mb0046 set 1 ok

8/2/2019 Mb0046 Set 1 Ok

1/42

Master of Business AdministrationMBA II Semester

MB0046 Marketing Management - 4 Credits(Book ID: B1135)

Assignment Set- 160 Marks

Q.1 Discuss the different marketing concepts with its meritsand drawbacks. [10 marks]

Ans:-Concepts of Marketing

There are certain fundamental concepts and tasks which oneneeds to know to fully understand the marketing function.

These concepts provide foundation for a marketing orientationand to manage the marketing function.1. Needs and Wants:- The marketers task lies in satisfyinghuman needs and wants through the exchange process. It isalleged that marketing creates needs and makes people buythings they do not actually need. In reality, marketing ormarketers do not create needs, but they create wants.Some needs are the basic human requirements of food,clothing, shelter, water and air. There are other needs such associal needs, esteem needs etc. When we desire certainspecific objects or items to fulfill these needs, they are calledwants. For example, when a person is hungry, he can satisfyhis hunger by taking a simple meal at home. Instead, if hewants to eat a Pizza or a Hamburger or a 5-Star Hotel meal, itis not a need but a want. This difference between wants andneeds is not the same as understood in the subject matter of

economics. The marketer identifies the need which may lieunexpressed by the customer.

The task of a marketer is to influence our wants rather thanneeds. He does so along with other influential factors such associo-cultural forces and institutions such as family,religion,and different reference groups.Marketers, suggest to consumers that a particular car would

DINESH KUMARROLL NO. 571118250

8/2/2019 Mb0046 Set 1 Ok

2/42

satisfy the persons need for esteem. They do not create theneed for esteem, but try to point out how a particular productwould satisfy that need.2. Demand :- Human wants are unlimited, but their resources

are limited. When a want for an object is backed or supportedby buying ability, willingness to spend and desire to acquire aproduct / service, it becomes a potential demand. The task ofassessing or estimating demand is very crucial for a marketer.He should understand the relationship of the demand for hisproduct with its price. Demand forecasting is essential forallocation of resources in a company. This is the reason whymarketers segment consumers on the basis of their earningcapacity. The income of the consumer indicates the potentialto buy.

3. Product and Services :-Product is a generic term used todescribe what is being offered by a seller or marketer. It maybe a good, a service or idea, which can be marketed byoffering a set of benefits it offers to customers to satisfy theirneeds. However, there is a distinction between products andservices. When we say product, we mean a physical or atangible product such as a tooth paste, a refrigerator or amobile phone, whereas service refers to an act, performance,a benefit and indicates intangibility and absence of ownership

or possession. Services can include banking service, hospitalityservice, airlines service, health service, entertainment serviceetc. Thus, a product can be defined as anything that can beoffered to market to satisfy a need or want. Today, many typesof entities such as goods, services, experiences, events,persons, places and ideas are being marketed.4. Target Market:- Very few products can satisfy everyone inthe market. Therefore, marketers divide the market intodistinct groups of buyers who have similar preferences. Thesegroups are called segments with their own specificdemographic, psychographic and behavioral characteristics.

The marketer decides as to which of these segment orsegments offer highest opportunity for his company. For eachof these target markets, the firm develops a product / servicesuited to their needs. TATA group has recently designed aneconomy car called NANO which is priced around Rs. 1 Lakh.


8/2/2019 Mb0046 Set 1 Ok

3/42

The target market for this car is all aspirants who dream ofowning a car but cannot afford cars, which are currentlyavailable for minimum Rs. 2.5 Lakh. A Target Market is thegroup of people at whom a marketer targets his marketing

efforts to sell his goods and services.5. Marketing Management:- Marketing Management which isalso the title of this course refers to all the activities which themarketing managers, executives and personnel have toundertake to carry out the marketing function of the firm. Itinvolves(i) analyzing the market opportunities by undertakingconsumer needs and changes taking place in the marketingenvironment, (ii) planning the marketing activities, and (iii)implementing marketing plans and settings control mechanism

to ensure smooth and successful accomplishment of theorganizations goals. Marketing Management is a criticalfunction, especially in highly competitive markets. It providescompetitive edge to an organization through strategic analysisand planning.6. Values and Satisfaction:- In developed and developingeconomies, consumers have several products or brands tochoose to satisfy his/her need. Consumers perceptions aboutvalue which they can expect from different products or

services depend upon several factors. Sources that build thecustomer expectations include, own experience with products,friends, family members, consumers reports and marketingcommunications. Customer value is the difference betweentotal benefits received and total costs incurred by him inacquiring the product or services. The types of benefits couldbe products functional value, or its brand related image valueand any accompanying service value. The types of costs acustomer can incur may be monetary cost and energy cost.Value is primarily a function of quality, service and cost. Valueincreases with increase in quality and service and decreaseswith increase in cost. Value is an important marketing conceptand the task of marketing is to identify, create, communicate,deliver and monitor customer value.Customers generally experience satisfaction when theperformance level meets minimum performance expectations


8/2/2019 Mb0046 Set 1 Ok

4/42

of a product or service. When the performance as perceivedexceeds the expected performance level, the customer will benot just satisfied, but delighted. Thus customer satisfaction ordelight with respect to a product or service encourages

customers to come back and repurchase the product orservice in future. Satisfied customers can be an asset to themarketing company over a period of time, as they will spreadfavorable word-of-mouth information or opinions.

Q.2 a) What are the features and objectives of marketingresearch? [5 marks]

Ans:-

Wide and Comprehensive Scope : Marketing research has avery wide scope. It includes product research, packagingresearch, pricing research, market research, sales research,etc. It is used to solve marketing problems and to takemarketing decisions. It is used to make marketing policies. It isalso used to introduce new products in the market and toidentify new markets. Marketing research is used to selectchannels of distribution, in advertising strategy, for salespromotion measures, etc.

Systematic and Scientific : Marketing research is conducted ina step-by-step manner. It is conducted in an orderly fashion.

Therefore, it is systematic. Marketing research uses scientificmethods. Thus, it is also scientific.Science and Art : A Science collects knowledge (data) while anArt uses this knowledge for solving problems. Marketingresearch first collects data. It then uses this data for solvingmarketing problems. Therefore, it is both, a Science and anArt.Collects and Analyses Data : Marketing research gathers dataaccurately and objectively. It first collects reliable data andthen analyses it systematically and criticallyContinuous and Dynamic Process : The company facesmarketing problems throughout the year. So, Marketingresearch is conducted continuously. It continuously collectsup-to-date data for solving the marketing problems. Large


8/2/2019 Mb0046 Set 1 Ok

5/42

companies have their own marketing research departments.They conduct Marketing research continuously throughout theyear. Therefore, Marketing research is a continuous process. Itis a dynamic process because it goes on changing. It does not

remain static (the same). It uses new methods and techniquesfor collecting, recording and analysing the data.Tool for Decision-Making : The marketing manager has to takemany decisions. For this, he requires a lot of data. Marketingresearch provides correct and up-to-date data to themarketing manager. This helps him to take quick and correctdecisions. Therefore, Marketing research is an important toolfor decision-makingBenefits Company and Consumers : Marketing research isuseful to the company in many ways. It increases the sales

and profits of the company. It helps the company to fightcompetition and boost its goodwill in the market. It reducesthe marketing risks. In short, Marketing research bringssuccess to the company. It also brings the company closer tothe consumers. It gives convenience and satisfaction to theconsumers.Similar to Military Intelligence : Marketing research is acommercial intelligence-gathering activity. It works similar tomilitary intelligence. Marketing intelligence first makes a

systematic study and only then takes a business action.Marketing research collects reliable data about the consumers,the competitors, the market, etc. This data is then organisedand used for planning, decision-making and problem solving.

This data is also further used for introducing new products andservices in the market.Applied Research : Applied research is used for solvingproblems. Marketing research is used for solving marketingproblems. Therefore, we can say that, Marketing research isalso an applied research. It has a practical value because it isused for solving present and future problems.Connected With Marketing Information Syatem (MIS) :Marketing research is a component of MIS. Marketing researchand MIS are interrelated. Both are used to solve marketingproblems and to take marketing decisions


8/2/2019 Mb0046 Set 1 Ok

6/42

Reduces Gap between Producers and Consumers : Marketingresearch informs producers about the needs and wants of theconsumers. The producers produce goods according to theneeds and demands of the consumers. This brings satisfaction

to the consumers and in return producers make good profits.So, Marketing research reduces the gap between theproducers and the consumers.Uses Different Methods : Marketing research uses threemethods for collecting data, viz., Survey Method, ExperimentMethod and Observation Method. All three methods arescientific. The researcher has to use a suitable method forcollecting a reliable data.Has Few Limitations : Marketing research has few limitationstoo. It is not an exact science. So, it does not give accurate

results. It provides suggestions and not solutions. It is also acostly and time-consuming process.Accurate Data Collection and Critical Analysis : Marketingresearch gives much importance to accurate data collectionand its critical analysis. Thus, in a Marketing research, the datamust be first collected accurately. That is, collected data orgathered information must be accurate, reliable and relevant.Later, this information must be systematically and criticallyexamined before making any decisions.

b) Give a note on psychoanalytic model of consumerbehaviour. [5 marks]Ans:- The Psychoanalytical Model: The psychoanalytical modeldraws from Freudian Psychology.According to this model, the individual consumer has acomplex set of deep-seated motives which drive him towardscertain buying decisions. The buyer has a private world with allhis hidden fears, suppressed desires and totally subjectivelongings. His buying action can be influenced by appealing tothese desires and longings. The psychoanalytical theory isattributed to the work of eminent psychologist Sigmund Freud.Freud introduced personality as a motivating force in humanbehavior.


8/2/2019 Mb0046 Set 1 Ok

7/42

According to this theory, the mental framework of a humanbeing is composed of three elements, namely,1. The id or the instinctive, pleasure seeking element. It is thereservoir of the instinctive impulses that a man is born with

and whose processes are entirely subconscious. It includes theaggressive, destructive and sexual impulses of man.2. The superego or the internal filter that presents to theindividual the behavioral expectations of society. It developsout of the id, dominates the ego and represents the inhibitionsof instinct which is characteristic of man. It represents themoral and ethical elements, the conscience.3. The ego or the control device that maintains a balancebetween the id and the superego. It is the most superficialportion of the id. It is modified by the influence of the outside

world. Its processes are entirely conscious because it isconcerned with the perception of the outside world.

The basic theme of the theory is the belief that a person isunable to satisfy all his needs within the bounds of society.Consequently, such unsatisfied needs create tension within anindividual which have to be repressed. Such repressed tensionis always said to exist in the subconscious and continues toinfluence consumer behavior.4. The Sociological Model: According to the sociological model,

the individual buyer is influenced by society or intimate groupsas well as social classes. His buying decisions are not totallygoverned by utility He has a desire to emulate, follow and fit in with his immediate environment.5. The Nicosia Model: In recent years, some efforts have beenmade by marketing scholars to build buyer behavior modelstotally from the marketing mans standpoint. The Nicosiamodel and the Howard and Sheth model are two importantmodels in this category. Both of them belong to the categorycalled the systems model, where the human being is analyzedas a system with stimuli as the input to the system andbehavior as the output of the system. Francesco Nicosia, anexpert in consumer motivation and behavior put forward hismodel of buyer behavior in 1966.

The model tries to establish the linkages between a firm andits consumer how the activities of the firm influence the


8/2/2019 Mb0046 Set 1 Ok

8/42

consumer and result in his decision to buy. The messages fromthe firm first influence the predisposition of the consumertowards the product. Depending on the situation, he developsa certain attitude towards the product. It may lead to a search

for the product or an evaluation of the product. If these stepshave a positive impact on him, it may result in a decision tobuy. This is the sum and substance of the activityexplanations in the Nicosia Model. TheNicosia Model groups these activities into four basic fields.Field one has two subfields the firms attributes and theconsumers attributes. An advertising message from the firmreaches the consumers attributes. Depending on the way themessage is received by the consumer, a certain attribute maydevelop, and this becomes the input for Field Two. Field Two is

the area of search and evaluation of the advertised productand other alternatives. If this process results in a motivation tobuy, it becomes the input for Field Three. Field Three consistsof the act of purchase. And Field Four consists of the use of thepurchased item.

Q. 3 Silver Line Manufacturers produce several varieties ofautomobile components. They have 3 to 5 suppliers whosupply materials regularly. Recently, procurement manager of

Silver Line discussed in the meeting that they have to look outfor new suppliers since they would be expanding theirbusiness operations to many places. How do you think SilverLine have to go about this situation? [10 marks]

Answer : Silver line manufacturers expanding their businessoperation to many places and they looking for new suppliers.Following are given below the criteria for new supplier:Supplier Selection Strategies and CriteriaSupplier selection criteria for a product or service categoryshould be defined by a cross-functional team ofrepresentatives from different sectors of your organization. Ina manufacturing company, members of the team typicallywould include representatives from purchasing, quality,engineering and production. Team members should includepersonnel with technical/applications knowledge of the product


8/2/2019 Mb0046 Set 1 Ok

9/42

or service to be purchased, as well as members of thedepartment that uses the purchased item.Supplier selection criteria:Previous experience and past performance with the

product/service to be purchased.Relative level of sophistication of the quality system, includingmeeting regulatory requirements or mandated quality systemregistration (for example, ISO 9001, QS-9000).Ability to meet current and potential capacity requirements,and do so on the desired delivery schedule.Financial stability.

Technical support availability and willingness to participate asa partner in developing and optimizing design and a long-termrelationship.

Total cost of dealing with the supplier (including material cost,communications methods, inventory requirements andincoming verification required).

The suppliers track record for business-performanceimprovement.

Total cost assessment.Methods for determining how well a potential supplier fits thecriteria:Obtaining a Dun & Bradstreet or other publicly available

financial report.Requesting a formal quote, which includes providing thesupplier with specifications and other requirements (forexample, testing).Visits to the supplier by management and/or the selectionteam.Confirmation of quality system status either by on-siteassessment, a written survey or request for a certificate ofquality system registration.Discussions with other customers served by the supplier.Review of databases or industry sources for the product lineand supplier.Evaluation (SUCH AS prototyping, lab tests, OR validationtesting) of samples obtained from the supplier.


8/2/2019 Mb0046 Set 1 Ok

10/42

Q.4 Briefly explain the bases for segmenting consumermarkets along with examples. Do you think these bases arerequired for market segmentation? Why? [10 marks]Answer :-

The bases for segmenting consumer markets:Geographic bases allow us to segment a market that is spreadover a large geographic area into sub-markets that coversmaller geographic areas. Geographic segmentation usuallyinvolves dividing up geographic markets by using existingpolitical boundaries, natural climatic zones, or populationboundaries. For example, Bennett, Coleman and Co. Ltddivided markets according to geographical units for theirtabloids. In Bangalore, the tabloid is known as BangaloreMirror where as it is Mumbai Mirror in Mumbai.

Demographic segmentation occurs when one or moredemographic traits are employed to divide a market. Typicaldemographic traits that are used include age, gender, race,ethnicity, marital status, family size and stage of the family lifecycle.a) Age and Life-Cycle Stage: Consumers wants and abilitieschange with age. On the basis of age, a market can be dividedinto four parts viz., children, young, adults and old. For theconsumers belonging to the different age groups, different

types of products are produced. For instance, different types ofready-made garments are produced for consumers of differentage groups. A successful marketing manager shouldunderstand the age group for which the product would bemost suited and determine a suitable marketing policy, pricingpolicy, advertising policy etcFor example, HUL launched Pepsodent kids toothpaste forsmall children.b) Gender: Gender segmentation has long been applied inclothing, hair-styling, cosmetics and magazines. For example,Emami segmented its personal care products on the basis ofgender i.e. Emami Naturally Fair for women and Fair andHandsome for men.c) Income: Segmentation based on Income is a traditionalpractice followed in product categories such as automobiles,clothing, cosmetics and travel. However, income does not


8/2/2019 Mb0046 Set 1 Ok

11/42

always determine the best customers for a given product.For example, Baja Auto limited, a leading automobilecompany, manufactures different bikes for differentcommuters on the basis of the Income levels. For entry level

(income less than Rs 35000) it is Bajaj CT 100, for midsegment (income greater than Rs 35000 but less than Rs.60000) it is Pulsar and for the upper segment (income greaterthan Rs 60000) Avenger and Eliminator are positionedrespectively.Social class segmentation employs a combination ofdemographic traits that are commonly believed to reflectmembership in different social class strata. Occupation,education, and income are the primary demographic traits thatreflect social class membership.

Psychographic segmentation bases divide markets based ondifferences in lifestyles or differences in personality traits.Lifestyle segmentation is one of the most popular and effectiveways to create segments for consumer products.b) Personality: When Marketers use personality variables tosegment the markets, they endow their products with brandpersonality that corresponds to consumer personalities. Forexample, Raymond advertises its fabrics with the tag TheComplete Man.

c) Social Class: It has a strong influence on the consumerpreferences and the products they buy or consume. Forexample, when buying cars, clothing, home furnishings, leisureactivities, reading habits etc., Social class becomes the keyfactor. Many companies design products and services forspecific social classes. For example, TATA Nano wasintroduced in the market as a One-Lakh Car that could beaffordable by middle and lower income groups.Consumer shopping behavior patterns include such things asthe type of store shopped in, timing of purchases (i.e. time ofday, week, or year), how much of a product is purchased on agiven visit to the store, and how often the individual frequentsa particular type of retail establishment or shopping mall.Product consumption behaviors include product consumptionor usage rates base (as discussed earlier). Othersegmentation bases included in this category are product


8/2/2019 Mb0046 Set 1 Ok

12/42

usage occasion, product use versus non-use, and loyalties tospecific brands.a) Occasions: According to the occasions, buyers develop aneed, purchase a product or use a product. It can help firms

expand product usage. A company can consider critical lifeevents to see whether they are accompanied by certain needs.For example, Tanishq a TATA enterprise offers gold schemesand promotions for Akshaya Thrutiya (auspicious day topurchase jewellery)b) Benefits: Buyers can be classified according to the benefitsthey seek from the products. For example, Peter England, aMadhura garment brand positioned its wrinkle free trousers onthe basis of benefits.c) User Status: Markets can be segmented into non-users,

potential users, first time users and regular users of a product.Each market segment requires a different marketing strategy.

The companys market position will also influence its focus.Market leaders will focus on attracting potential users,whereas smaller firms will try to attract current users awayfrom the market leader. For example, Kishkinda resort nearHampi classifies its customers according to this characteristic.Resort believes that locals falls into non- user category,affluent class come to Hampi as potential users, foreigners as

first time users, rich people near Hampi who frequently comethere as regular users.d) Usage Rate: Markets can be segmented into light, mediumand heavy product users. Heavy users are often a smallpercentage of the market but account for a high percentage oftotal consumption. Marketers prefer to attract one heavy userrather than several light users and so, they vary theirpromotional efforts accordingly.For example, Alan Paine textile brand, offered 4 cottontrousers for Rs. 999. Here, the Company is interested ingetting profits from sales volume rather than its selling price.e) Loyal Status: Consumers have varying degrees of loyalty tospecific brands, stores and other entities. Buyers can bedivided into four groups according to brand loyalty status.a) Hard-core Loyals: Consumers who buy one brand all thetime. For example, customer may be using only BSNL cellular


8/2/2019 Mb0046 Set 1 Ok

13/42

services though there are different options available.b) Split Loyals: Consumers who are loyal to two or threebrands. For example, consumer may go for tax savingsschemes of post offices and Life Insurance Corporation of India

c) Shifting Loyals: Consumers who shift from one brand toanother. For example, consumer who used Nokia cell phonesstarts buying Sony- Ericsson mobiles.Segmenting markets according to consumer predispositionsessentially entails creating segments based on differences in consumers wants, needs, and

attitudes. We talked at length about creating market segments based on differences in

consumers wants and needs (i.e. creating benefit segments). Sometimes it is useful tosegment markets based on how knowledgeable people are of a particular product category, or

whether theyve experienced problems with specific products or brands. And, finally, we also

include consumers media viewing habits in this category. When segmenting markets usingthis latter base, we are looking for differences in the types of media consumers prefer i.e.

preferences for specific television shows, radio stations, magazines, newspapers, and the like.

Q.5 Mention the forces in micro and macro environment thatare likely to influence an organisations working and functions.Is environmental scanning necessary for all organisations? [10marks]

Answer:

The Company: Safe Express, a leader in the supply chainmanagement solution wants to hold its number one position inthe US $ 90 billion Indian logistics market. The company plansto expand its service areas in the coming months. To meet thetargets of the marketing plan, other departments of safeexpress also expanding their horizon. The above exampleshows that the companys marketing plan should be supportedby the other functional departments also.Intermediaries: Marketing intermediaries: These are firmswhich distribute and sell the goods of the company to the

consumer. Marketing intermediaries play an important role inthe distribution, selling and promoting the goods and services.Retailers, wholesalers, agents, brokers, jobbers and carryforward agents are few of the intermediaries. Retailers arefinal link between the company and the customers.


8/2/2019 Mb0046 Set 1 Ok

14/42

Publics: These are microenvironment groups, which help acompany to generate the financial resources, creating theimage, examining the companies policy and developing theattitude towards the product. We can identify six types of

publicsFinancial publicsMedia publicsGeneral publicsInternal publicsAdvertisement regulation agencies, TRAI, & IRDA of thegovernmentCitizen action groups

Competitors

A company should monitor its immediate competitors as itssale will be affected by the nature and intensity of thecompetitors. The sale of Coca cola will be affected by Pepsicola, or Britannia cheese by Amul cheese.Suppliers: There are many kinds of suppliers to an enterpriseor an institution. There are typically, raw material suppliers,energy and fuel suppliers, labour suppliers, office itemsuppliers and so on. Suppliers are the first link in the entiresupply chain of the company.

Customers: A company may sell their products directly to thecustomer or use marketing intermediaries to reach them.Direct or indirect marketing depends on what type of marketsCompany serves.Forces in the macro environmentDemographic Environment: The study of populationcharacteristics like size, density, location, gender composition,age structure, occupation and religion. Demography statisticshelps companies to forecast demand. Demographicenvironment is analyzed on the basis of the following factors.Age structure of the populationMarital status of the populationGeographic distribution of the populationEducation levelMigrationOccupation.


8/2/2019 Mb0046 Set 1 Ok

15/42

Political and Legal EnvironmentGovernment policies, legislations, regulations, and stability willdirectly affect the business. Therefore it is inevitable for the

firm to closely monitor this environment. The political andlegal forces are grouped into the following four categories.Monetary and fiscal policies: These policies regulategovernment spending, money supply and tax legislations.Social legislations and regulationsLegislations, Policies and regulations relating to industriesLegislations related to manufacturing, trading, marketing etcEconomic, Monetary and Natural Environment

The economic environment includes consumption patterns,productivity patterns, spending patterns, and sectored growth

and so on. The monetary environment consists of inflation,interest rate, exchange rate, money supply etc. These providevital clues for marketers to decide on product offering,incentive offerings, promotional decisions and pricingdecisions.Natural Environment:Environmental concerns are growing over the years.Governments are bringing in stringent regulations to conserveand manage natural resources. Marketers should beware of

such trends in the environment. Some of the aspects/factorson which organizations should keep a vigil are;Inadequate raw materials arising out of strict miningregulationsGlobal warming and pollution levels which have ushered innew legislationsSocial and cultural environmentGrowing urbanization, increasing participation of women inlivelihood activities, advent of global cultural practices, greaterexposure to life styles practiced world wide etc has alteredmarketing efforts remarkably. A club house and a swimmingpool is an essential part of purchase decision for a flat in ametro. Marketers have encased this trend during the nineteennineties and later too. Companies like Hindustan Lever havesuccessfully marketed their low priced offerings of toiletriesand cosmetics in the rural areas.


8/2/2019 Mb0046 Set 1 Ok

16/42

Technological environmentThere are several tumultuous changes being wrought in thetechnological from which is transforming the way business isconducted. The changes are so rapid and sweeping those

enterprises have found it difficult to keep pace. Several havefallen by the wayside for failing to keep with the changes.Major public sector undertakings in India which did notupgrade in time and closed their shutters are, ITI, HMT, andHTIF. On the other hand in the private sector, HindustanMotors, LML etc are examples who were known as flagbearers, collapsed once they fell behind in the race fortechnology.Environmental scanningEnvironmental scanning refers to assessing the various

aspects of the external and internal environment such that theknowledge may provide information with which to make somepredictions for the future. If a mobile service provider is awarethat the government is opening up the 3G spectrum it wouldbe able to make a forecast on the demand for cell phones withthese facilities.Need for environmental scanning: It helps inIdentifying the opportunities that company has in immediatefuture.

Identifying the threats faced by the company.Demand forecastingDeveloping appropriate business plans.Adjusting the company strategy in changing competitiveenvironment.

Q.6 Consider the company, Maruthi Udyog Limited. Elaborateon the companys marketing mix and give examples related tothe 4 Ps. [10 marks]

Answer : MUL was a joint venture created in February 1981between Japans Suzuki Motor Company and the IndianGovernment when the latter decided to produce small,economical cars for the masses. The intention from thebeginning was to produce a peoples car. To get the project


8/2/2019 Mb0046 Set 1 Ok

17/42

off the ground MUL took over the assets of the erstwhile MarutiLtd., which was set up in 1971 and closed in 1978.Market

The Indian car market is one of Asias largest and most

competitive. Over 1,030,068 passenger cars, multi and sportsutility vehicles were sold during 2003/04, growing the marketby 32%With models in every segment of the automobile market,Maruti Udyog Limited (MUL), is well positioned to see howdemand is shifting. Due to drop in prices and low interest ratesthere has been a sharp migration of car buyers to the compactcar or B segmentfrom the entry-level A segment. Thissegment now accounts for 52% of the total passenger carmarket (excluding MUVs/SUVs). Compact car sales have raced

ahead in January 2004 by 82% to touch 40,649 units. This ismore than 22,297 units sold in December 2003. Thesesegments are two of the success stories for the car industry.Maruti Udyog Limited Companys marketing mixProductMUL manufactures leading models in all segments of the carmarket. Maruti 800 rules the A1 segment. In the A2 segment, it has the Zen, WagonR and Alto, whose combinedsales rose to 176,132 units in 2003/04, up 46% as compared

to 2002/03. In the A3 segment, it offers the Esteem and Baleno, while Omni and Versa stake out MULs presence in theMUV market. The Gypsy King marks Maruti Suzukis presencein the rough-terrain sector, and up a couple of notches in theluxury SUV market is the Grand Vitara.Pricing

The price of the Maruti car is between Rs. 210000 to Rs.1500000. Maruti 800 is the lowest price car of this company.Alto, Omni, Wagonr, are also the low price car of the company.Zen and Esteem are the mid price car of the company. ButGrand Vitrara is the high price model of the company. Theprice of car is decided according to its product Varity, quality,design etc.Place

The place of the car is in the whole world. Maruti udyogLimited decides its distribution channels for selling car, like


8/2/2019 Mb0046 Set 1 Ok

18/42

use some time on level or some time two level marketingchannels. They decide areas in which they deal withcustomers. They show the permanent location for selling thecar. They provide the many useful inventories. They define the

transport facility of the company for company to market andmarket to consumers. Many showroom of Maruti Udyog limitedis in our India.PromotionMUL strongly believes in attribute-oriented advertising. In anattempt to reposition M800 as a choice for those upgradingfrom a two-wheeler, MULs campaign of a child playing with atoy M800 drives home the fuel-efficiency factor: the car neverstops because the fuel never finishes. The futurecommunication strategy that MUL has envisioned for M800 is a

snap of a typical middle-class family commuting on their two-wheeler. Next to them is another family except that this one iscomfortably ensconced in a Maruti 800.One of MULs most ambitious television campaigns launchedthe Zen Predator. Positioning it as strong, sleek and sexy, thecommercial showcases the variants new styling through thetheme of predator and prey in the context of a modern

jungle. The theme is one of a chase that ends in willingsurrender, brought home in the baseline: Surrender to the

new Zen.The Zen Predator is being aggressively promoted in print. MULbought the entire advertising space on The Weeks first issueof 2004. Additionally, MUL is the first Indian automobilecorporate to utilize the internet for a complete brandingexercise, using interactive and page domination techniques.Recently, MUL has turned its marketing focus to corporate TVcommercials to promote its entire range of vehicles. Thecompany has rolled out a new corporate TV campaign,featuring the Maruti Puttar. The rationale behind a second

TVC featuring the same child model as the M800 campaign isto leverage the brand recall of the earlier commercial, drivinghome the point that A Maruti Suzuki family is a happy family.MUL is involved in a wide range of sponsorship activities,placing particular emphasis on motor sports. It was thefounding sponsor of Raid De Himalaya, and in its fifth year


8/2/2019 Mb0046 Set 1 Ok

19/42

continues to be closely involved with it. The company regularlyholds car rallies for amateur drivers and aspiring relists. MULnow has plans to host golf and polo events.Brand Values

In 1983, Brand Maruti Suzuki was defined as the peoples car.These values have remained consistent ever since.Over the years, MUL has set the stage for the successfullaunch of Suzukis international range in the Indian market, allbacked by the inherent value proposition of high quality, fuelefficiency and, compared with competition, low price. Thisformula has been largely responsible for a new generation ofIndian car users swearing by the Maruti Suzuki brand name.

Master of Business AdministrationMBA II SemesterMB0046 Marketing Management - 4 Credits(Book ID: B1135)Assignment Set- 260 Marks

Q.1 What is product mix? What are the strategiesinvolved in product mix and product line? (10 marks)Answer


8/2/2019 Mb0046 Set 1 Ok

20/42

Product mix

The number of individual products produced or sold by an

organization. The mix is defined by the industry andmanufacturing environment, and management strategies thatposition the company as a specialty, niche or broad-basedsupplier of goods and services. Instances where the productmix varies widely from period to period often requires moreinvestment in facilities and inventory, and may result in lowerlevels of customer service.

It is extremely important for any organization to have a well-managed product mix. Most organizations break down

managing the product mix, product line, and actual productinto three different levels.

Strategies involved in product mix and product line

Product-mix decisions are concerned with the combination ofproduct lines offered by the company. Management of thecompanies' product mix is the responsibility of topmanagement.

Some basic product-mix decisions include:

1.reviewing the mix of existing product lines;2.adding new lines to and deleting existing lines from theproduct mix;3.determining the relative emphasis on new versus existingproduct lines in the mix;4.determining the appropriate emphasis on internaldevelopment versus external acquisition in the product mix;5.gauging the effects of adding or deleting a product line inrelationship to other lines in the product mix; and6.forecasting the effects of future external change on thecompany's product mix.


8/2/2019 Mb0046 Set 1 Ok

21/42

Product-line decisions are concerned with the combination ofindividual products offered within a given line. The product-linemanager supervises several product managers who areresponsible for individual products in the line. Decisions about

a product line are usually incorporated into a marketing planat the divisional level. Such a plan specifies changes in theproduct lines and allocations to products in each line.

Generally, product-line managers have the followingresponsibilities:

1.considering expansion of a given product line;2.considering candidates for deletion from the product line;3.evaluating the effects of product additions and deletions on

the profitability of other items in the line; and4.allocating resources to individual products in the line on thebasis of marketing strategies recommended by productmanagers.

Decisions at the first level of product management involve themarketing mix for an individual brand/product. These decisionsare the responsibility of a brand manager (sometimes called aproduct manager). Decisions regarding the marketing mix for

a brand are represented in the product's marketing plan. Theplan for a new brand would specify price level, advertisingexpenditures for the coming year, coupons, trade discounts,distribution facilities, and a five-year statement of projectedsales and earnings. The plan for an existing product wouldfocus on any changes in the marketing strategy. Some ofthese changes might include the product's target market,advertising and promotional expenditures, productcharacteristics, price level, and recommended distributionstrategy

Managing the product mix for a company is very demandingand requires constant attention. Top management mustprovide accurate and timely analysis (BCG) of their company'sproduct mix so the appropriate adjustments can be made tothe product line and individual products.


8/2/2019 Mb0046 Set 1 Ok

22/42

Q.2 What is a distribution channel? Explain the factorsto be considered while setting up a distribution

channel. (10 marks)Answer

Distribution channel

A path through which goods and services flow in one direction(from vendor to the consumer), and the payments generatedby them that flow in the opposite direction (from consumer tothe vendor).

A marketing channel can be as short as being direct from thevendor to the consumer or may include several interconnectedintermediaries such as wholesalers, distributors, agents,retailers. Each intermediary receives the item at one pricingpoint and moves it to the next higher pricing point until itreaches the final buyer. Also called channel of distribution ormarketing channel.

Distribution is also a very important component of Logistics &

Supply chain management. Distribution in supply chainmanagement refers to the distribution of a good from onebusiness to another. It can be factory to supplier, supplier toretailer, or retailer to end customer. It is defined as a chain ofintermediaries, each passing the product down the chain tothe next organization, before it finally reaches the consumer orend-user. This process is known as the 'distribution chain' orthe 'channel.' Each of the elements in these chains will havetheir own specific needs, which the producer must take intoaccount, along with those of the all-important end-user.

Factors to be considered for setting up Distribution channel

The selection of distribution is affected by many of factors,which play significant role while choosing the channel fordistribution. It may include the buying pattern of consumer,


8/2/2019 Mb0046 Set 1 Ok

23/42

type of the product is perishable, or auto mobile, weight andbulk and it also depends on the company's resources.

The main affecting factors are following..

Organization objectives - If company objective is to have massappeal and rapid market penetration.type of product - Perishable products should have a shortdistribution channel, FMCG goods should have a widereaching, intensive distribution channel.nature and extent of market- Distribution to consumer marketor industrial markets would be different channel structures.existing channel for comparable product- company may choseit's existing channel of distribution for relative product.

buying habit of customers- Understanding consumer needsand criteria for buyingChannel Availability - Channels may not be available

and other factors likeCustomer CharacteristicsProduct Attributes

Type of OrganizaCompetition

Marketing Environmental Forces and Characteristics ofIntermediaries

ChannelsA number of alternate 'channels' of distribution may beavailable:Distributor, who sells to retailers,Retailer (also called dealer or reseller), who sells to endcustomersAdvertisement typically used for consumption goods

Distribution channels may not be restricted to physicalproducts alice from producer to consumer in certain sectors,since both direct and indirect channels may be used. Hotels,


8/2/2019 Mb0046 Set 1 Ok

24/42

for example, may sell their services (typically rooms) directlyor through travel agents, tour operators, airlines, touristboards, centralized reservation systems, etc. process oftransfer the products or services from Producer to Customer or

end user.

There have also been some innovations in the distribution ofservices. For example, there has been an increase infranchising and in rental services - the latter offering anythingfrom televisions through tools. There has also been someevidence of service integration, with services linking together,particularly in the travel and tourism sectors. For example,links now exist between airlines, hotels and car rental services.In addition, there has been a significant increase in retail

outlets for the service sector. Outlets such as estate agenciesand building society offices are crowding out traditionalgrocers from major shopping areas.

Channel decisions

Channel Sales is nothing but a chain for to market a productthrough different sources.

Channel strategyGravity & adventurePush and Pull strategyProduct (or service)CostConsumer location

Managerial concerns

The channel decision is very important. In theory at least,there is a form of trade-off: the cost of using intermediaries toachieve wider distribution is supposedly lower. Indeed, mostconsumer goods manufacturers could never justify the cost ofselling direct to their consumers, except by mail order. Manysuppliers seem to assume that once their product has beensold into the channel, into the beginning of the distribution


8/2/2019 Mb0046 Set 1 Ok

25/42

chain, their job is finished. Yet that distribution chain is merelyassuming a part of the supplier's responsibility; and, if theyhave any aspirations to be market-oriented, their job shouldreally be extended to managing all the processes involved in

that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of thesupplier:

Channel membershipChannel motivationMonitoring and managing channels

Q.3 Discuss the communication development processwith examples. (10 marks)AnswerIn development communication, you see that there are twowords-development and communication.

Communication is a message understood or sharing ofexperience. When we refer to communication, in the context ofdevelopment, we refer to various types

of communication like interpersonal, group and masscommunication.

Development,It is not easy to define this as it depends on thecontext. Development is about change. It is about changing forthe better.

It could be about social or economic change for improvementor progress. When we refer to development communication, itis about such communication that can be used fordevelopment. It is about using communication to change orimprove something. Here we use different types of messagesto change the socio-economic condition of people. Thesemessages are designed to transform the behaviour of peopleor for improving their quality of life. Therefore, developmentcommunication can be defined as the use of communication to


8/2/2019 Mb0046 Set 1 Ok

26/42

promote development. Those who write or produceprogrammes on issues related to development are calleddevelopment communicators.

Role of a development communicatorThe development communicator plays a very significant role inexplaining the development process to the common people insuch a way that it finds acceptance.

In order to achieve this objective a developmentcommunicator:has to understand the process of development andcommunication;should possess knowledge in professional techniques and

should know the audience;prepare and distribute development messages to millions ofpeople in such a way that they are received and understood,accepted and applied.

If they accept this challenge they will be able to get the peopleto identify themselves as part of a society and a nation. Thisidentity will help in bringing human resources together for thetotal welfare of the individual and the community at large.

DEVELOPMENT COMMUNICATION USING VARIOUS MEDIAThe history of development communication in India can betraced to rural radio broadcasts in the 1940s in differentlanguages. Have you ever heard a rural programme on radio?If you come from a rural area, you probably would have heard.People who present these programmes speak in a language ordialect that the people in your area speak. The programmesmay be about farming and related subjects. The programmemay comprise of interviews with experts, officials and farmers,folk songs and information about weather, market rates,availability of improved seeds and implements. There wouldalso be programmes on related fields. During the 1950s, thegovernment started huge developmental programmesthroughout the country.In fact, when Doordarshan started on15th September 1959, it was concentrating only on


8/2/2019 Mb0046 Set 1 Ok

27/42

programmes on agriculture. Many of you might have seen theKrishi Darshan programme on Doordarshan. Later in 1975,when India used satellites for telecasting televisionprogrammes in what is known as SITE (Satellite Instructional

Television Experiment), the programmes on education anddevelopment were made available to 2400 villages in thestates of Andhra Pradesh, Bihar, Karnataka, Madhya Pradesh,Orissa and Rajasthan.

As far as the print media is concerned, after Independencewhen the Five Year Plans were initiated by the government forplanned development, it was the newspapers which gave greatimportance to development themes. They wrote on variousgovernment development programmes and how the people

could make use of them.

If the print media have contributed to developmentcommunication, the electronic media radio and televisionespecially All India Radio and Doordarshan have spreadmessages on development as the main part of theirbroadcasts. However, amongst all the media that are used fordevelopment communication, traditional media are the closestto people who need messages of development like the farmers

and workers. Such forms of media are participatory andeffective.

You may have seen construction workers cooking their meal ofdal and rice over open fires in front of their tents set uptemporarily on the roadside. They need to be educated aboutthe values of balanced nutrition, cleanliness, hygiene andwater and sanitation.

In various parts of India, groups of volunteers use streettheatre as a medium for development communication. This isdone through humorous skits and plays through which theimportance of literacy, hygiene etc. are enacted. The contentfor the skits is drawn from the audiences life. For example,they are told about balanced nutrition . This means


8/2/2019 Mb0046 Set 1 Ok

28/42

supplementing their staple diet of dal and rice with green leafyvegetables known to cure night blindness, an ailment commonamong construction workers. Similarly, female constructionworkers and their children are taught how to read and write.

However, problems in communicating a message in aneffective way has been a matter of concern to developmentworkers.How can people be taught new skills at a low cost?What would be a good way to deal with sensitive topics suchas health issues?How can complicated new research, like that in agriculture forexample, be simplified so that ordinary people can benefit?One option has been the use of comics. But, in order to

achieve the desired results, these comics should be createdlocally.But what are comics ? You must have all at some point oftime read a comic.Comics involve story telling using visuals which must followlocal ideas and culture in order to be understood correctly bypeople. The important thing about comics is that they aremade by people on their own issues in their own language. So,readers find them closer to their day-to-day lives.

Programmes are organized in the remote areas of Jharkhand,Rajasthan, Tamilnadu, and the North East to provide trainingto rural communicators to enable them to use comics indevelopment communication.

Information on sensitive health issues such as HIV/AIDS hasbeen communicated throught the medium of comics in severalstates. However, you must understand that developmentcommunication using various media is possible only with theactive involvement of the following:

(i) Development agencies like departments of agriculture.(ii) Voluntary organizations(iii) Concerned citizens(iv) Non governmental organizations (NGOs)


8/2/2019 Mb0046 Set 1 Ok

29/42

Examples

One of the first examples of development communication was

Farm Radio Forums in Canada. From 1941 to 1965 farmersmet in groups each week to listen to special radio programs.There were also printed materials and prepared questions toencourage group discussion. At first this was a response to theGreat Depression and the need for increased food productionin World War II. But the Forums also dealt with social andeconomic issues. This model of adult education or distanceeducation was later adopted in India and Ghana.

In 1999 the U.S. Government and D.C. Comics planned to

distribute 600,000 comic books to children affected by theKosovo War. The comic books are in Albanian and featureSuperman and Wonder Woman. The aim is to teach childrenwhat to do when they find an unexploded land mine left overfrom Kosovo's civil war. The comic books instruct children notto touch the anti-personnel mines and not to move, butinstead to call an adult for help. In spite of the 1997 Ottawa

Treaty which attempts to ban land mines they continue to killor injure 20,000 civilians each year around the world.

Since 2002, Journalists for Human Rights, a Canadian basedNGO, has operated long term projects in Ghana, Sierra Leone,Liberia, and the DR Congo. jhr works directly with journalists,providing monthly workshops, student sessions, on the jobtraining, and additional programs on a country by countrybasis.


8/2/2019 Mb0046 Set 1 Ok

30/42

Q.4. Select any mobile handset and mobile companyand then evaluate its positioning strengths or

weakness in terms of attributes, benefits, values, brandname and brand equity. (10 marks)Answer

Abstract

In the late 1990s, Nokia overtook then leader Motorola toemerge as a behemoth in the global mobile phone industry.Nokia's dominance continued into the first few years of the2000s, but it suddenly came under threat in 2003-2004, when

smaller Asian vendors started making their presence felt withbetter products at lower prices.

The company's problems also had internal causes and analystssaid one of the reasons could be that it had become toocomplacent with its success and lost its agility in reading andresponding to market signals.

This case study discusses the various problems Nokia faced in

2003-2004, including the company's tardiness in introducingthe clamshell phones that had become very popular and itsresistance to manufacturing operator specific handsets. It alsodiscusses the efforts Nokia made to recover its market once itrealized that its performance was slipping. The case concludeswith an analysis of the challenges the company faced in thefuture and the various options ahead of it.

Issues:

To understand the difficulties faced by an erstwhile giant inthe global mobile phone industry in 2003-2004.

To appreciate the importance of innovation in a dynamic andvolatile industry.

To analyze the effect of changing market conditions oncompanies.


8/2/2019 Mb0046 Set 1 Ok

31/42

To appreciate the importance of keeping abreast withchanging market conditions and adapting to them speedily.

To examine future challenges that the company faced and thevarious options available to it

We want to be the company that brings this industry to thenext phase. And if we have a little bit of a bump in the road in2004, that's immaterial."

- Jorma Ollila, CEO of Nokia, in mid 2004.1

"Nokia didn't have the coolness factor. They didn't really doflip phones; they were a little late with cameras, and theydidn't push them. Coolness in the consumer space is a big

deal, and they were stodgy."

Jack Gold, vice president of Meta Group, aConnecticut-based technology consulting firm, in 2005.2

Positive SignsThe announcement of Nokia Corporation's (Nokia) quarterlyresults in April 2005 was a much awaited event as far as the

global mobile phone industry was concerned. The company,which had emerged as an industry leader in the late 1990s,had run into rough weather in 2003-2004, with sales andearnings falling below expected levels. So much so that whenthe company announced poor results in the first quarter of2004, several analysts declared that it was the beginning ofthe end of Nokia's dominance in the industry.

However, Nokia was not ready to throw in the towel quite soeasily. The company put up a tough fight over the second halfof 2004 to recapture its lost position in the market.

It introduced several new models, modified designs, andaggressively promoted products with a view to increasing itsmarket share, which had fallen to a low of around 28 percentin early 2004 from an average of 35 percent over the previous


8/2/2019 Mb0046 Set 1 Ok

32/42

three years.

Nokia's efforts started paying off by late 2004. The companyannounced satisfactory results for the fourth quarter of 2004

and market share for the year 2004 also stabilized at 32percent by the end of the year. Jorma Ollila (Ollila), Nokia'sCEO, while acknowledging that 2004 had been a challengingyear, declared that the company was poised to recover in2005. Ollila's prediction came true when the companyannounced better than expected results for the first quarter of2005, ending March 31.

In the first quarter of 2005, Nokia's sales increased 17 percentover the corresponding quarter of the previous year to $9.65

billion.

Net profit rose 18 percent to $1.1 billion. Global handset salesrose 11 percent, prompting Nokia to increase its estimate ofthe size of the global handset market in 2005 by 100 million to740 million.Commenting on Nokia's improved performance,

Jussi Hyoty (Hyoty), an analyst at securities firm FIM Securities,said, "Nokia's result was definitely better than expected, and itshows that it's a growth company again."3

However, despite these positive signs, several analystswondered whether Nokia would ever be able to dominate theindustry as it did in the late 1990s and the first two years ofthe new century, especially in light of the aggressivecompetition posed by several new Asian companies as well asmore established players like Motorola and Sony Ericsson.

BackgroundDespite the relatively recent emergence of the mobile phoneindustry globally, Nokia's company history goes back to the1800s.

The company was first set up on the banks of the river Nokia(after which it was named) in southwestern Finland in 1865 by


8/2/2019 Mb0046 Set 1 Ok

33/42

Fredrik Idestam, who was a mining engineer. The originalNokia was a forest industry enterprise that primarilymanufactured paper.

In 1898, Carl Henrik Lampen, a shopkeeper, and J.E.Segerberg, an engineer, set up the Finnish Rubber Works Ltd.(FRW) to manufacture rubber and associated chemicals. In1912, Konstantin Wikstrom, an engineer, set up the FinnishCable Works (FCW) to manufacture electrical cables forlighting purposes. These three companies had businessdealings with each other through the early 1900s andeventually merged in 1967 to form the Nokia Corporation. Thenew company had four major businesses - forestry, rubber,cable and electronics.

By 1980, Nokia was a large business conglomerate withseveral businesses ranging from tires to televisions andcomputers to telecommunications.Excerpts

The Rise to the TopNokia drew on its experience of setting up Nordic cellularnetworks (which were more advanced than those used by

Japan, the rest of Europe, and the US at that time) to

successfully adopt the GSM standard. The company was listedon the New York Stock Exchange in 1994. Over the 1990s,Nokia became one of the most successful mobile phonemanufacturers in the world and began to enter non-Scandinavian markets as well.

Nokia was also one of the first mobile manufacturers to realizethe importance of the design element in mobile phones and itsphones were more aesthetically designed than those ofcompetitors. In 1998, Nokia overtook Motorola to become thelargest mobile manufacturer in the world...

Designed for InnovationNokia was the first mobile phone manufacturer to realize in thelate 1990s that phones no longer played only a functional role;they were also becoming fashion symbols.


8/2/2019 Mb0046 Set 1 Ok

34/42

Until Nokia began emphasizing the design aspect, mobilephones were bulky, bricklike devices with an external antennaand a standard keypad. Manufacturers emphasized

functionality over aesthetic appeal.

Nokia broke new ground in 1999, when it launched its 8200handset on the catwalk at a Paris fashion week...

The In mid-2004, The Economist wrote, "When a firm dominates itsmarket, especially one that is driven by constant technologicaladvances, it risks becoming so fixated with trying to ward offwhat it reckons to be its most powerful challenger that it

leaves itself vulnerable to attack from otherdirections."Analysts said this statement accuratelycharacterized what happened with Nokia.

In the early 2000s, Microsoft Corp (Microsoft) announced itsdecision to enter the mobile phones market. Theannouncement set alarm bells ringing in Nokia as Microsofthad the reputation of being an aggressive competitor...

Efforts at RecoverySoon after announcing disappointing results in the first quarterof 2004, Nokia realized that it was in trouble and began to takesteps to correct matters. The company not only cut prices oncertain handsets to increase market share, but also fine-tunedits portfolio to adjust products to meet market needs. It killedsome outmoded models and brought forward the launch ofseveral others, including a number of clamshell phones.

In June 2004, Nokia launched five new models of phones, outof which three were clamshells. Nokia's new models were the6260 model, a clamshell whose cover not only flipped openbut also swiveled, the 6630, which Nokia claimed was theworld's smallest camera phone, designed for 3G networks,another clamshell, the 6170, and two low end models, the2650 and 2600. Several other models were also marketed


8/2/2019 Mb0046 Set 1 Ok

35/42

aggressively.

For instance, the low end 1100 model for emerging marketsand the 6230 mid range model became very popular in 2004.

(The 6230 was so popular in some markets that at times,Nokia was not able to meet the demand)...

A Challenging FutureDespite Nokia's laudable efforts in thedirection of recapturing its lost market position, the opinions ofanalysts on its turnaround were mixed.

While the company's detractors believed that Nokia had lostits competitive advantage in the mobile phone market, itssupporters said the company's inherent strengths and stable

financial position would help it sail through the difficulties ithad faced in 2003-2004 to recover in the future. However,most of them agreed that the mobile phone industry wasundergoing a vast change.

In the early 2000s, mobile phones were expected to perform avariety of functions in addition to looking stylish and beingeasy to operate. Nokia's competitors had understood this andwere in the process of launching several models that were

style statements in themselves...

ExhibitsExhibit I: The Phone Feature of N-Gage

Q. 5 What is retailing? Explain the functions anddifferent types of retailing with its key features. (10marks)Answer

RetailingRetail consists of the sale of goods or merchandise from afixed location, such as a department store, boutique or kiosk,or by mail, in small or individual lots for direct consumption bythe purchaser.[1] Retailing may include subordinated services,


8/2/2019 Mb0046 Set 1 Ok

36/42

such as delivery. Purchasers may be individuals or businesses.In commerce, a "retailer" buys goods or products in largequantities from manufacturers or importers, either directly orthrough a wholesaler, and then sells smaller quantities to the

end-user. Retail establishments are often called shops orstores. Retailers are at the end of the supply chain.Manufacturing marketers see the process of retailing as anecessary part of their overall distribution strategy. The term"retailer" is also applied where a service provider services theneeds of a large number of individuals, such as a public utility,like electric power.

Types of retailers by marketing strategy:

Department stores - very large stores offering a hugeassortment of "soft" and "hard goods; often bear aresemblance to a collection of specialty stores. A retailer ofsuch store carries variety of categories and has broadassortment at average price. They offer considerable customerservice.Discount stores - tend to offer a wide array of products andservices, but they compete mainly on price offers extensive

assortment of merchandise at affordable and cut-rate prices.Normally retailers sell less fashion-oriented brands.Supermarkets - sell mostly food products;Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouseclubs charge a membership fee;Variety stores or "dollar stores" - these offer extremely low-cost goods, with limited selection;Demographic - retailers that aim at one particular segment(e.g., high-end retailers focusing on wealthy individuals).Mom-And-Pop (or Kirana Stores as they call them in India): is aretail outlet that is owned and operated by individuals. Therange of products are very selective and few in numbers.

These stores are seen in local community often are family-runbusinesses. The square feet area of the store depends on thestore holder.


8/2/2019 Mb0046 Set 1 Ok

37/42

Specialty stores: A typical speciality store gives attention to aparticular category and provides high level of service to thecustomers. A pet store that specializes in selling dog foodwould be regarded as a specialty store. However, branded

stores also come under this format. For example if a customervisits a Reebok or Gap store then they find just Reebok andGap products in the respective stores.General store - a rural store that supplies the main needs forthe local community;Convenience stores: is essentially found in residential areas.

They provide limited amount of merchandise at more thanaverage prices with a speedy checkout. This store is ideal foremergency and immediate purchases.Hypermarkets: provides variety and huge volumes of exclusive

merchandise at low margins. The operating cost iscomparatively less than other retail formats. A classic exampleis the Metro in Bangalore.Supermarkets: is a self service store consisting mainly ofgrocery and limited products on non food items. They mayadopt a Hi-Lo or an EDLP strategy for pricing. Thesupermarkets can be anywhere between 20,000-40,000square feet. Example: SPAR supermarket.Malls: has a range of retail shops at a single outlet. They

endow with products, food and entertainment under a roof.Example: Sigma mall and Garuda mall in Bangalore, ExpressAvenue in Chennai.Category killers or Category Specialist: By supplying wideassortment in a single category for lower prices a retailer can"kill" that category for other retailers. For few categories, suchas electronics, the products are displayed at the centre of thestore and sales person will be available to address customerqueries and give suggestions when required. Other retailformat stores are forced to reduce the prices if a categoryspecialist retail store is present in the vicinity. For example:Pai Electronics store in Bangalore, Tata Croma.E-tailers: The customer can shop and order through internetand the merchandise are dropped at the customer's doorstep.Here the retailers use drop shipping technique. They acceptthe payment for the product but the customer receives the


8/2/2019 Mb0046 Set 1 Ok

38/42

product directly from the manufacturer or a wholesaler. Thisformat is ideal for customers who do not want to travel toretail stores and are interested in home shopping. However itis important for the customer to be wary about defective

products and non secure credit card transaction. Example:Amazon and Ebay.Vending Machines: This is an automated piece of equipmentwherein customers can drop in the money in machine andacquire the products. For example: Soft drinks vending atBangalore Airport.

Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level theytarget.

Other types of retail store include:

Automated Retail stores are self service, robotic kiosks locatedin airports, malls and grocery stores. The stores accept creditcards and are usually open 24/7. Examples include ZoomShopsand Redbox.Big-box stores encompass larger department, discount,general merchandise, and warehouse stores.

Convenience store - a small store often with extended hours,stocking everyday or roadside items;General store - a store which sells most goods needed,typically in a rural area;

Retailers can opt for a format as each provides different retailmix to its customers based on their customer demographics,lifestyle and purchase behaviour. A good format will lend ahand to display products well and entice the target customersto spawn sales.

Functions of Retailing

Retailers play a significant role as a conduit betweenmanufacturers, wholesalers, suppliers and consumers. In thiscontext, they perform various functions like sorting, breaking


8/2/2019 Mb0046 Set 1 Ok

39/42

bulk, holding stock, as a channel of communication, storage,advertising and certain additional services.

Sorting

Manufacturers usually make one or a variety of products andwould like to sell their entire inventory to a few buyers toredu7ce costs. Final consumers, in contrast, prefer a largevariety of goods and services to choose from and usually buythem in small quantities. Retailers are able to balance thedemands of both sides, by collection an assortment of goodsfrom different sources, buying them in sufficiently largequantities and selling them to consumers in small units.

The above process is referred to as the sorting process. Through this process, retailers undertake activities andperform functions that add to the value of the products andservices sold to the consumer. Supermarkets in the US offer,on and average, 15,000 different items from 500 companies.Customers are able to choose from a wide range of designs,sizes and brands from just one location. If each manufacturerhad a separate store for its own products, customers wouldhave to visit several stores to complete their shopping. While

all retailers offer an assortment, they specialize in types ofassortment offered and the market to which the offering ismade. Westside provides clothing and accessories, while achain like Nilgiris specializes in food and bakery items.Shoppers Stop targets the elite urban class, while Pantaloonsis targeted at the middle class.

Breaking Bulk

Breaking bulk is another function performed by retailing. Theword retailing is derived from the French word retailer,meaning to cut a piece off. To reduce transportation costs,manufacturers and wholesalers typically ship large cartons ofthe product, which are then tailored by the retailers intosmaller quantities to meet individual consumption needs.


8/2/2019 Mb0046 Set 1 Ok

40/42

Holding Stock

Retailers also offer the service of holding stock for themanufacturers. Retailers maintain an inventory that allows for

instant availability of the product to the consumers. It helps tokeep prices stable and enables the manufacturer to regulateproduction. Consumers can keep a small stock of products athome as they know that this can be replenished by the retailerand can save on inventory carrying costs.

Additional Services

Retailers ease the change in ownership of merchandise by

providing services that make it convenient to buy and useproducts. Providing product guarantees, after-sales serviceand dealing with consumer complaints are some of theservices that add value to the actual product at the retailersend. Retailers also offer credit and hire-purchase facilities tothe customers to enable them to buy a product now and payfor it later. Retailers fill orders, promptly process, deliver andinstall products. Salespeople are also employed by retailers toanswer queries and provide additional information about the

displayed products. The display itself allows the consumer tosee and test products before actual purchase. Retailessentially completes transactions with customers.

Channel of Communication

Retailers also act as the channel of communication andinformation between the wholesalers or suppliers and theconsumers. From advertisements, salespeople and display,shoppers learn about the characteristics and features of aproduct or services offered. Manufacturers, in their turn, learnof sales forecasts, delivery delays, and customer complaints.

The manufacturer can then modify defective or unsatisfactorymerchandise and services.


8/2/2019 Mb0046 Set 1 Ok

41/42

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance

with transport, storage, advertising and pre-payment ofmerchandise. This also works the other way round in case thenumber of retailers is small. The number of functionsperformed by a particular retailer has a direct relation to thepercentage and volume of sales needed to cover both theircosts and profits.

Q. 6 a. What is CRM? What are its objectives? (2 marks)b. Write a short note on Brand development. (8 marks)

Answer CRM stands for Customer RelationshipManagement. It is a process or methodology used to learnmore about customers needs and behaviors in order todevelop stronger relationships with them. There are manytechnological components to CRM, but thinking about CRM inprimarily technological terms is a mistake. The more usefulway to think about CRM is as a process that will help bringtogether lots of pieces of information about customers, sales,marketing effectiveness, responsiveness and market trends.

CRM helps businesses use technology and human resources togain insight into the behavior of customers and the value ofthose customers.

Objectives of CRM

CRM, the technology, along with human resources of the

company, enables the company to analyze the behavior ofcustomers and their value. The main areas of focus are as thename suggests: customer , relationship , and themanagement of relationship and the main objectives toimplement CRM in the business strategy are:

To simplify marketing and sales process


8/2/2019 Mb0046 Set 1 Ok

42/42

To make call centers more efficient To provide better customer service To discover new customers and increase customer

revenue

To cross sell products more effectively

The CRM processes should fully support the basic steps ofcustomer life cycle . The basic steps are:

Attracting present and new customers Acquiring new customers Serving the customers Finally, retaining the customers

Brand development

A plan to improve the performance of a particular product orservice. For example, as part of brand development a firm mayinitiate a new advertising campaign that includes freesamples.

mb0046 set 1 ok

Documents