Marketing Theory and Practice

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ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

Level: MBA
Course: Marketing theory &Practice (561)
Time allowed: 3 Hours
Semester: Autumn 2004

Maximum Marks: 100
Pass Marks: 40
Note: Attempt any five questions. All questions carry equal marks.
Q. No.1 What marketing recommendations would you make to enterprise
to help it improve its marketing strategies?
Ans .
There are following marketing recommendations improve marketing strategies.
1. A marketing strategy specifies a target marketing and related marketing
mix. It is big picture of what a firm will do in some market.
2. A product can have many different features and quality levels. Service
level can be adjusted. The package can be off various sizes, colors or
materials.
3. The brand name and warranty can be changed.
4. Various advertising media newspapers, magazines, radio, , televisions ,
billboards may be used .
5. A company own sales, force or other sales specialists can be used.
6. A company own sale force or other sales specialists can be used.
7. Different prices can be changed.
8. Price discounts may be driven, and so on . With so many possible variables,
the question is there any of simplifying the section of marketing mix.
9. The Company has to increase its network because existing network is
unable to give the services required. Since the customers are increasing so
the voice quality should also increase.
10-The company should improve its customer services in order to retain its
existing customers.
11-It should get rid of the extra staff it has at the moment.
12-The company should impart training to its existing employees so that they
get themselves ready for the tough competition that is coming forth.
13-It is very important for the company to reduce its communications
problems before they become too monumental to be handled.
Marketing theory & practice MBA
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14-Company should increase the promotions of their products through press

and media.
15-New sales strategies should be introduced so that to increase the current
sales.
16-Everyone should decrease 16-Tariff packages up to some extent so that it
can be affordable,
17-Company should introduce special discount packages to the new customers
or by giving a special offer to the existing customers
18-Company s sales staff should be recruited young and energetic.
19- the organization should improve its product quality as compare with their
imported brands. For this purpose more care should be taken to the quality
assurance and controlling activities.
20-One problem, which is facing by the group among its competitors, is price
issue. The organization should have a close look on its competitors related
product prices.
21-The marketing personnel should visit different areas for the solutions of
problem of end users of its products.
22-For increasing its sales volume, the organization should offer credit buying
and more discounted prices for greater volume of purchase.
23-The organization is greatly employing direct sale technique. Which is not
proving successful for all cases? For the Karachi market of organizations
products, the organization should use some other channels of product
distribution.
24-To achieve the sales targets the prospective buyers should be approached
more scientifically and frequently.
25-The organization should develop a system for attaining market
26-The organization should arrange customers surveys reports towards
27-End users and results should be obtained from their problems and
suggestions.
28-Price is only one of the marketing mix tools that a company uses to
achieve its marketing objectives prices decisions must beer coordinated with
produced design distribution and promotion decision to form consistent to form
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and effective marketing program. The decision to position the product on high
performance quality will mean that the seller must charge a higher price to cover
higher costs.
29- Costs set the floors for the price that the company can charge for ties
product. The company wants to charge a price that both cover all its costs for
producing.
A company costs may be an important element; in its pricing
strategy.
30- Management must decide who within the organization should set price
companies handle pricing in a variety of ways. In large companies pricing is
typically handled bogy divisional or produced line managers. In doctrinal markets
salespeople may be allowed to negotiate with customers within certain price
ranges.
31- to starts price planning begins with an analysis of costs and expense, many
of which are related to current market conditions.
32- when target market is price conscious, a company can use a lower price to
appeal to that market.
Q.No. 2
Name some organizations you determine are following the marketing
concept. Also explain how you made this determination.
Ans
There is following organizations use marketing concept.
1- Wah Nobles group of companies
2- U-Fone.
3- Dentonic Tooth paste
1- Wah Nobles Chemicals using marketing concept .
Functions of marketing department
Marketing department of the Wah Nobel Group of Companies arrange weekly
meeting for making their work more efficient.
Product Planning
The company WNGC has to face serious competition in the market. Keeping the
tradition of quality manufacturer, the group is committed to manufacture
products, which may match the standard and specification of specific products.
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Product development
Product Development into the market is a next step. This may be summed up
into this question. How a product affects and how it should be marketed. For this
purpose the management considers the following steps: Analyzing the internal environment
Analyzing the external environment
Considering the main objects and goals
Arranging about program plans
Development business strategies
Making arrangement for implementation
For controlling functions monitoring the feed back.
Product Pricing
In managing the price element organization faces the task of setting a price,
management must decide on its prices goal and then set the base price for a
good or service.
Penetrating Pricing
For the company, there is greater competition in the marketing of some chemical
products such as Acetic Acid, Butyl Acetate, and Ethyl Acetate, so the company is
following penetrating pricing strategy and companies such product prices are
somewhat lower than its competitors. The international prices of imported
products are slackening down which result a serious problem for this company to
set its products prices.
2- U-Fone using marketing concept
The
market environment that UFone faced after its
launch
was highly
competitive. The cell phone industry is expanding and there is no looking back,
according to a survey every mobile user after eight users is a GSM user and there
is a constant rise in the users and there usage rate is increasing day by day and
so is the industry size.
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According to another survey every person who is a mobile user does not
want to let go its use and the ones who do not have it have a will to have it. So,
it is on safe side to say that the entire industry is growing tremendously.
UFone has differentiated its target market and product line by
including post paid and prepaid packages such as, Josh, Tazba, Rabta, Asaish,
Lajawab etc. The prepaid packages are very much affordable and are positioned
to target the lower end market.
As, I conclude that Every Mobile Phone service was targeting higher
and affluent class.
UFone: Your very own mobile phone.
For the first time every common person had a change to have a mobile of it
3-DENTONIC TOOTHPASTE USING MARKETING CONCEPT
There are four elements of marketing mix concept use DENTONIC
TOOTHPASTE.
Product
price
Placement
Promotion.
Product:
We have chosen Dentonic because our research shows that most of the people
know Dentonic very well. By using this product, people would easily recognize
Dentonic as the company, which has served them for decades and has satisfied
their needs. Therefore any new product by them would never be ignored because
of the loyalty people have with the old things.
Varieties:
Weve thought of installing Dentonic initially in one variety only, which is the mint
flavor.
SIZE:
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Initially well be introducing a large size pack of seventy grams. Later on well
plan to introduce a small size pack as well as family size if its successful.
Design:
Well use the same design as that of Dentonic tooth powder, which has a
multitude of yellow and green color.
PACKING:
As we know its one of the major factors in promotion of the product. A good
packaging encourages impulse buying along with the fact that it attracts the
customers eyes and attention towards itself. Therefore, weve made an attractive
pack of Dentonic toothpaste the important features of our packaging are as
follows.
1. Price ;( which is clearly written on the pack.) Its effect would be that
the customer at first sight of the product would be able to assess its
value and would itself do the work of a sales person.
2. Some information relating to the use of the product and benefits etc
would be given in the pack.
3. Company name and P.O box number shall be given in front. So that if
any customer or the retailers etc if have any query than they could
easily contact the manufactures or the whole sellers for their urgent
problem.
4. Another thing is that the package shall be attractive which weve
taken form the original Dentonic parent product, which is quite
attractive. And weve used family packing, such as the one that
already exists in the original Dentonic so as to create a familiarity
with the original Dentonic product.
IMPORTANT FEATURES OF DENTONIC:
1. Its a low price high quality product.
2. The regular use of the Dentonic toothpaste twice a day prevents from
bacteria
3. Its available in a flexible plastic tube, which is soft packing that helps the
ejection of the paste a lot easier. This feature has never ever before been
introduced in a low priced toothpaste. Were the first one to introduce it.
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4. It packing resembles that of the original Dentonic powder.

Price:
As our target market is middle class (largely lower middle) whose earning per
month is between RS 2000 to 10,000. So we must keep the price between
RS 18-20 because.
Our target market financial capacity is not so good.
Our aim is to produce a quality product at low price.
We want higher sales.
We at initial stage will concentrate on higher sale and less profit margin.
Q.No. 3
Discuss how to design business portfolios and growth strategies.
Ans
Designing the business portfolio
Guided by the company mission statement and objectives
management now must plan its business portfolio the collection of business and
products their make up the company. The best business portfolio is the one that
best fits the company strengths and weakness to opportunities in the
environment.
Business portfolio
The collection of business and products make up the company.
Portfolio analysis
A tool by which management identifies and evaluates the various
businesses that makes up the company.
Analyzing the current business portfolio
The major activity in strategic planning is business portfolio analysis where by
management evaluates the businesses making up the company. The company
will want to put strong resources into its more profitable businesses and phase
down or drop its weaker ones For example in recent years. Dial corp. has
strengthened its suppliers meatpacking and computer leasing businesses.
Strategic business unit SBU

A unit of this company that has a separate mission and objectives
and that can be planned independently from other company businesses.
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Managements first step is to identify the key businesses making up

the company. These can be called the strategic businesses units. A strategic
business unit SBU is a unit of the company that has a separate mission and
objectives and that can be planned independently from other company
businesses.
Growth share matrix
A portfolio planning method that evaluates a companys strategic businesses
units in terms of their market growth rate and relatives market share. SBUS are
classified as starts cash cows question marks or dogs.
The Boston consulting group approach
Using the Boston consulting group BCG approach a company
classified all its SBUS according to the growth share matrix shown in. On the
vertical axis market growth rate provides a measure of market attractiveness. On
the horizons market growth rate provides a measure of market attractiveness.
On the horizontal axis relative market share serves as a measure of company
strength in the market. By dividing the growth share matrix as indicated four
types of SBUS can be distinguished.
1- Stars
Stars are high growth high share businesses or products. They often
need heavy investment to finance their rapid growth. Eventually their growth will
slow down and they will turn into cash cows.
2- Cash cows
Cash cows are low growth high share businesses or products. These
are established and successful SBUS need less investment to hold their market
share. Thus they produce a lot of cash that the company uses to pay its bills and
to support other SBUS that need investment.
3-Question marks
Question marks are low share business units high growth markets.
They require a lot of cash to held their share let alone increase it. Management
has to think hard about which question marks it should try to build into stares
and which should be phased out.
4-Dogs
Dogs are low growth low share businesses and products. They
may generate enough cash to maintain themselves. But do not promise to be
large sources of cash.
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The general electric approach

General electric GE introduced a comprehensive portfolioplanning tool called a strategic business-planning grid. Like the BCG approach it
uses a strategic business planning grid like the BCG approach it uses a matrix
with two dimensions one represents industry attractiveness the vertical axis and
one representing company strength in the industry the horizontal axis. The best
businesses are those located in high attractive industry where the company has
high business strength.
Problems with matrix approaches
The BCG and other formal methods revolutionized strategic
planning. However such approaches have limitation. They can be difficult time
consuming and costly to implement. Management may find it difficult to define
SBUS and measure market share and growth in addition these approaches
focus on classifying current businesses but provide little advice for further
planning. Management must still rely on its own judgment to set the
businesses objectives fore each SBU. To determine what resources each will
be given and to figure out which new businesses should be added.
Growth strategies
Product market expansion grid
A portfolio planning tool for identifying company growth
opportunities through market penetration market development product
development or diversification.
Developing growth strategies
Beyond evaluating current businesses designing the business
portfolio involves identifying businesses and products the company should
consider in the future one useful device for identifying growth opportunities is
the product market expansion grid.
Market penetration
A strategy for company growth by increasing seals of current
products current market segment without changing the product.
Market penetration making more sales to current customers
without changing products For example to increase its jeans sales Levi might
cut prices increase advertising get its products into more stores or obtain
better store displays and point of purchase merchandising from its retailers
basically Levi management would like to increase usage by current customers
and attract customer s of other clothing brands of levis.
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Market development
A strategy for company growth by identifying and developing
new market segments for current company products.
Second Levi Straus management might consider possibilities
for market development identifying and developing markets for its current
products. For instance mangers could review new demographic markets.
Children senior consumers women ethnic groups to see if any new groups
could be encouraged to buy Levi products for the first time or to buy more of
them. For example Levi recently launched new advertising campaigns to boost
its jeans sales in female and Hispanic markets.
Product development
It is Strategy Company modified or new products current market
segments. Third management could consider product development offering
modified on new products to current markets. Current Levi products could be
offered in new styles sizes and colors. Or Levi could offer new lines and launch
new brands of casual clothing to appeal to different users or to obtain more
business from current customers. This occurred when Levi introduced its
Dockers line.
Diversification
It is strategy of company growth by starting up or acquiring
businesses outside of companys current products and market. Fourth Level
Strauss might consider diversification. It could start up or buy businesses
outside of its current products and markets. For example the company could
move into means fashion recreations and exercise apparel or other related
business.
Planning functional strategies
A company strategic plan establishes what kinds of businesses
the company will be in and its objectives fore each. Then within each business
unit more detailed planning must take place. The major functional
departments in each unit marketing fianc accounting purchasing
manufacturing information systems human resources and others must work
together to accomplish strategic objectives.
Marketings role strategic planning

marketing
There is much overlap between overall company strategy and

strategy marketing looks at consumer needs and the companys
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ability to satisfy them these same factors guide the companies over all mission
objectives.
Marketing and the other business functions
Marketing play an important role in delivering customer value and
satisfaction. However marketing cannot do this alone. Because consumer value
and satisfaction are affected by the performance of other functions all
departments must work together to deliver superior value and satisfaction
Marketing plays and integrative role to help ensure that all departments work
together toward this goal.
Conflicts between departments
Each business function has a different view of which public
and activities are most important. Operations focuses on suppliers and
productions finance is concerned with stockholders and sound investment
marketing emphasizes consumers and products pricing promotion and
distribution ideally the different functions should work in harmony to product
value for consumers.
But in practice departmental relations are full of conflicts and
misunderstandings the marketing department takes the consumers point of
view however actions taken to improve customer satisfaction can increase
purchasing costs. Disrupt production schedules increase inventors and create
budget headaches.
Q.No. 4
(a)Contrast the general approaches to setting price.
(b) Discuss the key issues related to initiating and responding to price
change.
Ans part (a)
General pricing approaches
The price the company charges will be somewhere between
one that is too low to produce a profit and one that is too high to produce any
demand. The company must consider competitors prices and other external
and internal factors to find the vest price between these two extremes.
Cast based pricing
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Adding a standard markup to the cost of the product the simple

pricing method is cost plus pricing adding a standard markup to the cost of the
product. Construction companies for example sub mitt job bids by estimating the
total project cost and adding a standard markup for profit. Lawyers accountants
and other professionals typically price by adding a standard markup to their
costs.
Unit cost = variable cost + fixed costs = $10 + $ 300000 = $16
Unit sales
50000
Breakeven analysis and target profit pricing

Another cost oriented pricing approach is breakeven pricing or a
variation called target profit pricing. The firm tries to determine the price at
which it will break even or make the target profit it is seeking such pricing is
used by general motors.
The total revenue and total cost curves cross at 300000 unties.
This is the breakeven volume. At $ 20 the company must sell at lest 30000
units to break even that is for total revenue to cover total costs. Breakeven
volume can be calculated using the following formula.
Breakeven volume = fixed cost
= $ 300000 = 30000
Price variable cost $ 20 - $ 10
Value based pricing
Setting price based on buyers perceptions of value rather than on
the sellers cost.
An increasing number of companies are basing their prices on
the products perceived value. Value based pricing uses buyers perceptions of
value not the sellers cost as they key to pricing. Value based pricing means
that the marketer cannot design a product and marketing program and then
set the price. Price is considered along with the other marketing mix variable
before eth-marketing program is set.
A company using value based pricing ms7ut find out what
value buyers assign to different competitive offers. However measuring
perceived value could be difficult. Sometimes consumers are asked how much
they would pay for a basic product and for reach benefit added to the offer. Or
a company might conduct experiments to test the perceived value of different
product offers.
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If the seller charges more than the buyers perceived value

the companys sales will suffer. Many companies overprice their products and
their products sell poorly. Other companies underwrite underrated products
sell very well but they produce less revenue than they would if price were
raised to the perceived value level.
Competition based pricing
Consumer will base their judgments of a products value on the
prices that competitors charge for similar products. Here we discuss tow forms
of competition based pricing going rate pricing and sealed bid pricing
Going rate pricing
Setting price based largely on following competitors prices
rather than on company costs or demand. In going rate pricing the firm bases
its price largely on competitors prices with less attention paid to its own costs
or to demand. The firm might charge the same more or less than its major
competitions. In oil geopolitics industries that sell a commodity such as steel
paper or fertilizer firms normally charge the same price. The smaller firms
follow the leader. They change their prices when the market leaders prices
change rather than when their own demand or costs change. Some firms may
charge a bit more or les but they hold the amount of difference constant.
Thus minor gasoline retailers usually charge a few cents less
than the major oil companies without letting the difference increase or
decrease .Going rate pricing is quite popular. When demand elasticity is hard
to measure firms eel that the going price represents the collective wisdom of
the industry concerning the price that will yield a fair return. They also feel
that holding to the going price will prevent harmful price wars.
Sealed bid pricing
Setting price based on how the firm thinks competitors will price rather
than on its own costs or demand used when a company bids for jobs.
Competition based pricing it also used when firms bid for jobs. Using sealed bid
pricing a firm bases its price on how it thinks competitors will price rather than on
its own costs or on the demand. The firms want to win a contract and winning the
contract requires pricing lower than other firms.
Ans part (b)
Initiating and responding to price change.
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Imitating price changes

In some cases the company may find it desirable to initiate either
are price cut or a price increase. In both cases it must anticipate possible
buyer a compactor reactions.
Initiating price cuts
Several situations may lead a firm to consider cutting its
price. One such circum stance is excess capacity. In this case the firm needs
more business and cannot get it through increased sales effort product
improvement or other measures it may drop its follow the leader pricing
charging about the same price as their leading competitor and aggressively
cut prices to boost sales but as the airline construction equipment fast food
and other industries have learned in recent years, cutting prices in an industry
leaded with excess capacity may lead to price wars as competitors try to hold
on to market share.
Initiating price increases
In contrast many companies that had to raise prices in recent
years. They do this knowing that customer sealers and even their own sales
force may resent the price increases.
For example if the companys profit margin is three percent of
sales a one percent price increase will increase profits by thirty three percent
if sales volume is unaffected.
A major factor in price increase is cost inflation. Rising cost
squeeze profit margins and lead companies to regular rounds of price
increase. Companies often raise their prices by more than the cost increase in
anticipation of further inflation. Another factor leading to price increases is
over demand. When a company cannot supply all its customers needs it can
raise its prices ration products to customer or both.
Buyer reactions to price changes
Whether the price is raised or lowered the action will affect
buyer competitors distributors and suppliers and may interest government as
well. Customers do not always interpret prices in a straightforward way. They
may view a price cut in several ways. For example what would you think if
sonny were suddenly to cut its real ways? For example what would you think if
sonny were suddenly to cut its VCR prices in half?
You might think that these VCRS are about to be replaced by
newer models or that they have some fault and are not selling well. You might
think that Sony is abandoning the VCR business and may not stay in this
business gong enough to supply future parts. You might believe that quality
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has been reduced. Or you might think that the price welcomes down even
further and that it will pay to wait and see.
Competitor reactions to price changes
A firm considering a price change has to worry about the
reactions of its competitors as well as its customers competitors are most
likely to react when the number of firms involved is small when the product is
uniform and when the buyers are well informed.
Responding to price changes
Here we reverse the question and ask how a firm should respond
to a price change by a competitor. The firm needs to consider several issues.
Why did the competitor change the price? Wears it to take more market share
to sue excess capacity to met changing cost conditions or to lead an industry
wide price change is the price change temporary or permanent. What will
happen to the companys market share and profits and it does not respond are
other companies going to respond and what are the competitors and other
firms responses to each possible reaction likely to be.
Besides these issues the company must make a broader analysis
it has to consider its own producers stage in the life cycle the reproducers
importance in the companys product mix the intentions and resources of the
competitors and the possible consumer reactions to price changes the
company cannot always make an extended analysis of its alternatives at the
time of a price change however the competitor may have spend much time
preparing this decision but the company may have to react within hours or
days. About the only way to cut down reactions time to plan ahead for both
po9ssible competitors price changes and possible responses.
The ways a company might assess and respond to a
competitors price cut. Once the company ahs determined that the competitor
ahs cut as price and that this price reduction is likely to harm company sales
and profits a might simply decide to hold its current price and profit margin.
The company might believe that it will not lose too much market share or that
it would lose too much profit if it reduced its own price.
It might decide that it should wait and respond when it has
more information on the effects of the competitors price change. For now it
might be willing to hold on to good customers while giving jump the poorer a
new to the competitor. The argument against this holding strategy, however is
that the competitor may get stronger and more confident as its sales increase
and that the company might wait too long to act.
If the company decides that effective action can and should be
taken it might make any of four responses first it could reduce its price too
much the competitors price. It may decide that the market is price sensitive.
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And hat it would lose too much market shares to the lower priced competitor.
Or it might worry that recapturing
lost market share later would be too
hard. Cutting price will reduce the companys profits in the short run. Some
companies might also reduce their product quality services and marketing
communications to retain profit margin but this will ultimately hurt long run
market share. The company should try to maintain its quality as it s cuts
prices.
Q. No. 5
Illustrate the need for balancing customer and competitor orientations in
becoming a truly market centered organization.
Ans
Balancing customer and competitor orientations
Whether
Nicher it must watch
marketing strategy that
its strategies to the fast
a company is a market leader, challenger, follower or

its competitors closely and find the competitive
positions it most effectively. It must continually adapt
changing competitive environment.
This question now arises can the company spend too much
time and energy tracking competitors damaging its customer orientation. The
answer is yes a company can become so competitor centered that it loses its
even more important customer focus.
Competitor centered company
A competitor-centered company is one that spends most of its time
tracking competitors moves and market shares and trying to find strategies to
counter them. This approach ahs some pluses and minuses. On the positive side
the company develops a fighter orientation. It trains its marketers to be and a
constant watching for weaknesses in there own position and searching out
competitors weaknesses.
On the negative side the company becomes too reactive. Rather than
carrying out its own customer oriented strategy it bases its own moves on
competitors moves. As a result because so much depends on what the
competitors do the company does not move in a planned direction toward a goal
it may end up simply matching or extending industry practices rather than
seeking innovative new ways to bring more value to customers.
A customer-centered company by contrast focuses more on
customer developments in designing its strategies. Clearly the customercentered company is in a better position to identify new opportunities and set
long run strategies that make sense. By watching customer needs evolve it
can decide what customer groups and what emerging needs are the most
important to serve than concentrate its resources on delivering superior value
to target customers in practice todays companies must be market centered
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companies watching both their customers and their competitors. They must
not let competitor watching blind them to customer focusing.
Market centered company
In the first stage they were product oriented paying little
attention to either customers or competitors. In the second stage they became
customer oriented and started to pay attention to customers. In the third
stage when they started to pay attention to competitors they became
competitor oriented.
Today companies need to be market oriented paying balanced
attention to both customer and competitors. Rather than simply watching
competitors and trying to beat them on current ways of doing businesses they
need to watch customers and find innovate ways to deliver more value than
competitors do. A market orientation pays big dividends one study found a
substantial positive relationship between a companies marketing oriented and
its profitability relationship that held regardless of type of business or market
environment.
Q.No. 6
( a) Define consumerism and environmentalism and explain how they
affect marketing strategies .
(b) Explain the role of ethics in marketing.
Ans part (a)
Consumerism
American business firms have been target of organized
consumer movements on three occasions. The firs consumer movement took
place in the early 1900s. It was fueled by rising prices Upton Sinclairs writings
on conditions in the meat industry and scandals in the drug industry the
second consumer movement. In themed 01930s was sparked by an upturn in
consumer prices during the great depression and another drug scandal.
The third movement begins in the 1960s. Consumers had
become better educated products had become more complex and potentially
hazardous and people were unhappy with. American institutions Ralph nadir
appeared on the scene to force many issues. And other well-known writers
accused big business of wasteful and unethical practices. President John f
Kennedy declared that consumers had the right to after and to be informed to
chose and to be heard congress investment certain industries and proposed
consumer protection legislation. Since them many consumer groups have been
organized and several consumer laws have been passed. The consumer
movement ahs spread internationally and has become very strong in Europe.
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But what is the consumer movement consumerism is an

organized movement of citizens and government agencies to improve the
rights and power of buyers on relation to sellers. Traditional sellers right
includes.
The right to introduce any product in any size and style provided it is not
hazardous to personal health or safety or if it is to include proper
warnings and controls.
The right to charge any price for the product provided no discrimination
exists am0ong similar kinds of buyers.
The right to spend any amount to promote the product provided it is not
defined as unfair competition.
The right to sue any product message provided it is not misleading or
dishonest in content or execution.
The right to sue any buying incentive schemes provided they are not
unfair or misleading.
Traditional buyers right includes.
The right not to buy a product that is offered for sale
The right to expect the product to be safe
The right to expect the product to perform as claimed
Environmentalism
An organized movement of concerned citizens and
government agencies to protect and improve peoples living environment.
Whereas consumers consider whether the marketing system is efficiently
serving consumer wants environmentalists are concerned with marketings
effect on the environment and with the costs of serving consumer needs end
wants. Environmentalism is an organized movement of concerned citizens
businesses and government agencies to protect and improve peoples living
environment. Environmentalists are not against marketing and consumption
they simply want peoples and organizations to operate with more care of the
environment.
Environmentalists are not again marketing and consumption
they simply want people and organizations to operate with more care of the
environment the marketing systems goal they assert should not be to
maximize consumption consumer choice or consumer satisfaction but rather to
maximize life quality life equality mens not only the quantity and quality of
consumer goods and services but also the quality of the environment.
Environmentalists want environmental costs included in both producer and
consumer decision-making.
affect marketing strategies
The first of modern environmentalism in the United States was
driven by environmental groups and concerned consumers in the 1960s and
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1970s. They were concerned with damage to the ecosystem caused by strip
mining forest depletion acid rain loss of the atmosphere ozone layer toxic
wastes and litter. They also were concerned with the loss of recreational areas
and with the increase in health problems caused by bad air polluted water and
chemically treated food.
The second environmentalism wave was driven by government,
which passed laws and regulations during the 1970s and 1980s governing
industrial practices impacting the environment. This wave hit some industries
hard. Still companies and utilities had to invest billion of dollars in pollution
control equipment and costlier fuels. The auto industry had to introduce
expensive mission controls in cars.
The packaging industry had to find ways to reduce litter. These industries and
others have of the resented and resisted environmental regulations especially
when they have been imposed too rapidly to allow companies to make proper
adjustments. Many of these companies claim they have had to absorb large
costs, which have made them less competitive.
Environmentalism crates some special challenges for global
marketers. As international trade barriers come down and global markets
expand environmental issues are having an ever-greater impact on
international trade Countries in North America. Western Europe and other
developed regions are developing stringent environmental standards. In the
United States for example more than tow dozen major pieces of environmental
legislation have been enacted since 1970 and recent events suggest that more
regulation is on the way. A side accord to the North American free trade
agreement NAFTA set up a commission for resolving environmental matters.
The European Unions eco Management and audit regulation provides
guidelines for environmental self-regulation.
Ans part (b)
Role of ethics in marketing
Public policy and ethical issues in marketing

Direct marketers and their customers usually enjoy mutually
rewarding relationships. Occasionally however a darker side emerges .the
aggressive and sometimes shady taxies of a few direct marketers can bother
or harm consumers giving the entire industry a black eye. Abuses range from
simple excesses that irritate consumers to instance of unfair practices or even
outright deception and fraud. During the past few years the direct marketing
industry has also faced growing concerns about invasion of privacy issues.
Irritation unfairness deception and fraud
Direct marketing excesses sometimes annoy or offend
consumer mote of us dislike direct repose television commercials that are too
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loud too long and too insistent. Especially bothersome is dinnertime or late
night phone calls beyond irritating consumer some direct marketers have been
accused of taking unfair advantage of impulsive or less sophisticated buyers.
Television shipping shows and programming long elaborately staged
demonstrations Claims of drastic price reductions while they last time
limitations and unequaled ease of purchase to inflame buyers who have low
sales resistance.
Invasion of privacy
Invasion of privacy is perhaps the toughest public policy issue
now confronting the direct marketing industry. These days it seems that
almost every time consumers order products by mail or telephone enter a
sweepstake alpha for a credit card or take out a magazine subscription their
names are entered into some companies already bulging database. Suing
sophisticated computer technologies direct marketers can use these database
to microsurgery their selling efforts.
Discuss the public policy and ethical issues facing discuss marketers
Direct marketers and their customers have typically
forgot mutually rewarding relationships. However there remains a potential for
customer abuse ranging from irritation and unfair practices to deception and
fraud in addition there have been growing concerns about invasion of privacy
perhaps the most difficult pubic policy issue currently facing the direct market
industry.
Companies that know about individual customer needs and
characteristics can customaries their offers messages delivery modes and
payment methods so maximize customer value and satisfaction. Answer the
following question about these companies.
a)
b)
c)
d)
e)
State farm insurance

IBM
New York metropolitan opera
American cancer society and
Lexus
How could the companies create customer databases that

would reveal significant information about their customers? Where would they
get their information? Do you think the cost of building a database would be
significant what do you think would be the most significant demographic
information that should be part of the individual databases.
Direct mail marketing used to mean sending an offer
announcement reminder or item to a person through the mail. Today however
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we are fast becoming an electronic society and new forms of direct

communication are emerging.
a) Fax mail
b) E-mail and
c) Voice mail as forms of direct mail
Be sure to examine the advantages disadvantages
customer profile competitive advantage cost and future of the forms. Choose
either a direct response television commercial or an infomercial and compare
it against more traditional approaches such as radio news paper magazine in
store display or outdoors advertising consider at the following questions.
a) Under what circumstances do you think the two forms of direct response
work best?
b) What types of products seem naturally suited to the direct response
form
c) What do you see as the greatest disadvantage to the direct response
approach?
For marketing purpose what do we really know about the
typical Internet user using the information in as a springboard prepares a brief
profile of the typical internet user? What additional information would you like
to know and how might you obtain the information about the Internet use for.
a) An automobile company desiring to design an attractive web site for the
first time
b) A stock brokerage firm wishing to attract new customers and
c) An airline company wishing to expand its customer base
On line marketing offers great promise for the future assume
that you were the sales manger for a local travel agency make a case that
would persuade your superiors that going online would be a good investment
be sure to cite positive and negative consequences.
FEDERAL GOVERNMENT REGULATION
Legal powers - broadest & most direct power over promotional practices
Advertising substantiation program
Consent order
Cease & desist order
Affirmative disclosure
Corrective advertising
Celebrity endorsements
Q.No. 7
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If you owned a company that distributed products only to the United

States of America and Canada, would a web site benedictory our
company?
Ans
The U S department of Defense initially to link government labs
contractors and military installations Today the internet links computer users
of all types around the world anyone with a PC and modem or television and
set top web box and the right software can browse the internet to obtain or
share information on a almost any subject and to interact with other users.
Companies are using the Internet to link employees to interact with other
users. Companies are using the internet to link employees in remote offices
distribute sales information more quickly build closer relationships with
customers and suppliers an sell and is tribute their products more efficiently
and effectively.
Internet usage surged in the early 1990s with the development o
f the user-friendly World Wide Web. More than fifty million people now are
surfing the Internet each month up from just one million people in late 1994.
There may be as many as fourth to six million web sites worldwide and these
numbers are growing explosively. The World Wide Web has given companies
success to millions of new customer sat a fraction of the cost of print and
television advertising.
A forum may operate a library a chat room for real time message
exchanges and even a classified ad directory for example. America online
boasts some 14000-chat rooms, which account for a third of its members
online time. it recently introduced buddy lists which alert members when
friends are online allowing them to exchange instant messages.
Special interest groups sponsor most forums. Thus as a major
musical instruments manufacturer Yamaha might start a forum on classical
music. Newsgroups are the Internet version of forums. However such groups
are limited to people posting and reading messages on a specified topic rather
than managing libraries or conferencing. Internet users can participate in
newspaper with 0out subscribing. There are thousands of newsgroups dealing
with every imaginable topic, from healthful eating and caring for you bonsai
tree to collecting antique cars or exchanging views on the latest soap opera
happenings.
Bulletin board systems BBSS are online services that center on a
specific topic or group. There are over 60000 BBSS organization the United
States dealing with topics such as vacations healths computer games and real
estate. Marketers might want to identify and participate in newsgroups and
BBSS that attract subscribers who fit there target markets. However
newsgroups and BBS users often resent commercial intrusions on their new
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space so the marketer must tread carefully participating in subtle ways that
provide real value to participant.
Web communities can be either social or work related. One
successful work related community is agriculture online or agriculture online.
This site offers commodity prices recent farm news and chat rooms of all
types. Rural surfers can visits the electronic coffee shop and pick up the latest
down on the farm joke or join a hot discussion on controlling soybean cyst
nematodes agriculture online has been highly successful attracting as many as
five million hits per moths.
Companies can also sign on with any of a number of web casting
services which automatically download customized information to recipients
PCS. For a monthly fee subscribers to these services can specify the channels
they want news company information entertainment and others and the topics
they are interested in. then rather than spending hours scouring the internet
they can sit back while the web caster automatically delivers information of
interest to their desktops.
Web casting also know as push programming affords an
attractive channel through which online marketers can deliver their Internet
advertising or other information content. Now instead of waiting for web
surfers to stumble onto their sites and banner adds marketers a can send
animated ads directly to the desktops of target customers. Retailers such as
lands end and virtual vineyards are dabbling with such in your face methods to
notify subscribers of promotions and even send them order forms. Merchants
can approach live sales prospects and not just couch potatoes.
Web casting services such as point cast and Infusion are growing
fast and attracting can ever-increasing number of advertisers. The major
commercial online services are also beginning to offer recasting to other
members. For example American online has added a feature called driveway
that will fetch information web pages and e-mail based on members
preferences and automatically deliver it to their PCS.
However as with other types of online marketing companies must
be careful that they do not cause resentment among Internet users who are
already overloaded with junk e-mail.
Q.No.8
Write short notes on the following
(a)
Undifferentiated marketing.
(b)
Unsought product.
(c)
Product assortment.
Ans part (a)
Undifferentiated marketing
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A market coverage strategy in which a firm decides to ignore

market segment differences and go after the whole market with one
offer.Using an undifferentiated marketing strategy a firm might decide to
ignore marketing segment differences and go after the whole market with one
offer. This mass marketing strategy focuses on what is common in the needs
of consumers rather than on what is different. The company design as product
and a marketing program that will appeal to the largest number of buyers. It
relies on mass distribution and mass advertising and it aims to give the
product a superior image in peoples minds. An example of undifferentiated
marketing is the Hershey companys marketing some years ago of only one
chocolate candy bar for everyone.
Undifferentiated marketing proves cost economies. The narrow
product lien keeps down production inventory and transportation costs. The
undifferentiated advertising program keeps down advertising costs. The
absence of segment marketing research and planning lowers the costs of
marketing research and product management.
Most modern marketers however have strong doubts about this
strategy difficulties arise in developing a product or brand that will satisfy all
consumers firms using undifferentiated marketing typically develop an offer
timed at the largest segments in the market. When several firms to this heavy
competition develop in the largest segments and less satisfaction results in the
smaller ones. The heavy companys recognition of this problem has led firms
to be more interested in smaller market segments.
Part (b)
Unsought product
Consumer product that the consumer either does not know about
or knows about but does not normally thinks of buying. Using products are
consumer product that the consumers either does not know about or knows
about but does not normally think of buying. Most major new innovations are
unsought until the consumer becomes aware of them through advertising.
Classic examples of known business through product and services are life
insurance and blood donations to the Red Cross By their very nature.
Unsought products require a lot of advertising personal selling and other
marketing efforts.
Little product awareness and knowledge (or if aware, sometimes negative
interest)
Pricing varies
Distribution varies
Aggressive advertising
and personal selling by producers and resellers
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Part (c)
Retailers must decide on three major product variables product

assortment services mix and store atmosphere The retailers proud cut
assortment should match target shoppers expectations. The retailer must
determine both the product assortments width and its depth.
Thus a restaurant can offer a narrow and shallow assortment small
lunch counter a narrow and deep assortment delicatessen a wide and shallow
assortment cafeteria or a wide and wide and deep assortment large restaurant.
Another product assortment element is the quality of the gods. The customer is
interested not only in the range of choice but also in the quality of the product
available.
No matter what the stores product assortment and quality level
there always will be competitors with similar assortments and quality therefore
the retailer must search for other ways to differentiate itself from similar
competitors. It can use any of several product differentiation strategies. For
one it can offer merchandises that no other competitor carries its own private
brands or national brands on which it holds exclusive.
For example the limited designs most of the clothes carried by
its store and sakes gets exclusive rights to carry a well known designers label
second the trailer can fresher blockbuster merchandise sign events blooming
dales is known for running spectacular shows featuring goods from a certain
country such as India or china.
Or the retailer can offer surprise merchandise as when Lehmans offers
surprise assortments of seconds overstocks and closeouts. Finally the retailer
can differentiate itself by offering a highly targeted product assortment lane
Bryant carries goods for larger women brook stone offers an unusual
assortment of gadgets in what amounts to an adult toy store. Retailer also
must decide on a services mix to offer customers. The old mom and op
grocery store suffered home delivery credit and conversation services that
today supermarkets ignore. The serves mix is one of the key tools of nonprime
completion for getting one store apart from another.
The stores atmosphere is another elements in its product
arsenal. Every store has a psychical layout that makes moving around in it
either shard or easy. Each store has a feel one store is cluttered another
charming a third plus a fourth somber. The store must have a planned
atmosphere that suits the target market and moves customers to buy.
Increasingly retailers are tuning their stores into theaters that transport
customers into unusual existent shopping environments for example toy seller
F A O Schwartzs three story toy store on Chicagos upscale.
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North Michigan avenue has customs lining up to get in. once in

customers take an escalator to the third floor then make their way down
through various boutiques where crowds gather around spectacular Lego
exhibits Barbie doll departments giant stuffed zoo animals and even a talking
tree. Similarly bookseller Barnes and noble sue at Mosher to turn shopping for
books into entertainment it has found that to consumers shopping is a social
activity. They do it to mingle with others in a prosperous feeling crowd to see
whets new to enjoy the theatrical dazzle of the display to treat them to
something interesting or unexpected.
26

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ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

Semester: Autumn 2004

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