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Master of Business Administration - MBA Semester 2

MB0046 - Marketing Management - 4 Credits
Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer aII the questions.

Q.1 What is Marketing Information System? ExpIain its characteristics,
benefits and information types.
A Marketing nformation System can be defined as 'a system in which
marketing information is formally gathered, stored, analysed and distributed to
managers in accord with their informational needs on a regular basis'.
Set of procedures and practices employed in analyzing and assessing
marketing information, gathered continuously from sources inside and outside of a
firm. Timely marketing information provides basis for decisions such as product
development or improvement, pricing, packaging, distribution, media selection, and
promotion.
Characteristics of MIS
!hilip Kotler defines MS as "a system that consists of people, equipment and
procedures to gather, sort, analyze, evaluate and distribute needed, timely and
accurate information to marketing decision makers.
ts characteristics are as follows:
1. t is a planned system developed to facilitate smooth and continuous flow of
information.
2. t provides pertinent information, collected from sources both internal and external
to the company, for use as the basis of marketing decision making.
3. t provides right information at the right time to the right person.
A well designed MS serves as a company's nerve centre, continuously
monitoring the market environment both inside and outside the organization. n the
process, it collects lot of data and stores in the form of a database which is
maintained in an organized manner. Marketers classify and analyze this data from
the database as needed.
Benefits of MIS (Marketing Information System)
Various benefits of having a MS and resultant flow of marketing information
are given below:
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1. t allows marketing managers to carry out their analysis, planning implementation
and control responsibilities more effectively.
2. t ensures effective tapping of marketing opportunities and enables the company
to develop effective safeguard against emerging marketing threats.
3. t provides marketing intelligence to the firm and helps in early spotting of
changing trends.
4. t helps the firm adapt its products and services to the needs and tastes of the
customers.
5. By providing quality marketing information to the decision maker, MS helps in
improving the quality of decision making.
%ypes of Marketing Informations
A Marketing nformation System supplies three types of information.
1. Recurrent Information is the data that MS supplies periodically at a weekly,
monthly, quarterly, or annual interval. This includes data such as sales, Market
Share, sales call reports, inventory levels, payables, and receivables etc. which are
made available regularly. nformation on customer awareness of company's brands,
advertising campaigns and similar data on close competitors can also be provided.
2. Monitoring Information is the data obtained from regular scanning of certain
sources such as trade journals and other publications. Here relevant data from
external environment is captured to monitor changes and trends related to marketing
situation. Data about competitors can also be part of this category. Some of these
data can be purchased at a price from commercial sources such as
Market Research agencies or from Government sources.
3. Problem related or customized information is developed in response to some
specific requirement related to a marketing problem or any particular data requested
by a manager. !rimary Data or Secondary Data (or both) are collected through
survey Research in response to specific need.
For example, if the company has developed a new product, the marketing manager
may want to find out the opinion of the target customers before launching the product
in the market. Such data is generated by conducting a market research study with
adequate sample size, and the findings obtained are used to help decide whether
the product is accepted and can be launched.


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Q.2 a. Examine how a firm's macro environment operates.
The term micro-environment denotes those elements over which the
marketing firm has control or which it can use in order to gain information that will
better help it in its marketing operations. n other words, these are elements that can
be manipulated, or used to glean information, in order to provide fuller satisfaction to
the company's customers. The objective of marketing philosophy is to make profits
through satisfying customers. This is accomplished through the manipulation of the
variables over which a company has control in such a way as to optimise this
objective. The variables are what Neil Borden has termed 'the marketing mix' which
is a combination of all the 'ingredients' in a 'recipe' that is designed to prove most
attractive to customers. n this case the ingredients are individual elements that
marketing can manipulate into the most appropriate mix. E Jerome McCarthy further
dubbed the variables that the company can control in order to reach its target market
the 'four !s'. Each of these is discussed in detail in later chapters, but a brief
discussion now follows upon each of these elements of the marketing mix together
with an explanation of how they fit into the overall notion of marketing.
A scan of the external macro-environment in which the firm operates can be
expressed in terms of the following factors:
Political
conomic
Social
%echnological
The acronym !EST (or sometimes rearranged as "STE!) is used to describe a
framework for the analysis of these macro environmental factors. A !EST analysis
fits into an overall environmental scan as shown in the following diagram:
EnvironmentaI Scan
/ \
ExternaI AnaIysis InternaI AnaIysis
/ \
Macroenvironment Microenvironment
|
!.E.S.T.

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Political Factors
!olitical factors include government regulations and legal issues and define
both formal and informal rules under which the firm must operate. Some examples
include:
Tax policy
Employment laws
Environmental regulations
Trade restrictions and tariffs
Political stability
conomic Factors
Economic factors affect the purchasing power of potential customers and the
firm's cost of capital. The following are examples of factors in the macro economy:
Economic growth
Interest rates
Exchange rates
Inflation rate
Social Factors
Social factors include the demographic and cultural aspects of the external
macro environment.These factors affect customer needs and the size of potential
markets. Some social factors include:
Health consciousness
Population growth rate
Age distribution
Career attitudes
Emphasis on safety
%echnological Factors
Technological factors can lower barriers to entry, reduce minimum efficient
production levels, and influence outsourcing decisions. Some technological factors
include:
R&D activity
Automation
Technology incentives
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Rate of technological change
ternal Opportunities and %hreats
The !EST factors combined with external micro environmental factors can be
classified as opportunities and threats in a SWOT analysis.

Q.2 b. Mention the key points in !sychoanaIytic modeI of consumer behaviour.
%he Psychoanalytical Model:
The psychoanalytical model draws from Freudian !sychology.
According to this model, the individual consumer has a complex set of deep-
seated motives which drive him towards certain buying decisions. The buyer has a
private world with all his hidden fears, suppressed desires and totally subjective
longings. His buying action can be influenced by appealing to these desires and
longings. The psychoanalytical theory is attributed to the work of eminent
psychologist Sigmund Freud. Freud introduced personality as a motivating force in
human behavior.
According to this theory, the mental framework of a human being is composed
of three elements, namely,
%he id or the instinctive, pleasure seeking element. t is the reservoir of the
instinctive impulses that a man is born with and whose processes are entirely
subconscious. t includes the aggressive, destructive and sexual impulses of man.
%he superego or the internal filter that presents to the individual the behavioral
expectations of society. t develops out of the id, dominates the ego and represents
the inhibitions of instinct which is characteristic of man. t represents the moral and
ethical elements, the conscience
%he ego or the control device that maintains a balance between the id and the
superego.t is the most superficial portion of the id t is modified by the influence of
the outside world. ts processes are entirely conscious because it is concerned with
the perception of the outside world.
The basic theme of the theory is the belief that a person is unable to satisfy all
his needs within the bounds of society. Consequently, such unsatisfied needs create
tension within an individual which have to be repressed. Such repressed tension is
always said to exist in the subconscious and continues to influence consumer
behavior.
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. %he Sociological Model: According to the sociological model, the individual
buyer is influenced by society or intimate groups as well as social classes. His
buying decisions are not totally governed by utility; He has a desire to emulate,
follow and fit in with his immediate environment.
5. %he Nicosia Model: n recent years, some efforts have been made by marketing
scholars to build buyer behavior models totally from the marketing man's standpoint.
The Nicosia model and the Howard and Sheth model are two important models in
this category. Both of them belong to the category called the systems model, where
the human being is analyzed as a system with stimuli as the input to the system and
behavior as the output of the system. Francesco Nicosia, an expert in consumer
motivation and behavior put forward his model of buyer behavior in 1966.
The model tries to establish the linkages between a firm and its consumer
how the activities of the firm influence the consumer and result in his decision to buy.
The messages from the firm first influence the predisposition of the consumer
towards the product. Depending on the situation, he develops a certain attitude
towards the product. t may lead to a search for the product or an evaluation of the
product. f these steps have a positive impact on him, it may result in a decision to
buy. This is the sum and substance of the 'activity explanations' in the Nicosia
Model.
The Nicosia Model groups these activities into four basic fields. Field one has
two subfields the firm's attributes and the consumer's attributes. An advertising
message from the firm reaches the consumer's attributes. Depending on the way the
message is received by the consumer, a certain attribute may develop, and this
becomes the input for Field Two. Field Two is the area of search and evaluation of
the advertised product and other alternatives. f this process results in a motivation to
buy, it becomes the input for Field Three. Field Three consists of the act of purchase.
And Field Four consists of the use of the purchased item.

Q.3. ExpIain the key roIes pIayed and various steps invoIved in organizationaI
buying.
Point 1 - Introduction.
The need for an understanding of the organizational buying process has
grown in recent years due to the many competitive challenges presented in
business-to-business markets. Since 1980 there have been a number of key
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changes in this area, including the growth of outsourcing, the increasing power
enjoyed by purchasing departments and the importance given to developing
partnerships with
suppliers.
Point 2 - %he organizational buying behaviour process.
The organizational buying behaviour process is well documented with many
models depicting the various phases, the members involved, and the decisions
made in each phase. The basic five phase model can be extended to eight;
purchase initiation; evaluations criteria formation; information search; supplier
definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and
choice implementation (Matbuy, 1986).
Point 3 - %he buying centre.
The buying centre consists of those people in the organizational who are
involved directly or indirectly in the buying process, i.e. the user, buyer influencer,
decider and gatekeeper to who the role of 'initiator' has also been added. The buyers
in the process are subject to a wide variety and complexity of buying motives and
rules of selection. The Matbuy model encourages marketers to focus their efforts on
who is making what decisions based on which criteria.
Point - Risk and uncertainty
The driving forces of organizational buying behaviour. This is concerned with
the role of risk or uncertainty on buying behaviour. The level of risk depends upon
the characteristics of the buying situation faced. The supplier can influence the
degree of perceived uncertainty by the buyer and cause certain desired behavioural
reactions by the use of information and the implementation of certain actions. The
risks perceived by the customer can result from a combination of the characteristics
of various factors: the transaction involved the relationship with the supplier, and his
position vis--vis the supply market.
Point 5 - Factors influencing organizational buying behaviour.
Three key factors are shown to influence organizational buying behaviour,
these are, types of buying situations and situational factors, geographical and
cultural factors and time factors.
Point 6 - Purchasing Strategy.
The purchasing function is of great importance because its actions will impact
directly on the organization's profitability. !urchasing strategy aims to evaluate and
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classify the various items purchased in order to be able to choose and manage
suppliers accordingly. Classification is along two dimensions: importance of items
purchased and characteristics of the supply market. Actions can be taken to
influence the supply market. Based on the type of items purchased and on its
position in the buying matrix, a company will develop different relationships with
suppliers depending upon the number of suppliers, the supplier's share,
characteristics of selected suppliers, and the nature of customer-supplier
relationships. The degree of centralization of buying activities and the missions and
status of the buying function can help support purchasing strategy. The company will
adapt its procedures to the type of items purchased which in turn will influence
relationships with suppliers.
Point 7 - %he future.
Two activities which will be crucial to the future development of organizational
buying behaviour will be information technology and production technologies.
Point 8 - Conclusion.
Organizational buying behaviour is a very complex area, however, an
understanding of the key factors are fundamental to marketing strategy and thus an
organization's ability to compete effectively in the market place.

Q.4 ExpIain the different marketing phiIosophies and its approach.
Marketing is a societal process by which individuals and groups obtain what
they need and want through creating, offering and freely exchanging products and
services of value with others.
According to the American Marketing Association, "Marketing is the process
of planning and executing the conception, pricing, promotion and distribution of
ideas, goods and services to create exchanges that satisfy individual and
organizational goods.There are six competing philosophies under which
organizations conduct marketing activities "the production concept, product concept,
selling concept, marketing concept, customer concept; and societal concept.
1) %he Production Concept The production concept is one of the oldest concepts
in business.The production concept holds that consumers will prefer products that
are widely available and inexpensive. Managers of production-oriented businesses
concentrate on achieving high production efficiency, low costs and mass distribution.
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They assume that consumers are primarily interested in products availability
and low prices. This philosophy makes sense in developing countries, where
consumers are more interested in obtaining the product than its features. t is also
used when a company wants to expand the market.
2. %he product Concept !roduct concept holds that consumer will favour these
products that offer the most quality, performance and innovative features. Managers
in these organizations focus on making superior products and improving them over
time. They assume that buyers admire well-made products and can evaluate quality
and performance product oriented companies often trust that their engineers can
design exceptional products. They get little or no customer input, and very often they
will not even examine competitor's products.
3. %he Selling Concept: The selling concept holds that consumers and businesses,
if left alone, will ordinarily not buy enough of the organization's products. The
organization most, therefore, undertakes an aggressive selling and promotion effort.
This concept assumes that consumers typically show buying inertia or resistance
and must be coaxed into buying. t also assumes that the company has a whole
battery of effective selling and promotion tools to stimulate more buying. The selling
concept is epitomized by the thinking that "The purpose of marketing is to sell more
stuff to more people for more money in order to make more profit
Most firms practice the selling concept when they have over capacity. Their
aim is to sell what they make rather then make what market wants.
. %he Marketing Concept: The marketing concepts hold that the key to achieving
its organizational goals consists of the company being more effective then
competitors in creating, delivering and communicating superior customer value to its
chosen target markets.
The marketing concept rests on four pillars: target market, customer needs,
integrated marketing and profitability. There is a contrast between selling and
marketing concepts:
"Selling focuses on the needs of the seller; marketing on the needs of the buyer.
Selling is preoccupied with the seller's need to convert his product into cash;
marketing with the ideas of satisfying the needs of the customers by means of the
product and the whole cluster of things associated with creating, delivering and
finally consuming it.
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5. %he customer Concept Under customer concept, companies shape separate
offers, services and messages to individual customers. These companies collect
information on each customer's past transactions, demographics, psychographics
and media and distribution preferences. They hope to achieve profitable growth
through capturing a larger share of each customer's expenditures by building high
customer loyalty and focusing on customer lifetime value.
The ability of a company to deal with customers are at a time become
practical as a result of advances in factory customization, computers, the internet
and database marketing software.
%he Societal Marketing Concept The societal marketing concept holds that the
organization's goal is to determine the needs, wants and interests of target markets
and to deliver the desired satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the consumer's and the society's
well being.
The societal marketing concept calls upon marketers to build social and
ethical considerations into their marketing practices. They must balance and juggle
the often-conflicting criteria of company profits, consumer want satisfaction and
public interest.
Companies see cause-related marketing as an opportunity to enhance their
corporate reputation, raise brand awareness, increase customer loyalty, build sales
and increase press coverage. They believe that consumers will increasingly look for
signs of good corporate citizenship that go beyond supplying rational and emotional
benefits.
Q.5. What are the various stages invoIved in decision process when a
consumer is buying new product? AIso, expIain the adoption process.
Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision !rocess (For complex
decisions). Actual purchasing is only one stage of the process. Not all decision
processes lead to a purchase. All consumer decisions do not always include all 6
stages, determined by the degree of complexity.discussed next.
The stages are
1. Problem Recognition (awareness of need)difference between the desired state
and the actual condition. Deficit in assortment of products. HungerFood. Hunger
stimulates your need to eat.
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Can be stimulated by the marketer through product informationdid not know you
were deficient? .E.,see a commercial for a new pair of shoes, stimulates your
recognition that you need a new pair of shoes.
2. Information search-
o nternal search, memory.
o External search if you need more information. Friends and relatives (word of
mouth).
Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the
evoked set.
Hungry, want to go out and eat, evoked set is :
o Chinese food
o Indian food
o Burger king
o Klondike kates etc
3. valuation of Alternatives-need to establish criteria for evaluation features the
buyer wants or does not want. Rank/weight alternatives or resume search. May
decide that you want to eat something spicy, ndian gets highest rank etc.
f not satisfied with your choice then returns to the search phase. Can you
think of another restaurant? Look in the yellow pages etc. nformation from different
sources may be treated differently. Marketers try to influence by "framing
alternatives.
. Purchase decisionChoose buying alternative, includes product, package, store,
method of purchase etc.
5. PurchaseMay differ from decision, time lapse between 4 & 5, product
availability.
6. Post-Purchase valuation-outcome: Satisfaction or Dissatisfaction. Cognitive
Dissonance, have you made the right decision. This can be reduced by warranties,
after sales communication etc.
After eating an indian meal, may think that really you wanted a Chinese meal
instead.



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Adoption Process
Adoption is an individual "s decision to become a regular user of a product.
How do potential customers learn about new products, try them, and adopt or reject
them? The consumer adoption process is later followed by the consumer loyalty
process, which is the concern of the established producer. Years ago, new product
marketers used a mass market approach to launch products. This approach had two
main drawbacks: t called for heavy marketing expenditures, and it involved many
wasted exposures. These drawbacks led to a second approach, heavy user target
marketing. This approach makes sense, provided that heavy users are identifiable
and are early adopters. However, even within the heavy user group, many heavy
users are loyal to existing brands new product marketers now aim at consumers who
are early adopters.
The theory of innovation diffusion and consumer adoption helps marketers
identify early adopters.
An innovation is any good, service, or idea that is perceived by someone as
new. The idea may have a long History, but it is an innovation to the person who
sees it as new. nnovations take time to spread through the social system. The
nnovation diffusion process is defined as Coethe spread of a new idea from its
source of invention or creation to its ultimate users or adopters. The consumer
adoption process is the mental process through which an individual passes from first
hearing about an innovation to final adoption.
Adopters of new products have been observed to move through five stages:
1. Awareness : The consumer becomes aware of the innovation but lacks
information about it.
2. Interest : The consumer is stimulated to seek information about the innovation.
3. valuation: The consumer considers whether to try the innovation
. %rial: The consumer tries the innovation to improve his or her estimate of its
value.
5. Adoption : The consumer decides to make full and regular use of the innovation.





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Q.6. ExpIain briefIy the marketing mix eIements for an automobiIe company
giving sufficient
Marketing mix is the combination of elements that you will use to market your
product. There are four elements: !roduct, !lace, !rice and !romotion. They are
called the four !s of the marketing mix.
The objectives of this lesson about marketing mix are to give you:
The tools you need for establishing your detailed marketing plan and forecasting
your sales.
Challenge
Product
Place
4 Price
5 Promotion
Sales strategy
7 Do it yourself
8 Coaching

1. CHALLNG
ou have gotten a rough idea about the market situation and the
possibIe positioning of your product. Of course, it's far to be sufficient. Now, you
must write your detailed planning. t means that brainstorming is ended and that you
have to go to the specifics in examining and checking the entire hypothesis you had
made in the preceding chapters. You will use the marketing mix.
Some people think that the four !s are old fashionable and propose a new paradigm:
The four Cs! !roduct becomes customer needs; !lace becomes convenience, price
is replaced by cost to the user, promotion becomes communication. t looks like a
joke but the Cs is more customer-oriented.
2. PRODUC%
A good product makes its marketing by itseIf because it gives benefits
to the customer.
We can expect that you have right now a clear idea about the benefits your product
can offer. Suppose now that the competitors products offer the same benefits, same
quality, same price. You have then to differentiate your product with design,
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features, packaging, services, warranties, return and so on. n general, differentiation
is mainly related to:
a) %he design: it can be a decisive advantage but it changes with fads. For
example, a fun board must offer a good and fashionable design adapted to young
people.
b) %he packaging: t must provide a better appearance and a convenient use. n
food business, products often differ only by packaging.
c) %he safety: t does not concern fun board but it matters very much for products
used by kids.
d) %he 'green" A friendly product to environment gets an advantage among some
segments.
n business to business and for expensive items, the best mean of
differentiation are warranties, return poIicy, maintenance service, time
payments and financiaI and insurance services Iinked to the product.
3. PLAC-DIS%RIBU%ION
A crucial decision in any marketing mix is to correctly identify the distribution
channels.
The question "how to reach the customer" must always be in your mind.
Definition: %he place is where you can epect to find your customer and
consequently, where the sale is realized. Knowing this place, you have to look
for a distribution channel in order to reach your customer.
n fact, instead of "place it would be better to use the word "distribution but the MBA
lingo uses "place to memorize the 4 !s of the marketing mix!
. PRIC
!rice means the pricing strategy you will use. You have already fixed, as an
hypothesis a customer price fitted to your customer profile but you will have now to
bargain it with the wholesalers and retailers. Do not be foolish: They know better the
market than you and you have to listen their advices.
5. PROMO%ION
Advertising, public relations and so on are included in promotion and
consequently in the 4!s. Sometimes, packaging becomes a fifth !. As promotion is
closely linked to the sales, will mention here the most common features about the
sale strategy.
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Definition: %he function of promotion is to affect the customer behavior in
order to close a sale.
Of course, it must be consistent with the buying process described in the consumer
analysis.!romotion includes mainly three topics: advertisement, public relations, and
sales promotions.
a) Advertisement:
t takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You
have to take notice about three important notions:
i) Reach is the percentage of the target market which is affected by your
advertisementor example, if you advertise on radio you must know how many
people belonging to your segment can be affected
ii) Frequency is the number of time a person is exposed to your message It is
said that a person must be exposed seven times to the message before to be
aware of it Reach & frequency gives the gross rating point. You have to
evaluate it before any advertisement campaign
iii) Message: Sometimes, it is called a creative Anyway, the message must get
attraction, capture interest, create desire and finally require action that is to say
close the sale
b) Public relations:
!ublic relations are more subtle and rely mainly on your own personality. For
example, you can deliver public speeches on subjects such as economics, geo-
economics, futurology to several organizations (civic groups, political groups,
fraternal organizations, professional associations)

6. SALS S%RA%GY
Sales bring in the money. Salesmen are directly exposed to the pressure of
finding prospects, making deals, beating competition and bringing money.