marketing managementadl 02.pdf

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12/5/2015 Marketing ManagementADL 02

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Late majority Laggards

Consumer durables: Television Refrigerator Air conditioner Washing machine

VCD Player

Industrial products: Petrol

Diesel Kerosene Explosives Certain industrial chemicals

Q25. List out 5 functions performed by whole sellers in consumer product industry.

Ans25. A wholesaler buys the product in large quantities, and resells the goods in sizable lots to other

intermediaries down the line, such as semi-wholesalers and retailers. Normally a wholesaler does notsell directly to consumers, the exception being institutional buyers who prefer their requirements from

wholesalers rather than retailers. In fact, the distinguishing feature of wholesalers is that they do not

sell to the ultimate consumers for personal consumption. Even when they sell to institutional buyers

who are the ultimate consumers, the sale is not for personal consumption of an individual/household

consumer.

Wholesalers generally specialize: some specialize by type of product, some by industry and some by

markets. The rationale for their existence is their cost-effective operation in buying goods in large

quantities and reselling them to other intermediaries in smaller, yet sizable lots.

Wholesalers add value by performing a number of vital marketing functions. Stock holding and sub-

distribution are the main functions of the wholesaler. They also perform functions like promotion,

financing, and collection of accounts receivables and provision of market feedback. They serve


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. ,

with product failures, price changes and bad debts.

Wholesalers basically belong to two types: agent wholesalers and merchant wholesalers. Usually

merchant wholesalers participate in all the flows that characterize the distribution process while agent

wholesalers do so only in some of the flows.

Q27. Give 5 examples of Family brands in consumer products.

Ans27. Surf, Ponds, Lux, Taj Mahal tea, Colgate.

Q28. List out the 5 stages in new product development.

Ans28. Stages in new product development: Generating new product idea Idea screening Concept testing Business/market analysis Actual product development

Market test

Commercialization

Q29. Give 5 reasons why new products fail.

Ans29. Reasons for product failure: -

1: - Faulty product Idea.

2: - Distribution Problem.

3: - Unrealistic pricing.

4: - Week promotional activity.

5: - Poor quality Product.

6: - Strong designed strategy of the competitor.

Q30. What are the four stages in Product Life Cycle?

Ans30. Four stages in Product Life Cycle: Market pioneering stage Market growth stage Market maturity stage Market decline stage

Differentiate between the following:

Q31. Product diversification and Product differentiation

Ans31. Product Diversification: Product Diversification means increasing the product line length.

Most firms start with just one product line and one or two products in that line. Over the years, the line

grows, as the firm keeps adding more and more products/brands to the line to capture new marketing


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opportunities. More product lines also enter the scene, as the firm decides to expand to more new

businesses. It is a direct outcome of the long-term corporate growth strategy of the firm handled at the

corporate level. Line stretching is a measure firms undertake frequently in product management. Theaim is to enter a new price slot and a new market segment, which is not covered by the existing offers

of the firm.

Product Differentiation: T he differentiation route to strategy revolves around aspects other than

price. It works on the principle that a firm can make its own offer distinctive from all competing offers

and win through the distinctiveness. And, a firm adopting such route can price its product on the

perceived value of the attributes of the offer and not necessarily on competition-parity basis. The

differentiation route is a more dynamic and powerful route in competitive strategy. Most business

battles are fought on the strength of differentiation rather than price. The major temptation as well as

benefit in differentiation strategy is that it allows a firm to move away from the disadvantages of awholly price-based fight. In other words, differentiation allows a firm the flexibility for fighting on the

non-price front, on the other strength of the uniqueness and specialty of its offer. Differentiation,

therefore, is a crucial option for a firm in its search for a rewarding competitive strategy.

Q32. Marketing and Selling.

Ans32.

SELLING MARKETING

Selling starts with the seller, and is preoccupied all the time with the needs of

the seller.

Marketing starts with the buyer and focusesconstantly on the needs of the buyer.

Seller is the center of the business world. Buyer is the center of the business world.

Emphasis is on the saleable surplus

available with the concern.

Emphasis is on the identification of the

market opportunity.

Seeks to quickly convert product into cash. Seeks to convert customers needs into

product.

Concerns itself with the trick and

techniques of getting the customer to partwith their cash for the product available

with the salesman.

Emphasizes on fulfilling the needs of the

customer.

View business as a good producing

process.

View business as a customer satisfaction

process.

Overemphasizes the exchange aspect

without caring for the values satisfaction

Concerns itself primarily and truly with the

value satisfaction that should flow to the


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n erent n t e exc ange. customer rom t e exc ange.

Sellers preference dominates the

formulation of the Marketing Mix.

Buyer determines the shape Marketing Mix

should take.

Emphasis is on somehow selling there isno coordination between the different

functions of the total marketing task.

Emphasis is on the integrated marketing anintegrated strategy covering the product,

promotion, pricing, and distribution.

The firm makes the product first and then

figures out how to sell it and make profit.

The firm makes total product offering that

will match and satisfy the identified needs

of the customer.

Q33. Penetration Price and Skimming Price.

Ans33. Skimming Price: In skimming pricing, the new product is priced high and the cream of the

market is skimmed by concentrating on those segments that are not price sensitive. Such high price

will fetch the firm substantial initial incomes, which it can plough in for further market development

and promotion. Through this method, the firm also recovers a substantial potion of its development

cost. Later on, the firm may bring down the prices, when it enters mass markets, which are more price-

sensitive. Skimming pricing, however, cannot be employed if the product cannot command the

patronage of an affluent, non-price sensitive, market-segment.

Penetration Price: The skimming strategy cannot suit all new product contexts. When the new

product is likely to be highly price sensitive and when there is no elite market for it, penetration pricing

will be the option. As the very name implies, the intention in this strategy is to penetrate a broad

market through low prices. The income is generated by sales spread over large markets the large

volumes facilitate substantial economies in unit cost of production and marketing and the cycle can

continue. The strategy helps to establish the product in the market.

Q34. Individual Consumer and Industrial Consumer.

Ans34. Individual Consumer: Individual consumer buys things for his own personal and family

consumption.

Industrial Consumer: Industrial buyer is a commercial buyer who buys things for manufacturing

other products, or for reselling, or for use in the running of his enterprise.

Q35. Vertical Marketing and Horizontal Marketing.

Ans35.Horizontal Marketing

Definition: When two companies producing different products jointly market their products.


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.

Vertical Marketing

Vertical marketing focuses on developing solutions to user problems within specific industries. In

contrast, horizontal marketing provides g eneric one-size-fits-all offerings.

Q36. Packaging and Packing.

Ans36. Packaging: The package is another important component of total product personality,

especially in consumer products. The package performs two essential roles: (i) Giving protection to theproduct, (ii) Adding to its aesthetic and sales appeal.

Traditionally, packaging was intended to protect the product to prevent deterioration enroute, and to

facilitate handling at the various points of distribution. In later years, packaging also became a major

tool in the promotion of the product. The material of the package, the color, the shape and size of the

package, its finish, the labeling on it, the possibilities of reuse, etc., came to be utilized in building the

total sales appeal of the product. The power off good packaging in promoting on-the-spot purchases isfound to be very substantial.

Q37. Individual Brand and Family Brand.

Ans37. Individual Brand: In Individual Branding each product of the company is given an

independent brand name.

Criteria for selecting a brand name:

INDIVIDUAL BRANDING

1. The brand name selected should be easy to pronounce.

2. It should be easy to read and understand.

3. Appropriate for the product: Most companies select the brand name, which communicate the

functions\some key attributes of the product. To cite a few examples,

When Wipro Systems offered a software program on astrology, the name chosen was Jyotishi.

Shinex was the name chosen for an instant polish.The paint for the wooden furniture was given the name as Touchwood.

The first portable music player was given the name as Walkman.


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mind of the customer while making the purchase.

5. The brand name selected should be most descriptive in nature. Many a times the manufacturer

tries to choose a brand name that communicate the specialty of the product.

E.g. GMs Opel, Fords Ikon, Suzuki Zen are the names to communicate the specialty of the

respective brands.

The name TAJ given to the Hotel chain of Indian Hotels is an attempt to recapture and reflect

the Mughal Splendor.

Family Brand: When a group of products are given the same brand name, it becomes a case of family

brand. Family brand does not mean that entire product mix of the company should go under a singlebrand name. A company may resort to different branding approaches for different product lines.

Criteria for selecting a brand name:

FAMILY BRAND

1. Different products of the companies marketed under one brand name are given a family or

umbrella brand.

2. This sort of brand does not mean the entire product mix of the company should go under the

single brand name.

3. A company may approach to different branding approach to different product lines. When a

group of products are given the same brand name, it becomes a case of Family brand orUmbrella brand.

4. E.g. AMUL it is an umbrella / family brand name for one line of product for the company.

5. DHARA is an umbrella brand for the seven types of oil marketed by the a company: Dhara

Mustard oil, Dhara groundnut oil, Dhara sunflower oil etc.

Q38. Personal Selling and Missionary Selling.

Ans38. Personal Selling: Personal selling is unique as it is a face-to-face transaction between a

salesman and a prospective customer. Evidently, a well-trained and competitive spirited salesman can

be an effective communication medium. His knowledge about the product, the degree of his familiarity

with the customer, whether he is handling a new customer or an established customer, the degree of his

involvement in the company he is representing, the level of his motivation and his own convictions

about the quality and performance standards of the product will be the determining factors in his role

as a communicator.

Q40. Full Cost Pricing and Marginal Cost Pricing.

Ans40. Full Cost Pricing: Absorption cost pricing or full cost pricing rests on the estimate unit cost of

the product at the normal level of production and sales. The method uses standard costing techniques

and works out the variable and fixed costs involved in manufacturing, selling and administering the

product. By adding the cost of these three operations, we get the total cost. Adding the required margintowards profit to such total costs arrives at the selling price of the product. This method is also known

as full cost pricing since it envisages the realization of full costs from each unit sold.

Marginal Cost Pricing: Marginal cost pricing aims at maximizing the contribution towards fixed

costs. Marginal costs include all the direct variable costs of the product. In marginal cost pricing, these

direct variable costs are fully realized. In addition, a portion of the fixed costs is also realized. The


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