Pir Mehr Ali Shah

Arid Agriculture University, Rawalpindi

Office of the controller of Examinations
Final Exam / Spring 2020 (Paper Duration 8 hours)
To be filled by Teacher

Course No.: MGT-351 Course Title: Introduction to Marketing

Total Marks: 30 Date of Exam --2020.
Degree: …BSSE Semester: IV Section: ………Evening
Marks
Q.No. 1 2 3 4 5 6 7 8 9 10 Obtained/
Total Marks
Marks
Obtaine
d
Total Marks in Words:
Name of the teacher: Dr. Ali Raza
Who taught the course: Signature of teacher / Examiner:

To be filled by Student

Registration No.: 18-ARID-3040 Name: Sheikh Babar Ali

Answer the following questions.

Q. No.1. Explain various stages in new product development with an example (Marks 08)

Answer :
The new product development is the process of bringing the idea into the market in the form
of product.In order to be in the market and to be successful across the market is to carefully
execute new product development process.The drawback is that out of thousand of products
entering in the process, only a couple of them reach the market.Therefore there is no way
around the systematic, customer driven new product development process for finding and
the growth of new products.
There are eight major steps in the new product development process.
I. Idea Generation
The process of new product development starts with the generation of an idea.Idea
generation refers to the systematic search for new product ideas.A company may generate
multiple ideas to find the best one.There can be two sources of new ideas,which are as
follows
 Internal Idea Source : The company finds the new idea internally.Which means
Research And Development (R&D),but also contributes from the employees.
 External Idea Source : The company finds new ideas externally. This includes all the
external sources of any kind. The most important external source is customer.
II. Idea Screening
Idea screening means to filter all the ideas to find the best one.All the ideas generated are
screened to spot the good ones and to drop the poor ones as soon as possible.While the
purpose of the idea generation is to create a large number of ideas, the purpose of
screening stage is to reduce that number, because the product development costs rise
greatly in later stages.
III. Concept Development and Testing
Attractive ideas are required to be developed into a product concept to go in the process of
new product development. The concept of a product is a detailed version of the new product
idea stated in meaningful consumer terms.We should distinguish the following
 A product idea : An idea for a possible product.
 A product concept : A detailed version of the idea stated in meaningful consumer terms.
 A product image : The way consumers perceive an actual or potential product.
The new product concepts need to be tested with groups of target consumers. The concepts
can be presented to the consumers either symbolically or physically.

IV. Marketing Strategy Development

When a promising concept of product has been developed and tested, it is time to design an
initial marketing strategy for the new product based on the products concept for introducing
this new product to market.
The marketing strategy consists of three parts
 A description of the target market, planned value proposition, and the sales, market
share and profit goals.
 An outline of the product’s planned price, the distribution and the marketing budget.
 The planned long-term sales, profit goals and the marketing mix strategy.

V. Business Analysis
Business analysis involves a review of the sales,costs and the profit projections for the new
product to find out whether these factors satisfy the company’s objectives.
In order to estimate the sales, the company can look at the sales history of similar products
and conduct market surveys.Then it should be able to estimate minimum and maximum
sales to assess the range of risk. When the sales forecast is prepared, the company can
estimate expected costs and profits of a product, including marketing, R&D, operations etc.
All the sales and costs figures together can eventually be used to analyse the new product’s
financial attractiveness.

VI. Product Development

The new product development process goes on with the actual development of the product.
If the product concept passes the business test then it must be developed into a physical
product.
The R&D department will develop and test one or more of physical versions of the product
concept.Developing a successful prototype can take some time, depending on the product
and prototype methods.Products often undergo tests to make sure they perform safely and
effectively.

VII. Test Marketing

The new product development process, the product and its proposed marketing programme
are tested in the realistic market setting.Test marketing gives marketer experience with
marketing the product before going to the great expense of full introduction.The amount of
the test market necessary varies with each new product.
Especially when introducing a new product requiring a large investment, when the risks are
high, or when the company is not sure of the product or its marketing programme, a lot of
test marketing may be carried out.

VIII. Commercialization
Test marketing has given the management the information needed to make the final decision
i.e launch or do not launch the new product.Commercialization means to introduce the new
product into the market.
Some factors may need to be considered before the product is commercialized
 Introduction timing : If the company is facing problems with the economy it might be
wise to wait until the problem is solved.
 Introduction place : It should be considered where to launch the place in a single
location or a region or in the national market or the international market.Usually the
 companies develop a planned market roll-out over time due to lack of confidence,
capital or capacity.
Example :
Food and Beverage
Food and beverage products are among the easiest to start developing at a low cost and
from comfort.Creating a new energy bar can be as simple as buying ingredients and
tweaking the recipe in the kitchen.
In order to move from recipe to packaged goods, the product can be sold in stores or online.
 Labels and warnings : ingredient lists, nutritional information to display.
 Laws and regulations : dietary information, allergen warning, health claims.
 Expiry dates : understanding the product lifeline and how longer will it survive in different
conditions.

Q.No.2. Explain the branding strategy decisions with an example. (Marks 08)

Answer :

Brand decisions are the decisions that one makes about a certain brand they are building or
promoting.
There are four major branding decisions
I. Brand Positioning
Brand positioning concerns with how we want the customers to perceive the brand as
compared to the competitors.
Brand may be positioned on three things
 Attributes
Attributes are considered to be the lowest level in terms of brand positioning.Attributes
mainly concerns the physical attributes of the brand.For example if we are branding a car,it
will involve whether we are selling a BMW or AUDI and the colors they would be available in.
This has to work hand in hand with other factors as well that determine positioning.
 Benefits
The set of benefits that the target market would enjoy would also be the part of the brand
positioning.As mentioned above, benefits will cover the car’s safety features, speed
capabilities and other similar specs.
 Values and Beliefs
The benefits and the attributes can be shared between competitors.the challenge is to create
a deep emotional connection between the brand and the market, this is where a brand’s set
of values and beliefs would come in.
For example if we consider the Coca Cola company, their annual Christmas campaigns have
become a cultural phenomenon which endears them to families all over the world. This
shows that they value tradition,which makes the brand an even greater hit during the
holidays.

II. Brand Name Selection

Brand name selection is a risky process. As coming up with the decision could make or
break our success.The name of the brand has to be distinctive, catchy, and easy to
remember.
We have been seeing many brands that focus on catching attention
e.g GOOGLE.This trend has been changed dramatically,at the present time many brands
choose to pick names that carry real definitions e.g Quora, is the plural of quorum which
pertains to the minimum number of peoples required before a group can make any decision
or conduct business.

III. Brand Sponsorship

While considering the brand sponsorship, we have to think about choosing among four
options that are
 Manufacturer’s Brand
Manufacturer’s brand means to market our own output.For example, Sony would still be
selling the products they manufacture as Sony T.V or Sony cameras.Now if they start
manufacturing products to be sold to resellers who will not be using Sony brand,then these
resellers would be using a private.

 Private Brand
Private brands have become bigger in the recent years because consumers have also
become less brand conscious and more practical.Products that carry the popular brand
name would be more expensive compared to the private brands.
 Licensed Brand
The companies that use a certain name or symbol that is not necessarily created by a single
manufacturer.For example Disney.There are multiple manufacturers creating products that
use these brands.
 Co-Brand
Co-brand means to put two brands together for a single product.For example Nestle’s coffee
machines.

IV. Brand Development

Brand development covers four sections
 Line Extension
If the product is just an addition to the current offering than this can be considered as a line
extension.This means that we don’t have to think of separate brand name for the new
product.For example Cherry Coke.
 Brand Extension
Brand extension means the coming up with an entirely new product line,but still under the
same brand name.For example, Kellogg’s did this with their special k line, with an entire set
of cereals, biscuits and other similar products under it.
 Multi-brand
Big companies apply the multi-brand approach, which means that they have separate
product lines and market several brands under each category.For example, Procter and
Gamble sells 5 different shampoo brands.This allows them to have a separate brand offering
to different market segments.
 New Brand
Any new brand formed would fall under this segment. However, older manufacturer and
businesses could also be use this approach if their new product does not fit into existing
brands they already have.This can also be used when the existing brands do not have the
same power or appeal that it is used to have, or its owners were hoping they would have.

Q.No.3. Explain different methods of pricing with an example. (Marks 08)

Answer :
The Pricing Methods are the ways in which the price of goods and services can be
calculated by considering all the factors such as the product/service, competition, target
audience, product’s life cycle, firm’s vision of expansion, etc. influencing the pricing strategy
as a whole.
Following are the methods for pricing methods
I. Cost Based Pricing
The following approaches are commonly used under cost based pricing.
 Mark-up Pricing (Cost Plus Pricing)
In mark-up pricing the selling price of the product is fixed by adding a particular margin or
mark up to its cost.
 Full Cost Pricing (Absorption Cost Pricing)
Full Cost pricing is the pricing method that many among the manufacturer firms adopt. It is
based on the estimated unit cost of the product with the normal level of production and
sales. A profit margin is added to this unit cost. This method uses standard costing
techniques and works out the variable cost and fixed costs involved in manufacturing, selling
and administering the product. The selling price of the product is decided by adding the
required margin towards profit to such total costs.
 Marginal Cost Pricing
Marginal cost pricing targets at maximizing the contribution towards fixed costs. Marginal
costs include all the direct variable costs of the product. In marginal cost pricing, these costs
are fully realized and also a portion of fixed cost is also realized. The major difference in full
cost pricing and marginal cost pricing is that the latter gives the flexibility not to recover a
portion of the fixed costs depending upon the market situation. It also gives flexibility to
recover a larger share of the fixed costs from certain customers, or certain segment of the
business and smaller share from the others.It takes into account the cost and demand
aspects. However it is cost based method. Under competitive market conditions, marginal
cost pricing is more useful.

II. Break Even Analysis

Break even concept is essential for correctly understanding most of the cost-based method
of pricing. In producing and selling a certain volume of any product, certain fixed costs and
certain variable costs are incurred. When the volume is increased or decreased, the variable
costs go up or down. The fixed costs usually remain the same. The firm is basically
concerned with the total of the variable and fixed costs incurred for the particular volume.
The break- even concept is aimed at a level where the total costs exactly equal to the total
revenues, the result is zero profit and zero loss. At a level were the revenues exceed the
costs, profits are earned and at the other level, losses are incurred. When more units of the
break-even level are produced and sold at the given price, the profits go up.

III. Demand Based on Pricing

The following approaches are commonly used under cost based pricing.
 Skimming Pricing
One of the most commonly used strategies is the skimming strategy. This strategy refers to
a firm’s desire to skim the market by selling at a premium price. This method literally skims
the market in the first instance through high price and then settles down for a lower price.
This means that at high price high profits in the introduction stage of the product. This
method is especially useful in the pricing of new products of luxury. It also helps the firm to
get the feel of the demand of the product and then make appropriate changes in the pricing
strategy.
 Penetration Pricing
As opposed to the skimming strategy, the objective of penetration price strategy is to gain
foothold in highly competitive market. The main objective is to attain market share or market
penetration. This method is quite useful in pricing of new products under specific
circumstances.
 Charging What the Traffic Will Bear
It points out demand price. As there are two principles in pricing, one is called cost of service
principle and other is termed as value of service principle. The second term is charging what
the traffic can bear. Professionals like doctors, lawyers, chartered accountants etc., adopt
this principle. They charge their fees on the basis of ability to pay and the cost factor comes
secondary in their charges.

IV. Pricing as per Competition

Marketers will choose the brand image and desired market share as per competitive
reaction. It is necessary for the market planners to know what the rival firm is charging. Level
of competitive pricing enables the firm to price above, below, or at par and such a decision is
easier in many cases.
The following approaches are commonly used under Pricing as per Competition.
 Discount Pricing
Discounts and allowances are price concessions offered to traders or buyers in the form of
deductions from the list price of from the amount of a bill or invoice. These are forms of
indirect price competition. The common forms of discounts are:
a) Trade Discount
It is kind of functional discount, It is given to the buyers buying for resale, for example,
wholesaler or retailer, in payment of marketing functions which these traders are expected to
perform. Seller quotes price less discount rather than net price.
b) Cash Discount
It is rebate or a concession given to the trader or consumer to encourage him to pay in full
by cash or cheque within a short period of the date of the bill or invoice. It is a deduction
from the amount of the bill or invoice amount to be paid. Generally the period to avail the
cash discount is usually 10-15 days

c) Quantity Discount
In order to encourage a customer to make bulk or large purchases at a time, quantity
discount is offered. It can reduce the prices for bulk purchase order.These may be even
cumulative, i.e., on total volume of purchases made during a certain period. They are really
patronage discount.
d) Seasonal Discount
The manufacturer may offer additional seasonal discount for example 20%, 25% to a dealer
or a customer who places an order during the slack season.
This will ensure better use of production facilities.
 Premium Pricing
This strategy is used by a firm that has heterogeneity of demand for substitute products with
joint economies of scale. For example a colour television set. There are different models
available with different features, like few with remote control and another without it.
These types are substitute of each other and also it satisfies customer’s needs. But the firm
may opt to premium price the first model and hence position it at the top of the product line
for high income group of customers.
This strategy is also used in retail marketing where a merchandise may be offered at a
higher price in a premium store and at a lower market price in relatively low image store
catering to the mass market.
This strategy applies to complementing products also.
 Going Rate Pricing (Parity Pricing)
This is a method which is competition oriented, In this method, the firm prices its products at
the same level as that of competition. This method assumes that there will be no price war
within the industry. Despite its advantages there are few limitations,
the first is that it is not necessary that the leader firm had taken an apt decision thus the new
firms may follow a wrong pricing strategy.
Secondly, it is not always true that a decision taken in collective wisdom is the best.
Especially not be so from customer’s point of view.

Q.No.4. Define the following with an appropriate example. All carries equal marks (3*2)
(Marks 06)
a: Elaborate the role of digital marketing in today’s business world.
b: Discuss the various factors governing product line decisions?

Answer :
A
Digital marketing is the marketing of products or services using digital technologies, mainly
on the Internet, but also including mobile phones, display advertising, and any other

digital medium.

Online Market:

Online marketing is the process to catch the attention of potential customers for business
through particular banner,articles, video, images, flash animation etc. Marketing activities or
information are planned as an elegant tempt to the visitors in which particular website of
business wants to attract.

Website:

Website is the key to a successful digital marketing strategy because all other digital
marketing elements direct guests to our website, which should effectively convert guests.
Elements of website design that generate conversions are using best SEO practices and
tools, having a great user experience, and capitalizing on the wealth of analytics websites
offer. A website without effective SEO will not organically appear in the top spots on a
Search Engine Results Page (SERP), and therefore won’t generate many clicks from
Google, Bing, and other search engines.

Search Engine Optimization:

SEO stands for Search Engine Optimization. Search Engine Optimization. It means creating
good place of a website in search engine result page on the basis of keywords and phrases.
It comes under Digital marketing category. SEO is

the process of online visibility in no-paid search engine results.It basically depends on
Keywords. Search engine like Google, Yahoo, Bing. TRS Tech is offering best digital
marketing services in Toronto, Canada and it is one of the best companies in Canada.It is
the process of creation a web page easy to find, easy to crawl, and easy to categorize.It is
about helping our customers find out our business from among thousand other companies.
SEO is an integral part of any digital marketing strategy.

Social Media Marketing:

Social media marketing (SMM) is a form of Internet marketing that utilizes social networking
websites as a marketing tool. The goal of SMM is to produce content that users will share
with their social network to help a company increase brand exposure and broaden customer
reach.

AdWords:

Google AdWords is a marketplace where companies pay to have their website ranked right
with the top organic search results, based on keywords. The basic gist is, we select to
promote our brand based on keywords.

Google Analytics:

Google Analytics is a very important digital marketing tool. It allows us to measure the
results of individual campaigns in real-time, compare the data to previous periods, and so
much more. Google Analytics allows us to track many important metrics, covering all
aspects.

AdSense:

Google AdSense is a popular way for websites to make money from advertisements, all the
way from part-time bloggers to some of the largest publishers on the web. AdWords
advertisers pay Google either by the click (PPC). In turn, Google shares a percentage of that
revenue with the AdSense publishers.

Email Marketing:

Mail marketing, as the name suggests, is a digital marketing channel which is used to market
brands and businesses through emails. While email marketing runs the risk of emails getting
into the Spam folder, it is still a powerful means of increasing visibility of our brand or
business. Email marketing is used not just as a means of brand awareness, but also to
generate leads, highlight product offers, send out newsletters, and soon.

Search Engine Marketing

Search Engine Marketing or SEM covers the ground SEO ignores, paid traffic from search
engines. With SEM we purchase advertisement space that appears on a user’s SERP. The
most common paid search platform is Google Ad-Words.

Affiliate Marketing:
Affiliate marketing refers to the process of paying for conversions. Think of it like hiring a
sales person for our product or service. That affiliate earns a commission.We determine the
rate for affiliate marketing.We only pay for conversions. This means there is no upfront cost
to affiliate marketing. Many bloggers or e-commerce websites use affiliate marketing.When
we choose to use affiliate marketing ensure that all of our terms and boundaries are
discussed before hand.

Influencer Marketing:

Influencer marketing is among the newer types of digital marketing. Influencer marketing
uses people with an-enormous online reach considered experts by our target market to drive
traffic and sales.Influencer marketing is popular on social media channels like Instagram and
Snap chat. Companies hire Instagramers with large followings to promote their brand by
posting one or more photos with the product.

Reasons for the growth of online advertising

 Advertisement can reach very large number of potential buyers globally.

 Web superiority over other advertising medium.
 Web page can be updated any time and changes or corrections are painless.
 Online advertisement works 24 hours a day, 7 days a week, 365 days a year.
 In online advertisement specific interest groups or individuals can be targeted.
 Online advertisement can effectively use the convergence of text, audio, graphics, and
Animation.
 Online advertisements are cheaper in comparison to traditional advertisement.
 There is no printing costs, no postage costs etc.

1. Profitability:

Every business unit tries to maximize its profits. It makes certain changes in its product mix
in a way to realize positive impact on profitability. Company prefers to introduce more
product lines or product items in existing product lines to improve its profitability. Product mix
is constantly adjusted to realize more profits.

2. Objectives and Policy of Company:

Company frames its product mix to achieve its objective. Product mix is prepared, modified,
or changed in light of objectives. Therefore, addition, subtraction, or replacement of product
lines or product items is based on what a company wants to achieve. Product mix is
prepared and modified according to a company’s policy.

3. Production Capacity:

Marketing mix decisions, to a greater extent, depend on plant or production capacity of

company. Company will design its product mix in a way that optimum production capacity
can be utilized.

4. Demand:

Product mix decisions are taken with reference to demand. Marketer should study consumer
behaviour to find the popularity of products. Changes in consumers’ preference, fashion,
interest, habits, etc., must be reflected in product mix of company. Company, naturally,
priories those products which have more demand. In case of falling demand, company must
drop poor products gradually. Thus, product mix is constantly adjusted to meet consumer
needs and wants.

5. Production Costs:

Product mix is widened or narrowed depending upon production costs. Company will prefer
those products, which can be produced within budgeted limit. Sometimes, for any reason,
the manufacturing costs for existing products rise, the company decides to drop such
products to reduce their production costs. It tries to balance selling price, profit margin, and
production costs.

6. Government Rules and Restriction:

Every company produces such products, which are not restricted or banned by the
governments. Even, sometimes, company has to stop certain products or varieties when it is
declared as illegal. In same way, social and religious protests also play a vital role in this
regard. Contemporary legal framework has direct impact on size and composition of product
mix.

7. Demand Fluctuation:

Apart from consumer behaviour, demand is also fluctuated due to many reasons. Especially,
demand is affected due to seasonal effect, non-availability of substitutes, increase in
population, war, draught, flood, or any other reason. In order to meet with the changed
demand of certain products, the company has to adjust its product mix.

8. Competition:

It is one of the powerful factors affecting product mix. A company formulates its product mix
in such a way that competitors can be strongly responded. Product mix strategy adopted by
the close competitors has direct impact on company’s product mix.

9. Impact of Other Elements of Marketing Mix:

Over and above these factors, other elements of marketing mix such as price, promotion,
and distribution are also equally important in designing product mix. Company tries to
maintain consistency among these all elements to carry out marketing activities effectively
and efficiently.

10. Overall Business Condition or Condition of Economy:

Domestic as well as global economic conditions are also important considerations. Because
of liberalization and globalization, no business can dare underestimate macro picture of the
world economy. A company should keep in mind health of domestic economy with reference
to the world economy. This is more relevant when a company is involved in international
trade.