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1.) The major components of marketing mix are

(A) Product
(B) Price
(C) Place
(D) All of the above
ANS. D
EXP. Marketing mix is the set of marketing tools that the firm uses to pursue its
marketing objectives in the target market. As shown in figure, McCarthy classified
these tools into four broad groups that he called the “four Ps of marketing”:
Product, Price, Place, and Promotion. For marketing of services, three additional
P’s have been identified, People, Process and Physical evidence.

2.) Sales advertising targeted at retailers and wholesalers are known

(A) Trade Sales Promotions
(B) Consumer Sales Promotions
(C) Sales
(D) Marketing Mix
ANS. A
EXP. There are two types of tools of Sales Promotion:
a) Consumer Promotion Tools – sales advertising targeted at direct customers.
Examples of major consumer promotion tools – Samples, coupons, cash refunds
(rebates), premiums, prizes (contests, sweepstakes, games), patronage awards,,
free trials, product warranties, tie-in promotions, cross-promotions, point-of-
purchase displays and demonstrations

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b) Trade Promotion Tools – sales advertising trying to push a product through

intermediaries like retailers and wholesalers. Examples of major trade promotion
tools – Price-off, allowance, free goods, trade shows and conventions, sales
contests, and specialty advertising.

3.) Arrange the stages of Product Life Cycle in correct order

(i) Introduction
(ii) Growth
(iii) Accessible
(iv) Maturity
(v) Decline
(vi) Attitude
Codes:
(A) i, ii, iii and iv
(B) ii, iii, iv and v
(C) i, ii, iv and v
(D) All of the above
ANS. C
EXP. The four main stages of a product's life cycle and the accompanying
characteristics (4P’s) are:

Stage 1 - Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a
market for the product. The impact on the marketing mix is as follows:
• Product branding and quality level is established, and intellectual
property protection such as patents and trademarks are obtained.
• Pricing may be low penetration pricing to build market share rapidly, or
high skim pricing to recover development costs.
• Distribution is selective until consumers show acceptance of the
product.
• Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate
potential consumers about the product.

Stage 2 - Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market
share.
• Product quality is maintained and additional features and support
services may be added.
• Pricing is maintained as the firm enjoys increasing demand with little
competition.

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• Distribution channels are added as demand increases and customers

accept the product.
• Promotion is aimed at a broader audience.

Stage 3 - Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with
similar products. The primary objective at this point is to defend market share
while maximizing profit.
• Product features may be enhanced to differentiate the product from that
of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive and incentives may be offered to
encourage preference over competing products.
• Promotion emphasizes product differentiation.
Stage 4 - Decline Stage
As sales decline, the firm has several options:
• Maintain the product, possibly rejuvenating it by adding new features
and finding new uses.
• Harvest the product - reduce costs and continue to offer it, possibly to a
loyal niche segment.
• Discontinue the product, liquidating remaining inventory or selling it to
another firm that is willing to continue the product.

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4.) Which of the following are not the factors of the demand variable, according to
Philip Kotler?
(A) Environment Variable
(B) Competition Variable
(C) Customer Variable
(D) All of the above
ANS. D
EXP. According to Dr. Philip Kotler, “Demand variables are the factors which affect
Industry and company sales.” Hence, the demand variables are broadly classified
into two parts:
a) Controllable Demand Variables - These variables can be controlled by the
business enterprise itself. These variables are price of product, quality of product
and channels of distribution.
b) Uncontrollable Demand Variables - These variables affect the demand of the
product of the company. They cannot be controlled by the business enterprise.
These factors are:-
1. Consumer variables include the factors relating to the behavior of consumers (or
customers) such as the nature of consumers, their behavior, needs, income and
numbers, etc.
2. Competitive Variables are the factors which relate to the situation of
competition, number of competitors and the policies adopted by the competitors.
3. Environmental variables are the variables which include economic, social and
political conditions of the country.

5.) Match the following

List-I (Bases of Segmenting List-II (Factors)

Industrial Markets)
(a) Physical 1. Size of Industry
(b) Operational 2. Logistic Policy
(c) Purchases 3. Lobby Status
(d) Situational 4. Specific Order
5. Risk Factor
Codes:
(a) (b) (c) (d)
(A) 1 2 3 4
(B) 4 5 1 2
(C) 2 3 1 4
(D) 4 5 1 2
ANS. A

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EXP. The Nested Approach by Shapiro and Bonoma is a “Multi Step” industrial
market segmentation model divided in five different layers or steps according to
the amount of investigation and information required by the company to identify
and evaluate different market segmentation criteria.
The Nested Approach has an established hierarchy. The principal idea of this
model is to segment the market from the outer layers to the inner ones. The
outside layers require less information than inner ones. Therefore, the marketers
can move from easily observable information to the more specific one, depending
on the company´s capabilities to gather information of the market

1) Demographics (Physical) - General and easy information of the company,

customers and industry. Do not need to visit the customer or other complicated
information sources. Physical variables are – industry information, company size,
and customer location etc.

2) Operating Variables - Enables more precise information of customers within

demographics categories. These include technology, logistic policies, product and
brand-use status, customer capabilities etc.

3) Purchasing Approach - Involves the company philosophy, their purchasing

method and Buyer Center. It includes, purchasing function organization, buyer-
seller relationship, general purchasing policies, purchasing criteria, lobby status
(refers to persuading government to change policies or laws) etc.

4) Situational Factors – Refers to important buying situation. These are operating

variables, but are temporary and need a better understating of the customer.
These include urgency of order, product application, specific order specifications
etc.

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5) Personal Characteristics - Segment the market according to the individuals

involved in the purchasing process. For example, buyer motivation, individual
perception, risks management strategies etc.

6.) Match the following

List-I (Thinkers) List-II (Contribution)

(a) Mason and Rath 1. Principles and Practice of Commerce

(b) Cundiff and Still 2. Fundamental Marketing
(c) William J. Stanton 3. Basic Marketing
(d) James Stephenson 4. Marketing and Distribution
Codes:
(a) (b) (c) (d)
(A) 1 2 4 3
(B) 4 3 2 4
(C) 2 1 3 4
(D) 3 1 2 4
ANS. B
EXP. Below is the name of books and their authors:
1) Basic Marketing: concepts, decisions, and strategies by Edward W. Cundiff
and Richard R. Still
2) Principles and Practice of Commerce by James Stephenson
3) Marketing and Distribution by Ralph E. Mason and Patricia Mink Rath
4) Fundamentals of Marketing by William J. Stanton

7.) Which of the following are the Fast-growth young companies?

(A) Gazelles
(B) Life Style
(C) Foundation Company
(D) None of the above
ANS. A
EXP. a) Gazelles - A gazelle company or simply gazelle is a young, very fast-
growing company. This type of company maintains consistent and rapid expansion
of both employment and turnover (sales). Additionally, the company maintains a
high rate of expansion for at least consecutive four years. For example, Apple, Dell,
Yahoo, Cisco, Microsoft, Amazon, and Google were gazelle companies during their
initial years.
b) Life Style - A lifestyle business is one that is geared toward supporting the
owner’s income and personal requirements rather than maximizing revenue. Those
requiring extensive capital (e.g. mobile phone manufacturing) are difficult to

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launch and sustain on a lifestyle basis; others such as small creative industries
businesses are more practical for sole practitioners or small groups such as
husband-and-wife teams.
c) Foundation Company - A foundation is an independent legal entity set up for
solely charitable purposes. Unlike a public charity, which relies on public
fundraising to support its activities, the funding for a private foundation typically
comes from a single individual, a family, or a corporation, which receives a tax
deduction for donations. For example, The Bill and Melinda Gates Foundation,
Make-A-Wish Foundation etc.

8.) Marketing segmentations division of market into separate homogeneous group

of customer on the basis of
(i) Geographical variables
(ii) Demographic factors
(iii) Psychographic factors
(iv) Behavioural basis
Codes:
(A) i, ii and iii
(B) i, ii, and iv
(C) ii, iii and iv
(D) All of these
ANS. D
EXP. A market can be segmented on the basis of the following variables:
1. Geographic Segmentation: The characteristics of customers often differ across
nations, states, regions cities or neighborhoods. The marketer can decide to
operate in one or a few or all the geographic areas, but pay attention to differences
in geographic needs and preferences.
2. Demographic Segmentation: Variables such as age, sex, family size, income,
occupation, education, religion, race and nationality are widely used for market
segmentation.
3. Psychological Variables: Personality, life style, social class, value, etc. can also
be used for market segmentation. For example, some products like pens, watches,
cosmetics and briefcases are designed differently for common men and status
seekers.
4. Behavioural Segmentation: Buyers are divided into groups on the basis of
their knowledge, attitude, use or response to a product.

9.) Strong brand preferences and loyalty plays a role in buying of

(A) Industrial Products
(B) Unsought Consumer Products

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(C) Sought Industrial Product

(D) Specialty Products
ANS. D
EXP. Consumer products are those products and services that bought by final
consumers for personal use or consumption. Marketers mainly classify these
products and services based on how customers go about buying those products or
services. There are four types of consumer products:
1) Convenience products: A Convenience product is consumer products and
services that consumer purchase frequently; they buy those products for their
everyday uses. They have a little planning, little comparison or shopping effort to
buy those products. In addition, customer always shows low customer
involvement. This product have low price. Customer gets this product everywhere,
when they want. That is means those products distribution convenient locations.
Moreover, we see the mass promotion by the producer for those products. For
example, convenience products such as soft drinks toothpaste, chocolates, candy,
cigarettes, laundry detergent, magazines, fast food etc. are bought as soon as feels
the need for them.

2) Shopping products: A shopping product is consumer products and services

that are less frequently purchases than consumer products and services. They are
comparison of brands on price, quality, and style. Consumer spends much time
and effort in gathering information and making comparisons, When consumer
buying shopping products and services. Because of those products have high
price. Shopping products marketers usually distribute their products thought
fewer outlets that are known for the quality of their merchandize and provide
deeper sales support to help customers in their comparison efforts. These products
promotion go on by advertising and personal selling by both producer and
resellers. For example, jewelry, furniture, clothing, used car, hotel, airline services
etc.

3) Specialty products: A specialty product is consumer products and services

that consumer purchase to see strong brand performance and loyalty, special
purchase effort, little comparison of brand. They are more expensive than
convenience products and not purchased frequently. These products promotion go
on by widespread distribution in many outlets per market area. M0re carefully
targeted promotion by both producer and resellers. However, consumer spends a
lot of time in planning the purchase deciding on the brand and arranging for the
money to buy the product. For example, specific brands of cars, fine crystal, TV,
refrigerators, luxury goods, high priced photographic equipment etc.

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4) Unsought products: An unsought product is consumer products and services

that consumer either does not know about or knows about but does not normally
think of buying. Customer buying behavior is little product awareness, knowledge
(or, if aware, little or even negative interest). For these products price varies and
distribution varies. Unsought products require a lot of advertising or aggressive
advertising, personal selling, and other marketing efforts. For example, life
insurance, donations for charity, preplanned funeral services, blood donations to
hospitals or Red Cross blood donations etc.

10.) Pricing strategy whose steps are setup between different lines of product
offered by same organization is called
(A) Optional Pricing
(B) Product Line Pricing
(C) Competitive Pricing
(D) Captive Pricing
ANS. B
EXP. Most products are part of a broader product mix. Consequently, they must
be priced accordingly. The Five product mix pricing strategies (or situations) are
below:
1. Product Line Pricing: Since firms usually develop product lines rather than
single products, product line pricing plays a decisive role in product mix pricing
strategies. For example, when you look at a car brand such as Audi, you will see a
relation between the different series and their prices. The entry model, the Audi
A1, does cost you less than the top-range car A8.

2. Optional Product Pricing: Optional product pricing is the pricing of optional or

accessory products along with a main product. In many cases, you can buy
optional or accessory products along with the main product. For instance, when
you order your new Audi car, you may choose to order a GPS system and an
advanced Entertainment system. However, for the company, pricing these options
is not easy. They must decide carefully which items to include in the base price
and which to offer as options.

3. Captive Product Pricing: We speak of captive product pricing when companies

make product that must be used along with the main product. On the contrary, in
optional product pricing, we should think of products that can be bought/sold
with the main product. Examples for captive product pricing are razor blade
cartridges and printer cartridges. Captive product pricing is an extremely powerful
strategy in the set of product mix pricing strategies. Producers of the main
products, e.g. printers and razors, often price them very low and set high mark-
ups on the supplies you need in order to operate the main products.

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4. By-Product Pricing: By product, pricing refers to setting a price for by-

products to make the main product’s price more competitive. It is the result of the
fact that producing products and services often generates by-products. Often,
these by-products (as singly sold products) would not have any value and getting
rid of them is costly. This would then increase the price of the main product. But
by using by-product pricing, the company tries to find a market for these by-
products to help offset the costs of disposing of them and make the price of the
main product more competitive.

5. Product Bundle Pricing: Using product bundle pricing, companies combine

several products and offer the bundle at a reduced price. The best example is
probably a menu at McDonald’s: you get a bundle consisting of a burger, fries and
a soft drink at a reduced price. For the company, product bundle pricing is a very
effective product mix pricing strategy: it can promote the sales of products
consumers might not otherwise buy.

11.) International marketing strategy according to which company uses separate

marketing mix for each international target market is classified as
(A) Straight Product Marketing
(B) Product Adaptation Marketing
(C) Standardized Global Marketing
(D) Adapted Global Marketing
ANS. D
EXP.1) Adapted Global Marketing - It is an international marketing approach
that adjusts the marketing strategy and marketing mix elements to each
international target market. By adapting the marketing strategy to each market,
the overall marketing costs increases. However, as a result, it is hoped that the
adaption to different markets produces a larger market share and return on
investment. As an example of adapted global marketing, McDonald’s in India has
adapted to the local tastes of its consumers.

2) Straight Product Marketing – It is also called as Straight Product Extension

Marketing. In straight extension the same product is marketed to all countries (a
"world" product), except for labeling and language used in the product manuals.
The assumption behind this strategy is that consumer needs are essentially the
same across national boundaries. Straight extension can be successful when
products are not culture sensitive and economies of scale are present. For
example, The Philip Morris USA Tobacco Company used this strategy successfully
with its Marlboro brand cigarette, which is same globally.

3) Product Adaptation Marketing - Product adaptation is a strategy in which a

new product is based on customizations or modifications on existing products.

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These products are sometimes internal products or they can be also competitors'
product. These products do not depend on innovations and are a mixture of
previous products. It is sometimes modifying your existing product and re-
launching it. It is same as Adapted Global Marketing, although product adaptation
could be done within the same region as well.

4) Standardized Global Marketing - It is an international marketing strategy that

uses the same marketing strategy and marketing mix in all of the company’s
international markets. For example, Coco-Cola is able to use standard packaging,
distribution and brand in all of its international markets.

12.) Which one of the following does not fall under qualitative forecasting method?
(A) Market research
(B) Delphi method
(C) Judgmental methods
(D) Moving average methods
ANS. D
EXP. Moving average methods are methods of Time Series Forecasting, which fall
under Quantitative Methods. Moving Averages method types are:
1. Simple Moving Average
2. Weighted Moving Average
3. Exponential Smoothening
Time Series Methods are also called “Naive Methods”.

14.) Barriers to entry affect the ability of firms outside an industry to enter and
take advantage of profit opportunities. Which of the following is not an example of
such a barrier?
(A) The relative size of existing firms in the industry
(B) Product differentiation
(C) Capital requirements
(D) Switching costs
ANS. A
EXP. A high threat of new entrance can both make an industry more competitive
and decrease profit potential for existing competitors. On the other hand, a low
threat of entry makes an industry less competitive and increases profit potential
for the existing firms. New entrants are deterred by barriers to entry.
Barriers to entry are factors or conditions in the competitive environment of an
industry that make it difficult for new businesses to begin operating in that
market.
A high production-profitability threshold requirement, or economy of scale, is an
entry barrier that can lower the threat of entry. Highly differentiated products or
well-known brand names are both barriers to entry that can lower the threat of

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new entrants. Significant upfront capital investments required to start a business

can lower the threat of new entrants. Whereas, high consumer switching costs are
a barrier to entry. When access to distribution channels is an entry barrier – if it is
difficult to gain access to these channels, the threat of entry is low. Access to
favorable locations, proprietary technology, or proprietary production material
inputs also increase entry barriers and decrease the threat of entry.
And of course, if the opposite is true for any of these factors, barriers to entry are
low and the threat of new entrants is high. For example, no required economies of
scale, standardized or commoditized products, low initial capital investment
requirements, low consumer switching costs, easy access to distribution channels,
and no relevant advantages due to locale or proprietary assets all indicate that
entry barriers are low and the threat of entry is high.
Other factors also influence the threat of new entrants. Expected retaliation of
existing competitors and the existence of relevant government subsidies or policies
can discourage new entrants. While no expected retaliation and the lack of
relevant government subsidies or polices can encourage new entrants.

15.) Arrange the following stages of Industry Life Cycle in order?

(i) Fragmentation
(ii) Shake-out
(iii) Maturity
(iv) Decline
Codes:
(A) (ii)(i)(iii)(iv)
(B) (i)(ii)(iii)(iv)
(C) (i)(ii)(iv)(iii)
(D) (i)(iii)(iv)(ii)
ANS. B
EXP. Industry Life Cycle
There exists a circle of life for every living creature in this world and so does for the
industries. We have already studied stages of product life cycle, PLC (Introduction,
Growth, Maturity and Decline). The industry’s life cycle also consists of following
four stages:
1. Fragmentation
2. Shake-out
3. Maturity
4. Decline
The figure shows how sales volume may vary against different stages of industry
life cycle.

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Figure: Industry life cycle

1. Fragmentation Stage: The first stage of new industry is fragmentation
stage. In this stage, the new industry begins developing the business. It is in
the fragmentation stage, when the new industry normally arises as soon as
the entrepreneur overcomes both the problems of innovation and invention,
and works on the upbringing of new products or services within the market.
2. Shakeout: The second stage of industry life cycle is the shakeout stage. The
emerging of new industry begins in this stage. During this shakeout stage,
the competitors begin to realize and figure out the business opportunities
involved in emerging the industry. Therefore, value of the industry quickly
starts rising.
3. Maturity: The third stage of industry life cycle is the maturity. In the
maturity stage, efficiencies of the dominant business model render these
organizations a competitive advantage over the very competition. The
competition within the industry is growing rather aggressive because of
many competitors and substitute products in the field. All these factors
price, competition, and cooperation are taking on complex form. In fact,
some companies are shifting some of its production overseas to obtain
competitive advantage.
4. Decline: In order to compete within the industry effectively and
successfully, it is essential and prerequisite for the companies to
understand well, the use of industry life cycle as it is a survival equipment
for businesses these days. Information regarding the industry life cycle can
be easily obtained from business management books. Undoubtedly, several
variations in the lifecycle model have been made in order to address the
development of products, market and industry.

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The above figure shows how different industry characteristics vary at different
stages of industry life cycle.

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