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B2B Marketing

Part A: Basic Concepts

1. Which of following is not applicable for operating leases?


a. Short term agreements
b. Not fully a mortised
c. Asset is for short period.
d. Non Cancellable
e. Purchase option is not included.

2. ________, type of middlemen are most commonly found in data processing industry.
a. Brokers
b. Commission merchants
c. Manufacturer’s representatives.
d. VAR
e. Industrial distributors.

3. Gati Cargo Management services has used _______ segmentation and has targeted to deliver Cargo to
980 locations from 290 branches.
a. Demographic
b. Psychographic
c. Behavioral
d. End user
e. Geographic

4. Which of the following is not an organizational in Webster and wind organizational buying behavior model?
a. Authority
b. Organization Structure
c. Purchasing policies and procedures
d. Degree of Centralization in purchasing
e. Evaluation and reward system

5. Chemical week is an example of _______publication


a. Industrial directory
b. Yellow pages
c. Horizontal
d. General business
e. Vertical
6. Which of following is an disadvantage of reverse auctions
a. Most transparent method of procurement
b. Provides a level playing field in bidding process
c. Suppliers may to resort to aggressive under bidding
d. Suppliers are aware of other offers
e. Suppliers can compete effectively.

7. Which of the following is not an communication and conferencing tool


a. Work flow systems
b. Chat system
c. Electronic meeting system
d. Video conferencing
e. Data and voice conferencing

8. A leading electrical engineering company developing a “Flame proof Transwitch Unit for underground
applications for existing market in coal mines is ______strategy
a. Integrative Growth
b. Diversification
c. Market Penetration
d. Market Development
e. Product Development

9. Gas used in production process is an example of ________


a. Accessories
b. Component part
c. Raw material
d. Heavy equipment
e. Installation

10. A pump set can be used for pumping water, only if diesel engine or electric motor is available. This is a
case of _______ demand
a. Fluctuating
b. Cross elasticity
c. Derived
d. Inelastic
e. Joint

11. A precision tube manufacturing company had built adequate stocks in its warehouse located near a two
wheeler manufacturer to meet the fluctuating requirements of superior quality tubes of different sizes for
customer. Then this type of relationship is _______.
a. Transaction exchange
b. Collaborative exchange
c. Partnering exchange
d. Relationship Marketing
e. Value Added exchange
12. _______ is a type of purchasing activity whose objective is to reduce cost while maintaining product
reliability.
a. Jit
b. Multiple sourcing
c. Single sourcing
d. Out sourcing
e. Value analysis

13. Xerox learned how to improve reliability and reduce cost of its copies through _________
a. Market share analysis
b. Sales Forecasting
c. Sales Analysis
d. Bench marking
e. Business Trend Studies

14. Which of the following is not a micro segmentation variable


a. Buy Phases
b. Organizational capabilities
c. Industry Characteristics
d. Purchasing policies
e. Purchasing criteria

15. A dominant firm with diversified and financially strong business quotes very low prices for Rs.60 crore
tender of DOT for supply of jointing kits with intention of finishing off new and smaller firms. The type of
pricing is ______ Pricing.
a. Cost Plus
b. ROI
c. Penetration
d. Geographical
e. Predatory

16. If the list price of a product is Rs.1000 and industrial marketer gives the discount of 10% and the
concession of not charging freight say 3% of list price, then the net price is _______.
a. 900
b. 897
c. 879
d. 877
e. 870

17. Legal services offered to an industrial customer belongs to _______ category


a. Major product with minor service
b. Equal parts of product & service
c. Major Service with minor product
d. Pure intangible service
e. Pure tangible product
18. ______testing consists of testing the products which are high priced or new technologies internally in the
company
a. Beta
b. Gamma
c. Delta
d. Alpha
e. Market

19. A company producing only mercury vapour lamps is following ______specialization


a. Geographic
b. End user
c. Customer size
d. Product line
e. Customer

20. The type of analysis used to find out if any significant buying behavior exists among buying committee
members for different suppliers is _______
a. Multiple Regression Analysis
b. Multiple Discriminant Analysis
c. Factor Analysis
d. Conjoint Analysis
e. Inferential Analysis

21. _______ Account has a substantially large sales potential simple to serve through sales representative and
branch / regional manager.
a. Minor
b. Small
c. Major
d. National
e. International

22. The type of positioning followed by cerebra integrated technologies Limited, when it highlights about world
class quality products with authentic proof of ISO 9002 certification is based on ______variables.
a. Product
b. Benefit
c. Image
d. Personnel
e. Service

23. ______ phase of industrial buying process formal or informal review regarding the performance of each
supplier takes place
a. Problem recognition
b. Need Description
c. Proposal Solicitation
d. Selection of supplier
e. Performance feed back
24. Crompton Greaves went for ______integration by setting up its manufacturing plant for steel stampings
which were earlier supplied by GKW
a. Horizontal
b. Lateral
c. Forward
d. Backward
e. Full

25. Lobbying with legislators or bureaucrats is a _______ tool


a. Sales promotion
b. Advertising
c. Direct marketing
d. Public relations
e. Selling

26. In which of following methods of arriving at promotional budget is based on collective wisdom of industry
a. Objective and Task
b. Fixed sum per unit
c. Affordable
d. competitive parity
e. Percentage of sale

27. Turbines is an example of


a. Light equipment and accessories
b. Installations
c. Heavy equipment
d. Components
e. Accessories

28. _______ method of data collection is extremely useful for technological forecasting by using a group of
experts.
a. Survey
b. Indirect interview
c. Direct interview
d. Structural interview
e. Delphi

29. ______ stage of new product development process, engineers and techniques create the desired product
a. Business Analysis
b. Idea Screening
c. Test marketing
d. Concept testing
e. Product development
30. Most frequently used appeals in industrial advertising are ______.
a. Emotional
b. Sensory
c. Rational
d. Ego satisfaction
e. Slice of life

Part-B & C

1. Sales and profitability are the measures of effectiveness that advertises are ultimately interested in, but
sales depend upon so many things it is often difficult to isolate the unique effect that advertising has on
sales. While controlling for other extraneous variable such as level of economic activity? Discuss possible
ways to measure the effectiveness of industrial advertising?
(10 marks)
Suggested Answer:
After implementing the advertising / promotional plan it is necessary for industrial marketer to evaluate its
impact on the target audience. An evaluation is done by measuring the awareness, attitude and actual
purchase before and after promotional plan is implemented. The evaluation task becomes easier if the data
on awareness, attitude and purchase have been collected by conducting a marketing research before the
promotional plan is implemented. After implementation it is important to find whether target audience are
aware of company’s products, recall levels previous and current attitude, whether and in how much quantity
they have purchased the company’s products during the period. Marketing research studies could be
carried internally by the company or through an external agency like a MR firm. The major mistakes in
practice are that of failure to quantify the promotional objectives into measurable goods and not to plan
evaluation measurable goals and not to plan evaluation. In both the cases the industrial marketer is unable
to learn from experience and hence may continue to repeat the mistakes in future.

2. Leasing is becoming increasingly important in marketing of capital goods. What factors influence a buyer’s
decision to lease rather than buy capital goods?
(10 marks)
Suggested Answer:
The cost of leasing includes the lease payment and sacrifice of asset’s salvage value. Industrial buyers
have to basically evaluate the cost / benefits of lease based on whether cash flow benefits of the lease
exceed the cash flow costs. Benefits of leasing and different type of leasing also need to mentioned. In
addition while deciding on pricing strategy, whether to arrive at lease rate to favour leasing/ outright
purchase / balance both should also be discussed and how arriving at appropriate lease rate can lead to
demand stimulation should also be discussed.

3. Successful industrial market segmentation may often depend on the marketer’s ability to identify key
characteristics influencing purchasing preferences. Is it possible then to identify key characteristics along
the variables of age, experience, of key decision makers?
(10 marks)
Suggested Answer:
It may not be very easy to collect information but however, by institutionalizing systems, data could be
collected over a period of time and analyzed to identify key characteristics along the variables of age
decision of key decision makers. Before this the different Macro and Micro variables which are to be
considered in industrial market segmentation should also be discussed.
4. How does marketing strategy for capital items, services and suppliers differ?
(10 marks)
Suggested Answer:
Marketing strategy for capital items involves direct selling with extensive inter actions, involving top
executive, negotiations take considerable time. Whereas, marketing strategy for supplies involves selling
both through sales persons, distributors on the other hand, marketing strategy for services is more subtle.
Buying firms generally contact the selling firms who have their reputation by way of word of mouth. On
these aspects giving examples answer needs to be elaborated.

5. What factors should a firm evaluate in determining what level of customer service to offer and which
elements to emphasize?
(10 marks)
Suggested Answer:
Following steps must be taken for determining the important elements of customer service.
1. Set the goals of customer service levels for each service element
2. Measure actual performance for each service element.
3. Analyze the variance between actual service performance and goals
4. Take corrective actions to minimize the variance.
Different components of customer service presale service during sale service, post sales service to be
discussed.

Part C: Case Analysis

Saragam Aluminium Limited

Mr. Krishna Kumar, Vice-President, Marketing, of Saragam Aluminium Limited was considering the type of
pricing strategy and policy that would be effective for the new aluminium extruded products that were to be
launched in the Indian market in December 1991.

THE COMPANY
Saragam Aluminium Limited (SAL) had invested Rs 10 crore for manufacturing and marketing of aluminium
extruded products. The factory was located at Hosur in Tamil Nadu, and the marketing head-office was located
38 km away from factory at Bangalore. The managing director (MD) of the company had visited various
countries in the early 1990s for selection of the extrusion press and its accessories, which were critical
equipment for the manufacture of aluminium extrusions. The order was finally placed with a French supplier for
the supply and installation of the press and accessories at a cost of Rs four crore. The MD had earlier recruited
the works manager, design engineer, materials executive, financial controller, and personnel manager—all of
whom were reporting to the MD directly. In August 1991, Mr. Krishna Kumar, Vice-President (Marketing) was
recruited, reporting directly to the MD.

MARKET SURVEY
Mr. Krishna Kumar felt it necessary to carry out a market survey to understand consumer buying behavior,
market potential and competitors' analysis to make more effective marketing decisions. Aluminium extrusion
was a new industry for Mr. Krishna Kumar, who was basically an electrical engineer and a management
graduate with 15 years of experience in electrical, air-conditioning and refrigeration industries. He decided to
carry out the market survey in southern and western regions of India, where he decided to focus the company's
marketing efforts initially. The two marketing executives, who were recruited by the company, were involved in
carrying out the field work of data collection, under the guidance of Mr. Krishna Kumar. The major findings of
the market survey, carried out in-house, are outlined below:
Customer and Demand Analysis
The Customer (Market) segments, who require aluminium extruded products were household consumers,
commercial enterprises, government organizations, and institutional customers. Industrial buyers considered-
aluminium extrusion products as "capital items", where they were used as door, window, and partition frames.
However, extrusions were also used as "component parts" in the manufacture of electrical control panels, water
purification equipment, computers and electronic equipments (as heat sinks). The household consumers, who
used aluminium extruded products mainly for window and door frames, were extremely price-sensitive.
Aluminium frames for doors and windows, although costlier compared to wooden and steel frames, were more
elegant looking, rust-free, but less strong than steel. The industrial customers like commercial enterprises and
institutional customers were less sensitive to prices. However, government organizations had a policy of
purchasing from the lowest priced suppliers. The market potential of various market segments as a percentage
of total market demand is shown in Exhibit1.
Exhibit 1 Market Segments, Market Potential and Price Sensitiveness for Aluminium extruded
products in Southern and Western Regions
Market Segments Market Potential (%) Price Sensitiveness
Household consumers 50 High
Commercial enterprises 20 Medium
Institutions 10 Medium
Government organizations 15 High
Cooperative societies 05 Medium

100

Competitive Analysis
There were seven players, manufacturing and marketing aluminium extrusions in India. None of them was
an MNC, but the market leader was Jindal Aluminium, with its manufacturing unit located at Bangalore. Jindal
Aluminium was a national player serving all the markets in India. Other large scale national players were
primary aluminium manufacturers of ingots and billets, like Hindustan Aluminium Ltd, (Hindalco), National
Aluminium Company (NALCO), and Bharat Aluminium Company (BALCO), who also manufactured small
quantities of aluminium like ingots and billets. The secondary manufacturers (i.e. manufacturers of secondary
products like aluminium extrusions) were four, out of which only Jindal Aluminium was a national player and
others were local players.
The findings of the market survey indicated that based on consumers' perceptions, Jindal Aluminium
ranked first in product quality, followed by Hindalco and Nalco. On delivery/availability, the rankings were as
shown in Exhibit 2. However, there was a difference in the pricing, based on total cost of various suppliers.

Exhibit 2 Competitive Analysis


Competitors Primary/ Quality Delivery/ Relative
Secondary Ranking Availability Price
Manufacturer Ranking Comparison
1. Jindat Aluminium Secondary 1 1 110
2. Hindalco Primary 2 5 105
3. Nalco Primary 3 6 105
4. Balco Primary 4 7 105
5. Man. Aluminium Secondary 4 2 107
6. Bangla Aluminium Secondary 5 4 107
7. MP Aluminium Secondary 5 3 107

The Secondary manufacturers focused more on household consumers with thinner (less thickness of 0.8,
0.9 and 1mm) aluminium sections, which were purchased on weight basis of Rs 80,0007- per ton by the
dealers, but sold on rupees per meter basis. Industrial buyers preferred thicker aluminium sections as these
were considered as stronger and superior in quality. Primary manufacturers mainly concentrated their
marketing efforts with commercial enterprises, and government organizations.
Cost Analysis
The basic problem of all the secondary manufacturers was the (variable) cost of aluminium billets (i.e. small
aluminium bars as basic material used for extrusion), which was purchased from the primary manufacturers,
who were also their competitors. The minimum difference in the cost of aluminium billet between primary and
secondary manufacturers was six to seven per cent (i.e. four per cent CST + two to three per cent
transportation and handling costs).

The fixed costs (overheads) of primary manufacturers were considered to be higher than secondary
manufacturers, and hence, the difference in prices, as shown in Exhibit 2, was much less as compared to the
difference in the cost of aluminium billets. The information on other costs like marketing, direct labour, a factory
supply etc of various extrusion manufacturers was not available.

Pricing Objectives
Saragam Aluminium pricing objectives were derived from the corporate and marketing objectives, which
included (a) achieving long-term profits and (b) maximizing sales volume and market share respectively. The
pricing objective as stated by Mr. Krishna Kumar was to achieve market penetration through low initial price
strategy. He justified a low initial pricing strategy to the management by pointing out several market survey
findings and these included: (i) various market (customer) segments were medium to high levels of price
sensitive; (ii) competition was severe from primary and secondary manufacturers; and (iii) as the production and
sales volume increase, the unit cost will come down leading to achievement of long-term corporate and
marketing objectives.

On receiving the recommendation from Mr. Krishna Kumar, the managing director called a meeting of key
executives like works manager and financial controller to decide on the pricing strategy. In the meeting, the
financial controller argued in favour of "skimming strategy" through high initial price, which would give
advantage of recovering the investment sooner by generating larger profits. The works manager said that the
workers and production supervisors were new to the extrusion technology and the concept of experience (or
learning) curve will be applicable, in terms of decline in cost per unit, after accumulated experience of
production over a period of six to 12 months.

The finance manager pointed out that the break-even volume was estimated at 350 tons of production and
sales per month and wanted to know when would be achieved. The managing director intervened to observe
that all these points were important, but it was necessary to take a decision on the company's pricing strategy
and policy immediately to enable Mr. Krishna Kumar to plan marketing efforts.
a. What are pricing objectives of Saragam Aluminium
b. What is major problem in this case?
c. What were market survey findings?
d. If you were the MD, what would be your pricing decisions

END OF THE QUESTION PAPER