Question Paper Marketing Management (MB-221) : April 2004

Section A : Basic Concepts (30 Marks)

1. This section consists of questions with serial number 1 - 30. Answer all questions. Each question carries one mark. Maximum time for answering Section A is 30 Minutes.
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The Parker Pen Company manufactures several different categories of writing instruments: inexpensive disposable ballpoints, pens with erasable ink, pens specifically designed for artwork, and expensive executive pens. The Parker Pen Company is using which type of segmentation? (a) Benefit (c) Psychographic (b) Demographic (d) Geographic (e) None of the above.

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Arun is the owner of a luxury car dealership. He is very much worried about his business because sales of his luxury cars have declined dramatically. He has read that unemployment is up, that consumer spending is down, and consumer income is also down. Which of the following best describes the current economy? (a) Recession (c) Stagnation (b) Inflation (d) Price escalation (e) Depression.

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A brand is a name intended to identify the product of one seller and differentiate the product from competing products. Coca-Cola is the best-known brand name in the world. The name has a highperceived quality and high brand loyalty among soft drink users. The company has developed the brand name for over 100 years. Coca-Cola has a valuable (a) Line extension equity. (b) Brand mark (c) Private brand (d) Package (e) Brand

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Sigma-Sunco has decided to introduce its new sunscreen eye drops in a limited market consisting of only two cities and closely monitor the reactions of potential customers to the product and marketing program. This is called (a) Diffusion analysis (b) Use test (d) Test marketing (e) Laboratory test. (c) Concept test

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Rajeev Kapoor is a chef in a new downtown restaurant. He has sent out press releases to the major local media and has invited food critics to dine in his restaurant. Rajeev is engaging in: (a) Public relations (c) Sales promotion (b) Personal selling (d) Advertising (e) Direct marketing.

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PepsiCo is a large conglomerate that has separate subsidiaries called Pepsi-Cola (soft drinks), Tropicana (juices), Pepsi Bottling, and Frito-Lay (snack foods). Each of these subsidiaries has its own functional departments, its own planning, its own financial goals, and its own target markets. These subsidiaries may also be called (a) Ancillary units (c) Strategic business units (e) Heterogeneous markets. (b) Diversified divisions (d) Strategic alliances

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When the salesperson told the safety engineer his company needed to buy a mercury clean-up kit, the engineer promptly replied his company did not need such a thing and refused to introduce the salesperson to the companys purchasing agent. In this instance, the safety engineer acted in which buying center role? (a) Influencer Gatekeeper. (b) Buyer (c) User (d) Decider (e)

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A local private college has been offering an accounting program for several years. The program has a large but declining enrollment, and the program represents the largest income earner for the business division. The recommended strategic option(s) is/are to

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(a) Build above. 9.

(b) Divest

(c) Hold

(d) Harvest

(e) Both (a) and (b)

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The shift in marketing from trying to maximize profit on individual transactions to maximizing mutually beneficial relationships with consumers and others is called (a) Sales marketing (d) Relationship marketing (b) Production marketing (e) Proactive marketing. (c) Mega marketing

10. Ellen decided to conduct an experiment in her mall's car park to see if shoppers would respond to a lower parking price to park in some of the under-utilized sections of the car park. Which of the following types of market research is Ellen using? (a) Exploratory Behavioral. (b) Causal (c) Descriptive (d) Investigative (e)

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11. A physician charging a patient for a missed appointment because the service value existed only at that point of time is an example of which characteristic of services? (a) Intangibility (d) Perishability (b) Inseparability (c) Variability (e) None of the above.

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12. When Hindustan Motors sets its prices to achieve a 15 percent to 20 percent profit on its investment, which of the following type of pricing method is it using? (a) Cost-plus pricing (c) Target return pricing (e) Auction-type pricing. (b) Perceived-value pricing (d) Going-rate pricing

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13. When a car dealer complains to the manufacturer that another dealer of the same make of cars is selling outside their assigned territories, it is a type of (a) Parallel conflict (c) Vertical conflict (e) Multi-level conflict. (b) Customer-service conflict (d) Horizontal conflict

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14. When IBM and Apple Computer announced a joint operation to develop a new computer operating system, it was an example of a(n) (a) Corporate marketing system (c) Conglomerate marketing system (e) Contractual marketing system. (b) Administered marketing system (d) Horizontal marketing system

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15. If Videocon engineers its washing machines to spin the clothes faster regardless of whether or not customers want that speed, then Videocon has characteristics associated with (a) Production concept (c) Marketing concept (e) Societal marketing concept. (b) Selling concept (d) Product concept

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16. Pooja, a Chartered Accountant, reads an article that states that CAs receive the highest starting salary offers from consulting firms. The article also states that marketing majors start with lower salaries but surpass all other majors' salaries within ten years. Pooja doesn't remember reading this last part of the article, just the first part. This is an example of (a) Selective distortion (b) Selective exposure (c) Selective retention (d) Subliminal perception (e) Selective comprehension. 17. Wrigley's Chewing Gum ran an advertising campaign that targeted heavy smokers. The advertising indicated that "when you can't smoke, chew Wrigley's." This is an example of what type of segmentation? (a) Geographic (d) Psychographic (b) Usage rate (c) Demographic (e) None of the above.

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18. Munna jumps out of his truck and runs into a Foodworld store to grab a drink. While he is paying for his drink, he notices the chocolate bars at the counter and grabs one to buy. The chocolate bar in this case is considered to be a(n)

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(a) Specialty product (c) Convenience product

(b) Unsought product (d) Shopping product

(e) None of the above.

19. SoundSensation offers stereo equipment and accessories. It has a deep assortment and low prices. The store is operated on a self-service, no-frills concept. SoundSensation is a (a) Specialty store (c) Warehouse membership club (b) Factory outlet (d) Discount store (e) Category killer.

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20. The baking products division of Basic Foods, Inc., is the market leader in a mature and low-growth market. The baking products division generates more dollars than is required in order to maintain market share, and in portfolio matrix terms it is known as Basic Food's (a) Problem child above. (b) Cash cow (c) Star (d) Dog (e) None of the

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21. When Procter & Gamble introduced Swiffer, a new product to make it easier to clean increasingly popular hardwood floors, it knew it had to achieve high brand awareness among its potential consumers because the product was low-tech and fairly easily imitated. Which promotional element did P & G emphasize? (a) Advertising (c) Sales promotion (e) All of the above equally. (b) Personal selling (d) Public relations

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22. Marketing chewable vitamins for children and a different version for adults is an example of (a) Geographic segmentation (c) Regional segmentation (e) Physiological segmentation. (b) Psychographic segmentation (d) Age and life-cycle segmentation

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23. Which type of advertising is most appropriate for introducing new product categories? (a) Reminder advertising (c) Persuasive advertising (e) Reinforcement advertising. (b) Informative advertising (d) Comparison advertising

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24. The Coca-Cola Company (CCC), the worlds largest soft-drink bottler voluntarily recalled 7,362 Coke Classic 8-packs in France because of possible small glass particles in the product. No glass was found in the bottles, but a CCC representative said that it would rather recall the product than risk one of its customers being injured. This sentiment is most closely related to which moral philosophy? (a) Hedonism (c) Existentialism (b) Utilitarianism (d) Moral idealism (e) Socialism.

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25. The safety engineer for a manufacturer of pesticides submitted a request to the companys purchasing agent to restock the companys supply of personal protection badges, which monitor individual exposure to carbon monoxide, a chemical that is a by-product of the companys manufacturing process. This purchase would most likely be an example of a: (a) New buy (c) Conditional rebuy (b) Straight rebuy (d) Modified rebuy (e) None of the above.

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26. Ritz-Carlton hotel chain is famous for the level of high-quality service offered by the staff of the hotel chain. It targets the top five percent of corporate and leisure travelers. In terms of Michael Porter's generic business strategy, which of the following strategies is being used by Ritz-Carlton? (a) Differentiation (d) Both (a) and (b) above (b) Focus (e) None of the above. (c) Cost leadership

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27. Until Bill and Hillary saw a feature on local news about baby car seats, they thought all brands were alike. Having seen the news broadcast, they will be making a much more informed purchase decision when they buy a car seat for their soon-to-be-born son. What source did Bill and Hillary use to collect information for their purchase decision? (a) Public (d) Experiential (b) Commercial (e) None of the above. (c) Personal

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28. Pankajs purchase behavior is influenced by his hobbies of antique firearms, working out, and computers; his interest in scuba diving, music, and swimming; and his deeply held political and cause

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related opinions. All of these things are part of the personal influence factor called (a) Lifestyle Values. (b) Personality (c) Beliefs (d) Attitude (e)
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29. A research manager decides to have his telephone interviewers dial every tenth number in the telephone directory. This is referred to as (a) Convenience sample (c) Judgment sample (b) Probability sample (d) Quota sample (e) Snowball sample.

30. General Electric sells large home appliances both through independent retailers (department stores and discount houses) and directly to large housing-tract builders. This is an example of (a) Intensive distribution (c) Exclusive distribution (e) Both (a) and (b) above. (b) Selective distribution (d) Dual distribution END OF SECTION A

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Section B : Caselets (50 Marks)

This section consists of questions with serial number 1 6. Answer all questions. Marks are indicated against each question. Detailed explanations should form part of your answer. Do not spend more than 110 - 120 minutes on Section B. Caselet 1 Read the caselet carefully and answer the following questions:

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Do you think a products success will depend on aesthetics? Illustrate with examples. (9 marks) < Answer >

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Discuss and evaluate the various ways in which mobile phone and line providers are able to segment potential markets according to behavioural characteristics. (8 marks) < Answer >

AN UGLY BUSINESS OK, I'm just going to come right out and say it: Ericsson lost Dollars 2.3bn (Pounds 1.6bn) on mobile phone handsets last year because its products are ugly. We all know it, but are too polite to say so. So instead we talk about poor market segmentation, or excessive costs, or a slow product cycle. All true; but if the handsets had been prettier, these would have been merely glitches. In one sense, the Ericsson story is a case study of why industrial design matters. But often-beautiful products are commercial flops because they are too expensive or lack some mundane, essential feature. The real implication of the Ericsson story is that mobile phones have joined a surprisingly small category of products, ones with which purchasers identify so completely that they are not prepared to tolerate ugliness. It's a small group: consumers will put up with surprising ugliness in other products, witness the typical personal computer. The products where appearance counts have two characteristics: we bond with them intimately; and we believe that other people judge us by the models we choose. There are relatively few products in this category: clothes, shoes, cars andnowmobile phones. For most of recorded history, clothes and shoes occupied this niche all by themselves. So important was appearance that many countries had sumptuary laws restricting what you could wear. Beauty was for the rich and powerfuleveryone else was condemned to ugliness. Cars joined this elite group in the 1950s. The Ford Edsel reflected Detroit's insight that mass-market cars represented owners' self-image. Alas, the carand the namewere spectac-ularly ugly. But 10 years later, the same process produced the Ford Mustang. It looked good, wasn't named after the chairman's dad, and was a smash hit. The mass-market car's arrival as a visual identifier led to the reappearance of sumptuary laws in big companies. The sales reps had to drive Montegos while the bosses were allowed BMWs or Jaguars. For a while, financial considerations forced most private buyers to put up with econoboxes, ugly cheap cars. But these days most cars are reasonably good looking, at least to the groups they target. And appearance is crucial. In retrospect, it might seem obvious that mobile phonesa genuinely personal product - were destined to join this group. But that wasn't how they started: they were big, clumsy and functional. Just like portable computers, in fact. And those, Apple's valiant efforts notwithstanding, have stayed ugly. Even laptops and personal digital organisers, which we carry round with us, have avoided the tyranny of beauty. Why mobile phones have succumbed to this while Palm Pilots have not is a mystery. Perhaps Nokia's consistently good design was a spur. But as other products move out of the econobox era and personal technology proliferates, more products will make a similar switch. For those whose products might fall into this category, there are some lessons from the Ericsson experience. First of all, obey the logic that has long ruled in clothes and shoes. That doesn't just mean that you have to get a good designer, though Ericsson should certainly have learnt this lesson earlier. (It hired a new high-powered head of industrial design in November and is now talking about a handset deal with Sony, paragons of taste.) But the real secret of the fashion business is that it is prepared to put up with difficult, temperamental, quirky people in the name of style and ruthlessly dump them if they lose their abili-ty to please a fickle public. The second rule contradicts the first: beauty isn't enough. Clothes need to fit, wash and wear properly, otherwise there

will be no second orders. That's why Nokia makes sure its products don't just look goodthey also score highly on the practical things that users really want, such as battery life, light weight and a foolproof interface. So, you've made your product good looking, it works well, and is reason- ably priced. Will you automatically succeed? No, because you may not be able to make beauty the key differentiator. This is the Apple lesson: its computers have been consistently better looking than its rivals', but since the early 1980s it has been stuck in a niche. For most people, Apple's style just doesn't matter enough. One other thing: once a product has entered the beauty zone, it may not stay there indefinitely. If technology passes it by, an object that once sold on beauty will lose its mass appeal. Connoisseurs will still buy it but the general public won't. Someday, perhaps, mobile phones will follow fountain pens and mechanical watches down this road. Caselet 2 Read the caselet carefully and answer the following questions: 3. Relate the case to the Product Life Cycle concept and analyse the strategies adopted by ITC in the introduction and growth stage of the PLC of Scissors. (8 marks) < Answer > 4. What are the Brand Management lessons that can be learnt from ITCs management of Scissors, over the years? (9 marks) < Answer > SCISSORS Scissors was launched in 1912, by the erstwhile Imperial Tobacco Company, today's ITC. In launching Scissors, ITC was introducing not just a new brand of cigarette but an altogether new product in the market. In fact, the company was launching a new smoking habit for the Indians. The smoking habits till then generally consisted of Hookah, Chillum, Cigar and Beedi. Chewing tobacco was also popular and formed a part of the general pattern of tobacco consumption. ITC was attempting to open the vast Indian market for a new experience in smoking. Initially, ITC employed a commodity marketing approach for Scissors as those tempted by the promotions would naturally go for Scissors, because there was no competing brand. The Promotion campaign extolled the virtues of cigarette as such and not the brand, Scissors or the company. The brand was positioned in the market as a new concept in smoking. The Product itself was a Unique Selling Proposition. The prices were kept low. Promotions and distribution accounted for the bulk of ITC's expenditure. During 1920s, 30s and the major part of the 40s, the sales of Scissors climbed up substantially. A large number of conventional non-cigarette smokers were shifting to cigarettes. ITC kept a close watch on the price-demand patterns and increased the price in small doses. The low price continued as a part of the market penetration strategy. In the early 1940s the first competing brand, Panama, launched by the National Tobacco Company, appeared in the market. It was priced much lower than Scissors and adopted a high volume - low unit pricing strategy. It provided a new flavour. Its modern soft-cup design was an added attraction. This packaging was cheaper and reduced the unit costs. Panama had the benefit of yet another advantage, its Ad campaigns tried to explain the "Swadeshi" mood, a strong national sentiment, prevalent at that time. Positioning against ITC, the Imperial Tobacco Company of Britain, this was a cash-in point for Panama. Though Panama did not have a perceptible impact on launch, it succeeded in fragmenting the cigarette market, based on price. So far, for ITC, the job was one of marketing a generic product, cigarettes. Panama changed the situation for ITC and Scissors. Though Panama was a slow-starter, with the aid of aggressive marketing strategy and sustained market place inputs, it started growing in the early 1950s at the expense of Scissors. The sales of Scissors went down to 193 millions sticks in 1952-53 from 234 million sticks in 1948-49. ITC revamped the three-decades-old advertising campaign, by changing the visuals and the message. Along with the new Ad campaign, ITC also implemented several sales promotions aimed at the trade. It had very little image-building potential and had little effect on the consumers. ITC made an attempt to bring price parity with Panama, while, still, keeping the brand financially viable. To meet the double objectives, ITC went in for strategies of product economy like cheaper tobacco and reduced the length of the stick. To contain the costs further, ITC also reduced the expenditure on promotion and advertising. These mid-course corrective measures became counter-productive and expedited the process of decline. In 1948-49, Scissors commanded a share of 16.6% of the market. During the next 12 years, the market share of Scissors went down steeply touching a dismal 6.5% by 1961-62. ITC was confronted with two choices. Milk the brand and exit or revive the brand. ITC embarked on a bold strategy to make higher investments in the brand and revive its image and provide superior value for money. To revive the brand, enriching the product was a major requirement. Scissors was to acquire a distinct image through innovative packaging and marketing communication. Changing the pack design was a highly sensitive issue. Wrongly handled, it would amount to "discontinuity" of the brand and give opposite results. So, ITC discovered a reason for changing the pack design. A rationale was found in the diamond jubilee celebrations of Scissors. The new Ad campaign "For men of

Action - Satisfaction" adopted a life-style positioning. The "Action" was the image dimension, "Satisfaction" was intended to underscore the physical product promise. The product, too, came in a better blend. All these inputs reversed the decline, and the market share increased from 6.5% in 1961-62 to 12.8% in 1970-71. Between 1971 and 1973, the cigarette market underwent substantial changes. More manufacturers had come on the scene, dozens of new brands in various categories had appeared; the "filters" had come in a big way and the "plains" were losing ground and the consumers had a variety of choices available to them. Both Scissors and Panama were losing their sales and shares. Their customers were turning away from them, switching over to brands in the lower price categories. In 1974, Scissors hiked its price beyond the erstwhile price of 10p per stick while Panama held its price at 10p per stick. Scissors market share nose-dived from 13%in 1970-71 to 3.9% in 1975-76. The volume fell to 191 million sticks in 1975-76 from 675 million in 1970-71. Scissors, obviously, had not yet attained an image, strong enough, to breakaway from the price barrier. The brand had not been prepared for a price increase - a lesson ITC learnt the hard way. In 1977, the price was reverted to the original level of 10p per stick. In 1980, Scissors managed to capture the all-time high of 17% market share and a volume of 1133 million. But this revival was at the cost of profits. While the Scissors sales volume continued to grow, the profitability of the brand continued to decline due to the inability of the manufacturer to increase its price in the face of the competitors holding their price. ITC did not repeat its earlier mistake of a quick price increase. It adopted a strategy entirely different from the earlier one. Scissors was prepared for a price increase through product improvement. Scissors was provided with fresh inputs in product, packaging, blend and quality. The "Action - Satisfaction" theme was retained, as an element of continuum, but "the man of action" was more sophisticated. He graduated from the scooter rallies of yester-years to car rallies. These inputs allowed Scissors to break away from the strangle-hold of the competitor's price barrier. The price was increased in 1981. The consumer did perceive the improved product as good value for money. On this occasion the volume decline was only marginal and, after a temporary dip, the volume continued to grow. Recognising the need for further upgrading the brand image and heightening its contemporariness, ITC also placed a king-size version of Scissors in that market. Over the years, the goodwill of the Scissors brand was used to spawn an entire brand family. Scissors massive volume base made it a carrier brand on whose broad back, many other brands of ITC rode. Caselet 3 Read the caselet carefully and answer the following questions: 5. What was the initial positioning strategy adopted by Lifebuoy? Was it successful? If yes then why it had to relaunch and reposition its product again? (7 marks) < Answer > 6. What do you think were the strengths and weaknesses of the Brand? What steps do you suggest and why do you suggest those steps for the brand in future? (to be taken by the company). (9 marks) < Answer > BRAND BUILDING - THE EXAMPLE OF LIFEBUOY, THE 100 YEAR OLD BRAND Nurturing a brand into a strong, profitable brand is a challenging task. It is worth examining the case of Lifebuoy which provides an instance of successful brand building. Lifebuoy is probably the oldest toilet soap available today. From its small beginnings in England in 1894, Lifebuoy has come a long way to become one of the most popular and largest selling soaps in the world. In the Indian market, Lifebuoy has been enjoying a place of prominence ever since it was introduced in its red tablet form in 1895. From a sale of 200 tonnes, Hindustan Lever now sells 1.25 lakh tonnes of Lifebuoy which accounts for 39 percent of the total 3.20 lakh tonne toilet soap market of India. When Lifebuoy was introduced in the Indian market 100 years ago, its positioning was clear. Lifebuoy was the soap that would destroy germs and keep the body healthy. To quote Hindustan Lever "It was the clean, honest hardworking brand with no frills". Though the properties were clear, the brand found the going tough especially in rural markets where the concept of using toilet soap was alien. Most rural people were accustomed to bathing with plain water. Therefore, HLL decided to launch Lifebuoy as soap for hand wash. After initial resistance, the brand began to look up. By 1900, it had established itself as a good medium for hand wash. At this stage the brand's inherent properties were expanded and Lifebuoy was repositioned as bath soap. 'Where there is Lifebuoy, there is health" became a very popular jingle. In 1964, the brand was relaunched with a slight change in its shape and wrapper design. The relaunch was also backed by advertising the health aspect. Rural promotions were intensified with mobile display-cum-sales vans. And during this period Lifebuoy started associating itself with sports events. This kind of sales promotion helped Lifebuoy to gain a more 'macho image' and it was getting accepted as a champion's soap. By the seventies, competitors also entered the market; Lifebuoy's supremacy was being challenged, especially in the

rural markets. Those were anxious years for HLL as the rural markets were the brands mainstay. The USPs in the soap market was also fast changing from health care to deodorant-based products. HLL defended Lifebuoy from the challengers by reinforcing the brand. HLL now launched Lifebuoy Personal - perfumed, pink-coloured, 75 gm soap. But the brand suffered because it did not carry the USPs of health and value for money. HLL subsequently mended these drawbacks. In the eighties HLL made special attempts to make Lifebuoy more acceptable to urban consumers. To quote HLL, "Lifebuoy was considered down-market especially in the urban areas. So, we had to instil a sense of pride in the user and not be ashamed of using Lifebuoy". This thinking resulted in the launch of Lifebuoy Plus, which basically was the old Lifebuoy with a new perfume. Backed by high-powered advertising, HLL managed to popularise Lifebuoy Plus. 'With Lifebuoy Plus, we could widen the appeal to new urban consumers. By this time Liquid Lifebuoy also staged its entry to strengthen the brand's presence in the urban market. In the rural markets Lifebuoy continued its dominance; there was the old, stubborn user in the rural areas who continued to patronise Lifebuoy. Even today 60 percent of lifebuoy sales are from rural areas. The brand remains the largest selling brand and a Cash Cow for HLL.

END OF SECTION B

Section C : Applied Theory (20 Marks)

This section consists of questions with serial number 7 - 8. Answer all questions. Marks are indicated against each question. Do not spend more than 25 -30 minutes on section C.

7.

Times Global Bank is a new entrant in an overcrowded and fiercely competitive banking sector in India against the backdrop of falling interest rates and a resultant decline in consumers propensity to deposit with banks. Recently it has got formal approval of the RBI. Discuss briefly the various marketing mix variables that are important to this bank? And also discuss how the bank could differentiate itself from the clutter. (10 marks) < Answer >

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The household detergents division of a large household products company with worldwide distribution is planning a research study among women 21 years and over to determine their attitudes toward home laundering and the products and brands used in such activities. Studies are to be carried out in a variety of countries in the Far East, Middle East, Africa, Western Europe, Eastern Europe, and South America. What data-collection problems would you expect to experience in doing this research across a variety of countries? (10 marks) < Answer >

END OF SECTION C END OF QUESTION PAPER

Suggested Answers
Marketing Management (MB-221) : April 2004
Section A : Basic Concepts
1. Answer : (a) Reason : Benefit segmentation: cluster consumers according to benefit sought. (b) Demographics are the vital statistics that describe a population (gender, age, income, family size, education, social class, and ethnicity). (c) Psychographic segmentation involves examining attributes related to how a person thinks, feels, and behaves (personality, lifestyles, and values). (d) Geographic segmentation divides the market based upon the geographic distribution of population (regional, urban, suburban, and rural). Answer : (a) Reason : A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters is referred to as Recession. The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. (c) A period of little or no economic growth is referred as Stagnation. (e) A period during which business activity drops significantly. High unemployment rates and deflation often accompany a depression. Answer : (e) Reason : Brand equity is the value a brand adds to the product. The sources of brand equity include the product, its name, and its personification, logo, country of origin, advertising themes, and style and packaging approach. (a) Line extensions is the practice of using a current brand to enter a new market segment in its product class. (b) A brand mark is the part of the brand that appears in the form of a symbol, design, or distinctive coloring or lettering (c) A company uses private branding, often called private labeling or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer. (d) The package is the most important component of the product as a communications device. It reinforces associations established in advertising, breaks through competitive clutter at the point of purchase, and justifies price and value to the consumer. Package cues include color, design, shape, brand name, physical materials, and product information labeling. Answer : (d) Reason : Test marketing is a limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. Test marketing involves offering a product for sale on a limited basis in a defined area. Market tests are also used to check other elements of the marketing mix besides the productsuch as price, level of advertising support, and distribution. Disadvantages are that market tests are time consuming and costly and they also reveal plans to competitors. Answer : (a) Reason : Public relations builds good relations with the organizations various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. (b) Personal selling is a personal (face-to-face) presentation for the purpose of making sales and building relationships. (c) Sales promotion is a short-term incentive to encourage the purchase or sale of a product. (d) Advertising is any paid form of nonpersonal presentation by an identified sponsor. (e) Direct marketing is direct communications with carefully targeted individual consumers to obtain an immediate response through the use of nonpersonal tools (mail, telephone, fax, and email). Answer : (c)
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When a firm has several different businesses, it often organizes them into single groupings of related businesses called strategic business units (SBU). They are defined in terms of customer groups, customer needs, and technology. SBUs consist of separate units of the company that can be planned independently from other company businesses. Thus, to be identified as an SBU, an entity should be a separately identifiable business, have a distinct mission, have its own competitors, and have its own executive group with profit responsibility. Strategic alliances - cooperate for the purpose of achieving common goals such as competitive advantage or customer value creation. Answer : (e) Reason : Gatekeepers control the flow of information to other members of the buying center. (a) The influencer is the member (or outsiders) who affect the purchase decision by supplying advice or information. (b) The buyer is the member with the formal authority to purchase the product. (c) Users - these people in the organization actually use the product or service. (d) The decider is the member who makes the actual purchase decision. Answer : (c) Reason : Hold - maintain market share; often used for cash cows which are already generating large amounts of cash, and are fairly stable. (a) Build - increase market share through cash injection; make stars out of question marks. (b) Divest- sells the SBU; this generates cash for more promising SBUs. Question marks and dogs are ideal candidates to divest. (d) A Harvest strategy should be used in the two cells just below the three-cell diagonal. These SBUs should not receive substantial new resources. Answer : (d) Reason : Relationship marketing is building mutually satisfying long-term relationships with customers. The aim of Customer relationship management is to produce high customer equity. There are five levels in customer relationship building. Answer : (b) Reason : Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing by the company. Alternative (a) is incorrect because in Exploratory research is used when there is a need for large amounts of information. Alternative (c) is incorrect as Descriptive research is conducted when there is need to understand in detail about the specific phenomenon to solve a particular problem. Alternative (d) is not term used for developing the research plan. Alternative (e) is incorrect as in Observational research fresh data is gathered by the observing the relevant actors and settings. Answer : (d) Reason : Services have four major characteristics that greatly affect the design of marketing programs; Intangibility, Inseparability, Variability and Perishability. Alternative (a) is incorrect as Intangibility talks about physical evidence of the product. Inseparable products/services are typically marketed in combination or supplemented with the core product; hence option (b) is incorrect. Option (c) is incorrect because normally services are variable and service buyers are aware of this variability and often talk to others before selecting a service provider. Answer : (c) Reason : Companies select the pricing method considering competitors prices and the prices of substitutes. Generally seven pricing-setting methods are used by the firms to set the prices; markup-pricing, targetreturn pricing, perceived-value pricing, value pricing, going-rate pricing, auction-type pricing and group pricing. Alternative (a) is incorrect because in Cost-plus pricing price is set to cover costs and pre-determined percentage of profit. In Perceived-value pricing companies base their price on the customers perceived value; hence option (b) is incorrect. Option (d) is incorrect as in Going-rate pricing; the firm bases its price largely on competitors prices. Auction-type pricing came into picture especially because of growth of the Internet. Answer : (d) Reason : Even if the channels are well designed and managed, there will be some conflict, if for not other reason than the interests of independent business entities do not always coincide.

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14.

Answer : Reason :

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Answer : Reason :

Alternative (a) and (b) are not real types of conflict in distribution; hence they are incorrect. Vertical conflict means conflict between levels within the same channel; hence option (c) is incorrect. Alternative (e) is incorrect because multi-level conflict exists when the manufacturer has established two or more channels that sell to the same market (d) Distribution channels can be arranged in vertical, horizontal and multichannel marketing systems. Corporate and Administered are vertical marketing systems which combines successive stages of production and distribution under single ownership; hence options (a) and (b) are incorrect. A contractual vertical marketing system consists of independent firms at levels of production and distribution integrating their programs on a contractual basis; hence option (e) is incorrect. Alternative (c) is not a real term (d) The product concept holds that the consumers will favor those products that offer the most qulaity, performance or innovative feautures. a.

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16.

The production concepts hold that consumers will prefer products that are widely available and inexpensive. b. The selling concept holds that consumers and businesses, if left alone, will ordinarily not by enough of the organisations products. c. The marketing concept holds that the key to achieving its organisational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. (e) The societal-marketing concept holds that the organisations task is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effecitively and efficiently than competitors do. Answer : (c) Reason : Selective retention is the process whereby a consumer remembers only that information which supports his/her personal feelings or beliefs. Selective Distortion-Changing/twisting current received information, inconsistent with beliefs. Selective Exposure-select inputs to be exposed to our awareness. More likely if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop). (d) Subliminal Perception, which means that people see or hear messages without being aware of them, is a hotly debated issue with more popular appeal than scientific support. Research evidence suggests that such messages have limited effect on behavior (e) Selective Comprehension involves interpreting information so that it is consistent with a person's attitudes and beliefs. Answer : (b) Reason : Usage rate- (quantity consumed or patronagestore visits during a specific period). Whether a person is a nonuser or a light, medium, or heavy user is important in many segmentation problems. The 80/20 rule, a concept that suggests 80 percent of a firms sales are obtained from 20 percent of its customers, is not fixed at exactly 80 and 20 percent but suggests that a large fraction of a firms sales come from a small fraction of its customers. (a) Geographic segmentation divides the market based upon the geographic distribution of population (regional, urban, suburban, and rural); hence option (a) is incorrect. (c) Demographics are the vital statistics that describe a population (gender, age, income, family size, education, social class, and ethnicity). (d) Psychographic segmentation involves examining attributes related to how a person thinks, feels, and behaves (personality, lifestyles, and values). Answer : (c) Reason : Convenience products are bought frequently, immediately, and with a minimum of comparison and buying effort (groceries). The lack of forethought that went into this purchase made it a convenience product. (a) Specialty products are unique in some way and substitutes are not accepted (expensive automobiles). (a) (b)

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Unsought products are those not normally thought of either because consumers dont want to think of them (burial insurance) or consumers are unaware of them (a telephone number allowing you to check your email messages (d) Shopping products are less frequently purchased and are carefully compared on suitability, quality, price, and style (clothing). Answer : (d) Reason : A discount store or discount house or discount center is a retail outlet engaged in selling merchandise at prices below those customarily charged. It generally deals in national-branded merchandise and fixed-price products. The discounter provides emphasis on a high-volume of sales and rapid inventory turnover. Aggressive merchandising techniques are employed. (a) Store retailers include many types, such as Specialty stores, department stores, supermarkets, convenience stores, superstores, combination stores, hypermarkets, discount stores, warehouse stores, and catalog showrooms. (b) The factory outlet store is an off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturers surplus, discontinued, or irregular goods at a marked-down price. Many such stores are being organized into factory outlet malls, which are located on freeways but at some distance from major population areas. Examples of these retailers are the Nike Outlet Store and Liz Claiborne Factory Outlet. (c) A warehouse membership club is an off-price retailer that sells a limited selection of brandname grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees. The largest national chain warehouse club is Sams Club. Stores look more like warehouses and offer few frills or services and consumers are expected to buy in bulk. In exchange, consumers get low prices. (e) Category killers are superstores that focus on a narrow product line. A category killer carries a very deep assortment of a particular line and is staffed by knowledgeable employees. They usually come into markets and kill the competition in that line of products by virtue of their size and assortment. Examples of category killers are Toys R Us and Best Buy. Answer : (b) Reason : Cash cows are dominant share of slow growth market enables sbu to generate large amounts of cash to be used for company overhead and investment in other SBU. (a) Question Marks/Problem Child (also called a "Problem Child") are high growth, low share businesses. A question mark requires a lot of cash both to keep up with a rapidly growing market and improve its share position. Strategy must decide between further investment to move question marks to star status (differential advantage) or to phase out the product. (c) Stars are high growth, high share businesses. They are the market leaders in fast-growth markets and often require heavy investment to build and/or maintain share in rapidly expanding markets. The strategy is to build or even maintain or hold its position as long as possible. (d) Dogs are often targets for divestment, but may still be profitable and/or contribute to other organizational goals Answer : (a) Reason : Adverting would be the prime choice P& G prefer to promote the new offering. Personal selling is the face-to-facd interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders, hence opion (b) is incorrect. Sales promotion is the variety of short-tem incentives to encourae trial or purchase of a product or service. Public relations are variety of programs designed to promote or protect a companys image or its individual products, hence option (d) is incorrect. Answer : (d) Reason : Market segmentation consists of taking the total heterogeneous market consisting of customers with diverse characteristics, needs, wants and behaviour, and carve it up into one or more homogenous markets which are made up of individuals or organizations with similar needs wants and behavioral tendencies. Alternative (a) is incorrect because in Geographic segmentation, marketer divides the market into different geographical units such as nations, states and regions. Alternative (b) is incorrect as in Psychographic segmentation, buyers are divided into different groups on the basis of lifestyle or personality or values. Alternatives (c) & (e) are incorrect because they are not real terms

(b)

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Answer : (b) Reason : Advertising objectives can be classified according to whether their aim is inform, persuade , remind or reinforce. Reminder advertising aims to stimulate repeat purchase of products and services; hence alternative (a ) is incorrect. Alternative (c ) is incorrect as Persuasive advertising will create liking , preference, conviction and purchase of a product or service. Comparison advertising is not real time classification used in setting advertising objectives; hence option (d) is incorrect. Alternative (e) is incorrect because Reinforcement advertising aims to convince current purchasers that they made the right choice Answer : (d) Reason : Alternative (a) is incorrect because Hedonism refers to the doctrine that the pleasure is the chief good in life. Alternative (b) is incorrect as Utilitarianism refers to the theory that the greatest good for the greatest number should be the main consideration in making a choice of actions. Option (c) is incorrect because it is the philosophy centered on individual existence and personal responsibility for acts of free will in the absence of certain knowledge of what is right or wrong. Alternative (e) is incorrect because Socialism refers to any of the social systems based on shared on government ownership and administration of the means of production and distribution of goods. Answer : (b) Reason : A new task/new buy is a buying situation in which a purchaser buys a product or service for the first time, hence option (a) is incorrect. Alternative (c) is incorrect because Conditional rebuy is not realtime term used in organisational purchases. The modified rebuy is a situation in which the buyer wants to modify product specifications, prices, delivery requirements, or other terms, so the same is incorrect. Answer : (a) Reason : The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market, hence alternative (a) is the correct answer. Options (b), (c), (d) and (e) are not the real terms coined by Michael Porter Answer : (a) Reason : Customer information sources fall into four groups: (b) Commercial sources: Advertising, salespersons, dealers, packaging, displays (c) Personal sources: Family, friends, neighbors, acquaintances (d) Experiential sources: Handling, examining, using the product. Answer : (a) Reason : A Lifestyle is a persons pattern of living as expressed in his or her activities, interests, and opinions (AIOs). Lifestyle is a rich descriptor of peoples buying patterns. (b) Personality is an individuals pattern of traits that influence behavioral responses. (c) Beliefs are a consumer's subjective perception of how well a product or brand performs on different attributes. (d) An attitude is a learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way. (e) Values represent a reflection of a persons needs adjusted for the realities of the world in which we live. Answer : (b) Reason : A Probability sample is characterized by every element in the population having a known nonzero probability of being selected, allowing an estimate of the accuracy of the sample. (a) Convenience sample: The researcher selects the most accessible population members. (c) Judgment sample: The researcher selects population members who are good prospects for accurate information. (d) Quota sample: The researcher finds and interviews a prescribed number of people in each of several categories. Answer : (d) Reason : Some producers select two or more different channels to distribute the same products to target markets, a practice called dual or multiple distribution. (a) Intensive distribution means that a firm tries to place its product or services in as many outlets

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as possible. It is usually chosen for convenience products or services. (b) Selective distribution lies between these two extremes and means that a firm selects a few retail outlets in a specific geographical area to carry its products. It weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution (c) Exclusive distribution is the opposite of intensive distribution because only one retail outlet in a specified geographical area carries the firm's product. It is typically chosen for specialty products or services

Section B : Problems
1. Answers may vary. The term aesthetics was coined in the 18th century by the German philosopher Alexander Baumgarten from the Greek word aisthetikos (meaning "perceptive, especially by feeling"). Baumgarten aimed to produce "a science of sensuous knowledge in contrast with logic, whose goal is truth". Baumgarten was particularly interested in the impact of physical features on individuals' experiences. Later, GWF Hegel limited the usage of aesthetics to the study of the fine arts. It's time to free the term to its original broader use. So the book's title Marketing Aesthetics refers to the marketing of sensory experiences in corporate or brand output that contributes to the organisation's or brand's identity. Today's environments are multimedia, multichannel, multisensory and digital. Communications, transportation and products and services are becoming global. Environments like these provide ideal conditions for marketing aesthetics. Managers have stories to tell about organisations, their products or their services. These stories can be managed by placing them into multisensory communications that provide aesthetic experiences. These communications are managed through an aesthetics strategy across various identity elements like logos, typefaces, packages, lighting, buildings, grounds, fixtures, uniforms, stationery, business cards, promotions, advertising, point-of-purchase displays, event posters, product configurations, scents, musical backgrounds, ornaments, textures and many other viable media for creating and sending communications. Marketing aesthetics draws from three disparate areas: (a) product design, (b) communications research, and (c) spatial design. Each is characterised by dichotomies: Product design revolves round Function (eg product benefits) and Form (eg packaging of the product) Communications research around the Central Message (main persuasive issues or arguments) and Peripheral Messages (eg tangential elements such as the attractiveness of the presenter) Spatial Design around Structure (eg how people interact with their physical environment) and Symbolism (nonfunctional experiential aspects of the space) Marketing Aesthetics cuts across these three disparate areas. In particular, it connects the poles of Form & Peripheral Message & Symbolism.
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The student is expected to relate the behavioral segmentation varibles to segment the market.
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The answer must contain: A graphical illustration of PLC of scissors. The graph must be constructed with the data available in the case. An analysis of the generic strategies adopted by ITC for scissors.
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The answer can discuss the following Brand Positioning Brand Repositioning Price/Value Proposition Price-parity paradigm Brand revival Brand image Preparing the brand for price revisions Extending brand life cycle
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The responses should reflect the analytical skills of the student. When positioning a product, the marketer wants to convey the benefits most desired by the target market. Because a products position is critical to its evaluation, firms go to great lengths to influence how positions are formed. Based on the facts in the case, the student should be able to identify lifebuoys positioning strategy, its success and its repositioning strategy.
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A brands strength & weakness should be talked from the point of view of: Brand name Brand Strategy whether they are appropriate under the circumstances of the case. Any suggestion for the brand needs to be substantiated. < TOP >

Section C: Applied Theory

7. The bank should formalize the initial list of products and services, which will become a part of its product portfolio, with a broad classification as to the product portfolio, with a broad classification as to the product offered to the retail and corporate clients. Also it should list down its core product and augmented products. Pricing is another important factor, considering its recent entry into the banking industry, price should be based on a trade of between costplus and competition-related approach Banking being a service oriented industry banks should have the necessary infrastructure (number of branches in major cities) to facilitate in the form of communication (advertisement, brochures, ambience in service delivery points like bank branches, ATM locations and people). Process with its client, in a proper place backed up sound processes which in turn leads to quick and perfect services to first time and everytime . The physical evidence aspect tangibilizing the intangible service is a major challenge for the banks marketers in terms of imagine time designing of the bank stationery, product packing an ambience at the branches are all marketing mix variable that are importance focus areas for a new bank like prestige nation bank Todays organization are racing to develop the analytical and technological tools that will help them identify, attract, and build relationship with precisely those customer they want. They realize that they must evolve their marketing strategies, operating structures, and systems to confront the sophisticated, information-driven marketing models wielded by non-traditional competitors, such as retailers and Web-enabled financial services firm. Banks that want to capture and keep the lead will use what is learned about individuals not just segments, or even micro segments to determine the product configurations, promotions tactics, pricing service levels and channel mix that make sense for each customer. Broad Customer Segment Identified Profitability based segmentation and house holding for current customer are the primary weapons Unrefined customer analyses have some influence on the product, channel, pricing, retention, cross selling and service mix offered Generally speaking the organization is internally focused Banks are striving to obtain more value from high-value customers with targeted cross-selling. At the same time, they are actively migrating low-value customers to lower-cost (self-service) channels and providing them with lower-cost service offerings. Customer Needs Behaviors and Values Clarified. Banks achieve better prospect and customer management by combining profitability, behavioral segmentation, and analysis. Banks deliver information to customer touch points (eg branches or call center) to influence customer activity and workflow management. Stage Two banks manage and influence the workflow of their branches and call centers, and generate more effective customer acquisition and management activities. Virtual Intimacy: You can achieve virtual intimacy with your clients through a major transformation of strategies. Processes, systems, and structures. The traditional organization design is redrawn and It infrastructure redesigned Advanced predictive capability enhances customer acquisition and cross selling You will gain influence over your competitors strategies Banks completely transform many elements of their customer acquisition and management strategies thereby creating an entirely new marketing approach. Moving beyond the previous stages, the Stage Three bank constantly designs and tests product offerings tailored for specific micro-segments as small as one
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The problems which will be encountered in doing such research across a variety of countries include the difficulties associated with sample design (inadequate population data), questionnaire design, hiring/training/control over interviewers, data collection methods (phone versus personal interviewing), and actual data collecting (asking questions and recording answers). It will be difficult to compare the results across countries given the variation in the sample designs, the response rates of different groups, the caliber of the interviewers, and the meaning of key words in the questionnaire.

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