31- DE-1995-Marketing Management

1. What are the features of service marketing?

Service marketing is marketing based on relationship and value. It may be used to market a service or a
product.
Features of Service marketing:
1. Intangibility:
A physical product is visible and concrete. Services are intangible. The service cannot be touched or viewed,
so it is difficult for clients to tell in advance what they will be getting. For example, banks promote the sale
of credit cards by emphasizing the conveniences and advantages derived from possessing a credit card.

2. Inseparability:
Personal services cannot be separated from the individual. Services are created and consumed
simultaneously. The service is being produced at the same time that the client is receiving it; for example,
during an online search or a legal consultation. Dentist, musicians, dancers, etc. create and offer services at
the same time.

3. Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong possibility that the same enquiry
would be answered slightly differently by different
people (or even by the same person at different times). It is important to minimize the differences in
performance (through training, standard setting and quality assurance). The quality of services offered by
firms can never be standardized.

4. Perishability:
Services have a high degree of perishability. Unused capacity cannot be stored for future use. If services are
not used today, it is lost forever. For example, spare seats in an aeroplane cannot be transferred to the next
flight. Similarly, empty rooms in five-star hotels and credits not utilized are examples of services leading to
economic losses. As services are activities performed for simultaneous consumption, they perish unless
consumed.

5. Changing demand:
The demand for services has wide fluctuations and may be seasonal. Demand for tourism is seasonal, other
services such as demand for public transport, cricket field and golf courses have fluctuations in demand.

6. Pricing of services:
Quality of services cannot be standardized. The pricing of services are usually determined on the basis of
demand and competition. For example, room rents in tourist spots fluctuate as per demand and season and
many of the service providers give off-season discounts.

7. Direct channel:
Usually, services are directly provided to the customer. The customer goes directly to the service provider to
get services such as bank, hotel, doctor, and so on. A wider market is reached through franchising such as
McDonald’s and Monginis.

3. Define marketing research What are its objectives?

Various definitions of marketing research are given below:
“The systematic gathering, recording and analysis of data about problems relating to the marketing of goods
and services” —The American Marketing Association.

“The systematic objective and exhaustive research for and study of the facts relevant to any problem in the
field of marketing.” —Richard Crisp
“Marketing research is the careful and objective study of product design, markets, and such transfer
activities as physical distribution and warehousing, advertising and sales management.” —Clark and Clark

Objectives of Marketing Research:

Marketing research is undertaken for attaining the following objectives:
(1) To Provide Basis For Proper Planning:
Marketing and sales forecast research provides sound basis for the formulation of all marketing plans,
policies, programmes and procedures.

(2) To Reduce Marketing Costs:

Marketing research provides ways and means to reduce marketing costs like selling, advertisement and
distribution etc.

(3) To Find Out New Markets for The Product:

Marketing research aims at exploring new markets for the product and maintaining the existing ones.

(4) To Determine Proper Price Policy:

Marketing research is considered helpful in the formulation of proper price policy with regard to the
products.

(5) To Study in Detail Likes and Dislikes of the Consumers:

Marketing research tries to find out what the consumers, (the men and women who constitute the market)
think and want. It keeps us in touch with the consumers, minds and to study their likes and dislikes.

(6) To Know The Market Competition:

Marketing research also aims at knowing the quantum of competition prevalent in the market about the
product in question. The company may need reliable information about competitor’s moves and strategies
which are of immense significance for further planning.

(7) To Study The External Forces and Their Impact:

Marketing research provides valuable information by studying the impact of external forces on the
organisation. External forces may include conditions developing in foreign markets, govt, policies and
regulations, consumer incomes and spending habits, new products entering in the market and their impact on
the company’s products.

4. Write short notes on i product modification ii Product elimination

product modification
Product modification means changing one or more of the product's features and may involve reformulation
and repackaging to enhance its customer appeal. Modifications can give a competitive advantage, e.g., a
company may be able to charge a higher price and enhance customer loyalty. Product modification is often
used as a way of extending the product life cycle of a product. Brassington and Pettit (2003) classify
modifications into three distinct types: quality, design, and performance. Quality modifications relate to the
product's dependability and durability; performance modifications relate to the effectiveness, convenience,
and safety of products (e.g., washing machines that use less heat and water); and design modifications alter
the aesthetic and sensory appeal of the product (such as its taste, texture, sound, and appearance). Such
modifications can act to differentiate products in the marketplace, e.g., BMW cars have an immediately
recognizable style. A number of issues have to be considered before deciding whether or not to keep the
product, change it, or eliminate it (see product deletion); for example, what is the customer appeal? The
product may have lost its distinctiveness because of the introduction of new products or improvements of its
main rivals. By reformulating the product, it may be possible to regain its competitive edge
Product eleimination

This study identified the elimination strategies used by companies to implement the elimination decision,
which includes the following options: (1) phase out immediately; (2) phase out slowly; (3) drop the product
from the standard range and reintroduce it as a “special” sell out. The study also determined that the “phase
out slowly” strategy is generally preferred and that “stock on hand” and “replacement product development”
are two of the main factors influencing the formulation of phase out plans. A systematized model for the
implementation of the product elimination decision based on the findings of the study is described.

-----------------------------------------------------------------------------------------------------------------------
5. Briefly explain the process of price determination of a product.

Steps Involved in Price Determination Process

Some of the major steps involved in price determination process are as follows: (i) Market Segmentation (ii)
Estimate Demand (iii) The Market Share (iv) The Marketing Mix (v) Estimate of Costs (vi) Pricing Policies
(vii) Pricing Strategies (viii) The Price Structure.

Decisions on pricing are taken in the light of marketing opportunities, competition and many other valuables
influencing pricing.

The Price decision must take into account all factors affecting both demand price and supply price.

(i) Market Segmentation:

In market segments, marketers will have firm decisions on:
(a) The type of products to be produced or sold.

(b) The kind of service to be rendered.

(c) The costs of operations to be estimated.

(d) The types of customers or market segments sought.

(ii) Estimate Demand:

Marketers will estimate total demand for the product based on sales forecast, channel opinions and degree of
competition in the market. Prices of comparable rival products can guide us in pricing our products. We can
determine market potential by trying different prices in different markets.

(iii) The Market Share:

Marketers will choose a brand image and the desired market share on the basis of competitive reaction.
Market planners must know exactly what his rivals are charging. Level of competitive pricing enables the
firm to price above, below or at par and such a decision is easier in many cases.

Higher initial price may be preferred, in case of smaller market share is anticipated, whereas, in the
expectation of a much larger market share for the brand, marketer will have to prefer relatively lower price.
Proper pricing strategy is evolved to reach the expected market share either through skimming price or
through penetration price or through a compromise, i.e., fair trading or fair price- to cover cost of goods,
operating expenses and normal profit margin.

(iv) The Marketing Mix:

The overall marketing strategy is based on an integrated approach to all the elements of marketing mix.

It covers:
(a) Product-market strategy
(b) Promotion strategy

(c) Pricing Strategy

(d) Distribution Strategy

Marketers will have to assign an appropriate role to price as an element of marketing- mix. Promotional
strategy will affect pricing decisions.

The design of marketing mix can indicate the role to be played by pricing in relation to promotion and
distribution policies. Price is critical strategic element of the marketing mix as it influences the quality
perception and enables product or brand positioning. Price is also a good tactical variable. Changes in price
can be made much faster than in any other variable of marketing mix. Hence, price has a good tactical value.

(v) Estimate of Costs:

Straight, cost-plus pricing is not desirable always as it is not sensitive to demand. Marketing must take into
account all relevant costs as well as price elasticity of demand.

(vi) Pricing Policies:

Pricing policies are guidelines to carry out pricing strategy. Pricing policy may be fixed or flexible. Pricing
policies must change and adopt themselves with the changing objectives and changing environment.

(vii) Pricing Strategies:

Strategy is a plan of action to adjust with changing condition of the– market place. New and unanticipated
developments such as price cut by rivals, government regulations, economic recession, changes in consumer
demand etc. may take place, and then changes all for special attention and relevant adjustments in the
pricing policies and producers.
(viii) The Price Structure:
Developing the price structure on the basis of pricing policies and strategies is the final step in price
determination prices. The price structure will now define the selling prices for all products and permissible
discounts and allowances to be given to distributor’s co-dealers as well as various types of buyers.

7. What is channel conflict ? Discuss its types.

Types of Channel conflicts – Levels of channel conflicts
It is important that a company which sells its products through channel marketing, understanding the
different types of channel conflicts and thereby take steps to manage channel conflicts. Let us understand the
typical distribution channel first.
A typical channel will flow like this
Manufacturer >> C&F >> Distributor >> Retailer >> End consumer
In the above case, the manufacturer is level 1, the C&F or carrying or forwarding agent is level 2, the
distributor is level 3, the retailer is level 4 and the end consumer is level 5. Understanding the levels is
important to understand which level the channel conflict is arising from or is it on multiple levels. Let us
delve deeper into these conflicts.
The three type of channel conflicts which can occur are
1) Horizontal Channel conflicts
2) Vertical Channel Conflicts
3) Multi Channel conflicts
1) Horizontal channel conflicts
One of the most common type of channel conflicts to occur are the horizontal ones. Horizontal channel
conflict is a conflict between two players at the same level in the distribution channel. So a conflict between
2 distributors or a conflict between 2 retailers is known as horizontal channel conflict.
2) Vertical Channel conflict
Another type of conflict seen in channel management is the Vertical channel conflict. Where the horizontal
channel conflict exists between players within the same level of the distribution channel, the vertical channel
conflict happens at different levels of the distribution channel. A typical conflict might be between the
retailer and the distributor, or it might be between the distributor / C&F and the company.
3) Multiple channel conflict
Because of their very nature, vertical channel conflicts happen rarely, but once they happen, they have a
long lasting effect. In the recent decade, we have seen some fantastic examples of Multi channel conflicts.

Section B
9. Describe the various factors that influence the marketing environment.

10. Discuss the role of marketing in Economic developement of a country.

Importance of Marketing for the Economic Development of a Country!

Marketing has acquired an important place for the economic development of the whole country. It has also
become a necessity for attaining the object of social welfare.

As a result of it, marketing is considered to be the most important activity in a business enterprise while at

the early stage of development it was considered to be the last activity. For convenience, the importance of
marketing may be explained as under:

i) Delivery of standard of living to the society:

A society is a mixture of diverse people with diverse tastes and preferences. Modern marketing always aims

for customer satisfaction. So, main liability of marketing is to produce goods and services for the society
according to their needs and tastes at reasonable price.

Marketing discovers needs and wants of society, produces the goods and services according to these needs

creates demand for these goods and services. They go ahead and promote the goods making people aware

about them and creating a demand for the goods, encouraging customers to use them. Thus, it improves the
standard of living of the society.

ii) Decrease in distribution cost:

Second important liability of marketing is control the cost of distribution. Through effective marketing the

companies can reduce their distribution costs to a great extent. Decrease in cost of distribution directly

affects the prices of products because the cost of distribution is an important part of the total price of the
product.

iii) Increasing employment opportunities:

Marketing comprises of advertising, sales, distribution, branding and many more activities. So the

development of marketing automatically gives rise to a need for people to work in several areas of

marketing. Thus the employment opportunities are born. Also successful operation marketing activities

requires the services of different enterprises and organisation such as wholesalers, retailers, transportation,
storage, finance, insurance and advertising. These services provide employment to a number of people.

iv) Protection against business slump:

Business slump cause unemployment, slackness in the success of business and great loss to economy.
Marketing helps in protecting society against all these problems.

v) Increase in national income:

Successful operation of marketing activities creates, maintains and increases the demand for goods and

services in society. To meet this increased demand the companies need to increase the level of production in

turn raising their income. This increase, in turn, increases the national income. Further effective marketing

leads to exports adding to the national income. This is beneficial to the whole society.

11. Explain the different stages involved in consumers buying process.

Stages of consumer buying decision process

The marketer is responsible for selling the goods in the market so he must have the knowledge how the
consumers actually make their buying decisions. For this he must study the consumer buying decision
process or model. It involves five stages.
1.) Need recognition:- consumer buying decision process starts with need recognition. The marketer
must recognize the needs of the consumer as well as how these needs can be satisfied. For example if a
person is hungry then food is desired or if it is a matter of thirst than water is desirable.
2.) Information search:– in consumer buying decision process information search comes at second
number. In this stage consumer searches the information about the product either from family, friends,
neighborhood, advertisements, whole seller, retailers, dealers, or by examining or using the product.
3.) Evaluation of alternatives:– after getting the required knowledge about the product the consumer
evaluate the various alternatives on the basis of it’s want satisfying power, quality and it’s features.
4.) Purchase decision:– after evaluating the alternatives the buyer buys the suitable product. But there are
also the chances to postpone the purchase decision due to some reasons. In that case the marketer must try to
find out the reasons and try to remove them either by providing sufficient information to the consumers or
by giving them guarantee regarding the product to the consumer.
5.) Post purchase behavior:– after buying the product consumer will either be satisfied or dissatisfied. If
the consumer is not satisfied in that case he will be disappointed otherwise If he is satisfied than he will be
delighted. It is usually said that a satisfy consumer tell about the product to 3 people and a dissatisfy
consumer tell about the product to 11 people. Therefore it is the duty of the marketer to satisfy the
consumer.
Thus, these are the five stages of the consumer buying decision process.

12. What is product lifecycle ? Explain its concept with example.

Introduction Phase
The introduction phase is when the public first sees or hears about a product. The product appears in stores
for the first time, and people start seeing print and television ads. During this phase, a company may choose
one of two pricing strategies. They may set prices high to recoup initial expenses that went into producing
the product. For example, a cellphone manufacturer with new technology may introduce cellphones 10
percent to 20 percent above the prices of most premium cellphones. They may price their phones higher
because of the hype and anticipation of the new technology. The company also knows enough people will
pay the extra 10 to 20 percent for it to earn substantial profits. Contrarily, the same cellphone company may
introduce a cellphone with basic features at reduced prices in hopes of gaining lots of new customers.
Growth Phase
The growth phase is when sales and profits for the new product start rising. A company will usually keep
product prices about the same during the growth stage to maximize earnings. Product quality is also
maintained. However, a company will usually expand its product distribution during the growth stage. For
example, a consumer-products company might start selling its organic cereal in new markets, based on
positive marketing research from consumers. Eventually, the organic cereal will start appearing in stores
across the country. Company marketers usually increase advertising during the growth phase, too, according
to NetMBA.com.
Maturity Stage
Success inevitably leads to increased competition. Other companies eventually will start introducing similar
products, especially if the initial product is highly successful. Consequently, the demand for the product and
its competitors will peak at some point. Sales growth will start to decline. Some companies may lower prices
to capture additional market share or new customers. At this point, a company may need to develop new
product features or services to differentiate its products from the competition's. For example, the company
that first introduced the product may enhance its customer-service department to establish itself as the
service leader in the industry. The company's stellar customer service may be the distinguishing element that
spurs additional sales and customers. The company would then feature its superior customer service in most
of its advertising.
Decline Stage
Demand for the product will eventually wane as newer technologies are introduced. Hence, companies can
either maintain the product, sell it at heavily reduced prices or discontinue the product. A company that
maintains the product may continue increasing sales by finding new uses for the product. For example, a
soap manufacturer may discover through marketing research that restaurants and industrial companies like
the cleaning properties of its soap. Subsequently, the company would start selling its soap to both consumers
and businesses. This strategy could help extend the life of the product.
13. Explain the factors affecting pricicng decision.
Pricing is a process to determine what manufactures receive in exchange of the product. Pricing depends on
various factors like manufacturing cost, raw material cost, profit margin etc.

Factors Influencing Pricing

Pricing of a product is influenced by various factors as price involves many variables. Factors can be
categorized into two, depending on the variables influencing the price.

Internal Factors
The following are the factors that influence the increase and decrease in the price of a product internally −

 Marketing objectives of company

 Consumer’s expectation from company by past pricing

 Product features

 Position of product in product cycle

 Rate of product using pattern of demand

 Production and advertisement cost

 Uniqueness of the product

 Production line composition of the company

 Price elasticity as per sales of product

Internal factors that influence pricing depend on the cost of manufacturing of the product, which includes
fixed cost like labour charges, rent price, etc., and variable costs like overhead, electric charges, etc.

External Factors
The following are the external factors that have an impact on the increase and decrease in the price of a
product −

 Open or closed market

 Consumer behaviour for given product

 Major customer negotiation

 Variation in the price of supplies

 Market opponent product pricing

 Consideration of social condition

 Price restricted as per any governing authority

External factors that influence price depend on elements like competition in market, consumer flexibility to
purchase, government rules and regulation, etc.