering- It contains product and allows a harmonious relationship container-contained.
iii. Communicational- It transmits information on the different attributes of the product like- colour, shape, design and symbols, smell, taste, etc. It is part of the positioning strategy from the visual point of view.
iv. Portable- It allows product transportation and handling for use.
v. Commercial- In self-service system points of sale, this becomes a strong promoter for consumers’ purchasing process. This is why product attractiveness and design balance are so important to differentiate it from the competition. As with the brand, the container individualizes the product and distinguishes it from the ones presented by competitors.
A container may be primary when it is in direct and close contact with the product, and secondary when several primary containers are grouped for exhibition. The tertiary container is the grouping of secondary containers in bigger modular systems (unitization).
Marketing Question and Answer:- Q. 63. Explain the size and growth of marketing research.
Ans. An Advertising Age reporter who specializes in marketing research estimated that total 1985 expenditures on marketing research in the United States amounted to $2 billion. A 1987 study by Market Facts, Inc., reported that almost 60 percent of the 84 respondent companies said that they would increase their current year’s spending on marketing research over the previous year’s expenditures. In each of the four similar surveys Market Facts, Inc., had undertaken in the previous six years, between 60 and 83 percent of the responding companies reported that their marketing research expenditures would increase over the prior year’s expenditures.
One of the leaders of marketing research- Arthur C. Nielsen, Jr., past chairman of the A. C. Nielsen Code estimated that the marketing research held is doubling in size every five years. This evidence supports the general belief that market research is a large and growing field of business activity that is playing an increasingly important role in decision making.
Marketing Question and Answer:- Q. 64. What are the factors affecting price fixation?
Ans. For price determination can thus be determined by internal and external factors discussed below:
A. Internal Factors:
Internal factors are associated with the business’ goals and objectives as well as the processes catering to them.
Internal factors accordingly include:
i. Organisational Objectives:
Organisational objectives are associated with the operations of a business directed towards customers’ requirements and needs. For introducing a new or an existing but improvised product in the market, the business’ main objective would be to align their resources towards target markets using relevant marketing tools that can influence revenue generation and customer satisfaction. Prices of the products/services are accordingly determined, based on such organisational objectives.
ii. Costs of Product:
Pricing of the product is based on specific costs related to cost of raw materials, costs of factors of production and distribution. Depending upon the nature of the industry and business practices followed costs of products and services cannot be always low and feasible. For example, costs of oil exploration and drilling are extremely high. With less number of businesses involved in oil exploration and drilling, costs of oil production and costs of their refined components like petrol, propane, kerosene, etc. will also be high.
Other marketing mix elements-Other marketing mix elements like product, place and promotion affect the pricing of the product. The nature of the product and its final consumption determined in a defined or identified place supported with certain promotional activities adds to the cost of the product. These costs also determine the price of the underlying product.
External factors are related to factors that affect the business indirectly from its surrounding environment which consist of a business’ competitors, vendors, suppliers, government, socio-political and economic changes.
External factors include:
Demand from consumer from selected markets can affect the prices of the product /service. Marketers needs to study the nature of demand affected by elasticity of demand, presence of substitutes and complementary goods, growth in demand for the products, market share and sales of the products. These factors assist a business to forecast the possible shift in demand that influences the prices of the products.
Competition and their nature also influence the prices of the product/services. Nature of competition implies whether there are few producers with large or small number of buyers and large number of producers with large or small number of buyers. Either way prices would change according to imperfectly competitive nature of the markets. The most favourable approach to tackling an imperfect market is to identify a significant advantage the business can adopt either in terms of quality, efficient business processes, effective supply chain and distribution approaches. These advantages can allow the business to be competitive and accordingly determine a price catering to a selected market.
iii. Legal Constraints:
Businesses should set their pricing policies within the legal framework prescribed by the government. Businesses should not set them against these pricing limits as they are set by governments for safeguarding customers’ interests.
iv. Psychological Pricing:
Psychological pricing is related to realising the changing tastes and preferences of consumers in the market reflecting their purchasing behaviour. Factors influencing their purchasing behaviour should be studied to determine the prices. This includes, understanding the nature of the target markets, the conditions of the product during and post purchase, consumers’ attitudes and perceptions and so on.
Marketing Question and Answer:- Q. 65. What are the features of virtual mail and electronic message?
Ans. The electronic mail is an excellent means to initiate a primary bond of trust with the external operator quickly and at a low cost. This instrument, however, has to be complemented and strengthened with non-virtual means such as the telephone, the fax machine, commercial samples, or personal trips, so that transactions are made in an atmosphere of transparency.
The message has to be personalized and a unique massive standardized message, or bulk e-mail, must be avoided, irrespective of whether it is with a visible copy or an occult copy, because this makes the message less serious. Message contents have to be written in the destination place language or a language usual in international trade, such as English. It is very important to be kind and polite in every virtual communication produced by the company.
The organization has to be very careful about SPAM practices. These are massive messages with special offers, unasked by the addressees. To avoid confusion, it is important to make it clear that the message sent is not SPAM, and indicate clearly the information source of the addressed company data, with the condition, at the end of the text, that the receiver may optionally require not to be contacted again.
Marketing Question and Answer:- Q. 66. What are the uses of electronic mail?
Ans. The electronic mail or e-mail allows international communication of different character at a low cost and it is used, among other things for:
i. Production of offers or quotations to the external market. In these cases, the message has to be clear and precise, unnecessary explanations and writing ambiguities in the electronic text have to be left aside. Besides, the webpage company name as well as its links or hyperlinks towards other interesting webpages that can interest the addressee, may additionally be added.
ii. Company loading notification (with indication of departure date, ship and flag, and estimated arrival date) and consignment or presentation of commercial and financial documentation at the bank.
iii. Alterations request about some buyers’ requirements like: documentation, packaging, product model, etc.
iv. Delivery of enclosed files with product price lists or reports about the company or the marketed product line.
v. Delivery of enclosed files with scanned brochure or catalogue with a description of the products offered by the company.
vi. Shipment or sampling demurrage notification.
vii. Sending of the pro forma invoice so that the importer can start the different customs, insurance and banking formalities.
viii. International freight, port expenses, international insurance quotation request.
ix. Company operations promotion towards potentially interested clients in different markets. This kind of message must contain a reference to the origin or resource from where the company obtained the electronic addresses of the addressees (for example commercial attaches, chambers, etc.), so that the message can enjoy more reliability.
x. Communication with intermediaries based in destination country related to the company (agents, distributor, etc.).
xi. Information request about external markets (importers listings, events, statistics, barriers, prices in force, etc.) to the different foreign trade agents (chambers, commercial attaches, governmental institutions, etc.).
Marketing Question and Answer:- Q. 67. What are the types of electronic marketing?
Ans. Webpages show different approaches to electronic trade:
According to the Intervening Parties:
1. G2G (Government to Government):
It deals with the relationship between governments of different nations, as well as between different country governmental departments, through the net.
2. G2B (Government to Business):
It refers to public administration data transfer to different private organizations.
3. G2C (Government to Consumer):
It consists in the public administration information transmission to the consumers.
4. B2C (Business to Consumer):
It includes the virtual commercial relationships developed by the company for consumers.
5. B2B (Business to Business):
It is about inter-entrepreneurial virtual commercial relationships. It is possible that new bonds among the companies generate and extend beyond the short term, generating cooperative attitudes.
6. B2G (Business to Government):
It includes public market management activities through the net.
7. C2C (Consumer to Consumer):
Its objective is the development of transactions between consumers. Example: virtual auction sites.
8. C2B (Consumer to Business):
It consists of groups of consumers, who perform joint buying of products from companies, with a greater negotiation capacity than at individual level.
9. C2G (Consumer to Government):
It has to do with private individual payment of taxes through the net.
Marketing Question and Answer:- Q. 68. What are the approaches of international marketing strategy?
Ans. According to different authors (Keegan, Garcia Cruz, Cateora), external market strategy approach may be different, that is:
1. National or Domestic Approach:
The company does not consider the possibility of exploring external markets, neither does it develop any contact with international operators; its marketing strategy only considers local contextual factors (competition, domestic commerce practices and national consumers). This strategic approach generally lacks exporting conscience, and does not take any world risk or commitment.
2. International or Extension Approach:
The company is already involved in the internationalization process, but gives more importance to the national market and a secondary place to external markets. There develops an ethnocentric approach, which deploys the same national strategy in the different external markets, without any kind of adaptation to the different international environments (economic, legal and politico-legal).
The entrepreneur believes that national strategies successfully implemented in the internal market must also function well at world scale. So, the marketing strategy implemented in the local market is extended to the different country-markets, presupposing their homogeneity and similarity. This strategy is generally applied in the first stages of the company internationalization, when the aim is to penetrate markets similar to the national market (psychographic closeness).
3. Adaptation or Multinational Approach:
The company gains access to international markets taking into account the particulars of each country. A specific marketing strategy is designed for each country, considering adequations to each market local needs. It is a multi-centric approach, in which each country-market is individually considered for international strategy design and implementation.
The existing legislative, cultural, economic, legal, technological development and political issues differences among the different markets make it necessary to individualize access approaches.
This approach is generally adopted after an extension approach, when particular markets needs are recognized to satisfy them. This strategic attitude is characterized by a stronger company familiarization with international activities and by an understanding of the existence of differences among the different country-markets.
Although the company develops a variety of multi-local strategies adapted to each market, this approach has high country-specific adaptation issues costs.
4. Global Approach:
Strategically, international markets are considered as a single market; each country is not individually important in itself, but for its contribution to enterprise total strategy. One premise of this strategic approach is the interconnection and interdependency of the different international markets.
This is why, what happens in one of the markets affects the others. The global approach to world markets access comprises activities of strategic extension, adaptation creation, integrated in a global approach.
Global strategy deployment produces synergy in the use of resources and efforts for external operation. Different markets interconnection, considered here as a unique global market, demands for coordination of activities, as well as for sharing and spreading information generated in each market, so that it may be used by the others.
Within this strategy, the company can develop some degree or standardization of its marketing mix variables, which implies the application of identical marketing policies without individual modifications or adaptations. This standardization will never be absolute, it is only degrees of standardization.
In some cases, other company chain of value activities can be restructured like, for example, the productive process, which may be centralized in a country in order to achieve economies of scale.
This geocentric approach allows the entrepreneur to distribute the productive links in different countries, by considering the comparative advantages of each one, through a world integrated productive system. Adaptation issues are considered in this approach, since the strategy, developed at a global level, is also sensible to the implantation local needs of each country-market. Also, the cost inefficiency implied by sustaining different strategies that vary from country to country, is solved with the integration of every market selected in a global strategy.
5. Regio-Centric Approach:
The strategy may be regio-centric when it selects particular regions as operative areas for the design of a generic, integrated strategy for them. In this case, the company designs pan-regional strategies that consider the market objective made up by different countries, as if it were a single market for strategic purposes.
Marketing Question and Answer:- Q. 69. What are the features of macro-segmentation?
Ans. 1. Market Size:
A study of the macro-economic variables of a country has to be made- number of inhabitants, Gross Domestic Product, rate of demographic growth, and volume and trend of total imports and of product. With this information, the company has to anticipate and estimate data towards the desired segment.
2. Psychographic Closeness:
Also-called “psychological closeness”, consist in the similitude existing between the market of origin and that of destination in the marketing practices, commercial legislation in force, consumers’ habits, language and certain cultural features. It allows the entrepreneur to observe the external market with a vision more familiar with the national market. So, a mental state towards a more reliable and certain vision of internationalization is generated.
3. Purchasing Power:
It is important to evaluate the purchasing power of potential consumers. Some hints can be perceived by the per capita GDP.
4. Geographic Vicinity:
A very relevant factor is the ease of access and the vicinity of the selected country. This factor affects everything related to the cost of international transportation of the merchandise and logistics complexity. It is convenient for a company in its first internationalization stages to start by concentrating its exports in the closest markets, reaching to neighbouring countries.
5. Degree of Economy Liberalization in the Country of Destination:
It can be measured by the relationship between the total imports and the Gross Domestic Product. Another indicator is the level of duties and the paratariff barriers imposed to the company product.
6. Country-Market Risk:
This has to be measured from a wide point of view that takes into account not only economic but also financial, legal and political aspects.
7. Relevant Economic Indicators:
Some interesting indicators could be- illiteracy rate, average salary, minimum salary and energy consumption, among others. These indicators provide for consumers’ general characteristics.
8. Product Modification:
The number of adaptations to a product due to cultural, economic or legal aspects has to be taken into account. Some changes could consist in the obligatory use of particular components or packaging, labelling rules, technical requirements and quality standards.
9. Simplicity and Speed to Operate:
The agility, simplification and celerity of the product introduction procedures in the country of destination have to be analyzed. These include all the bureaucratic activities, documentation procedures, granting of permits and licenses, registration in control bodies, among others.
10. Existence of Government Incentives:
It has to be known that some foreign countries grant financing lines to local producers to use them in certain imports. Other issue to analyze is the validity of advantageous and ample foreign investment laws for the companies of origin. These regulations can motivate the entrepreneur to manufacture the product in the destination market, through production branches that benefit him or her in taxation and finance.
11. Product Lifecycle:
Those markets in which the company product is in an initial stage have to be clearly distinguished from those in which it is in the development stage of its vital cycle. These cycles vary from market to market, because of cultural, economic and technological reasons.
12. Existence of Regional Homogeneous Markets:
A very differentiated feature appears in those country-markets that are members of a commercial block. The company may consider a direct or indirect subsequent access to the rest of the regional market.
13. Company Resource Level Applied to Internationalization:
The selection of the international market to penetrate has a close relationship with the amount of monetary, financial, productive and human resources that the company is going to make use of in its international strategy.
It is important to examine the company internationalization stage. The organization can be in an initial stage, as, for example an experimental or sporadical export, or consolidated in the external markets through continuous export.
14. Other Relevant Features:
Among others, the amount of potential business opportunities detected and the structure and infrastructure of the competitive environment in a particular external market are of great importance.
Marketing Question and Answer:- Q. 70. What is the importance of marketing research?
Ans. (1) Ever expanding markets require numerous middlemen between producer and consumer and this has created a chronic communication gap in the flow of information from consumer to producer. The widening of communication gap is the chief single factor for increasing importance of marketing research and marketing research alone can provide first-hand knowledge of consumers and changes in the pattern of demand.
(2) Emergence of buyer’s market and increasing competition demanded continuous need of marketing research to ensure maximum consumer satisfaction and repeat purchases and to lay down appropriate marketing strategies to meet competition, to survive and grow in a competitive market. Marketing research can establish best positive correlation between the product/brand and consumer needs and preferences.
(3) The moment customer becomes the centre of the marketing universe, marketing research assumes unique importance and it becomes an invaluable management tool to formulate accurate and realistic plans and programmes of marketing advertising and sales promotion based on realistic information of consumer demand — changing tastes, preferences, whims, fancies etc. Marketing research can ensure quick way to profit viz., to serve the customers in the ways in which he/she wants to be served.
(4) There is nothing permanent except change. Change alone is constant. Change is the essence of life. Change is the common denominator in planning, organising, motivating and controlling marketing activity. Marketing research enables management to anticipate, meet and adapt change and creativity and accelerate conditions of change, particularly in consumer demand.
The real challenge to marketing management is to believe firmly that changing a business — finding its new role, new customers, new products and new markets— is even more important than efficient operations of the business. In a dynamic environment, marketing information and research helps forward looking marketer to manage all challenges and problems created by environmental forces.
(5) Marketing research can solve the problem of catching up with new developments brought about by unprecedented growth of science and technology. It can help management to bring about prompt adjustments and innovations in product design, packaging, advertising, sales promotion and distribution policies so that the business can keep itself up-to-date in the dynamic marketplace.
(6) Marketing research enables producers, merchants, distributors and advertisers to avoid mistakes either in manufacturing or in marketing. To that extent, it can minimise business failures and maximise profitability.
Marketing Question and Answer:- Q. 71. What are the components of export price?
Ans. The components that make up the exported product vary according to the incoterm (or price clause) used and may consist in a perceptual or fixed amount calculated upon the final quoted price.
Some of the main items are:
1. Production Costs:
They have to include those product costs which are the result of adaptation to legal, cultural or economic requirements of the market of destination.
2. Administration, International Marketing and Financing Costs:
The following costs are going to be considered: expenditures related to the company export department, international market exploration, obtention of credits to export or manufacture exportable products, bank commissions from financial instruments used (letter of credit, international transfers or documentary collection), international participation in trade shows, among others.
3. Export Costs:
This series of expenses include-
i. Documentation necessary to export- export commercial invoice, packaging list, certificate of origin and sanitary certificate, customs papers, transportation papers, etc.
ii. Manuals, labels, etc.
iii. Internal carriage and insurance.
iv. Sampling abroad.
v. Port taxes and expenses.
vi. Commissions per commercial contact made.
vii. Different intervening professionals’ fees (customs agents, consultants, etc.).
viii. Container loading and consolidating costs.
ix. Export taxation (rights).
x. Various inspections costs (phytosanitary, quality, etc.).
4. Export Incentives:
If the company received some government incentives, such as refunds or drawbacks, those components should be deducted from the price to make it more competitive.
5. Wished Earnings:
They may consist of a fixed or perceptual amount on the quoted incoterm or a combination of both.
6. International Carriage:
International freight charge, which will vary according to use (water, air or ground) and conditions agreed with the carrier.
7. International Insurance:
Insurance cost will vary according to coverage, potential risks, product features, means of transport used, distance covered, among other factors.
8. Interests for External Financing:
Components of deferred collection of export operations financing.
9. Expenses in Destination:
They are of different kind-
i. Discharge, port, documentation management and customs tax collection (import tariff barriers).
ii. Internal carriage and insurance.
iii. Intermediation commissions in their different levels (wholesalers, retailers, bonded warehouses, etc.).
iv. Different taxes and duties in destination.
Ans. Trade between two or more nations is called foreign or international trade. Modern civilisation reflects multiple, innumerable, varied and ever-changing human wants. In fact, multiplicity and variety in our wants are the indices of growth of the economies, and are the attributes of modern civilisation.
However, no country can produce all its multifarious requirements and be absolutely self-sufficient. Hence, even the matured and affluent countries like the U.S.A., cannot maintain a prosperous economic life without foreign trade.
Nowadays, most international trade is the result of national specialisation of production. Trade between nations takes place due to two main reasons- (1) No country is able to have all the natural resources it needs due to climatic and other reasons, and (2) International specialisation of labour and of production give a number of economic advantages.
Every country avoids the production of some goods and it relies upon other countries for those goods. The principle of territorial division of labour began to operate successfully in the working of international commerce on account of industrial and transport revolutions. The countries all over the world became mutually interdependent for those goods in which they were deficient.
Each country tried to specialise in the production of certain goods in which it enjoyed special comparative advantages and sell its goods to the rest of the world in exchange of other goods in which it was deficient.
Foreign trade is a two-way affair. No country can expect to sell its own goods abroad unless it is prepared and willing to buy goods or services in return, so as to achieve a balance of trade. The balance of trade is essential to ensure adequate foreign exchange position in international commerce.
Export promotion devices enable a country to boost her exports and solve the problem of balance of payments. Borrowing from abroad is the last alternative but it is not a permanent solution. Hence, ‘export or perish’ is our motto.
Marketing Question and Answer:- Q. 73. Define the term logistics.
Ans. Logistics refers to managing the movement and storage of raw materials and final products from a manufacturer to end users. The functions of logistics are order taking, packaging, wrapping, bundling, and assembling, storing, warehousing, loading, unloading, and displaying products. The organizations are continuously trying to increase their efficiency in delivering services to customers. They have introduced automation in operations with the help of the Enterprise Resource Planning (ERP) system. The organizations that provide logistics services store raw materials and supply finished products to customers at a reasonable cost.
Logistics has become a very important factor in the success of an organization. The functions of an organization cannot be successfully executed without logistics. The distance between the manufacturing and consumption points of the products is gradually increasing. This increased distance gave a way to the development of transportation and warehousing. Logistics is important for managing the storage and delivery of products at the right time and right place.
Marketing Question and Answer:- Q. 74. Explain the meaning & objectives of purchasing.
Ans. Purchasing is a managerial activity that goes beyond the simple act of buying and includes the planning and policy activities covering a wide range of related and complementary activities. In other words, purchasing is the procurement of materials, supplying of machines, tools and services required for the equipment, maintenance and operation of a manufacturing unit.
Objectives of purchasing are as follows:
1. Right Quantity- Material should be purchased in the right quantity so that the production is not hindered due to lack of material and at the same time capital is not blocked due to over stocking.
2. Right Quality- The quality of material should be according to the pre-determined standards. Material should be of standard quality.
3. Right Price- Material should be purchased at the right price because goods purchased at higher prices can affect the sale of goods because once the goods are purchased at higher price they will have to be sold at higher price, which affects the competitiveness of the product.
4. Right Time- Purchasing should be done at the right time i.e., the utility of the time should be kept in mind while purchasing. Purchasing should be done in accordance with the short-term and long-term requirements.
5. Right Source- The source from which the material is being purchased should be right i.e., supplier should be such who can regularly supply the goods of the right quality at the right price.
Ans. Functions of the purchasing department are as follows:
(i) Finding out suppliers for required materials and services and selecting the best supplier.
(ii) Coordinating with other departments so that requirements can be constantly supplied.
(iii) To be well versed with the market conditions, to collect information regarding demand, supply and price of the material.
(iv) Inviting quotations, preparing comparative statement and ordering as per the policies of the organisation.
(v) To determine the quantity of the required material which is to be purchased and at what time it has to be purchased.
(vi) Maintaining proper records of purchases and checking those records at regular time intervals.
(vii) Physical verification of materials.
(viii) Checking the quality and quantity of goods.
(ix) Finding regularly the new and improvised material.
(x) Disposal of waste and scrap.
Marketing Question and Answer:- Q. 76. Explain the process of logistics.
Ans. Logistics is a process of designing, managing, and improving the movement of products through supply chain management. Supply chain management engages in the activities that are necessary to turn raw materials into products and make the products available for customers. A supply chain consists of the organizations that supply necessary raw materials and move final products from manufacturers to customers.
Logistics focuses on the requirements of customers. It also manages the flow of raw materials, products, and information from the manufacturer to customers. Logistics includes various functions, such as inventory management, transportation, warehousing, material handling, packaging, and security of products. Logistics has an objective of reaching the right customer, at right place, in right time, with right quantity and quality of product.
Marketing Question and Answer:- Q. 77. Define salesmanship.
Ans. Salesmanship is an art of selling goods and services for a consideration. Actually, it is a power or ability of sales personal to induce people or influence people or persuade people to purchase their goods. Salesmanship includes all the activities which are undertaken to convert a trying ‘suspect’ into a ‘prospect’ and then the ‘prospect’ into a ‘customer’ for organizations product. Different experts have defined salesmanship in different ways.
Some of the important definitions of salesmanship are:
According to R.S. Davar, “Salesmanship may be defined as the art of persuading people to buy goods which will give them lasting satisfaction by the use in the process. It is the ability to convert the human needs into wants. Salesmanship is the persuasion and not compulsion”.
From the above explanation and definition it can be said that salesmanship is the skill of seller which he uses to persuade the prospective customers to buy his goods or services. The ultimate aim of salesmanship is to bring benefits to both the seller (in the form of profit), and buyer (in the form of satisfaction from the product).
Marketing Question and Answer:- Q. 78. What are the types of logistics?
Ans. The purpose of a logistics system is to ensure the timely delivery of products to the customers. An organization can use various types of logistics system as per the requirement.
Following points explain some of the logistics system:
a. Business Logistics – Refers to a type of logistics that plans, implements, and controls the movement and storage of products and services from the manufacturer to customers.
b. Military Logistics – Refers to the integration of all the activities related to operations to ensure the readiness, reliability, and efficiency of the organization.
c. Event Logistics – Involves the activities, such as providing facilities, hiring the required personnel, scheduling, and deploying the resources for an event.
d. Service Logistics – Includes the activities of acquiring, scheduling, and managing personnel to support and sustain a service operation or business.
Marketing Question and Answer:- Q. 79. What are the features of salesmanship?
Ans. i. It is the art of persuading prospects to buy the product.
ii. It is personal service to prospective customer for imparting knowledge and technical assistance to them.
iii. It consists of winning buyer’s confidence for seller’s goods and thereby winning over a permanent customer.
iv. It establishes co-ordinal and a binding relationship between the organization and the customer by benefits to both.
v. It is beneficial to both organizations as well as the customer. Organization gets benefit in the form of profit from sale of their product and customer gets benefits in form of satisfaction derived from consumption of organization’s product.
Marketing Question and Answer:- Q. 80. What are the objectives of logistics?
Ans. The objectives of logistics are as follows:
i. Reducing the Cost of Product:
It refers to the minimization of cost by involving the least number of distribution channel members.
ii. Offering Best Services:
It refers to provide best services to customers. For example, best services can be timely delivery, good relationship with customers, warranty, and guarantee.
iii. Maintaining Transparency in Operational Activities:
It refers to the openness in sharing the information of operational activities with customers and employees. For example, FedEx shares information about the delivery of products. Customers can track the delivery status of the product in transition at any time.
Ans. Salesmen are of different types according to the nature of job performed by them.
The following are the six kinds of salesman:
(i) Manufacturer’s Salesman:
Manufacturer’s salesmen are those salesmen who are appointed by the manufacturers for selling their goods in the market.
There are three types of manufacturer’s salesman namely:
a. Pioneer salesman – The pioneer salesman is that salesman who is appointed by the manufacturers to introduce their new product in the market. These salesman contacts with wholesalers, retailers, and other dealers and convince them about the qualities of product. They are also called as missionary salesman.
b. Re-sale salesman – These are also known as service or delivery salesman. These salesmen are appointed by the manufacturers so as to have contact with their wholesaler and retailers. The chief task of re-sale salesman is to assure his employer of never ending reorders of firm’s merchandise.
c. Merchandising salesman – These salesman collect information and gives sound and sincere advice to manufacturer on various problems. Major task of this kind of salesman is to promote sales and build goodwill of business in the market.
Before a product reaches in the hand of customer it pass through number of members in channel of distribution, important ones are wholesaler and retailer. Wholesaler sells goods to retailer or the stores from where customer buys the product. These types of salesman are appointed by the wholesaler to distribute or sell the product to retailer according to their requirement. The main task of this kind of salesman is to insure that goods are regularly, promptly and accurately supplied to retailer.
Retailer’s salesmen are of two types i.e. counter salesman and travelling salesman. The counter salesman sits on the counter and sells the product as demanded by the customer.
Travelling salesmen are those salesmen who visit the customer’s house or office and try to sell the products.
A speciality salesman is the one who is concerned with the promotion and sales of speciality goods only. The goods sold by them are high priced and require technical assistance. For e.g. cars, computers etc. require special technical knowledge apart from selling skills.
A salesman who sells the goods to industries, business houses or manufacturer is known as technical or industrial salesman. Goods sold by this kind of salesman require technical knowledge. Generally, goods sold by these salesmen are machines, spare parts, etc. that is why they are also called sales engineer.
A salesman who is appointed by the business house to sell the product in overseas market is known as exporter’s salesman. These salesmen are appointed to cater the demand of product in foreign market. The main task of this kind of salesman is to supply regularly and promptly the goods in foreign market.
Marketing Question and Answer:- Q. 82. What are the functions of purchasing and storage department?
Ans. Well-designed store systems and procedures ensure timely information for decision making. “Functions of stores start even before material moves in the inventory”.
Stores system can be broadly classified in two categories:
(i) Closed, and
The stores department according to their functions and utility may be divided into two categories:
(i) Main or Central Stores and
(ii) Sectional or Branch Stores Depot.
In a large company there is normally a centralised purchasing and storage department. This department is divided into purchase and storage sections. These sections work in accordance with the purchase policy and storage policy of the company.
The main functions of purchasing and storage department are given below:
1. Location and Selection of the Sources of Supply- This department locates the vendors and chooses appropriate vendor who can supply the materials at the best terms and conditions and in time.
2. Placing the orders- It is the responsibility of the purchase department to purchase the materials at the least cost to the company. Proper quality and quantity must be ordered.
3. Follow-up- It is the responsibility of the purchase department to remind the suppliers to maintain delivery dates. It is necessary to the see that the materials are delivered in time, neither too soon nor too late.
4. Verification of Invoices- The invoices received from suppliers are checked to ensure that only the goods actually received are charged and prices charged are correct.
5. Issuing Requisitions- The first step in this process is to receive requisitions from different departments for purchase of materials. The store keeper after checking the stock position sends requisitions to purchasing agents for purchase of materials.
6. Receiving Materials- The storekeeper receives materials supplied by the supplier and finished products from the factory. The receiving department must compare the quantity and if there is any discrepancy between the quantity ordered and the quantity received, the supply manager must be informed.
7. Storing Materials- To keep the goods safe, and issue them whenever they are required, a storekeeper unpacks and checks the goods when he receives it. Then they are stored in proper containers.
8. Issuing Materials- The storekeeper issues materials on requisitions duly signed by an authorised person. Authorised person issues a requisition slip and storekeeper after entering it into register issues the material.