TUTOR MARKED ASSIGNMENT

Course Code : AMK-01

Course Title : Marketing
Assignment Code : AMK-01/TMA/2013-14
Coverage : All Blocks

Maximum Marks:
100

Attempt all the questions.

1. Differentiate between the following:

(a) Publicity and Advertising

(b) Primary Middlemen & Ancillary Middlemen

(c) Market Skimming and Market Penedration Price

(d) Market testing and Product Testing (4x5)

2. What do you mean by product diversification? How would you plan diversification for the

firm? Classify with suitable examples. (20)



3. What would be the most suitable channel of distribution for the following products? Give
reasons to support your answer

a) Newspaper

b) Refrigerator

c) Bathing Soap

d) Scooters (20)

4. What do you mean by Product Life Cycle (PLC)? How marketing mix to be changed during

different stages of PLC? (20)

5. What is marketing environment? Explain its role and importance in formulating marketing

policies and strategies. (20)



AMK
2013-14

Q.NO.1
(A)
Difference between Advertising and Publicity:
1. Advertising is paid form of ideas, goods and services while publicity is not paid by the
sponsor.
2. Advertising comes from an identified sponsor while publicity comes from a neutral and
impartial source.
3. Advertising is controllable by the organisation while publicity is not controllable because it
comes from a neutral source.
4. Advertising is less credible in comparison to publicity while publicity is more credible
because it comes from an impartial source.
5. Advertising is what you or your organisation says and promotes about you or your
organisation but publicity is what others say for you or your organisation.
6. In advertising same content is repeated by the sponsor while in publicity it is not generally
possible.
7. Advertising always carries a positive message about your organisation because it is the content
you pay for but publicity can be positive or negative because it comes from an impartial source.
8. In advertising you have full chance to show your creativity but in publicity creativity is limited
because it comes from non paid source.
9. Advertising is targeted to the practicular audiences by the sponsor while in publicity it is not
focused.
10. Most of the times in advertising social responsibility is ignored while in publicity special
focus is given on social responsibility.


(B)
Like them or hate them,middle men have come to stay!How do you eliminate middle-men? Its
not possible. Some say they have the expertise and mobility that farmers and
farmers'organisations don't have. They know the market very well and sometimes absorb the
risks that would have otherwise been absorbed by the farmer. But others say they serve no useful
purpose! They are cheats, liars and simply rip off farmers! What's your take on this?
Can we prevent middle-men from ripping off the farmers through proper information
dissemination? How can farmers get upto the minute information about prices in the market,
trends and other useful information about farming? Which stakeholders should assume primary
responsibility in the provision of these services?
For years, American Airlines labored in solitude as it sought to reduce its reliance on ticketing
global distribution systems (like Amadeus, Sabre and others), and now United Airlines is doing
something similar.

Priceline and United announced that they have a new long-term agreement, and that the airlines
heretofore unknown United Technology Application, powered by Farelogix, would serve as the
primary connectivity between the two parties.
This so-called direct-connect technology means that the global distributions systems would lose
a lot of their existing Priceline-United volume.
(C)
Penetration pricing and price skimming are marketing strategies commonly implemented when
companies launch new products or services. Both approaches have worked for businesses, but
you have to understand how your price relates to your overall marketing and promotions
strategies. Penetration pricing relies on a low upfront price to attract customers, while skimming
is the use of high upfront prices to maximize short-term profits from the most eager and
interested customers.
Penetration pricing is intended to attract a larger contingent of customers away from competing
brands. The idea is to use a better mix of product benefits and a lower price to lure customers
only modestly satisfied with existing products. This is not typically the case with skimming,
which often leads to a select market of initial customers, with broader market appeal coming
later when prices are reduced. Skimming may make more sense with a niche market of highly
selective customers.



(D)
Initial product testing and test marketing are not the same. Product testing is totally initiated by
the producer: he or she selects the sample of people, provides the consumer with the test product,
and offers the consumer some sort of incentive to participate.
Test marketing, on the other hand, is distinguished by the fact that the test cities represent the
national market. The consumer must make the decision herself, must pay his or her own money,
and the test product must compete with the existing products in the actual marketing
environment. For these and other reasons, a market test is meant to serve as an accurate
simulation of the national market and serves as a method for reducing risk. It should enhance the
new product's probability of success and allow for final adjustment in the marketing mix before
the product is introduced on a large scale.


Q.NO-2
A product diversification strategy is a form of business development. Small businesses that
implement the strategy can diversify their product range by modifying existing products or
adding new products to the range. The strategy provides opportunities to grow the business by
increasing sales to existing customers or entering new markets.
Set your objectives for product diversification. You can take a defensive approach with the
objective to protect your business if, for example, demand drops for your products or you face
strong competition. This might be important for news companies that have built their business on
a single product. Declining market share or revenue could threaten the survival of your business.
Alternatively, you can take an offensive approach where you see a strong market opportunity but
cant take advantage of it with your existing products.
Diversification is entering new markets with new products. Sometimes you just need to bust out
and try something new like learning the polka. Or if youre a tobacco firm, buying a
packaged-food company; a cola firm entering the water business; or a chemical company going
into the spa supply business. All these moves, except the polka of course, are examples of
diversification. (The polka would be diversifying your dance portfolio, but thats another book
altogether.)
Many companies appreciate the need to diversify but few use it as a way of relating to their
markets. Fundamentally, this strategy is about creating new products with new product life
cycles and making the existing ones obsolete.
By doing so, firms launch new products that are developed not just for current customers but for
new ones, too. To execute this strategy, you usually manage a merger, an acquisition, or a
completely new business venture.
Well-known, highly innovative companies include Intel, Google, DuPont, and all the
pharmaceutical companies. A companys diversification strategy can be either related or
unrelated to its original business. Related diversification makes more sense than unrelated
because the company shares assets, skills, or capabilities. But many successful companies, such
as Tyco and GE, continue to buy unrelated businesses.
Diversification is a corporate strategy to increase sales volume from new products and new
markets. Diversification can be expanding into a new segment of an industry that the business is
already in, or investing in a promising business outside of the scope of the existing business.
Diversification is part of the four main growth strategies defined by Igor Ansoff's
Product/Market matrix:
[1]


Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The
first three strategies are usually pursued with the same technical, financial, and merchandising
resources used for the original product line, whereas diversification usually requires a company
to acquire new skills, new techniques and new facilities.
Note: The notion of diversification depends on the subjective interpretation of new market and
new product, which should reflect the perceptions of customers rather than managers. Indeed,
products tend to create or stimulate new markets; new markets promote product innovation.
Product diversification involves addition of new products to existing products either being
manufactured or being marketed. Expansion of the existing product line with related products is
one such method adopted by many businesses. Adding tooth brushes to tooth paste or tooth
powders or mouthwash under the same brand or under different brands aimed at different
segments is one way of diversification. These are either brand extensions or product extensions
to increase the volume of sales and the number of customers.

As discussed below, this figure summarizes the reasons for related and unrelated diversification.



Q.NO-3
(A)
Vancouver has two major English-language daily newspapers, The Vancouver Sun (a
broadsheet) and The Province (a tabloid). Both are published by Postmedia Network. There are
also two national newspapers distributed in the city: The Globe and Mail, which began
distribution of a "national edition" into B.C. in 1983, and in more recent years launched a three-
page B.C. news section in an effort to increase its readership in the city. The National Post, also
owned by Postmedia, entered city markets only in the last few years but has very little British
Columbia content.
Vancouver has four Chinese-language daily newspapers, Ming Pao, Sing Tao, World Journal and
The Epoch Times. Ming Pao and Sing Tao cater to a Cantonese-speaking readership whereas
World Journal and The Epoch Times target Mandarin speakers.
Vancouver business publications include the following:
BC Business Mag (monthly)
Business Edge Vancouver (weekly)
Business In Vancouver (weekly)
Journal of Commerce BC (daily)
Make It Business (monthly)
Western Investor (monthly)
Two free daily newspapers, 24H and Metro are published in the city from Monday to Friday.
Both contain a small number of local news stories and 24H occasionally breaks news stories.
Neither is long-established and both tend to concentrate on celebrity news and gossip.

(B)
Marketing channels are sets of interdependent organizations participating in the process of
making a product or service available for use or consumption. They are the set of pathways a
product or service follows after production, culminating in purchase and consumption by the
final end user.
Some intermediariessuch as wholesalers and retailersbuy, take title to, and resell the
merchandise; they are called merchants. Othersbrokers, manufacturers' representatives, sales
agentssearch for customers and may negotiate on the producer's behalf but do not take title to
the goods; they are called agents. Still otherstransportation companies, independent
warehouses,
banks, advertising agenciesassist in the distribution process but neither take title to goods nor
negotiate purchases or sales; they are called facilitators.

(C)
In addition to evaluating customer and product characteristics, the channel analyst must consider
company characteristics. The relevant characteristics are the company objectives, financial
status, product mix, past channel experiences and the desired degree of channel control.

If a producer wishes to retain a high degree of control over the price the consumer pays for his
product as well as how the product is presented to the market, then he will either sell direct or
use only one middleman. Again, where a company has a wide and divergent product mix, long
channels may be used for some products and short channels for others. For instance, Unilever
uses long channels to distribute toilet soaps and short channels to distribute industrial detergents.
Thus, the channels used to distribute products are partly determined by company characteristics.
(D)
International marketing channels deal with channels within which goods and services pass to
reach their foreign consumers. This implies that manufacturers and consumers must be located in
either the manufacturers or consumers country or having presence in both countries.
It is said that reputation travels faster than the man. It is true in the case of companies also who
wish to select channel of distribution. In case of companies with outstanding reputation like Tata
Steel, Bajaj Scooters, Hindustan Levers etc indirect channel of distribution (wholesalers,
retailers, etc.) is more desirable and profitable.

Q.NO-4
When the product is brought into the market. In this stage, there's heavy marketing activity,
product promotion and the product is put into limited outlets in a few channels for distribution.
Sales take off slowly in this stage. The need is to create awareness, not profits.

The second stage is growth. In this stage, sales take off, the market knows of the product; other
companies are attracted, profits begin to come in and market shares stabilize.

The third stage is maturity, where sales grow at slowing rates and finally stabilize. In this stage,
products get differentiated, price wars and sales promotion become common and a few weaker
players exit.

The fourth stage is decline. Here, sales drop, as consumers may have changed, the product is no
longer relevant or useful. Price wars continue, several products are withdrawn and cost control
becomes the way out for most products in this stage.

A product life cycle is the typical stages a product goes through during its lifetime. The product
life cycle is broken down into five different stages, which include the development, introduction,
growth, maturity and decline stages of the product. Characteristics for each stage differ and in
response to the different needs of the product as it moves through its life cycle, the market mix
(various marketing tactics) used during these stages differ as well. Understanding the product life
cycle can help business owners and marketing managers plan a marketing mix to address each
stage fully.
Development Stage
During the development stage, the product may still be just an idea, in the process of being
manufactured or not yet for sale. In this stage, the marketing mix is in the planning phase, so
rather than implementing marketing strategies, the product producer is researching marketing
methods and planning on which efforts the company intends on using to launch the product. The
marketing mix for this stage includes ways to bring awareness of the product to potential
customers through marketing campaigns and special promotions.
Introduction Stage
As the product hits the market, it enters the introduction stage of the product life cycle. Because
it is a new product that customers are not yet aware of, the product sales during the introduction
stage are generally low. At this time, marketing expenses are generally high because it requires a
lot of effort to bring awareness to the product. The marketing mix during this stage of the
product life cycle entails strategies to establish a market and create a demand for the product.
Growth Stage
As customers become aware of the product and sales increase, the product enters into the growth
stage of the product life cycle. Marketing tactics during the growth stage requires branding that
differentiates the product from other products in the market. Marketing the product involves
showing customers how this product benefits them over the products sold by the
competition—also known as building a brand preference.
Maturity Stage
As the product gains over its competition, the product enters the maturity stage of the product
life cycle. The marketing mix during this stage involves efforts to build customer loyalty,
typically accomplished with special promotions and incentives to customers who switch from a
competitor’s brand.
Decline Stage
Once a product market is over saturated, the product enters into the decline stage of the product
life cycle. This is the stage where the marketing mix and marketing efforts decline. If the product
generated loyalty from customers, the company can retain customers during this stage, but does
not attract new sales from new customers. For the marketing mix that remains during the decline
stage, the focus is generally on reinforcing the brand image of the product to stay in a positive
light in the eyes of the product's loyal customers.
Q.NO-5
Marketing Environment
The marketing environment surrounds and impacts upon the organization. There are three key
elements to the marketing environment which are the internal environment, the
microenvironment and the macroenvironment. Why are they important? Well marketers build
both internal and external relationships. Marketers aim to deliver value to satisfied customers, so
we need to assess and evaluate our internal business/corporate environment and our external
environment which is subdivided into micro and macro.
Internal Environment
The internal environment has already been touched upon by other lessons on marketing teacher.
For example, the lessons on internal marketing and also on the functions within an organization
give a good starting point to look at our internal environment. A useful tool for quickly auditing
your internal environment is known as the Five Ms which are Men, Money, Machinery,
Materials and Markets. Here is a really quick example using British Airways. Looking internally
at men, British Airways employees pilots, engineers, cabin crew, marketing managers, etc.
Money is invested in the business by shareholders and banks for example. Machinery would
include its aircraft but also access to air bridges and buses to ferry passengers from the terminal
to the aircraft. Materials for a service business like British Airways would be aircraft fuel called
kerosene (although if we were making aircraft materials would include aluminium, wiring, glass,
fabric, and so on). Finally markets which we know can be both internal and external. Some
might include a sixth M, which is minutes, since time is a valuable internal resource.
A company has to have an overall company mission which defines what the company is all
about and what makes it unique. For example, is the firm concerned with selling consumer goods
(B2C), weapons, heavy machinery (B2B), etc.? Remember it is important not to suffer from
marketing myopia, and this is why a business must be defined in terms of a need that is being
satisfied and not an existing product. The mission statement will also define the culture, values,
and philosophy of the firm. The mission statement provides direction for a firm so that
employees, customers, suppliers, investors, and other stakeholders know what the the
organization is about and where it is headed. If done well, it also serves to motivate and inspire
employees. A good mission statement considers the needs of all stakeholders and makes it clear
that the firm is not only concerned about profit. A large number of papers and books have been
written about corporate social responsibility (CSR). More will be said about CSR in later
chapters.
The marketing plan is an important document used by companies for planning. It is a road map
and surveys the business environment, describes problems, threats and opportunities in the
industry, contains a marketing strategy, and has financial projections/budgets. Do not confuse a
marketing plan with a business plan. A marketing plan is concerned more with strategy whereas
a business plan is more concerned with financial information. The primary purpose of a business
plan is to raise money from venture capitalists or bankers; the primary purpose of a marketing
plan is to provide direction for a company. The marketing plan is an integral part of the business
plan.
Contents of the Marketing Plan

I. Executive Summary and Table of Contents
The marketing plan begins with a brief synopsis of the key points and major
recommendations. The Table of Contents follows the executive summary.

II. Environmental Analysis (also known as Situation Analysis)
Before starting this section, the organization might first discuss its mission statement.
Section II provides information about the firm's current situation with regard to the current
marketing environment. It is sometimes referred to as a situation analysis. The marketing
environment must be discussed. This section will look at external environmental factors such as
the market, competition, marketing channels, economy, political climate, technology, legal and
political climates, and sociocultural factors. This section will also examine internal
environmental factors such as costs, profits, human resources, financial resources, and the age of
plant and equipment. The target markets also have to be studied. Have their needs
changed? Is the company doing a good job of satisfying the needs of its customers? Finally, the
organization has to ascertain whether their marketing objectives are still reasonable given the
changing environment. The information in section II is used to help the organization with the
SWOT analysis
III. SWOT Analysis
SWOT has become a buzzword in marketing today: Companies should know their Strengths,
Weaknesses, Opportunities, and Threats. A company has to understand its internal Strengths and
Weaknesses and also be cognizant of external opportunities and threats. To do a SWOT analysis
correctly, you must know about your competition and the industry. After the SWOT analysis is
complete, a company has to build on the strengths that is has, do everything possible to eliminate
or correct weaknesses, take advantage of opportunities, and do what it takes to minimize or avoid
threats.

IV. Marketing Objectives
Based on the SWOT analysis, The organization's major objectives are stated. This makes it clear
to all what the organization is trying to accomplish through its marketing plan. Objectives are in
terms of such factors as market share, profitability, and/or sales volume. Other factors to be
considered include innovation (introduce five new products), image, distribution, etc.
V. Marketing Strategies
A marketing strategy, as you know, has two key components: a target market and a marketing
mix to satisfy the target market. A good marketing strategy enables a firm to achieve its
objectives. A firm will succeed if it can use its strategy to achieve an advantage over the
competition. A successful product offers either a quality advantage and/or price advantage over
competing brands. How the product or service will be positioned is also discussed in this section.
Positioning will be discussed in a later chapter.
VI. Marketing Implementation/Action Program
This section describes the actual marketing programs that will be undertaken in order to
implement the marketing strategy. Some issues that must be discussed include what specific
actions must be taken? Who will do it? When is it going to be done? How much will it cost?

VII. Financial Projections/Evaluation and Control
Financial projections are required so that the organization can determine whether the marketing
plan is actually working. The detailed financial projections are done on a monthly or quarterly
basis. These projections are usually in terms of sales volume, profits, and/or market share. Costs
must also be projected since total profit = total revenue - total cost. If the marketing plan is not
working, it is very important for the organization to be able to pinpoint the cause as soon as
possible and have a contingency plan.