Unit 8 Marketing Management PYQ’s 17th Oct 2020 Shift 2

The correct answer is – Discount retailers

Key Points

Discount retailers:

• Discount stores are a category of retail stores where retailers sell merchandise at a discounted price.
• Discount store retailers buy merchandise that doesn’t have an expiry limit like clothes, shoes, etc. in large quantities from manufacturers to get a massive discount.
• As the discount stores directly buy from the manufacturers, they skip the middlemen’s expense so the cost of doing business is reduced too.

Therefore, Discount retailers have comparatively low prices as a major selling point combined with the reduced costs of doing business.

Additional Information

Convenience stores:

• Convenience stores are small local stores that carry limited basic items such as groceries, soft drinks, coffee, snacks, newspapers, magazines, etc.
• They have stable revenue streams because of the nature of their business.
• This means that the convenience store owners would have a certain level of economic stability, even when there are downturns in the economy.

Limited line retailers:

• A retail business has only a single line or a few related lines of products rather than a wide assortment of products.
• They are also known as single-line stores.
• Speciality store, Catalogue stores are an example of limited line retailers.

Category killer stores:

• Category killer is often called a big-box store, is a large retail chain store that effectively “kills” the other stores or products in the same category.
• It specializes in and carries a deep product assortment within a given category and has a massive competitive edge over the other retailers through selection, pricing, and market penetration activities.
• Charlie Lazarus, the founder of Toys R Us, is generally credited with inventing the concept of a category killer.

The correct answer is – Direct marketing

Key Points

Direct marketing:

• Direct marketing gives the opportunity of promoting goods and services directly to the customers who need them the most.
• Direct marketing helps in building relationships with new customers.
• All promotional information is relayed without intermediaries and any third parties.
• Emails, newspapers, outdoor advertising, SMS marketing, Tele-marketing, websites, catalog distribution, etc. are various types of direct marketing strategies.

Therefore, Tele-marketing is a part of Direct marketing.

Additional Information

Viral marketing:

• Viral marketing is an advertising strategy that uses social media to generate interest and a potential sale of a brand or product through viral messages in the form of memes, shares, likes, and forwards.

• It refers to how consumers spread information about a product with other people, in the same way, that a virus spreads from one person to another.
• In other words, marketing is considered viral when it reaches a point where it is being shared by the people at large rather than just the target audience.

Social marketing:

• It is a systematic application of marketing activities along with other concepts and techniques to achieve specific behavioral goals for social good.
• Philip Kotler states, “Social marketing seeks to influence social behaviors not to benefit the marketer, but to benefit the target audience and the general society.”
• This technique has been used extensively in international health and sanitation programs.
• The main objective of social marketing is to promote the well being of society.

Relationship marketing:

• It is defined as, “Relationship marketing is a strategy designed to foster customer loyalty, interaction and long-term engagement. It is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication.”

• It refers to the activities undertaken by the organization to maintain loyalty, profitability, and long-term relationship with the customers.

The correct answer is – Marketing strategy development

In order to compete and lead the market, organizations need to obtain new products by carefully executing the new product development process.

Out of thousands of products entering the process, only a handful of products make it to the market. Therefore, it is vital to understand customers, market, and competitors in order to develop a new product that will deliver superior value to the customers.

Key Points

There are 8 major steps in the development of a new product.

After concept testing, the next stage is:

Market strategy development:

• When a promising concept has been developed and tested, it is essential to design an initial marketing strategy for the new product.
• The marketing strategy consists of three parts:

1. A description of a target market, the planned value proposition, the sales, profit goals, and the market share for the initial years.
2. An outline of the product’s price, distribution, and marketing budget for the initial years.
3. The planned long-term goals and marketing mix strategies.

Therefore, after concept testing, a firm would engage in the Marketing strategy development stage in developing and marketing a new product.

The correct answer is – Social marketing

Swachh Bharat Abhiyan or Clean India Mission is a country-wide initiative taken by the Government of India in 2014 to eliminate open defecation and improve solid waste management. The main aim of this project is to create sanitation facilities for all and provide every rural family with a toilet by 2019.

Key Points

Social marketing:

• It is a systematic application of marketing activities along with other concepts and techniques to achieve specific behavioral goals for social good.
• Philip Kotler states, “Social marketing seeks to influence social behaviors not to benefit the marketer, but to benefit the target audience and the general society.”
• This technique has been used extensively in international health and sanitation programs.
• The main objective of social marketing is to promote the well being of society.

Therefore, Swachh Bharat Abhiyan is an example of social marketing.

Additional Information

Sustainable marketing:

• It is the promotion of environmentally and socially responsible products, practices, and brand values.
• It is also referred to as green marketing and it focuses on a long-term strategy and value for current and future clients.
• If someone has spent a little bit more amount on a product just because it is locally sourced or 100% recyclable then they have experienced sustainable marketing.

Services marketing:

• It refers to the application of various sets of techniques or strategies to the consumer’s need for an intangible product.
• The American Marketing Association defines services marketing as an organizational function and set of processes for identifying and creating, communicating and delivering value to customers. And for managing relationships in a way that benefits the organization and stakeholders.

Relationship marketing:

• It is defined as, “Relationship marketing is a strategy designed to foster customer loyalty, interaction and long-term engagement. It is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication.”

• It refers to the activities undertaken by the organization to maintain loyalty, profitability, and long-term relationship with the customers.

Important Points

Total Sanitation Campaign is one of the most prominent social marketing campaigns undertaken by the Government of India under the Swachh Bharat Mission.

The correct answer is – Perishability

Market segmentation refers to subdividing a larger market into smaller submarkets.

Philip Kotler defines, “Market segmentation is a process of identifying groups of buyers with different desires or requirements.”

Key Points

Criteria for effectively evaluating the resulting market segment:

1) Identifiable and Measurability:

• The segments must be identifiable so that the marketer can know which customers belong to a segment and which do not.
• The size, profile, and other relevant characteristics must be measurable in terms of data.
• It must be possible to determine the values of the variables used for segmentation with justifiable efforts.
• It is important especially for demographic and geographic variables.

2) Relevant size of the resulting segment:

• The size and the profit potential of the segment must be large enough to economically justify separate marketing activities for that segment.
• If the resulting segment is small in size then the cost of marketing activities will not be justified.

3) Accessibility:

• The segment has to be accessible and servable for the organization.
• This criterion refers to the ease of effectively reaching chosen segments with marketing efforts.
• Some desired segments could be inaccessible due to legal reasons.

4) Substantial:

• The resulting segments must be substantial to generate required returns.
• The activities with a small segment could give a biased or negative result.

These four are important criteria for effectively evaluating the resulting market segment.

Therefore, Perishability is NOT a criterion for evaluating the resulting market segment.

Additional Information

Perishability:

• It is used in marketing to describe the way in which a service cannot be stored for sale in the future.
• Once served to a customer, the service is totally consumed and could not be delivered to another consumer.

The correct answer is – Low

1. Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering.

2. The lower price helps a new product or service penetrate the market and attract customers away from competitors.
3. The goal of a price penetration strategy is to entice customers to try a new product and build market share with the hope of keeping the new customers once prices rise back to normal levels.

Hence Option 3 is correct

The correct answer is – B, C, D and E only

Key Points

SERVQUAL:

• It is a multidimensional research instrument, designed to capture consumer expectations and perception of service along the five dimensions (reliability, assurance, tangibles, empathy, responsiveness) of service quality.

• The SERVQUAL questionnaire has been described as “the most popular standardized questionnaire to measure service quality.”

• Service firms use this instrument to measure service quality and customer satisfaction.

SERVPREF:

• Cronin and Taylor proposed that the perception of performance is the only criteria for service quality and developed the SERVPREF model.
• It focused on trying to overcome the “perceptions-minus-expectations” measurement focus of SERVQUAL.
• The SERVPREF model aimed to provide an alternative method of measuring perceived service quality and the importance of the relationship between service quality, customer satisfaction, and purchase intentions.

DINESERV:

• Dining consumers determine which restaurants meet their service quality and value standards.
• DINESERV is proposed as a reliable, relatively simple tool for determining how consumers view a restaurant’s quality.
• The 29 item DINESERV questionnaire comprises service-quality standards that fall into five categories: assurance, empathy, reliability, responsiveness, and tangibles.

RSQS:

• RSQS is an abbreviation of the Retail Service Quality Scale.
• As service quality plays a vital role in creating quality perception, retail service quality is also associated with future consumption behavior in terms of customer’s intention to visit, purchase, and recommend to others.
• RSQS is a 28 item scale with five dimensions: physical aspect, reliability, personal interaction, problem-solving, and policy development.

Therefore, survey instruments used to assess customer perception of service quality are called SERVQUAL, SERVPREF, DINESERV, RSQS.

Additional Information

CETSCALE:

• The consumer ethnocentrism tendencies scale (CETSCALE) was developed by Shimp and Sharma in 1987 to measure consumer ethnocentrism.
• Consumer ethnocentrism focuses on the responsibility and morality of purchasing foreign products vs. consumer’s loyalty towards products made in their own country.
• For the ethnocentric consumer, the perception of importing products is not appropriate because it is not patriotic, as a result, ethnocentric consumers will evaluate their products differently from those manufactured in other countries.
• It is the most commonly used scale in marketing literature.

The correct answer is – A and B only

Channel conflict refers to any dispute, difference arising between two or more partners, where one partner’s activity affects the business or goal accomplishment of other channel partner.

In the process of regular supply of goods in the market, several intermediaries join the channel, any clash among these channel intermediaries is considered as channel conflict.

Key Points

Types of Channel conflict:

Vertical:

• A vertical channel is a structured, organized, and unified distribution channel system in which producers and intermediaries like wholesalers and retailers work closely to facilitate the smooth flow of goods and services from the producer to the consumer.
• In vertical channel conflict, the channel partner that belongs to a higher level enters into a dispute with a channel partner of a lower level or vice-versa.
• For example, channel conflict between wholesalers and retailers or dealers and retailers.

Horizontal:

• A horizontal channel is a form of distribution channel where two or more companies at the same level unrelated to each other come together to gain economies of scale.
• In horizontal channel conflict, the channel partners belonging to the same level enters into a dispute.
• For example, issues between two or more retailers of different territories, on the grounds of manufacturer’s biases, etc.

Therefore, Channel conflicts can be Vertical and Horizontal only.

Additional Information

Multi-channel:

• A multi-channel is a distribution system where a single producer sets up two or more marketing channels to reach one or more customer segments.
• Multi-channel conflicts arise when a producer has established two or more channels that compete against each other in selling to the same market.
• In other words, multi-channel conflicts refer to where the channel partners involved in a particular distribution channel encounters an issue with the other channel.

There are only 3 types of Channel Integration:

1. Vertical Marketing System
2. Horizontal Marketing System
3. Multi-channel / Hybrid Marketing System.

The correct answer is – C only

Retail analytics focuses on providing insights related to sales, inventory, customers, and other important aspects crucial for a merchant’s decision-making process. It is used to help make better choices, run a business more efficiently, and deliver improved customer service analytics.

Key Points

Data mining:

• Data mining is a concept of computer science but has played a significant role in the retail industry as it helps retailers to learn the buying behavior and patterns of their customers.

• Retailers keep on collecting information about seasonal product sales, transactional data, and demographics, etc. the collected data is of no use if it is not converted into useful knowledge and converting data into knowledge requires a proper mechanism.
• Data mining is proved to be one of the most important tools to identify useful information from the large pool of information collected over time.
• It is also used to improve revenue generation and reduce the costs of business.

Therefore, retail analytic applications involve the use of Data mining techniques to gain insights into customer’s buying patterns.

Additional Information

Factor analysis:

• Factor analysis is a technique used to reduce a large number of variables into a few factors.
• This technique extracts maximum common variance from all variables and puts them into a common score.
• As an index of all variables, that score can be used for further analysis.

Data scraping:

• Data scraping is a technique in which a computer program extracts data from human-readable output coming from another program.
• It often ignores binary data, display formatting, redundant labels, and other information that is either irrelevant or hinders automated processing.
• It is generally considered as ad-hoc, inelegant techniques used as a last resort when no other mechanism for data interchange is available.

Data cloning:

• Data cloning refers to a complete and separate copy of a database system that includes the business data, the DBMS software, and any other application that makes up the environment.
• Data cloning involves both fully functional and separate in its own right.
• The cloned data can be modified at its inception due to configuration changes or data subsetting.

Regression analysis:

• Regression analysis is a reliable method of identifying which variables have an impact on a topic of interest.

• The process of performing a regression allows you to confidently determine which factors matter most, which factors can be ignored, and how these factors influence each other.

The correct answer is – A, B, D, E only

The consumer’s price sensitivity is influenced by:

Who bears the cost

What percentage of total expenditure does the product represent

Consumption of product by the customer

Knowledge about the product

Key Points

Price sensitive customers are those who view price as a serious factor in a purchase. Some customers view extremely low prices as too good to be true and may assign a poor value to a product without having tried it. These types of prestige price customers often refuse to purchase a product of lower cost.

On the other hand, bargain hunters may only look for the lowest cost possible, without regard to the overall quality or longevity of the item. Learning how to deal with price-sensitive customers helps improve sales and customer service initiatives.

• Price sensitivity is the degree to which demand changes when the cost of a product or service changes.
• Price sensitivity is commonly measured using the price elasticity of demand, which states that some consumers won’t pay more if a lower-priced option is available.
• The importance of price sensitivity varies relative to other purchasing criteria; quality may rank higher than price, making consumers less susceptible to price sensitivity.

The correct answer is – B, C, D only

A service is a transaction in which there is no physical transfer of goods from the seller to the buyer. The benefits of such a service are held to be demonstrated by a buyer’s willingness to make the exchange.

Key Points

Readily accepted characteristics of the services are as follows:

1) Perishability:

• Services are perishable in nature.
• Goods if not sold today, can be preserved for further selling, but in the context of services, it is considered lost not only for today but even for the future.
• For example, if a seat in aircraft or a bedroom in a hotel remains unbooked, a chair in a cinema halls remains vacant; the business is found non-existent and the opportunity is lost as well.
• It creates unique strategic challenges and the opportunities come and the firms need to capitalize on the same by using excellence.

2) Inseparability:

• This characteristic is also a challenge that professional needs to face while marketing the services.
• It focuses on the fact that services are not of separable nature.
• Services are generated and supplied simultaneously.
• This feature makes it essential that the service-providers are behaving professionally so that the marketing process is not to pave the avenues for degeneration in the quality.

3) Intangibility:

• Intangibility is an important consideration that complicates the functionality of a marketing manager, especially while influencing the customers.
• It is a matter of consumer perception of the services and their expectations, not smelling or tasting the services.
• The customers expect safe, fast, decent services.
• As service is an abstract phenomenon, it is a unique strategic challenge for the marketer.

Therefore, Perishability, Inseparability, Intangibility only are readily accepted distinguishing characteristics of the services that create unique strategic challenges.

Additional Information

Other important characteristics of services are:

• Heterogeneity
• Ownership
• Simultaneity
• Quality measurement
• Nature of demand.

The correct answer is – B, C, D, A, E

Customer relationship management (CRM) is the process of managing interactions with existing as well as past and potential customers. It is one of many different approaches that allow a company to manage and analyze its own interactions with its past, current, and potential customers. It uses data analysis about customers’ history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth.

CRM process involves the activities and strategies that companies use to manage their interaction with current and potential customers. Successfully collecting information about your customers allows you to understand them more. In turn, you can improve your products and services based on their demands.

Key Points

The steps in the CRM process are:

1. Collection of customer data: CRM systems allow companies to interact effectively with customers, streamline marketing processes, and improve profitability.
2. Analyzing customer data: CRM analytics comprises all programming that analyzes data about customers and presents it to help facilitate and streamline better business decisions. CRM analytics can be considered a form of online analytical processing (OLAP) and may employ data mining.
3. Identify the target customers: After analyzing data about customers next step in the CRM process is to identify the target customers.
4. Developing CRM programs: It refers to all strategies, techniques, tools, and technologies used by enterprises for developing, retaining, and acquiring customers. The software gathers customer data from multiple channels.
5. Implementing programs: Implementation is the process of installing CRM software so an organization can manage current and potential customer relationships. Successful CRM implementation can help businesses analyze customer interactions, efficiently track leads, and streamline processes.

Therefore, option 2 is the correct answer.