Notes of UGC NET

NTA UGC-NET
Management
SAMPLE
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Management - VI
1. MARKETING
Marketing refers to the identification of customer needs, selling and promotion of goods and
services for customer satisfaction. It is also known as the activity or action where a group of people or
institutions come together for exchanging goods and services to satisfy their needs profitably. In simple
terms we can say, "Marketing is satisfaction of needs profitably"
Marketing Definitions
UK based Chartered Institute of Marketing (CIM) defines marketing as: "The management process
responsible for identifying, anticipating and satisfying customer requirements profitably"
Whilst the American Marketing Association states: "Marketing is the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large"
Marketing author and academic Philip Kotler defines marketing as: "Marketing is the process by
which companies create value for customers and build strong customer relationships in order to capture
value from customers in return"
Marketing is "The management process responsible for identifying, anticipating and satisfying
customer requirements profitably." – The Chartered Institute of Marketing
"Marketing is not only much broader than selling; it is not a specialized activity at all. It encompasses
the entire business. It is the whole business seen from the point of view of the final result, that is, from
the customer's point of view. Concern and responsibility for marketing must therefore permeate all areas
of the enterprise." – Peter Drucker
"Marketing is everything." – Regis McKenna
Marketers market mainly three types of entities : Goods, Services and Events.
Marketing Concepts
There are various marketing concepts exists which are being used by the marketers for the
reference in the marketing field.
The five major concepts are :
(i) Production concept
(ii) Product concept
(iii) Selling concept
(iv) Marketing concept
(v) Societal marketing concept
(i) The Production Concept : This concept came in era of mid 1950's. During this period
Production was the major concern. Companies concentrating on this concept believed that customer
only demand for the goods that are affordable and easily accessible.
A production oriented company works on economies of scale, under which increased
production can decrease cost and increase profits.
(ii) The Product Concept : This concept based on the belief that customers will prefer the
products with good quality. Producers focuses on improving the performance and quality of the goods
and services. As the major focus is the product quality producers may fail to attract the customers
whose demand is influenced by price, availability etc.
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Management (Management-VI)
(iii) The Selling Concept : In selling concept producers majorly focuses on improving actual
sale of the product. Producers will make efforts only to increase sales not considering the need of
customer and quality of the product.
(iv) The Marketing Concept : Under this concept company emphasizes on building relations
with the consumers. They aim to understand the needs and wants of customer. By focusing on consumer
needs and wants, company can provide with more value than other competitors.
(v) The Societal Marketing Concept : Under this concept, well being of the customer and
society is the major concern. They must balance between company profits, customer satisfaction and
public interest.
Nature of Marketing
1. It is an Economic Function : Marketing covers all the business activities involved in
getting goods and services, from the producers to consumers. The business phases
through which goods progressed on the way to final consumers is the concern of marketing.
2. Transfer of ownership : In the process of marketing the ownership of goods transfers
from seller who is the purchaser or from producer to the end consumer.
3. It is a System of Interacting Business Activities : Marketing is that system through
which a business enterprise, institution, or organisation interacts with the customers and
stakeholders with the objective to earn profit, satisfy customers, and manage relationship.
It is the performance of business activities that direct the flow of goods and services from
producer to consumer or user.
4. Marketing is a Managerial function : According to managerial or systems approach –
"Marketing is the combination of activities designed to produce profit through ascertaining,
creating, stimulating, and satisfying the needs and/or wants of a selected segment of the
market."
5. As per the above approach, we can say that marketing focuses on hot the organization
process marketing and develops the strategic dimensions of marketing actions.
6. Marketing is a Social Process : Marketing is the providing of a standard of living to the
society. Marketers should know about the customer need and changes in the needs.
Marketers fulfil the demand of the consumers as per the need. It involves the efficient
provision for distribution and payment systems.
Scope of Marketing
1. Study of Consumer Wants and Needs : Goods are produced to fulfil consumer needs.
Thus, it is about the identification of consumer needs and wants. These needs motivate
consumer to buy.
2. Study of Consumer Behaviour : The study and Analysis of consumer behaviour assists
the marketers in market segmentation, targeting and positioning.
3. Production Planning and Development : Product planning and development begins
with the idea of a product and ends with the product development and commercialisation.
It includes everything from branding and packaging to product line expansion and
contraction.
4. Pricing Policies : Marketer determine pricing policies for the products. Pricing policies
varies from product to product. It depends on the competition in the market, product life
cycle, marketing goals and objectives, etc.
5. Distribution : Distribution channel is vital in marketing. For increased sales and profit
goods are needed to be distributed with the maximum consumers at minimum cost.

6. Promotion : It includes personal selling, sales promotion, and advertising. Accurate

promotion mix is a key to accomplish marketing goals.
7. Consumer Satisfaction : The products offered by the producers must satisfy consumer
needs. Consumer satisfaction is the main object of marketing.
8. Marketing Control : Marketing audit is done to control the marketing activities.
Environmental Scanning
Environmental scanning requires members of an organization to look externally and identify
prominent lessons, trends, opportunities or threats that can adversely affect the company. Once identified,
the company can develop new strategies that best correspond to these external market factors. Executives
must be aware of issues that not only affect the company's direct customers or suppliers, but also
competitors, regulatory changes, the overall macroeconomic environment and the ever-changing political
landscape. Because of the constant introduction of new technological innovations, the business
environment is always changing. As a result, organizations need to understand the entire market
landscape in order to develop optimal business strategies. Constant oversight through research and
learning that is shared internally can help mitigate the risk that a business is left unaware of important
changes in the marketplace.
Given the number of factors that a company must watch, it is of little wonder why so many are
unable to employ sound business strategies. While most organizations focus on industry and market
conditions, it seems that fewer give consideration to emerging technologies, new regulations, or social
changes. For an organization to survive, grow and prosper, management must master the challenges
of this profoundly changing environment. To achieve this goal, leaders need to develop and implement
a systematic approach to environmental scanning. One approach is a PESTLE analysis, which includes
an assessment of six separate environments (Political, Economic, Social, Technological, Legal and
Environment). According to Eileen Abels, formerly an Associate Dean and Professor at Drexel University
in Philadelphia, environmental scanning efforts can include:
 Gathering data deliberately through market research studies;
 Having informal conversations with other executives;
 Reading secondary sources such as web articles, newspapers, magazines and journal
literature;
 Monitoring demographic data; and
 Benchmarking initiatives that compare one company's or industry's performance, finances,
etc., to another company or industry.
While some companies have succeeded in anticipating movements in the macro environment
and adapted accordingly, others have not.
Environmental Scanning Examples
Success: PepsiCo
As the world's second largest food and beverage company, PepsiCo realized that the increased
focus on health and wellness (both societal and political) meant that the company needed to invest more
heavily in this area. CEO Indra Nooyi's "long-term strategy is to make PepsiCo's 'nutrition business' a
much larger part of the company's portfolio than it is today. She wants to increase what she calls its
'good for you' products – snacks and drinks made of grains, fruit, nuts, vegetables, and dairy - from the
ten billion dollar business it is now into a thirty billion dollar business by 2020." The company has moved
to acquire brands in the functional food and beverage space (Naked) and increased investment in
RandD to formulate healthier ingredients (salt and sugar alternatives) that can be applied to products
within its lucrative soft drink and chips business.
While PepsiCo has adapted to the changing environment, other companies have not fared as
well.
Failure: Borders
The bookstore chain Borders filed for Chapter 11 bankruptcy in 2011 and was forced to shutter
dozens of stores across the country. According to Mark Evans, former Director of Merchandise Planning
and Analysis at Borders, bankruptcy was the result of "a failure to properly invest in and develop an
internal internet sales channel, too sizable an investment in its CD business, and an over-investment
in book inventory." At every turn, it seemed as though Borders was too slow to react. The internet has
become an immensely popular sales channels for nearly any established business; the company chose
to focus on CDs despite the emergence of digital downloads in the music space; and increased
emphasis on physical books as trends pointed toward an increased demand for eBooks. Borders offers
a cautionary example of what can happen when a company remains oblivious to changes in its external
environment and the subsequent ramifications for the organization.
The Importance of Environmental Scanning
Quarterly environmental scans that take into account the multiple factors can help an organization
stay abreast of the external landscape and adapt its strategy accordingly. These scans are just as
important for small and medium-sized businesses as they are for multinational corporations. Effective
environmental scanning can help companies to take advantage of opportunities before competitors,
address threats before they become significant problems, and align the company's strategy to meet
changing demand in the marketplace. Small and medium businesses cannot afford to only focus on
short-term profits. As PepsiCo's Nooyi reminds us, "companies have to be on a glide path that allows
us to perform at a reasonable level for a long time. The only way you do it is you look around the bend
constantly and say 'What's coming?' and then retool the company for the new reality."
Marketing Myopia
Theodore Levitt originally proposed the marketing myopia theory. This theory states that marketers
must look to the market and alter the company and products accordingly rather than looking at your own
company, its potential for catering the market. The needs of the market must receive first preference.
In other words, a company should be technically sound and product oriented and also needs to
be consumer oriented. It must know what are the needs of the customer and what further innovations
can the company bring to uphold consumer's interest or how it can adjust to the changing business
market.
Implications of the Marketing Myopia theory: Marketers can use Marketing myopia as well as
advertisers to evaluate whether they are catering the right market. Should they modify their products to
cater a larger market? Also determine the advertising strategies they should use.
In other words, Marketing myopia asks the companies to do the following:
 Be more customer focused
 Be in control
 Understand customer desires
 Conduct marketing research programs
 Marketing strategy should be developed keeping feedback of customers in mind.
Market Orientation
Market orientation is a philosophy mainly aims at customer needs and demands. Organizations
with orientation approach makes efforts in identifying consumer needs and try to fulfill them by making
changes in the product. Organizations instead of trying to get consumers know about their product
quality or offerings, they focus on tailor their products according to the needs of the consumer. They
try to design or modify the product as per the desires of the consumers. Most of the Marketing Gurus
as defined market orientation as coordinated campaign between a supplier and the buyers.

Market Orientation can be broadly divided into four steps:

1. Initiation : Under this stage, executives and other stakeholders initially identify the probable
threats to the organization. Further they make efforts to be implemented as a part of
transformational process.
2. Reconstitution : The plan is presented in front of the employees. It should include the
values that have been adopted to guide the company's behavior. Company can inform to
different departments by sending their teams that how these values affects the ability to
meet the needs.
3. Institutionalization : Employees are being rewarded for the improvement in the business
performance. Training programs and seminars are conducted to re enforce the cultural
values in the employees.
4. Maintenance : It helps in preventing any kind of deterioration in the company's values
and culture. Job Applicants are selected with the utmost care and existing employees are
made to do research and filed visits.
Customer Value and Satisfaction
Customer Value : Customer value is a subjective perception, which cannot be controlled but
only influenced. It is the satisfaction which consumer experiences or expects to experience by taking
any action comparing the cost of the action.
Measuring Customer Value : The most simplest and common equation to measure customer
value is below:
Perceived Value = Perceived Benefits/Cost
As the above equation suggests, the rise in cost with existing benefits will decrease the customer
value. And the decrement in cost with the given benefits or increase in the benefits with the given cost
will increase the perceived value.
Customer Satisfaction : Customer satisfaction is the important parameter to measure how
efficiently the organization meets customer needs. Customer satisfaction can only be attained when
there is good relationship of costumer and supplier. Today's business world is so competitive that
organization should work on customer satisfaction by applying different strategies.

Marketing Research
It is one of the important functions of marketing management. It is known as the process or set
of processes that associations the producers, customers, and end users to the marketer through
information used to recognize and define marketing opportunities and problems; generate, refine, and
assess marketing actions; monitor marketing performance; and improve understanding of marketing as
a process. It also stipulates the information required to address the problems, designs the method for
collecting information, manages, and implements the data collection process, analyzes the results, and
conveys the conclusions and their implications.
American Marketing Association defines marketing research as 'the systematic gathering, recording,
and analyzing of data about problems relating to marketing of goods and services'. Kotler and Keller
define marketing research as 'the systematic design, collection, analysis, and reporting of data and
findings relevant to a specific market situation facing the company'.
Marketing Research consists of following steps :
(1) Identifying consumers,
(2) Ascertain their needs and preferences,
(3) Finding out markets and investigating into their special features and
(4) Forecasting the demand for products.
Earlier it was termed as Market Research and was mainly concerned with the assessment and
study of markets. Now, Marketing Research has a wider inference. As defined by Richard Crisp "Marketing
Research is the systematic, objective and exhaustive search for and study of, the facts relevant
to any problem in the field of marketing."
Marketing Research can be done in following areas :
(a) Research on products and services,
(b) Research on markets and
(c) Research on sales methods and policies.
Objectives of Marketing Research
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.

Prof. Giles has rightly pointed out that, "The basic objective of marketing research is to supply
management with information which will lead to a fuller understanding of the distribution habits and
attitudes of present and potential buyers and users, and their reactions to products, packing, selling and
advertising methods".
By the study objectives in detail, we can say that preparation of marketing plans and their
execution based on marketing research. Marketing policies, actions and programs are planned in the
prevailing market conditions and then these plans and programs are translated into action.
Multiple costs are included in the marketing and marketing objectives is to reduce them. Promotion
cost, selling and distribution cost are taken into examination and methods are devised to secure economy
as far as possible without affecting the volume of sales.
Sales activities completely covers with the Marketing Research. Right product, proper pricing,
satisfactory quality, timely placement of products on the market are the objectives of marketing research.
Marketing Research is all embracing and covers the whole range of the business activities in
such a way the business world gets benefit and stands to prosper through marketing research.
Marketing Information System – MIS
According to Philip Kotler "people, equipment, and procedures to gather, sort, analyze, evaluate,
and distribute needed, timely, and accurate information to marketing decision makers".
In other words, Marketing information includes all the facts, estimates, guidelines, opinions,
policies, and other significant facts which are necessary for taking marketing decisions. This information
may be collected from the internal and external sources. This information usually collected from customers,
competitors, company salespeople, suppliers, government sources, specialized agencies, and others.
Now a day MIS system uses modern techniques for collecting, analyzing, storing and distributing
information.
Steps of Marketing Information System
Step-1 : Assessing Information Needs
Step-2 : Developing Information
Step-3 : Distributing Information
Assessing Information Needs
Initially marketers must know why the marketing information is essential? MIS system mainly
serves the management and company's employees. However, it also provides information to outside
partners, such as suppliers, retailers, and other marketing agencies. For example, Wal-Mart gives their
key suppliers access to their information system.
Company's supervisors essentially know about a new product that competitors are planning to
introduce. So, we can say that marketing information system plays a vital role for a company to make
on time decision making and effective business strategy.
Marketers can get the information from:
1. Internal Records can be found in company's marketing, sale, accounting departments.
2. Marketing Intelligence collect and analyzed publicly available data of competitors and
other developments in the marketplace.
3. Marketing Research analyzed the collected data for report generation.
4. Marketing Decision Support Systems are tools help in marketing decision process.

Developing Information
The second and most important step in marketing information system is to develop or collect
information. There are various techniques adopted by different companies for collecting data and
information. The techniques of collecting data may vary from company to company according to their
specific needs. The common methods of data collection are as under:
 Observational research
 Survey research
 Focus group interview
 Personal contact method
 Sampling research plan and
 Questionnaires
Distributing and Using Marketing Information
The gathered information has no value until it is used to make better marketing decision making.
So the information should be timely available to managers and other top level management who make
marketing decisions and deal with customers. This can only be happen by regular performance reports,
intelligence updates and other information collected by research studies.
Components of MIS
MIS is made up of parts, subparts or subsystems which are called the components. Typically,
according to Philip Kotler, a marketing information system consists of four interrelated components -
Internal Reports (Records) System, Marketing Research System, Marketing Intelligence System, and
Marketing Decision Support System, as shown in Fig. All components are interrelated and interdependent.
1. Internal Records System
Internal records system is a major and easily accessible source of information. It supplies the
results data. It consists of all records of marketing operations available within organisation. This system
concerns with collecting, analyzing, interpreting, and distributing needed information from records of
various departments of the company.
Main sources include various records on sales and purchase, ordering system, sales force
reporting system, inventory level, receivable-payables, marketing staff, costs, the past research works,
and other literatures/reports available within organisation. Particularly, for sales orders and sales force
reporting, the computer technology is excessively used for accurate, efficient, and speedy transmission
of information.
To manage the internal record system, some companies appoint internal MIS committee to deal
with all aspects of internal information.

The committee :
1. Attends request for all type of information required by managers,
2. Determines sources of the information and tools needed to collect, evaluate, and analyze
information,
3. Deals with presenting, distributing and updating the information,
4. Handles complaints of employees, and
5. Performs all types functions related to information.
Internal records system keeps regular circulation of the information throughout the organisation
without much expense and efforts. Managers can get the up-to-date information about marketing
operations. Once the system is set up properly, it can serve the purpose continually.
2. Marketing Intelligence System
While internal report system concerns with information available from internal records of
organisation, the marketing intelligence system supplies the managers with happening data. It provides
information about external happenings or external environment.
Marketing intelligence system :
The set of procedures and sources used by managers to obtain everyday information regularly
about pertinent developments in the marketing environment. A manager can try to expose external
environment in various ways.
Marketing intelligence system consists of various methods.
A manager can use one or more below mentioned methods:
(i) Reading newspapers, books, and other publications.
(ii) Watching TV, hearing radio, or Internet surfing.
(iii) Talking to customers, dealers, suppliers, and other relevant parties.
(iv) Talking to other managers and employees of his company as well as of other companies.
(v) Maintaining live contacts with other officials and agencies.
(vi) Purchasing useful information from professional sources.
(vii) Assigning marketing intelligence task to professional agencies, etc.
Effective marketing intelligence system can facilitate managers to take immediate actions like
reacting to competitors, meeting changing needs of customers, solving dealers' problems, and so on.
3. Marketing Research System
Marketing research is a powerful and independent branch of the MIS. In certain cases, managers
need detailed information on the specific problem of the specific marketing area. Thus, it is a formal
study of specific problems, opportunities, or situations. Normally, it is carried out for solving the specific
problem.
In this sense, it is not a part of routine activity. It collects need-based information. Nowadays,
it is treated as the separate discipline or subject. Philip Kotler defines: "Marketing Research is the
systematic design for collection, analysis, and reporting of data and findings relevant to specific marketing
situations facing the company."
Marketing research consists of collecting primary and secondary data from various respondents
using various tools through various methods for definite period of time, analyzing data using appropriate
statistics tools, and presenting findings in forms of a report. It is conducted by internal expert staff or
external professionals.
4. Marketing Decision Support System (MDSS)
Previously, the component was known as Analytical Marketing System. While former three
components supply data, the marketing decision support system concerns more with processing or
analyzing available data. This component can improve efficiency and utility of the whole marketing
information system.

The system is used to help managers make better decisions. John D. C. Little defines: "A
marketing decision support system (MDSS) is coordinated collection of data, systems, tools, and
techniques with supporting software and hardware by which an organisation gathers and interprets
relevant information from environment and turns it into a basis for making decisions."
Marketing Environment
The Marketing Environment includes such factors that surround the business and influence the
marketing operations. Some of these factors are controllable and some of them are non-controllable.
Firms must be aware of the marketing environment to cope up with the negative impact of environmental
factors on the marketing activities.
According to Philip Kotler, marketing environment refers to "external factors and forces that
affect the company's ability to develop and maintain successful transactions and relationships with its
target customers".
Elements of Marketing Environment
Marketing environment can also be classified as :
(i) Controllable Forces and
(ii) Uncontrollable Forces.
(i) Controllable forces : Controllable forces consist of the marketing strategies and policies
which can be controlled inside the organization. We can say these forces are inherent in the organization
and can be controlled or modified with certain effort by the management. These controllable factors are
Internal Forces, which is also known as Internal Environment.
Internal Environment : The Internal Environment of business comprises internal factors of the
business which are controllable by making efforts by the internal management. It can also be changed
or modified according to the external environment. It includes all internal departments of the organization
viz, Sales Department, Marketing Department, Manufacturing Departments, Human resource Department
etc.
The above components can be classified as Five M's of the business:
 Men
 Money
 Machinery
 Materials
 Markets
(ii) Uncontrollable Forces : There are certain forces which may affect the organization and not
under the control of management. Even a well conceived planning andstrategy may fail due to these
uncontrollable factors which are related to the outside the organization. These uncontrollable factors are
External Factors which are also known as External Environment. The external Environment is divided
into micro-environment and macro-environment.
(a) Micro Environment
(b) Macro Environment
(a) Micro Environment : The Micro Marketing Environment includes all those factors that
are from outside the organization but closely associated with the operations of the business
and influences its functioning. The microenvironment factors include customers, employees,
suppliers, retailers and distributors, shareholders, Competitors, Government and General
Public. These factors are controllable to some extent.
These factors are further elaborated :
 Customers : Business growth and success depends on how market strategy is
customer oriented that focuses on customer needs and fulfills them.
 Employees : Employees are the major component of a business whose contribution

is significant. Better training and motivation techniques should be applied for good
quality of employees.
 Suppliers : Suppliers are the persons who provide us raw material for transforming
it into finished good. Business should identify existing suppliers who can fulfill
firm's requirements easily.
 Retailers and Distributors : These are the channel partners playing an important
role. They are directly in touch with the customers, so they can give us best
suggestions regarding the desires of customer.
 Competitors : A business must know his competitors so that proper strategies
can be framed accordingly to cope up with the competition.
 Shareholders : Shareholders are known to be the owners of the company, and
every company has an objective of maximizing its shareholder's wealth. So,
marketing strategies should be framed keeping in mind the returns to shareholders.
 Government : Governmental departments frame several policies such as pricing
policies, export import policies, credit policies etc that have an impact on marketing
strategies of the company. A company must keep knowledge of government policies
and make marketing strategies accordingly.
 General Public : Every business success is based on the response of the society.
Thus business should design all its marketing strategies keeping social welfare in
mind.
(b) Macro Environment : The Macro Environment consists of all the factors that are present
outside the Company and can not be controlled. These factors mainly includes Political,
Economic, Social, Technological, Legal and Environmental factors. It is also known as
PESTLE framework.
The detailed description of Macro factors is given below:
 Political Factors : Due to the change in government/political parties, certain
changes may occur in the market in the terms of various policies such as taxes,
trade, duties, codes and practices, market regulations etc. Firm has to comply
with all the changes otherwise adverse effects can be faced by the company.
 Economic Factors : Every business operating is affected by its economy. Polices
and practices cannot be same at the time of recession which they were earlier at
the time of inflation.
 Social and Cultural Factors : Socio-cultural environment consists of attitudes,
beliefs, norms, values, lifestyle of individuals of the society. These are the crucial
factors which affect the buying preferences of the consume, his tastes and
preferences towards the goods. Therefore, these factors must be reviewed on
regular basis to avoid risks.
 Technological Factors : As technology gets advanced day by day, company
must keep themselves updated with the changes so that customer can be met
more precisely.
 Legal Environment : Marketing strategies should be framed according to the
legal policies of the country otherwise adverse effect can be faced by the business
which may not be revocable.
Importance of Marketing Environment
 For existence in the market, business environment must be analyzed and understood.
 Current and future profits, image depend on its internal and external environment.
 To run the business smoothly, one must understand the business environment..

Marketing Mix
The term marketing mix first used and developed by Neil Borden in 1949. Marketing Mix refers
to a set of actions that a company used to promote its brand and product in the market.
4p's of marketing introduced by E Jerome McCarthy in the 1960. These 4 P's are as below :
1. Price
2. Product
3. Promotion
4. Placement
Over time, Booms and Pitner added three extended P's' :
1. Physical evidence
2. People and
3. Processes
Today, marketers use these 7 P's for framing their marketing strategies and policies to take the
advantage of the market and increase their profits.
These 7 P' are defined as below :
Prices : The product price should give good value for money to consumers. It does not necessarily
mean the availability of cheapest products, usually customers are ready to pay little more something
really well for them.
Products : The product should be comprising the qualities fulfilling customer expectations.
Place : Place refers to availability of the product. If the product is easily available then it may
be in the preferences of the customers.
Promotion : It is the main tool which is used to communicate the message to the correct
audience relating the product. Key tools used by organizations are Advertising, PR, Sales Promotion,
Personal Selling etc.
Physical Evidence : Physical evidence mainly concerns with the brand image of the product.
Customer will always prefer to the well known products. eg. Mc Donalds, Nike etc, customer can easily
recognize what their logos stand for.
People : People comprises the persons who are directly or indirectly involved in the product.
They may be the producers, they may bring products to customers, they may talk to customer. Choosing
right people for the company is very crucial.
Process : Process can affect the quality and availability of the product. It can also affect the
marketing strategy. So organizations should use well tailored process for the goods and services they
are providing.
By the time with the rise in digital era of mobile phones and internet, Us marketers need to add
4 more P's to the Marketing Mix :
1. Public Commentary
2. Privacy
3. Personalization/Personal Interest
4. Partnerships/Personal Networks
Marketing Decisions/Mixes
1. Pricing Decision
Pricing can be understood as a procedure to determine the revenue of the manufacturers what
they receive in exchange of the product. It depends on multiple factors such as Production cost, cost
of raw material, profit margin etc.

 Objectives of Pricing
Following are the objectives of pricing decision:
 Maximization of profits in short and long run
 Maximization of return on investment
 Decrement in sales turnover
 Achieving sales target
 Penetration in market share
 Entering in new markets/Introduction of new products
 Handle competition
 Stability of pricing
 Factors Influencing Pricing
Pricing of a product can be influenced by different factors as price involves many variables.
These factors are categorized into two parts:
(a) Internal Factors
The following are the factors mentioned that influence the increment and decrement in the price
of a product internally ?
 Marketing objectives of company
 Consumer's expectation from company by past pricing
 Product features and quality
 Position of product in product cycle
 Production and advertisement cost
 Production line and Uniqueness of the product
 Price elasticity
Internal Factors which influence pricing decision depend on the cost of production, which includes
fixed cost like labor charges, rent price, etc., and variable costs like overheads, electricity charges, etc.
(b) External Factors
The following are the external factors mentioned that influence the increment and decrement in
the price of a product :
 Open or closed market
 Consumer behavior
 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 are the factors that influence prices depending on various elements like
competition, consumer's flexibility to buy, government policies, etc.
Pricing Methods
(i) Cost plus Pricing : This cost includes adding profit margin in the product cost of product.
So the difference between the actual cost of the product and its price is known as profit. This is the most
simple and common method most marketers uses.
It can also be defined as the cost of production per unit plus profit margin decided by the
company.
Step 1 : (Calculation of Average Variable Cost)
Step 2 : (Calculation of Average Fixed Cost)

Step 3 : (Determination of the desired profit margin)
Unit total cost = AVC + AFC
Selling Price = Unit total cost + Desired unit profit
(ii) Break Even Analysis : Under this method, company strives to cover all levels of fixed and
variable cost. It is the price which is equal to the cost of goods sold. In other words, we can say that
there is neither profit nor loss.
Contribution = Selling price – Variable cost per unit
It is such a point where the investments and received revenue are equal, beyond this point
company earns profits.
(iii) Prices Based on Marginal Analysis : Under this method, additional cost of the activity is
compared with additional profit on the same. The additional cost charged for additional activity is known
as marginal cost. Prices are calculated according to margin cost. Finally cost and prices are evaluated
and prices are decided so as to maximize the profits.
(iv) Mark-up Pricing : Under this method, mark-ups are determined as a percentage of selling
price and not the cost price. As only the cost and desired mark up margin is known, following is the
formula used for calculating selling price:
Unit Cost = Variable cost + Fixed cost/unit sales
Mark-up price = unit Cost/1-desired return on sales
Selling Price=Unit Cost + Mark-up Price
(v) Target Return Pricing : Under this method, the firm decides the prices in order to strive a
particular level of return on investment (ROI).
The target return price can be calculated by the following formula:
Target return price = Total costs + (Desired % ROI investment)/ Total sales in unit
Pricing Strategies
Let us now understand the various pricing strategies :
(i) Price Skimming : In this method, producers introduces a new product with higher prices
initially in order to cover sunk cost at beginning. The idea is to skim the cost before competition enters
the market. Firm gradually decreases the price after covering its sunk cost. Its main concentration is on
upper segment of the market.
(ii) Penetration Pricing : Under this method, producers introduces their products with initial low
prices. Producers keep prices low, so that customers lure away from competitors and try new products
introduced. The main aim penetration pricing is to fill the market with the products producers have
introduced. Lowers prices also attract the consumers to use the product. Using this strategy, more
consumers can be penetrated or targeted.
(iii) Discounts and Allowances : Discounts and allowances are the monetary benefits given to
the consumers in order to increase the demand for the product. Following are the points to be considered
before offering discount :
 Discount in quantity
 Discount in trade
 Discount in cash
 Other discounts like seasonal, promotional, etc.
(iv) Geographical Pricing Strategies : Under this method, final prices are decided on the basis
of geography or location. A company operating in numerous countries or various regions in a single
country, then it need to implement geographical pricing method as per the local taxation and other
requirements.

Following are the things to be considered before deciding prices under this strategy :
 Uniform delivery pricing strategy
 Zone delivery pricing strategy
 Freight absorption pricing strategy
 Point of production pricing strategy
(v) Special Pricing Strategies : Under this method, special or changed prices are introduced
for a short interval of time. This technique is used for the promotion of the product in the market.
Following are the things to be considered before deciding prices under this strategy:
 Flexible price strategy
 Flat rate pricing strategy
 Single price strategy
 Odd pricing
 Leader pricing
 High low pricing
 One price strategy
 Resale price maintenance
 Everyday low pricing
 Price lining
(vi) Psychology Pricing : This pricing strategy practice is based on the belief that customers
would tend to process a price from the left-most digit to the right, and so will tend to ignore the last few
digits of a price. This effect seems to be accentuated when the fractional portion of a price is printed
in smaller font than the rest of a price. This technique is used by the marketers to encourage the
consumers to respond on emotional basis rather than logical ones. Eg. Keeping price of product at $199
instead of $200.
(vii) Pricing at a Premium : This strategy is ideal for the small business which sell unique
products. Generally, customers give preference to the product with a higher price tag considering it of
good quality. Owners should create a high quality product, ensuring a hard work to create value, the
packaging and store's decor etc.
2. Place/Distribution Decision
Distribution decisions are very important in the marketing of goods. This should focus on
establishing a particular system that allows customer to access goods and services and purchase them.
These channels are relevant in all types of products. We can see how distribution channel plays and
important role in the physical goods. Nowadays, Internet is also playing a very important role in distribution
channel.
Distribution channel
A distribution channel can be defined as a chain of intermediaries through which goods or
services circulated until it reaches the ultimate consumer. It includes wholesalers, retailers, distributors,
internet etc.
Functions of Distribution Channels
Logistics and Physical Distribution: Distribution channels are duly responsible for gathering,
storing, sorting, and transportation of goods from manufacturers to the customers.
Facilitation : They even provide pre-sale and post-purchase services like financing, maintenance,
information dissemination and channel coordination.
Creating Efficiencies : Wholesalers and retailers buy goods from the manufacturers in bulk
quantity and break these goods in smaller parts to distribute it to various other channels or customers.
Sharing Risks : Most of the channels buy the goods from manufacturers beforehand and try to
do every possible effort to sell the goods sharing risk with the manufacturer.
Types of Distribution Channels

Distribution channels can broadly divided into two parts :
(i) Direct Channel or Zero-level Channel (Manufacturer to Customer) : Direct channel is a
method where manufacturers or brand owners directly cone into the contact with the buyers and sell
their products. They may provide these goods on brand stores or take their order online. This method
one of the oldest methods used by the manufactures, it does not include any of the intermediaries. This
method is used by the manufactures of perishable goods, expensive goods goods or whose targeted
buyers are geographically concentrated.
(ii) Indirect Channels (Selling Through Intermediaries) : When there is involvement of
middleman or intermediaries to sell the product to customers, it is known as indirect distribution channel.
It is divided into three types:
(a) One-level Channel (Manufacturer to Retailer to Customer) : Under this method, there
is involvement of retailer and manufacturer. Retailers buy the goods from manufacturers
directly and sell them to consumers. This channel system fits best for the shopping goods
viz, clothes, shoes etc.
(b) Two-Level Channel (Manufacturer to Wholesaler to Retailer to Customer) : Under
this method, there is involvement of Manufacturers, Wholesalers and Retailers. In this
method, wholesalers buy the bulk quantity of product from the manufacturer and divides
it smaller parts then sell it to retailers. Retailers finally sell these goods to ultimate
consumers. Retailers who eventually sell it to the end customers. This type of distribution
channel is suitable for durable, standardized and inexpensive goods.
(c) Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to Customer)
: This type of channel involves manufacturer, an agent, wholesaler and retailer. When
there is a requirement to move goods in the market very quickly, agents can play a very
good role. These agents are assigned with the responsibility of supplying goods or
distribution management of -particular area in return of a certain percentage commission.
When the consumer base is spread all over the country, three level distribution channel is proved
to be the best option for manufacturers.
3. Product Mix Decisions
A product is a blend of physical or symbolic traits which gives satisfaction to the buyer or user.
These traits can be its shape, size, color, quality etc.
Products have 3 components:
Core product – this is the end benefit for the buyer and answers the question: What is the buyer
really buying? For example, the buyer of a car is buying a means of transport, the buyer of an aspirin
is buying pain relief and the buyer of financial advice is hoping to buy financial security and peace of
mind.
Formal product – this is the actual physical or perceived characteristics of your product including
its level of quality, special features, styling, branding and packaging.
Augmented product – the support items that complete your total product offering such as after-
sales service, warranty, delivery and installation.
A Product can be broadly divided into two parts :
1. Convenience or shopping goods
2. Durable or non-durable goods
Product can be classified as follows:
(i) Local products : These products are suitable for single market and in limited area.
(ii) International products : These products are likely to inter into other markets also.

(iii) Multinational products : The other nationals adapt these products due to its uniqueness.
(iv) Global products : These products are designed to meet the requirements of global
segments.
Product planning : It refers to a course including various activities like, product research,
screening, development, and commercialization of new products. It starts with an idea of new product
and ends with the introduction of the product in the market. It can also include modification in existing
product lines or discontinuation of unprofitable products.
Product Mix : The product mix covers the complete range or all the products that are offered
by the company or firm for the sale.
The product mix can be classified into four dimensions:
Breadth : The breadth refers to how many different product lines a company carries. For e.g.
ITC has four different product lines available viz, Foods, cigarettes, Lifestyle retailing, education and
stationary.
Length : It refers to the total number of items in the product mix. E.g. Food items offered by
ITC has three brands viz, Kitchen of India, Sunfest, Aashirwad.
Depth : It refers to the variants of each product in the product line. E.g. Kitchen of India provides
various products such as curry, paste, biryani, conserves.
Consistency : It refers to the extent to which the product lines are closely related to each other
in terms of end use, distribution requirements, production requirements, price ranges, advertising media,
etc.
Product Development : Product Development refers to a process of producing goods with new
ideas having diverse features or characteristics offering further benefits to the consumers. It may involve
alteration/modification in prevailing products or formulation of a new product. It also involves weeding
out obsolete or matured products from the market, which are no more in demand. Companies spend
crores of money on product development, so that they can take advantage of shifting needs of the
consumers.
Factors to be considered for product development :
1. Consumer Acceptance
2. Patent, Copyright, and Trademark Protection
3. Developing and Manufacturing Costs
4. Complementary Products
5. Effects on Other Products
6. By-Products
In the course of product development, a company needs to follow a series of steps :
(i) Idea Generation
(ii) Idea Screening
(iii) Business Analysis
(iv) Concept Development
(v) Testing
(vi) Commercialization
Product Life Cycle
The product life cycle defines the period over which an item is developed, brought to market,
and ultimately removed from the market. The cycle is divided into four stages: introduction, growth,
maturity, and decline. The concept of the product life cycle is used in marketing to decide when it is
appropriate to advertise, reduce prices, explore new markets, or create new packaging.

The product life cycle has 4 clearly defined stages :
Fig. : Product Life Cycle

Introduction Stage : This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means sales are low,
although they will be increasing. On the other hand, the cost of things like research and development,
consumer testing, and the marketing needed to launch the product can be very high, especially if it's
a competitive sector.
Growth Stage : This stage is typically characterized by a strong growth in sales and profits, and
because the company can start taking advantage from economies of scale in production, the profit
margins, as well as the overall amount of profit, will increase. It makes possible for the businesses to
invest more money in the promotional activity to maximize the potential of this growth stage.
Maturity Stage : In this stage, the product is established and the purpose of the manufacturer
is now to keep the market share they have built up. It is probably the most competitive time for many
products and they should invest wisely in any marketing they undertake. They must consider any
product alterations or enhancements to the production process which might give them a competitive
advantage.
Decline Stage : Ultimately, the market for a product will starts shrinking, hence it is known as
the decline stage. The shrinkage could be due to the market becoming saturated (i.e. all the customers
who will buy the product have already purchased it), or because the consumers are moving to different
type of products. Though this decline may be unavoidable, it may still be conceivable for companies to
make some profit by switching to less-expensive manufacturing methods and cheaper markets.
Place and Promotion Decision
Promotion decision includes the tools and techniques of promotion. They attract the buyers by
giving them information in such a manner that they find the product useful for them. Promotional activity
is just not the communication about the product but it's a platform used for creating new consumers and
retaining existing consumers. This technique is majorly concerned on increasing the sales..
Promotion decision can be implemented by the following steps –
 Step 1 : Setting of the objectives
 Step 2 : Determining promotion budget
 Step 3 : Target Market
 Step 4 : The appeal
 Step 5 : Promotion Mix
Some elements of promotional mix are as follows ?
 Advertising
 Sales promotion
 Public relations and publicity

 Personal selling
 Direct marketing
 Type of product market
 Overall marketing strategy
 Buyer readiness stage
 Product life cycle stage
Integrated Marketing Communication (IMC)
Integrated marketing communication aims at involving all the methods of brand promotion for the
promotion of a particular product or service among target customers. Under this, all aspects of marketing
communication are involved to increase the sales with cost effective manner,
In other words, we can say that It is an approach to strive the object of marketing campaign
through optimum use of various promotional techniques that are intended to each other.
As defined by the American Association of Advertising Agencies, "Integrated Marketing
Communication recognizes the value of a comprehensive plan that evaluates the strategic roles of a
variety of communication disciplines advertising, public relations, personal selling, and sales promotion
and combines them to provide clarity, consistency, and maximum communication impact."
Importance of Integrated Marketing Communication:
1. It gives a seamless and unified brand experience to consumers.
2. It coordinates the all aspects of marketing communication.
3. It makes ensure that all messaging and communication strategies are consistent across
all channels.
4. It helps in Overall Cost Savings
5. It aligns with the customer preferences
Following are the major elements of Integrated Marketing Communication:
1. Public Relations : It helps in building credible image in the market. Media relations is
a common PR strategy used by marketers. Social media sites are also playing a good
role in creation of relation building with the consumers.
2. Advertising : Advertising is paid method of communication. Under this method, company
communicates about the products, it quality and offerings to the consumers. It is a good
technique to introduce new products in the market.
3. Sales Promotion : Sales promotion techniques are very crucial part of marketing and
sales planning. It is very useful in improving sales. So better techniques should be implied
for the same.
4. Direct Mail : It is a way to target the specific audiences. Under this method mailers are
sent to customers which can also involve coupons in it. So that customer can win some
prizes by showing the coupon number.
5. Digital Marketing and Social Strategy : Digital marketing promotes the product by
attracting consumers through all digital platforms including internet or non internet based
channels. Social Media Marketing uses social media sites, blogs etc. to promote the
product and brand for creating awareness.
Vertical Marketing System (VMS)
Vertical Marketing System is known as the marketing system used for creating a cooperation
between multiple levels of distribution channels. Members work as a team to promote efficiency and
economies to scale. They also promote goods to consumers, provide them credit, facility of inspection
by the consumer is given by them and delivery of goods.

Members of a Vertical Marketing System

The three major participants of a vertical marketing system are:
 The producer: The producer is the actual manufacturer that physically makes a product.
 The wholesaler: The wholesaler purchases the products from the producer and makes
the distribution to retailers.
 The retailer: Retailers finally mark up the price and sell these goods to ultimate consumers.
Vertical Marketing System is divided into three main types:
1. Corporate Vertical Marketing : A corporate vertical marketing system includes the
ownership of single company to all levels of production and distribution chain. This system
consist of forward and backward integration. In forward integration, company expands its
distribution networks and in backward integration it starts buying up suppliers of its
widgets.
2. Contractual Vertical Marketing : A contractual vertical marketing system includes a
formal agreement among the different levels of distribution or production channels to
harmonise the overall process. It is a popular form of vertical marketing. It has various
forms such as Franchising, retail and wholesale sponsoring are forms of a contractual
vertical marketing system.
3. Administered Vertical Marketing : An administered vertical marketing system involves
the single member in the production and distribution chain. Due to its big size, it is
dominant in the vertical marketing system. Eg. Wal-Mart.
Advertising
Advertising a paid, well structured, non personal communication to the targeted audience. It
informs about the offerings of the product, its features, qualities etc. Advertising should be done in a
way to achieve organizational objective which is basically increase in sales. We can say, it is technique
used for influencing targeted audiences to buy the product. If the advertisement is good enough to
attract the consumers, he will be ready to pay little extra to buy the product.
Objectives and Importance:
 It increases sales
 Competitors can identify the competitors and competition in the market with the help of
advertisement.
 Company can launch new product with the help of advertisement.
 It can help in creating goodwill among the consumers
Classifications of Advertisement
Advertising By purpose
 Primary-versus selective-demand advertising: Primary demand advertising is focused on
creating demand for a specific industry or general product category/class. Whereas,
Selective-demand advertising aims on increasing demand for a specific organization's
offerings. It is also known as brand specific advertisement.
 Brand advertising: Its main aims is to create demand for a particular brand in the market.
It emphasizes on demand creation for stimulating sales for a specific brand.
 Retail advertising: This type of advertisement is used for increasing the traffic at particular
store/retailer. These retailers provide consumers with good offers, so that footfall of
consumers can be increased at their retail store.
 Direct-response advertising: This type of advertising uses a certain medium to stimulate
the sales. Consumer can respond to the call and product can be directly delivered to him.

Advertising by Geographic Area

1. National : National Advertising includes the advertisement nationwide. It is often done by large
organizations to inform and attract the target market of the organization. As it helps in re enforce the
image, it is also known as brand advertising.
2. International : International Advertising is used by multinational corporations to inform about
their brands to their trade member and also to the ultimate buyers.
3. Local : Local Advertising used to encourage retail sales. It provides the support to local
retailer.
Advertising By Target Audience
1. Business-to-business advertising (B-to-B) : As the name suggests, this type of
advertising is done to inform about the product to the trade members only. It can be
categorize into three parts:
a. Industrial Advertising : It focuses on the people who makes the decision of
buying the industrial goods and business services for the organization.
b. Professional Advertising : It focus on influencing professionals, viz, doctors or
lawyers to use or recommend the organization's products or services to their
clients.
c. Trade Advertising : It aims at distribution channel members to market the
organization's product to the ultimate buyer.
2. Consumer Advertising : This type of advertising aims at individuals who personally use
the products of the organization. It includes national, local, brand, retail advertising etc.
in it.
Advertising By medium used : Advertisement can also be categories by the medium used to
inform the organization's message to the targeted audiences. These media can be print, broadcast,
internet, telephone etc.
Advertising Media : The media comprise the different methods of communication used to
convey advertising messages. Within the classification of media types are several specific broadcast
programmes or publications in which the advertisements are placed. These are called media vehicle.
Advertising channels include the broad categories of print, broadcast, outdoor and interactive
media.
Print :
a. newspapers
b. magazines
Broadcast :
a. Radio
b. Television
Out of Home :
a. Cinema and Product placements
b. Billboards and similar out of home media
c. Non traditional media
Interactive :
a Internet Advertisements
Sales Promotion
Sales promotion is one the techniques of promotional mix. It is a strategy used to attract new
customer and to retain existing customer of the product. It involves various activities of attempting in
providing the value added services to the wholesalers, agents, distribution partners, retailers, end
consumers etc. to enhance the current sales. It can be done in the form of discounts, rebates, loyalty
coupons, gifts, lucky draws etc.

There are several sales promotion techniques :

1. Rebate : Under this method, products are offered at lower prices in order to clear the
stock.
2. Discount : In this method, products are made available at lesser prices than list price.
3. Refunds : In this method, some part of the price is refunded to the customer on showing
any proof of purchase on his end.
4. Product Combination : In this method, some other product as a gift is offered to
customer along with the main product.
5. Quantity Gift : Under this technique, some extra quantity of the product is offered with
the main product to the customer as a gift.
6. Lucky draw : While purchasing a product, customer are given with a lucky coupon with
the product. On a specific date, these coupons are drawn and winner is decided on the
basis of lucky draw.
7. Full finance @ 0% : Under this method, product is sold and the money is recovered in
installments. The number of installments is decided by the seller and no interest would
be charged on the installment.
8. Contests : In order to popularize the product, some companies organize contests where
consumer has to fill answers of few simple questions and the same has to be submitted
to company. Winners are decided with a draw at the company.
DAGMAR approach in advertising :
DAGMAR is a marketing expression that stands for "Defining Advertising Goals for Measured
Advertising Results". It is a marketing tool to compute the results of an advertising campaign. DAGMAR
attempts to guide customers through ACCA model. According to this approach, every purchase encounters
four steps; Awareness, Comprehension, Conviction, and Action. DAGMAR method is an established
technique of creating effective advertising.
The DAGMAR Model
1. Awareness : Awareness of the existence of a product or a service is needful before the

purchase behaviour is expected. The fundamental task of advertising activity is to improve
the consumer awareness of the product.
2. Comprehension : Awareness on its own is not sufficient to stimulate a purchase.
Information and understanding about the product and the organisation are essential. This
can be achieved by providing information about the brand features.
3. Conviction : Conviction is the next step where the customer evaluates different products
and plans to buy the product. At this stage, a sense of conviction is established, and by
creating interests and preferences, customers are convinced that a certain product should
be tried at the next purchase.
4. Action : This is the final step which involves the final purchase of the product. The
objective is to motivate the customer to buy the product.
Benchmarks
and Degree of Written Goal
Change Sought
DAGMAR
approach
Concrete and Specified

Measurable Timeframe
Target Audience
Channel Management
Channel management is known as the process of managing distribution channels in order to sell
goods to various agents across the world. It is the only system to successfully reach a worldwide
consumer.
Functions of a Channel : A channel majorly performs three important functions. These functions
are as follows :
 Transactional functions: buying, selling, and risk assumption
 Logistical functions: assembly, storage, sorting, and transportation
 Facilitating functions: post-purchase service and maintenance, financing, information
dissemination, and channel coordination or leadership
Types of Channels :
(i) Direct selling;
(ii) Selling through intermediaries;
(iii) Dual distribution; and
(iv) Reverse channels.
(i) Direct Selling : It involves the marketing and selling of products directly to consumers away
from a retail location. Peddling/Hawking is the oldest form of direct selling.
Modern direct selling includes sales made through the party plan, one-on-one demonstrations,
personal contact arrangements as well as internet sales.
(ii) Selling Via Intermediaries : A marketing channel where mediators such as wholesalers and
retailers are involved to make a product available to the customer is known as indirect channel.
The indirect channel is used when there are numerous small manufacturers and small retailers
and an agent is used to help harmonize a large supply of the product.
(iii) Dual Distribution : It describes a wide variety of marketing activities by which the manufacturer
or wholesalers uses more than one channel simultaneously to reach the end consumer. They sell
directly to the end consumers, also sell to resellers. Using two or more channels to appeal the same
target market can sometimes lead to channel conflict.
(iv) Reverse Channels : This goes in the reverse direction and can go from consumer to
intermediary to beneficiary.
The difference between reverse channels and the more traditional ones is the introduction of a
beneficiary. In a reverse flow, there is no producer rather a Beneficiary.
Market Segmentation
Market segmentation can be understood as the procedure of dividing the whole market consisting
potential consumers into small segments or groups based on various characteristics. The segments or
groups which are created consists the consumers who will respond according to market strategies and
having similar interests, needs, and traits.
Importance of Market Segmentation
 It helps in personalizing the marketing campaigning's.
 Marketers can focus on their target audience only.
 Market segmentation can reduce the risk of unsuccessful campaigning
 Marketers can focus on potential consumers and can be more efficient with time, money
and other resources.
Criteria for Segmentation
1. Segments must be internally homogeneous --- consumers within the segment will be
more similar to each other in characteristics and behaviour than they are to be consumers
in other segments.
2. Segments must be identifiable --- individuals can be 'placed' within or outside each
segment based on a measurable and meaningful factor
3. Segments must be accessible --- can be reached by advertising media as well as distribution
channels. Only then, the segments can be acted upon.
4. Segments must have an effective demand --- the segment consists of a large group of
consumers and they have the necessary disposable income and ability to purchase the
good or service.
Process of Segmentation
Step-1 : Define the purpose and scope of the segmentation
 What are our Marketing Objectives?
 Are we looking for new segments or determining how to better satisfy existing ones?
 Will we use existing data or invest time and money in new research?
 What level of detail will be needed in the segmentation analysis?
Step-2 : Analyze total Market Data
 What is the character of the total market? (e.g. size)
 Are there basic differences between users and non-users of the product class?
 Are there any factors which clearly distinguish users from non-users or users of different
brands?
 What is our competitive position in the market now?
Step-3 : Develop Segment Profiles
 What factor seems to differentiate groups of consumers most clearly?
 Are the profiles of each segment internally consistent?
Step-4 : Evaluate Segmentation
 What are the major similarities and differences among segments?
 Should the number of segments described be reduced or increased?
 How sensitive is this segmentation of the market to growth?
Step-5 : Select Target Segment(s)
 Which segment(s) represent our best market opportunity ?
 What further details do we know about the target segment's characteristics and market
behaviour?
 If complete data on market behaviour for the target segment are not available, can we
make reasonable assumptions ?
 Are we alone in competing for this target segment ?
Step-6 : Designing the marketing strategy for the target segment
 What type of product do these consumers want ?
 What kinds of price, promotion or distribution tactics will best suit their needs ?
 Would other segments react positively to a similar strategy ? (If so, the segments should
probably be merged)
Step-7 : Reappraisal of segmentation
 Do we have the resources to carry out this strategy ?
 If we wish to broaden or change our target definition in the future, how flexible is the
strategy ?
 If we wish to change some element of the strategy in the future, how would that change
probably influence the target segment ?
 Does the target segment/strategic plan meet our objective ? Does it fit our corporate
strengths ?
Segmenting the Consumer Markets
Consumer markets are those where the products are purchased by ultimate consumers for
personal use. Industrial markets are those where the goods and services are purchased for use either
directly or indirectly in the production of other goods and services for resale. Market segmentation of
these markets use different variables.
The consumer market segmentation variables appear to fall into two broad classes: consumers'
background characteristics and consumers' market history. The following tables illustrate the most
important factors and variables that have been found useful for market segmentation.
Basis of Market Segmentation
1. Geographic Segmentation : Geographical segmentation is the simplest and common
way of segmenting the market. This segmentation is done on the various geographical
and locational factor such as region, state, district, climate etc. People living in one region
have different needs from people in other regions. E.g. People who are living in rural
areas have different banking needs than those of from urban areas.
2. Demographic Segmentation : This is also a most commonly used way of segmenting
the market. This segmentation is done based on various factors such as age, sex, marital
status, family size, race, religion, community, language, occupation, income, education
etc.
3. Psychographic Segmentation : This segmentation based on psychographic make up of
a person. There are various factors can be used for the segmentation under psychographic
segmentation such as personality traits, lifestyle, socio-economic classes, value system
etc.
Based on psychographic segmentation consumers are divided into 5 types :
(a) Innovators : Customer who are eager to try new ideas.
(b) Early Adopters : These are influential people with whom the average person checks out
an innovation.
(c) Early Majority : This group tends to deliberate before adopting a new product.
(d) Late Majority : This group is cautious and adopts new ideas after an innovation has
received public confidence.
(e) Laggards : These are past-oriented people. suspicious of change and innovations.
Behavioral Segmentation : It is a more focused method of market segmentation based on

buying behavior of a consumer. It is also the buying behavior of a consumer what they show at the time
of purchasing. Consumers can be segmented into various buying patterns viz, consumption, lifestyle,
usage, spending, desired benefits
Segmentation using Consumer Background Characteristics
Segmentation Variable Some Examples Comments

of Variables Measured
Geography  Region of product Geographic segmentation is one of

distribution the oldest and most basic of
 Cultural differences market descriptors. In most cases, it
 Mobility of alone is not sufficient for a
consumers meaningful consumer segmentation
Demographic  Age Also basic and included as a

 Sex variable in most segmentation
 Income analyses. Demographic profiles of
 Educational level segments are important especially
 Social status when making later advertising
media decisions
Psychographic  Personality traits Psychographic variables are more

 Perceptual styles useful because there is often no
 Attitudes direct link between demographic
 Reference groups and market behaviour variables.
 Social roles These consumer profiles are often
tied more directly to purchase
motivation and product usage
General life-style  Correlation of Provides a rich, multi-dimensional

demographic and profile of consumers that integrates
psychographic individual variables into clearer
variables pattern that describes the
 Activities and consumer’s routines and general
interests ‘way of life’

Segmentation using Consumers' Market History
Segmentation Variable Some Examples Comments

of Variables Measured
Product usage  Frequency of Segmenting the market into heavy,

brand/product use medium, light and non-users gives
 Brand loyalty good understanding of present
 Attitudes toward situation in market
product
Product benefit  Expectations of Very useful if product can be

product performance positioned in a number of ways.
 Needs product must Primary use of this variable segments
fill the market into groups that look for
 Perceptions of different product benefits
brands
 Satisfaction
(dissatisfaction
measures)
Decision-process  Shopping patterns Use of this variable segments the

 Media-use patterns market into price/non-price sensitive,
 Product information shoppers/impulse buyers and other
searches segments which characterize the
 Sensitivities to price, market behaviour of each group. Must
to promotion and to be used in conjunction with analysis of
place (channel) consumer characteristics to allow
identification of the individuals
involved
Market Positioning
Having chosen an approach for reaching the firm's target segment, marketers must then decide
how best to position the product in the market. The concept of positioning seeks to place a product in
a certain 'position' in the minds of the prospective buyers. Positioning is the act of designing the
company's offer so that it occupies a distinct and valued place in the target customers' minds. In a world
that is getting more and more homogenized, differentiation and positioning hold the key to marketing
success!
The positioning gurus, Al Ries and Jack Trout define positioning as: Positioning is … your
product as the customer thinks of it. Positioning is not what you do to your product, but what you do
to the mind of your customer. Every product must have a positioning statement. A general form of such
a statement is given below:
Product X is positioned as offering (benefit) to (target market) with the competitive advantage
of (competitive advantage) based on (basis for competitive advantage) For example, the positioning
statement of toothpaste X may read as follows:
Toothpaste X is positioned as offering to kids a toothpaste made especially for those kids who
don't like to brush with the competitive advantage of a mild fruit taste and lower foaming.
One way to think about positioning is to imagine a triangle, with the baseline anchored by the
organization and competitor concerns and the apex, the customers. The marketer's job is to find a
positioning of the product or service that is both possible and compatible with organization constraints
which uniquely places the product/service among competitive offerings so as to be most suitable to one
or a number of segments of customers.

Positioning can be done along different possibilities. Attribute positioning is when the positioning
is based on some attribute of the product. Benefit positioning is when a derived benefit is highlighted
as the unique selling propositioning. Competitor positioning is when a comparison is drawn with the
competitor and a differentiation from the competitor is emphasized. Product category positioning is when
a products positioned to belong to a particular category and not another category which probably is
crowded.
Quality/price positioning is when the product is positioned as the best value for money. For
example, a Pizza may be positioned on its taste or it's natural contents or as an easy meal or with a
thicker topping or as the lowest priced offering the best value for money. Each one of them offers a
distinct positioning possibility for a pizza.
In the positioning decision, caution must be taken to avoid certain positioning errors:
Underpositioning is done when a unique, but not so important attribute is highlighted. As a result, the
customer does not see any value in such a position.
Overpositioning is done when the product's performance does not justify the tall claims of
positioning. Confused positioning is when the customer fails to categorize the product correctly and the
product ends up being perceived differently from what was intended.
Doubtful positioning is when the customer finds it difficult to believe the positioning claims.
Positioning map is a valuable tool to help marketers position products by graphically illustrating
consumers' perceptions of competing products within an industry.
For instance, a positioning map might present two different characteristics, price and quality, and
show how consumers view a product and its major competitors based on these traits. Marketers can
create a competitive positioning map from information solicited from consumers or from their accumulated
knowledge about a market.
Positioning Identities
Positioning is creating an identity to your product. This identity is a cumulative of the following
four positioning identities.
1. Who am I ?
It refers to the corporate credentials like the origin, family tree and the 'stable' from which it
comes from. For instance, think of the mental associations when a buyer buys a Japanese car and it
is a Honda!
2. What am I ?
It refers to the functional capabilities. The perceived brand differentiation is formed using the
brand's capabilities and benefits. For instance, the Japanese cars are known for their fuel-efficiency,
reasonable-price and utility-value.
3. For whom am I ?
It refers to the target segment for the brand. It identifies that the market segment for which his
brand seems to be just right and has competitive advantage. For instance, the Japanese car makers
have traditionally focused on the quality conscious, value-seeking and rather-serious car buyer
4. Why me ?
It highlights the differential advantage of the brand when compared to the competing brands. It
gives reasons as to why the customer should select this brand in preference to any other brand. For
instance, Japanese car makers have tried to score a competitive advantage on the lines of quality and
technology.

Targeting Approaches
Target market selection is the next logical step following segmentation. Once the market-segment
opportunities have been identified, the organization got to decide how many and which one is to target.
Lots of marketing efforts are dedicated to develop strategies that will best match the firm's product
offerings to the needs of particular target segments. The firm should look for a match between the value
requirements of each segment and its distinctive capabilities. Marketers have identified four basic
approaches to do this:
Undifferentiated Marketing
A firm may produce only one product or product line and offer it to all customers with a single
marketing mix. Such a firm is said to practice undifferentiated marketing, also called mass marketing.
It used to be much more common in the past than it is today. A common example is the case of Model
T built by Henry Ford and sold for one price to everyone who wanted to buy. He agreed to paint his
cars with any colour that consumers wanted, 'as long as it is black'.
While undifferentiated marketing is efficient from a production viewpoint (offering the benefits of
economies of scale), it also brings inherent dangers. A firm that attempts to satisfy everyone in the
market with one standard product, may suffer if competitors offer specialized units to smaller segments
of the total market and better satisfy individual segments.
Differentiated Marketing
Firms that promote numerous products with different marketing mixes designed to satisfy smaller
segments are said to be practice differentiated marketing.
It is still aimed at satisfying a large part of the total market, Instead of marketing one product
with a single marketing program, the firm markets a number of products designed to appeal to individual
parts of the total market.
By providing increased satisfaction for each of many target markets, a company can produce
more sales by following a differentiated marketing approach. In general, it also raises production,
inventory and promotional costs. Despite higher marketing costs, a company may be forced to practice
differentiated marketing in order to remain competitive.
Concentrated Marketing
Rather than trying to market its products separately to several segments, a firm may opt for a
concentrated marketing approach. With concentrated marketing (also known as niche marketing), a firm
focuses its efforts on profitably satisfying only one market segment. It may be a small segment, but a
profitable segment.
This approach can appeal to a small firm that lacks the financial resources of its competitors and
to a company that offers highly specialized goods and services. Along with its benefits, concentrated
marketing has its dangers. Since this approach ties a firm's growth to a particular segment, changes
in the size of that segment or in customer buying patterns may result in severe financial problems. Sales
may also drop if new competitors appeal successfully to the same segment. Niche marketing leaves the
fortunes of a firm to depend on one small target segment.
Micro Marketing
This approach is still more narrowly focused than concentrated marketing. Micro marketing
involves targeting potential customers at a very basic level, such as by the postal code, specific
occupation or lifestyle. Ultimately, micromarketing may even target individuals themselves. It is referred
to as marketing to segments of one. The internet allows marketers to boost the effectiveness of
micromarketing.
With the ability to customize (individualization attempts by the firm) and to personalize
(individualization attempts by the customer), the internet offers the benefit of mass customization - by
reaching the mass market with individualized offers for the customers.
Management (MSP)
Management
Model Solved Paper
Time : 120 min. Maximum Marks : 200
Note : This paper contains hundred (100) objective type questions, each question carries two
(2) marks. Attempt all the questions.
1 From the following determinants of demand indicate the correct code for the determinants having
a positive relationship with the demand :
(a) Price of substitute goods (b) Price of Complementary goods
(c) Taxes imposed by government (d) Subsidies given by government
Codes :
(A) a, b, c and d (B) a only
(C) a and d (D) a, b and d
2. Match the items given in List-II with those given in the List-I and suggest the correct code :
List-I List-II
(a) Price Elasticity of Demand (i) Positive value of coefficient of elasticity
(b) Income Elasticity of Demand (ii) Negative value of coefficient of elasticity
(c) Cross Elasticity of Demand (iii) Shift to right with an increase in Income
(d) Demand Curve (iv) Change in demand of tea with respect to
change in price of coffee
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iv) (iii)
(D) (ii) (i) (iii) (iv)
3. Gross National Products less depreciation is called:

(A) Net National Product (B) Gross National Product
(C) Net Domestic Product (D) Gross National Income
4. If a certain market has features like (i) price discrimination, (ii) lies between the pure monopoly
and monopolistic competition, (iii) few sellers, it is the case of __________ market.
(A) Monopoly (B) Oligopoly
(C) Perfect Competition (D) Duopoly

Management (MSP)
List-I List-II
(a) Tender Pricing (i) Applicable where competition is limited
(b) Going Rate Pricing (ii) Mostly done in secret
(c) Value Pricing (iii) Based on consumer perception
(d) market Skimming Pricing (iv) High Price Low Volume
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iv) (iii)
(D) (ii) (i) (iii) (iv)
6. In which type of advertising a product or a particular brand is incorporated in some entertainment

and media channel?
(A) Covert Advertising (B Brand Advertising
(C) Broadcast Advertising (D) Out-Door Advertising
7. Indicate the correct code from the following that represent the advantages of Net Present Value
method:
(a) Benefits of entire life span (b) Considers time value of money
(c) Liquidity Oriented (d) Comparison of relative profitability
Codes :
(A) (a), (b) and (c) only (B) (a) and (c) only
(C) (b) and (d) only (D) (a), (b) and (d) only
8. For the following two statements of Assertion (A) and Reasoning (R) suggest the correct code:
Assertion (A) : The perceptual process is not complete without perceptual interpretation.
Reasoning (R) : Individuals unknowingly use a set of previously gathered information from past
experiences to perceive new information which may consist of his memories, beliefs, value
system, etc.
Codes :
(A) (A) is correct but (R) is not correct.
(B) (A) is not correct but (R) is correct.
(C) (A) and (R) both are correct and (R) is right explanation of (A).
(D) (A) and (R) both are correct but (R) is not right explanation of (A).
9. The contribution of "perception" to the field of Organizational Behaviour is studied at which unit
of analysis?
(A) Individual (B) Group
(C) Organization system (D) Departmental
Management (MSP)
List-I List-II
(a) Scientific Management Theory (i) Henry Fayol
(b) Administrative Management (ii) F.W Taylor
Theory
(c) Bureaucracy Theory of (iii) Elton Mayo
Management
(d) Neo-Classical Approach (iv) Max Weber
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iv) (iii)
(D) (ii) (i) (iii) (iv)
11. The process of coordinating people and human resources to accomplish organizational goals
known as :
(A) planning (B) directing
(C) management (D) leadership
12. Identify the correct code for the images showing the common networks of formal communication:
(i) (ii)
(iii) (iv)
(A) (i) - Channel Pattern, (ii) - Chain Pattern, (iii) - Circle Pattern, (iv) - Wheel Pattern
(B) (i) - Wheel Pattern, (ii) - Chain Pattern, (iii) - Circle Pattern, (iv) - Channel Pattern
(C) (i) - Wheel Pattern, (ii) - Circle Pattern, (iii) - Chain Pattern, (iv) - Channel Pattern
(D) (i) - Circle Pattern, (ii) - Wheel Pattern, (iii) - Channel Pattern, (iv) - Chain Pattern
13. When we judge someone on the basis of our perception of the group to which he or she belongs,
we are using the shortcut, called ________
(A) Selective Perceptive (B) Halo effect
(C) Contrast effect (D) Stereotyping

Management (MSP)
List-I List-II
(a) A shared concept of right and (i) Organizational Culture Inventory
wrong behaviour in the workplace
which reflects the true values of
the organization and shapes the
ethical decision-making of its
members
(b) An organisation in which members (ii) Ethical Work Climate
are encouraged to work together
in ways that meet higher order
human needs
(c) A condition that takes place when (iii) Institutionalization
an organization assumes a life of
its own, a part from any of its
members and acquires immortality
(d) A process which adapts employees (iv) Socialization
to the culture of the organization
Codes :
(a) (b) (c) (d)
(A) (ii) (i) (iii) (iv)
(B) (iv) (iii) (ii) (i)
(C) (iv) (ii) (iii) (i)
(D) (i) (iii) (ii) (iv)
15. A _______ is an organised or concerted withdrawal of the supply of labour, whereas _______
is withholding the demand for it
(A) Strike; Lockout (B) Lockout; Strike
(C) Strike; Boycott (D) Gherao; Boycott
16. Lay-off is a method of handling a situation of surplus manpower. Which of the following state-
ments is definitely untrue about lay-off ?
(A) Lay off can be either temporary or permanent.
(B) Organizations resort to layoff when an employee's job becomes redundant.
(C) Layoff affects the morale of the employees negatively.
(D) Proper human resource planning can help minimize these lay-off.
17. Which of the following career path consists of both vertical sequence of jobs and series of
horizontal opportunities:
(A) Network career path (B) Transitory career path
(C) Spiral career path (D) Expert career path

Management (MSP)
18. According to the _______ perspective of Industrial relations workplace conflict is viewed as a
temporary abnormality and that it can be resolved when unions and the management arrive at
a mutual understanding and cooperation.
(A) Unitary perspective (B) Pluralist
(C) Marxist (D) Gandhian
19. Find the correct code for given statements being correct or incorrect.
Statement-I : The financial perspective is the most important focus on the balanced scorecard.
Statement-II : Companies should judge the health of the business only by the amount of money
they make.
Statement-III : Financial measures are only part of the picture and takes a short-term approach.
(A) Statements I and III are correct and II is incorrect
(B) Statement III is correct and I and II are incorrect
(C) Statements I, II and III all are correct
(D) Statement III is correct and I and II are incorrect
List-I List-II
(Feature) (Theory)
(a) development and implementation 1. High involvement management
of several HR practices together
so that they are interrelated there
by complementing and reinforcing
each other
(b) a form of management aimed at 2. Bundling
eliciting a commitment so that
behaviour is primarily self-regulated
rather than controlled by sanctions
and pressures external to the
individual, and relations within the
organization are based on high
trust levels.
(c) to obtain, analyse and report 3. Human Capital Management
data that informs the direction of
value-adding people management
on strategic, investment and
operational decisions.
(d) committing to manage the 4. Corporate social responsibility
business ethically in order to
make a positive impact on
society and the environment.

Management (MSP)
Codes :
(a) (b) (c) (d)
(A) 2 1 3 4
(B) 4 1 3 2
(C) 4 2 3 1
(D) 1 3 4 2
21. Who among the following defined "A trade union is an association of employees designed
primarily to maintain or improve the condition of employment of its members"
(A) Webb (B) Lester
(C) Miner (D) Chamberlain and Kuhn
22. The formula (Where P0 is the Market price per share at the beginning of the period, D1 is
Dividend to be received at the end of the period, D1 is Dividend to be received at the end of the
period and Ke is Cost of equity capital) has been given by:
(A) Myron Gordon (B) James E Walter
(C) Modigliani - Miller (D) David Durrand
23. An uncovered cost at start of year is divided by full cashflow during recovery year then added
in prior years to full recovery for calculating
(A) Payback Period (B) Original Period
(C) Net Present value (D) Internal Rate of Return
24. For the following two statements of Assertion (A) and Reasoning (R) select the correct code :
Assertion (A) : Net Present Value is more precise than Payback Period method.
Reasoning (R) : Net Present Value uses discounted cash flows in the analysis.
Code :
(A) (A) is incorrect but (R) is correct.
(B) (A) is correct but (R) is incorrect.
(C) (A) and (R) both are correct and (R) is right explanation of (A).
(D) (A) and (R) both are correct but (R) is not right explanation of (A).
25. From the following statements related to Merger and Acquisition identify the code with the correct
statements:
(A) merger means "to combine", Acquisition means "to acquire."
(B) merger results in a formation of a new company but acquisition does not.
(C) Merger is through the mutual decision of the companies but acquisition may be hostile.
Code:
(A) a and c (B) a, b and c
(C) b and c (D) a and b

Management (MSP)
26. Identify the correct code for the following types of decisions which comes under financial man-
agement:
(a) Investment Decision (b) Financing Decisions
(c) Dividend Policy Decisions (d) Pricing Decisions
Codes :
(A) (a) and (b) only (B) (a), (b) and (c) only
(C) (a), (b), (c) and (d) (D) (b), (c) and (d) only
27. Which of the following is not an assumption of Modigliani and Miller Model?
(A) There exist a perfect market
(B) There are no floatation or transaction costs
(C) There are no taxes
(D) Retained earning decisions influence the market value of a share.
28. Identify the correct code for the following measures of central tendency which are mathematical
averages :
(a) Mean (b) Median
(c) Mode (d) Geometric Mean
(e) Harmonic Mean
Codes :
(A) a, b and c (B) a, d and e
(C) c, d and e (D) b and c
29. Services or products that customers buy immediately after noticing are known as:
(A) augmented product or services
(B) shopping goods or services
(C) convenience products and services
(D) sought products or services
30. Pricing strategy used to set prices of products that are must be used with main product is called:
(A) optional product pricing (B) product line pricing
(C) competitive pricing (D) captive product pricing
31. Which of the following can be thought of as a perceptual map of in which like products of the
same company (say toothpaste) are positioned very close to one another and compete more with
one another than with brands of other companies.
(A) Brand Comparison (B) Cannibalization
(C) Positioning (D) Brand Association
32. McDonald's offering regular hamburgers, Big Macs, and Quarter Pounders is an example of what
type of marketing?
(A) Mass marketing (B) Target marketing
(C) Micro marketing (D) Product-variety marketing

Management (MSP)
33. Identify the code which shows the correct sequence Strategic Management process
1. Goal setting, strategy formulation, administration, and strategic control
2. Setting Courses of action attaining objective, process of seeking key areas and strategy
formulation
3. Integrating the organization with culture.
4. Strategic planning and acting on these plants.
Codes:
(A) 1, 2 and 3 (B) 1, 2 and 4
(C) 1, 3 and 4 (D) 2, 3 and 4
34. For making advertisements more effective, the manufacturers improve _____________and launch
new products.
(A) Existing products (B) Advertisement style
(C) Marketing channel (D) Sponsors
35. Identify the code which shows the major internal sources of new-product ideas:
a. Picking the brains of company executives, scientists, engineers and salespeople is a
good way to generate ideas.
b. Intrapreneurial programs that encourage employees to think and develop new-product
ideas is a good way to generate ideas.
c. Some companies employ creative approaches, including both "method and madness" in
helping them to generate new product ideas.
d. Good ideas come from watching and listening to customers.
Codes :
(A) a, b and c (B) a, b and d
(C) a and b (D) a, b, c and d
36. The minimum stock level is calculated as :

(A) Reorder level – (Normal consumption x Normal delivery time)
(B) (Reorder level – Normal consumption) x Normal delivery time
(C) (Reorder level + Normal consumption) x Normal delivery time
(D) (Reorder level + Normal consumption) / Normal delivery time
37. Statement (I) : Least Cost Method is the best method for finding the initial solution of a trans-
portation problem as it results in minimum transportation cost.
Statement (II) : Queuing analysis helps them determine the optimum number of service stations
required.
Statement (III) : The Maximin criterion is based upon the 'conservative approach'.
Find the correct code for given statements being correct or incorrect.
(A) Statement (I) and (II) are correct but (III) is not correct.
(B) Statement (II) and (III) are correct but (I) is not correct.
(C) Statement (I) is correct but (II) and (III) are not correct.
(D) Statement (II) is correct but (I) and (III) are not correct.

Management (MSP)
38. Statement (I) : The concept of Statistical Quality Control (SQC) was developed by Walter A.
Shewart.
Statement (II) : Kaizen is the process of measuring the performance of a company's products,
services, policies, programs, strategies or processes against those of another business consid-
ered to be the best in the industry, "best in class."
Which of the following code is correct related to above statements being correct or incorrect?
(A) Both Statements (I) and (II) are correct.
(B) Both Statements (I) and (II) are not correct.
(C) Statement (I) is correct but (II) is not correct.
(D) Statement (II) is correct but (I) is not correct.
39. Which of the following holds that a government can improve the economic well-being of a
country by encouraging exports and discouraging imports without a reliance on previous metals?
(A) Mercantilism. (B) The Leontief paradox.
(C) Neo-mercantilism. (D) Quotas
40. Trade Mark is

(A) a name, term, symbol or design which is intended to identify the goods and services of
a seller
(B) a brand that has been given legal protection
(C) giving protection to the product and adding to its aesthetics and sales appeal
(D) providing written information about the product
41. Match the items of List-II with List-I to find the correct code :
List-I List-II
(a) Process Layout (i) Better and more efficient supervision
(b) Fixed Position Layout (ii) Weight, size or some other factor makes it
undesirable or extremely difficult to move the
product.
(c) Product Layout (iii) preferred in the plants that manufacture
products on mass scale
(d) Hybrid Layouts (iv) combination of several types of layouts
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iv) (iii)
(D) (ii) (i) (iii) (iv)
42. The benefits of e-supply chain management gained by a B2B company are quite comprehensive.
Which of the following is incorrect ?
(A) Reduced complexity of the supply chain
(B) Increased efficiency of individual processes
(C) Increased costs through outsourcing
(D) Improved data integration between elements of the supply chain

Management (MSP)
43. For entrepreneurs 'Departure Point' represents:

(A) Activities occurring when a new venture is started.
(B) Activities leading to closure of a venture
(C) Activities undertaken for diversification of the business
(D) Activities undertaken for creating differentiation from the competitors.
44. Which one of the following possibilities leads to Type II error in hypothesis testing ?
(A) Rejection of a Hypothesis which should have been accepted and is denoted by  (alpha).
(B) Accepting a Hypothesis which should have been rejected and is denoted by  (alpha).
(C) Rejection of a Hypothesis which should have been accepted and is denoted by  (Beta).
(D) Accepting a Hypothesis which should have been rejected and is denoted by  (Beta).
45. Which one among the following does not relates to the probability-based sampling technique?
(A) Cluster Sampling (B) Sampling with Replacement
(C) Stratified sampling (D) Judgement sampling
46. Which of the following statement is true for the regression line Y = a + bX :
(A) Y = independent variable, a = slope of the line, b = Y intercept and X = dependent
variable
(B) Y = dependent variable, a = slope of the line, b = Y intercept and X = independent
variable
(C) Y = independent variable, a = dependent variable, b = Y intercept and X = slope of the
line
(D) Y = dependent variable, a = Y intercept, b = slope of the line and X = independent
variable
47. In which one of the following probability distributions, the mean value of the distribution is equal
to the variance of the distribution ?
(A) Normal distribution (B) Binomial distribution
(C) Exponential distribution (D) Poisson distribution
48. Match the items of List-II with the items of List-I and denote the code of correct matching :
List-I List-II
(a) developed by R.A. Fisher (i) t-test
(b) most helpful with a smaller (ii) Chi-square
sample size
(c) Testing the goodness of fit of (iii) F-test
a distribution
(d) based on the normal probability (iv) Z-test
distribution
Code :
(a) (b) (c) (d)
(A) (iii) (i) (ii) (iv)
(B) (ii) (iii) (i) (iv)
(C) (ii) (i) (iii) (iv)
(D) (i) (ii) (iii) (iv)
Management (MSP)
49. Which of the following programming language is exclusively used for artificial intelligence:
(A) C (B) Java
(C) J2EE (D) Prolog
50. Low cost, Differentiation and Focus are example of :

(A) Corporate Strategy (B) Operational Strategy
(C) Business Strategy (D) Functional Strategy
List-I List-II
(a) corporate planning tool used to (i) GE Business Model
portray firm's brand portfolio or
SBUs on a quadrant along
relative market share axis
(b) a strategy tool which offers a (ii) BCG Matrix
systematic approach for the
multi-business corporation to
prioritize its investments among
its business units.
(c) framework used to evaluate a (iii) PEST Analysis
company's competitive position
and to develop strategic planning
(d) framework used by marketers to (iv) SWOT Analysis
analyse the macro-environmental
factors that have an impact on
an organisation
Codes :
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iv) (iii)
(D) (ii) (i) (iii) (iv)
52. Who among the following people are charged with the responsibility of continuous screening of
performance?
(A) Managers (B) Supervisors
(C) Top management (D) Audit committee
List-I List-II
(a) Retrenchment Strategies 1. Retrenchments - either internally or externally
(b) Divestment Strategies 2. Contraction of activities through elimination
of the scope of one or more of its business
(c) Turnaround Strategies 3. Involves the sale or liquidation of a portion of
a business
Management (MSP)
Codes :
(a) (b) (c)
(A) 1 2 3
(B) 3 2 1
(C) 2 3 1
(D) 3 1 2
54. It is generally more detailed. More information than a standard. The contents of each individual
package are detailed. It also indicated the legal gross and net. The above statement refer to:
(A) Commercial Invoice (B) Certificate of Origin
(C) Trade Documents (D) Packing List
55. One of the following does not represent a general market risk in the internationalization process:
(A) competition from other organizations in foreign markets
(B) lack of tax incentives for organizations that export
(C) complexity of shipping services to overseas buyers
(D) language and cultural differences
56. Why should an entrepreneur do a feasibility study for starting a new venture?
(A) To identify possible sources of funds
(B) To see if there are possible barriers to success
(C) To estimate the expected sales
(D) To explore potential customers
57. Enterprises engaged in providing or rendering of services is considered as small scale where the
investment in equipment is:
(A) more than Rs.2 crores but does not exceed Rs. 5 crore
(B) more than Rs.1 crores but does not exceed Rs. 2 crore.
(C) more than Rs.10 lakh but does not exceed Rs. 2 crore.
(D) more than Rs.10 lakh but does not exceed Rs. 1 crore
58. Affluent Entrepreneurs refers to:

(A) Educated women living in urban areas with or without work experience who take the risk
of a new enterprise.
(B) Women who take up some business activity in order to overcome financial difficulties.
(C) Daughters and wives of wealthy businessmen who have the financial aid and the neces-
sary resources to start a new enterprise.
(D) Women entrepreneurs who belong to rural areas.

Management (MSP)
59. Consider the below mentioned statements and state the correct code of the statements being
true or false.
Statement-I : Entrepreneurship is always about creating a new product.
Statement-II : An entrepreneur is one who always searches for change.
Codes :
(A) Both the Statements (I) and (II) are false.
(B) Both the Statements (I) and (II) are true.
(C) Statement (I) is false and Statement (II) is true.
(D) Statement (I) is true and Statement (II) is false.
60. Which of the following is an internal cause of sickness of small scale industries?
(A) Production Constraints (B) Ineffective Corporate Management
(C) Marketing Constraints (D) Finance Constraints
61. Under which theory of entrepreneurship, people consider profit to be a measure of success and
competency.
(A) Sociological Theories (B) Opportunity Based Theory
(C) Innovation Theory (D) Achievement Theory
62. Which of the following is not a part of incentives to SSI ?

(A) Subsidy to labour wages (B) Tax holidays
(C) Lower Interest (D) Interest Subsidy
63. Rural Small Business Development Centre is a government centre for micro, small and medium
businesses sponsored by
(A) SIDBI (B) RBI
(C) NABARD (D) SBI
64. The framework for establishing good corporate governance and accountability was originally set
up by the:
(A) Nestle's Committee (B) Rowntree Committee
(C) Thornton Committee (D) Cadbury Committee
65. The intensity of the ethical issue is greater when ________.

(A) The number of people harmed is low.
(B) None agrees that the action is wrong.
(C) The action has a less impact on the victims.
(D) The consequences of the action may be felt immediately.
66. Which of the followings is not an importance of employee's compensation or reward system?
(A) It is the most influencing factor for employee motivation.
(B) It helps in reducing industrial disputes
(C) It does not influence the retention of employee in the organization
(D) Effective compensation system builds employer brand

Management (MSP)
67. Match the items of List-II with List-I to find the correct code:
List - I List-II
(a) Emphasize that outcomes should (i) Distributional Justice
be distributed must be
proportionate to inputs
(b) Fairness of decision making with (ii) Procedural Justice
respect to a given outcome
(c) Concerned with the quality of (iii) Interactional Justice
interpersonal treatment employees
are given especially as part of the
formal decision making process
(d) The extent to which employees (iv) Interpersonal Justice
are treated with respect,
politeness and dignity by
authorities and third parties
involved in execution of decisions
or determining outcomes.
Codes :
(a) (b) (c) (d)
(A) (ii) (i) (iii) (iv)
(B) (iv) (iii) (ii) (i)
(C) (iv) (ii) (iii) (i)
(D) (i) (ii) (iii) (iv)
68. Standardized and customized flow of activities, simple and complex number of steps and cus-
tomer involvement by which a service is delivered is called:
(A) Place Mix (B) Physical Evidence Mix
(C) Process Mix (D) People Mix
69. Which of the following actions will not help directors to protect themselves from non-compliance
with their obligations and responsibilities ?
(A) including a disclaimer clause in their service contracts
(B) seeking professional help
(C) ensuring that regular management accounts are prepared by the company
(D) keeping themselves fully informed about company affairs
70. Which of the following is a key issue of CSR?

(A) Labour right (B) Environmental conditions
(C) Human Rights (D) Profit maximisation
71. At which level we can create dimensional models?

(A) Business requirements level (B) Architecture models level
(C) Detailed models level (D) Implementation level

Management (MSP)
72. Mandatory settlement of an industrial dispute by way of a labour court or a tribunal is called:
(A) Arbitration (B) Code of discipline
(C) Adjudication (D) Conciliation
73. Assertion (A) : In the money option has intrinsic value.

Reasoning (R) : A put option is In the Money if the market price is below the strike price.
Code :
(A) (A) and (R) both are correct; and (R) is the right explanation of (A).
(B) Both (A) and (R) are correct; but (R) is not the right explanation of (A).
(C) Both (A) and (R) are incorrect.
(D) (A) is correct but (R) is incorrect.
74. When labour welfare activities have to be undertaken to further the legislation enacted by the
government, it is a _______ labour welfare activity
(A) Statutory (B) Voluntary
(C) Mutual (D) Cooperative
75. Innovation introduce ?

(A) New quality of product (B) New employees
(C) New product (D) New market
Codes :
(A) A and B (B) A, B and C
(C) A, C and D (D) A, B, C and D
76. Identify the correct code of the steps of grievance procedure required to be followed for the
grievance handling:
1. Departmental Manager 2. Immediate Supervisor
3. Arbitration 4. Trade Union's intervention
Code:
(A) 1, 2, 3 & 4 (B) 2, 3, 1 & 4
(C) 2, 1, 4 & 3 (D) 2, 4, 1 & 3
77. According to Indian Labour Commission (ILC) major recommendations, Union once recognised
should be valid for a period of _____ years to be co-terminus with the period of settlement.
(A) Two (B) Three
(C) Four (D) Five
78. The best way to improve search engine ranking is with:

(A) Video
(B) A blog
(C) Having at least 500 words of text per page
(D) Using a lot of graphics per page

Management (MSP)
79. An integrated model which assumes problem-solving approach in buying and adopts input-output
or system approach in buying is known as
(A) Howard-Sheth Model
(B) Hierarchy of effects
(C) Engel-Kollat-Blackwell Model
(D) Question does not provide sufficient data
80. Identify the correct code which shows three basic elements of marketing plan:
1. Objectives 2. Decision
3. Periodic 4. Procedure
5. Hints 6. Policies
7. Command 8. Program
9. Diversity
Codes :
(A) 1, 2 and 3 only (B) 6, 7 and 8 only
(C) 1, 6 and 8 only (D) 2, 3 and 9 only
81. Which of the following strategy may require a firm to redefine its business and may involve
divestment of a major product line or an SBU, abandon some markets or reduce its functions.
(A) Expansion Strategy (B) Retrenchment Strategy
(C) Combination Strategy (D) Stability Strategy
82. Technology scanning refers to:

(A) strategies of multinational firms based on technologies.
(B) locating a firm's research centres in countries or regions where relevant cutting-edge
research is pursued.
(C) a framework for strategic planning in the knowledge economy.
(D) the process of identifying technologies in the external business environment.
83. The sequence of a typical manufacturing supply chain is:

(A) Storage-Supplier-manufacturing-storage-distributor-retailer-customer
(B) Supplier-Storage-manufacturing-storage-distributor-retailer-customer
(C) Supplier-Storage-manufacturing- distributor-storage-retailer-customer
(D) Supplier-Storage-manufacturing-storage-retailer-distributor-customer
84. The phrase 'cogs in a machine' is intended to refer to which of the following theories?
(A) Theory Y (B) Theory Z
(C) Bureaucracy Theory (D) Theory X
85. Santosh Limited earns Rs.5 per share is capitalized at a rate of return of 10% and has a rate
of return on investment of 18%. What should be the price per share at 25% dividend payout ratio
as per the Walter's Model?
(A) Rs. 90 (B) Rs. 80
(C) Rs. 180 (D) Rs. 120

Management (MSP)
86. Consider the below mentioned statements and state the correct code of the statements being
true or false.
Statement (I) : Degree of operating leverage is 2.8 it means if sales increase by 1%, EBIT
increase by 2.8%.
Statement (II) : The cost of floating an equity issue is lesser than the cost of floating a debt
Code :
(A) Both the Statements (I) and (II) are false.
(B) Both the Statements (I) and (II) are true.
(C) Statement (I) is false and Statement (II) is true.
(D) Statement (I) is true and Statement (II) is false.
87. Which of the following is an efficiency ratio?

(A) Price-earnings ratio (B) Debt-equity ratio
(C) Acid test ratio (D) Average collection period
88. 12% Debenture @ Rs100 each issued at 20% Premium Brokerage Rs8 Per Debenture and tax
rate 30% cost of debenture will be?
(A) 6% (B) 9%
(C) 7.5% (D) 5.9%
89. Match the items of List-II with the items of List-I and select the correct matching.
List-I List-II
(a) Classification of cost into fixed 1. Contribution
and variable costs
(b) Difference between sales and 2. P/V Ratio
variable costs
(c) Both fixed and variable costs 3. Marginal Costing
are charged to product
(d) Relative profitability 4. Absorption Costing
Codes :
(a) (b) (c) (d)
(A) 4 3 1 2
(B) 3 4 1 2
(C) 3 1 4 2
(D) 4 3 2 1
90. Which of the following is not disclosed in cash flow statement:

(A) Cash inflow from financing activities
(B) Cash inflow from investing activities
(C) Cash inflow from operating activities
(D) Credit purchase of raw material

Management (MSP)
91. Alpha Limited has outstanding 1,00,000 shares selling at Rs. 100 each. The firm has declared
a dividend of Rs. 5 per share. The capitalization rate is 10%. What will be the price of the share
at the end of the year?
(A) Rs. 100 (B) Rs. 105
(C) Rs. 120 (D) Rs. 130
92. A project with an initial investment of Rs. 10,000 generates cash inflows of Rs 5000, Rs 4000
and Rs 3000 with life of 3 years. The discount factors @10% for 3 years are 0.909, 0.826 and
0.751 respectively and @12% are 0.893, 0.797 and 0.712 respectively. What will be the internal
rate of return ?
(A) 10.65% (B) 12.65%
(C) 10.50% (D) 12.50%
List-I List-II
(International Body) (Date of Formation)
(a) World Bank (i) December, 1945
(b) World Trade Organization (ii) 26th November, 1966
(c) Asian Development Bank (iii) December, 1944
(d) International Monetary Fund (iv) 1st January 1995
Codes:
(a) (b) (c) (d)
(A) (iii) (iv) (ii) (i)
(B) (i) (ii) (iii) (iv)
(C) (iii) (ii) (i) (iv)
(D) (iv) (iii) (ii) (i)
94. Identify the correct code which shows the role of world bank?
(A) To provide loans or guaranteed by it so that more useful and urgent projects receive first
priority.
(B) To provide finance to projects from its own capital, funds raised by it and by participating
with other members.
(C) To promote private investment and long run balanced growth of international trade
(D) To Bring Stability in Exchange rate
Code:
(A) A and B (B) A, B and C
(C) A, B, C and D (D) B, C and D
95. How many activities the general Decision Support System (DSS) Development process con-
tains?
(A) 4 (B) 7
(C) 3 (D) 9

Management (MSP)
96. Which of the following code is correct related to following statements being correct or incorrect?
Statement-I : International trade drives globalization because it encourages and strengthens
interdependence between countries.
Statement-II : Foreign Direct Investment means buying and selling of foreign currency-domi-
nated financial assets such as sovereign and private company bonds.
Codes :
(A) Both the statements are true.
(B) Both the statements are false.
(C) Statement-I is true while Statement-II is false.
(D) Statement-I is false while Statement-II is true.
97. Which among the following is known as one of the seamless value-added processes across
organization boundaries to meet the actual needs of the end customer.
(A) Value charting
(B) Supply chain management
(C) Business Process engineering
(D) Operations
98. Jo is a well-paid lawyer who loves new technology and always has to be the first to own the latest
music player or phone. According to Rodgers' model, which category of adopter best describes
Jo ?
(A) Innovator (B) Early adopter
(C) Early majority (D) Late majority
99. The statements relate to Foreign Exchange Market. Denote the code of the statements being
correct or incorrect.
Statement (I) : When the one unit of foreign currency is expressed in terms of domestic currency
it is known as direct quote.
Statement (II) A lower exchange rate in a direct quote implies that the domestic currency is
appreciating in value.
Code :
(A) Both the statements are correct.
(B) Both the statements are incorrect.
(C) Statement (I) is correct while Statement (II) is incorrect.
(D Statement (I) is incorrect while Statement (II) is correct.
100. International trade is most likely to generate short-term employment in:

(A) Industries in which there are neither imports nor exports.
(B) Import competing industries
(C) Industries that sell to domestic and foreign buyers.
(D) Industries that sell to only foreign buyers.

Management (MSP)
ANSWER KEY
1 2 3 4 5 6 7 8 9 10
C C A B D A D D A C
11 12 13 14 15 16 17 18 19 20
D B D A D B A A B A
21 22 23 24 25 26 27 28 29 30
B C A C B B D B C D
31 32 33 34 35 36 37 38 39 40
B C B A A A B C C A
41 42 43 44 45 46 47 48 49 50
A C A D D D D A D C
51 52 53 54 55 56 57 58 59 60
C D C D B B C C C B
61 62 63 64 65 66 67 68 69 70
D A C D D C D C A D
71 72 73 74 75 76 77 78 79 80
B C B A C C C B A C
81 82 83 84 85 86 87 88 89 90
B D B D B D D C C D
91 92 93 94 95 96 97 98 99 100
B A A B B C B A B B

Management (MSP)
SOLUTIONS
1. (C) As price of substitute goods goes up demand of commodity also goes up. More is the
subsidy given by the government less will be the price of the commodity and higher will
be the demand.
As price of complementary goods goes up demand of a commodity goes down. Higher
will be the taxes imposed by the government higher will be the price and lesser will be
the demand of the commodity.
2. (C) (ii) (i) (iv) (iii)
3. (A) Net National Product
4. (B) Oligopoly
5. (D) (ii) (i) (iii) (iv)
6. (A) Covert Advertising
7. (D) (a), (b) and (d) only
8. (D) (A) and (R) both are correct but (R) is not right explanation of (A).
9. (A) Individual
10. (C) (ii) (i) (iv) (iii)
11. (D) leadership
12. (B) (i) - Wheel Pattern, (ii) - Chain Pattern, (iii) - Circle Pattern, (iv) - Channel Pattern
13. (D) Stereotyping is a type of perceptual interpretation. It is an over-generalized belief about
a particular category of people in terms of the roles they are expected to play in their
workplaces based on social assumptions. One instance of stereotyping women is that are
expected to play the role of a caretaker at home instead of striving to be an independent
working woman.
14. (A) (ii) (i) (iii) (iv)
15. (D) Gherao; Boycott
16. (B) Organizations resort to layoff when an employee's job becomes redundant
17. (A) Network career path
18. (A) Unitary perspective
19. (B) Statement III is correct and I and II are incorrect
20. (A) 2 1 3 4
21. (B) Lester
22. (C) Modigliani - Miller
23. (A) Payback Period
24. (C) (A) and (R) both are correct and (R) is right explanation of (A).
25. (B) a, b and c
26. (B) The Financial Management can be broken down in to three major decisions or functions
of finance. They are
(i) The Investment Decision
(ii) The Financing Decision and
(iii) The Dividend Policy Decision.
27. (D) Modigliani and Miller Model says that dividend decisions and retained earning decisions
do not influence the market value of the shares.
28. (B) a, d and e
Management (MSP)
29. (C) convenience products and services

30. (D) captive product pricing
31. (B) Cannibalization
32. (C) Micro marketing
33. (B) 1, 2 and 4
34. (A) Existing products
35. (A) a, b and c
36. (A) Reorder level - (Normal consumption x Normal delivery time)
37. (B) Vogel's Approximation is the best method for finding the initial solution of a transportation
problem as it usually results in an optimal or a near optimal solution.
38. (C) Benchmarking is the process of measuring the performance of a company's products,
services, policies, programs, strategies or processes against those of another business
considered to be the best in the industry, "best in class."
39. (C) Neo-mercantilism.
40. (A) a name, term, symbol or design which is intended to identify the goods and services of
a seller
41. (A) (i) (ii) (iii) (iv)
42. (C) Increased costs through outsourcing
43. (A) Activities occurring when a new venture is started.
44. (D) Accepting a Hypothesis which should have been rejected and is denoted by ? (Beta)
45. (D) Judgement sampling
46. (D) Y = dependent variable, a = Y intercept, b = slope of the line and X = independent
variable
47. (D) Poisson distribution
48. (A) (iii) (i) (ii) (iv)
49. (D) Prolog
50. (C) Business Strategy
51. (C) (ii) (i) (iv) (iii)
52. (D) Audit committee
53. (C) a-2, b-3, c-1
54. (D) Packing List
55. (B) lack of tax incentives for organizations that export
56. (B) To see if there are possible barriers to success
57. (C) more than Rs.10 lakh but does not exceed Rs. 2 crore.
58. (C) Daughters and wives of wealthy businessmen who have the financial aid and the neces-
sary resources to start a new enterprise.
59. (C) Statement (I) is false and Statement (II) is true.
60. (B) Ineffective Corporate Management
61. (D) Achievement Theory
61. (A) Subsidy to labour wages
63. (C) NABARD
64. (D) Cadbury Committee

Management (MSP)
65. (D) The intensity of the ethical issue is greater when the number of people harmed is large,
everyone agrees that the action is wrong, there are greater chances of the act causing
harm, the person feels close to the victims, the act has a serious impact on the victims,
and the consequences of the action may be felt immediately.
66. (C) It does not influence the retention of employee in the organization
67. (D) (i) (ii) (iii) (iv)
68. (C) Process Mix
69. (A) including a disclaimer clause in their service contracts
70. (D) Profit maximisation
71. (B) Architecture models level
72. (C) Adjudication
73. (B) Both (A) and (R) are correct ; but (R) is not the right explanation of (A).
74. (A) Statutory
75. (C) A, C and D
76. (C) 2, 1, 4 & 3
77. (C) Four
78. (B) A blog
79. (A) Howard-Sheth Model
80. (C) 1, 6 and 8 only
81. (B) Retrenchment Strategy
82. (D) the process of identifying technologies in the external business environment.
83. (B) Supplier-Storage-manufacturing-storage-distributor-retailer-customer
84. (D) Theory X
85. (B) Value per share as per Walter formula
D r(E  D) / Ke
P 
Ke Ke
where P = Market Price per share
D = Dividend per share
r = Internal rate of return
E = Earnings per share
Ke = Cost of equity capital or capitalisation rate.
Substituting the values in the above formula. we get
1.25 0.18(5  1.25) / 0.10

P 
0.10 0.10
= 12.50 + 67.50
= Rs. 80
86. (D) Statement (I) is true and Statement (II) is false.
87. (D) Average collection period is calculated in case of credit sale. It is a turnover ratio focused
on measuring efficiency.

Management (MSP)
88. (C) I = 12
I(1 – t) = 12(1 – 0.30)
= 12(.70)
= 8.4
NP = 100 + 20 - 8
= 112
I(1  t)  100
Kd 
N.P.
8.4  100

112
= 7.5 %
89. (C) 3 1 4 2
90. (D) Credit purchase result in Buying without any cash payment so no cash flow is there.
91. (B) According to M-M Model
P1 = P0(1 + Ke) – D1
where P1 = Market price per share at the end of the period
D1 = Dividend to be received at the end of the period
Ke = Cost of equity capital or capitalisation rate
Substituting the values in the above formula, we get :
(i) When dividend is not declared :
P1 = 100(1 + 0.10) – 0
= 100 × 1.10 = Rs. 110
(ii) When dividend is declared :
P1 = 100(1 + 0.10) – 5
= 100 × 1.10 – 5
= 110 – 5 = Rs. 105
92. (A) Step-1 : For this, first trail rate will be calculated as follows :
Initial Investment
P.V. Factor 
Average Annual Cash Inflows
Rs. 10,000

Rs. 5,000  Rs. 4,000  Rs. 3,000
3
Rs. 10,000
  2.5
Rs. 4,000
In the row of 3rd year of the cummulative present value table, the rate of return at this
P.V. Factor is approximately 10%. Therefore, total present value of cash inflows of differ-
ent years at this rate will be compared with the cost of investment :
Verification of First Trial Rate of Return
Year Cash Inflows P.V. Factor at 10% Present Value

Rs. Rs.
1 5,000 0.909 4,545
2 4,000 0.826 3,304
3 3,000 0.751 2,253
10,102

Management (MSP)
Step-2 : As the total present value of cash inflows (Rs. 10,102) is more than the cost of
investment (Rs. 10,000); hence, the next trial rate will be higher than this i.e. 12% and
total present value at this rate will be as follows :
Verification of Second Trial Rate of Return
Year Cash Inflows P.V. Factor at 12% Present Value

Rs. Rs.
1 5,000 0.893 4,465
2 4,000 0.797 3,188
3 3,000 0.712 2,136
9,789
Step-3 : At this rate (12%) the total present value of cash inflows (Rs. 9,789) is less than
the cost of investment (Rs. 10,000), therefore, the IRR will be lower than this. The actual
IRR will be calculated by interpolation as follows :
P1  Q
IRR  LDR   (HDR  LDR)
P1  P2
Rs. 10,102  10,000

 10   (12  10)
Rs. 10,102  9,789
102
 10  2
313
204
 10 
313
= 10 + 0.65 = 10.65%
93. (A) (iii) (iv) (ii) (i)
94. (B) A, B and C
95. (B) 7
96. (C) Statement-I is true while Statement-II is false.
97. (B) Supply chain management
98. (A) Innovator
99. (B) Both the statements are incorrect.
100. (B) Import competing industries

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6. Promotion : It includes personal selling, sales promotion, and advertising. Accurate

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Market Orientation can be broadly divided into four steps:

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 Employees : Employees are the major component of a business whose contribution

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Step 2 : (Calculation of Average Fixed Cost)

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Types of Distribution Channels

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The product life cycle has 4 clearly defined stages :

Fig. : Product Life Cycle

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Members of a Vertical Marketing System

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Advertising by Geographic Area

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There are several sales promotion techniques :

1. Awareness : Awareness of the existence of a product or a service is needful before the

Concrete and Specified

Behavioral Segmentation : It is a more focused method of market segmentation based on

Segmentation Variable Some Examples Comments

Geography  Region of product Geographic segmentation is one of

Demographic  Age Also basic and included as a

Psychographic  Personality traits Psychographic variables are more

General life-style  Correlation of Provides a rich, multi-dimensional

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Segmentation using Consumers' Market History

Segmentation Variable Some Examples Comments

Product usage  Frequency of Segmenting the market into heavy,

Product benefit  Expectations of Very useful if product can be

Decision-process  Shopping patterns Use of this variable segments the

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3. Gross National Products less depreciation is called:

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6. In which type of advertising a product or a particular brand is incorporated in some entertainment

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36. The minimum stock level is calculated as :

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40. Trade Mark is

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43. For entrepreneurs 'Departure Point' represents:

50. Low cost, Differentiation and Focus are example of :

58. Affluent Entrepreneurs refers to:

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62. Which of the following is not a part of incentives to SSI ?

65. The intensity of the ethical issue is greater when ________.

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70. Which of the following is a key issue of CSR?