Question Paper Marketing Management (MB221) : January 2004

Section A : Basic Concepts (30 Marks)

This section consists of questions with serial number 1 30. Answer all questions. Each question carries one mark. Maximum time for answering Section A is 30 Minutes. 1. Khanna is a marketing manager faced with planning marketing strategies during times of < Answer > inflation. He should be aware that inflation causes consumers to a. b. c. d. e. 2. Purchase more goods and services to support their psychological well-being such as counseling and stress management training Decrease their brand loyalty to products they have traditionally used Buy in small quantities until inflation is over Consume more meals away from home Put more money into savings accounts because prices are too high. < Answer >

When Steve goes to the grocery store every other week, he buys the same brands of coffee, milk, cereal, and dog food. This type of buying behaviour is called a. b. c. d. e. Routine response behaviour Extensive decision making Limited decision making Situation convenience Both (b) and (d) above.

3.

If Videocon engineers its washing machines to spin the clothes faster regardless of whether or not customers want that speed, then Videocon has characteristics associated with a. b. c. d. e. Production concept Selling concept Marketing concept Product concept Societal marketing concept.

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4.

The Kewl Clothing Company has just hired you to develop a marketing strategy for their new line of casual wear. The firm wants to target several different ethnic groups, so you suggest a "stitching niches" approach. Which of the following would you use to illustrate your suggestion? a. Create a different product for each of the niche markets the firm is targeting b. Position the products so they simultaneously meet the needs of the different ethnic groups c. Maintain Kewl's core identity by creating different promotional campaigns and brand extensions for the various markets served d. Use the same marketing mix that has worked so well for the firm throughout the West Coast e. Gain market share by developing an entirely distinct marketing mix for the largest niche market.

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5.

Prasad is trying to decide what kind of new car he is going to buy. He relies on Consumer Reports, car magazines, and the advice of car mechanics. Prasad is using a. b. c. d. e. Marketing controlled information sources Nonmarketing controlled information sources Demographic information sources Secondary data sources Internal search sources.

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6.

Pooja, a Chartered Accountant, reads an article that states that CAs receive the highest starting salary offers from consulting firms. The article also states that marketing majors start with lower salaries but surpass all other majors' salaries within ten years. Pooja doesn't remember reading this last part of the article, just the first part. This is an example of a. b. c. d. e. Selective distortion Selective exposure Selective retention Subliminal perception Selective comprehension.

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7.

When the demand for soft drinks grew by 12 percent in one year, the demand for aluminum cans and glass bottles grew also. The aluminum and glass industries are enjoying the effects of a. b. c. d. e. Joint demand Inelastic demand Derived demand Unitary demand Elastic demand.

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8.

Wrigley's Chewing Gum ran an advertising campaign that targeted heavy smokers. The advertising indicated that "when you can't smoke, chew Wrigley's." This is an example of what type of segmentation? a. b. c. d. e. Geographic Usage rate Demographic Psychographic None of the above.

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9.

Which of the following is the best example of a marketing research objective? a. b. c. d. e. To determine why sales have decreased over the past three years To create a print advertisement emphasizing customer service To determine what role children have in influencing family decisions about vacation destinations To increase sales by 10 percent To develop a method to track consumer attitudes.

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10. Munna jumps out of his truck and runs into a Foodworld store to grab a drink. While he is paying for his drink, he notices the chocolate bars at the counter and grabs one to buy. The chocolate bar in this case is considered to be a(n) a. b. c. d. e. Specialty product Unsought product Convenience product Shopping product None of the above.

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11. Fabrique, Inc. invented a fabric that was fireproof and tearproof. The week after the product was invented, a group of the firm's employees got together and listed ways the product might be used. This is an example of a. b. c. d. e. Lateral thinking Concept testing Brainstorming Venture group activities Screening.

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12. Zakki owns Pet Plus, a complete pet service that offers grooming, obedience training, show training for animals and handlers, boarding, special food preparation, and minor veterinary care. To maintain a quality image, Zakki provides complete training for each employee in the company operations, objectives, and expected performance standards. What unique aspect of services is Zakki attempting to address?

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a. b. c. d. e.

Inventoriability Inconsistency Intangibility Impropriety Heterogeneity. < Answer >

13. General Electric sells large home appliances both through independent retailers (department stores and discount houses) and directly to large housing-tract builders. This is an example of a. b. c. d. e. Intensive distribution Exclusive distribution Selective distribution Alternative distribution Dual distribution.

14. The Xerox corporation stays in touch with its customers through phone calls and greeting cards, periodically sends out needs-assessment questionnaires, and designs new services to meet new needs. This is an example of relationship marketing based on a. b. c. d. e. Financial bonds Service recovery Social bonds Customization bonds Structural bonds.

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15. SoundSensation offers stereo equipment and accessories. It has a deep assortment and low prices. The store is operated on a self-service, no-frills concept. SoundSensation is a a. b. c. d. e. Specialty store Factory outlet Warehouse membership club Discount store Category killer.

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16. The advertisements for Bertone Ramarro Car claim that it is the most expensive car in the world. This is an example of a a. b. c. d. e. Target return pricing strategy Market share pricing strategy Prestige pricing strategy Maintained markup pricing strategy Profit maximization pricing strategy.

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17. Rajeev Kapoor is a chef in a new downtown restaurant. He has sent out press releases to the major local media and has invited food critics to dine in his restaurant. Rajeev is engaging in a. b. c. d. e. Public relations Personal selling Sales promotion Advertising Publicity.

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18. A rental car company with the second largest market share runs advertisements showing how its customer service is superior to that of the largest competitor. This is an example of a. b. c. d. e. Comparative advertising Corrective advertising Primary demand advertising Institutional advertising Pioneering advertising.

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19. Consult-Me Consultants, Inc., has recently been engaged in several special meetings where issues such as business mission, situation analysis, market and growth alternatives, and implementation approaches have been discussed. Consult-Me is apparently engaged in a. b. c. Target market planning Writing the mission statement The strategic planning process

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d. e.

Business analysis Strategic contingency planning. < Answer >

20. Pepsico is a large conglomerate that has separate subsidiaries called Pepsi-Cola (soft drinks), Tropicana (juices), Pepsi Bottling, and Frito-Lay (snack foods). Each of these subsidiaries has its own functional departments, its own planning, its own financial goals, and its own target markets. These subsidiaries may also be called a. b. c. d. e. Product market niches Diversified divisions Strategic business units Strategic alliances Heterogeneous elements.

21. The baking products division of Basic Foods, Inc., is the market leader in a mature and lowgrowth market. The baking products division generates more dollars than is required in order to maintain market share, and in portfolio matrix terms it is known as Basic Food's a. b. c. d. e. Problem child Cash cow Star Dog None of the above.

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22. A local private college has been offering an accounting program for several years. The program has a large but declining enrollment, and the program represents the largest income earner for the business division. The recommended strategic option is to a. b. c. d. e. Build Divest Hold Harvest Cultivate.

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23. Product portfolio analysis is based on the idea that a. b. c. d. e. A firm's market share and market attractiveness are factors for a marketing strategy A firm has a profitable impact on marketing strategy A products market growth rate and its relative market share are important determinants of its marketing strategy A products market growth rate and market attractiveness determine the marketing strategy A firms market growth rate is the only determinant in the marketing strategy.

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24. Tata Tea has its own tea gardens, processing units, packaging units and marketing channels, spread out all over the country. Tata Tea can therefore be said to have a high degree of a. b. c. d. e. Industry scope Vertical scope Market scope Geographical scope Competence scope.

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25. Some banks have increased their market share by offering a new type of account especially for children, traditionally a market they have ignored. This illustrates which of the following growth strategies a. b. c. d. e. Market Penetration Market Development Product Development Diversification Product Penetration.

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26. When Julie gives her customers her card during a sale and invites them to call with any questions they might have later, which of the following levels of relationship marketing Julie

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is practicing? a. b. c. d. e. The basic level The reactive level The accountable level The proactive level The partnership level. < Answer >

27. Ellen decided to conduct an experiment in her mall's car park to see if shoppers would respond to a lower parking price to park in some of the under-utilized sections of the car park. Which of the following types of market research Ellen is using? a. b. c. d. e. Exploratory Causal Descriptive Investigative Observational.

28. When a car dealer complains to the manufacturer that another dealer of the same make of cars is selling outside their assigned territories, it is a type of a. b. c. d. e. Parallel conflict Customer-service conflict Vertical conflict Horizontal conflict Multi-level conflict.

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29. Which of the following see(s) the product, in a commodity market as very important and demand the deepest discount and the highest service? a. b. c. d. e. Bargain hunters Programmed buyers Relationship buyers Transaction buyers Gatekeepers.

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30. A brand is a name intended to identify the product of one seller and differentiate the product from competing products. Coca-Cola is the best-known brand name in the world. The name has a high-perceived quality and high brand loyalty among soft drink users. The company has developed the brand name for over 100 years. Coca-Cola has a valuable a. b. c. d. e. Line extension Brand mark Private brand Package Brand equity. END OF SECTION A

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Section B : Caselets (50 Marks)

This section consists of questions with serial number 1 6. Answer all questions. Marks are indicated against each question. Detailed workings should form part of your answer. Do not spend more than 110 - 120 minutes on Section B.

Caselet 1
Read the caselet carefully and answer the following questions:
1. 2. What challenges did KFC face in its expansion and how did it overcome them successfully? (8 marks) < Answer > What are the questions an organization should ask when analyzing International Markets? (9 marks) < Answer > KFC, the world's largest fried and rotisserie chicken restaurant chain, offers great-tasting complete meals and snacks in nearly 10,000 restaurants around the world. KFC operates in more than 76 countries - from Shanghai to Sao Paolo; from the sands of Saudi Arabia to the sidewalks of New York. Everyday, nearly seven million meals are served around the world. KFC's menu everywhere includes Original Recipe chicken-made with the same great taste Colonel Harland Sanders created more than a half-century ago. What is KFC's secret to global success? First and perhaps most important is the worldwide acceptance of chicken. In Malaysia, for instance, annual per capita consumption of chicken has doubled during the past decade. According to the president of KFC International, "Chicken is probably the most universally accepted source of protein. There is not a country in the world where you won't find chicken". And unlike other meats, chicken is not forbidden by religions or cultures, except among vegetarians. This acceptance presented an excellent opportunity for KFC, but it did not guarantee success. KFC made some early mistakes in Latin America and Europe. The company learned that opening an American fast-food restaurant abroad is not simple. Cultural differences between countries result in different eating habits. For instance, people eat their main meal of the day at different times throughout the world. Different menus must also be developed for specific cultures while still maintaining the core product-fried chicken. You can always find original recipe chicken, cole slaw, and fires at every KFC outlet, but restaurants in China feature Chinese tea and French restaurants offer more desserts. Above all, KFC emphasizes consistency. Whether in Shanghai or Kentucky, the product basically tastes the same. KFC usually enters a new market by opening a single store. The company locates the store in a large urban area on the most visible piece of real estate available. If the project fails, the land can be sold. Usually foreign stores are eat-in restaurants, not the take-out establishments generally found in the United States. Prices are usually high at first to appeal to an upscale market. International markets offer many opportunities and challenges for KFC. The company is growing outside the United States at nearly five times the rate of domestic growth. While many businesses complain about the inability to compete in Japan, KFC has more than 1,000 restaurants in Japan alone. The secret is quality, such as using fresh chicken rather than frozen. Freezing chicken causes a discoloring of the bone, which bothers the Japanese. Eastern Europe also holds great promise for KFC. KFC also faces several challenges. In some areas of the world, such as Malaysia and Indonesia, it is illegal to import poultry, a situation that has led to product shortages. Another challenge facing KFC is to adapt to foreign cultures. The company has been most successful in foreign markets when stores are operated by people who understand the culture. The objective is to think like a local, like an American company starting an American business in a foreign country.

Caselet 2

Read the caselet carefully and answer the following questions:

3. Is PSI successful in delivering the message to the target audience? Justify your comments.

4.

(7 marks) < Answer > Government represented organisations play a vital role in the social marketing campaigns. Explain the advantages and disadvantages if government has an active role in such campaigns. (9 marks) < Answer > The question has the assembled audience squirming. "How many of you have touched a condom this week? Those who have, raise your hands," urges the speaker. Amidst silence, some shifting and some embarrassed laughter, Sanjay, Programme Director (HIV/AIDS Prevention), Population Services International (PSI), tries to make the point that the stigma attached to discussing sexual health issues is more dangerous than the virus that causes AIDS. Sanjay is giving a presentation at the regional conference on AIDS prevention. PSI, which was set up in India in 1988, uses social marketing to deliver health products and services to lower-income groups in developing countries, to motivate their use and promote healthy behaviour. A Washington, DC-based non-profit organisation working in over 50 countries, its forte is AIDS prevention, family planning, maternal and child health. In India, PSI markets its own brand of Masti condoms, and helps market the Kama Sutra and Nirodh Dlx brands in smaller towns and remote areas. Among other health products it markets are the Pearl brand of contraceptive pills, the Union Government's Mala D, oral rehydration solution and a clean delivery kit. PSI, which has just launched a campaign in Tamil Nadu and Andhra Pradesh, among the States with the highest incidence of HIV, is involved in social marketing and communications for health. Aimed at increasing awareness of the risk of contracting HIV/AIDS through unprotected sex with non-regular partners and at busting certain misconceptions associated with it, the campaign has two parts to it. The campaign is part of Operation Lighthouse, a port-based HIV/AIDS/STD intervention, set to reach millions of people, specifically vulnerable populations in port communities, with the information, services, and products they need to protect themselves from HIV/AIDS. The key target groups include truck drivers, commercial sex workers and their clients, and port workers. These high-risk populations are responsible for the vast majority of HIV incidence in port communities. They also play a critical role in accelerating the spread of HIV to the general population.

"Puli Rajavukku AIDS varumaa?" is the horrified question that rings through the teaser ad. This goes on to three more spots which advise the target 'consumer' to practise safe sex with non-regular partners. The other part urges the target group to `be faithful'. The exercise is based on the Balbir Pasha campaign that PSI ran in Mumbai, one that generated much controversy and flak for the organisation. The Balbir Pasha campaign (developed by Lowe) was slammed for being "anti-women", perceived as implying that women spread HIV/AIDS and charged with stigmatizing sex workers but was "remarkably successful" in that post campaign, PSI's helpline received 250 per cent more calls; its Saadhan clinics, (Saadhan integrates the multiple issues of family health by offering more accessible information on more choices) voluntary counselling and testing centres, had 150 per cent more visitors and there was a 300 per cent rise in all brands of condoms sold in the red light district of Mumbai. The Puli Raja campaign uses TV, radio, print and outdoors. It uses locations frequented by the target group. In Mumbai, Kolkata and Delhi, there are clearly defined red light areas, but not so in TN and AP, which is major challenge of this endeavour. The points that PSI seeks to address are, that a healthy-looking person or known partner need not necessarily be HIV/AIDS-free, and that alcohol-induced forgetfulness leads to the failure of using a condom. In fact, this is the ideal on which the second sub-campaign, Be Faithful, is based. It shows how, by having extra-marital affairs, men can give HIV to their wives and thus to unborn children, putting their lives at risk. Puli Raja, who was visualised as a tall, hefty, invincible, fun-loving hero in pre-campaign testing, actually remains faceless throughout the campaign. "He is every man, his conscience. He's an idea.

By keeping him abstract, it's easier for those in the target group to identify with him. Giving him a face will lead people to develop associations and reject similarities with him.

The organisation is looking at developing a campaign with a local celebrity who urges the target group to overcome their reserve in talking about AIDS. In Mumbai, the Balbir Pasha campaign was followed by a primarily print one which created awareness of the Saadhan clinics, and this is what is planned for TN and AP too. The campaign tries to break away from the established pattern of social cause advertising, which is "not engaging" though informative. Mass media can be effective in such contexts if they are used strategically, PSI's tack is to focus on the consumer, get him involved in on-ground activity (interpersonal communication) and then go on to making him aware of the products and the services available.

Caselet 3
Read the caselet carefully and answer the following questions: Explain, with appropriate example, how a global computer manufacturing company can practice mass 5. customization and create competitive advantage 6. (8 marks) < Answer > How can Customer Relationship Management (CRM) be an enabling factor to derive full benefits of mass customization? (9 marks) < Answer > Mass customization is best defined as a delivery process through which mass-market goods and services are individualized to satisfy a very specific customer need, at an affordable price. Based on the public's growing desire for product personalization, it serves as the ultimate combination of "custom-made" and "mass production." And it is rapidly emerging as the organizing business principle of the 21st century. Simply stated, mass customization is about choice; about giving consumers a unique end product when, where and how they want it. During the last 15 years, choice has become an important ingredient of consumer purchasing decisions. During this period, the number of automobile models has increased from 140 to 260; the selection of soft drinks from 20 to 90. Today, the U.S. market alone offers consumers 3,000 brands of beer, 50 brands of bottled water, 340 kinds of breakfast cereals, 70 styles of Levi's jeans and 31 types of bicycles. With choice playing such a critical role in consumer buying habits, mass customization is becoming increasingly evident in day-to-day life. For example, internet-based e-commerce now makes it possible for anyone to order a computer designed to his or her exact needs and specifications. Or compile music CDs containing any combination of songs. Or obtain customized home mortgages. Or design a one-of-a-kind friend of Barbie, complete with unique name, clothing and personality. Unlike mass production, which produces some variety of an item in high volumes, mass customization is characterized by small volumes - in many cases, lot sizes of one. It is also characterized by competitive cost, timely deliveries and a move away from centralized manufacturing to more distributed production. Consequently, when combined with the very latest digital technology, such as e-commerce and robotics, mass customization not only benefits the consumer, it offers the manufacturer significant benefits as well: a high degree of product/service flexibility, reduced inventory risk, and a competitive edge in the marketplace. In agile product development, product development teams must concurrently develop flexible processes that are so agile that companies can quickly develop a broad portfolio of niche market products, build products to order, mass customize individual products at mass-production speed and efficiency, and rapidly introduce a steady succession of "new" products that are really planned "variations on a theme" based on common parts and modular product architecture. Business Process Engineering Business Process Engineering (BPE) focuses on the design and the improvement of entire process through the company, such as the fulfillment of customer orders from the first contact with the customer to the

finished product. Organizational structures are changed in order to integrate previously separated functions along process chains, non-value adding activities are removed, and information systems are re-designed to efficiently support entire processes rather than single functions. Quality Function Deployment Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those requirements. The "voice of the customer" is the term to describe these stated and unstated customer needs or requirements. The voice of the customer is captured in a variety of ways: direct discussion, surveys, customer specifications, observation, warranty data, field reports, etc. This understanding of the customer requirements is then summarized in a product planning matrix or "house of quality". These matrices are used to translate higher level "what's" or requirements into lower level "how's" or means to satisfy the requirements.

END OF SECTION B

Section C : Applied Theory (20 Marks)

This section consists of questions with serial number 7 - 9. Answer all questions. Marks are indicated against each question. Do not spend more than 25 -30 minutes on Section C.

7.

The detergents division of a large household products company with worldwide distribution is planning a research study among women 21 years and over to determine their attitudes toward home laundering and the products and brands used in such activities. Studies are to be carried out in a many countries in the Far East, Middle East, Africa, Western Europe, Eastern Europe, and South America. What data-collection problems would you expect to experience in doing this research across a variety of countries? (6 marks) < Answer > Assume that you are the vice-president of marketing in a small firm that includes the following departments: marketing, finance, purchasing, and strategic planning. The sales force manager has mentioned to you that one of the salespersons thought that cellular telephones would help the sales force become more efficient. The manager requests that eight such phones be purchased. Illustrate the six buying decision roles that would take place for the purchase of these cellular phones? (8 marks) < Answer > Head and Shoulders Shampoo has targeted a new segment of people with dry scalps. To be useful, a segmentation scheme must produce segments that meet four basic criteria. Name and briefly describe each of these four criteria, and assess whether a dry scalp segment meets these criteria. (6 marks) < Answer >

8.

9.

END OF SECTION C END OF QUESTION PAPER

Suggested Answers Marketing Management (MB221) : January 2004

Section A : Basic Concepts
1. (b) Reason : 2. (a) Answer Inflation causes consumers to regulary switch to other brands. Answer Reason : : : < TOP >

3. (d)

< TOP > Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc (b) Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, and education. Spend a lot of time seeking information and deciding. Information from the companies, friends and relatives, store personnel etc. Go through all six stages of the buying process. (c) Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand. (d) Impulse buying, no conscious planning Answer : < TOP > Reason : The product concept holds that the consumers will favor those products that offer the most qulaity, performance or innovative feautures. (a) The production concepts hold that consumers will prefer products that are widely available and inexpensive. (b) The selling concept holds that consumers and businesses, if left alone, will ordinarily not by enough of the organisations products. (c) The marketing concept holds that the key to achieving its organisational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. (e) The societal-marketing concept holds that the organisations task is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effecitively and efficiently than competitors do. Answer :

4. (b)

5. (b)

< TOP > Reason : Stitching niches means seeking common interests, motivations or needs across ethnic groups. Mass marketing does not take the needs of various distinct cultures into account, and creating unique marketing mixes for individual mixes does not try to find a common basis among niches. Answer : < TOP > Reason : Public sources of information such as magazines, consumer rating organizations or even professionals not associated with the marketing company are known as nonmarketing-controlled information sources. Answer Reason : : < TOP > Selective retention is the process whereby a consumer remembers only that information which supports his/her personal feelings or beliefs. (a) Selective Distortion-Changing/twisting current received information, inconsistent with beliefs. (b) Selective Exposure-select inputs to be exposed to our awareness. More likely if it is

6. (c)

linked to an event, satisfies current needs, intensity of input changes (sharp price drop). (d) Subliminal Perception, which means that people see or hear messages without being aware of them, is a hotly debated issue with more popular appeal than scientific support. Research evidence suggests that such messages have limited effect on behavior (e) Selective Comprehension involves interpreting information so that it is consistent with a person's attitudes and beliefs. 7. Answer : (c) < TOP > Reason : The demand for soft drink containers is driven by the consumer demand for soft drinks; therefore, the containers have a derived demand. Inelastic demand exists when a 1 percent decrease in price produces less than a 1 percent increase in quantity demanded. With inelastic demand, price elasticity is less than 1; hence option (b) is incorrect. Unitary demand exists when the percentage change in price is identical to the percentage change in quantity demanded. In this instance, price elasticity is equal to 1; hence option (d) is incorrect. Elastic demand exists when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded. Price elasticity is greater than 1 with elastic demand; hence option (e) is incorrect. 8. (b) Answer Reason : : < TOP > Usage rate- (quantity consumed or patronagestore visits during a specific period). Whether a person is a nonuser or a light, medium, or heavy user is important in many segmentation problems. The 80/20 rule, a concept that suggests 80 percent of a firms sales are obtained from 20 percent of its customers, is not fixed at exactly 80 and 20 percent but suggests that a large fraction of a firms sales come from a small fraction of its customers. (a) Geographic segmentation divides the market based upon the geographic distribution of population (regional, urban, suburban, and rural); hence option (a) is incorrect. (c) Demographics are the vital statistics that describe a population (gender, age, income, family size, education, social class, and ethnicity). (d) Psychographic segmentation involves examining attributes related to how a person thinks, feels, and behaves (personality, lifestyles, and values). Answer : < TOP > Reason : Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions to improve an organization's marketing activities. Objectives are specific measurable goals the decision maker seeks to achieve in solving a problem. Typical marketing objectives are (1) increasing revenues and profits, (2) discovering what consumers are aware of and want, and (3) finding out why a product isn't selling well. Answer Reason : :

9. (c)

10. (c)

11. (c)

< TOP > Convenience products are bought frequently, immediately, and with a minimum of comparison and buying effort (groceries). The lack of forethought that went into this purchase made it a convenience product. (a) Specialty products are unique in some way and substitutes are not accepted (expensive automobiles). (b) Unsought products are those not normally thought of either because consumers dont want to think of them (burial insurance) or consumers are unaware of them (a telephone number allowing you to check your email messages (d) Shopping products are less frequently purchased and are carefully compared on suitability, quality, price, and style (clothing). Answer : < TOP > Reason : Brainstorming is a process designed to obtain the maximum number of ideas relating to a specific area of interest. Answer Reason : : < TOP > Heterogeneity results because no two customers are precisely alike; each will have unique demands or experience the service in a unique way. Thus the heterogenity connected with services is largely the result of human interaction and all of the vagaries that accompany it. (a) Inventory problems exist with goods because many items are perishable and because there are costs associated with handling inventory. With services, inventory carrying costs are more subjective and are related to idle production capacity, which is when the service provider is

12. (e)

available but there is no demand. The inventory cost of a service is the cost of paying the person used to provide the service along with any needed equipment. Inventory carrying costs of service vary widely, from the high end of airlines and hospitals with highly trained, salaried specialists to the low end of real estate agencies and hair salons with employees working on commission and needing little expensive equipment. The quality of a service is often inconsistent. People who have different capabilities and also vary in their job performance from day to day provide services. Inconsistency is much more of a problem in services than it is with tangible goods, but problems can be reduced through standardization and training. (c) Services are intangible; they cannot be held, touched, or seen before the purchase decision. A major marketing need for services is to make them tangible or show the benefits of using the service. (d) Incorrectness or Inaccuracy is otherwise referred as Impropriety. Answer : < TOP > Reason : Dual distribution is an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product. (a) Intensive distribution means that a firm tries to place its product or services in as many outlets as possible. It is usually chosen for convenience products or services. (b) Exclusive distribution is the opposite of intensive distribution because only one retail outlet in a specified geographical area carries the firm's product. It is typically chosen for specialty products or services. (c) Selective distribution lies between these two extremes and means that a firm selects a few retail outlets in a specific geographical area to carry its products. It weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution. For this reason, selective distribution is the most common form of distribution intensity. Answer : < TOP > Reason : Social interpersonal bonds are common among professional service providers and their clients as well as among personal care providers ( Hairdressers, Counsellers, health care providers) and their clients. Financial bonds is considered to be the level one in the levels of relationship strategies, the customer is tied to the firm primarily through financial incentives-lower prices for greater volume purchases or lower prices for customers who have been with the firm a long time. (b) Service recovery refers to the actions taken by an organization in response to a service failure. (d) Customization bonds approach suggests that customer loyalty can be encouraged through intimate knowledge and individual customers and through the development of one-to-one solutions that fit the individual customers needs. (e) Structural bonds are created by providing servicestore the client that are frequently designed right into the service delivery system for that client. Answer : < TOP > Reason : A discount store or discount house or discount center is a retail outlet engaged in selling merchandise at prices below those customarily charged. It generally deals in national-branded merchandise and fixed-price products. The discounter provides emphasis on a high-volume of sales and rapid inventory turnover. Aggressive merchandising techniques are employed. (a) Store retailers include many types, such as Specialty stores, department stores, supermarkets, convenience stores, superstores, combination stores, hypermarkets, discount stores, warehouse stores, and catalog showrooms. (b) The factory outlet store is an off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturers surplus, discontinued, or irregular goods at a marked-down price. Many such stores are being organized into factory outlet malls, which are located on freeways but at some distance from major population areas. Examples of these retailers are the Nike Outlet Store and Liz Claiborne Factory Outlet. (c) A warehouse membership club is an off-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees. The largest national chain warehouse club is (a) (b)

13. (e)

14. (c)

15. (d)

Sams Club. Stores look more like warehouses and offer few frills or services and consumers are expected to buy in bulk. In exchange, consumers get low prices. (e) Category killers are superstores that focus on a narrow product line. A category killer carries a very deep assortment of a particular line and is staffed by knowledgeable employees. They usually come into markets and kill the competition in that line of products by virtue of their size and assortment. Examples of category killers are Toys R Us and Best Buy. 16. Answer : (c) < TOP > Reason : Prestige pricing involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. Products with an element of prestige pricing in them may sell worse at lower prices than at higher ones because buyers tend to associate a lower price with lower quality. Firms such as supermarkets often use target return-on-sales pricing to set typical prices that will give them a profit that is a specified percentage of sales volume. Target returnon-investment pricing is a method of setting prices to achieve an annual return-on-investment (ROI) target; hence option (a) is incorrect. 17. (a) Reason : Answer : < TOP > Public relations builds good relations with the organizations various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. (b) (c) (d) (e) Personal selling is a personal (face-to-face) presentation for the purpose of making sales and building relationships. Sales promotion is a short-term incentive to encourage the purchase or sale of a product. Advertising is any paid form of nonpersonal presentation by an identified sponsor. Publicity is a non-personal, indirectly paid presentation of an organization, good, or service. The primary advantage of publicity is its credibility. Disadvantages relate to the lack of control over what the message says, to whom, or when. Answer Reason : :

18. (a)

< TOP > Comparative advertising shows one brand's strengths relative to those of a competitor.

19. (c)

(b) Advertisements or messages within advertisements, the concerning body orders a company to run, for the purpose of correcting consumers' mistaken impressions created by prior advertising. (c) Advertising designed for the generic product category, as opposed to selective demand advertising. (d) Advertising to promote an institution or organization, rather than a product or service, in order to create public support and goodwill. (e) Pioneering advertisements tell people what a product is, what it can do, and where it can be found. Answer : < TOP > Reason : Strategic planning is the process of developing and analyzing the organization's mission, overall goals, general strategies, and allocating resources. The strategic planning process is carried out at the corporate level, business level, and product level. It begins with an analysis of the organization's current strategic posture, but strategic planning focuses on the future. Answer Reason : : < TOP > A strategic business unit has several distinct characteristics in it: (a) Is a single business that can be planned independent of other businesses. (b) Has its own competitors. (c) Has one manager with profit responsibility. The SBUs are analyzed as though they were a collection of separate investments. This is called business portfolio analysis. The SBUs are positioned on a growthshare matrix. Answer Reason : : < TOP > Cash cows are dominant share of slow growth market enables sbu to generate large amounts of cash to be used for company overhead and investment in other SBU.

20. (c)

21. (b)

(a)

Question Marks/Problem Child (also called a "Problem Child") are high growth, low share businesses. A question mark requires a lot of cash both to keep up with a rapidly growing market and improve its share position. Strategy must decide between further investment to move question marks to star status (differential advantage) or to phase out the product. Stars are high growth, high share businesses. They are the market leaders in fast-growth markets and often require heavy investment to build and/or maintain share in rapidly expanding markets. The strategy is to build or even maintain or hold its position as long as possible. Dogs are often targets for divestment, but may still be profitable and/or contribute to other organizational goals Answer :

(c)

(d) 22. (c) Reason :

< TOP > Hold: Maintain market share. Often used for cash cows, which are already generating large amounts of cash, and are fairly stable. (a) Increase market share through cash injection. Make stars out of question marks. (b) Sell the SBU. This generates cash for more promising SBUs. Question marks and Dogs are ideal candidates to Divest. (d) Increase short-term cash output of the SBU, even if this results in a loss of market share. Pump cash from dogs or cash cows into stars or question marks.

23. (c)

Answer

24. (b)

< TOP > Reason : Product portfolio analysis is based on the idea that a products market growth rate and its relative market share are important determinants of its marketing strategy. Answer : < TOP > Reason : The number of channel levels from raw material to final product and distribution in which a company will participate. (a) The range of industries in which a company will operate. Some companies will operate in only one industry; some only in a set of related industries; some only in industrial goods, consumer goods, or services and some in any industry. The type of market or customers a company will serve. Some companies will serve only the upscale market The range of regions, countries, or country groups in which a compnay will operate. At one extereme are companies that operate in a specific city or state. At the other extreme are multinationals such as Unilever and Caterpillar, which operate in alomost every country in the world. The range of technological and other core competencies that a company will master and leverage Answer :

(c) (d)

(e) 25. (b)

< TOP > Reason : By employing a market development strategy, an organization might identify new markets for its product by determining potential user groups for its current products, seeking additional distribution channels in its present locations, or offering its product for sale in new geographic locations, either domestic or international (a) (c) (d) A market penetration strategy suggests that growth is possible by achieving a deeper penetration (sell more) of its present product within a present market. Through a product development strategy, an organization might create an augmented, or entirely new, product in order to stimulate the current markets and create new ones.

26. (b)

An organization could consider diversification as a growth strategy. The organization develops new products to sell to new markets. Also, it could involve acquiring or starting businesses outside current markets Answer : < TOP > Reason : Relationship marketing is building mutually satisfying long-term relationships with customers. The aim of Customer relationship management is to produce high customer equity. There are

five levels in customer relationship building. Alternative (a) is incorrect as in basic level the salesperson simply sells the product. In Accountable marketing the salesperson phones the customer to check whether the product is meeting expectations, hence alternative (c) is incorrect. Alternative (d) is incorrect because in the proactive level of relationship marketing the salesperson contacts the customer from time to time with suggestions about improved products uses or new products. 27. Answer : (b) < TOP > Reason : Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Alternative (a) is incorrect because Exploratory research is used when there is a need for large amounts of information. Alternative (c) is incorrect as Descriptive research is conducted when there is a need to understand in detail about a specific phenomenon to solve a particular problem. Alternative (d) is not term used for developing the research plan. Alternative (e) is incorrect as in Observational research fresh data is gathered by observing the relevant actors and settings. 28. Answer : (d) < TOP > Reason : Even if the channels are well designed and managed, there will be some conflict, if for not other reason than the interests of independent business entities do not always coincide. Alternatives (a) and (b) are not real types of conflict in distribution; hence they are incorrect. Vertical conflict means conflict between levels within the same channel; hence option (c) is incorrect. Alternative (e) is incorrect because multi-level conflict exists when the manufacturer has established two or more channels that sell to the same market. 29. Answer : (a) < TOP > Reason : Rangan, Moriarty and Swartz studied mature commodity market, steel strapping and found four business segments; Programmed buyers, Relationship buyers, Transaction buyers and Bargain hunters. Alternative (b) is incorrect because Programmed buyers view the product as routine purchase item, usually paying full price and receiving below average service. Relationship buyers regard the product as moderately important and are knowledgeable about competitive offerings; hence option (c) is incorrect. Alternative (d) is incorrect because Transaction buyers are price and service sensitive; they see the product as very important for their operations. Gatekeepers are people who have the power to prevent sellers or information from reaching members of the buying center; hence option (e) is incorrect. 30. Answer : (e) < TOP > Reason : Brand equity is the value a brand adds to the product. The sources of brand equity include the product, its name, and its personification, logo, country of origin, advertising themes, and style and packaging approach. (a) Line extensions is the practice of using a current brand to enter a new market segment in its product class. (b) A brand mark is the part of the brand that appears in the form of a symbol, design, or distinctive coloring or lettering (c) A company uses private branding, often called private labeling or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer. (d) The package is the most important component of the product as a communications device. It reinforces associations established in advertising, breaks through competitive clutter at the point of purchase, and justifies price and value to the consumer. Package cues include color, design, shape, brand name, physical materials, and product information labeling.Services have four major characteristics that greatly affect the design of marketing programs; Intangibility, Inseparability, Variability and Perishability.

Section B : Problems
1. KFC has been successful due to the following reasons: a. Universal Appeal (Protein) b. Focus on core product (Chicken) c. Consistency (Taste) d. Emphasis on Quality e. Socially well accepted (transcending religious beliefs) KFC'S challenges in Global expansion a. Legal/Regulatory b. Cultural/Adaptation c. Think Global, act Local. < TOP > 2. Questions to ask when analyzing International Markets are given as under: a. About Markets How large is the market? How many consumers use the product? What is our expected market share? Is the market growing? b. About competitors Who are our major competitors? What is the market share of each competitor? What are the trends in market share among competitors? About Culture What is the distribution of the population by education, occupation, and religion? Does our product fit the cultural values of the foreign country? Can our marketing program be adapted to these cultural values?

c.

3.

About Consumers What types of consumers buy this product? What are the characteristics of the consumers in terms of demographics, life-style, and attitudes? How and when do consumers use the product? What are their motives for buying the product? < TOP > Population Services International (PSI) is partially successfull in delivering the message to the target audience. As there is lot of hue and cry about the Balbir Pasha and Puliraja campaigns raised by number of womens organisations in Maharashtra and Andhra Pradesh, this campaign is considered as partially successful campaign. The consulting agency (Lowe) and PSI should have taken these organisations into consideration while launching the campaign. < TOP > Government intervention in such campaigns is definetely a positive sign for the society. As these social campaigns will not generate any revenue, the governement bodies will fund most of the campaigns. Nongovernmental organisations like PSI will have tough time, if they are engaged in such campaigns. The advantages of government intervention can be studied under following heads: (a) (b) (c) Ample funding can be provided to these campaigns. There is a less chance of agitations, if the government would launch these campaigns with consensus. If any such complicacies takes place, government can easily handle with its adminstration. < TOP >

d.

4.

5.

Students are expected to write how Dell Computers is selling products on its website http://www.dell.com/. Students to cover following marks: a. b. CRM is attracting, aquiring and growing profitable customers. CRM can identify profitable customer group for which mass customisation can be offered,otherwise doing mass customistion to all the customers would be difficult,impracticable and non/less profitable activity. CRM can identify profitable customers however for attracting such customers mass customisation can be of great help. With mass customisation, customers gets delighted and sticks to the same brand, customer gives more business fulfilling the objective of CRM. < TOP >

c. d.

6.

Mass customization is best defined as a delivery process through which mass-market goods and services are individualized to satisfy a very specific customer need, at an affordable price. A firm by enabling itself with CRM tools and its processes will get first hand inforamation on the customers needs and wants. This data can be further utilised to new product development which will certainly help firms to bulid products and services on mass cutomization Advantages of Mass Customization Low inventory --Inventory control is one benefit clothing manufacturers could gain from mass customization. These manufacturers tend to have high inventories of finished products and must forecast demand many months in advance. But those forecasts are likely to be wrong, resulting in surpluses of some products. What's needed to transfer the concept of mass customization to the commercial clothing industry is for manufacturers to abandon their mass-production techniques and create flexible product-manufacturing teams that would be able to add to clothing special features such as differently shaped pockets. Consumers will demand it because they are getting so much smarter and know how things work. If the larger clothing manufacturers do it, everyone will . Retaining of customers - Consider a Fictitious Customized Online Magazine: Mass customization provides a way to automate relationship marketing, and thus provides small firms another way to beat their bigger, slower competitors. The winning firms in the information economy will be those that can deliver the right message, to the right customer, at the right time. Savvy marketers today will look for ways to adapt their strategy to the dynamics of one-to-one marketing. Profit Potential - Its also potentially very profitable. In one study by the American Apparel Manufacturers Association in Washington, it was estimated that if 10% of manufacturing output were devoted to mass customization, it would produce 30% of company profits. Less operating cost, long term business relationship, less operating expense and inventory. Another thing is the creation of a long-term business relationship with customers. It's much better from a cost perspective to keep a current customer than to get a new one. So even if your mass-customized product is not cheaper to make, it can reduce your marketing costs because it satisfies customers to such a degree that they don't leave you. < TOP >

Section C: Applied Theory

7. The problems which will be encountered in doing such research across a variety of countries include the difficulties associated with sample design (inadequate population data), questionnaire design, hiring/training/control over interviewers, data collection methods (phone versus personal interviewing), and actual data collecting (asking questions and recording answers). It will be difficult to compare the results across countries given the variation in the sample designs, the response rates of different groups, the caliber of the interviewers, and the meaning of key words in the questionnaire. < TOP > 8. The initiator of the buying decision could be identified as the salesperson who identified the need but more likely would be the sales force manager who suggested the purchase be made. Influencers/evaluators might include the finance office (which would control the amount of money available for the purchase), members of the sales force (who might provide information about phones that competitors are using), and the purchasing department (which would have a good knowledge of alternative

suppliers). Gatekeepers could include management (which would only approve of certain phone models that are compatible with existing phone systems), the finance office (which may only approve a limited budget), and the purchasing department (which would recommend matches with likely vendors). The decider might be the president of the company, the president of marketing, or the sales force manager; the decider is the person with the power to approve the brand of phone. The purchaser will be the purchasing agent in the purchasing department who will negotiate the terms of the sale. Users will include all salesforce members who will use the cellular phone < TOP > 9. Substantiality: A selected segment must be large enough to warrant developing and maintaining a special marketing mix. (This means that the segment is commercially viable.) One could assume that many people have a dry scalp problem, especially in dry climates, after a sunburn, or when participating in outdoor activities with high winds (skiing, sailing, and so on). Identifiability and Measurability: The segments must be identifiable and their size measurable. Descriptive data regarding demographic, geographic, and other relevant characteristics of segment members must be available. It may be difficult to identify people who have dry scalps and describe them in terms of relevant characteristics. People may not realize that they have dry scalps and therefore may not respond to marketing research probes. Accessibility: The firm must be able to reach members of targeted segments with customized marketing mixes. If the segment is not measurable and cannot be described, it may be difficult to precisely know how to reach the dry scalp segment. Where do people with dry scalps shop? What media do they watch or read? What are their buying habits? Responsiveness: The market segment must respond differently from other segments to a marketing mix; otherwise, there is no need to treat that segment separately. People with dry scalps may not consider their problem to be important enough to respond differently and may continue to buy their current shampoo, which seems to meet their needs < TOP > < TOP OF THE DOCUMENT >