Unit 8 Marketing Management PYQ’s 17th Oct 2020 Shift 1

The correct answer is – Deals with customers directly

Mass Marketing does not deal with customers directly.

Key Takeaways

1. Mass marketing is a market strategy in which a firm decides to ignore market segment differences and appeal to the whole market with one offer or one strategy, which supports the idea of broadcasting a message that will reach the largest number of people possible.
2. Mass marketing has very little direct contact with its customers and must distribute its product through various retail outlets alongside its competitors.

1. Communication is impersonal, as evidenced by its national television and print advertising campaigns, couponing, and point-of-purchase displays.
2. The success of mass marketing is contingent on the probability that within the huge audience exposed to the marketing strategy there exist sufficient potential customers interested in the product to make the strategy worthwhile.

The correct answer is – Hindustan Unilever Ltd.

Hindustan Unilever Ltd is not a major direct selling company in India.

• Eureka Forbes focused solely on its direct sales model with its iconic Eurochamp, “the friendly man from Eureka Forbes,” going door-to-door selling the firm’s primary products — water purifiers and vacuum cleaners, which respectively account for 75% and 22% of the company’s sales.
• Modicare Limited, one of India’s leading Direct Selling Companies, has been recognized in the top 5 among India’s Great Mid-size Workplaces 2020 by the Great Place to Work® Institute. The recognition is a testament to the rich culture of the organization that values respect, transparency, collaboration, and empowerment. Modicare is the third company of Modi Enterprises, after Indofil Industries Limited and Godfrey Phillips India that has been recognized by Great Place to Work® and reflects the commitment of the group towards its employees.

• Amway is the world’s largest direct selling company ($8.8B reported sales, 2018). It manufactures and distributes nutrition, beauty, personal care, and home products—which are exclusively sold in 100 countries through Amway Independent Business Owners (IBOs).

HUL has a large distribution network comprising 5000 redistribution stockists and 40 C & F agents (Clearing and Forwarding Agents). The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company.

Additional Notes

1. Direct Selling means when distributors avoid intermediaries in the supply chain and sell products directly to consumers.

1. In traditional retail settings, products are sold online or at a physical store, but direct selling relies heavily on salespeople getting in front of customers in nontraditional settings.

The correct answer is – Direct Selling Agent

In Marketing, DSA stands for Direct Selling Agent.

Key Takeaways

1. DSA is an abbreviation of Direct Selling Agent.

1. A direct selling agent or DSA is a person who works as a referral agent for a bank or NBFC.
2. They are marketing agents who bring business to the banks.
3. The job of a DSA is to find potential customers for the bank they represent.
4. To do this, DSAs will look for people who are in the market for a loan.
5. These leads are then directed to the concerned bank or NBFC and the loan process is taken forward.
6. For the effort put in by the DSA, a payout is provided. This payout is a percentage of the type of loan and the loan amount. And this payout is a great way to earn a little extra cash.

1. In rural areas, DSA’s are known as business correspondents.

Thus, option 3 is the correct answer.

The correct answer is – Growth

Product Life Cycle:

1. The term product life cycle refers to the length of time a product is introduced to consumers into the market until it’s removed from the shelves.
2. The life cycle of a product is broken into four stages—introduction, growth, maturity, and decline.
3. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.
4. The process of strategizing ways to continuously support and maintain a product is called product life cycle management.

Key Takeaways

1. Introduction Stage:
   • The introduction stage shows low sales numbers as the product is being introduced in the market.
   • Profit is zero or negative in this stage because of the heavy expenses of product introduction.
   • Sales Promotion Strategy: Use heavy sales promotion to entice trial.
2. Growth Stage:
   • With proper marketing, a product can go into the growth stage.
   • During the growth stage, sales rise rapidly as consumers begin to accept the product.
   • The production runs become longer, and economies of scale are achieved, reducing per-unit cost, and also helping profits to increase rapidly.
   • Sales Promotion Strategy: Reduce to take advantage of heavy consumer demand.
3. Maturity Stage:
   • During the maturity stage of the product life cycle, the sharp growth in sales begins to slow, and profits at the beginning of this stage decline.
   • The most notable characteristic of this stage is the peaking of the product’s sales and profit curves.
   • At the beginning of the maturity stage, sales continue to grow but at a much slower rate.
   • Towards the end of this stage, sales and profits will start to fall fairly rapidly.
   • This stage is characterized by severe competition as many brands enter the market.
   • To combat competition, marketing costs increase substantially results in a reduction in profits.
   • Sales Promotion Strategy: Increase to encourage brand switching.

For any product, it’s PLC will go to the decline stage, where the product’s sales and profits fall very quickly, and most competitors leave the market. Sales Promotion Strategy: Reduce to a minimal level.

Thus, option 2 is the correct answer.

The correct answer is – Discount and allowance pricing

Discount and allowance pricing is a price adjustment strategy where a company reduces prices to reward customer responses such as volume purchases, paying early, or promoting the product.

Key Takeaways

Discount and allowance pricing can take many forms:

1. Discounts can be granted as a cash discount, a price reduction to buyers who pay their bills promptly.
2. Typical payment terms look like this: “2/10, net 30”, meaning that payment is due within 30 days, but the buyer can deduct 2 percent if the bill is paid within 10 days.
3. Also, a quantity discount can be given, which is a price reduction to buyers who buy large volumes.
4. A seasonal account is the third form of discount, being a price reduction to buyers who buy merchandise or services out of season.

Additional Notes

1. Psychological pricing: Adjusting prices for psychological effect
2. Promotional pricing: Temporarily reducing prices to increase short-run sales
3. Dynamic pricing: Adjusting prices continually to meet the characteristics and needs of individual customers and situations

The correct answer is – Perishability

Some doctors charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up, which is an example of Perishability.

Key Takeaways

Perishability – Characteristics of Services

1. Perishability means that services cannot be stored for later sale or use.
2. In other words, services cannot be inventoried.
3. This is one of the most significant characteristics of services, since it may have a major impact on financial results.

1. Doctors or dentists often charge patients for missed appointments because the service value has foregone. The value existed only at that particular point and disappeared when the patient did not come.

1. When demand is steady, the perishability of services is not a problem.
2. However, in the case of fluctuating demand, service firms can have difficult problems.
3. For this reason, transport companies own much more equipment than they would if demand were even throughout the day: the demand during rush-hours needs to be served at that specific time, it cannot be served later or earlier.

Additional Notes

1. Inseparability – Characteristics of Services

• Characteristics of services include inseparability, which means that services are produced and consumed at the same time.
• This also entails that services cannot be separated from their providers.
• Contrary to services, physical goods are produced, then stored, later sold, and even later consumed.
• Services are first sold, then produced and consumed at exactly the same time.

2. Intangibility – Characteristics of Services

• When thinking about the characteristics of services, intangibility may come to your mind first.
• Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before they are bought.
• You cannot try them out.
• For instance, airline passengers have nothing but a ticket and a promise that they will arrive at a certain time at a certain destination. But there is nothing that can be touched.

3. Variability – Characteristics of Services

• Variability does also belongs to the important characteristics of services.
• It refers to the fact that the quality of services can vary greatly, depending on who provides them and when, where, and how.
• Because of the labor-intensive nature of services, there is a great deal of difference in the quality of service provided by various providers, or even by the same providers at different times.

The correct answer is – (C), (E), (A), (D), (B)

Marketing Process: 5 Steps of Marketing Process

Marketing is how companies create value for customers and build strong customer relationships to capture value from customers in return. 5 step process of the marketing framework wherein value is created for customers and marketers capture value from customers in return.

Key Takeaways

Steps of the marketing process:

Step 1: Understanding The Marketplace And Customer:

• It is important to understand customer needs, wants, and demands to build want- satisfying market offerings and building value-laden customer relationships.
• This increases long-term customer equity for the firm.

Step 2: Designing A Customer-Driven Marketing Strategy: Focus areas for designing a marketing strategy:

• Selecting customers to serve -defining the target market
• Deciding how to serve customers in the best way – choosing a value proposition

Step 3: Constructing an integrated marketing plan that delivers superior value

• The company’s marketing strategy outlines which customers the company will serve and how it will create value. Then the marketer develops integrated marketing plans that will the intended value to target customers.
• It consists of the firm’s marketing mix (4Ps), the set of marketing tools the firm uses to implement its marketing strategy.

Step 4: Build Profitable Relationships

• Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Step 5: Capturing Value From Customers

• Customer relationship management’s ultimate aim is to produce high Customer equity – total combined lifetime values of all of the company’s current and potential customers.

Therefore, option 4 is the correct answer.

The correct answer is – (B) only

Defensive marketing refers to the actions of a brand, especially a market leader, to protect its brand and maintain its position as a market leader. If a brand fails to maintain its position then it might lose some of its customers to the competitors.

Key Takeaways

Types of Defensive marketing:

1) Flank defense:

• It is a competitive marketing strategy used by a market leader to identify and strengthen its own weak points, market segments where it is under-performing before a smaller rival can mount an attack against it.

2) Preemptive defense:

• This strategy works well when the market is segmented and one of the segments is not catered well by the competitor.
• Market leaders use this strategy to gain an advantage over competitors and upset industry balance.

3) Mobile defense:

• The market leader shifts domain to new territories that will serve as a future center for defense and offense.
• It can be done through Market broadening i.e. shift focus from current product to generic product, and Market diversification i.e. shift into unrelated industries.

4) Contractor defense:

• It is a competitive strategy in which a market leader withdraws from a market segment in which it is not strong in order to concentrate on other market segments where it is strong.
• It is also known as strategic withdrawal.

5) Counteroffensive defense:

• This strategy is used when the market leader is attacked by the other company.

• This involves that the market leader will attack the attacker in its main territories so that the attacker will have to put back some resources for the attacked territories and will have to divert its attention from launching an attack on the market leader.

Therefore, the strategies of flanking defense, preemptive defense, mobile defense, contractor defense, and counteroffensive defense are used by Market Leader.

Additional Notes

The correct answer is – (A), (B), (C), (D)

In today’s times, the automobile sector is robust with growth, and more and more players are entering the automobile industry. Market segmentation is a marketing term that refers to aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.

Key Takeaways

The market for automobiles needs to be segmented on the basis of:

1. Geographic segmentation:

• Geographical segmentation is one of the most important bases of segmentation of the automobile sector, especially in large-sized countries like India, where the conditions in different regions are different.
• Taking the segmentation in India itself, we find that manufacturers of tractors would focus only on those areas where agriculture is of prime importance and would target those agriculturists who have sizeable land holdings and have the resources to buy a tractor.
• On the other hand, commercial vehicle companies would segment the market on the basis of the concentration of industries in different regions.
• Luxury carmakers would definitely target the metropolitan regions for the sale of their cars, whereas small carmakers would also take into account developing cities and townships into account during the process of segmentation of their products.

2. Demographic segmentation:

• Another important basis for the segmentation of the automobile sector is demographic segmentation.
• Demographic segmentation provides a base marketing of products according to income, status, age, etc.
• Manufactures of small cars like Nano would primarily focus on the segment of the people belonging to the middle-class.
• On the other hand, luxury car manufacturers would focus more on the high-income segment.
• According to the age of the target market group, automobile manufacturers would come up with different color variants, for instance, bright and flashy colors for the young and vice versa.

3. Psychological segmentation:

• Based on psychological segmentation, automobile manufacturers come up with different variants of the models of their products.
• This has been largely seen in the case of cars, where companies generally come up with two or three variants of the same model, and it has been observed by industry analysts that the variant of the medium variant of the model sells the most.
• Tag- lines such as “Men are Back” (used by Maruti Suzuki for the launch of a new car) and “Definitely Male” (used by Bajaj for a popular bike) target a particular category of individuals and help to increase sales and popularity in that segment.
• Manufacturers of luxury cars like Ferrari, Porsche, etc target the section of the society with a large disposable income and high status, and this can be achieved by psychological segmentation.

4. Buying behavior segmentation:

• Behavioral segmentation is done on the basis of the benefits sought, loyalty status, etc.
• This is another important means for segmentation in the automobile sector, and taking yet again the example of a car, Daimler, the manufacturer of luxury car Maybach, customizes the cars according to the needs and requirements of the customers.

Thus, option 4 is the correct answer.

The correct answer is – A – III, B – II, C – IV, D – I

Key Takeaways

Therefore, it is clear from the above explanation that option 1) is the correct answer.

The correct answer is – (B), (D) and (E) only

Customer Value is the perception of what a product or service is worth to a customer versus the possible alternatives. Worth means whether the customer feels she or he got benefits and services over what s/he paid.

In a simplistic equation form, Customer Value is Benefits-Cost (CV=B-C).

Key Takeaways

1. “Firms rarely work alone in creating value for customers and building profitable customer relationships. Instead, most of them are only a single link in a large supply chain and marketing channel. As such, an individual firm’s success depends on not only how well it performs but also on how well its entire marketing channel competes with competitor’s channels.” (Kotler & Armstrong)
2. When it comes to creating customer value and building strong customer relationships, today’s marketers know that they can’t go it alone. They must work closely with a variety of marketing partners. In addition to being good at customer relationship management, marketers must also be good at partner relationship management. Major changes are occurring in how marketers partner with others inside and outside the company to jointly bring more value to customers.

1. Individual companies and brands don’t compete, their entire value delivery networks do. “A value delivery network is made up of the company, suppliers, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system in delivering customer value.” (Kotler & Armstrong)

1. Value has two components: contribution and cost. The relationship between the two can be defined as follows: Value=Contribution/Cost.
2. The higher the contribution a product or service offers the client, and/or the lower the cost, the more valuable it is.
3. The obvious but often ignored implication here is that to offer the most value, we must increase the contribution of our services while at the same time minimizing the client’s cost. Also, addressing clients’ most important needs offers the highest contribution – they typically pay more to address their hottest issues. To compete, we must clearly provide more value than our peers from the client’s perspective.

Thus, option 4 is the correct answer.