Bachelor of Business Administration-BBA Semester 1

BB0001 – Marketing - 2 Credits

(Book ID: B0078)

Assignment Set- 1 (30 Marks)

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

Q.1 a. What do you mean by buying motives? Give examples. (4 marks)

b. Explain briefly the stages involved in buying process. (6 marks)

Answer:

a. Meaning of Buying Motives

According to Wit. Stanton: “A motive can be defined as a drive or an urge for which an

individual seeks satisfaction. It becomes a buying motive when the individual seeks

satisfaction through the purchase of something.” Motive is thus inner urge that moves or

prompts a person to some action. Motive is an effectual desire that prompts one to a

definite action. A motive is the inner state that energises, activates or motives and that

directs or channels behaviour towards goals.

Table:

Primary buying motives Secondary buying motives

1. Food and Drink 1. Bargains

2. Comfort 2. Information

3. To attract opposite sex 3. Cleanliness

4. Welfare of beloved ones 4. Efficiency

5. Freedom from fear and danger 5. Convenience

6. To be superior 6. Dependability quality

7. Social approval 7. Style beauty

8. To live longer 8. Economy profit

9. Curiosity.

All these motives are not equally forceful. Here we give only important buying motives:

1. Freedom from fear and danger: Fear is a negative motive but is a very powerful

one. The most basic instinct of a human being is self-preservation. A person would do

almost anything to guarantee – his safety. Fear is a very powerful and compelling force

in human affair.

2. Desire for economy: People desire money to satisfy their other desires. The

businessman wants money to make more profits or lower costs. Saving money is a

universal desire. Customers spend money to get more money.

3. Vanity: Vanity is a powerful motive in the hands of the marketing man being the

safest appeal that may be used.

4. Appreciation: Everybody desires to be appreciated and complimented. They like to

be recognized as an important person. They want to be in a position from where they

can issue orders to others.

5. Fashion: It is the desire of everyone to imitate what others are doing. This may also

be called imitation motive. It is closely linked with pride or desire for importance.

6. Possession: The instincts of possession or a desire to call things as „mine‟ leads

persons to hoard and collect things. A miser takes delight in possessing money. Some

persons collect postage stamps and old coins. Here the hoarding instinct is at work.

7. Sex or romance: The sex motive is a very powerful one and can sell almost

anything. It is no wonder that this instinct is very often used by marketers in women

centred advertisements.

8. Love of others: This motive plays an important part when parents purchase all kinds

of things for their children like toys, fancy garments and other presents, or go in for life

insurance to make provision for their future. Insurance men use this motive to include

the prospect to protect his loved ones by purchasing an insurance policy.

9. Health or physical well-being: Young persons are full of energy and are sometimes

indifferent to their health or physical well-being till they attain the age of forty. Many

persons purchase health foods, vitamin tablets and patent medicines to maintain their

health and physical well-being.

10. Comfort and convenience: Most people like to be easy going. They don’t like to

exert much. They simply like to do everything the easy way and in comfort. Hence this

motive may be well exploited by the marketers, particularly for selling luxury items.

Using buying motives in marketing

Human behaviour is fundamentally related to instincts. It is these instincts which make a

person behave differently at different times. The motivation-research is meant to

measure the changes of instincts of people.

The marketer should plan well making full use of these motives. Marketing men are

placed in a better position to develop an effective marketing programme to satisfy such

motives. The use or low priced cigarettes may supply the desire for saving money while

high priced one may suggest approval and quality. The appropriate motive must be

crystallized if the marketing programme is to be effective and appropriate in terms of

product features and advertising strategy.

b. Stages of Buying Process

The purchaser or consumer takes his buying decision, for some commodities

immediately without much consideration such as items of daily use while for some other

commodities mainly luxury or durable items, he thinks much before taking a decision to

purchase it. Sometimes, he consults others. Generally, the purchaser passes through

five distinct stages in taking a decision for purchasing a particular commodity. These

stages are:

(i) need arousal,

(ii) information search,

(iii) evaluation behaviour,

(iv) purchase decision, and

(v) post purchase feelings.

i) Need arousal: The buying process starts with need arousal. A need can be activated

through internal or external stimuli. The basic needs of a common man arise to a level

and become a drive and he knows from his previous experience how to satisfy those

needs like hunger, thirst, sex, etc. This is a case of internal stimulus. A need can also

be aroused by an external stimulus such as sight of a new thing in a shop while

purchasing other things.

ii) Information search: After need arousal, the consumer tries to solve it and gathers

the sources and information about the product.

There are four consumer information sources.

i) Personal sources (family, friends, neighbours etc.).

ii) Commercial sources (advertisements, salesmen, dealers).

iii) Public sources (mass media, consumer-rating organizations).

iv) Experiential sources (handling, examining, using the product).

iii) Evaluation behaviour: Having collected the information, the consumer clarifies and

evaluates the alternatives. There is, unfortunately no simple and single evaluation

process used by all consumers or even by one consumer in all buying situations. The

most current process of evaluation is to judge the product largely on a conscious and

rational basis. Various considerations form the part of judgement such as product

attributes, importance, weights, brand image, utility function for each attribute, and

attitude etc. After evaluation of various alternatives, he takes the decision to buy.

iv) Purchase decision: Evaluation behaviour leads the consumer to form a ranked set

of preferences. Normally a consumer buys the article, he or she likes most but there are

three more important considerations for taking the buying decision:

a) attitude of others such as of wife, relatives, and friends, but it depends upon the

intensity of their negative and the consumers‟ motivation to comply with the other

person’s wishes;

b) anticipated situation factors as expected family income, expected total cost of the

product and the expected benefits of the product;

c) unanticipated situational factors such as looks or manner of the salesman, or the way

business is carried on, or worry about his income situation.

The marketer must consider these factors and should try to provoke the feeling of risk in

the consumer and attempt to provide information and support that will help him.

v) Post purchase feelings: After buying and trying the product, the consumer will feel

some level of satisfaction or dissatisfaction and level of satisfaction depends very much

on the expectation and the product’s perceived performance. If the product matches

upto his expectations, the consumer is satisfied; if it exceeds, he is highly satisfied; and

if it falls short of expectations, he is dissatisfied. Consumers form their expectations on

the basis of message and claims sent out by the seller and other communication

sources. If seller makes exaggerated claims, the consumer will naturally feel

dissatisfaction. So, the smart seller must make claims about the performance of the

product that are congruent with its quality so that the consumer would feel satisfied.

Q.2 Explain the marketing concepts with its relevance in today’s marketing

environment.

(10 marks)

Answer:

Marketing Concepts :

Studies reveal that different organisations have different perceptions of marketing. And

these differing perceptions have led to the formation of different concepts of marketing

such as

1. The Exchange Concept

2. The Production Concept

3. The Product Concept

4. The Selling Concept

5. The Marketing Concept

6. The Societal Marketing Concept.

1. The Exchange Concept : The exchange concept of marketing, as the very name

indicates, holds that the exchange of a product between the seller and the buyer is the

central idea of marketing. While exchange does form a significant part of marketing, to

view marketing as a mere exchange process would amount to a gross undermining of

the essence of marketing. A proper scrutiny of the marketing process would readily

reveal that marketing is much broader than exchange. Exchange covers the distribution

aspect and the price mechanism involved in marketing.

The other important aspects of marketing, such as concern for the customer, generation

of value satisfactions, creative selling and integrated action for serving the customer,

get completely overshadowed in the exchange concept of marketing.

2. The Production Concept: This philosophy holds that customers favour those

products with low offered price and easily available products. Thus this concept holds

that high production efficiency and wide distribution coverage would sell the product

offered to the market.

Organisations voting for this concept are impelled by a drive to produce all that they

can. Naturally they get focussed on production and put all their efforts toward that

aspect of the organisation. They do achieve efficiency in production. But their thinking is

guided by the assumption that the steep decline in unit costs arising from the

maximisation of output would automatically bring them all the customers and all the

profits that they need. But, they do not get the best of customer patronage. Customers,

after all, are motivated by a variety of considerations in their purchases. As a result, the

production concept fails to serve as the right marketing philosophy for the enterprise.

Production concept is applicable in situations where demand exceeds supply.

3. The Product Concept: This philosophy holds that customer favours quality,

performance, innovative features etc. The buyer will admire such products. Therefore

firms following this philosophy believe that by making superior products and improving

their quality overtime, they will be able to attract customers.

The product concept is somewhat different from the production concept. Whereas the

production concept seeks to win markets and profits via high volume of production and

low unit costs, the product concept seeks to achieve the same result via product

excellence - improved products, new products and ideally designed and engineered

products. It also places the emphasis on quality assurance. They spend considerable

energy, time and money on research and development and bring in a variety of new

products.

Organisations which follows this concept concentrate on achieving product excellence.

They do not bother to study the market and the consumer in depth. They get totally

engrossed with the product and almost forget the consumer for whom the product is

actually made.

They fail to find out what the consumers actually need and what they would gladly

accept. When organisations fall in love with the product it leads to marketing Myopia

because the focus is on the product rather than on the customer needs.

Marketing Myopia

The term ‗Marketing Myopia‘ is to be credited to Prof. Theodore Levitt. It means a

coloured or crooked perception of marketing and a short sightedness about business

executive attention to production or product or selling aspect at the cost of the customer

and his actual needs, creates this myopia. It leads to a wrong or inadequate

understanding of the market and hence failure in the market place. The myopia even

leads to wrong or inadequate understanding of the very nature of the business in which

a given organisation is engaged and thereby affects the future of the business as well.

Levitt explained further that while business that maintains itself through the changing

times, there is some fundamental characteristics in each business. And the fundamental

characteristic invariably relates to the basic human need which the business seeks to

serve and satisfy through its products. A wise entrepreneur or marketing man would

understand this important fact and define his business in terms of this fundamental

characteristic of the business rather than in terms of the products and services

manufactured and marketed by him at a given point of time. For Ex. the Railways

should define their business as transportation, the movie makers should define

business as entertainment and the beverage marketers should define their business as

nutrition.

4. The Selling Concept: This philosophy holds that customer, if left alone, would not

buy enough of the company‘s products. The organization must, therefore undertake an

aggressive selling and promotion effort. As more and more markets became buyers‘

markets and the entrepreneurial problem became one of solving the shortage of

customers rather than that of goods, the sales concept became the dominant idea

guiding marketing. Most firms practice this concept when they have overcapacity. This

concept maintains that a company cannot expect its product to get picked up

automatically by the customers. The company has to consciously push its products.

Aggressive advertising, high-power personal selling, large scale sales promotion, heavy

price discounts and strong publicity and public relations are the tools used by

organisations that rely on this concept. As a result the public often identifies marketing

with hard selling and advertising.

But marketing based on hard selling carries high risks. It assumes that customers who

are coaxed into buying a product will like it and if they don‘t, that they won‘t bad mouth it

or complain to consumer organisations and will forget their disappointment and buy it

again.

These assumptions do not have base. One study showed that dissatisfied customers

may bad-mouth the product to 10 or more acquaintances and bad news travels fast.

Selling concept is practised more aggressively with unsought goods, goods that buyers

normally do not think of buying such as insurance, encyclopedias etc. These industries

have perfected various sales techniques to locate prospects and hard sell them on their

product‘s benefits. It is also practised in the non-profit area by fund raisers and political

parties.

5. The Marketing Concept: The marketing concept holds that the key to achieving its

organisational goals consists of the company being more effective than competitors in

creating, delivering and communicating customer value to its chosen target markets.

This concept was born out of the awareness that marketing starts with the determination

of consumer wants and ends with the satisfaction of those wants. The concept puts the

customer both at the beginning and at the end. It says that any business should be

organised around the marketing function, anticipating, stimulating and meeting

customer‘s requirements. The customer has to be the centre of the business universe

and not the organisation. A business cannot succeed by supplying products and

services that are not properly designed to serve the needs of customers.

The marketing concept rests on four pillars. They are

a. Target market

b. Customer needs

c. Integrated marketing

d. Profitability.

This can be illustrated with the help of the following figure which differentiates it from

selling concept.

a) Target market: A marketer has to define the market to which it will direct its efforts.

The specification and identification of market would enable the marketer to design

specific marketing strategies. A target market is defined as a set of actual and potential

buyers of a product, service or idea. A buyer, who has interest in the product, income

and willingness to buy can broadly be called as potential buyer. However, it might not

be possible for the marketer to target all of them. There might be geographical barriers,

unsuitabilities of product to certain climatic conditions or inability of the marketer to

reach certain hilly or remote areas. Thus, a small portion of potential market might

become part of the target market.

The following figure clarifies the target market and penetrated market.

The penetration of product is difficult even if the potential market is large.

b) Customer needs: A company can define its target market but fail to correctly

understand the customers‘ needs. Understanding customer needs and wants is not

always simple. Some customers have needs of which they are not fully conscious or

they cannot articulate their needs or they use words that require some interpretation.

There are five types of needs. They are stated needs, real needs, unstated needs,

delight needs and secret needs. Responding only to the stated need may shortchange

the customer.

A responsive marketer finds a stated need and fills it. He is going to lose the customer

in the near future. An anticipative marketer looks ahead into what needs customers may

have in the near future. A creative marketer discovers and produces solutions

customers did not ask for but to which they enthusiastically respond. Therefore

companies must go beyond just asking consumers what they want. This is necessary

because a company‘s sales comes from two groups, new customers and repeat

customers. One estimate shows that attracting a new customer can cost five times as

much as pleasing an existing one and it might cost sixteen times as much to bring the

new customer to the same level of profitability as the lost customer. Customer retention

is thus more important than customer attraction.

c) Integrated marketing: When all the company‘s departments work together for

serving the customers, the result is integrated marketing. Integrated marketing takes

place on two levels first the various marketing functions – sales force, advertising,

customer service, product management, marketing research must work together.

Second marketing must be embraced by the other departments, they must also think

customer. According to David Packard of Hewlett – Packard, ―Marketing is far too

important to be left only to the marketing department.

To foster team work among all departments, the company carries out internal marketing

as well as external marketing. Internal marketing is the task of hiring, training and

motivating able employees who want to serve customers well. External marketing is

marketing directed at people outside the company. The following figure illustrates the

relevance of integrated marketing.

d) Profitability: The ultimate purpose of the marketing concept is to help organisations

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Q.3 What is product mix and product life cycle? Elaborate. (10 marks)

Answer:

Product Mix

One major management aspect involved in product policy is the decision concerning

product mix. This is more important nowadays since most of the manufacturers are

diversifying their products. The product policy decisions are made of these different

levels - product mix, product items and product line. These „three in one‟ elements

make the product planning effective. Product mix is the list of all products offered for

sale by a company. It is defined as the composite of products offered for sale by a firm

or a business unit. The product mix is three dimensional, it has breadth, depth and

consistency. Breadth is measured by the number of variety of products manufactured by

a single manufacturer. For example, Bajaj Electricals produce a variety of electrical

appliances such as fans, presses, mixers, lamps, etc. Depth refers to the assortment of

sizes, colours and models offered within each product line. For example, Bajaj

Electricals manufacture different varieties of models of fans and lamps. Consistency

refers to the close relationship of various product lines either to their end use or

production requirements or to distribution channels to other variables. Bajaj Electricals,

for example, produce those goods which fall under the category „Electrical appliances‟.

So there is consistency in their products.

Life Cycle of a Product

All products have certain length of life during which they pass through certain

identifiable stages. Through the conception of the product, during its development and

upto the market introduction, product remains in prenatal stage. Its life begins with its

market introduction, then goes through a period during which its market grows rapidly,

eventually, it reaches maturity and then stands saturated. Afterwards its market declines

and finally its life comes to an end.

The important stages from the view point of marketing can be grouped into six: (i)

Innovation, (ii) Growth, (iii) Maturity, (iv) Saturation, (v) Decline, and (vi) Obsolescence.

This is termed as a product life cycle.

Different stages of product life cycle

Different stages of a product life cycle are as follows:

i) Introduction: It is the first stage of the product life cycle. The product is first

introduced in the market. Heavy expenditure on advertisement is made to inform the

customers about its qualities and characteristics and it is made popular among its users

through promotional efforts.

Since the consumers are quite unaware of the products characteristics, the sales do not

pick up much. Consequently the quantum of profits is low or rather negligible in this

stage but risk factor is much higher. Competitors are not in the market because the

product is new for the consumers. Most of the products fail in this stage due to lack of

proper innovation efforts.

ii) Growth: After the product is introduced in the market, the product enters the second

stage, i.e., growth stage. Under this stage, the product gains popularity among and

recognition from the customers. The demand and sales go up tremendously due to

promotional efforts. Consequently profits of the firm start going up because of two

primary reasons: (a) Production and sales go up hence firm gets economies of large

scale production and sales, and (b) Advertising and distribution costs, though they go

up, per unit cost is reduced. High profits attract the competitors to enter the field.

iii) Maturity: The next is maturity stage. In this stage competition increases, though

sales of the product go up but with a lower speed.

The advertisement and distribution costs increase in order to make the product service.

The profit rate begins to decline. The producer makes search for new markets. Market

and marketing research expenditure goes up. The prices came down due to stiff

competition.

iv) Saturation: Next comes the saturation point. The sale value comes to standstill

despite best efforts but it is at all time high. The competition is also at its peak in this

period. Competition brings the cost of distribution and promotional efforts at new high;

prices begin to fall and therefore profits come down. Fresh efforts are made in this stage

to improve the product. New markets are tried.

v) Decline: This stage is brought about by the product’s gradual displacement by some

new innovation or change in consumer behaviour. New and new products are

introduced in the market by competitors. Sales go down inspite of all best efforts of

picking it up. Cost control becomes necessary to reduce the price in order to compete.

vi) Obsolescence: As new products are developed and introduced by the competitors,

the company’s product dies out. Its demand and sales are likely to taper off. Profits are

reduced to a negligible point. At this stage, it is advisable to stop the production of the

product and switch off to other products.

The above discussion concentrates on the life cycle of a product beginning with its

introduction into the market and ending with its death, (i.e., only post-marketing stages

of a life cycle are given) but, a series of processes are to be undertaken by the

management even prior to its introduction. The various expenses are made even before

its introduction to the market on research, engineering and technical improvements,

post-production and pre-marketing (test-marketing, advertising) etc.

This cycle of a product can be depicted in Figure:

Time

Fig. : The product life cycle model shows four stages that products and product

categories move through.

Utility of product life cycle concept

The concept of product life cycle is

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