ANSWERS TO THE FREQUENTLY ASKED QUESTIONS IN MARKETING

L ong Answers Based On Marketing Theories:

Q1. What is the current situation of organised retail sector in India? Explain with the help of porter's five forces (Marketing/Strategy)

• Porters Five Forces:

A. Threat of new entrants

Retailing has played a major role all over the world in increasing productivity across a wide range of consumer goods and services. In the developed countries, the organised retail industry accounts for almost 80% of the total retail trade. In contrast, in India organised retail trade accounts for merely 5% of the total retail trade. This highlights tremendous potential for retail sector growth in India. Seeing this potential major international players in retail like Tesco and Walmart are looking forward to enter Indian market which poses threat of new entrants to the existing players in the Indian retail market i.e., Future Group, Reliance, Aditya Birla.

B. Threat of substitute products or services

Historically, Indians have been conservative spenders. Transition from traditional retail to organized retailing is taking place due to changing consumer expectations, demographic mix, etc. With the revival in consumer spending, expansion plans of retailers are back in full swing. The convenience of shopping with multiplicity of choice under one roof (Shop- in Shop), and the increase of mall culture etc. are factors appreciated by the new generation. This changing trend has done a great loss to unorganized sector players. But, to overcome the loss due to the organized retail outlets, the unorganized outlets are also shifting towards a modern retail format, offering self-selection shop layout, selective discounting, membership offers, online orders, free home delivery. In any event, it is impossible for organized retailers to replicate the convenience of neighbourhood presence of unorganized retailers.

C. Bargaining power of customers (buyers)

Organized retailers cater mainly to individual consumers, and also to an extent to unorganized retailers. Since the policy of FDI-in-multi-brand retail has been a non-starter (due to a variety of reasons), and due to high rentals, both domestic and FDI-driven organized retail has failed to grow anywhere close to potential. Hence, the bargaining power of customers, which was high to begin with due to proliferation of unorganized retail, hasn’t changed and is unlikely to do so in the next 5-7 years.

D. Bargaining power of suppliers

The bargaining power of suppliers varies depending upon the target segment, the format followed, and products on offer. The unorganised sector has a dominant position, still contributing 95% of the total retail market. There are few players who have a slight edge

over others on account of being established players and enjoying brand distinction. Since it is a capital intensive industry, access to capital also plays an important part for expansion in the space.

E. Intensity of competitive rivalry

High competition is characterised by many factors, including assortment, products, price, quality, service, location, reputation, credit and availability of retail space etc. Had the multi-brand retail FDI policy been conducive and enjoyed bi-partisan support of most of the political parties, India would have seen several new entrants (domestic business houses and international players) which would have in turn resulted in competition rivalry. The Future group is trying to set up a neighbourhood located franchisee home-delivery model, and Reliance Retail has plans to stop retailing and instead convert itself to a wholesaler catering to unorganized retailers. Such moves will benefit consumers by way of greater choice and cheaper prices.

Q2. Define BCG Matrix and Ansoff’s Matrix. Link both the matrix.

BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and it’s potential. It classifies business portfolio into four categories based on industry attractiveness (growth rate of that industry) and competitive position (relative market share). These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it. The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested.

Relative market share.

One of the dimensions used to evaluate business portfolio is relative market share. Higher corporate’s market share results in higher cash returns. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits. Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share.

Market growth rate.

High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. Therefore, business units that operate in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future.

There are four quadrants into which firms brands are classified:

Dogs.

Dogs hold low market share compared to competitors and operate in a slowly growing market. In general, they are not worth investing in because they generate low or negative cash returns. But this is not always the truth. Some dogs may be profitable for long period of

time, they may provide synergies for other brands or SBUs or simple act as a defence to counter competitors moves. Therefore, it is always important to perform deeper analysis of each brand or SBU to make sure they are not worth investing in or have to be divested.

Strategic choices: Retrenchment, divestiture, liquidation

Cash cows.

Cash cows are the most profitable brands and should be “milked” to provide as much cash as possible. The cash gained from “cows” should be invested into stars to support their further growth. According to growth-share matrix, corporates should not invest into cash cows to induce growth but only to support them so they can maintain their current market share. Again, this is not always the truth. Cash cows are usually large corporations or SBUs that are capable of innovating new products or processes, which may become new stars. If there would be no support for cash cows, they would not be capable of such innovations.

Strategic choices: Product development, diversification, divestiture, retrenchment

Stars.

Stars operate in high growth industries and maintain high market share. Stars are both cash generators and cash users. They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows. Yet, not all stars become cash flows. This is especially true in rapidly changing industries, where new innovative products can soon be outcompeted by new technological advancements, so a star instead of becoming a cash cow, becomes a dog.

Strategic choices: Vertical integration, horizontal integration, market penetration, market development, product development

Question marks.

Question marks are the brands that require much closer consideration. They hold low market share in fast growing markets consuming large amount of cash and incurring losses. It has potential to gain market share and become a star, which would later become cash cow. Question marks do not always succeed and even after large amount of investments they struggle to gain market share and eventually become dogs. Therefore, they require very close consideration to decide if they are worth investing in or not.

Strategic choices: Market penetration, market development, product development, divestiture

The BCG matrix is a prioritization tool. In this, the product lines of a firm’s product portfolio are classified into four categories on the basis of the market share and market growth rate.

Ansoff’s Matrix

• Market penetration –

This involves increasing market share within existing market segments. This can be achieved by selling more products/services to established customers or by finding new customers within existing markets.

• Product development –

This involves developing new products for existing markets. Product development involves thinking about how new products can meet customer needs more closely and outperform the products of competitors.

• Market development –

This strategy entails finding new markets for existing products. Market research and further segmentation of markets helps to identify new groups of customers.

• Diversification

This involves moving new products into new markets at the same time. It is the most risky strategy. The more an organisation moves away from what it has done in the past the more uncertainties are created. However, if existing activities are threatened, diversification helps to spread risk.

BCG Matrix gives a direction to brand managers about which product lines should be prioritised and which product lines needs to be divested. Once a BCG Matrix has been constructed of different product lines, the Ansoff’s Matrix framework is used to strategize as to what further needs to be done with the product lines classified as Question-marks or Dogs.

Q3. Definition: Product life cycle (PLC) :

The cycle through which every product goes through from introduction to withdrawal or eventual demise. These stages are:

• Introduction:

When the product is brought into the market, there is heavy marketing activity, product promotion and the product is put into limited outlets in a few channels for distribution. Sales take off slowly in this stage. The need is to create awareness, not profits, and to showcase the product to smaller outlets and online channels.

• Growth:

The second stage is growth. In this stage, product sales takes off, distribution expands, multi-channel retailing is done, market awareness grows, profits begin to come in, market shares stabilizes, and more competition is attracted.

• Maturity:

The third stage is maturity, where sales grow at slowing rates and finally stabilize. In this stage, products get differentiated, price wars and sales promotion become common and a few weaker players exit.

• Decline:

The fourth stage is decline. Here, sales drop, as consumers may have switched to alternate brands/ products, the product is no longer relevant or useful. Price wars continue, several products are withdrawn and cost control becomes the way out for most products in this stage.

Significance of PLC:

• If properly done, PLC analysis can alert a company as to the health of the product in relation to the market it serves. PLC also forces a continuous scan of the market and allows the company to take corrective action faster. But the process is rarely easy.

Q4. How to generate business in rural market?

Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non-availability of retail outlets are major problems faced by the marketers. Many brands, which should have been successful, have failed miserably. This is because most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analysed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: -

• Understanding the Rural Consumer Behaviour

• Poor Infrastructure

• Physical Distribution

• Channel Management

• Promotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.

Strategies to be followed:

• Marketing Strategy

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

• Distribution Strategy

One of the ways could be using company delivery van which can serve two purposes - it can distribute the products to the rural retailers, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion. However, only the big brands can adopt this channel. Companies with relatively fewer resources can go in for either exclusive rural distributors that is serviced by either a dedicated or common company sales-force, or companies can adopt syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual "melas" organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the Indian Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days (often called "Haats') when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as "Mandis" or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns, they will easily be able to cover a large section of the rural population.

• Promotional Strategy

Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. Instead one has to rely upon influencing opinion-leaders and retailers in mandi-towns; also, audio-visual media and product demos can be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.

• Some Live Examples

One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on TV or press advertisements, but rather concentrated on focused approach depending on geographical and market parameters like fairs/melas, mobile nautanki/ comedian shows, etc. Looking at the 'kuchha' roads of village, they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line 'Jaandar Sawari, Shandar Sawari'. It helped them achieve whopping sales of 95000 vehicles annually.

HLL started 'Operation Bharat' to tap the rural markets. Under this operation, it passed out low-priced sample packets of its toothpaste, fairness cream, Clinic-Plus shampoo, and Ponds cream to twenty million households.

ITC is setting up e-Choupals, which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep.

BPCL introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population, and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

Q5. Relate Networking with marketing, with examples.

Network- marketing is a business model that relies on a network of distributors to grow a business. Network marketing typically involves using three basic types of systematic strategies to make money:

1. Lead Generation: To locate new prospects;

2. Recruiting: Adding customers and/or business partners to your network; and

3. Building and Management: Methods you use to train, motivate, and manage your recruits.

There are many types of network marketing including two-tier programs and multi-level marketing, but many of the more solid marketing companies, like Avon, are single-tier

• Single-Tier Network Marketing:

• You sign up with an affiliate program to sell their product or service. You do not need to recruit other distributors and are only paid if you make a direct sale. Avon, is a company that uses single-tier networking marketing.

• In some online affiliate programs you are only paid for traffic you have referred to the affiliate's website. Pay-per-click (PPC) and pay-per-lead (PPL) affiliate programs are other examples of single-tier networking.

• Two-Tier Network Marketing:

This term applies to network marketing that pays you for direct sales (or traffic you refer to a website) and for direct sales or referred traffic made by affiliates or distributors you recruit to work under you. An example of a two-tier program is Ken Envoy's Site Sell.

• Multi-Level Marketing (MLM):

Is a distribution-based marketing network that is two or more tiers "deep?" Some MLM programs allow you to make money five or more tiers deep. Examples of MLM businesses include The Trump Network, Magnetic Sponsoring, and Amway.

Q6. Name and explain a branding model.

The Aaker Model, created by David A. Aaker, a marketing professor at the University of California-Berkeley and a management consultant at Prophet, is a marketing model which views brand equity as a combination of brand awareness, brand loyalty and brand associations, which add up to give the value provided by a product or service. For Aaker, brand management starts with developing a brand identity, which is a unique set of brand associations representing what the brand stands for and offers to customers an aspiring brand image.

Aaker primarily sees brand identity as consisting of 8-12 elements which fall under four perspectives:

a) Brand as Product - consists of product scope, product attributes, quality or value of the product, uses, users and country of origin.

b) Brand as Organisation - consists of organizational attributes, local workings versus global activities.

c) Brand as Person - consists of brand personality and customer-brand relationships.

d) Brand as Symbol - consists of audio and visual imagery, metaphorical symbols and brand heritage.

The purpose of the Aaker Model is to help in creating a brand strategy consisting of different brand elements or patterns, so as to clarify, enrich and differentiate a brand from its competitors. An organization carefully employs several of these elements to communicate to the consumers what their brand stands for.

Q7. What are B2B sales? What is the most critical part of B2B? Which is more difficult B2B or B2C? Difference between B2B and B2C? How would you connect the FMCG to B2B?

B2B is short for “business to business”. It indicates sales made to other businesses, rather than sales to individuals. The latter is referred to as “business to consumer” sales.B2B sales often take the form of one company selling supplies or components to another. For example, a tyre manufacturer sells to a car manufacturer. Wholesalers often sell their products to retailers, who then turn around and sell them to consumers. Supermarkets are a

classic example: they buy food from wholesalers and then sell it at a slightly higher price to individuals. Business-to-business sales can also include services. Attorneys who take cases for business clients, accountant firms that help companies do their taxes, and technical consultants who set up networks and email are all examples of B2B service providers.

• A key part of B2B Marketing is associated with managing the relationships that can develop between organizations and the people who represent them. Managing customers is vitally important, and one task is to identify and manage those customers that are important to the success of the organization. This is referred to as Key Account Management.

B2B Marketing is more difficult as compared to B2C because the customers of B2B are difficult to convert as they are experienced and do a lot of information processing and evaluation.

B2B Marketing is fundamentally different from consumer goods or services marketing because organizational buyers do not consume the products and services themselves – organizations, not individual people, undertake the act of purchase.

Connecting FMCG to B2B: the business to business (B2B) side of FMCG sales is probably the most important. People who focus on this area tend to arrange and attend meetings with the buying department of retail companies, showcase their products and try to convince clients to order their products in bulk.

Q8. Why SWOT analysis is used?

Uses of SWOT analysis

• A SWOT (strengths, weaknesses, opportunities and threats) analysis looks at internal and external factors that can affect business. Internal factors are the strengths and weaknesses. External factors are the threats and opportunities

• Strategic planning, brainstorming and decision making

A SWOT analysis is a useful tool for brainstorming and strategic planning. SWOT analysis gives more value if conducted it with a specific objective or question in mind. For example SWOT analysis helps to decide how one should:

• take advantage of a new business opportunity

• respond to new trends

• implement new technology

• deal with changes to competitors' operations.

• building on strengths

A SWOT analysis helps to identify areas of business that are performing well. Identifying these strengths can help make sure one maintains them so as not to lose the competitive advantage. Growing the business involves finding ways of using and building on these strengths.

• Minimising weaknesses

Weaknesses are the characteristics that put business at a disadvantage to others. Conducting a SWOT analysis can help identify these characteristics and minimise or improve them before they become a problem. When conducting a SWOT analysis, it is important to be realistic about the weaknesses in business so as to deal with them adequately.

• Seizing opportunities

A SWOT analysis can help to identify opportunities that a business could take advantage of to make greater profits. Opportunities are created by external factors, such as new consumer trends and changes in the market.

• Conducting a SWOT analysis will helps understand the internal factors (business’s strengths and weaknesses) that will influence the ability to take advantage of a new opportunity. If business doesn't have the capability to seize an opportunity but decides to anyway, it could be damaging. Similarly, if it has the capability to seize an opportunity and don't, it could also be damaging.

• Counteracting threats

Threats are external factors that could cause problems for business, such as changes to the market, a competitor's new advertising campaign, or new government policy. A SWOT analysis can help identify threats and ways to counteract them, depending on the strengths and weaknesses.

• Addressing individual issues: SWOT analysis can be done to address individual issues, such as:

•staffing issues

•business culture and image

•organisational structure

•advertising

•financial resources

•operational efficiency.

• When conducting an individual SWOT analysis, it should be kept in mind that a strength for one issue might be a weakness for another.

Q9: How should a new product be launched in the market?

Step 1: Conduct market research. Learn who is using the product, who will buy it and to whom is it beneficial?

Step 2: Conduct competitive analysis. Evaluate how your product differs or compares to current product offerings and determine the ways in which your product/company excels. Identify the reasons customers purchase elsewhere and the ways that you can entice them to purchase your new product instead.

Step 3: Determine your marketing strategy and test it with focus groups to determine their response to your promotions. Most successful product launches involve marketing of many types. Online promotions, radio/television spots, and email solicitations can all lead a visitor to your website to learn more about the new product and other product offerings.

Step 4: Create a public relations program. Ideas include allowing the press to review your product, writing articles to send to public media, giving interviews, and holding a launch event. The more opportunities you have to present your product to the target market, the more people will know the product and become interested in purchasing it.

Step 5: Evaluate the readiness of the launch to make sure the overall timing is coordinated and the product is absolutely ready when it is announced.

Step 6: Create a timeline in the marketing plan and follow up regularly to ensure that everyone involved is on schedule.

Step 7: Train your customer service department fully so that employees can effectively sell the product. The minute the product is available for purchase, your sales staff should be fully knowledgeable about the product and ready to sell it.

Q10. What is the difference between fashion and fad?

“Fashion” and “Fad” are interestingly intertwined. Usually a fashion and a fad are considered the same thing but they have some differences. The differences between a fashion and a fad can be understood by the following information.

• Most importantly, fashion is something which is always present. It keeps changing, it keeps transforming, it keeps adapting itself to the changing society, changing times, and changing industries. Whereas a fad is a short-term trend; it does not change, it just vanishes after a time or fades away. Once a fad fades, another one might become popular.

• The word “fashionable” is used for people who keep up with whatever the present fashion is and adapt it to suit their personal style. A fad, however, is a special type of fashion in a particular span of time. It might stay only for a very short period of time, but everybody wants to follow it. Most of the general population of a particular society follows a particular kind of fashion which is short lived. This is a fad.

• “Fashion” and “fad” are both seen in many aspects of life; clothing, accessories, music, dance, etc. Fashion, in general, is basically linked to clothes and accessories and shoes or footwear, but fads are linked to many things like a particular behaviour, a particular fashion

of clothing, music, dance moves, food. Fads usually arise and are driven by a desire to be a part of something, to be a part of a group. It is followed collectively.

• Fashion and fads have been seen to have an impact on society. The society impacts them and they impact the society. For example, the hippies started as a fad. People wanted to follow the movement to rebel against the general norms and to belong to a particular group of people who were rebelling against it. It affected the society for many years; changed the outlook of people; changed the way people dressed and thought and behaved. But being a fad it did fade away. Fashion, however, evolves. For example, gowns for ladies, cocktail dresses for ladies, button-down shirts for men, these will always exist while humanity exists, but they will keep evolving. They will keep adapting to the changing times depending upon comfort, industry, and textiles that are being developed.

• Summary:

1. Fashion is ever present. It might evolve or adapt, but it is always there. A fad, on the other hand, fades away quickly.

2. Fashion is followed by many selected people in the society. It might be shown by people related to movies or television or the fashion world. A fad is followed by a huge portion of the society. Everybody and anybody follows a fad.

3. Fashion is mainly used in reference to clothes, accessories, footwear, makeup, and hairstyles; whereas a fad can be of clothes, music, behaviour, food, and dance movements, and many others.

4. Fashion depends upon the society, how the society has evolved, which industries have developed in the past years and developing in the future, what the changing lifestyle of people are demanding, comfort, and weather. A fad is just a type of fashion for a very short time.

Q 11. What is the difference between product and brand?

• Product is a generic descriptor of a physical item, whereas, a brand is the specific name of the product that is used for marketing communication by brand owners or their authorized channel partners. An individual product may have multiple manufacturers and multiple brands.

• Companies Make Products and Consumers Make Brands

A product is made by a company and can be purchased by a consumer in exchange for money while brands are built through consumer perceptions, expectations, and experiences with all products or services under a brand umbrella. For example, Toyota’s product is a car. Its umbrella brand is “Toyota” and each product has its own more specific sub-brand name that distinguisheseach product lines from one another. Without a product, there won’t be a brand.

• Products Can Be Copied and Replaced but Brands Are Unique

A product can be copied by competitors at any time. When Amazon launched the Kindle e-reader device, it didn’t take long for competitors to come out with their own branded versions of an e-reader product. However, the brand associated with each e-reader device offers unique value based on the perceptions, expectations, and emotions that consumers develop for those brands through previous experiences with them. Similarly, a product can be replaced with a competitor’s product if consumers believe the two products offer the same features and benefits. Products with low emotional involvement are typically easily replaced. For example, do you really care what brand of milk you buy or do you primarily just care that the milk you buy is fresh and includes the fat percentage that you want?

• Products Can Become Obsolete but Brands Can Be Timeless

Remember VHS players? With the introduction of DVD players and more recently DVR devices and streaming video services, VHS players have become obsolete. The same thing happened to 8-track tapes, vinyl records, cassettes, and CDs. Today, most people buy their music in digital format and listen to it on their portable digital music-players. The Elvis Presley brand is timeless, but no one buys Elvis music on cassettes anymore.

• Products Are Instantly Meaningful but Brands Become Meaningful over Time.

When you launch a new product, it’s easy to make that product instantly meaningful and useful to consumers because it serves a specific function for them. However, a brand is meaningless until consumers have a chance to experience it, build trust with it, and believe in it. That’s why the 3 steps to brand building include consistency, persistence, and restraint. It takes time and effort to convince consumers to believe in your brand. Consider Google as an example. When Google first hit the Internet scene it offered a simple product — a search engine. That product was instantly meaningful to consumers because it helped them find information online quickly. However, the Google brand didn’t become meaningful to consumers until people had a chance to use the Google search engine product and see for themselves that it really was a better search engine. Through those experiences, consumers began to trust that the Google brand could deliver faster and better information online. Today, when Google launches a new product (like Google+ recently), people are quick to try those products because they trust the Google brand.

Q12. What are the advantages of Internet Marketing?

a) Convenience

Internet marketing enables you to be open for business around the clock without worrying about store opening hours or overtime payments for staff. Offering your products on the

Internet is also convenient for customers. They can browse your online store at any time and place orders when it is convenient for them.

b) Reach

By marketing on the Internet,one can overcome barriers of distance. You can sell goods in any part of the country without setting up local outlets, widening your target market. You can also build an export business without opening a network of distributors in different countries. However, if you want to sell internationally, you should use localization services to ensure that your products are suitable for local markets and comply with local business regulations. Localization services include translation and product modification to reflect local market differences.

c) Lower Cost

Marketing products on the Internet costs less than traditional marketing and selling through brick-and-mortar retailers. You do not have the recurring costs of property rental and maintenance. You do not have to purchase stock for display in a store. You can order stock in line with demand, keeping your inventory costs low.

d) Personalization

Internet marketing enables you to personalize offers to customers by building a profile of their purchasing history and preferences. By tracking the web pages and product information that prospects visit, you can make targeted offers that reflect their interests. The information available from tracking website visits also provides data for planning cross-selling campaigns so that you can increase the value of sales by customer.

e) Relationships

The Internet provides an important platform for building relationships with customers and increasing customer retention levels. When a customer has purchased a product from your online store, you can begin the relationship by sending a follow-up email to confirm the transaction and thank the customer. Emailing customers regularly with special, personalized offers helps to maintain the relationship. You can also invite customers to submit product reviews on your website, helping to build a sense of community.

f) Social

Internet marketing enables you to take advantage of the growing importance of social media. An article on the Harvard Business School Executive Education website highlighted the link between social networking and online revenue growth. According to the article, a group of consumers that responded most strongly to the influence of social networks generated increased sales of around 5 percent. You can take advantage of this type of influence by incorporating social networking tools in your Internet marketing campaigns.

Q13. What are the key factors which affect the length of the distribution channel? Factors Pertaining to the Product

Keeping in view the nature, qualities and peculiarities of the product, could only the channel for distribution be properly made. The following factors concerning the product, affect the selection of the channel of distribution:(1) Price of the Product.

The products of a lower price have a long chain of distributors. As against it, the products having higher price have a smaller chain. Very often, the producer himself has to sell the products to the consumers directly.

(2) PerishabilityThe products which are of a perishable nature need lesser number of the intermediaries or agents for their sale. Under this very rule, most of the eatables (food items), and the bakery items are distributed only by the retail sellers.

(3) Size and Weight.The size and weight of the products too affect the selection of the middlemen. Generally, heavy industrial goods are distributed by the producers themselves to the industrial consumers.

(4) Technical Nature. Some products are of the nature that prior to their selling, the consumer is required to be given proper instructions with regard to its consumption. In such a case less of the middlemen arc) required to be used.

(5) Goods Made to Order.The products that are manufactured as per the orders of the customers could be sold directly and the standardized items could be sold off only by the middlemen.

(6) After-Sales Service. The products regarding which the after-sales service is to be provided could be sold off either personally or through the authorized agents.

Factors Pertaining to the Consumer or MarketThe following are the main elements concerned with the consumer or the market:(1) Number of Customers.

If the number of customers is large, definitely the services of the middlemen will have to be sought for. As against it, the products whose customers are less in number are distributed by the manufacturer himself.

(2) Expansion of the Consumers. The span over which are the customers of any commodity spread over, also affects the selection of the channel of distribution. When the consumers are spread through a small or limited sphere, the product is distributed by the producer himself or his agent. As against it, the goods whose distributors are spread throughout the whole country, for such distributors, services of wholesaler and the retailer are sought.

(3) Size of the Order. When bulk supply orders are received from the consumers, the producer himself takes up the responsibility for the supply of these goods. If the orders are received piece-meal or in smaller quantities, for it the services of the wholesaler could be sought. In this way, the size of the order also influences the selection of the channel of the distribution.

(4) Objective of Purchase. If the product is being purchased for the industrial use; its direct sale is proper or justified. As against it, if the products are being

purchased for the general consumption, the products reach the consumers after passing innumerable hands.

(5) Need of the Credit Facilities. If, for the sale of any product, it becomes necessary to grant credit to any customer, it shall he helpful for the producer that for its distribution, the services of the wholesaler and retailer businessmen be sought. In this way, the need of the credit facilities too influences the selection of the channel of distribution.

Short Answers Based On Marketing Facts:

Q14. What is primary and secondary research?

Market research can be either primary or secondary. Primary research is new research, carried out to answer specific issues or questions. It can involve questionnaires, surveys or interviews with individuals or small groups. Secondary research makes use of information previously researched for other purposes and publicly available. This is also known as 'desk research'. Secondary research includes published research reports in a library, surveys or the Internet.

Q15. Difference between marketing and selling?

Marketing activities include consumer research (to identify the needs of the customers), product development (designing innovative products to meet existing or latent needs), advertising the products to raise awareness and build the brand. The typical goal of marketing is to generate interest in the product and create leads or prospects. On the other hand, sales activities are focused on converting prospects to actual paying customers. Sales involves directly interacting with the prospects to persuade them to purchase the product. Marketing thus tends to focus on the general population (or, in any case, a large set of people) whereas sales tends to focus on individuals or a small group of prospects.

Q16. What does the FMCG sector contribute to the GDP of the economy?

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return.

Contribution of retail sector to the GDP of India: “Retail industry is one of the pillars of Indian economy and accounts for 14–15% of its GDP”- ("The Uneasy Compromise – Indian Retail". The Wall Street Journal, Anand Dikshit (12 August 2011).)

Q17. While plotting BCG Matrix, what do we take on X&Y axis and why?

• X-Axis: Relative market share

• Y-Axis: Market growth rate (over previous year for the company)

Calculating the Market growth rate comprises of both industry growth and product growth rate thereby giving a fair knowledge of where the product / SBU (strategic business unit) stands in comparison to the Industry. Market share, on the other hand, is determined as the ratio between own and cumulative market size of all brands in the market. Thus when we consider growth rate and market share together, it automatically gives us an overview of the competition and the industry standards as well as an idea of what the future might bring for the product.

Q18. Is it always necessary that 'growth stage' will come after 'introductory stage'?

Yes, the growth stage always comes after introductory stage but, the duration of each stage of the PLC varies by product category type. For some products the introductory stage may last for a longer duration and for some products it may be shorter.

Q19. Can ‘time’ be used as a segmentation tool?

Yes, time can be used as a segmentation tool. For example ‘Kellogg’s’ introduced its cornflakes in Japan using the slogan that it is best suited for ‘breakfast time.

Q20. How does the ‘branding’ exercise help reduce a ‘high involvement’ product to a ‘low involvement’ product?

For high involvement products customers do an extensive search and evaluation for alternatives. But, if any brand has established itself as the market leader providing the best quality at a reasonable price the need for searching for alternatives will be low. Therefore, we can say that branding exercise can help reduce a ‘high involvement’ product to a ‘low involvement’ product.

Q21. ‘Aquaguard’ fulfils which need in the Maslow’s need hierarchy? Safety Needs.

Q22. What starts first ‘selling’ or ‘marketing’?

Marketing starts first, as marketing includes designing the product, determining the price, finding the place and promoting the product. Selling starts after these P’s of the marketing are finalised.

Q23. Why can’t a consumer durable company have as long a channel network as FMCG companies?

The FMCG products need to be available in all the markets, local grocery shops, supermarkets and every small shops where the competitors’ products are available. Moreover the FMCG products availability should be very convenient to the customers as these are low involvement products and customers purchase them as per their reach and convenience, for this purpose the marketers should ensure wide availability of their products through agents, wholesalers, retailers and distributors. Whereas consumer durable company needs to make their presence in high streets and malls as these are high involvement products and customers prefer buying these items from big showrooms, from retailers who will take the trouble of explaining the pros and cons of options, and they do not look for convenient location of the shop. For this reason, consumer durable products does not need to have as long a distribution channel as FMCG products.

Q24. Normally FMCG companies offer lesser intermediary margins as compared to durables. Why?The FMCG companies have longer distribution channel than the consumer durables company and at each level of the distribution channel the commissions need to be paid. This is the reason that in case of the FMCG the intermediaries are more in number and the intermediary margin gets divided among them and in the consumer durable company lesser intermediaries are involved so the intermediary margin paid is high.

Q25. Advertising is different from publicity? Are both of them different from ‘promotion’?Yes, advertising and publicity are two different promotional mix out of the seven promotional mix any company has.An advertisement is a communications tool which is used to make people patronize a product while publicity is a communications tool which manages people’s impressions about a subject.An advertisement is a paid promotion while publicity is free; an individual or company only has to spend funds on the materials needed.In an advertisement, the company can dictate how the information about it is presented including the content while in publicity, the company has no control over how it is shown if at all.Since it comes from a third party, publicity is viewed as more credible by most consumers in contrast to an advertisement which comes directly from the company.

Q26. When a consumer buys a Monalisa Painting, how does he/she consume it?Consumer is the person who is the end-user of any product. So, if a person buys a Monalisa painting it is supposed to be consumed (used) when the customer decorates the walls with that painting.

Q27. If all brands become ‘homogeneous’, would marketing be required?Yes, it marketing would be required as marketing is not only about branding it is about designing a proper product, price, and place and promotion strategy.

Q28. Which environmental variables shows effect on marketing plan?All the macro- environmental or the uncontrollable environmental factors show effect on marketing plan. These are: demographic, cultural, technological, economical, competitors, Geographical, political and legal environmental factors.

Q29. What is sampling? Why is it done?Sampling is a process used in statistical analysis in which a predetermined number of observations will be taken from a larger population. The methodology used to sample from a larger population will depend on the type of analysis being performed, but will include simple random sampling, systematic sampling and observational sampling.The sample should be a representation of the general population. Sampling is done because it is not possible to take observations from the whole population.

Q30. What is segmentation? How does it help? Do all companies need to do it? Even when they have large resources?

Market segmentation is a marketing strategy that involves dividing a broad target market into sub-sets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow reaching them.It is recommended that all companies do segmentation, even if they have larger resources as it helps them understand their customers’ needs and wants and serve them with the customised products and services. Moreover a segmentation based approach helps the marketers to have a focussed approach in formulating all of their strategies.

Q31. What is positioning? How is it done? Does it really help in real life? Product positioning" is a marketing technique intended to present products in the best possible light to different target audiences. The method is related to "market segmentation" in that an early step in major marketing campaigns is to discover the core market most likely to buy a product—or the bulk of the product. Once segmentation has defined this group the positioning of the product consists of creating the message likely to reach this group. Positioning involves symbol and message manipulation, including displays and packaging.Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.Generally, the product positioning process involves:-

Defining the market in which the product or brand will compete (who the relevant buyers are)

Identifying the attributes (or dimensions) that define the product 'space' Collecting information from a sample of customers about their perceptions of

each product on the relevant attributes

Determine each product's share of mind Determine each product's current location in the product space Determine the target market's preferred combination of attributes (referred

to as an ideal vector) Examine the fit between the product and the market. Positioning helps in real life as, if the marketer has successfully positioned its

product then the product gets a unique and distinctive image among its competitors and the customers can easily correlate that a particular product will fulfil their which type of need.

Q32. Which is more effective: Advertising or Personal Selling? Personal selling is more effective because it involves a face-to-face interaction with the customer which enables the sales-person to better explain about the product and better understand the customer. It is a focussed and targeted approach whereas, advertising gives message to mass market.

Q33. When we sell insurance, is it a product or a service?Insurance comes in the service industry.

Q34. What is essential in selling?

o Searching for prospectso Deciding how to allocate their time between prospects and customers.o Communicating information about the company’s products and services.o Servicingo Information gathering

Q35. Sales force strategy in the introduction, growth, maturity and decline stages of PLC.

Introduction: Create awareness and generate quick product uptake.Growth: Penetrate deeper into existing segments and develop new ones.Maturity: Focus on efficiently serving and retaining existing customers.Decline: Emphasize efficiency, protect critical customer relationships.

Questions based On Important Marketing Definitions

Q36. What is comparative analysis?

The item-by-item comparison of two or more comparable alternatives, processes, products, qualifications, sets of data, systems, or the like.

Example: Analysis done by realtors to assess a property's value by examining similar properties that have sold within the past year. A comparative market analysis may be done for both buyers and sellers. Buyers will want to know how much other homes sold for to ensure that the price is fair and sellers want to make sure that they set their selling price at the right level.

Q37. What is Brand Management & Brand Recall?

Brand management

Is a marketing function that includes analysis and planning on how that brand is positioned in the market, which target public the brand is targeted at, and maintaining a desired reputation of the brand. Developing a good relationship with target public is essential for brand management. Tangible elements of brand management include the product itself; look, price, the packaging, etc. The intangible elements are the experience that the consumer takes away from the brand, and also the relationship that they have with that brand. A brand manager would oversee all of these things. The KRAs of Brand managers are market share, volume/ value growth, profitability.

Brand Recall

A marketing research test conducted by a company to understand ‘How many people recall the company’s product brand name, when placed among various other companies’ products?’

Q38. Define market and market-place?

Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (such as the housing market or the grain market). Whereas, a marketplace is physical, such as a store you shop in.

Q39. What is Brand Equity?

Brand equity is a phrase used in the marketing industry which describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well-known name, as consumers believe that a product with a well-known name is better than products with less well-known names.

Q40. What do you understand by ‘societal-marketing concept’?

A marketing idea that emphasizes social responsibility and aims to provide value to customers while sustaining and even benefiting both their and society's well-being. Using

the societal concept of marketing often helps a business ethically improve their image with customers, shareholders and the general public.

Q41. What is the difference between ‘customer’ and ‘consumer’?

Customer is the person who buys any product (for either re-sale or end-use), while a Consumer is the person who actually uses the product. In some cases the customer and the consumer may be the same person and if any person buys something for somebody else then the person who is buying will be the customer and the person who uses the product will be the consumer.

Q42. What is ‘customer lifetime value’?Recognition by the company of the potential sales, profits and endorsements that come from a repeat customer who stays with the company for several years

Q43. What is e-marketing? E-marketing means using digital technologies to help sell your goods or services. These technologies are a valuable complement to traditional marketing methods whatever the size of your company or your business model.The basics of marketing remain the same – creating a strategy to deliver the right messages to the right people. What has changed is the number of options you have. Though businesses will continue to make use of traditional marketing methods, such as advertising, direct mail and PR, e-marketing adds a whole new element to the marketing mix. Many businesses are producing great results with e-marketing and its flexible and cost-effective nature makes it particularly suitable for small businesses.

Q44. What is Product category? It is the specific generic to which a good or service belongs; for example, while Fanta is a brand name, the product category to which it belongs is soft drinks.

Q45. What is Product mix? It is the variety of distinct product lines and items manufactured or distributed by an organisation or company.

Q46. What is Promotion mix? It is the range of means available to an organisation for communication with its target market. These may be advertising, sales promotion, personal selling, publicity, sponsorship and public relations.

Q47. What is marketing mix?

Marketing Mix are the major controllable variables i.e. product, price, promotion and place (distribution) - that the firm blends to produce the desired market response they are also called the Four Ps of marketing.

Q48. What is Targeting?Targeting is selection of potential customers to whom a business wishes to sell products or services. The targeting strategy involves segmenting the market, choosing which segments of the market are appropriate, and determining the products that will be offered in each segment. A business offering multiple products can determine if the various segments should receive one generic product (such as in mass marketing), or if each segment should receive a customized product (multi-segment), based upon the market's diversity, maturity, the level of competition and the volume of sales expected.

Q49. What is Predatory Pricing? Predatory Pricing is a pricing practice by which a company hopes to inhibit or eliminate competition by charging lower than normal prices for its products in certain geographic regions.

Q50. What is market skimming? Market Skimming is a pricing approach in which the producer sets a high introductory price to attract buyers with a strong desire for the product and the resources to buy it, and then gradually reduces the price to attract the next and subsequent layers of the market.

Q51. What is PR? Public relations (PR) is the practice of managing the spread of information between an individual or an organization and the public. Public relations may include an organization or individual gaining exposure to their audiences using topics of public interest and news items that do not require direct payment. The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions. Common activities include speaking at conferences, winning industry awards, working with the press, and employee communication.

Q52. What is CSR? Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law." CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers,

employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.

Q53. What is direct marketing? Also known as desk-to-desk marketing direct Marketing is a form of business-to business selling in which firms purchase and use computer databases to locate potential customers; typically, the databases are compiled by list brokers and are organised according to business type, sales revenue, number of employees, location and telephone area code.

Q54. What is STP?STP stands for segmenting, targeting and positioning. Explained in the above answers.

Q55. What is viral marketing?Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networking services and other technologies to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes. It can be delivered by word of mouth or enhanced by the network effects of the Internet and mobile networks. The ultimate goal of marketers interested in creating successful viral marketing programs is to create viral messages that appeal to individuals with high social networking potential (SNP) and that have a high probability of being presented and spread by these individuals and their competitors in their communications with others in a short period of time.

Q56. What is guerrilla marketing?Guerrilla marketing is an advertising strategy in which low-cost unconventional means (graffiti, sticker bombing, flash mobs) are used, often in a localized fashion or large network of individual cells, to convey or promote a product or an idea. The term guerrilla marketing is easily traced to guerrilla warfare which utilizes atypical tactics to achieve a goal in a competitive and unforgiving environment.

Q57. What do you understand by market research?Market research is the systematic gathering of information about a market by means of survey, observation or experimentation.

Q58. What is sales forecasting?Sales Forecast is an estimation of the likely volume of sales, measured in dollars and units, for a future planning period; typically, sales forecasting is done on the basis of past trends, sales force estimations, survey of consumer buying intentions, managerial judgement, or quantitative models.

Q59. What is difference between need and want?Need is innate feelings of deprivation in a person and the need turns into want when it becomes product specific.

Q60. What is PEST analysis?PEST analysis (Political, Economic, Social and Technological analysis) describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.

Q61. What is Sales Plan?Sales plan is the assessment of the current situation in a sales region, the setting of objectives, the formulation of strategies and tactics, and the establishment of control and evaluation procedures.

Q62. What is Sales Budget?A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both monetary terms and units of production. An accurate sales budget is the key to the entire budgeting in some way. The sales budget will help determine how many units will have to be produced. Thus, the production budget is prepared after the sales budget.

Q63. What is Quota? Quota is the sales target assigned to a sales-person for their allocated territory, generally for a period of one year.

Q64. What is Sales Promotion?Sales Promotion is a form of promotion which encourages customers to buy products by offering incentives, such as contests, coupons, sweepstakes, samples, free gifts and so on. It is one of the major elements of the promotion mix.

Q65. Differentiate between: personal selling and experiential selling?Personal Selling is a form of promotion utilising the services of a sales team; one of the major controllable variables (with advertising, sales promotion and publicity) of the promotion mix.

Experiential marketing is based on the entire experience a consumer has with a product or service. While traditional marketing sells by pointing out benefits and features, experiential marketing focuses on allowing the consumer to try the service or product for himself. Experiential marketers control the environment in which this happens to some degree, but they want the consumer to make his own judgments about the product or service.

Q66. Difference between ‘guarantee’ and ‘warranty’?Guarantee is a written assurance by the manufacturer that a product will be replaced or repaired to the customer's satisfaction if it is found to be defective or does not perform as intended.Warranty is a guarantee by a manufacturer that a product will be repaired or replaced or the purchase price refunded if it is found to be defective within a specified period, if it does not perform the task for which it was intended or if it does not meet the purchaser's reasonable expectations.

Q67. What is product-line, length of product line, depth of product line and width of product line? Product line is a group of products that are closely related in terms of their functions and benefits they provide. The depth of the product line is number of variants offered within the product line. Product Line Length is the number of different products in a product line. The width of product line is the number of product lines in an organisation.

Q68. Cluster Analysis in Market Research?Clustering of similar brands or products according to theircharacteristics allow one to identify competitors, potentialmarket opportunities and available niches.