MBA – II SEM

Financial Management - MB0030

Set – 1

Q1. Explain the meaning of marketing and its importance in business?

Ans. Marketing Management is a business discipline which is focused on the practical

application of marketing techniques and the management of a firm's marketing resources
and activities. Rapidly emerging forces of globalization have compelled firms to market
beyond the borders of their home country making International marketing highly significant
and an integral part of a firm's marketing strategy. Marketing managers are often
responsible for influencing the level, timing, and composition of customer demand accepted
definition of the term. In part, this is because the role of a marketing manager can vary
significantly based on a business' size, corporate culture, and industry context. For example,
in a large consumer products company, the marketing manager may act as the overall
general manager of his or her assigned product To create an effective, cost-efficient
Marketing management strategy, firms must possess a detailed, objective understanding of
their own business and the market in which they operate. In analyzing these issues, the
discipline of marketing management often overlaps with the related discipline of strategic
planning.

Traditionally, marketing analysis was structured into three areas: Customer analysis,
Company analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has
become fashionable in some marketing circles to divide these further into certain five "Cs":
Customer analysis, Company analysis, Collaborator analysis, Competitor analysis, and
analysis of the industry Context.

Department analysis is to develop a schematic diagram for market segmentation, breaking

down the market into various constituent groups of customers, which are called customer
segments or market segmentations. Marketing managers work to develop detailed profiles of
each segment, focusing on any number of variables that may differ among the segments:
demographic, psychographic, geographic, behavioural, needs-benefit, and other factors may
all be examined. Marketers also attempt to track these segments' perceptions of the various
products in the market using tools such as perceptual mapping.

In company analysis, marketers focus on understanding the company's cost structure and
cost position relative to competitors, as well as working to identify a firm's core competencies
and other competitively distinct company resources. Marketing managers may also work with
the accounting department to analyze the profits the firm is generating from various product
lines and customer accounts. The company may also conduct periodic brand audits to assess
the strength of its brands and sources of brand equity.

The firm's collaborators may also be profiled, which may include various suppliers,
distributors and other channel partners, joint venture partners, and others. An analysis of
complementary products may also be performed if such products exist.

Marketing management employs various tools from economics and competitive strategy to
analyze the industry context in which the firm operates. These include Porter's five forces,
analysis of strategic groups of competitors, value chain analysis and others. Depending on
the industry, the regulatory context may also be important to examine in detail.

In Competitor analysis, marketers build detailed profiles of each competitor in the market,
focusing especially on their relative competitive strengths and weaknesses using SWOT
analysis. Marketing managers will examine each competitor's cost structure, sources of
profits, resources and competencies, competitive positioning and product differentiation,
degree of vertical integration, historical responses to industry developments, and other
factors.
Marketing management often finds it necessary to invest in research to collect the data
required to perform accurate marketing analysis. As such, they often conduct market
research (alternately marketing research) to obtain this information. Marketers employ a
variety of techniques to conduct market research, but some of the more common include:
• Qualitative marketing research, such as focus groups
• Quantitative marketing research, such as statistical surveys
• Experimental techniques such as test markets
• Observational techniques such as ethnographic (on-site) observation

Marketing managers may also design and oversee various environmental scanning and
competitive intelligence processes to help identify trends and inform the company's
marketing analysis.
Though marketing is tied to Sales it continues to be an expenditure that is hard to link to
growth in sales. Given the economic down turn many world economies or companies are
facing... how would a function like marketing justify itself as a necessary expenditure so it
would not be cut... budget or as a department.
In a downturn, marketing becomes even more important to the company's bottom line,
making a profit. A marketing plan is key to establishing the dimensions of your market,
where you fit according to your product and identifying where a company should focus its
marketing budget to achieve the best overall results.
In a downturn, marketing helps to identify new markets, target new customers and
determine the value of the product. If the product that is currently in production does not
have a substantial customer base of support, if sales are slipping and competition is securing
your former market share. Marketing helps to identify the need for a product revitalization
or reinvention.

Q2.Explain the relevance of BCG matrix and GE matrix with examples

Ans. This model is used to identify company’s SBU’s position in the market. This model
identifies the SBU’s strengths weaknesses, opportunities and threats on the basis of market
growth rate and relative market share.
This model is also known as growth share matrix. The origin of the Boston Matrix lies with
the Boston Consulting Group in the early 1970s. It was devised as a clear and simple method
for helping corporations decide which parts of their business they should allocate their
available cash to. Today, this is as important as ever because of the limited availability of
credit.

However, the Boston Matrix is also a good tool for thinking about where to apply other finite
resources: people, time and equipment. Market share is the percentage of the total market
that is being serviced by your company, measured either in revenue terms or unit volume
terms. The higher your market share, the higher proportion of the market you control. The
Boston Matrix assumes that if you enjoy a high market share you will normally be making
money (this assumption is based on the idea that you will have been in the market long
enough to have learned how to be profitable, and will be enjoying scale economies that give
you an advantage).

The question it asks is, "Should you be investing your resources into that product line just
because it is making you money?" The answer is, "not necessarily." This is where market
growth comes into play. Market growth is used as a measure of a market's attractiveness.
Markets experiencing high growth are ones where the total market is expanding, which
should provide the opportunity for businesses to make more money, even if their market
share remains stable.

By contrast, competition in low growth markets is often bitter, and while you might have high
market share now, what will the situation look like in a few months or a few years? This
makes low growth markets less attractive
Axis components:

a. Market Growth rate: the rate at which market is growing.

b. Relative Market Share: market share of the SBU dived by the market share of the
largest competitor.

Model Components:

These groups are explained below:

Dogs:

Low Market Share / Low Market Growth. In these areas, SBU’s market presence is weak, so
it's going to take a lot
of hard work to get noticed. Also, you won't enjoy the scale economies of the larger players,
so it's going to be difficult to make a profit.

Cash Cows:

High Market Share / Low Market Growth Here, SBU’s are well-established, so it's easy to get
attention and exploit
new opportunities. However it's only worth expending a certain amount of effort, because the
market isn't growing and your opportunities are limited. here we can say cash cow can be
milked.

Stars:

High Market Share / High Market Growth Here SBU’s are well-established, and growth is
exciting! These are
fantastic opportunities, and you should work hard to realize them.

Question Marks (Problem Child)

Low Market Share / High Market Growth These are the opportunities no one knows what to
do with. They aren't
generating much revenue right now because you don't have a large market share. But, they
are in high growth markets so the potential to make money is there. Here there are two
choices, either to invest heavily to bring it to star position or divest or liquidate from that
position. Question Marks might become Stars and eventual Cash Cows, but they
could just as easily absorb effort with little return. These opportunities need serious thought
as to whether increased investment is warranted.

Key Points

The Boston Matrix is an effective tool for quickly assessing the options open to you, both on a
corporate and personal basis. With its easily understood classification into "Dogs", "Cash
Cows", "Question Marks" and "Stars", it helps you quickly and simply screen the
opportunities open to you, and helps you think about how you can make the most of them.

Limitations:

As any other marketing theories in the field, the BCG matrix model is not perfect either.
There are according problems of this theory. Some limitations concerning the particular use
of BCG include:

1. Only two dimensions – market share and product or service growth rate, are employed.
These are the first limitations.
2. How to define market and how to get data about market share are also problems.
3. High market shares don’t always necessarily lead to profit at all times. It is not the only
success factor.
4. Low share or niche businesses can be profitable too, which means in the real world some
Dogs can be more profitable than cash Cows.
5. The model cannot reflect the growth rates of the general market and market growth is not
the only indicator for market attractiveness.
6. The model also neglects the effects of synergy between different business units.

The GE screen matrix is essentially a derivation of the Boston Consulting Group’s Boston
growth matrix. It was developed by McKinsey and Co. for General Electric as it had been
recognized that the Boston Consulting Group matrix was not flexible enough to take broader
issues into account The GE matrix cross-references market attractiveness and business
position using three criteria for each – high, medium and low. The market attractiveness
considers variables relating to the market itself, including the rate of market growth, market
size, potential barriers to entering the market, the number and size of competitors, the
actual profit margins currently enjoyed, and the technological implications of involvement in
the market. The business position criteria look at the business’s strengths and weaknesses in
a variety of fields. These include its position in relation to its competitors, and the business’s
ability to handle product research, development and ultimate production. It also considers
how well placed the management is to deploy these resources. The matrix differs in its
complexity compared with the Boston Consulting Group matrix. Superimposed on the basic
diagram are a number of circles. These circles are of variable size (see Figure 22). The size of
each represents the size of each market. Within each circle is a clearly defined segment
which represents the business’s market share within that market. The larger the circle, the
larger the market, and the larger the segment, the larger the market share.

Q3. What to do mean by MIS? Explain its benefits, types and components?

Ans. A management information system (MIS) is a system or process that provides

information needed to manage organizations effectively [1]. Management information
systems are regarded to be a subset of the overall internal controls procedures in a business,
which cover the application of people, documents, technologies, and procedures by
management accountants to solve business problems such as costing a product, service or a
business-wide strategy. Management information systems are distinct from regular
information systems in that they are used to analyze other information systems applied in
operational activities in the organization.[2] Academically, the term is commonly used to
refer to the group of information management methods tied to the automation or support of
human decision making, e.g. Decision Support Systems, Expert systems, and Executive
information systems.
MIS as System: MIS is a system, which makes available the right information to the right
person at the right place, at the right time, in the right form & at the right cost.

At the start, in businesses and other organizations, internal reporting was made manually
and only periodically, as a by-product of the accounting system and with some additional
statistic(s), and gave limited and delayed information on management performance.
Previously, data had to be separated individually by the people as per the requirement and
necessity of the organization. Later, data was distinguished from information, and instead of
the collection of mass of data, important, and to the point data that is needed by the
organization was stored.

Early on, business computers were mostly used for relatively simple operations such as
tracking sales or payroll data, often without much detail. Over time these applications
became more complex and began to store increasing amounts of information while also
interlinking with previously separate information systems. As more and more data was stored
and linked man began to analyze this information into further detail, creating entire
management reports from the raw, stored data. The term "MIS" arose to describe these
kinds of applications, which were developed to provide managers with information about
sales, inventories, and other data that would help in managing the enterprise. Today, the
term is used broadly in a number of contexts and includes (but is not limited to): decision
support systems, resource and people management applications, ERP, SCM, CRM, project
management and database retrieval application.

An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in
the form of information needed to carry out the functions of management. In a way it is a
documented report of the activities that were planned and executed. According to Philip
Kotler "A marketing information system consists of people, equipment, and procedures to
gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to
marketing decision makers."

The terms MIS and information system are often confused. Information systems include
systems that are not intended for decision making. The area of study called MIS is
sometimes referred to, in a restrictive sense, as information technology management. That
area of study should not be confused with computer science. IT service management is a
practitioner-focused discipline. MIS has also some differences with Enterprise Resource
Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision
support.

Any successful MIS must support a businesses Five Year Plan or its equivalent. It must
provide for reports based up performance analysis in areas critical to that plan, with feedback
loops that allow for titivation of every aspect of the business, including recruitment and
training regimens. In effect, MIS must not only indicate how things are going, but why they
are not going as well as planned where that is the case. These reports would include
performance relative to cost centers and projects that drive profit or loss, and do so in such a
way that indentifies individual accountability, and in virtual real-time.

Benefits

1. Improves personal efficiency

2. Expedites problem solving(speed up the progress of problems solving in an
organization)
3. Facilitates interpersonal communication
4. Promotes learning or training
5. Increases organizational control
6. Generates new evidence in support of a decision
7. Creates a competitive advantage over competition
8. Encourages exploration and discovery on the part of the decision maker
9. Reveals new approaches to thinking about the problem space
 10. Helps automate the Managerial processes.

Decision Support Systems (DSS) are a specific class of computerized information systems
that supports business and organizational decision-making activities

Definition: Management Information Systems (MIS) is the term given to the discipline
focused on the integration of computer systems with the aims and objectives on an
organisation. It does the following function .
- sub serves managerial function
- collects stores , evaluates information systematically and routinely
- supports planning and control decisions
- Includes files , hardware , software , software and operations research models
It Facilitates planning
In Minimizes information overload
MIS Encourages Decentralization
It brings Co ordination
It makes control easier
MIS assembles, process , stores , Retrieves , evaluates and Disseminates the information

Types
Management information systems are those systems that allow managers to make decisions
for the successful operation of businesses. Management information systems consist of
computer resources, people, and procedures used in the modern business enterprise. The
term MIS stands for management information systems. MIS also refers to the organization
that develops and maintains most or all of the computer systems in the enterprise so that
managers can make decisions. The goal of the MIS organization is to deliver information
systems to the various levels of corporate managers. MIS professionals create and support
the computer system throughout the company. Trained and educated to work with corporate
computer systems, these professionals are responsible in some way for nearly all of the
computers, from the largest mainframe to the desktop and portable PCs.

Management information systems can be used as a support to managers to provide a

competitive advantage. The system must support the goals of the organization. Most
organizations are structured along functional lines, and the typical systems are identified as
follows:
Accounting management information systems: All accounting reports are shared by all
levels of accounting managers.

Financial management information systems: The financial management information

system provides financial information to all financial managers within an organization
including the chief financial officer. The chief financial officer analyzes historical and current
financial activity, projects future financial needs, and monitors and controls the use of funds
over time using the information developed by the MIS department.

Manufacturing management information systems: More than any functional area,

operations have been impacted by great advances in technology. As a result, manufacturing
operations have changed. For instance, inventories are provided just in time so that great
amounts of money are not spent for warehousing huge inventories. In some instances, raw
materials are even processed on railroad cars waiting to be sent directly to the factory. Thus
there is no need for warehousing.
Marketing management information systems: A marketing management information
system supports managerial activity in the area of product development, distribution, pricing
decisions, promotional effectiveness, and sales forecasting. More than any other functional
area, marketing systems rely on external sources of data. These sources include competition
and customers, for example.

Human resources management information systems: Human resources management

information systems are concerned with activities related to workers, managers, and other
individuals employed by the organization. Because the personnel function relates to all other
areas in business, the human resources management information system plays a valuable
role in ensuring organizational success. Activities performed by the human resources
management information systems include, work-force analysis and planning, hiring, training,
and job assignments.

Components

Components of MIS:-
1) Marketing Research System (MRS)
2) Marketing Intelligence System (MIS)
3) Internal Record System (IRS)
4) Decision Support System (DSS)

Q.4.Suppose you need to conduct a small marketing research in your neighborhood

regarding the purchase and use of toothpastes, what will be your approach in the
process.

Ans.: A Toothpaste that uses 'concentrated' rare herbs and oils so effectively for soothing
troubled gums, protecting teeth and adding 'extended' freshness that you'll even wonder why
you EVER used mouthwash…

Reviews: “Since I began using your Pepsodent toothpaste, I've had the best checkups that
I've ever had. The person who cleans my teeth is very impressed with my gums and has
begun using Herbodent herself and is recommending it to her other patients. "

"I can't believe it but after less than a month, my gums are not bleeding. I was using another
product from the dentist's office and it did not help at all, but your toothpaste really, really
worked for me. I am very happy! I am going to need a lifetime's supply! "

Recognizing the power of nature's gifts, Health and Yoga recommends a natural based,
herbal toothpaste which has been manufactured using extracts and oils of natural
ingredients.

In fact, with fluoride in toothpastes and alcohol in mouthwashes being increasingly linked
to oral cancer by scientists worldwide, the switch to natural-based tooth and gum cleansers
and mouth fresheners is not only suggested but actually encouraged…even more so for
children with their delicate gums and susceptible teeth.

Pepsodent Complete Care Enamel-Safe Whitening Toothpaste

New and Improved! Complete Protection for Strong Enamel and Healthy Gums

• Promotes Healthy Teeth and Gums

 • Special Formula to Help Control Tartar
• Fights Cavities. Gently Removes Plaque and Stains to Whiten Teeth
• Contains Enamel-Strengthening Fluoride for Effective Cavity Protection
• Smooth Mint Flavor in a convenient 6 oz tube

Active Ingredients: Sodium Fluoride (0.24%) (Purpose: anticavity toothpaste)

Inactive Ingredients: Sorbitol, Water, Hydrated Silica, PEG 32, Sodium Lauryl Sulfate, SD
Alcohol 38B, Flavor, Cellulose Gum, Zinc Citrate Trihydrate, Sodium Saccharin, Titanium
Dioxide

Q5. Explain the consumer buying decision process with respect to new product.
Give example?

Ans. Research suggests that customers go through a five-stage decision-making process in

any purchase. This is summarised in the diagram below:

This model is important for anyone making marketing decisions. It forces the marketer to
consider the whole buying process rather than just the purchase decision (when it may be
too late for a business to influence the choice!)

The model implies that customers pass through all stages in every purchase. However, in
more routine purchases, customers often skip or reverse some of the stages.

For example, a student buying a favourite hamburger would recognise the need (hunger) and
go right to the purchase decision, skipping information search and evaluation. However, the
model is very useful when it comes to understanding any purchase that requires some
thought and deliberation.

The buying process starts with need recognition. At this stage, the buyer recognises a
problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to
a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and
chocolate muffins).

An “aroused” customer then needs to decide how much information (if any) is required. If the
need is strong and there is a product or service that meets the need close to hand, then a
purchase decision is likely to be made there and then. If not, then the process of information
search begins.

A customer can obtain information from several sources:

•Personal sources: family, friends, neighbours etc

• Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale
displays
• Public sources: newspapers, radio, television, consumer organisations; specialist magazines
• Experiential sources: handling, examining, using the product

The usefulness and influence of these sources of information will vary by product and by
customer. Research suggests that customers value and respect personal sources more than
commercial sources (the influence of “word of mouth”). The challenge for the marketing
team is to identify which information sources are most influential in their target markets.

In the evaluation stage, the customer must choose between the alternative brands, products
and services.

How does the customer use the information obtained?

An important determinant of the extent of evaluation is whether the customer feels

“involved” in the product. By involvement, we mean the degree of perceived relevance and
personal importance that accompanies the choice.

Where a purchase is “highly involving”, the customer is likely to carry out extensive
evaluation.

High-involvement purchases include those involving high expenditure or personal risk –

for example buying a house, a car or making investments.

Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in
the supermarket) have very simple evaluation processes.

Why should a marketer need to understand the customer evaluation process?

The answer lies in the kind of information that the marketing team needs to provide
customers in different buying situations.

In high-involvement decisions, the marketer needs to provide a good deal of information

about the positive consequences of buying. The sales force may need to stress the important
attributes of the product, the advantages compared with the competition; and maybe even
encourage “trial” or “sampling” of the product in the hope of securing the sale.

Post-purchase evaluation - Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It is common for customers to
experience concerns after making a purchase decision. This arises from a concept that is
known as “cognitive dissonance”. The customer, having bought a product, may feel that an
alternative would have been preferable. In these circumstances that customer will not
repurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade the
potential customer that the product will satisfy his or her needs. Then after having made a
purchase, the customer should be encouraged that he or she has made the right decision.
Q6. Explain the different consumer behaviour models?

ENVIRONMENTAL FACTORS BUYER'S BLACK BOX

BUYER'S
Marketing Environmental Buyer Decision RESPONSE
Stimuli Stimuli Characteristics Process

Problem
recognition
Economic Attitudes
Information Product choice
Product Technological Motivation
search Brand choice
Price Political Perceptions
Alternative Dealer choice
Place Cultural Personality
evaluation Purchase timing
Promotion Demographic Lifestyle
Purchase decision Purchase amount
Natural Knowledge
Post-purchase
behaviour

The black box model shows the interaction of stimuli, consumer characteristics, decision
process and consumer responses.[1] It can be distinguished between interpersonal stimuli
(between people) or intrapersonal stimuli (within people). The black box model is related to
the black box theory of behaviourism, where the focus is not set on the processes inside a
consumer, but the relation between the stimuli and the response of the consumer. The
marketing stimuli are planned and processed by the companies, whereas the environmental
stimulus are given by social factors, based on the economical, political and cultural
circumstances of a society. The buyers black box contains the buyer characteristics and the
decision process, which determines the buyers response.

The black box model considers the buyers response as a result of a conscious, rational
decision process, in which it is assumed that the buyer has recognized the problem.
However, in reality many decisions are not made in awareness of a determined problem by
the consumer.

Information search

Once the consumer has recognised a problem, they search for information on products and
services that can solve that problem. Belch and Belch (2007) explain that consumers
undertake both an internal (memory) and an external search.

Sources of information include:

• Personal sources
• Commercial sources
• Public sources
• Personal experience

The relevant internal psychological process that is associated with information search is
perception. Perception is defined as 'the process by which an individual receives, selects,
organises, and interprets information to create a meaningful picture of the world'

The selective perception process

Stage Description
-Selective exposure consumers select which promotional messages they will expose
themselves to.
-Selective attention consumers select which promotional messages they will pay attention to
- Selective comprehension consumer interpret messages in line with their beliefs, attitudes,
motives and experiences
- Selective retention consumers remember messages that are more meaningful or important
to them

The implications of this process help develop an effective promotional strategy, and select
which sources of information are more effective for the brand.CV

Information evaluation

At this time the consumer compares the brands and products that are in their evoked set.
How can the marketing organization increase the likelihood that their brand is part of the
consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the
functional and psychological benefits that they offer. The marketing organization needs to
understand what benefits consumers are seeking and therefore which attributes are most
important in terms of making a decision.

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase
decision. Sometimes purchase intention does not result in an actual purchase. The marketing
organization must facilitate the consumer to act on their purchase intention. The organisation
can use variety of techniques to achieve this. The provision of credit or payment terms may
encourage purchase, or a sales promotion such as the opportunity to receive a premium or
enter a competition may provide an incentive to buy now. The relevant internal psychological
process that is associated with purchase decision is integration. Once the integration is
achieved, the organisation can influence the purchase decisions much more easily.

Post purchase evaluation

It is common for customers to experience concerns after making a purchase decision. This
arises from a concept that is known as “cognitive dissonance”. The customer, having bought
a product, may feel that an alternative would have been preferable. In these circumstances
that customer will not repurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade the
potential customer that the product will satisfy his or her needs. Then after having made a
purchase, the customer should be encouraged that he or she has made the right decision. It
is not affected by advertisement.

Internal influences

Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality,

motivation, knowledge, attitudes, beliefs, and feelings. Consumer behaviour concern with
consumer need consumer actions in the direction of satisfying needs leads to his behaviour of
every individual depend on thinking

External influences

Consumer behaviour is influenced by: culture, sub-culture, locality, royalty, ethnicity, family,
social class, reference groups, lifestyle, and market mix factors.
 MBA – II SEM
Financial Management - MB0030
Set 2

Q1. Give a short note on bases of Segmentation?

Ans. Process of dividing the market according to similarities that exist among the various
subgroups within the market. The similarities may be common characteristics or common
needs and desires. Market segmentation comes about as a result of the observation that all
potential users of a product are not alike, and that the same general appeal will not interest
all prospects. Therefore, it becomes essential to develop different marketing tactics based on
the differences among potential users in order to effectively cover the entire market for a
particular product. There are four basic market segmentation strategies: behavior
segmentation, demographic segmentation, geographic segmentation, and physiographic
segmentation.

B. Analyse the pricing methods with relevant examples.

Pricing methods

The main methods used are:

• Return-on-investment pricing
• Cashflow pricing (payback)
• Competitor pricing
• Price slot pricing

The targets under each method will depend on whether the organisation aims to make a
quick profit or is aiming to build up a market or brand. Many publishers will not invest in new
titles, which do not make a fast profit on the first printing. Organisations with, or with access
to, large cash resources, can develop titles and lists for longer term potential. In young
economies most publishers producing textbooks for the Ministry of Education or local parents
will expect to recover all new title costs in the first printing even under competitive tendering
processes.

Method Explanation

Return on The investment in publishing terms is defined as the first edition

Investment costs up to printing stage (and perhaps including promotional
pricing 1 expenditure. The profit is the difference between revenues from
sales less printing, distribution and royalty costs. This method is not
widely used in book publishing as the “investment” per title is low

Return on The cashflows are calculated for all costs and revenues directly
Investment associated with the title as above. The Internal Rate of Return (IRR)
pricing 2 or Net Present Value (NPV) is then calculated. This method is
becoming more widely used in the media industries as computer
spreadsheets facilitate the calculation.

Cash flow This is a simplified version of Return on Investment Pricing. The

Pricing Payback rather than the Net Present Value is calculated. Both
methods can be combined usefully
 Competitor This is a pricing policy rather than method of calculation. The
pricing publisher will estimate the cost of developing a book that will sell
successfully against books from competitors. The selling price may
be different to those of competitors’ products if the publisher decides
to compete by offering a different treatment, design approach,
selling price, and pagination.

Price Slot Where market search proves the need for price slots, or major
pricing customers demand, publishers will “work backwards” to produce
books that will sell at the agreed slots

Q2. Explain the benefits and demerits of the different types of advertising media.
How will a marketer decided on the suitable media for his/her products?

Newspapers
Benefits
• Your ad has size and share, and can be as large as necessary to communicate as
much of a story as you care to tell.
• The distribution of your message can be limited to your geographic area.
• Split-run tests are available to test your copy and your offer.
• Free help is usually available to create and produce your ad.
• Fast closings. The ad you decide to run today can be in your customer's hands two
days from now.
Demerits
• Clutter. Your ad has to compete for attention against large ads run by supermarkets
and department stores.
• Poor photo reproduction limits creativity.
• A price-oriented medium. Most ads are for sales.
• Short shelf life. The day after a newspaper appears, it's history.
• Waste circulation. You're paying to send your message to a lot of people who will
probably never be in the market to buy from you.
• A highly visible medium. Your competitors can quickly react to your prices.

Magazines
Benefits
• High reader involvement means more attention will be paid to your advertisement.
• Less waste circulation. You can place your ads in magazines read primarily by buyers
of your product or service.
• The smaller the page (generally eight and half by eleven inches) permits even small
ads to stand out.
Demerits
Long lead times (generally 90 days) mean you have to make plans a long time in advance.
• The cost for space is higher in addition to higher creative costs.

Yellow Pages
Benefits
• Everyone uses the yellow pages.
• Ads are reasonably inexpensive.
 • You can easily track your responses.
Demerits
• All of your competitors are listed so you run the ad as a defensive measure.
• Ads are not very creative since they follow certain formats.

Radio
Benefits
• A universal medium. Can be enjoyed at home, at work, and while driving. Most people
listen to the radio at one time or another during the day.
• Permits you to target your advertising dollars to the market most likely to respond to
your offer.
• Permits you to create a personality for your business using only sounds and voices.
• Free creative help is ususally available.
• Rates can generally be negotiated.
• Least inflated medium. During the past ten years, radio rates have gone up less than
other media.
Demerits
• Because radio listeners are spread over many stations, to totally saturate your market
you have to advertise simultaneously on many stations.
• Listeners cannot refer back to your ads to go over important points.
• Ads are an interruption to the entertainment. Because of this, radio ads must be
repeated to break through the listener's "tune out" factor.
• Radio is a background medium. Most listeners are doing something else while
listening, which means your ad has to work hard to be listened to and understood.
• Advertising costs are based on ratings which are approximations based on diaries kept
in a relatively small fraction of a region's homes.

Television
Benefits
• Permits you to reach great numbers of people on a national or regional level.
• Independent stations and cable offer new opportunities to pinpoint local audiences.
• Very much an image-building medium.
Demerits
• Ads on network affiliates are concentrated in local news broadcasts and on station
breaks.
• Creative and production costs can quickly mount up.
• Lead time can result in items being sold out before ad runs.
• Most ads are ten or thirty seconds long, which limits the amount of information you
can communicate.

Direct Mail
Benefits
• Your advertising message is targeted to those most likely to buy your product or
service.
• Your message can be as long as necessary to fully tell your story.
• You have total control over all elements of creation and production.
 • A "silent" medium. Your message is hidden from your competitors until it's too late for
them to react.
Demerits
• Long lead times required for creative printing and mailing.
• Requires coordinating the services of many people: artists, photographers, printers,
etc.
• Each year over 20% of the population moves, meaning you must work hard to keep
your mail list up to date.
• Likewise, a certain percentage of the names on a purchased mailing list is likely to be
no longer useful.

Telemarketing
Benefits
• You can easily answer questions about your product/service.
• It's easy to prospect and find the right person to talk to.
• Cost effective compared to direct sales.
• Highly measurable results.
• You can get a lot of information if your script is properly structured.
Demerits
• Many business use telemarketing.
• Professionals should draft the script and perform the telemarketing in order for it to
be effective.
• Can be extremely expensive.
• Most appropriate for high-ticket retail items or professional services.

Q3. Write a note on new product development and product mix.

Ans. New product development: New product development NPD is a process which is
designed to develop, test and consider the viability of product which are new to the
market in order to ensure the growth or survival of the organisation.

New Product Development Process:

• Idea Generation and Screening

• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Product Development
• Test Marketing
• Commercialization

Product Mix: Product mix is a combination of products manufactured or traded by the same
business house to reinforce their presence in the market, increase market share and increase
the turnover for more profitability. Normally the product mix is within the synergy of other
products for a medium size organization. However large groups of Industries may have
diversified products within core competency. Larsen & Toubro Ltd, Godrej, Reliance in India
are some of the examples.

One of the realities of business is that most firms deal with multi-products .This helps a firm
diffuse its risk across different product groups/Also it enables the firm to appeal to a much
larger group of customers or to different needs of the same customer group .So when
Videocon chose to diversify into other consumer durables like music systems, washing
machines and refrigerators, it sought to satisfy the needs of the middle and upper middle
income group of consumers.

Likewise, Bajaj Electricals a household name in India has almost ninety products in i8ts
portfolio ranging from low value items like bulbs to high priced consumer durables like
mixers and luminaires and lighting projects .The number of products carried by a firm at a
given point of time is called its product mix. This product mix contains product lines and
product items .In other words it’s a composite of products offered for sale by a firm.

Q4. Select any brand of toilet soap and evaluate its positioning strengths or
weaknesses in terms of attributes, benefits, values, brand name and brand equity.
Also, examine how competitive brands influence the marketing strategies of the
selected soap?

LUX

Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. Lever
Brothers encouraged women to home launder their clothes without fear of satins and silks
being turned yellow by harsh lyes that were often used in soaps at the time. The flake-type
soap allowed the manufacturer some leeway from lye because it did not need to be shaped
into traditional cake-shaped loaves as other soaps were. The result was a gentler soap that
dissolved more readily and was advertised as suitable for home laundry use. Lux toilet soap
was introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play on the word
"luxury." Lux has been marketed in several forms, including bar and flake and liquid (hand
wash, shower gel and cream bath soap). Lux in step with the changing trends and evolving
beauty needs of the consumers, offers an exciting range of soaps and Body Washes with
unique elements to make bathing time more pleasurable. One can choose from a range of
skincare benefits like firming, fairness and moisturising. Lux stands for the promise of beauty
and glamour as one of India's most trusted personal care brands. Since its launch in India in
the year 1929, Lux has offered a range of soaps in different colours and world class
fragrances. Lux is a beauty soap of film stars. Lux recognized the need for a compelling
message about beauty that would resonate with women of today. From the 1930s right
through to the 1970s, Lux soap colours and packaging were altered several times to reflect
fashion trends. In 1958 five colours made up the range: pink, white,
blue, green and yellow. People enjoyed matching their soap with their bathroom colours. In
the early 1990s, Lux responded to the growing trend away from traditional soap bars by
launching its own range of shower gels, liquid soaps and moisturizing bars. Lux beauty facial
wash, Lux beauty bath and Lux beauty shower were launched in 1992.
In 2004, the entire Lux range was re-launched in the UK to include five shower gels, three
bath products and two new soap bars. 2005 saw the launch of three exciting new variants
with dreamy names such as “Wine & Roses” bath cream, “Glowing Touch” and “Sparkling
Morning” shower gels. Lux has recently launched its two fruit extract variants – New Lux
Strawberry & Cream and Lux Peach & Cream contain a blend of succulent fruits & luscious
Chantilly cream. The most recent addition in the brand is Lux Crystal Shine.

Study of LUX with respect to 4 P’s

a. Product
A product is anything that can be offered to a market to satisfy a need or want. Products that
are marketed include physical goods, services, experiences, events, persons, places,
properties, organizations, information and ideas.
Product Classification
· LUX is a Tangible, Non Durable Good on the basis of this classification.
· LUX and other soaps fall into the category of Convenience Good

Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of a collection of
incentive tools, mostly short term, designed to stimulate quicker or greater purchase of
particular products or services by consumers or the trade.
Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy. Sales
promotion includes tools for
Prominent Sales Promotion Schemes Used By LUX
· Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer from
Delhi. According to the promotional offer that Lux unveiled in October 2000, a consumer
finding a 22-carat gold coin in his or her soap bar got an opportunity to win an additional 30
gm gold. The first 10 callers every week got a 30 gm gold each. The offer could be availed
only on 100 gm and 150 gm packs of Lux soap. · Lux celebrated 75 years of stardom with
the Har Star Lucky Star activity. All wrappers of Lux had a star printed inside them. If the
consumer found written inside the star, any number from “1” to “5”, she would get an
equivalent discount (in rupees) on her purchase from her shopkeeper. If the consumer found
“75 years” written inside the star, she will get a year’s supply of Lux free.

Price segments of toilet soaps

Segment Price/weight
Premium > Rs. 15 / 75 gms
Popular Rs. 8-15/75 gms
Economy < Rs. 8 /75 gms
However, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm),
giving in to the pressures of inflation. This paves the way for competing soap makers like
Godrej Consumer Products (GCPL) to take price increases. Lux has versions in all the three
price segments:
Recent pricing of Lux (100 g) Lux Crystal Shine Rs 17 Lux Festive Glow Rs 15 Mini Lux Rs
5

STRENGTHS OF LUX

1. Strong Market Research (door to door sampling is done once a year in Urban and Rural
areas)
2. Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts, Saffron,
Sandalwood Oil, and Honey to name a few)
3. Strong sales and distribution network backed by HLL
4. Strong brand image
5. Positioning focuses on the attractive beauty segment
6. Dynamically continuous innovation of the product and brand rejuvenation – new variants
(Aromatic Glow and Chocolate Seduction and Lux White Spa body wash) and innovative
promotions (22 carat gold coin promotion – ‘Chance Hai’)
7. Perceived to have high value for money (strong brand promotion but relatively lower price
which is a winning combination in the popular segment)
8. Though it is in popular segment, it is having mass appeal/market presence across all
segments (15% of the soap market captured by Lux (sales / volume)
9. Unique advantage of having access to resources and assets of HLL

WEAKNESSES
1. Lux is mainly positioned as beauty soap targeted towards women, hence it lacks unisex
appeal
2. Usage rate/ wear rate is high and is generally mushy and soggy
3. Some variants like the sunscreen, International variant did not do well in the market
4. Certain advertisements like the recent one with Shah Rukh Khan resulted in controversial
interpretations of the message of the advertisement and lead to some loss of focus (of
message of the advertisements)
5. Stock out problems - replenishment time is high in semi-urban/rural areas
6. Earlier positioning as the “soap of the stars” has somewhat alienated the brand from a
portion of the consumers especially in rural areas.
Q5. As a salesperson in a fast moving consumer goods company, What kind of
training and development methods do you feel are required? How important is
training for sales force and how can it be evaluated?

Customers — informed, professional salespeople continuously prepare to meet the service

and product needs of customers. Training salespeople gives customers the assurance that
you value and respect their time. Knowledgeable, educated sales people add value.
Customers trust and view them as business partners. Customers feel their needs come first
when trained salespeople work with them.

Company — Retention and morale is higher in companies that invest in the development of
all employees. Price seldom becomes an issue for the trained sales professional. Therefore
profit margins improve and predictability of earnings leads to job stability.

The trained sales force produces more with confidence. In addition, they’re aware of trends
in the market, technology, industry and environment. This knowledge enhances their ability
to sell and the reputation of your company.

Training programs should address knowledge, competencies, ability, capability and skills.

The factors affecting the development of a sales team include:

External — market and industry trends, customers, economy, government regulation,

society, competition, and personal bias.

Internal — company strategy, culture of the sales team, product lines and life cycle,
customer service support, etc.

Q6. What is International Marketing? What are the various strategies to enter
international market? Explain?

International Marketing is defined as “The performance of business activities designed to

plan, price, promote and direct the company’s flow of goods and services to consumers or
users in more than one nation for a profit”. A company that wants to sell their product in
other than domestic market should understand the environmental factor, consumer
behaviours, market forces and other character relevant to the international market. After
understanding the definition, several questions may arise in your mind like why marketer
should go to the international market?

International Market Entry Strategies

Organisation that plan to go for international marketing should answer some basic question
like:

a) In how many countries would the company like to operate

b) What are the types of countries it plans to enter. To answer the above question
companies evaluate each country against the market size, market growth and, cost
of doing business, competitive advantage and risk level.
Once the market is found to be attractive companies should decide how to enter this market.
Companies can enter the international market from any one of the following strategies they
are

Exporting: Exporting is the technique of selling the goods produced in the domestic country
in a follow country with some modifications for example Gokaldas textiles export the cloth to
different countries from India. Exporting may be indirect or direct. In case of indirect
exporting, companies works with independent international market intermediaries.

Licensing: According to Philip kotlor, licensing is a method of entering a follow market in

which the company enters into an agreement with a license in the follow market, offering the
right to use of manufacturing, process the trade market, patent, or other items of value for a
fee or royalty.

Contract Manufacturing: Company enters the international market with a tie up between
manufacturer to produce the product or the services. For example, Gigabyte technology had
target manufacturing agreement with D-Link India to produce and sell their mother boards.

Market Contracting: In this type a company enters the international market by providing
the no how of the product to the domestic manufacturer. The capital, marketing and other
activities are carried out by the local manufacturer hence its less risk too.

Joint Ownership: A form of joint venture in which an international company invest equally
with a domestic manufacturer therefore it also has equal right in the controlling operations.
For example, Barbara a lingeries manufacturer has joint venture with Gokaldas Images in
India.

Direct investment: In this method of international market entry, company invests in

manufacturing or assembling. The company may enjoy the low cost advantage of that
country. Many manufacturing forms invested directly in the Chinese market to get its low
cost advantage. Some governments provide incentives and companies benefits to the
company which manufacturers the product in their country. There is government restriction
in some countries to opt for direct investment, is it produce the jobs to the local people. This
made also debts on the country attractiveness. It may become risk if the market mature or
unstable government exists.