National Institute of Business Management

Chennai - 020
FIRST SEMESTER EMBA/ MBA
Subject: Marketing Management
Enrollment No - MBA1/OCT15N/93171446117645F
Attend any 4 questions. Each question carries 25
marks
(Each answer should be of minimum 2 pages / of 300
words)
______________________________________________________________
1. Explain pricing policy.
Pricing is an essential part of any business strategy. The decision of
pricing is very important in any business. It is of great importance to
the

producer,

wholesaler,

retailer

and

the

consumer.

For

an

organization, price creates the revenue to support existing and future

opportunities. Sometimes, survival of an organization may depend
upon product pricing policies. In a competitive market, importance of
pricing cannot but be overemphasized. Price once fixed is never
permanent. It needs to be reviewed and revised according to the
market conditions. Prices once fixed cannot be kept constant forever; it
has to be revised according to the condition and the economic
situation.

Objectives of Pricing Policy

The main objective of pricing policy is to maximize profit for the firm,
stability is necessary to win the confidence of the customers and it
should be able to capture enough market for the firm.

To Maximize Profits
Every firm tries to maximize their profits. So they should have a price
policy, which fetches them maximum revenue. Every firm should have
a price policy keeping the long run prospects in mind.
Price Stability
Always fluctuating price is not for the goodwill of the company. A stable
price always wins the confidence of customers.
Capture the Market
Producers aim is to capture the market and to do so, he fixes
comparatively lower price for his product, while introducing a product
to capture the lion share of market. But once they gain stability and
consistency they can change their price policy.
Facing Competitive Situation
Every producer should fix the price, keeping the price of the competitor
in mind in some types of market structure; prices are fixed in such a
way so as to restrict the entry of rival firms in the industry.
Ability to Pay:
The price should be fixed according to the ability of consumer to pay;
high price for rich customers and low for poor customers. This can be

applied in case of services given by doctors, lawyers etc.

Pricing Policy decisions are influenced by numerous factors. Of the
numerous factors affecting pricing decisions, Cost, Demand and
Competition are the major ones,
1) Product cost: Product cost is the total expenditure incurred in
terms of money by the producer of the product which includes
expenditure

towards

procurement

of

materials,

employment

of

workers, using machinery including power, communication/distribution

channels, expenditure incurred on sales force etc.
2) Demand for the product: Higher the price, lower the demand,
and vice versa, other things remaining the same is the popular law of
demand. Thus, demand for the product influences the price and vice
versa.
3) Competition: When there is competition, neither an individual nor
an organization can really influence price. Under severe competition,
price will follow the direction of the resultant of the forces of
competition.
Pricing Policy mainly depends on product cost, demand for the product
and competition. When data about these factors are collected, before
fixing up the product price by adopting an appropriate pricing method,
the existing pricing policy must be reviewed and updated taking into
consideration, the changed business environment, if any.
The existing pricing policy is to be periodically reviewed and updated in
relation to other policies like selling methods, advertising policy and
production policy and programme. For example, it may be necessary to

reduce the product price to enable fuller utilization of plant capacity,

more quickly. One of the reasons for not utilizing the installed capacity
fully may be the existing imbalance in the installed production
facilities. Such an imbalance may be due to the reason that the
capacity of different equipment of a plant does not match. In such
cases, the following alternatives are available to the manufacturing
organization to rectify the imbalance in the existing production
facilities:
To

sub-contract

part

production

which

is

restricting

the

production.
To install balancing equipments with higher output potential.
To introduce shift working.
If there is consistent imbalance in the production facilities, entire
plant can be replaced by installing new automatic plant.
Idle equipment may be sold so that entire attention can be
diverted to fully utilized equipments.
In all such cases, production will increase and the increased volume of
production may be sold by a suitable reduction in product price. There
can be many such cases of changing business environment which may
affect short-term and long-term objectives.
____________________________________________________________________

2. Explain the different Marketing Environments and

the role of culture and subculture?

The marketing firm operates within a complex, dynamic, external

macro-environment. It is the task of the marketing oriented firm to
link the resources of the organization to the requirements of
consumers

within

the

framework

of

opportunities

and

threats

presented by this macro-environment. Hence, the marketing firm not

only has to put consumers requirements at the top of its list of
priorities, but it also needs continually to adjust to environmental
factors. Rather than establishing what the organization can produce
and then going out and selling it, the marketing-oriented firm first
finds out the genuine needs and wants of consumers and then
attempts to

produce products and services that satisfy

these

requirements. In a wider sense, the marketing concept is more an

attitude of mind or a customer-oriented business philosophy, rather
than merely a functional area of management. Although a clear
understanding of consumers requirements is of paramount importance
in putting such a business philosophy into practice, there are also other
factors to consider.
Kotler defines the general marketing environment as follows: a
companys marketing environment consists of the actors and forces
that affect the companys ability to develop and maintain successful
transactions with its target customers. Such a definition includes all
environmental forces outside of the firms marketing management
function. This would also include inter-departmental influences.

Russ and Kirkpatrick call the interaction between the marketing

department and other functional areas of management the intra-firm
environment. It is important, in order to understand the influences of
external

environment

forces,

to

appreciate

that,

although

the

marketing function is the channel through which the firm adapts to

change in external conditions, marketings ability to carry out this role
is also influenced by internal factors.
The general marketing environment, therefore, consists of all the
factors and forces influencing the marketing function. This includes
both internal and external forces. Internal forces, i.e., the intra firm
environment, are largely within the control of the firm. It is the
generally uncontrollable forces outside the firm in the macroenvironment that pose the most important sources of opportunities
and threats to the company.
Kotler reserves the term macro-environment to denote other external
forces such as demographic, economic, political, technological, and
socio-cultural forces. The term macro-environment denotes all these
forces and agencies external to the marketing firm. Some of these
outside factors and forces will be somewhat closer to the firm than
others, for example immediate suppliers and competitors.
Introduction
A variety of environmental forces influence a companys marketing
system. Some of them are controllable while some others are

uncontrollable. It is the responsibility of the marketing manager to

change the companys policies along with the changing environment.
According to Philip Kotler, A companys marketing environment
consists of the internal factors & forces, which affect the companys
ability to develop & maintain successful transactions & relationships
with the companys target customers.
The Environmental Factors may be classified as:
1. Internal Factor
2. External Factor
External Factors may be further classified into:
External Micro Factors & External Macro Factors
Companys Internal Environmental Factors
A Companys marketing system is influenced by its capabilities
regarding production, financial & other factors. Hence, the marketing
management/manager

must

take

into

consideration

these

departments before finalizing marketing decisions. The Research &

Development Department, the Personnel Department, the Accounting
Department also has an impact on the Marketing Department. It is the
responsibility of a manager to company-ordinate all department by
setting up unified objectives.
External Micro Factors
1. Suppliers: They are the people who provide necessary resources
needed to produce goods & services. Policies of the suppliers have a

significant influence over

the marketing managers decisions

because, it is laborers, etc. A company must build cordial & longterm relationship with suppliers.
2. Marketing Intermediaries: They are the people who assist the
flow of products from the producers to the consumers; they include
wholesalers, retailers, agents, etc. These people create place & time
utility. A company must select an effective chain of middlemen, so
as to make the goods reach the market in time. The middlemen give
necessary information to the manufacturers about the market. If a
company does not satisfy the middlemen, they neglect its products
& may push the competitors product.
3. Consumers: The main aim of production is to meet the demands of
the consumers. Hence, the consumers are the center point of all
marketing activities. If they are not taken into consideration, before
taking the decisions, the company is bound to fail in achieving its
objectives. A companys marketing strategy is influenced by its
target consumer. E.g.: If a manufacturer wants to sell to the
wholesaler, he may directly sell to them, if he wants to sell to
another manufacturer, he may sell through his agent or if he wants
to sell to ultimate consumer he may sell through wholesalers or
retailers. Hence each type of consumer has a unique feature, which
influences a companys marketing decision.
4. Competitors: A prudent marketing manager has to be in constant
touch regarding the information relating to the competitors
strategies. He has to identify his competitors strategies, build his

plans to overtake them in the market to attract competitors

consumers towards his products.
Any company faces three types of competition:
a) Brand Competition: It is a competition between various
companies producing similar products. E.g.: The competition
between BPL & Videocon companies.
b) The Product Form Competition: It is a competition between
companies manufacturing products, which are substitutes to each
other E.g.: Competition between coffee & Tea.
c) The Desire Competition: It is the competition with all other
companies to attract consumers towards the company. E.g.: The
competition between the manufacturers of TV sets & all other
companies manufacturing various products like automobiles,
washing machines, etc.
Hence, to understand the competitive situation, a company must
understand the nature of market & the nature of customers.
Nature of the market may be as follows:
I. Perfect Market
II. Oligopoly
III. Monopoly
IV. Monopolistic Market
V. Duopoly
5. Public:

Companys

obligation

is

not

only

to

meet

the

requirements of its customers, but also to satisfy the various groups.

A public is defined as any group that has an actual or potential
ability to achieve its objectives. The significance of the influence of

the public on the company can be understood by the fact that

almost all companies maintain a public relation department. A
positive interaction with the public increases its goodwill irrespective
of the nature of the public. A company has to maintain cordial
relation with all groups, public may or may not be interested in the
company, but the company must be interested in the views of the
public.
Public may be various types. They are:
a. Press: This is one of the most important groups, which may make
or break a company. It includes journalists, radio, television, etc.
Press people are often referred to as unwelcome public. A
marketing manager must always strive to get a positive coverage
from the press people.
b. Financial Public: These are the institutions, which supply money to
the company. E.g.: Banks, insurance companies, stock exchange,
etc. A company cannot work without the assistance of these
institutions. It has to give necessary information to these public
whenever demanded to ensure that timely finance is supplied.
c. Government: Politicians often interfere in the business for the
welfare of the society & for other reasons. A prudent manager has
to maintain good relation with all politicians irrespective of their
party affiliations. If any law is to be passed, which is against the
interest of the company, he may get their support to stop that law
from being passed in the parliament or legislature.
d. General Public: This includes organizations such as consumer
councils, environmentalists, etc. as the present day concept of

marketing deals with social welfare; a company must satisfy these

groups to be successful.

External Macro Environment

These are the factors/forces on which the company has no control.
Hence, it has to frame its policies within the limits set by these forces:
1. Demography: It is defined as the statistical study of the human
population & its distribution. This is one of the most influencing
factors because it deals with the people who form the market. A
company

should

study

the

population,

its

distribution,

age

composition, etc before deciding the marketing strategies. Each

group of population behaves differently depending upon various
factors such as age, status, etc. if these factors are considered, a
company

can

produce

only

those

products

which

suits

the

requirement of the consumers. In this regard, it is said that to

understand the market you must understand its demography.
2. Economic Environment: A company can successfully sell its products
only when people have enough money to spend. The economic
environment affects a consumers purchasing behavior either by
increasing his disposable income or by reducing it. E.g.: During the
time of inflation, the value of money comes down. Hence, it is
difficult for them to purchase more products. Income of the
consumer must also be taken into account. E.g.: In a market where
both husband & wife work, their purchasing power will be more.
Hence, companies may sell their products quite easily.

3. Physical Environment or Natural Forces: A company has to adopt its

policies within the limits set by nature. A man can improve the
nature but cannot find an alternative for it.
Nature offers resources, but in a limited manner. A product manager
utilizes it efficiently. Companies must find the best combination of
production for the sake of efficient utilization of the available
resources. Otherwise, they may face acute shortage of resources.
E.g.: Petroleum products, power, water, etc.
4. Technological Factors: From customers point of view, improvement
in technology means improvement in the standard of living. In this
regard, it is said that Technologies shape a Persons Life.
Every new invention builds a new market & a new group of
customers. A new technology improves our lifestyle & at the same
time creates many problems. E.g.: Invention of various consumer
comforts like washing machines, mixers, etc have resulted in
improving our lifestyle but it has created severe problems like power
shortage.
E.g.: Introduction to automobiles has improved transportation but it
has resulted in the problems like air & noise pollution, increased
accidents, etc. In simple words, following are the impacts of
technological factors on the market:
a) They create new wants
b) They create new industries
c) They may destroy old industries
d) They may increase the cost of Research & Development.

5. Social & Cultural Factors: Most of us purchase because of the

influence of social & cultural factors. The lifestyle, values, believes,
etc are determined among other things by the society in which we
live. Each society has its own culture. Culture is a combination of
various factors which are transferred from older generations & which
are acquired. Our behavior is guided by our culture, family,
educational institutions, languages, etc.
The society is a combination of various groups with different cultures
& subcultures. Each society has its own behavior. A marketing
manager must study the society in which he operates.
Consumers attitude is also affected by their society within a society;
there will be various small groups, each having its own culture.
E.g.: In India, we have different cultural groups such as Assamese,
Punjabis, Kashmiris, etc. The marketing manager should take note of
these differences before finalizing the marketing strategies.
Culture changes over a period of time. He must try to anticipate the
changes new marketing opportunities.

_______________________________________________________________
3. Explain the procedure in Marketing Planning.
Marketing is a process of developing and implementing plans to
identify and satisfy customer needs and wants with the objective of
customer satisfaction and profits making. The main elements of
marketing planning are - market research to identify and anticipate

customer needs and wants; and planning of appropriate marketing mix

to meet market requirements/demands.
Market-oriented strategic planning is the managerial process of
developing

and

maintaining

feasible

balance

between

the

organizations objectives, skills, and resources and its changing market

opportunities. Strategic planning aims at shaping the companys
business and products to yield target profit and growth.
The Marketing Manager plays a vital role in strategic planning process.
He

defines

the

business

mission,

analyses

the

environmental,

competitive, and business situation, and finally develops objectives,

goals and strategies.
"Marketing Planning is the process of developing marketing plan
incorporating overall marketing objectives, strategies, and programs of
actions designed to achieve these objectives."
Marketing Planning involves setting objectives and targets, and
communicating these targets to people responsible to achieve them. It
also involves careful examination of all strategic issues, including the
business environment, the market itself, the corporate mission
statement, competitors, and organizational capabilities.
Marketing Planning Process
Marketing planning process is a series of stages that are usually
followed in a sequence. Organizations can adapt their marketing plan
to suit the circumstances and their requirements. Marketing planning
process involves both the development of objectives and specifications

for how to achieve the objectives. Following are the steps involved in a
marketing plan.
1) Mission: Mission is the reason for which an organization exists.
Mission statement is a straightforward statement that shows why an
organization is in business, provides basic guidelines for further
planning, and establishes broad parameters for the future. Many of the
useful

mission

statements

motivate

staff

and

customers.

2) Corporate Objectives: Objectives are the set of goals to be

achieved within a specified period of time. Corporate objectives are
most important goals the organization as a whole wishes to achieve
within a specified period of time, say one or five years. All the
departments

of

an

organization

including

marketing

department works in harmony to achieve the corporate objectives of

the organization. Marketing department must appreciate the corporate
objectives and ensure its actions and decisions support the overall
objectives of the organization. Mission statement and corporate
objectives are determined by the top level management (including
Board of Directors) of the organization. The rest of the steps of
marketing planning process are performed by marketing department.
All the actions and decisions of the marketing department must be
directed to achieve organization mission and its corporate objectives.
3)

Marketing

Audit:

Marketing audit helps in

analyzing

and

evaluating the marketing strategies, activities, problems, goals, and

results. Marketing audit is done to check all the aspects of business
directly related to marketing department. It is done not only at the

beginning of the marketing planning process but, also at a series of

points during the implementation of plan. The marketing audit clarifies
opportunities and threats, so that required alterations can be done to
the

plan

if

necessary.

4) SWOT Analysis: The information gathered through the marketing

audit process is used in development of SWOT Analysis. It is a look at
organizations marketing efforts, and its strengths, weaknesses,
opportunities, and threats related to marketing functions.

Strengths and Weaknesses are factors inside the organization that

can be controlled by the organization. USP of a product can be the
example of strength, whereas lack of innovation can be the
example of weakness.

Opportunities and Threats are factors outside the organization

which are beyond the direct control of an organization. Festive
season can be an example of opportunity to make maximum
sales, whereas increasing FDI in a nation can be the example of
threat to domestic players of that nation.

5) Marketing Assumptions: A good marketing plan is based on deep

customer understanding and knowledge, but it is not possible to know
everything about the customer, so lot of different things are assumed
about

customer.

For example:

Target Buyer Assumptions - assumptions about who the target

buyers are.

Messaging/Offering

Assumptions

assumptions

about

what

customers think are the most important features of product to be

offered.
6) Marketing Objectives and Strategies: After identification of
opportunities and challenges, the next step is to develop marketing
objectives that indicate the end state to achieve. Marketing objective
reflects what an organization can accomplish through marketing in
the coming years. Objective identifies the end point to achieve.
Marketing strategies are formed to achieve the marketing objectives.
Marketing strategies are formed to determine how to achieve those
end points. Strategies are broad statements of activities to be
performed to achieve those end points.
7) Forecast the Expected Results: Marketing managers have to
forecast the expected results. They have to project the future numbers,
characteristics, and trends in the target market. Without proper
forecasting, the marketing plan could have unrealistic goals or fall
short on what is promised to deliver.

Forecasting Customer Response - Marketing managers have to

forecast the response that the average customers will have to
marketing efforts. Without some idea how the marketing will be
received, managers can't accurately plan the promotions.

Forecasting Marketing cost - To make the marketing plan stronger,

accurate forecast of marketing cost is required to be done.

Forecasting the Market - To accurately forecast the market,

marketing managers have to gain an intimate understanding of
customers, their buying behavior, and tendencies.

Forecasting the Competition - Forecast of competition like - what

they market, how they market, what incentives they use in their
marketing can help to counter what they are doing.

8) Create Alternative Plan: An alternate marketing plan is created

and kept ready to be implementing at the place of primary marketing
plan if the whole or some part of the primary marketing plan is
dropped.
9) Marketing Budget: The marketing budget is the process of
documenting the expected costs of the proposed marketing plan. One
common method to allocate marketing budgeting is based on a
percentage of revenue. Other methods are - comparative, all you
can afford, and task method.
10) Implementation and Evaluation: At this stage the marketing
team is ready to actually start putting their plans into action. This may
involve spending money on advertising, launching new products,
interacting with potential new customers, opening new retail outlets
etc.
The marketing planning process is required to be evaluated and
updated regular. Regular evaluation of marketing efforts helps in
achieving marketing goals.
_____________________________________________________________________

5. Examine the basic principles of organisation design?

Describe the techniques and methods for designing
organization structure?
A business organization must have a separate marketing department
to focus on customer needs and expectations.
Objective is to be aware about the meaning of marketing organization,
basic principles of organization design, techniques and methods for
designing organization structure, functional organization in marketing
and strategy for building a companywide marketing orientation.
Marketing organization-meaning
The recent years have seen the growth of marketing from simple sales
department to a complex group of activities. The main contributing
factors for this growth are the concepts of Re-engineering, Globalizing,
Outsourcing etc. All these require a change in the administration of
marketing departments. Marketing organization deals with strategic
and tactical organization, implementation, evaluation and control of
the marketing activities.
Basic principles of organization design
Traditionally, marketers played the role of middlemen, involved in
realizing the customer needs and transmitting the voice of the
customer to various functional areas in the organization. Today,
marketing has evolved into full-fledged departments with functions

depending upon the nature of the company. Marketing departments

are of the following designs:
1. Simple sales department:

Small companies with a sales vice-

president, who manages the sales force and also performs some
selling, have a simple sales department configuration.
2. Sales departments with Ancillary marketing functions:
Larger companies require conducting marketing research to learn
about customer needs and market potential. It also has to
advertise its products and services. An Advertising Manager may
be hired to handle these activities.
3. Separate Marketing Department:

As the company grows

further, it makes additional investments in marketing research,

new product development, advertising and sales promotion. The
CEO recognises the advantages of establishing a separate
marketing department headed by a Marketing Vice President or
Executive Vice-President. This recognizes sales and marketing as
separate functions that work closely together.
4. Modern Marketing Department:
The modern marketing
department has a Marketing and Sales Executive Vice-President
with managers of all marketing functions (including sales
management) reporting to them. This is to reduce friction
between sales and marketing departments as all the conflicts are
settled between the Executive Vice-Presidents.
5. Effective Marketing Company:
For a company to do
marketing effectively, all the departments of the company should
take up responsibilities of marketing. Only when all the employees
realize that their jobs are created by customers, the company
becomes an effective marketer.

6. Process and outcome based company:

Many companies

are shifting their structure from departmental organization to

process and outcome based organization. This ensures that the
marketing and sales people are consequently spending more time
within a team as process team members. This team is also
responsible for training its marketing personnel, assigning them
to new teams, and evaluating their overall performance.
Though all the departments of the company are expected to
interact harmoniously to pursue the firms overall objectives,
there usually exists deep rivalries and distrust amongst them.
This conflict starts from differences in opinion as to what is in the
companys best interest.
Techniques and methods for designing organization structure
The modern marketing department can be of the following structures
based on function, geographic area, products of customer markets.
Functional organization:
It is the most common form of marketing organization structure and
consists of functional specialists reporting to a marketing vicepresident, who coordinates their activities.
Geographic organization: This kind of organization structure is
followed by companies selling in a national market. The functions like
sales force and marketing are organized along geographic lines.
Product-Or Brand Management Organization:
This kind of organization is seen in companies dealing with a wide
variety of products (or brands). In this kind of structure, a Product
Manager supervises product category managers, who in turn supervise

specific product and brand managers. The following are the main
functions performed by product and brand managers:

Developing a long range and competitive strategy for the product.

Preparation of annual marketing plans and sales forecast.
Dealing with advertising and merchandising agencies.
Encouraging the sales force and the distributors.
Performing regular studies on products performance, customer
and

changing

dealer

attitudes,

and

new

problems

and

opportunities.
Market-Management Organization
This kind of organization is common in companies which sell their
products to a diverse set of markets. When customer falls into different
user groups with distinct buying preferences and practices, a market
management organization is desirable. In this kind of organization, the
following structure is preferred
Market- Management organization Structure
Market Manager
Market

Development

Market

Industry
Managers
Specialists

Specialists

Many companies have recognized the significance of having a market

entered organization and are finding a substantial positive effect of
market orientation on both commodity and non-commodity business.
Corporate Divisional Organization
This kind of organization structure is very popular with companies that
grow very rapidly. They often convert their larger product or market
groups

into

separate

divisions.

The

divisions

have

their

own

departments and services. The potential contribution of a corporate

marketing staff varies in different stages of the companys evolution.
At the beginning stages companies have weak marketing skills and
require a corporate staff to guide them but in the later stages
corporate marketing has much less to offer.