2nd PUC Business Studies Question Bank Chapter 11 Marketing Management

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Karnataka 2nd PUC Business Studies Question Bank Chapter 11 Marketing Management

Question 1.
What is a market? ( 1 Mark )
Answer:
Market refers to a set of actual and potential buyers of a product or service. For example, market for smart phone refers to all the actual and potential buyers for smart phone.

(Note: In the traditional sense, the term market refers to the place where buyers and sellers gather to enter into transactions involving the exchange of goods and services).

Question 2.
What is marketing? ( 2 Marks )
Answer:

Marketing is a process whereby people exchange goods and services for money or for something of value to them.
In other words, marketing is a social process wherein people interact with others, in order to persuade them to act in a particular way, say to purchase a product or service.

(Note: Traditionally, marketing has been referred to as performance of business activities that direct the flow of goods and services from producers to consumers. In this connection, a number of activities such as product designing, packaging, warehousing, transportation, branding, selling, advertising and pricing are to be performed).

Question 3.
Define marketing. ( 2 Marks )
Answer:
Philip Kotler has defined marketing as, “a social process by which individual groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others.”

Question 4.
State any two features of marketing. ( 2 Marks )
Answer:
Features of Marketing:

(1) Needs and Wants: The focus of the marketing process is on satisfaction of the needs and wants of individuals and organizations.

(2) Creating a market offering: On the part of the marketers, the effort involves creation of a market offering: (Market offering refers to a complete offer for a product or service at a certain price available at a given outlet or location).

(3) Customer value: The process of marketing facilitates exchange of products and services between the buyers and the sellers. In the process, marketer tries to add to the value of the product so that the customer prefer to buy it.

(4) Exchange mechanism: The process of marketing works through the exchange mechanism. The individuals
(buyers and sellers) obtain what they need and want through the process of exchange. In other words, the process of marketing involves exchange of products and services for money or something considered valuable by the people.

(Write any two points)
(Note: 4 points may be asked for 4 marks)

Question 5.
State any two examples for things that can be marketed other than product. ( 2 Marks )
Answer:

A service: (e.g., services rendered by a doctor, insurance service.)
An idea (Family planning)
An event (music concert, fashion show)
A place (The city of gardens)
(Write any two examples)

Question 6.
Give an example for the marketing of services. ( 1 Mark )
Answer:
Examples for marketing of services:

Insurance
Health care,
Business Process Outsourcing
Online trading
(Write any one)

Question 7.
Define marketing management. ( 2 Marks )
Answer:
Philip Kotler has defined, marketing management as “the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer values of management.”

Question 8.
Discuss briefly any four differences between selling and marketing. ( 4 Marks )
Answer:
Marketing refers to a large set of activities of which selling is just one part.
The major differences between selling and marketing are:

(1) Part of the process vs wider term: Selling is only a part of the process of marketing. But marketing is a much wider term consisting of number of activities such as identification of the customer’s needs, developing the products to satisfy these needs, fixing prices and persuading the potential buyers to buy the same.

(2) Transfer of title vs satisfying customer needs: Selling is concerned with affecting transfer of title and possession of goods from sellers to buyers (i.e., consumers or users). But marketing activities concentrate on satisfaction of the customers needs and wants.

(3) Profit through maximizing sales vs customer satisfaction: The main aim of selling is profit maximization through maximization of sales. But marketing is concerned with customer satisfaction and thereby increasing profit in the long run.

(4) Start and end of the activities: Selling activities start after the product has been developed. But marketing activities start much before the product is produced and continue even after the product has been sold.

(5) Difference in the emphasis: In selling, the emphasis is to make the customer to buy the product. But in marketing, the attempt is to develop the product as per the customer need.?.

(6) Difference in the strategies: Selling involves efforts like promotion and persuasion. But marketing uses
integrated marketing efforts involving strategies in respect of product, promotion, pricing and physical distribution. (Write any 4 points)

Question 9.
State any one marketing management philosophy (or concept). ( 1 Mark )
Answer:

The production concept.
The product concept.
The selling concept.
The marketing concept.
The societal marketing concept
(Write any one point)

Question 10.
Explain any eight functions of marketing. ( 8 Marks )
Answer:
Functions of marketing: Marketing is concerned with exchange of goods and services from producers to consumers or users in such a way that maximizes the satisfaction of customers’ needs. The process of marketing involves the performance of following functions.

(1) Gathering and analyzing market information: One of the important functions of a marketer is to gather and analyse market information. It involves gathering information about the market conditions such as number of potential consumers, their location, their preference, their purchasing power etc. Further, the gathered information must be analysed. This is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products and services.

(2) Mark ting planning: Another important activity of a marketer is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved. For example, if a marketer of product ‘X’ decides to increase his market share by 20% over the last years share, he has to develop a complete marketing plan for increasing the level of production, promotion of the product etc. to achieve this target.

(3) Product designing and development: Another important marketing activity relates to product designing and development. A good design (i.e., shape, style etc) of a product gives it a competitive advantage in the market.

(4) Standardization and grading: Standardization of products, i.e., producing goods of predetermined specifications which helps in achieving uniformity and consistency in output, is another important marketing activity. Marketing activity also involves grading, i.e., the process of classification of products into different groups, on the basis of some of its important characteristics such as quality, size, etc, e.g. Grade I apple, Grade II apple etc.

(5) Packaging and labeling: Marketing activity involves designing and developing the package for the product and the label to be put on the package. Packaging protects the products and also serves as a promotional tool.

E.g., packaging has played an important role in the success of many of the consumer products in recent times such as lays or uncle chips, potato wafers, clinic plus shampoo, Colgate tooth paste, etc.

(6) Branding: Giving a brand name to products such as ‘Reynolds’ pen, ‘Samsung’ Cell phone, ‘Colgate’ tooth paste, ‘Godrej’ Almira is another important function of marketing. It helps in distinguishing the product of a firm with that of the competitor. .

(7) Customer support services: A very important function of the marketing management relates to developing customer support services such as after sales services, handling customer complaints and adjustments, procuring credit services, maintenance services, technical services and consumer information. All these services aim at providing maximum satisfaction to the customers which is the key to marketing success.

(8) Pricing of product: The marketers have to properly analyse the factors such as cost of production, profit expected, competitors price etc. and determine the appropriate price to it. Because the demand for a product or service is related to its price.

(9) Promotion: The marketer has to inform the customers about the firms product, its features, etc. and persuade them to purchase these products, Advertising, personal selling, publicity and sales promotion are the different methods used by a marketer to undertake promotion. Marketer has to decide the promotion budget and promotion mix.

(10) Physical Distribution: Managing physical distribution is another very important function in the marketing of goods and services. Marketer has to decide the channels of distribution (like wholesalers, retailers) to be used and physical movement of the product from where it is produced to a place where it is required by the customers.

(11) Transportation: Marketer has to take measures for the physical movement of goods from the places of production to the places of consumption by using suitable modes of transport (i.e., land or water or air transport)

(12) Storage or warehousing: Marketer provides proper facilities for storage of the products in order to maintain smooth flow of products in the market.

Thus, marketing involves the performance of many important functions which helps the trader to earn sufficient profits through the satisfaction of consumer needs.
(Write any 8 points)

Question 11.
What is standardization? ( 2 Marks )
Answer:
Standardization refers to producing goods of predetermined specifications, which helps in achieving uniformity and consistency in the output.

Question 12.
What is grading of products? ( 2 Marks )
Answer:
Grading is the process of classification of products into different groups, on the basis of some of its important characteristics such as quality, size, etc. e.g., Grade I, Grade II etc.

Question 13.
How do you describe Marketing mix?
(Or)
What is marketing mix? ( 2 Marks )
Answer:
Marketing mix is a set of marketing tools that the firm uses to pursue its marketing objectives in a target
market. There are 4 elements of marketing mix. They are:

Product
Price
Place
Promotion

Question 14.
Explain the elements of marketing mix. (4 Marks )
Answer:
Marketing mix consists of the following elements (popularly known as 4 Ps of marketing):

Product
Price
Place
Promotion

(1) Product: Product means goods or services or ‘anything of value’ which is offered to the market for sale. For example, Amul milk, ghee, butter, cheese, chocolates, etc. are the food products offered to the market for sale by AMUL. The concept of product relates to not only the physical product but also the benefits offered by it.

It also includes other aspects like after sales services, availability of spare parts, handling complaints etc. The important product decisions include, deciding about the features, quality, packaging, labeling and branding of the products.

(2) Price: Price is the amount of money that the customers have to pay to obtain the product. Marketers have to analyse the factors determining the price such as, cost of the product, profit expected, elasticity of demand, competitors price etc. and fix a price for the firms products. Decisions have also to be taken in respect of discounts to customers, credit terms etc.

(3) Place: Place or physical distribution include activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers (e.g., wholesaler, retailers etc) to reach the customers and providing support to the intermediaries (e.g. by way of discounts etc). The other decision areas include managing inventory, storage and transportation of goods from the place it is produced to the place it is required by the buyers.

(4) Promotion: Promotion of products and services include activities, that communicate availability, features, merits etc. of the products to the target customers and persuade them to buy it. Most marketing organizations undertake various promotional activities through using number of tools such as advertising, personal selling and sales promotion techniques (like price discounts, free samples etc)

The success of a market offer will depend on how well these ingredients are mixed to create superior value for the customers and simultaneously achieve their sale and profit objectives.

Question 15.
State any one element of marketing mix. ( 1 Mark )
Answer:
Elements of marketing mix

Product
Price
Place
Promotion
(Write any one point)

Question 16.
Give the meaning of ‘product’? ( 1 Mark )
Answer:
Product means goods or services or ‘anything of value’ which is offered to the market to satisfy customer needs.
OR
Product is a mixture of tangible and intangible attributes, which are capable of being exchanged for value, with ability to satisfy customer needs.

Question 17.
What do you mean by consumer goods?
(OR)
Give the meaning of consumer products. ( 2 Marks )
Answer:
Products which are purchased by the ultimate consumers or users for satisfying their personal needs and desires are referred to as consumer products. For example, soap, eatables, textiles, toothpaste, fans, etc.

Question 18.
Give the meaning of convenience goods. ( 2 Marks )
Answer:
Those consumer products, which are purchased frequently, immediately and with least time and efforts are referred to as convenience goods. E.g., ice creams, medicines, newspapers, stationary items, toothpaste etc.

Question 19.
Give two examples for convenience goods. ( 2 Marks )
Answer:
Examples for convenience goods:

Cigarettes
Ice creams
Medicines
Newspapers
Stationery items
Toothpaste
(Write any two items)

Question 20.
Write any four characteristics of convenience products (goods) ( 4 Marks )
Answer:
Features or characteristics of convenience products

These products are purchased at convenient locations, with least efforts and time.
Consumer products have a regular and continuous demand.
These products have small unit of purchase and low prices.
Convenience products have standardized price.
The competition in these products is high.
(Write any four points)

Question 21.
State any one feature of convenience goods. ( 1 Mark )
Answer:
These products are purchased at convenient locations, with least efforts and time.

Question 22.
How do you describe shopping products?
(Or)
Give the meaning of shopping products. ( 2 Marks )
Answer:
Shopping products are those consumer goods in the purchase of which buyers devote considerable time to compare the quality, price, style, suitability etc. at several stores before making the fixed purchase, e.g., clothes, shoes, jewellery, furniture, television etc.

Question 23.
State any two characteristics of shopping products. ( 2 Marks )
Answer:
Characteristics of shopping products:

The shopping products are generally of durable nature.
The unit price and profit margin of shopping products is generally high.
Purchase of shopping products are generally preplanned.
Retailers generally play an important role in the sale of shopping products.
(Write any two points)

Question 24.
Give the meaning of specialty products. ( 2 Marks )
Answer:
Specialty products are those consumer goods which have certain special features because of which people make special efforts in their purchase. E.g., rare collection of artwork or of antiques.

Question 25.
State any four characteristics (or feaures) of speciality products. ( 4 Marks )
Answer:
Characteristics of speciality products:

The demand for speciality products is limited as relatively small number of people buy these products.
These products are generally costly and their unit price is very high.
These products are available for sale at a few places.
An aggressive promotion is required for the sale of speciality products in order to inform people about their availability, features etc.
After sales services are very important for many of the speciality products.

Question 26.
Give the meaning of durable products. ( 2 Marks )
Ans: Those tangible consumer products which normally survive many uses are referred to as durable products.
E.g. Refrigerator, television, bicycle, sewing machine, kitchen gadgets etc.

Question 27.
State any two examples of durable products.
Answer:
Examples of durable products:

Refrigerator
Bicycle
Sewing machine
Cooker
Television
(Write any two points)

Question 28.
Give the meaning of non-durable products. ( 2 Marks )
Answer:
The consumer products which are normally consumed in one or few uses are called non-durable products.
E.g. toothpaste, bathing soap, stationary products, etc.

Question 29.
State any two examples for services. ( 2 Marks )
Answer:
Examples for services:

Dry cleaning
Watch repairs
Hair cutting
Postal services
Services offered by a doctor.
(Write any two points)

Question 30.
State any two characteristics of services. ( 2 Marks )
Answer:
Characteristics of services:

Services are intangible.
A service is inseparable from its source.
The services cannot be stored.
Services are highly variable.
(Write any two points)

Question 31.
Give the meaning of industrial products. ( 2 Marks )
Answer:
Industrial products are those products which are used as inputs in producing other products.
E.g, raw materials, machines, engines, etc.

Question 32.
Give two examples of industrial products. ( 2 Marks )
Answer:
Examples of Industrial products:

Raw materials
Machines
Engines
Tools
Lubricants
(Write any two points)

Question 33.
Briefly explain any four characteristics of industrial products. ( 4 Marks )
Answer:
Characteristics of industrial products.

Number of buyers: The number of buyers of industrial products is limited. E.g. sugarcane is purchased by a few producers of sugar.
Channel levels: The sale of industrial products is generally made with the help of shorter channels of distribution i.e., direct selling or one level selling.
Derived demand: The demand for industrial products is derived from the demand for consumer products e.g, (he demand for leather (i.e., industrial product) will be derived from demand for shoes (consumer product)
Role of technical considerations: Technical considerations assume greater significance in the purchase of industrial products because these products are complex products bought for use in business operations.
Leasing out: A growing trend in industrial product market is to lease out rather than to purchase the products on outright basis because of the heavy price of these products.
Geographical concentration: Industrial markets are highly concentrated, geographically.
Reciprocal buying: Some big companies like steel, rubber, medicines resort to the practice of reciprocal
buying.
(Write any four points)

Question 34.
What is generic name of a product? ( 1 Mark )
Answer:
Generic name refers to the name of the whole, class of the product. For example, a book, a camara, a wrist watch, tyre, toilet soap.

[Note: If products are sold by generic names, marketers find it difficult to distinguish their products from that of their competitors],

Question 35.
What is branding? ( 2 Marks )
Answer:
The process of giving a name or a sign or a symbol etc. to a product by marketer is called branding. It helps in identifying and distinguishing his products from the competitors products.

Question 36.
What is branding? Explain briefly its advantages to marketers and customers. ( 8 Marks )
Answer:
The process of giving a name or a sign or a symbol etc. to a product by marketer is called branding. It helps in identifying and distinguishing his products from the competitors products.

I. Advantages of branding to the marketers:

(1) Enables Marking Product Differentiation: Branding helps a firm in distinguishing its product from that of its competitors. This enables the firm to secure and control the market for its products.

(2) Helps in Advertising and Display Programmes: A brand aids a firm in its advertising and display programmes. Without a brand name, the advertiser can only create awareness for the generic product.

(3) Differential Pricing: Branding enables a firm to charge different price for its products than that charged by its competitors. This is possible because if customers like a brand they do not mind paying a little higher for it.

(4) Ease in Introduction of New Product: If a new product is introduced under a known brand, it enjoys the reflected glory of the brand and is likely to get off to an excellent start. Samsung extended the brand name of its Television to Washing Machines, Cell Phone and other products.

II. Advantages of branding to customers:
(1) Helps in Product Identification: Branding helps the customers in identifying the products. For example, if a person is satisfied with a particular brand of a product, say detergent soap, while buying it, he need not make a close inspection every time. Thus, branding greatly facilitates repeat purchase of the products.

(2) Ensures Quality: Branding ensures a particular level of quality of the product. Thus, whenever there is any deviation in the quality, the customers can get remedy from the manufacturer or the marketer. This builds up confidence of the customers and helps in increasing his level of satisfaction.

(3) Status Symbol: Some brands become status symbols because of their quality. The consumers of those brands of products feel proud of using them and adds to the level of satisfaction of the customers. Thus, branding plays an important role in helping both the marketer and the customers.

Question 37.
What is a brand? ( 2 Marks )
Answer:
A brand is a name, term, symbol, design or some combination of them, used to identify the products – goods or services of one seller and to differentiate them from those of the competitor’s. For example, some of the common brands are, Bata, Life buoy, Dunlop, Parkar, Colgate, Godrej etc. Brand has two components – brand name and brand mark.

[Note: Brand mark: That part of a brand which can be recognized but which is not utterable is called brand mark. It appears in the form of a symbol or design e.g., Devil of Onida].

Question 38.
State any four considerations to be kept in mind while choosing a brand name.
(Or)
State any four characteristics of a good brand name. ( 4 Marks )
Answer:
Characteristics of a good brand name or considerations to be kept in mind while choosing a brand name:

The brand name should be short, easy to pronounce, spell, recognize and remember e.g., Ponds, VIP, Rin, Vim, etc.
A brand should suggest the product’s benefits and qualities. It should be appropriate to the product’s function. E.g., Promise, Boost.
A brand name should be distinctive e.g., Zodiac.
The brand name should be adaptable to packing or labeling requirements, to different advertising media and to different languages.
The brand name should be sufficiently versatile to accommodate new products, which are added to the product line e.g., Maggie, Samsung.
It should be capable of being registered and protected legally.
Chosen name should have staying power i.e., it should not get out of date.
(Write any four points)

Question 39.
What is packaging? ( 1 Mark )
Answer:
Packaging refers to the act of designing and producing the container or wrapper of a product.

Question 40.
How does packaging acquire significance in the marketing of goods?
(Or)
Explain the importance of packaging in marketing of goods.
(Or)
Explain the advantages of packaging of consumer products. ( 4 Marks )
Answer:
Packaging plays a very important role in the marketing success of many products. For example, it was one of the important factors in the success of products like Maggie’s Noodles and Uncle chips.

Packaging has acquired great significance in the marketing of goods and services, because of the following reasons.

(1) Rising standards of health and sanitation: Because of the increasing standards of living in the country, more and more people have started purchasing packed goods as the chances of adulteration in such goods are minimized.

(2) Self service outlets: Packaging plays the role of personal selling in respect of promotion in self service retail outlets, particularly in major cities and towns.

(3) Innovational Opportunity: Some of the recent developments in the area of packaging have completely changed the marketing scene in the country. For example, milk can now be stored for 4-5 days without refrigeration in the recently developed packing materials. Similarly, in the area of pharmaceuticals, soft drinks, etc., lots of new innovations have come in respect of packaging. As a result, the scope for the marketing of such products has increased.

(4) Product Differentiation: Packaging is one of the very important means of creating product differentiation. The colour, size, material etc., of package makes real difference in the perception of customers about the quality of the product.

Question 41.
Explain the functions of packaging. ( 4 Marks )
Answer:
Functions of Packaging: Packaging performs a number of functions in the marketing of goods. Some of the Important functions are as follows:

(1) Product identification: Packaging greatly helps in identification of the products. For example, Colgate in red color, or Ponds cream jar can be easily identified by its package.

(2) Product protection: Packaging protects the contents of a product from spoilage, breakage, leakage, pilferage, damage, climatic effect, etc. This kind of protection is required during storing, distribution and transportation of the product.

(3) Facilitating Use of the Product: The size and shape of the package helps the consumers to handle, open and use the product conveniently. Cosmetics, medicines and tubes of toothpastes are good examples of this.

(4) Product Promotion: Packaging is also used for promotion purposes. A startling colour scheme, or photograph may be used to attract attention of the people at the point of purchase. Sometimes it may work even better than advertising. In self-service stores, this role of packaging becomes all the more important.

Question 42.
State any two functions of packaging. ( 2 marks )
Answer:

Product identification: Packaging greatly helps in identification of the products. For example, Colgate in red color, or Ponds cream jar can be easily identified by its package.
Product protection: Packaging protects the contents of a product from spoilage, breakage, leakage, pilferage, damage, climatic effect, etc. This kind of protection is required during storing, distribution and transportation of the product.

Question 43.
What is labeling? ( 1 Mark )
Answer:
The task in the marketing of goods which relates to designing the label to be put on the package is called labeling.

Question 44.
Explain any four functions performed by a label.
(Or)
Describe the functions of labeling in the marketing of products. ( 4 Marks )
Answer:
Functions performed by a label or functions of labeling:

(1) Describe the product and specify its contents: The label on the package of a brand of coconut oil describes the product as pure coconut oil with Heena, Amla, Lemon and specifies how these are good for Hair. One of the most important functions of labels’is to describe the product, its usage, cautions in use, etc. and specify its contents.

(2) Identification of the Product or Brand: The other important function performed by labels is to help in identifying the product or brand. For example, the brand name of any product, say Biscuits or Potato Chips imprinted on its package, helps us to identify, from number of packages, which one is our favourite brand.

Other common identification information provided by the labels include name and address of the manufacturer, net weight when packed, manufacturing date, maximum retail price and Batch number.

(3) Grading of Products: Another important function performed by labels is to help grading the products into different categories.

(4) Helps in Promotion of Products: An important function of label is to aid in promotion of the products. A carefully designed label can attract attention and give reason to purchase. We see many product labels providing promotional messages for example, the label on the package of a brand of Detergent Powder says, ‘Keep cloth look good and your machine in top condition’.

Labels play important role in sales promotional schemes launched by companies. For example the label on the package of a Shaving Cream mentions; ‘40% Extra Free’ or package of a toothpaste mentioning, ‘Free Toothbrush Inside’, or ‘Save Rs.15’.

(5) Providing Information Required by Law: Another important function of labeling is to provide information required by law. For example, the statutory warning on the package of Cigarette or Pan Masala, ‘Smoking is Injurious to Health’ or ‘Chewing Tobacco is Injurious to Health.

Thus, labels perform number of important functions relating to communicating with the potential buyers and promoting the sale of the products.
(Write any four points)

Question 45.
What is ‘Price’ of a product? ( 1 Mark )
Answer:
Price is the amount of money paid by a buyer (or received by a seller) in consideration of the purchase of a product or service.
OR
Price is the exchange value of goods and services expressed in terms of money.

Question 46.
What is pricing? ( 2 Marks )
Answer:
Pricing is the process of determining and fixing the price of a product or service. Pricing decision is to be taken after considering certain factors like product cost, expected profit, competitors price and so on.

Question 47.
What is pricing? Explain the factors affecting price determination.
(Or)
What is pricing? Explain the factors affecting determination of the price of a product or service. ( 8 Marks )
Answer:
Pricing is the process of determining and fixing the price of a product or service. Pricing decision is to be taken after considering certain factors like product cost, expected profit, competitors price and so on.

Factors affecting price determination:
Some of the important factors which affect the fixation of the price of a product are:

(1) Product Cost: One of the most important factor affecting price of a product or service is its cost. This includes the cost of producing, distributing and selling the product. The cost sets the minimum level or the floor price at which the product may be sold. Generally, all marketing firms strive to cover all their costs (total of the fixed, variable and semi-variable costs) atleast in the long run. In addition, they aim at earning a margin of profit over and above the costs.

(2) The utility and demand: The utility provided by the product and the intensity of demand of the buyer sets the upper limit of price which a buyer would be prepared to pay. The buyer may be ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of the price paid.

The seller would, however, try to at least cover the costs. According to the law of demand, consumers usually purchase more units at a low price than at a high price. The price of a product is affected by the elasticity of demand of the product. If the demand of a product i inelastic, the firm is in a better position to fix higher prices.

(3) Extent of Competition in the Market: Competitors prices and their anticipated reactions must be considered before fixing, the price of a product. Not only the price but the quality and the features of the competitive products must be examined carefully, before fixing the price.

The price to be fixed is affected by the nature and the degree of competition. The price will tend to reach the upper limit in case there is lesser degree of competition while under conditions of free competition, the price will tend to be set at the lowest level.

(4) Government and Legal Regulations: In order to protect the interest of public against unfair practices in the field of price fixing, Government can intervene and regulate the price of commodities. Government can declare a product as essential product and regulate its price.

(5) Pricing Objectives: Pricing objectives are another important factor affecting the fixation of the price of a product or a service. Generally the objective is to maximise the profits. If the firm decides to maximise profits in the short run, it would tend to charge maximum price for its products.

But if it is to maximise its total profit in the long run, it would opt for a lower per unit price so that it can capture larger share of the market and earn greater profits through increased sales.
Apart from profit maximisation, the pricing objectives of a firm may include.

(a) Obtaining Market Share Leadership: If a firm’s objective is to obtain larger share of the market, it will keep the price of its products at lower levels so that greater number of people are attracted to purchase the products.

(b) Surviving in a competitive market: If a firm is facing difficulties in surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor, it may resort to discounting its products or running a promotion campaign to liquidate its stock; and

(c) Attaining Product Quality Leadership: In this case, normally higher prices are charged to cover high quality and high cost of Research and Development.
Thus, the price of a firm’s products and services is affected by the pricing objective of the firm.

(6) Marketing Methods Used: Price fixation process is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided. For example, if a company provides free home delivery, it has some flexibility in fixing prices.

Thus, there are many factors which influence the pricing decision.

Question 48.
State any two objectives of pricing. ( 2 Marks )
Answer:
Objectives of pricing

Profit maximisation
Obtaining market share leadership
Surviving in a competitive market
Attaining product quality leadership.
(Write any two points)

Question 49.
What do you mean by channels of distribution? ( 2 Marks )
Answer:
Channels of distribution are set of firms and individuals that take title or assist in transferring title, to particular goods or services as it moves from the producers to the consumers.
OR
Channels of distribution refers to a team of merchants, agents and business institutions that combine physical movement and title movement of products to reach specific destinations (i.e., consumers).
E.g., Producer- wholesaler- retailer -consumer.

Question 50.
What do you mean by channels of distribution? What functions do they play in the distribution of goods and services? Explain. ( 8 Marks )
Answer:
Channels of distribution are set of firms and individuals that take title or assists in transferring title, to particular goods or services as it moves from the producers to the consumers.

Channels of distribution refers to a team of merchants, agents and business institutions that combine physical movement and title movement of products to reach specific destinations (i.e., consumers).
E.g., Producer – wholesaler – retailer – consumer.

Functions of distributive channels in the distribution of goods and services:
Channels of distribution smoothen the flow of goods by creating possession, place and time utilities. They facilitate movement of goods by overcoming various time, place and possession barriers that exist between the manufacturers and consumers. The important functions performed by middlemen are as follows:

(1) Sorting: Middlemen procure supplies of goods from a variety of sources, which is often not of the same quality nature, and size. For example, a wholesaler of cashew nuts may procure a large quantity from different cashew nut producing areas, which would contain nuts of varied quality and sizes. He/She then sorts the nuts into homogenous groups on the basis of the size or quality.

(2) Accumulation: This function involves accumulation of goods into larger homogeneous stocks, which help in maintaining continuous flow of supply.

(3) Allocation: Allocation involves breaking homogenous stock into smaller marketable lots. For example; once cashew nuts are graded and large quantities are built, these are divided into convenient packs of say 1 kg, 500 gms and 250 gms, to sell them to different types of buyers.

(4) Assorting: Middlemen build assortment of products for resale. There is usually a difference between the product lines made by manufacturers and the assortment or combinations desired by the users. For example, a cricket player may need a bat, a ball, wickets, gloves, helmet, a T-shirt: and a pair of shoes. Perhaps no one manufacturer produces these products in desired combination. Middlemen procure variety of goods from different sources and deliver them in combinations desired by customers.

(5) Product Promotion: Mostly advertising and other sales promotion activities are organised by manufacturers. Middlemen also participate in certain activities such as demonstrations, special displays, contests, etc., to increase the sale of products.

(6) Negotiation: Channels operate with manufacturers on the one hand and customers on the other. Arriving at deals that satisfy both the parties is another important function of the middlemen. They negotiate the price, quality guarantee and
other related matters with customers so that transfer of ownership is properly affected.

(7) Risk Taking: In the process of distribution of goods the merchant middlemen take title of the goods and thereby assume risks on account of price and demand fluctuations, spoilage, destruction, etc.

Question 51.
What do you mean by zero level distribution channel. ( 1 Mark )
Answer:
Zero level distribution channel is a channel of distribution where in the goods are made directly available by the manufacturers to customers without involving any intermediary. Here, manufacturer sells goods through his own retail outlets e.g. Bata, Raymond’s, McDonalds.
manufacturer → consumer (direct channel or zero level channel).

Question 52.
State any two indirect channels of distribution. ( 2 Marks )
Answer:
Indirect channels of distribution:

Manufacturer → Retailer → Customer (One level channel).
Manufacturer → Wholesaler → Retailer → Customer : (Two level channel)
Manufacturer → Agent → Wholesaler → Retailer → Customer: (Three level channel)
(Write any two points)

Question 53.
Name any one distribution channel. ( 1 Mark )
Answer:

Manufacturer → Customer.
Manufacturer Retailer → Customer
Manufacturer → Wholesaler → Retailer → Customer
Manufacturer → Agent → Wholesaler → Retailer → Customer
(Write any one)

Question 54.
Name any one middlemen in the channel of distribution.
Answer:
Middlemen in the channel of distribution:

Wholesaler
Retailer
(Write any one)

Question 55.
Explain any four factors determining the choice of channels of distribution. ( 4 Marks )
Answer:
The factors determining the choice of channels of distribution:

(1) Product related factors: The important product related considerations in deciding the channels include whether product is an industrial or a consumer product, whether it is a perishable or a non-perishable product, what is the unit value of the product and the degree of complexity of the product.

Industrial products require short channels i.e., direct channel or involving few middlemen. Consumer products, can be better distributed by long network of channels, involving many middlemen. Perishable products are best sold through short channels, while non-perishable products require longer channels to react wide spread consumers.

(2) Company characteristics includes the financial strength of the company and the degree of control it wants to hold on other channel members. If the firm has plenty of funds it may go for direct distribution. If spare funds are not available, it may go for indirect channels. Similarly if the management want to have greater control on the channel members, short channels are used but if the management do not want more control over the middlemen, it can go in for longer channel.

(3) Competitive Factors: The choice of channel is also affected by the channel selected by competitors in the same industry. If the competitor’s have selected a particular channel say Chemist shops for the sale of toiletry products like hair oil, the other firm may also like to select the similar channel. But it will depend upon the policy of the firm whether it wants to go with the competitors or be different from them.

(4) Market factors: Important market factors affecting the choice of channel of distribution include size of market, geographical concentration of potential buyers and quantity purchased. In case the number of buyers is small, like for most industrial products, short channels are used.

But if the number of buyers is large, as in case of most convenience products like soft drink, toothpaste etc., longer channels involving large number of intermediaries are used. If the buyers are concentrated in a small place, short channels may be used but if the buyers are widely dispersed over a large geographical area longer channels may be used.

(5) Environmental Factors: Other important factors affecting the choice of channels of distribution include
environmental factor such as economic condition and legal constraints. In a depressed economy marketers use shorter channels to distribute their goods in an economical way.
(Write any four points)

Question 56.
Give the meaning of physical distribution. ( 2 Marks )
Answer:
The physical handling and movement of goods from the place of production to the place of distribution is referred to as physical distribution.

Important activities involved in physical distribution include transportation, warehousing, material handling and inventory control.

Question 57.
Explain briefly the components of physical distribution.
(Or)
Explain the major activities involved in the physical distribution of products. ( 4 Marks )
Answer:
Physical distribution covers all the activities required to physically move goods from manufacturers to the customers. Important activities involved in physical distribution (i.e., the main components of physical distribution) includes:

(1) Order processing: In a typical buyer seller relationship order placement is the first step. Order flow from customers to the manufacturers. A good physical distribution system should provide for an accurate and speedy processing of orders.

(2) Transportation: Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. It is one of the major elements in the physical distribution of goods.

(3) Warehousing: Warehousing refers to the act of storing and assorting products in order to create time utility in them. The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store then, The need for warehousing arises because there may be difference between the time a product is produced and the time it is required for consumption.

(4) Inventory Control: Linked to warehousing decisions are the inventory decisions which hold key to success for many manufacturers. A very important decision in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers.

Question 58.
What is promotion? ( 2 Marks )
Answer:
Promotion refers to the use of communication with the twin objective of informing potential customers about a product and persuading them to buy it.
OR
Promotion is an important element of marketing mix by which marketers makes use of various tools of communication to encourage exchange of goods and services in the market.

Question 59.
Give the meaning of advertising. ( 2 Marks )
Answer:
Advertising is the most commonly used tool of promotion. It is an impersonal form of communication which is paid for by the marketers (sponsors) to promote some goods or service.
The most common modes of advertising are newspapers, magazines and television.

Question 60.
State any two distinguishing features of advertising. ( 2 Marks )
Answer:
Features of advertising:

Paid form: Advertising is a paid form of communication. That is the sponsor has to bear the cost of communicating with the prospective buyers.
Impersonality: There is no direct face-to-face contact between the prospective buyers and the advertiser. It is therefore, referred to as impersonal method of promotion. Advertising creates a monologue and not a dialogue.
Identified sponsor: Advertising is undertaken by some identified individual or company, who makes the
advertising efforts and also bears the cost of it.
(Write any two points)

Question 61.
Explain the advantages (or merits) and limitations of advertising. ( 8 Marks )
Answer:
Advertising is the most commonly used tool of promotion. It is used to promote some goods or service.

Merits or advantages advertising:
Advertising, as a medium of communication to promote sales has the following merits:

(1) Mass reach: Advertising is a medium through which a large number of people can be reached over a vast geographical area. For. example, an advertisement message placed in a national daily reaches lakhs of its subscribers.

(2) Enhancing Customer Satisfaction and Confidence: Advertising creates confidence amongst prospective buyers as they feel more comfortable and assured about the product quality and hence feel more satisfied.

(3) Expressiveness: With the developments in art, computer designs, and graphics, advertising has developed into one of the most forceful medium of communication. With the special effects that can be created, even simple products and messages can look very attractive.

(4) Economy: Advertising is a very economical mode of communication if large number of people are to be reached. Because of its wide reach, the overall cost of advertising gets spread over numerous communication links established. As a result the per-unit cost of reach comes low.

Limitations of Advertising:
The following are the limitations of advertising as a tool of promotion:

Less Forceful: Advertising is an impersonal form of communication. It is less forceful than the personal selling as there is no compulsion on the prospective buyers to pay attention to the message.
Lack of Feedback: The evaluation of the effectiveness of advertising message is very difficult as there is no
immediate and accurate feedback mechanism of the message that is delivered.
Inflexibility: Advertising is less flexible as the message is standardised and is not tailor made to the requirements of the different customer groups.
Low Effectiveness: As the volume of advertising is getting more and more expanded it is becoming difficult to make advertising messages heard by the target prospects (customers). This is affecting the effectiveness of advertising.

The advantages of advertising outweigh the limitations. Hence, it is considered as an important tool of promotion.

Question 62.
State any two advantages and any two limitations of advertising. ( 4 Marks )
Answer:
(1) Mass reach: Advertising is a medium through which a large number of people can be reached over a vast geographical area. For. example, an advertisement message placed in a national daily reaches lakhs of its subscribers.

Question 63.
Explain briefly any four objections against advertising. ( 4 Marks )
Answer:
The opponents of advertising say that the expenditure on advertising is a social waste as it adds to the cost, multiplies the needs of people and undermines social values.

(1) Adds to cost: The opponents of advertising argue that advertising unnecessarily adds to the cost of product, which is ultimately passed on to the buyers in the form of high prices. An advertisement on TV, for a few seconds, for example, costs the marketers several lakhs of rupees.

(2) Undermines Social Values: Another important criticism of advertising is that it undermines social values and promotes materialism. It breeds discontent among people as they come to know about new products and feel dissatisfied with their present state of affairs. Some advertisements show new life styles, which don’t find social approval.

(3) Confuses the Buyers: Another criticism against advertisement is that so many products are being advertised which makes similar claims that the buyer gets confused as to which one should be relied upon. For example, we may note similar claims of whiteness or stain removing abilities in competing brands of detergent powder or claims of whiteness of tooth or ‘feelings of freshness’ in competing brands of toothpaste that it is sometimes confusing to us as to which one to buy.

(4) Encourages sale of inferior products: Advertising does not distinguish between superior and inferior
products and persuade people to purchase even the inferior products.

(5) Some Advertisements are in Bad Taste: Another criticism against advertising is that some advertisements are in bad taste. These show something which in not approved by some people, say, advertisements showing women dancing when not required or running after a man because he is wearing a particular suit or using a particular perfume are certainly not good. Some advertisements distort the relationship like employer employee and are quite offensive.

(6) Most of the criticism against advertising are not entirely true. In the changed economic environment of globalization, advertising is considered as an important tool of marketing. It helps a firm in effectively communicating with its target market, increasing the sale and there by reducing the per unit cost of production.

It is not a social waste, rather it adds value to the social cause by giving a boost to production and generating employment.
(Write any four points)

Question 64.
What is personal selling? ( 2 Marks )
Answer:
Oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales is called personal selling. It is a personal form of communication.

Question 65.
State the two features of personal selling. ( 2 Marks )
Answer:
Features of Personal Selling:

Personal Form: In personal selling a direct face-to-face dialogue takes place between the seller and the buyer.
Development of relationship: Personal selling allows a salesperson to develop personal relationships with the prospective customers.

Question 66.
State any two merits of personal selling. ( 2 Marks )
Answer:
Merits of Personal Selling:

Flexibility: There is lot of flexibility in personal selling. The sales presentation can be adjusted to fit the specific needs of the individual customers.
Direct feedback: As there is direct face-to-face communication in personal selling, it is possible to take a direct feed back from the customer and to adapt-the presentation according to the needs of the prospects, (potential customers)
Minimum Wastage: The wastage of efforts in personal selling can be minimised as company can decide the target customers before making any contact with them.
(Write any two points)

Question 67.
Explain the importance of personal selling to a business organisation (or businessman). ( 8 Marks )
Answer:
Personal selling plays a very important role in the marketing of goods and services.

Importance of personal selling to Businessmen:
Personal selling is a powerful tool for creating demand for a firm’s products and increasing their sale. The importance of personal selling to a business organisation are:

Effective Promotional Tool: Personal selling is very effective promotional tool, which helps in influencing the prospects about the merits of a product and thereby increasing its sale.
Flexible Tool: Personal selling is more flexible than other tools of promotion such as advertising and sales promotion. It helps business persons in adopting their offer in varying purchase situations.
Minimises Wastage of Efforts: Compared with other tools of promotion, the possibility of wastage of efforts in personal selling is minimum. This helps the business persons in bringing economy in their efforts.
Consumer Attention: There is an opportunity to detect the loss of consumer attention and interest in a personal selling situation. This helps a business person in successfully completing the sale.
Lasting Relationship: Personal selling helps to develop lasting relationship between the sales persons and the customers, which is very important for achieving the objectives of business.
Personal Rapport: Development of personal rapport with customers increases the competitive strength of a business organisation.
Role in introduction stage: Personal selling plays very important role in the introduction stage of a new product as it helps in persuading customers about the merits of the product.
Link with customers: Sales people play three different roles namely persuasive role, service role and informative role and thereby link a business firm to its customers.

Question 68.
Explain the importance of personal selling: (i) to customers ; and (ii) to society. ( 8 Marks )
Answer:
Importance of personal selling to customers:

I. The customers are benefited by personal selling in the following ways:

Help in Identifying Needs: Personal selling helps the customers in identifying their needs and wants and in knowing how these can best be satisfied.
Latest Market Information: Customers get latest market information regarding price changes, product availability and shortages and new product introduction, which help them in taking the purchase decisions in a better way. .
Expert Advice: Customers get expert advice and guidance in purchasing various goods and services, which help them in making better purchase.
Induces customers: Personal selling induces customers to purchase new products that satisfy their needs in a better way and thereby helps in improving their standards of living.

II. Importance of personal selling to society:

Converts latent demand: Personal selling converts latent demand into effective demand. It is through this cycle that the economic activity in the society is fostered, leading to more jobs, more incomes and more products and services. That is how economic growth is influenced by personal selling.
Employment opportunities: Personal selling offers greater income and employment opportunities to the unemployed youth.
Career opportunities: Personal selling provides attractive career with greater opportunities for advancement and job satisfaction as well as security, respect, variety, interest and independence to young men and women.
Mobility of sales people: There is a greater degree of mobility in sales people, which promote travel and tourism in the country.
Product Standardisation: Personal selling increases product standardization and uniformity in consumption pattern in a diverse society.

Question 69.
State any eight differences between advertising and personal selling. ( 8 Marks )
Answer:
The major differences between advertising and personal selling are as follows:
Differences between Adverting and Personal selling

Advertising :

Advertising is an impersonal form of communication.
Advertising involves transmission of standardised messages, i.e., same message is sent to all the customers in a market segment.
Advertising is inflexible as the message can’t be adjusted to the needs of the buyer.
It reaches masses, i.e., a large number of people can be approached;
In advertising the cost per person reached is very low.
Advertising can cover the market in a short time.
Advertising makes use of mass media television, radio, newspaper, and magazines.
Advertising lacks direct feedback. Marketing research efforts are needed to judge customer’s reactions to advertising.
Advertising is more useful in creating and building interest of the consumers in the firm’s products.
Advertising is more useful in marketing to the ultimate consumer’s who are large in numbers.

Personal selling:

Personal selling is a personal form of communication.
In personal selling, the ‘sales talk’ is adjusted keeping in view of customer’s background and needs.
Personal selling is highly flexible as the message can be adjusted.
Only a limited number of people can be contacted because of time and cost considerations.
The cost per person is quite high in the case of personal selling.
Personal selling efforts take a lot of time to cover the entire market.
Personal selling makes use of sales staff, which has limited reach.
Personal selling provides direct and immediate feed back. Sales persons come to know about the customers reactions immediately.
Personal selling plays important role at the awareness stage of decision making.
Personal selling is more helpful in selling products to the industrial buyers or to intermediaries such as, dealers and retailers who are relatively few in numbers.

Question 70.
Give the meaning of sales promotion. ( 2 Marks )
Answer:
Sales promotion refers to short-term incentives such as offering cash discount, sales contests, free gift offers and free sample distribution, which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity.

Question 71.
State two merits of sales promotion. ( 2 Marks )
Answer:
Merits of Sales Promotion:

Attention value: Sales promotion activities attract attention of the people (because of the use of incentives).
Useful in New Product Launch: Sales promotion tools can be very effective at the time of introduction of a new product in the market.
Synergy in total promotional efforts: Sales promotion activities are designed to supplement the personal
selling and advertising efforts used by a firm.
(Write any two points)

Question 72.
State two limitations of sales promotion. ( 2 Marks )
Answer:
Limitation of Sales Promotion:

Reflects crisis: If a firm frequently rely on sales promotion, it may give the impression that it is unable to manage its sales or that there are no takers of its product.
Spoils product image: Use of sales promotion tools may affect the image of a product. The buyers may start feeling that, the product is not of good quality or is not appropriately priced.

Question 73.
What are the commonly used sales promotion activities? Explain. ( 8 Marks )
Answer:
Commonly used Sales Promotion Activities.

Rebate: Offering products at special prices, to clear off excess inventory. Example, a car manufacturer’s offer to sell a particular brand of car at a discount of Rs. 10,000, for a limited period.
Discount: Offering products at less than list price. Example, a shoe company’s offer of Discount Up to 50% or a shirt marketer’s offer of 40% discount.
Refunds: Refunding a part of price paid by customer on some proof of purchase say on return of empty foils or wrapper. This is commonly used by food product companies to boost their sales.
Product Combinations: Offering another product as gift along with the purchase of a product, say offer of a pack of 1/2 kg of rice with the purchase of a bag of Aatta (wheat flour).
Quantity Gift: Offering extra quantity of the product. For example, a shaving cream’s offer of ‘40% extra’. ‘Buy 2 Get 1 Free’ of a marketer of shirts.
Instant draws and assured gift: for example, ‘Scratch a Card’ and instantly win a Refrigerator, Car, T-shirt, Computer, with the purchase of a TV.
Lucky draw: For example, the offer of a bathing soap to win a gold coin on lucky draw coupon.
Usable Benefit: ‘Purchase goods worth Rs. 3000 and get holiday package worth Rs. 3000 free’ or ‘Get a Discount Voucher for Accessories on Apparel Purchase of Rs. 1000 and above.’
Full finance @0%: Many marketers of consumer durables such as Electronic goods, automobiles etc. offer
easy financing schemes such as “24 easy instalments, eight Up Front and 16 to be paid as Post Dated Cheques.
Free samples: Offer of the sample of a product, say a detergent powder or tooth paste to potential customers at the time of launch of a new brand.
Contests: Competitive events involving application of skills or luck, say solving a quiz or answering some questions.

Thus, in addition to personal selling, advertising and publicity, marketers adopt some of the above mentioned promotional efforts to boost the sales of a firm.

Question 74.
As a marketing manager suggest any five sales promotion activities to boost up the sales. ( 5 Marks )
Answer:
As a marketing manager, I suggest the following sales promotion activities to boost up the sales.

Rebate: Offering products at special prices, say at a discount of Rs. 1,000 per unit for a limited period.
Discount: Offering products at less than list price. E.g., offer of 20% Discount.
Refunds: Refunding a part of price paid by customers on proof of purchase, i.e., on return of empty wrapper.
Product combination: Offering another product as gift along with the purchase of a product e.g., offering a gift of 1 litre cooking oil with the purchase of 5 litre capacity cooker.
Quantity gift: Offering extra quantity of the product e.g., offering 1 extra shirt free on the purchase of 2 shirts.
Instant draws and assured gift.
Lucky draw
Usable benefit.
Offering full finance at 0%.
Offering free samples.
(Write any 5 points)

Question 75.
What is publicity? ( 2 Marks )
Answer:
Publicity is a non-personal and non paid form of communication of some favourable news presented in the mass media about a product or service. It has more credibility.

Question 76.
State the two important features of publicity. ( 2 Marks )
Answer:
The two important features of publicity are:

Publicity is an unpaid form of communication. It does not involve any direct expenditure by the marketing firm; and
There is no identified sponsor for the communication as the message goes as a news item.

Question 77.
Explain any four functions performed by public relations department of an organisation. ( 4 Marks )
Answer:
Functions performed by public relations department of an organisation.

(1) Press relations: The public relations department is in contact with the media to present true facts and a correct picture about the company.

(2) Product publicity: The public relations department manages the sponsoring of events which are necessary to draw attention to new products.

(3) Corporate communication: The public relations department promotes the image of the organisation through communicating with the public and the employees within the organisation. Speeches by the company’s executives at a meeting of trade associations or trade fairs can really boost the company’s image. Even interviews with TV channels and responding to queries from the media go a long way in promoting public relations.

(4) Lobbying: The organisation has to deal with government officials and different ministers in charge of corporate affairs, industry, finance with respect to policies relating to business and the economy. The public relations department is proactive in promoting or decoding regulations that affect them.

(5) Counselling: The public relations department advises the management on general issues which affect the public and the position the company would like to take on a particular issue.