Chapter 11 Marketing Solutions
Question - 21 : - How does branding help in creating product differentiation? Does it help in marketing of goods and services? Explain.
Answer - 21 : - Branding helps a firm in distinguishing its products from that of its competitors. This helps the firm to secure and control the market for its products. If products were sold by generic names, it would be very difficult for the marketers to distinguish their products from its competitors. Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from their competitors product. This process of giving a name or a sign or a symbol etc to a product is called Branding.
Question - 22 : - What are the factors affecting determination of the price of a product or service? Explain.
Answer - 22 : -
There are number of factors which affect the fixation of the price of a product. Some of the important factors in this regard are discussed as below
(i) Product Cost The cost sets the minimum level or the floor price at which the product may be sold. There are broadly three types of cost—fixed costs, variable costs and semi variable cost. Total cost is the sum of all these three. Generally, all firms try to cover all their costs, atleast in the long Sun. In addition, they aim at earning a margin of profit over and above the costs.
(ii) 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. Infact the price must reflect the interest of both the parties to the transaction — the buyer and the seller. The buyer may be ready to pay up to the point, where the utility from the product is atleast equal to the sacrifice made in terms of the price paid. The seller would, however, try to cover the costs. According to the law of demand, consumers generally purchase more units at a low price than at a high price.
(iii) The Extent of Competition in the Market
The price is also affected by the nature and degree of competition. The price will tend to reach the upper limit in case there is less degree of competition while under free competition, the price will tend to be set at the lowest level.
(iv) Government and Legal Regulations
In order to profit 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.
(v) Pricing Objectives
Pricing objectives are another important factor affecting the fixation of the price of a product or a service. Apart from price maximisation, the pricing objectives of a firm may include.
(a)Obtaining Market Share Leadership If a firm objective is to obtain larger share of the market, it will keep the price of its products at lower level, so that greater number of people are attracted to purchase the products.
(b)Surviving in a Competitive Market If a firm is facing difficulties surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor.
(c) Attaining Product Quality Leadership In this case, normally higher prices are charged to cover high quality and high cost of R & D (Research and Development).
(vi) Marketing Methods used Price Fixation
Price 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 service provided.
Question - 23 : - What do you mean by ‘Channels of distribution’? What functions do they play in the distribution of goods and services? Explain.
Answer - 23 : -
People, institutions, merchants and functionaries, who take part in the distribution of goods and services are called ‘Channels of Distribution’. 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.
Channels of distribution smoothen the flow of goods by creating possession, place and time utilities. They facilitate movement of goods by overcoming various barriers The important function performed by middlemen are
(i) Sorting Middlemen procure supplies of goods from a variety of sources, which is often not of the same quality, nature and size. These goods are sorted into homogeneous groups on the basis of the size or quality.
(ii) Accumulation This function involves accumulation of goods into larger homogeneous stock, which help in maintaining continuous flow of supply.
(iii) Allocation Allocation involves breaking homogeneous stock into smaller, marketable lots to sell them to different types of buyers.
(iv) 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. Middlemen produce variety of goods from different sources and delivers them in combinations, desired by customers.
(v) Product Promotion Middlemen also participate in some sales promotion activities, such as demonstration, special display, contests etc. to increase the sale of products.
(vi) Negotiation Channels operate with manufacturers on the one hand and customer on the other. They negotiate the price, quality, guarantee and other related matters with customers, so that transfer of ownership is properly affected.
(vii) 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, destinations etc.
Question - 24 : - Explain the major activities involved in the physical distribution of products.
Answer - 24 : -
Physical distribution covers all the activities required to physically move goods from manufacturer to the customers. Important activities involved in the physical distribution include transportation, warehousing, material handling and inventory control.
(i) Order Processing
In a typical buyer-seller relationship order placement is the first step. Products flow from the manufacturers to customers via channel members while orders flow from customers to manufacturers. Therefore, a good speedy and accurate system of order processing becomes a necessity.
(ii) 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 element in the physical distribution of goods. It is important because unless the good are physically made available, the sale can not be completed.
(iii) 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 them. 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. Generally, the efficiency of a firm in serving its customers will depend on, where these warehouses are located and where are these to be delivered.
(iv) Inventory Control
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 but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock. The decision regarding level of inventory involves prediction about the demand for the product. A correct estimate of the demand helps to hold inventory and cost level down to a minimum. The major factors determining inventory levels include.
(a) Firm’s policy regarding the level of customer service. Higher the level of service, greater will be the need to keep more inventories.
(b) Degree of accuracy of the sales forecast. In case more accurate estimates are available, the need for keeping very high level of inventory can be minimised.
(c) Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products to the market.
(d) Cost of inventory, which includes holding cost, such as cost of warehousing, tied up capital etc and the manufacturing cost
Question - 25 : - Expenditure on advertising is a social waste’ Do you agree? Discuss.
Answer - 25 : -
The opponents of advertising say that the expenditure on advertising is a social waste as it adds to the cost, multiplies the needs of the people and undermines social values. The proponents, however argue that advertising is very useful as it increases the reach, brings the per unit cost of production down and adds to the growth of the economy.
Following are the points of criticism
(i) 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. It is line that advertisement of a product cost lots of money but it helps to increase the demand for the product as large number of potential buyers come to know about the availability of the products, its features etc and are persuaded to buy it. This increases the demand and therefore the
– production. As a result, the per unit cost of production comes down as the total cost is divided by larger number of units.
(ii) Undermines Social Values
Advertising undermines social values and promotes materialism. It breeds discontentment among people as they come to know about new products and feel dissatisfied with
their present state of affairs. This criticism is not entirely time. Advertisement in fact helps buyer by informing them about the new products which may be improvement over the existing products.
(iii) Confuses the Buyers
Another criticism against advertisements is that so many products are being advertised which makes similar claims that the buyer gets confused as to which one is true and which are should be relied upon, e.g., there are so many brands of soaps, shampoos, cars, TVs, cell phones etc which are advertised. The supporters of advertisement, however argued that we are all rational human beings who make our decisions for purchase of products on factors, such as price, style, size, etc. Thus the buyers can clear their confusion by analysing the information provided on the advertisements and other sources before taking a decision to purchase a product.
(iv) Encourages Sale of Inferior Product
Advertising does not distinguish between superior and inferior products and persuade people to purchase even the inferiors products. The desired level of quality will depend on the economic states and preferences of the target customers. Advertisements sell products of a given quality and the buyers will buy, if it suits their requirements.
(v) Some Advertisements are in Bad Taste
Another criticism against advertising is that some advertisements are in bad taste. They show something which is not approved by some people. Some advertisement spoil the relationship between employer and employee, husband and wife etc.
From the above discussion, we have learnt that through advertisements are crticised but still they have their own advantages. It is not a social waste, rather it adds value to the social cause by giving a boost to production and generating employment.
Question - 26 : - As marketing manager of a big hotel located at an important tourist destination, what societal concerns would be facted by you and what steps would you plan to take care of these concerns? Discuss.
Answer - 26 : -
The societal marketing concept holds that the task of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner, so that the long term well-being of the consumers and the society is taken care of. In case any business activity encourages pollution, deforestation, storage of resources, population explosion, then its benefits can not be justified. As marketing manager of a big hotel located at an important tourist destination certain care need to be taken regarding environment.
(i) Proper drainage facility
(ii) In-built plant for re-cycling the waste
(iii) Solar geysers to be used
(iv) Rain water harvesting
(v) proper maintainance of greenery-lawns, parks, gardens
(vi) CNG based vehicles to be used to provide transport facility to the guests.
Question - 27 : - Suppose you are the marketing Vice President of an insurance company, planning to design a new mediclaim policy for senior citizens. What information would you like lo collect to perform this task and how will, you collect such information? Discuss.
Answer - 27 : -
The following information about the senior citizens should be collected
(i) Age of the senior citizen
(ii) Their source of income
(iii) Medical background
(iv) Present working states
There are various sources of collecting the above information – personal visits, questionnaires, medical reports from nursing homes, doctor clinics eta.
Question - 28 : - What shopping products have been purchased by you/your family in the last six months? Make a list and specify what factors influenced the purchase of each of these products.
Answer - 28 : -
The following shopping goods were purchased by my family
(i) Clothes Price, fashion, occasion for which they were bought.
(ii) Refrigerator Brand, price, features, books, durability.
(iii) Shoes Size, price, brand , material used.
(iv) Furniture (study table) Design, quality, finishing, comfort level, cost.
Question - 29 : - What information is generally placed on the package of a food product? Design a label for one of the food product of your choice.
Answer - 29 : -
The following information is normally placed on the package of good product
(i) Name of the product
(ii) Brand name
(iii) Veg/Non-veg sign (green/red dot)
(iv) Price
(v) Manufacturing date and date of expiry
(vi) Ingredients
(vii) Net weight
(viii) Directions for use
(ix) FPO mark
(x) Preservatives used
Question - 30 : - For buyers of consumer durable products, what ‘customer care services’ would you plan as a manager of a firm marketing new brand of motorcycle. Discuss.
Answer - 30 : -
For marketing motorcycles, the following customer care services can be planned
(i) Specified period warranties
(ii) Easy monthly instalments
(iii) Exchange offer
(iv) 0% finance scheme
(v) Free servicing