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Question PaperMarketing Management (MB221) : January 2004

Section A : Basic Concepts (30 Marks)

This section consists of questions with serial number 1 -30.

Answerall

questions.

Each question carries one mark.

Maximum time for answering Section A is 30 Minutes.

1. Khanna is a marketing manager faced with planning marketing strategies during times ofinflation. He should be aware that inflation causes consumers to

a. Purchase more goods and services to support their psychological well-being such ascounseling and stress management training

b. Decrease their brand loyalty to products they have traditionally usedc. Buy in small quantities until inflation is overd. Consume more meals away from homee. Put more money into savings accounts because prices are too high.

< Answer >

2. When Steve goes to the grocery store every other week, he buys the same brands of coffee,milk, cereal, and dog food. This type of buying behaviour is called

a. Routine response behaviourb. Extensive decision makingc. Limited decision makingd. Situation conveniencee. Both (b) and (d) above.

< Answer >

3. If Videocon engineers its washing machines to spin the clothes faster regardless of whetheror not customers want that speed, then Videocon has characteristics associated with

a. Production conceptb. Selling conceptc. Marketing conceptd. Product concepte. Societal marketing concept.

< Answer >

4. The Kewl Clothing Company has just hired you to develop a marketing strategy for their newline of casual wear. The firm wants to target several different ethnic groups, so you suggest a"stitching niches" approach. Which of the following would you use to illustrate yoursuggestion?

a. Create a different product for each of the niche markets the firm is targetingb. Position the products so they simultaneously meet the needs of the different ethnicgroupsc. Maintain Kewl's core identity by creating different promotional campaigns and brand

extensions for the various markets servedd. Use the same marketing mix that has worked so well for the firm throughout the West

Coaste. Gain market share by developing an entirely distinct marketing mix for the largest niche

market.

< Answer >

5. Prasad is trying to decide what kind of new car he is going to buy. He relies on ConsumerReports, car magazines, and the advice of car mechanics. Prasad is using

a. Marketing controlled information sourcesb. Nonmarketing controlled information sourcesc. Demographic information sourcesd. Secondary data sourcese. Internal search sources.

< Answer >

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6. Pooja, a Chartered Accountant, reads an article that states that CAs receive the higheststarting salary offers from consulting firms. The article also states that marketing majors startwith lower salaries but surpass all other majors' salaries within ten years. Pooja doesn'tremember reading this last part of the article, just the first part. This is an example of

a. Selective distortionb. Selective exposurec. Selective retention

d. Subliminal perceptione. Selective comprehension.

< Answer >

7. When the demand for soft drinks grew by 12 percent in one year, the demand for aluminumcans and glass bottles grew also. The aluminum and glass industries are enjoying the effectsof

a. Joint demandb. Inelastic demandc. Derived demandd. Unitary demande. Elastic demand.

< Answer >

8. Wrigley's Chewing Gum ran an advertising campaign that targeted heavy smokers. Theadvertising indicated that "when you can't smoke, chew Wrigley's." This is an example ofwhat type of segmentation?

a. Geographicb. Usage ratec. Demographicd. Psychographice. None of the above.

< Answer >

9. Which of the following is the best example of a marketing research objective?

a. To determine why sales have decreased over the past three yearsb. To create a print advertisement emphasizing customer servicec. To determine what role children have in influencing family decisions about vacation

destinations

d. To increase sales by 10 percente. To develop a method to track consumer attitudes.

< Answer >

10. Munna jumps out of his truck and runs into a Foodworld store to grab a drink. While he ispaying for his drink, he notices the chocolate bars at the counter and grabs one to buy. Thechocolate bar in this case is considered to be a(n)

a. Specialty productb. Unsought productc. Convenience productd. Shopping producte. None of the above.

< Answer >

11. Fabrique, Inc. invented a fabric that was fireproof and tearproof. The week after the productwas invented, a group of the firm's employees got together and listed ways the product mightbe used. This is an example of

a. Lateral thinkingb. Concept testingc. Brainstormingd. Venture group activitiese. Screening.

< Answer >

12. Zakki owns Pet Plus, a complete pet service that offers grooming, obedience training, showtraining for animals and handlers, boarding, special food preparation, and minor veterinarycare. To maintain a quality image, Zakki provides complete training for each employee in thecompany operations, objectives, and expected performance standards. What unique aspect ofservices is Zakki attempting to address?

< Answer >

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a. Inventoriabilityb. Inconsistencyc. Intangibilityd. Improprietye. Heterogeneity.

13. General Electric sells large home appliances both through independent retailers (departmentstores and discount houses) and directly to large housing-tract builders. This is an example of

a. Intensive distributionb. Exclusive distributionc. Selective distributiond. Alternative distributione. Dual distribution.

< Answer >

14. The Xerox corporation stays in touch with its customers through phone calls and greetingcards, periodically sends out needs-assessment questionnaires, and designs new services tomeet new needs. This is an example of relationship marketing based on

a. Financial bondsb. Service recoveryc. Social bondsd. Customization bondse. Structural bonds.

< Answer >

15. SoundSensation offers stereo equipment and accessories. It has a deep assortment and lowprices. The store is operated on a self-service, no-frills concept. SoundSensation is a

a. Specialty storeb. Factory outletc. Warehouse membership clubd. Discount storee. Category killer.

< Answer >

16. The advertisements for Bertone Ramarro Car claim that it is the most expensive car in theworld. This is an example of a

a. Target return pricing strategyb. Market share pricing strategyc. Prestige pricing strategyd. Maintained markup pricing strategye. Profit maximization pricing strategy.

< Answer >

17. Rajeev Kapoor is a chef in a new downtown restaurant. He has sent out press releases to themajor local media and has invited food critics to dine in his restaurant. Rajeev is engaging in

a. Public relationsb. Personal sellingc. Sales promotiond. Advertisinge. Publicity.

< Answer >

18. A rental car company with the second largest market share runs advertisements showing howits customer service is superior to that of the largest competitor. This is an example of

a. Comparative advertisingb. Corrective advertisingc. Primary demand advertisingd. Institutional advertisinge. Pioneering advertising.

< Answer >

19. Consult-Me Consultants, Inc., has recently been engaged in several special meetings whereissues such as business mission, situation analysis, market and growth alternatives, andimplementation approaches have been discussed. Consult-Me is apparently engaged in

a. Target market planningb. Writing the mission statementc. The strategic planning process

< Answer >

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d. Business analysise. Strategic contingency planning.

20. Pepsico is a large conglomerate that has separate subsidiaries called Pepsi-Cola (soft drinks),Tropicana (juices), Pepsi Bottling, and Frito-Lay (snack foods). Each of these subsidiarieshas its own functional departments, its own planning, its own financial goals, and its owntarget markets. These subsidiaries may also be called

a. Product market niches

b. Diversified divisionsc. Strategic business unitsd. Strategic alliancese. Heterogeneous elements.

< Answer >

21. The baking products division of Basic Foods, Inc., is the market leader in a mature and low-growth market. The baking products division generates more dollars than is required in orderto maintain market share, and in portfolio matrix terms it is known as Basic Food's

a. Problem childb. Cash cowc. Stard. Doge. None of the above.

< Answer >

22.A local private college has been offering an accounting program for several years. Theprogram has a large but declining enrollment, and the program represents the largest incomeearner for the business division. The recommended strategic option is to

a. Buildb. Divestc. Holdd. Harveste. Cultivate.

< Answer >

23. Product portfolio analysis is based on the idea that

a. A firm's market share and market attractiveness are factors for a marketing strategyb. A firm has a profitable impact on marketing strategyc. A products market growth rate and its relative market share are important determinants

of its marketing strategyd. A products market growth rate and market attractiveness determine the marketingstrategy

e. A firms market growth rate is the only determinant in the marketing strategy.

< Answer >

24. Tata Tea has its own tea gardens, processing units, packaging units and marketing channels,spread out all over the country. Tata Tea can therefore be said to have a high degree of

a. Industry scopeb. Vertical scopec. Market scoped. Geographical scopee. Competence scope.

< Answer >

25. Some banks have increased their market share by offering a new type of account especially

for children, traditionally a market they have ignored. This illustrates which of the followinggrowth strategies

a. Market Penetrationb. Market Developmentc. Product Developmentd. Diversificatione. Product Penetration.

< Answer >

26. When Julie gives her customers her card during a sale and invites them to call with anyquestions they might have later, which of the following levels of relationship marketing Julie

< Answer >

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is practicing?

a. The basic levelb. The reactive levelc. The accountable leveld. The proactive levele. The partnership level.

27. Ellen decided to conduct an experiment in her mall's car park to see if shoppers would

respond to a lower parking price to park in some of the under-utilized sections of the carpark. Which of the following types of market research Ellen is using?

a. Exploratoryb. Causalc. Descriptived. Investigativee. Observational.

< Answer >

28. When a car dealer complains to the manufacturer that another dealer of the same make ofcars is selling outside their assigned territories, it is a type of

a. Parallel conflictb. Customer-service conflictc. Vertical conflict

d. Horizontal conflicte. Multi-level conflict.

< Answer >

29. Which of the following see(s) the product, in a commodity market as very important anddemand the deepest discount and the highest service?

a. Bargain huntersb. Programmed buyersc. Relationship buyersd. Transaction buyerse. Gatekeepers.

< Answer >

30. A brand is a name intended to identify the product of one seller and differentiate the productfrom competing products. Coca-Cola is the best-known brand name in the world. The namehas a high-perceived quality and high brand loyalty among soft drink users. The company has

developed the brand name for over 100 years. Coca-Cola has a valuablea. Line extensionb. Brand markc. Private brandd. Packagee. Brand equity.

< Answer >

END OF SECTION A

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Section B : Caselets (50 Marks)

This section consists of questions with serial number 1 6.

Answerall questions.

Marks are indicated against each question.

Detailed workings should form part of your answer. Do not spend more than 110 - 120 minutes on Section B.

Caselet 1

Read the caselet carefully and answer the following questions:

1. What challenges did KFC face in its expansion and how did it overcome them successfully?

(8 marks) < Answer >

2. What are the questions an organization should ask when analyzing International Markets?


KFC, the world's largest fried and rotisserie chicken restaurant chain, offers great-tasting complete mealsand snacks in nearly 10,000 restaurants around the world. KFC operates in more than 76 countries - from

Shanghai to Sao Paolo; from the sands of Saudi Arabia to the sidewalks of New York. Everyday, nearlyseven million meals are served around the world. KFC's menu everywhere includes Original Recipechicken-made with the same great taste Colonel Harland Sanders created more than a half-century ago.

What is KFC's secret to global success? First and perhaps most important is the worldwide acceptance ofchicken. In Malaysia, for instance, annual per capita consumption of chicken has doubled during the pastdecade. According to the president of KFC International, "Chicken is probably the most universallyaccepted source of protein. There is not a country in the world where you won't find chicken". And unlikeother meats, chicken is not forbidden by religions or cultures, except among vegetarians. This acceptancepresented an excellent opportunity for KFC, but it did not guarantee success.

KFC made some early mistakes in Latin America and Europe. The company learned that opening anAmerican fast-food restaurant abroad is not simple. Cultural differences between countries result indifferent eating habits. For instance, people eat their main meal of the day at different times throughout theworld. Different menus must also be developed for specific cultures while still maintaining the core

product-fried chicken. You can always find original recipe chicken, cole slaw, and fires at every KFCoutlet, but restaurants in China feature Chinese tea and French restaurants offer more desserts. Above all,KFC emphasizes consistency. Whether in Shanghai or Kentucky, the product basically tastes the same.

KFC usually enters a new market by opening a single store. The company locates the store in a large urbanarea on the most visible piece of real estate available. If the project fails, the land can be sold. Usuallyforeign stores are eat-in restaurants, not the take-out establishments generally found in the United States.Prices are usually high at first to appeal to an upscale market.

International markets offer many opportunities and challenges for KFC. The company is growing outsidethe United States at nearly five times the rate of domestic growth. While many businesses complain aboutthe inability to compete in Japan, KFC has more than 1,000 restaurants in Japan alone. The secret is quality,such as using fresh chicken rather than frozen. Freezing chicken causes a discoloring of the bone, whichbothers the Japanese. Eastern Europe also holds great promise for KFC.

KFC also faces several challenges. In some areas of the world, such as Malaysia and Indonesia, it is illegal

to import poultry, a situation that has led to product shortages. Another challenge facing KFC is to adapt toforeign cultures. The company has been most successful in foreign markets when stores are operated bypeople who understand the culture. The objective is to think like a local, like an American company startingan American business in a foreign country.

Caselet 2

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3. Is PSI successful in delivering the message to the target audience? Justify your comments.


4. Government represented organisations play a vital role in the social marketing campaigns. Explain theadvantages and disadvantages if government has an active role in such campaigns.

(9 marks) < Answer >The question has the assembled audience squirming. "How many of you have touched a condom this

week? Those who have, raise your hands," urges the speaker. Amidst silence, some shifting and someembarrassed laughter, Sanjay, Programme Director (HIV/AIDS Prevention), Population ServicesInternational (PSI), tries to make the point that the stigma attached to discussing sexual health issues ismore dangerous than the virus that causes AIDS. Sanjay is giving a presentation at the regional conferenceon AIDS prevention.

PSI, which was set up in India in 1988, uses social marketing to deliver health products and services tolower-income groups in developing countries, to motivate their use and promote healthy behaviour. AWashington, DC-based non-profit organisation working in over 50 countries, its forte is AIDS prevention,family planning, maternal and child health. In India, PSI markets its own brand of Masti condoms, andhelps market the Kama Sutra and Nirodh Dlx brands in smaller towns and remote areas. Among otherhealth products it markets are the Pearl brand of contraceptive pills, the Union Government's Mala D, oral

rehydration solution and a clean delivery kit.PSI, which has just launched a campaign in Tamil Nadu and Andhra Pradesh, among the States with thehighest incidence of HIV, is involved in social marketing and communications for health. Aimed atincreasing awareness of the risk of contracting HIV/AIDS through unprotected sex with non-regularpartners and at busting certain misconceptions associated with it, the campaign has two parts to it. Thecampaign is part of Operation Lighthouse, a port-based HIV/AIDS/STD intervention, set to reach millionsof people, specifically vulnerable populations in port communities, with the information, services, andproducts they need to protect themselves from HIV/AIDS. The key target groups include truck drivers,commercial sex workers and their clients, and port workers. These high-risk populations are responsible forthe vast majority of HIV incidence in port communities. They also play a critical role in accelerating thespread of HIV to the general population.

"Puli Rajavukku AIDS varumaa?" is the horrified question that rings through the teaser ad. This goes on tothree more spots which advise the target 'consumer' to practise safe sex with non-regular partners. The otherpart urges the target group to `be faithful'. The exercise is based on the Balbir Pasha campaign that PSI ranin Mumbai, one that generated much controversy and flak for the organisation. The Balbir Pasha campaign(developed by Lowe) was slammed for being "anti-women", perceived as implying that women spreadHIV/AIDS and charged with stigmatizing sex workers but was "remarkably successful" in that postcampaign, PSI's helpline received 250 per cent more calls; its Saadhan clinics, (Saadhan integrates themultiple issues of family health by offering more accessible information on more choices) voluntary

counselling and testing centres, had 150 per cent more visitors and there was a 300 per cent rise in allbrands of condoms sold in the red light district of Mumbai.

The Puli Raja campaign uses TV, radio, print and outdoors. It uses locations frequented by the targetgroup. In Mumbai, Kolkata and Delhi, there are clearly defined red light areas, but not so in TN and AP,which is major challenge of this endeavour.

The points that PSI seeks to address are, that a healthy-looking person or known partner need notnecessarily be HIV/AIDS-free, and that alcohol-induced forgetfulness leads to the failure of using acondom. In fact, this is the ideal on which the second sub-campaign, Be Faithful, is based. It shows how, byhaving extra-marital affairs, men can give HIV to their wives and thus to unborn children, putting theirlives at risk. Puli Raja, who was visualised as a tall, hefty, invincible, fun-loving hero in pre-campaigntesting, actually remains faceless throughout the campaign. "He is every man, his conscience. He's an idea.

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By keeping him abstract, it's easier for those in the target group to identify with him. Giving him a face will leadpeople to develop associations and reject similarities with him.

The organisation is looking at developing a campaign with a local celebrity who urges the target group toovercome their reserve in talking about AIDS. In Mumbai, the Balbir Pasha campaign was followed by aprimarily print one which created awareness of the Saadhan clinics, and this is what is planned for TN andAP too.

The campaign tries to break away from the established pattern of social cause advertising, which is "notengaging" though informative. Mass media can be effective in such contexts if they are used strategically,PSI's tack is to focus on the consumer, get him involved in on-ground activity (interpersonalcommunication) and then go on to making him aware of the products and the services available.

Caselet 3


5. Explain, with appropriate example, how a global computer manufacturing company can practice masscustomization and create competitive advantage


6. How can Customer Relationship Management (CRM) be an enabling factor to derive full benefits of masscustomization?


Mass customization is best defined as a delivery process through which mass-market goods and servicesare individualized to satisfy a very specific customer need, at an affordable price. Based on the public'sgrowing desire for product personalization, it serves as the ultimate combination of "custom-made" and"mass production." And it is rapidly emerging as the organizing business principle of the 21st century.

Simply stated, mass customization is about choice; about giving consumers a unique end product when,where and how they want it. During the last 15 years, choice has become an important ingredient of

consumer purchasing decisions. During this period, the number of automobile models has increased from140 to 260; the selection of soft drinks from 20 to 90. Today, the U.S. market alone offers consumers 3,000brands of beer, 50 brands of bottled water, 340 kinds of breakfast cereals, 70 styles of Levi's jeans and 31types of bicycles.

With choice playing such a critical role in consumer buying habits, mass customization is becomingincreasingly evident in day-to-day life. For example, internet-based e-commerce now makes it possible foranyone to order a computer designed to his or her exact needs and specifications. Or compile music CDscontaining any combination of songs. Or obtain customized home mortgages. Or design a one-of-a-kindfriend of Barbie, complete with unique name, clothing and personality.

Unlike mass production, which produces some variety of an item in high volumes, mass customization ischaracterized by small volumes - in many cases, lot sizes of one. It is also characterized by competitivecost, timely deliveries and a move away from centralized manufacturing to more distributed production.Consequently, when combined with the very latest digital technology, such as e-commerce and robotics,mass customization not only benefits the consumer, it offers the manufacturer significant benefits as well: ahigh degree of product/service flexibility, reduced inventory risk, and a competitive edge in themarketplace.

In agile product development, product development teams must concurrently develop flexible processesthat are so agile that companies can quickly develop a broad portfolio of niche market products, buildproducts to order, mass customize individual products at mass-production speed and efficiency, and rapidlyintroduce a steady succession of "new" products that are really planned "variations on a theme" based oncommon parts and modular product architecture.

Business Process Engineering

Business Process Engineering (BPE) focuses on the design and the improvement of entire process throughthe company, such as the fulfillment of customer orders from the first contact with the customer to the

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finished product. Organizational structures are changed in order to integrate previously separated functions alongprocess chains, non-value adding activities are removed, and information systems are re-designed toefficiently support entire processes rather than single functions.

Quality Function Deployment

Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirementsand translating them into specific plans to produce products to meet those requirements. The "voice of thecustomer" is the term to describe these stated and unstated customer needs or requirements. The voice ofthe customer is captured in a variety of ways: direct discussion, surveys, customer specifications,

observation, warranty data, field reports, etc. This understanding of the customer requirements is thensummarized in a product planning matrix or "house of quality". These matrices are used to translate higherlevel "what's" or requirements into lower level "how's" or means to satisfy the requirements.

END OF SECTION B

Section C : Applied Theory (20 Marks)

This section consists of questions with serial number 7 - 9.

Answerall questions.

Marks are indicated against each question. Do not spend more than 25 -30 minutes on Section C.

7. The detergents division of a large household products company with worldwide distribution is planning aresearch study among women 21 years and over to determine their attitudes toward home laundering andthe products and brands used in such activities. Studies are to be carried out in a many countries in the FarEast, Middle East, Africa, Western Europe, Eastern Europe, and South America. What data-collectionproblems would you expect to experience in doing this research across a variety of countries?


8. Assume that you are the vice-president of marketing in a small firm that includes the followingdepartments: marketing, finance, purchasing, and strategic planning. The sales force manager hasmentioned to you that one of the salespersons thought that cellular telephones would help the sales forcebecome more efficient. The manager requests that eight such phones be purchased. Illustrate the six buyingdecision roles that would take place for the purchase of these cellular phones?


9. Head and Shoulders Shampoo has targeted a new segment of people with dry scalps. To be useful, asegmentation scheme must produce segments that meet four basic criteria. Name and briefly describe eachof these four criteria, and assess whether a dry scalp segment meets these criteria.


END OF SECTION C

END OF QUESTION PAPER

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Suggested AnswersMarketing Management (MB221) : January 2004

Section A : Basic Concepts

1. Answer :(b) < TOP >

Reason : Inflation causes consumers to regulary switch to other brands.

2. Answer :(a) < TOP >

Reason : Routine Response/Programmed Behavior--buying low involvement frequently purchased lowcost items; need very little search and decision effort; purchased almost automatically. Examplesinclude soft drinks, snack foods, milk etc(b) Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or

infrequently bought products. High degree of economic/performance/psychological risk.Examples include cars, homes, computers, and education. Spend a lot of time seekinginformation and deciding. Information from the companies, friends and relatives, storepersonnel etc. Go through all six stages of the buying process.

(c) Limited Decision Making--buying product occasionally. When you need to obtaininformation about unfamiliar brand in a familiar product category, perhaps. Requires amoderate amount of time for information gathering. Examples include Clothes--knowproduct class but not the brand.

(d) Impulse buying, no conscious planning

3. Answer :(d) < TOP >

Reason : The product concept holds that the consumers will favor those products that offer the mostqulaity, performance or innovative feautures.

(a) The production concepts hold that consumers will prefer products that are widely availableand inexpensive.

(b) The selling concept holds that consumers and businesses, if left alone, will ordinarily not byenough of the organisations products.

(c) The marketing concept holds that the key to achieving its organisational goals consists ofthe company being more effective than competitors in creating, delivering, andcommunicating superior customer value to its chosen target markets.

(e) The societal-marketing concept holds that the organisations task is to determine the needs,wants and interests of target markets and to deliver the desired satisfactions moreeffecitively and efficiently than competitors do.


Reason : Stitching niches means seeking common interests, motivations or needs across ethnic groups.Mass marketing does not take the needs of various distinct cultures into account, and creatingunique marketing mixes for individual mixes does not try to find a common basis among niches.

5. Answer :

(b) < TOP >Reason : Public sources of information such as magazines, consumer rating organizations or even

professionals not associated with the marketing company are known as nonmarketing-controlledinformation sources.

6. Answer :(c) < TOP >

Reason : Selective retention is the process whereby a consumer remembers only that information whichsupports his/her personal feelings or beliefs.

(a) Selective Distortion-Changing/twisting current received information, inconsistent withbeliefs.

(b) Selective Exposure-select inputs to be exposed to our awareness. More likely if it is

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linked to an event, satisfies current needs, intensity of input changes (sharp price drop).(d) Subliminal Perception, which means that people see or hear messages without being

aware of them, is a hotly debated issue with more popular appeal than scientific support.Research evidence suggests that such messages have limited effect on behavior

(e) Selective Comprehension involves interpreting information so that it is consistent with aperson's attitudes and beliefs.


Reason : The demand for soft drink containers is driven by the consumer demand for soft drinks;therefore, the containers have a derived demand. Inelastic demand exists when a 1 percentdecrease in price produces less than a 1 percent increase in quantity demanded. With inelasticdemand, price elasticity is less than 1; hence option (b) is incorrect. Unitary demand exists whenthe percentage change in price is identical to the percentage change in quantity demanded. In thisinstance, price elasticity is equal to 1; hence option (d) is incorrect. Elastic demand exists when a1 percent decrease in price produces more than a 1 percent increase in quantity demanded. Priceelasticity is greater than 1 with elastic demand; hence option (e) is incorrect.


Reason : Usage rate- (quantity consumed or patronagestore visits during a specific period). Whether aperson is a nonuser or a light, medium, or heavy user is important in many segmentationproblems. The 80/20 rule, a concept that suggests 80 percent of a firms sales are obtained from20 percent of its customers, is not fixed at exactly 80 and 20 percent but suggests that a largefraction of a firms sales come from a small fraction of its customers.

(a) Geographic segmentation divides the market based upon the geographic distribution ofpopulation (regional, urban, suburban, and rural); hence option (a) is incorrect.

(c) Demographics are the vital statistics that describe a population (gender, age, income,family size, education, social class, and ethnicity).

(d) Psychographic segmentation involves examining attributes related to how a personthinks, feels, and behaves (personality, lifestyles, and values).


Reason : Marketing research is the process of defining a marketing problem and opportunity,systematically collecting and analyzing information, and recommending actions to improve anorganization's marketing activities. Objectives are specific measurable goals the decision makerseeks to achieve in solving a problem. Typical marketing objectives are (1) increasing revenuesand profits, (2) discovering what consumers are aware of and want, and (3) finding out why a

product isn't selling well.10. Answer :(c) < TOP >

Reason : Convenience products are bought frequently, immediately, and with a minimum of comparisonand buying effort (groceries). The lack of forethought that went into this purchase made it aconvenience product.

(a) Specialty products are unique in some way and substitutes are not accepted (expensiveautomobiles).

(b) Unsought products are those not normally thought of either because consumers dontwant to think of them (burial insurance) or consumers are unaware of them (a telephonenumber allowing you to check your email messages

(d) Shopping products are less frequently purchased and are carefully compared onsuitability, quality, price, and style (clothing).

11. Answer :

(c) < TOP >Reason : Brainstorming is a process designed to obtain the maximum number of ideas relating to a

specific area of interest.

12. Answer :(e) < TOP >

Reason : Heterogeneity results because no two customers are precisely alike; each will have uniquedemands or experience the service in a unique way. Thus the heterogenity connected withservices is largely the result of human interaction and all of the vagaries that accompany it.

(a) Inventory problems exist with goods because many items are perishable and becausethere are costs associated with handling inventory. With services, inventory carrying costs aremore subjective and are related to idle production capacity, which is when the service provider is

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available but there is no demand. The inventory cost of a service is the cost of paying the person used to providethe service along with any needed equipment. Inventory carrying costs of service vary widely,from the high end of airlines and hospitals with highly trained, salaried specialists to the low endof real estate agencies and hair salons with employees working on commission and needing littleexpensive equipment.

(b) The quality of a service is often inconsistent. People who have different capabilities andalso vary in their job performance from day to day provide services. Inconsistency is muchmore of a problem in services than it is with tangible goods, but problems can be reducedthrough standardization and training.

(c) Services are intangible; they cannot be held, touched, or seen before the purchasedecision. A major marketing need for services is to make them tangible or show the benefitsof using the service.

(d) Incorrectness or Inaccuracy is otherwise referred as Impropriety.


Reason : Dual distribution is an arrangement whereby a firm reaches different buyers by employing twoor more different types of channels for the same basic product.

(a) Intensive distribution means that a firm tries to place its product or services in as manyoutlets as possible. It is usually chosen for convenience products or services.

(b) Exclusive distribution is the opposite of intensive distribution because only one retailoutlet in a specified geographical area carries the firm's product. It is typically chosen forspecialty products or services.

(c) Selective distribution lies between these two extremes and means that a firm selects a few

retail outlets in a specific geographical area to carry its products. It weds some of themarket coverage benefits of intensive distribution to the control over resale evident withexclusive distribution. For this reason, selective distribution is the most common form ofdistribution intensity.


Reason : Social interpersonal bonds are common among professional service providers and their clientsas well as among personal care providers ( Hairdressers, Counsellers, health care providers) andtheir clients.

(a) Financial bonds is considered to be the level one in the levels of relationship strategies,the customer is tied to the firm primarily through financial incentives-lower prices forgreater volume purchases or lower prices for customers who have been with the firm a longtime.

(b) Service recovery refers to the actions taken by an organization in response to a servicefailure.

(d) Customization bonds approach suggests that customer loyalty can be encouraged throughintimate knowledge and individual customers and through the development of one-to-onesolutions that fit the individual customers needs.

(e) Structural bonds are created by providing servicestore the client that are frequentlydesigned right into the service delivery system for that client.


Reason : A discount store or discount house or discount center is a retail outlet engaged in sellingmerchandise at prices below those customarily charged. It generally deals in national-brandedmerchandise and fixed-price products. The discounter provides emphasis on a high-volume ofsales and rapid inventory turnover. Aggressive merchandising techniques are employed.

(a) Store retailers include many types, such as Specialty stores, department stores,

supermarkets, convenience stores, superstores, combination stores, hypermarkets, discountstores, warehouse stores, and catalog showrooms.

(b) The factory outlet store is an off-price retailing operation that is owned and operated bya manufacturer and that normally carries the manufacturers surplus, discontinued, orirregular goods at a marked-down price. Many such stores are being organized into factoryoutlet malls, which are located on freeways but at some distance from major populationareas. Examples of these retailers are the Nike Outlet Store and Liz Claiborne FactoryOutlet.

(c) A warehouse membership club is an off-price retailer that sells a limited selection ofbrand-name grocery items, appliances, clothing, and other goods at deep discounts tomembers who pay annual membership fees. The largest national chain warehouse club is

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Sams Club. Stores look more like warehouses and offer few frills or services and consumers are expected tobuy in bulk. In exchange, consumers get low prices.

(e) Category killers are superstores that focus on a narrow product line. A category killercarries a very deep assortment of a particular line and is staffed by knowledgeableemployees. They usually come into markets and kill the competition in that line ofproducts by virtue of their size and assortment. Examples of category killers are Toys RUs and Best Buy.

16. Answer :

(c) < TOP >Reason : Prestige pricing involves setting a high price so that quality- or status-conscious consumers will

be attracted to the product and buy it. Products with an element of prestige pricing in them maysell worse at lower prices than at higher ones because buyers tend to associate a lower price withlower quality. Firms such as supermarkets often use target return-on-sales pricing to set typicalprices that will give them a profit that is a specified percentage of sales volume. Target return-on-investment pricing is a method of setting prices to achieve an annual return-on-investment(ROI) target; hence option (a) is incorrect.


Reason : Public relations builds good relations with the organizations various publics by obtainingfavorable publicity, building up a good corporate image, and handling or heading offunfavorable rumors, stories, and events.

(b) Personal selling is a personal (face-to-face) presentation for the purpose of making salesand building relationships.

(c) Sales promotion is a short-term incentive to encourage the purchase or sale of a product.

(d) Advertising is any paid form of nonpersonal presentation by an identified sponsor.

(e) Publicity is a non-personal, indirectly paid presentation of an organization, good, orservice. The primary advantage of publicity is its credibility. Disadvantages relate to thelack of control over what the message says, to whom, or when.


Reason : Comparative advertising shows one brand's strengths relative to those of a competitor.

(b) Advertisements or messages within advertisements, the concerning body orders acompany to run, for the purpose of correcting consumers' mistaken impressions created by

prior advertising.(c) Advertising designed for the generic product category, as opposed to selective demand

advertising.

(d) Advertising to promote an institution or organization, rather than a product or service, inorder to create public support and goodwill.

(e) Pioneering advertisements tell people what a product is, what it can do, and where it canbe found.


Reason : Strategic planning is the process of developing and analyzing the organization's mission,overall goals, general strategies, and allocating resources. The strategic planning process iscarried out at the corporate level, business level, and product level. It begins with an analysis ofthe organization's current strategic posture, but strategic planning focuses on the future.


Reason : A strategic business unit has several distinct characteristics in it: (a) Is a single business that canbe planned independent of other businesses. (b) Has its own competitors. (c) Has one managerwith profit responsibility. The SBUs are analyzed as though they were a collection of separateinvestments. This is called business portfolio analysis. The SBUs are positioned on a growth-share matrix.


Reason : Cash cows are dominant share of slow growth market enables sbu to generate large amounts ofcash to be used for company overhead and investment in other SBU.

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(a) Question Marks/Problem Child (also called a "Problem Child") are high growth, lowshare businesses. A question mark requires a lot of cash both to keep up with a rapidlygrowing market and improve its share position. Strategy must decide between furtherinvestment to move question marks to star status (differential advantage) or to phase out theproduct.

(c) Stars are high growth, high share businesses. They are the market leaders in fast-growthmarkets and often require heavy investment to build and/or maintain share in rapidlyexpanding markets. The strategy is to build or even maintain or hold its position as long aspossible.

(d) Dogs are often targets for divestment, but may still be profitable and/or contribute to otherorganizational goals


Reason : Hold: Maintain market share. Often used for cash cows, which are already generating largeamounts of cash, and are fairly stable.

(a) Increase market share through cash injection. Make stars out of question marks.

(b) Sell the SBU. This generates cash for more promising SBUs. Question marks and Dogs areideal candidates to Divest.

(d) Increase short-term cash output of the SBU, even if this results in a loss of market share.Pump cash from dogs or cash cows into stars or question marks.


Reason : Product portfolio analysis is based on the idea that a products market growth rate and itsrelative market share are important determinants of its marketing strategy.


Reason : The number of channel levels from raw material to final product and distribution in which acompany will participate.

(a) The range of industries in which a company will operate. Some companies will operate inonly one industry; some only in a set of related industries; some only in industrial goods,consumer goods, or services and some in any industry.

(c) The type of market or customers a company will serve. Some companies will serve onlythe upscale market

(d) The range of regions, countries, or country groups in which a compnay will operate. Atone extereme are companies that operate in a specific city or state. At the other extreme aremultinationals such as Unilever and Caterpillar, which operate in alomost every country inthe world.

(e) The range of technological and other core competencies that a company will master andleverage


Reason : By employing a market development strategy, an organization might identify new markets forits product by determining potential user groups for its current products, seeking additionaldistribution channels in its present locations, or offering its product for sale in new geographiclocations, either domestic or international

(a) A market penetration strategy suggests that growth is possible by achieving a deeperpenetration (sell more) of its present product within a present market.

(c) Through a product development strategy, an organization might create an augmented, orentirely new, product in order to stimulate the current markets and create new ones.

(d) An organization could considerdiversification as a growth strategy. The organizationdevelops new products to sell to new markets. Also, it could involve acquiring or startingbusinesses outside current markets


Reason : Relationship marketing is building mutually satisfying long-term relationships with customers.The aim of Customer relationship management is to produce high customer equity. There are

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five levels in customer relationship building. Alternative (a) is incorrect as in basic level the salesperson simplysells the product. In Accountable marketing the salesperson phones the customer to checkwhether the product is meeting expectations, hence alternative (c) is incorrect. Alternative (d) isincorrect because in the proactive level of relationship marketing the salesperson contacts thecustomer from time to time with suggestions about improved products uses or new products.


Reason : Marketing research is the systematic design, collection, analysis, and reporting of data and

findings relevant to a specific marketing situation facing the company.

Alternative (a) is incorrect because Exploratory research is used when there is a need for largeamounts of information. Alternative (c) is incorrect as Descriptive research is conducted whenthere is a need to understand in detail about a specific phenomenon to solve a particular problem.Alternative (d) is not term used for developing the research plan. Alternative (e) is incorrect as inObservational research fresh data is gathered by observing the relevant actors and settings.


Reason : Even if the channels are well designed and managed, there will be some conflict, if for not otherreason than the interests of independent business entities do not always coincide.

Alternatives (a) and (b) are not real types of conflict in distribution; hence they are incorrect.Vertical conflict means conflict between levels within the same channel; hence option (c) isincorrect. Alternative (e) is incorrect because multi-level conflict exists when the manufacturerhas established two or more channels that sell to the same market.


Reason : Rangan, Moriarty and Swartz studied mature commodity market, steel strapping and found fourbusiness segments; Programmed buyers, Relationship buyers, Transaction buyers and Bargainhunters.

Alternative (b) is incorrect because Programmed buyers view the product as routine purchaseitem, usually paying full price and receiving below average service. Relationship buyers regardthe product as moderately important and are knowledgeable about competitive offerings; henceoption (c) is incorrect. Alternative (d) is incorrect because Transaction buyers are price andservice sensitive; they see the product as very important for their operations. Gatekeepers arepeople who have the power to prevent sellers or information from reaching members of thebuying center; hence option (e) is incorrect.


Reason : Brand equity is the value a brand adds to the product. The sources of brand equity include theproduct, its name, and its personification, logo, country of origin, advertising themes, and styleand packaging approach.

(a) Line extensions is the practice of using a current brand to enter a new market segment in itsproduct class.

(b) A brand mark is the part of the brand that appears in the form of a symbol, design, ordistinctive coloring or lettering

(c) A company uses private branding, often called private labeling or reseller branding, when itmanufactures products but sells them under the brand name of a wholesaler or retailer.

(d) The package is the most important component of the product as a communications device. It

reinforces associations established in advertising, breaks through competitive clutter at the pointof purchase, and justifies price and value to the consumer. Package cues include color, design,shape, brand name, physical materials, and product information labeling.Services have fourmajor characteristics that greatly affect the design of marketing programs; Intangibility,Inseparability, Variability and Perishability.

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Section B : Problems

1. KFC has been successful due to the following reasons:

a. Universal Appeal (Protein)b. Focus on core product (Chicken)c. Consistency (Taste)d. Emphasis on Qualitye. Socially well accepted (transcending religious beliefs)KFC'S challenges in Global expansiona. Legal/Regulatoryb. Cultural/Adaptationc. Think Global, act Local.

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2. Questions to ask when analyzing International Markets are given as under:

a. About Markets

How large is the market?How many consumers use the product?What is our expected market share?Is the market growing?

b. About competitors

Who are our major competitors?What is the market share of each competitor?What are the trends in market share among competitors?

c. About Culture

What is the distribution of the population by education, occupation, and religion?Does our product fit the cultural values of the foreign country?

Can our marketing program be adapted to these cultural values?

d. About Consumers

What types of consumers buy this product?What are the characteristics of the consumers in terms of demographics, life-style, andattitudes?How and when do consumers use the product?What are their motives for buying the product?

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3. Population Services International (PSI) is partially successfull in delivering the message to the targetaudience. As there is lot of hue and cry about the Balbir Pasha and Puliraja campaigns raised by number ofwomens organisations in Maharashtra and Andhra Pradesh, this campaign is considered as partiallysuccessful campaign. The consulting agency (Lowe) and PSI should have taken these organisations intoconsideration while launching the campaign.

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4. Government intervention in such campaigns is definetely a positive sign for the society. As these socialcampaigns will not generate any revenue, the governement bodies will fund most of the campaigns. Non-governmental organisations like PSI will have tough time, if they are engaged in such campaigns. Theadvantages of government intervention can be studied under following heads:

(a) Ample funding can be provided to these campaigns.(b) There is a less chance of agitations, if the government would launch these campaigns with consensus.(c) If any such complicacies takes place, government can easily handle with its adminstration.

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5. Students are expected to write how Dell Computers is selling products on its website http://www.dell.com/.

Students to cover following marks: -

a. CRM is attracting, aquiring and growing profitable customers.

b. CRM can identify profitable customer group for which mass customisation can be offered,otherwisedoing mass customistion to all the customers would be difficult,impracticable and non/less profitableactivity.

c. CRM can identify profitable customers however for attracting such customers mass customisationcan be of great help.

d. With mass customisation, customers gets delighted and sticks to the same brand, customer gives morebusiness fulfilling the objective of CRM.

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6. Mass customization is best defined as a delivery process through which mass-market goods and servicesare individualized to satisfy a very specific customer need, at an affordable price. A firm by enabling itselfwith CRM tools and its processes will get first hand inforamation on the customers needs and wants. Thisdata can be further utilised to new product development which will certainly help firms to bulid productsand services on mass cutomization

Advantages of Mass Customization Low inventory --Inventory control is one benefit clothingmanufacturers could gain from mass customization. These manufacturers tend to have high inventories of

finished products and must forecast demand many months in advance. But those forecasts are likely to bewrong, resulting in surpluses of some products. What's needed to transfer the concept of masscustomization to the commercial clothing industry is for manufacturers to abandon their mass-productiontechniques and create flexible product-manufacturing teams that would be able to add to clothing specialfeatures such as differently shaped pockets.

Consumers will demand it because they are getting so much smarter and know how things work. If thelarger clothing manufacturers do it, everyone will .

Retaining of customers - Consider a Fictitious Customized Online Magazine:

Mass customization provides a way to automate relationship marketing, and thus provides small firmsanother way to beat their bigger, slower competitors. The winning firms in the information economy will bethose that can deliver the right message, to the right customer, at the right time. Savvy marketers today willlook for ways to adapt their strategy to the dynamics of one-to-one marketing.

Profit Potential - Its also potentially very profitable. In one study by the American Apparel ManufacturersAssociation in Washington, it was estimated that if 10% of manufacturing output were devoted to masscustomization, it would produce 30% of company profits.

Less operating cost, long term business relationship, less operating expense and inventory. Another thing isthe creation of a long-term business relationship with customers. It's much better from a cost perspective tokeep a current customer than to get a new one. So even if your mass-customized product is not cheaper tomake, it can reduce your marketing costs because it satisfies customers to such a degree that they don'tleave you.

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Section C: Applied Theory

7. The problems which will be encountered in doing such research across a variety of countries include the

difficulties associated with sample design (inadequate population data), questionnaire design,hiring/training/control over interviewers, data collection methods (phone versus personal interviewing), andactual data collecting (asking questions and recording answers). It will be difficult to compare the resultsacross countries given the variation in the sample designs, the response rates of different groups, the caliberof the interviewers, and the meaning of key words in the questionnaire.

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8. The initiator of the buying decision could be identified as the salesperson who identified the need butmore likely would be the sales force manager who suggested the purchase be made.

Influencers/evaluators might include the finance office (which would control the amount of moneyavailable for the purchase), members of the sales force (who might provide information about phones thatcompetitors are using), and the purchasing department (which would have a good knowledge of alternative

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suppliers).

Gatekeepers could include management (which would only approve of certain phone models that arecompatible with existing phone systems), the finance office (which may only approve a limited budget),and the purchasing department (which would recommend matches with likely vendors).The decider might be the president of the company, the president of marketing, or the sales force manager;the decider is the person with the power to approve the brand of phone.The purchaser will be the purchasing agent in the purchasing department who will negotiate the terms ofthe sale.

Users will include all salesforce members who will use the cellular phone< TOP >

9. Substantiality: A selected segment must be large enough to warrant developing and maintaining a specialmarketing mix. (This means that the segment is commercially viable.) One could assume that many peoplehave a dry scalp problem, especially in dry climates, after a sunburn, or when participating in outdooractivities with high winds (skiing, sailing, and so on).

Identifiability and Measurability: The segments must be identifiable and their size measurable.Descriptive data regarding demographic, geographic, and other relevant characteristics of segmentmembers must be available. It may be difficult to identify people who have dry scalps and describe them interms of relevant characteristics. People may not realize that they have dry scalps and therefore may notrespond to marketing research probes.

Accessibility: The firm must be able to reach members of targeted segments with customized marketingmixes. If the segment is not measurable and cannot be described, it may be difficult to precisely know how

to reach the dry scalp segment. Where do people with dry scalps shop? What media do they watch or read?What are their buying habits?Responsiveness: The market segment must respond differently from other segments to a marketing mix;otherwise, there is no need to treat that segment separately. People with dry scalps may not consider theirproblem to be important enough to respond differently and may continue to buy their current shampoo,which seems to meet their needs

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