Study Guide Marketing Management Mba
Study outline schema question in preparation for final Exam MBA 531 1. What is marketing? Discuss the components of marketing? Marketing is the managerial function responsible for identifying and anticipating and satisfying customer requirements profitably. It is a multi-disciplinary subject.
The best way to gauge its scope is to know the components of it. There are four components of Marketing: The offer The market, The system and The forces. The offer: An offer is the outcome of marketing activities of the firm.
An offer includes product or service and allied conditions of offer precisely, it includes “what”, “who” and “why” and through “whom” of the purchase. The Market: Market is the aggregate of forces or conditions within which buyers and sellers make decisions that result in the transfer of goods and services. In other words, it is the aggregate demand of the potential buyers for a commodity or service. The System: Marketing is concerned with the flow of goods and services from the points of production to the points of consumption. There is a systematic arrangement of these unctions of marketing to move the goods and services to the needy persons. The forces: The final component of marketing is to do with environment in which marketing takes place. It is taken as the final component because, environmental forces influence the nature and character of the “offer”, “market” and the “system”. Environmental forces contribute to every aspect of change and adjustment in a marketing network. 2. What are the major Functions of Marketing? Explain Marketing functions: Marketing function is an act or operation or service by which original product and the final consumers are linked together.
The functions of marketing are “eyes and ears” of the business. Marketing is responsible for keeping the business in close contact with its environment and informed of events that influence its operations. Marketing functions are performed by the manufacturer and all middlemen in the machinery of distribution. 1 Marketing functions have been classified by different marketing experts in different ways. But the most acceptable and meaningful classification is as follows: Functions of Exchange 1. Buying 2. Selling 3. Pricing 4. Advertising 5. Sales Promotion
Functions of physical Supply 1. Transportation 2. Storage Facilitating functions 1. Financing 2. Risk-Taking 3. Marketing information 4. Marketing Research 5. Standardization & grading 6. Packaging 7. Branding 3. Explain the salient features of modern marketing? The following are the major features of Modern Marketing: 1. Modern marketing is consumer-oriented: in Modern Marketing what is offered for sale today is determined not by the seller at all. On the contrary, the seller takes the lead from the buyer what product is to produce to meet the demands of consumers.
Therefore, the manufacturer can no longer determine what the product should be without a close study of the needs and demands of the customer or user. It is more profitable as well as more responsible socially to find out when, where and what the people need and then set out to serve them efficiently. Thus, the modern marketing is not production oriented but customer-oriented. 2. Modern marketing starts and ends with the customer: Marketing starts and ends with the consumer, with information flowing from the consumer to the producer, and goods flowing back to the consumer from the producer.
Under consumer oriented marketing, it is highly essential to know that the consumer really wants. This is possible only when proper information is collected 2 from the consumers. Therefore, to say that modern marketing starts and ends with consumer is true in all respects. 3. Modern marketing precedes and succeeds production: All organizations accept that the marketing activities start far ahead of production. It is not enough if the activities are begun after the product is ready. The firm appreciates and understands the consumer’s strategic osition as a determinant of the firm’s survival and growth. In firms operating under the marketing concept, entire marketing is designed to serve consumer needs. 4. List out the various marketing concepts and suggest the one suitable to Ethiopia? There five types of marketing concept orientations that can be followed by the business firms to market its good or service. These orientations are Production concept: consumers will favor products that are affordable and available. Therefore organizations should increase their production and distribution efficiency.
Product concept: consumers favor those products which offer high quality, performance and innovative features. Therefore, marketing strategy should focus on continuous product improvement. Selling concept: consumers will not buy the products unless the firm undertakes large-scale selling and promotion effort. Therefore, the aim is to sell what the company makes rather than what the market wants. Marketing concept: achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than the competitors.
Under this concept, customer focus and value are the paths to sales and profits. Therefore this is a customer-centered concept. The job is not to find the right customers for your product but to find the right product for your customers. Social marketing concept: the marketing strategy should deliver value to customers in a way that maintains or improves both the customer’s and the society’s well-being. Therefore it’s similar to the Marketing concept but adds the focusing on society’s well-fare. So there are three considerations underlying the social marketing 3 oncept: Consumers Satisfaction, Company’s Profit and Society’s Welfare. Considering the different aspects of these marketing concepts and the economic structure of Ethiopia, I suggest that the production concept works for countries like Ethiopia who have huge labor force and abundant natural resources. The Managers, under production-concept, focus on achieving high production efficiency, low costs, and mass distribution. Therefore, it makes sense in developing countries like Ethiopia where consumers are more interested in obtaining the product than in its features.
Manufacturing firms take advantage of the country’s huge inexpensive labor force to achieve market expansion through production efficiency, low cost, and be successful in today’s competitive market. 5. “Marketing begins with consumers and ends with consumers”. Discuss. Marketing starts and ends with the consumer, with information flowing from the consumer to the producer, and goods flowing back to the consumer from the producer. Under consumer oriented marketing, it is highly essential to know that the consumer really wants. This is possible only when proper information is collected from the consumers.
Therefore, to say that modern marketing starts and ends with consumer is true in all respects. 6. What do you mean by “integrated marketing concept”? What are its outstanding attributes? The management functional areas are interdependent and not independent. The marketing functions influence production, finance, personnel, and in turn is influenced by these functions. The various departments in the company must recognize that the activities they take may have profound effect on the company’s ability to create and retain customers.
When all the departments of the firm work together for customer interest, it is integrated marketing. The modern marketing concept or integrated marketing concept is the best concept because it is characterized by the following attributes of integrates: A. consumer orientation, B. consumers Satisfaction, C. integrated Managerial action and D. Realization organizational goals. 7. Distinguish between Marketing and Selling. 4 Marketing is social process by which groups and individuals obtain what they need and want through creating, offering and freely exchanging something of value with others.
Whereas selling is the process of exchange of something of value to another which leads increasing the volume of sales of goods and services through different mechanism. In selling, the company make sale what is easily made by the company but not what consumer wants. But in marketing, the company sells what the consumer wants. Therefore, the difference between marketing and selling is the differences exist between in selling and marketing orientation concept. 8. What is “market” what are the differences between market and Marketing? A market is the set of actual and potential buyers of a product.
These buyers share a particular need or want that can be satisfied through exchange. Thus, the size of a market depends on the number of people who exhibit the need, have resources to engage in Exchange, and are willing to offer these resources in exchange for what they want. Whereas; marketing is a set of activities under taken by the company to identify, anticipate and satisfy the consumer’s requirement and meet them profitably. 9. What is a “marketing-mix”? Discuss its elements or inputs Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.
These tools Classified into four broad groups that are usually kwon four Ps of marketing mix: are product, price, place, and promotion. Product is something to be offered to the market with different varieties of forms, quality, and size and so on. Price is the return for the product or service offered to consumer Place is the availability of offers at convenient location for the consumer. Promotion is the process of an attempt to increase the sales by convincing and persuading consumers to buy the product. 10. Define marketing micro-environment. Discuss the components of marketing micro-environment.
Micro environment is the forces which are close to the firm. These factors affect the firm’s ability to serve its customers and it surrounds both the firm and the marketing mix. The forces in micro environment directly influence marketing manager’s decisions and actions through their influence on consumer’s reactions toward the firm’s marketing mix and mixes. The 5 company itself (including departments), Suppliers, Marketing channel firms (intermediaries), Customer markets, Competitors and Publics. 11. Explain the impact of the following on the marketing management of a firm: a. demographic environment . economic environment c. Social environment d. Cultural environment Macro environmental forces that shape opportunities and pose threats to the company. A. Demographic environment: Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. B. Economic Environment: Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability.
Marketers must pay careful attention to trends affecting purchasing power because they can have a strong impact on business. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it. C. Socio-Cultural Environment: The cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors. Certain cultural characteristics can affect marketing decisionmaking. Some cultural values and beliefs are open to change, therefore, marketers want to spot them and be able to apitalize on the change potential. 12. Comment on the marketing environment in Ethiopia? Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. Sometimes these laws also create new opportunities for business. 13. What do you mean by “environmental scanning”? What are the different stages in environmental scanning? Marketing Environmental scanning refers to possession and tilization of information about occasions, patterns, trends, and 6 relationships within an organization’s internal and external environment. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment and an organization must take advantage of the opportunities and minimize the threats. 14. Discuss the marketing strategies a. Offensive Marketing strategy Firms engage in offensive marketing strategies to improve their own competitive position by taking market share away from ivals. Offensive strategies include direct and indirect attacks or moving into new markets to avoid incumbent competitors. Offensive marketing strategies take many forms from flanking attacks or bypassing the competition to all-out frontal attacks intended to defeat the competition with all available means at the attacker’s disposal Offensive Strategies are Frontal attack, flanking attack, Guerrilla attack, encirclement strategy, predatory strategy, Seek undefended markets, underdog strategy, Judo strategy and pivot and the hammer strategy b. Defensive Strategy
Because of ongoing rivalry, established firms need to engage in defensive strategies to fend off the various challengers. The primary purpose of defensive strategy is to make a possible attack unattractive and discourage potential challengers from attacking another firm. Defensive strategies work better when they take place before the challenger makes an investment in the industry, or if they enter the industry before exit barriers are raised, making it difficult for the challenger to leave the industry. There are two types of defensive marketing strategies. Pre-entry strategies are actions taken by incumbents before they are ttacked by challengers. Defensive marketing strategies may also take the form of post-entry actions that are initiated after the challenger has entered the market Defensive Strategies are classified as Pre-entry strategies are Signaling, Fortify and defend, Cover all bases, Continuous improvement and Capacity expansion. Post-entry strategies are Defend position before entrant becomes established; Introduce fighting brands and Engage in cross-parry 7 c. Niche marketing strategy: A niche is a more narrowly defined customer group seeking a distinctive mix of benefits.
Marketers usually identify niches by dividing a segment into sub segments. The customers in the niche have a distinct set of needs; they will pay a premium to the firm that best satisfies their needs; the niche is not likely to attract other competitors; the nicher gains certain economies through specialization; and the niche has size, profit, and growth potential. 15. Evaluate the role, scope and importance of Marketing Information System. In order to produce superior value and satisfaction for customers, companies need information at almost every turn.
Good products and marketing programs begin with a thorough understanding of consumer needs and wants. Companies also need abundant information on competitors, resellers, and other factors and forces in the market place. Increasingly marketers are viewing information not just as an input for making better decisions, but also as an important strategic asset and a marketing tool i. e As a competitive advantage Market information includes all facts, estimates, opinions and other information used in marketing decisions, which affects the marketing of products.
Therefore, the success of a producer or a merchant depends upon the knowledge of the demands of his product or products in the market. 16. What are the various stages through which the marketing research is organized? Briefly describe them. Marketing research is the systematic method of gathering, recording, analyzing and reporting of data and finding a solution relevant to specific marketing situation facing the company. ” Marketing research process is a set of six steps which defines the tasks to be accomplished in conducting a marketing research study. : Problem Definition: takes into account the purpose of the study, the relevant background information, what information is needed, and how it will be used in decision making. . 2: Development of an Approach to the Problem: includes formulating an objective or theoretical framework, analytical models, research questions, hypotheses, and identifying characteristics or factors that can influence the research design. . 3: Research Design Formulation is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the required information. : Field Work or Data Collection involves a field force or staff that operates in the field to collect data. 8 5: Data Preparation and Analysis: This is a process of concerned with the conversion of row data into information. 6: Report Preparation and Presentation: The findings should be presented in a comprehensible format so that they can be readily used in the decision making process. 17. Distinguish clearly between marketing research and Market research? Market research deals specifically with the gathering of information about a market’s size and trends.
Market research is the research that may be done into a single market, focusing on the size and trends in that market. Marketing research covers a wider range of activities. While it may involve market research, marketing research is a more general systematic process that can be applied to a variety of marketing problems. 18. What do you mean by “Market Segmentation”? Explain its objective and importance. Market segmentation is classification of large market in to smaller reachable target markets based on their similar wants, purchasing power, and geographical location, buying attitudes, or buying habits.
The main objectives of segmentation of market is to prepare different programs and strategies for all segments so that maximum satisfaction may be provided to all the consumers’ of these segments, and the object of earning maximum profit may be achieved. 19. Clearly distinguish “Market Segmentation” and “Product differentiation” Product differentiation A marketing process that looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller.
Physical products may vary in their Form, Features, Performance, Conformance, Durability, Reliability, Repair ability, Style & Design. Whereas, Market segmentation is classification of large market in to smaller target markets based on their similar wants, purchasing power, and geographical location, buying attitudes, or buying habits. 20. Explain different market coverage strategies which can be adopted by marketers. 9 21. “There is close relationship between market segmentation and marketing mix” Discuss. 22. Define “Product” and explain its essential features and importance.
Product is something that can be offered to the market to satisfy the customer’s need. A product can be tangible and intangible which would be good, service, an idea, information, experience, place and person that satisfy the needs of the consumer. Physical products may vary in their Form, Features, Performance, Conformance, Durability, Reliability, Repair ability, Style & Design. 23. Briefly discuss the various types of consumer goods and their characteristics. Consumer goods are goods that are bought from retail stores for personal, family, or household use. They are grouped into three subcategories on the basis of consumer buying habits:
I. Convenience goods II. Shopping goods and III. Specialty goods. I. Convenience Goods are items that buyers want to buy with the least amount of effort, and most are nondurable goods of low value that are frequently purchased in small quantities. II. Shopping Goods are purchased only after the buyer compares the products of more than one store or looks at more than one assortment of goods before making a deliberate buying decision. These goods are usually of higher value than convenience goods, bought infrequently, and are durable. Price, quality, style, and color are typical factors in the buying decision.
III. Specialty Goods are items that are unique or unusual—at least in the mind of the buyer. Buyers know exactly what they want and are willing to exert considerable effort to obtain it. These goods are usually, but not necessarily, of high value, and they may or may not be durable goods 24. What is “Product life cycle”? Discuss different stages of the concept with implications. The stages through which individual products develop over time, begins with the introduction of the product, and then it moves on to the growth stage, the maturity stage, and ends with a decline in the product’s sales.
This process product’s life cycle -period usually consists of five major steps or phases: 1) Product Development begins when the company finds and develops the idea of a new product. In this stage, sales are zero and investments costs are high. 10 2) Introduction is a period of slow sales growth and no profits as the product is introduced in the market. 3) Growth is a period of rapid market acceptance and increasing profits. 4) Maturity is a period of slowdown in sales and profits decline. 5) Decline is a period when sales fall off and profits drop. 25.
Explain the marketing strategies which may be adopted during the lifecycle of a product. Marketing strategies during the life-cycle of a product Marketing strategies during product life cycle Introduction stage Rapid Skimming strategy, slow skimming strategy, Rapid penetration strategy and slow penetration strategy, Distribution arrangements are introduced, Aggressive pricing Growth stage Product improvement, new models are developed, Enters new market segment, Enlarges distribution channels etc. , barriers are licenses and copyrights, price discount Maturity stage
Convert nonusers, Enter new market segments, Win Competitor’s customers etc, Marketing mix modifications in Prices, Distribution, Advertising, sales promotion, personal selling, service, new brands are introduced, Promotion and advertising relocates from the scope of getting new customers, to the scope of product differentiation in terms of quality and reliability. 26. Explain the factors affecting the life-cycle of a product. Marketing and non-marketing factors contribute to new product failures. Researchers through several studies on new product success and failure described seven critical marketing factorswhich sometimes overlap. . Insignificant point of difference A distinctive point of difference is essential for a new product to defeat competitive ones-through having superior characteristics that deliver unique benefits to the user. 2. Incomplete market and product definition before product development starts A new product needs a precise statement before product development begins. Identifies a well-defined target market, specific customer’s needs, wants, and preferences; and what the product will be and do. Without this precision, huge amount money will be lost in research and development. 3. Too little market attractiveness 1 Market attractiveness refers to the ideal situation every new product manager looks for: a large target market with high growth and a real buyer need. 4. Poor execution of marketing mix 5. Poor product quality in critical factors One or two quality factors can kill the product, even though the general quality is high. 6. Bad/poor timing of the product The product is introduced too soon, too late, or at a time when consumer tastes are shifting dramatically. 7. Non economical access to buyers Many small manufacturers simply do not have the money to gain effective exposure for their products. 7. Explain the meaning and benefits of product diversification. What are the advantages and disadvantages of product diversification? Product diversification, Advantage, disadvantage Product diversification is a policy of management philosophy of operating a company so that its business and profits came from a number of sources, usually from diverse products that differ in market or production characteristics. Precisely, when a manufacturer or a distributor manufactures or distributes more than one product, it is known as “Product diversification”.
Advantages of product diversification Product diversification strategy brings in its wake some distinct advantages. They are: 1. Profit maximization: Product diversification increases the products and product types in the product port-folio of the concern. On account of increases in the number of products, it is possible to reduce the area of fringe market and the zone of indifference in the total market of a company and match larger number of consumer self-images. This product market integration brings in more profit caused by improved situation. 2.
Growth with stability: New products in the company’s basket will enable it to exploit new markets and meeting the requirements of established markets in much better way than before. Increased market share is further sustained as the product-line is thoroughly overhauled to meet the changing requirements of the consumers. It 12 guarantees growth with stability because, it estimates seasonal and cyclical fluctuation in demand and supply. 3. Long-term measure: Product diversification is not a shortterm measure which has far reaching and more durable influence on a company’s future.
It requires adequate planning and due care and caution as it is likely to be misused. Disadvantage/ Weaknesses The most serious weaknesses or disadvantages are as follows: 1. Huge Investment: Any proposal for product diversification involves considerable investment of corporate resources in developing the necessary manufacturing and marketing activities. It is not easy to procure finances required for diversification purposes. 2. Risk-ridden: The risks involved in diversification strategy are in no way small.
Though the diversification plan is undertaken to move up from the low level profits to high level, the dream remains dream because, consumer preferences change, competitors introduce close substitutes for the diversified products, and the government policies change. All these are sure to mar the profit potentialities of the diversification plan. 3. Trap of full-line competition: The trap of full-line competition is also a major drawback of the policy of diversification. Product diversification program involves addition of new products to the existing line to strengthen the competitive ability of the firm.
With this effort to make the product portfolio full and complete, the firm is entering a trap which has no point of comeback. The competitors will not keep quite. They do add, hence, the firm adds again. It becomes a new war which is unmanageable and uneconomical at a point of time. The effect is sure collapse. 28. What is a “new product”? What are the stages involved in new product development? New Product Development Strategy The development of original products, product improvements, modifications through the firm’s own R efforts. Idea Generation: New product development starts with idea eneration. Idea generation is the systematic search for new 13 product ideas. According to one management consultant, companies “will run through 3000 ideas before they hit a winner”. Internal Idea Sources: Using internal idea sources, the company can find new ideas through formal research and development by picking the brains of its executives, scientists, engineers, staff and salespeople. External Idea Sources: New product ideas also come from watching and listening to customers. The company can analyze customer questions and complaints to find new products that better solve consumer problems.
Idea Screening: Idea generation creates large number of ideas. Idea screening reduces that number – by spotting good ideas and dropping poor ones. Concept Development and Testing: A product idea is an idea for a possible product that the company can offer. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive a product. Concept Testing: Concept testing calls for testing new-product concepts with groups of target customers to find out if the concepts have strong consumer appeal. 29.
What marketing strategies are employed while introducing a new product into the market? Marketing Strategy Development The next step is marketing strategy development. The marketing strategy statement consists of three parts: 1. The first part describes the target market, product positioning and sales, shares and profits goals. 2. The second part outlines the product’s planned price, distribution and marketing budget for the first year. 3. The third part describes long-run sales, profit goals and marketing mix strategy. 30. What is the “Consumer adoption process”? Describe the stages in the process of consumer adoption process.
Consumer adoption process Deals with the question how do potential consumers learn about new products, try them, adapt to them or reject them? Adoption is an individual’s decision to become a regular user of a product. Stages in the consumer adoption process: Adopters of new products have been observed to move through five stages: 1. Awareness stage:-the consumer become aware of the innovation but lacks some information about it 2. Interest stage:-the consumer is stimulated to seek information about the innovation. 14 3. Evaluation stage:-the consumer considers whether to try the innovation. 4.
Trial stage:-the consumer tries the innovation to improve his or her estimate of its value. 5. Adoption stage:-the consumer decides to make full and regular use of the innovation. 31. What is “pricing”? What are the major objectives of pricing? In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values qthat customers give up in order to gain the benefit of having or using a product or service. A business firm can pursue any of the following major objectives through pricing: survival, maximum current profit, maximum market share or maximum market kimming. 32. Discuss briefly the procedure followed for determining the price of a product. Procedures followed in pricing Price denotes the value of product or service expressed in money. Price is a powerful marketing instrument. Price is one of the marketing-mix variables. Firms should be systematic in setting the prices. Certain logical steps are involved in the appropriate approach to pricing. The ultimate goal of price fixing process is to set a price that is compatible with the rest of the marketing mix. A systematic approach to pricing involves seven steps.
These seven logical steps are: 1. Identifying the potential customer 2. Estimating the demand for the product 3. Anticipating competition 4. Determining expected share of market 5. Selecting suitable price strategy 6. Examination of firm’s marketing policies a. Product policy b. Channels of distribution c. Promotional policies 7. Selection of a specific price 33. Distinguish between skimming price policy and penetration price. Marketing Skimming: Companies unveiling a new technology favour setting high prices to skim market revenue layer by layer.
Market skimming makes sense under the following conditions: (1) A sufficient number of buyers have a high current demand; (2) the unit costs of producing a small volume are not so high that they cancel the advantage of charging what the traffic will bear; (3) the high 15 initial price does not attract more competitors to the market; (4) the high price communicates the image of a superior product. Whereas Market-penetration pricing is setting a low initial price in order to penetrate the market quickly and deeply- to attract a large number of buyers and win a large market share.
The high sales volume results in falling costs, allowing the company to cut its price further. 34. Describe the chief pricing methods which are usually used to determine the price of a product. Methods of Product Pricing Companies select pricing methods that enable to reach a specific price for its product. The company usually considers customers’ demand, cost and the competitors’ cost, price and offer in selecting the pricing methods. The company might use the following pricesetting methods: Mark up Pricing: is setting price by adding a standard mark-up or profit margin to the product’s cost.
Targeting Pricing; the firm determines the price that would yield its target rate of return on investment (ROI). Perceived Value Pricing: is setting price for their product based on the customer’s perceived value, not the seller’s cost as the key to price. They use non pricing variable in the marketing mix to build up perceived value in the buyers’ mind. Value Pricing: the company charges a fairly low price for a high quality offering. Value pricing says that the price should represent a high-value offer to consumers. Going –Rate Pricing: In going-rate pricing, the firm bases its price largely on competitors’ prices.
Smaller firms “follow the leader,” changing their prices when the market leader’s prices change rather than when their own demand or costs change. Auction-Type Pricing: Auction-type pricing is growing more popular; one major purpose of auctions is to dispose of excess inventories or used goods. In the auction type of pricing the auctioneer announces either minimum or the maximum price of a product and slowly increases or decreases until the bidder accepts the price. 35. What do you mean by “price discrimination”? What are its objectives?
Price discrimination occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs. The basic objective of price discrimination is that, by setting different prices for the same product in different markets / segments, a business can increase its total sales revenues, increases market shares and use as defending marketing strategy. 16 36. What is breakeven point pricing? Break-even pricing is a strategy that yields zero profit on a transaction. At break-even pricing the sales revenue equals expenses and is calculated by totaling the fixed and variable costs.
Break-even pricing may be used as an aggressive marketing tool for market expansion or penetration. Understanding break-even price points gives management the tools to work toward generating profits or whether or not to even enter a particular market. 37. What do you understand by “promotion”? Explain the objectives and importance of promotion. Meaning of promotion Promotion is the form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives. Objectives of promotion The possible objectives for marketing promotions may include the following.
I. Build awareness New products and new companies are often unknown to market, which means initial promotional efforts must focus on establishing an identity. In this situation the marketer must focus promotion to: Effectively reach customers and tell the market who are they are and what they have to offer II. Create interest Moving customer from awareness of a product to making a purchase can present a significant challenge. The focus on creating messages that convenience customers that a need exist has been the hall mark of marketing for a long time with promotional appeals argeted at basic human characteristics such as emotion, fear, and humor. III. Provide information Some promotion is designed to assist customers in the search stage of the purchasing process. IV. Stimulate demand The right promotion can drive customers to make a purchase. In the case of products that a customer has not previously purchased or has not purchased in long time, the promotional efforts may be directed at getting customers to try to the product. V. Reinforce the brand Once a purchase is made, the marketer can use promotion to help build a strong relationship that lead to the purchaser becoming loyal customer.
For instance many retail stores now ask e-mail address of customers in order to follow up and maintain their relationship. 17 38. Explain the different Kinds of promotion. There are two main types of promotion: I. Informative promotion: attempts to give lots of details about the product. This is often used by the Government, for example to inform people of new laws. Informative advertising enables firms to draw consumers’ attention to a brand and educate them about distinctive features and benefits. This is especially important when a product is new or technologically complex.
II. Persuasive promotion: attempts to persuade the consumer that he or she needs the product. Its role is to convince consumers that one product is better than another in meeting their needs and delivering specific benefits they seek. It can also be used to motivate a higher-volume or more immediate purchase than a buyer would ordinarily make. 39. What is “Promotion-mix”? Explain the factors which affect the promotion-mix of a company. Promotional mix elements Promotion mix is a combination of the tools that are used to accomplish an organization communication objective. The romotion mix element include advertising, sales promotion, personal selling, publicity, direct marketing and internet marketing. Each promotional tool has its own unique characteristics and costs. a) Advertising: is any paid form of non-personal presentation and promotion of ideas, goods or service through an identified sponsor. It also includes any informative or persuasive message carried by a non-personal medium to achieve various marketing objectives. b) Personal selling: – is the form of person-to-person communication in which a seller attempts to assist/persuade prospective buyers to purchase the company product.
Here there is a face-to-face communication with one /more prospective purchasers for the purpose of making presentations, answering questions and procuring orders. c) Sales promotion is consists of a diverse collection of incentive tools, mostly short term, designed to stimulate trial, or quicker or greater purchase, of particular products or services by consumers or the trade. d) Publicity/public relation: – is no-personal communication regarding on organization’s product, service or idea that is not directly for usually comes in the form of news story, editorial and an announcement about an organization and its product.
Public relation has broader objective than publicity, as its purpose is to 18 establish and maintain a positive image of the company among its various publics. e) Direct marketing: -is use of mail telephone e-mail and other nonpersonal contact tools to communicate directly with or solicit a direct response from specific customer and prospects. Many forms: Telephone marketing, direct mail, online marketing, etc. ; Four distinctive characteristics: Nonpublic, Immediate, Customized, Interactive; Well-suited to highly-targeted marketing efforts. Factors in Setting the Marketing Communications Mix
Companies must consider several factors in developing their promotion mix: Type of product market: Push-versus-pull strategy: A push strategy involves the manufacturer using sales force and trade promotion to induce intermediaries to carry, promote, and sell the product to end users. A pull strategy involves the manufacturer using advertising and consumer promotion to induce consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. This is especially appropriate when there is high brand loyalty and high involvement in the category;
Buyer-readiness stage: Promotional tools vary in cost effectiveness at different stages of buyer readiness (awareness, knowledge, liking convincing, preference, and purchase). Product-life cycle stage: Promotional tools also vary in cost effectiveness at different stages of the product life cycle. Company market rank: Market leaders derive more benefit from advertising than from Sales promotion. Conversely, smaller competitors gain more by using sales promotion in their marketing communications mix. 40. Define “sales promotion”. Describe the various methods of sales romotion. Sales promotion is consists of a diverse collection of incentive tools, mostly short term, designed to stimulate trial, or quicker or greater purchase, of particular products or services by consumers or the trade. Sales promotion includes those promotional activities other than personal selling, advertising and public relations that are intended to induce buyers purchase or to stimulate dealer effectiveness in a time. Tools and Techniques of sales promotion 19 Two categories of sales promotion the trade oriented and consumer oriented sales promotion.
Consumer sales promotion techniques are Price deal, Loyal Reward Program, Cents-off deal, Price-pack deal, Coupons, Loss leader, Rebates, Trade sales promotion techniques are Trade allowances, Dealer loader, Trade, Point-of-purchase displays, Training programs and Push money. 41. What is “personal selling”? Enumerate relative merits and limitations of personal selling. Personal selling: – is the form of person-to-person communication in which a seller attempts to assist/persuade prospective buyers to purchase the company product. Here there is a face-to-face communication with one /more prospective purchasers for the urpose of making presentations, answering questions and procuring orders. Merits and demerits of personal selling Merits of Personal Selling 1. Flexibility and Adaptability: Sales persons should adapt to each selling situation. Salesperson is to be sensitive to what is happening and flexible enough to make those adaptations. 2. Minimum Wastage: The efforts put in buy the salesman are highly focused on a single customer or a small group of customers. As a result of oral, face-toface presentation, the message is likely to reach the customer or customers without distortion and diffusion. 3. It is a Feedback:
The salesman is, in effect, a marketing researcher. Being in direct contact with customers, he has the specific advantage of collecting and transmitting the relevant marketing information affecting his company, products and services and himself. 4. It creates impinge and Lasting Impressions: The process of personal selling is so direct and penetrating those long dashing business relations can be developed between the selling house and the class of customers. 5. It generates Gainful Employment Opportunities: Developing countries have the situation where people run after jobs rather than jobs running after people.
Hence, there is good scope for self-employment and ready jobs in this line of selling. 6. Salesmanship makes the Economic System more Stable: Demerits of Personal Selling: 1. It is Expensive: 20 Personal selling, as a method of promotion, is quite expensive. Getting the good salesman is one thing and retaining them for longer period is another. 2. Problem of Getting Gifted Salesman: it is really very difficult to get a suitable salesman from the company’s point of view. 3. High Stake in Consumer Loyalty: customer loyalty depends on the presence of a successful salesman.
That is, firm’s fortunes are tied to the loyalty of the customers which, in turn, depends on the very presence of a particular salesman or salesmen. 4. More Administrative Problems: Personal selling involves more administrative problems than impersonal selling. firm has to meet the challenges in the areas of manpower planning, organizing, directing, coordinating, motivating and controlling. 5. It is not an easy Profession: Salesmanship is not an easy job. It is needs long hours of hard work, to be away from family facing all the odds both mental and physical. 6.
As a Profession has Little Respect: Salesmanship as a profession commands very little respect. Many go in for salesmanship as it has easy entry points. 7. Mark of Fraud: In salesmanship, there are good chances of fraud and deception. Malpractices that are followed by salesman not all are sufficient to damage the very image of salesmanship the great art and profession. 42. What are the essentials of effective selling? Essentials of effective selling Personal selling is an art and a profession. It is a creative work. Success in personal selling depends upon the salesman and the framework in which he words.
Personal selling demands a command over certain requisitions making selling a thrilling success. There are seven requisites or essentials of effective selling. They are: 1. Knowledge of self 2. Knowledge of product 3. Knowledge of company 4. Knowledge of competition 5. Knowledge of selling process 6. Knowledge of customers 7. Knowledge of advertising Knowledge of self: One should know himself and his own abilities and personality before embarking upon to do a particular job. Knowledge of Product: Product knowledge is almost inevitable, as the very existence of salesman is dependent on the products. So a 21 alesman should know all about his product: Materials from which it is made, how it is used and how it is maintained, Product features, Customer benefits and Selling points of the product in relation to its rivals and son. Knowledge of the company or enterprise: Most products, especially costly and complicated products, are not judged on their own merits. They are judged by the name of the company that manufacturers them. Knowledge of Competition: A salesman should constantly study the products offered by his competitors and determine their strengths and weaknesses in comparison to his own product.
Awareness of competition enables a salesman if necessary, to compare his product with that of rivals on those points in which the buyer seems most interested. Knowledge of customers: A salesman must have adequate knowledge about both the customer’s wants and desires, and the products offered by the company to satisfy customers. Knowledge of selling process: the salesman should have in-depth knowledge of the selling process and each stage of it. Selling process is made up of at least six stages to convert prospect into a customer.
The stages are: prospecting, pre-approach, approach, presentation and demonstration, overcoming objections and closing the deal. A salesman should be well-versed in the principles and techniques of salesmanship. Knowledge of advertising: Publicity work undertaken by the concern is a good source of information and a force that creates a staged for his effective performance. Advertising copies helps him in planning his sales talk. Though advertising is an indirect way of selling, it supports and reinforces the efforts of salesman. Hence, a salesman is to study and analyze the advertisements. 3. Discuss the methods of personal selling? 44. What do you mean by “Advertising” Discuss its objectives and functions. Advertising: – is any paid form of non-personal presentation and promotion of ideas, goods or service through an identified sponsor. It also include any informative or persuasive message carried by a 22 non-personal medium and paid for by a sponsor whose product is in some way identified in the message. Depending upon the marketing situation, companies use advertising to achieve various marketing objectives: 1. To do the entire selling job (as in mail-order marketing) 2.
To introduce a new product (by building brand awareness among potential buyers) 3. To force middlemen to handle the product (pull strategy) 4. To build brand preference (by making it more difficult for middlemen to sell substitutes) 5. To remind users to buy the product (retentive strategy) 6. To publicize some change in marketing strategy (e. g. , a price change, a new model, or an improvement in the product) 7. To provide rationalizations for buying (i. e. , “socially acceptable” excuses) 8. To combat or neutralize competitors advertising efforts. 9. To improve the morale of dealers and/or salesmen. 0. To acquaint buyers and prospective buyers with new uses of the product. 45. “Selection of advertising media should be preceded by an analysis of all factors involved in the total marketing situation”. What factors should you consider in such an analysis and why? 46. State the differences between advertising and Publicity? 47. What is “Physical distribution”? Explain its role in modern marketing. 48. What is “distribution channel”? What factors influence the length as well as width of the channel? 49. “Middlemen are parasites. They should be eliminated” Do you agree? Explain.
Of course, why because in a Marketing chain where distribution comes, if i put it in a rough count, out of the 100% which we pay as MRP , about 40 % is the manufacturing cost and the rest 60 % is going as middlemen expenditure. We, the end customers are paying 60% above the unit cost for a product. There are intellectual Distribution channels which will avoid these middlemen. Good Companies like Amway does that and in this case they can ensure that the original products reach the end customers. 50. What is tele-marketing? Telemarketing is one of the ways of direct marketing which involves the use of the telephone for the marketing purpose.
The salesperson involved uses the telephone to directly convince the customer over 23 the buying of some kind of product or service with the complete information and detailing session. The telemarketing is basically categorized into two different types which are the Business-to-consumer telemarketing and the business to-business telemarketing. The most importantly used subcategories of telemarketing today are the Outbound and the inbound telemarketing. Outbound is the proactive marketing in which the customers either who exist lready or the prospective ones are all contacted directly for the purpose of the marketing The Inbound telemarketing includes the reaction and reception of the orders and also information coming in so as to explain the customer about the product and give detailed information on which they are interested. 51. What is “international marketing “? Why firms want to go international or global? International marketing: is the performance of business activities designed to plan, price, promote and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.
The only difference between the definitions of domestic marketing and international marketing is that in the latter case marketing activities take place in more than one country. The main reason for companies to go to international marketing is to exploit a better business opportunity in terms of increased sales and profits. Foreign markets may offer an opportunity for growth. The major reasons to go to international markets are: Market Saturation: When domestic markets are becoming saturated for faster than new markets are being found.
Trade Deficit: To balance the trade deficit i. e. to balance import & export. Foreign Competition: Competition forced some companies to shift their products to foreign markets. Emergence of new Markets: The world is changing fast, resulting in the emergence of new markets. Eg. the growing Asian Markets. The Possibility of achieving economies of scale: In industrialized where economies of scale are feasible, a large market is essential, so it if the home market is not large enough, entering foreign markets may be an attractive alternative.
Safety net during business downturns/to extend products life cycle/: Usually a recession starts in one country. Thus, firms that do business internationally can shift to foreign markets during recession. 24 To get cheap Labor costs: Since labor cost in developing countries is much lower than in the developed countries, it is economically attractive for the companies to expand foreign operations. Tax Incentives: Some nations offer tax incentives to attract foreign business to their countries. To develop and /or test new products outside: This practice avoids exposure to competitors and to some extent, keeps new evelopment information secret until the product is ready for full introduction. E. g. Ford did much of its world car development in Germany. To find less competitive Markets: Some markets are less competitive than the home market of the company. 52. Explain the main tasks involved in international marketing? The International marketing Task is more complicated than that of the domestic marketing because the international marketing must deal with at least two levels of uncontrollable uncertainty instead of one.
A foreign country where a company operates adds its own unique set of uncontrollable elements. With the growth of the number of foreign markets a company operates in, the variety of foreign environmental uncontrollable become greater. A solution to a problem in a country might not be applicable to a problem in other country. To tackle these problems the following tasks should be considered. the market and 1. Distinguish between selling and marketing? Selling is the process of making the company’s sales volume increase 25 2.
What is product positioning: Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market? The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. 3. Direct and indirect channel distribution Direct distribution channel is marketing channel that has no intermediary levels; the company sells its product directly to consumers. Whereas indirect distribution channel is a channel containing one or more intermediary levels is called indirect marketing channel. 26