Marketing Mix Long Answer Type Questions

Question 1.
What do you mean by “product life cycle? Explain?
Answer:
Product life cycle is similar to human life cycle. It is defined as “an attempt to recognize distinct stages in the sales history of the product”. It is also defined as generalized model of sales and profit trends for a product class or category over a period of time.”

Stages of product life cycle:
PLC has 4 stages as showed in the diagram namely introduction, growth, maturity and decline.
Marketing Mix Long Answer Type Questions IMG 1

(a) Introduction:
It is the first step of PLC. In this stage product is introduced in the market, sales volume begins to grow but the rate of growth is slow. Profit is not be there because of low sales volume, large production and distribution company requires heavy advertising and sales promotion.

(b) Growth:
It is the period during which the product is accepted by customers and the traders. During this stage the rate of increase of sales turnover is very rapid profit also increase in proportion to sales. In the growth stage company gives top priority to sales volume and quality maintenance may have secondary preference. In this stage effective distribution and advertising are considered as key factors.

(c) Maturity:
During this stage keen competition brings pressure on prices increasing marketing expenditure and falling price will reduce profit. Additional expenditure . is involved in product modification and improvement of the product line marketers have to adopt new strategy to stimulate demand and face competition, through additional advertising and sales promotion.

(d) Saturation:
The saturation point occurs in the market when all potential buyer are using the product and company is having the work of selling product, consumption achievers a constant rate and the marketer have to concertrate on competitions to get more market share, price may fall rapidly and profit margin becomes small, company must make certain plan for improvement in product characteristics and production cost reduction to gain the market share for product.

(e) Decline stage:
After the reaching of peak point product slowly enter the decline stage and become obsolete, some time product may be gradually displaced by some new innovation. Competition covers the market and sales drops severely company have to reduce expenditure on advertising and sales promotion. Cost control becomes the key factors to generate profit.

Question 2.
Explain the various components of product planning.
Answer:
Product plan or strategy:
A product strategy is a company plan for marketing its products. We lay down product objectives. We develop a product design to achieve the set objectives. We have a product programme suitable to the products position in the life cycle. Product plan or strategy involves a number of issues to be resolved.

(1) Product line:
Product line is a group of products that are related either because they satisfy similar needs of different market segments, or because they satisfy different but related needs of a given market segment.

(2) Product mix:
Product mix implies all the products offered by a firm for sale. It may consist of a single product line or several lines of products.

(3) Packaging:
Packaging may be defined as the general group of activities in the planning of a,product. These activities concentrate on formulating a design of the package and producing an appropriate and attractive container or wrapper for a product.

(4) Labeling:
Label is a part of a product. It gives verbal information about the product and the seller

(5) Branding:
Brand preference is the activity of the consumers who prefer to buy only particular type of products.

(6) Organising for product planning and development:
Product planning involves decision regarding the products or service which the firm is to produce or sell. It is concerned with the estimation and analysis of potential markets, estimation of sales volume, searching and screening of new products, budgeting of costs, modification of existing productions and scrapping of marginal or unprofitable products.

Product planning involves decision making in the following areas which are termed as components of product planning.
(a) What changes have place or likely to take place in consumer demand, product characteristics must be designed to match the requirements of consumers. Therefore, the first step in product planning is the study of market to determine buyers needs.

(b) Which new products or improvements in existing products are necessary to meet changes in demand.

(d) Should the company expand or simplify its product line.

(e) How should the product by styled and designed and in what size, colour, materials quality should be produced.

(f) What package, brand and label should be used to each product.

(g) What services, warranties and amenties should be supplied along with product.
Thus product planning involves the formulation of product policy and guidelines regarding the nature and extent of goods and services that the firm is to provide to its target market.

(7) Product research and improvements:
In marketing product analysis and research is a study of consumers preference and habit as well as dealer preferences and habits relating to a given product. Such a study can determine the extent to which the product should be altered modified or adopted to meet exactly the existing demands of the customers and resellers. The study can also enable us to devise a new product exactly needed in the market.

Question 3.
What is product-positioning? Give examples of different positioning strategies.
Answer
Meaning of Product Positioning:
Product positioning is an aid to product planning. It shows where the proposed and or present brands are located in a market. This is technically defined as a process of identifying the needs of market segments, product strength and weakness and the extent to which competing products are received to meet customer needs.

The position of a product with consumers are fixed by Consumers themselves with or without the assistance of marketers. Marketers should plan position strategies that will give their products the greatest competitive advantage in selected target markets. The positioning strategies are based on product or service attitudes benefits, usage, class of users, against competitors etc.

Different positioning strategies:
The different positioning strategies are –
(i) Attributes positioning:
When a product is positioned on its specific attributes, it is known as attributes positioning. Example – Maruti Omni Van as a family car with its features more suitable to more people ad for more comforts.

(ii) Benefits as Basis:
When a product is positioned on the needs they bill or the benefits they offer it is known as positioning the product on benefits as basis. Example : Colgate toothpaste reduces cavity.

(iii) Classes of Users:
When a product is positioned for certain classes of users it is known as positioning on the basis of classes of users. Example : Johnson and Johnson Baby bath soap.

(iv) Against competitors:
In this positioning strategy, the product is positioned against a competitor. Example – Matador (Bajaj) Van is advertised giving comparative performance of the vehicle along with other makes.

(v) Advertisement changes:
In this strategy, an advertisement claim is different from that made earlier. Example: Bournavita advertisement claims it is a ‘Health, strength and energy drink.

(vi) Usage Occasions:
In this strategy, products are positioned according to usage occasions. Example – Usha Fans for a cool summer.

(vii) Product classes:
In this strategy, products are positioned with respect to product classes. Example – Sun flower cooking oil is positioned against groundnut oil.

(viii) Away from competitors:
In this strategy, products are positioned away from competitors. Example – Thanda bole to Coca Cola.

Question 4.
What steps are involved in new product development?
Answer:
There are seven steps in the planning and development of a new product.
(a) New product ideas:
In the first stage of hew product development company generates the new idea for introduction of new product in market. It finds out the detailed features of new model product Ideas may be contributed by scientists, professional designers, competitors customers, sates, force, top, management, deafens, etc., company should collect many number of ideas to get one commercially viable product.

(b) Ideas screening:
It is the second stage of new product development. In this stage company in evaluating all ideas and inventions. Poor and bad ideas are dropped out and through the process of elimination only most promising and profitable ideas are picked up for farther detailed investigation and research.

(c) Concept of development and testing:
In this stage of work only best selected ideas are studied in detail. They wit? be developed into mature product concepts. At this stage company can corporate consumer meaning into product ideas concept testing helps the company to choose the best among the alternative product concepts.

(d) Business analysis:
After the selection of best product concept it is the duty of the; company to – evaluate its market potential. Capital investment, rate of. return on capital etc. Business analysis is combination of marketing research, cost benefit analysis and probability analysis. Business analysis will prove the economic prospects of the new product concept. The proposed product must offer a realistic’profit objective.

(e) Product development and programme:
Under this stage the product idea is converted into the tangible physical product. This involves the design and formulation of the product and development of a technically and commercially method of manufacture. Product development involves developing the product features and’ farther development of manufacturing packing and distribution cost estimates.

(f) Test marketing:
After the product is examined it will be ready for mass production and marketing. But the marketers do not take the risk of mass marketing unless they are assured of positive market response. Therefore they resort to test marketing. Test marketing is the actual conduct of a marketing campaign with in a limited market for a limited period of time, it confirms the management about the product marketing at national level or international level.

(g) Commercialisation:
The final stage in product planning is commercialization of the product. Commercialization means the process of finally deciding the product profile in this stage products ope actually introduced into market place commercialization is the last step in product development process and it includes actual sale of product in the market.

Question 5.
What are the importance of branding?
Answer:
Following are the importance of good brand name –

Branded products can be easily recognized by the customer in the retail shop.
Branding enable the firm assured control over the market.
Branding creates an exclusive market for the product.
It differentiate the products from its rivals.
Branding reduces price flexibility.
Good brand and branding gives greater bargaining power to the manufacture with the dealer.
It reduces the advertising costs.
Powerful brands have the! capacity to create maintain and externa the demand for the product.
It helps to increase sales.
Consumers always prefer goods branded goods.
It protects the consumers against duplicate goods.
Branded products gives standard life style to consumers.
Branded goods are always supplied by firm continuously therefore there is no irregularity in supply of branded goods.
Branded products covers more market share and more number of customers.
It popularizes the product in the market.

Question 6.
What are the factors influencing pricing decision policy?
Answer:
Company’s pricing decisions are influenced by both the internal and external factors. These factors are –
(A) Internal factors:
(a) Organisational factors:
It means an internal arrangement for decision making and its implementation. These decisions are different from one company to other pricing decision is intended by production and market specialization.

(b) Product differentiation:
Product differentiation is the ability of a manufacturer to make his- product distinctive from others in the market therefore product differentiation makes the company to fix differentiated price rate to his product.

(c) Cost:
Product quality ingrediants and production costs determines the pricing, level of production and productivity influence the decision maker to take decision on pricing policy.

(d) Product life cycle:
The pricing policy is also influenced by the age of product. In the introduction stage of product price is usually fixed at high rate to cover preliminary expenditure and during the deceline stage price is fixed at low rate to- clear stock of product.

(e) Pricing objective:
Profit maximization in common objective of many companies therefore usually companies are fixing high rate to this product. But some companies are in the nature of service rendering and those companies are fixing low rate to this product.

(f) Functional position:
Functional position of manufacturer, wholesaler, retailer has its own impact on the firm’s pricing policy. If the firm has a longer channel of distribution the product price for the consumer is bound to be higher than in case of a smaller channel.

(B) External factors:
(a) Product demand:
Demand for the product is the most important single factor having tremendous impact on price, price policy and strategy followed by the firm.

(b) Competition :
Determination of price is influenced by present and potential competition. The competitions price helps the firms in setting its price. Therefore company should carefully study the competitors prices and the consumers reactions towards product in determining the price.

(c) Distribution channel;
Goods are available to consumers through middlemen each one of them has to be compensated for the service rendered. This compensation should be included in the consumer price. Therefore longer the distribution channel more will be the price for the product.

(d) Government:
Government interference also makes influence on pricing decision. If government increases tax the ultimate consumers will have to pay mote for the product.

(e) Economic conditions:
Economic conditions prevailing in the market and in the country influences price fixation usually prices are raised during inflation, because of increase in costs. During the periods of depression prices are reduced.

(f) Types of Buyers:
Price fixation is largely depends on the types of consumers. Different buyers have different motives and values. Quality, safety, status, symbol beauty hobby are the different factors taken into consideration from the buyers in their purchase.

(g) Other external factors:
Other external factors are sudden change in technology ecological, influence, resellers reactions etc., These are also taken into consideration in price fixation.

Question 7.
What are the different methods of pricing policy?
Answer:
Following are the different methods of pricing policy –
(a) Cost based method:

Cost – plus pricing
break – even analysis and target profit pricing.

(b) Buyers based method:

Perceived value pricing

Going rate pricing
Sealed bid pricing

(a) Cost based pricing:
(i) Cost plus pricing:
In this method of pricing manufacturing cost of a product serves as the base for price fixation. Management uses the policy of adding profit to cost of product to determine the price. Most of the manufactures are using this – method to cover manufacturing cost and to fix price by adding profit.

(ii) Break even analysis and target profit pricing:
it is also cost oriented approach. In this method break even analysis is the base for price fixation. Price is fixed, at a desired percentage return over and above the break even point.

(b) Buyer based method:
(i) Perceived value pricing:
Some companies are using this, method of price fixation, Companies are concentrating on buyer’s perception value not on the sellers cost as the key to pricing. This type of price fixation always depends on number of buyers to the product.

(c) Competition based method:
(i) Going rate pricing:
In this method of pricing price setting is largely related to the prices of competitors. Therefore under this method firm may charge more or less than the competitors price. This pricing method is popular where the costs are difficult to measure and competitive response is uncertain.

(ii) Seated bid pricing:
Under this methods firms bid for jobs. The firm fixes its prices on how the competitors price their product, it means that if the firm is to win a contract or a job it should quote less than the competitors. This method of pricing is selected by the firm only when the strong competitors are better and able to select appropriate prices.

Question 8.
Explain different kinds of pricing strategies and policies?
Answer:
(a) Geographic pricing;
Manufactures are concentrated in some areas but their consumers are throughout the country and world. Therefore firms adopt different prices at different area. The distance and transportation cost involved in moving the products from the place of production to different regions for marketing plays an important role in price fixation.

(b) Prestige pricing:
In this method price is based on the perceived value of a product. Many customers judge the quality of a product by its price. Consumers may think that higher the price better will be the quality. Therefore it is the duty of the firm to establish the value in the minds of the customers.

(c) Job work:
Government contracts are usually awarded through this method. It is called as tender. The expected is worked out indetail and quotation is placed. The minimum quoted price, is accepted and the work contract is entered into with the party.

(d) Skim-the cream pricing (High pricing):
This method is used for newly introduced product. In the initial stage of product introduction firm fixes high prices to cover preliminary expenditure. This is called as market skimming, generally extra ordinary or new fashionable products are introduced under this pricing strategy.

(e) Penetration pricing (Low pricing):
It is the opposite of high pricing system, in the product introduction stage firm fixes low price to cover more market and to attract large number customers towards the market for a product.

(f) One price policy:
Under single-price.policy single price is charged to all buyers without discriminating between regions and customers, terms of sale are same for similar qualities of product.

(g) Variable price policy:
Under this system seller will sell similar quantities to similar buyers at different prices. Certain favoured customers are offered lower prices. The terms of sale e.g. discount, offer etc. are.granted on unequal terms to buyers.

(h) Psychological pricing:
It is the practice of fixing odd price rates to products example Rs. 17.97 Rs. 999 etc. This policy is usually followed in consumer goods industry example Bata. Shoes company. This pricing strategy is based on the belief that a buyer is mentally prepared to pay a little less than the rounded figure.

(i) Customary pricing:
These prices are fixed by custom. This pricing system is adopted by chain stores e.g. soft drinks of all companies are priced under this method.

(j) Price lining:
Under this system pricing decisions are made only initially and such fixed prices remain constant over a long periods of time. Any charge in the market conditions are met by adjustments in the quality of merchandise.

(k) Administered pricing:
This is a practice of pricing the products for the market not on the basis of cost, competitive pressures etc., but only on the basis of the price policy decisions of the sellers. It remains unchanged for a longer period of time.

(l) Monopoly pricing:
In case of new product introduction stage if there is absence of competition, seller has a free hand in fixing the price such price will maximize the profit.

(m) Accepted pricing:
In this method price is fixed by the seller according to customer expectations. The response of the consumers to the price is analysed and later a price is fixed.

(n) Negotiated pricing:
This method is usually adopted by industrial suppliers manufacturers who require goods of highly specialized often negotiate and only then fix the price.

(o) By product pricing:
By products are produced in addition to main product. These by products.price is fixed by the seller taking selling and distribution cost into an account. Because production cost is not a main point in by product production. Therefore the aim of seller is to recover selling and distribution cost.

(p) Time pricing:
Price is charged according to time is called as time pricing.

(q) Two part pricing :
This method is followed in Service sectors according to this method price is divided into two parts viz. fixed price and variable price. For example Minimum auto fare upto 2 kms. is fixed irrespective of any fraction of 2 kms. Travelled there after for every kilometer price is charged.

(r) Product bundle pricing:
A group of product sold as a package is called as product bundle. example Tools kit, shaving set etc., The price of the such bundle is normally less than each individual products price.

(s) Market segment pricing policy:
Under this method customers will be divided into group based on some common features and a single price is charged to customers belonging to a segment. example Senior citizens and children are charged less fare in buses and other passengers are charged general high fare for bus service.

(t) Location pricing:
The prices charged will depend upon the location of supply of product or service. E.g. In hospital charges are different for general ward, special ward, etc.

Question 9.
What is pricing strategy? Explain the different polices and strategies followed by business firms.
Answer:
Pricing strategies are more specific than the objectives’and deal with situations in the foreceable future, that generally recur. It provides the framework and consistency needed by the firm to make reasonable, practicable and effective pricing decisions.

The different pricing strategies followed by the firm as follows:

Cost-oriented or cost-based pricing strategy.
Demand-oriented or Demand-based pricing strategy.
Cost-demand – oriented pricing strategy.
Competition-oriented or pricing strategy.

(a) Cost oriented or cost based pricing strategy:
It is also referred to as cost plus pricing. This policy assures that no product is sold at a loss but a fixed percentage of profit is added to the unit cost. Under this method, the pricing determination of a product is made on the basis of cost of production plus an assitional profit margin. The advantage of this strategy is that it is a simple and socially fair system, recovery of cost is guaranteed and can be applied in changing situations, The disadvantage is that it ignores demand and future cost.

(b) Demand-oriental or Demand-based pricing strategy:
Under this method demand of the product is considered while fixing the price i.e. price is fixed on the basis of demand for the product. The advantage of this method is that consumers preferences are considered and inefficiency on the manufacturer is penalized. The disadvantage is that it is socially unfair and does not ensure competitive harmony.

(c) Cost-demand – oriented pricing strategy:
Under this method, the prices of the competitors are taken into account while determining the price. This means that this method neither takes into account the cost of the product nor the demand of the product.

(d) Competition-oriented or pricing strategy:
This pricing strategy is based on the concept of break-even-point (i.e. where the sales revenue are equal to total cost). At break-even-point there will be neither profit nor toss. It helps in estimating the effects of different prices on profits.

Question 10.
Write a note on types of marketing channels.
Answer:
The most common routes used for bringing the precuts in the market from producer to consumer are as below.
(a) Manufacturer – consumer – channel (Direct sale):
This is shortest and simplest channel of distribution. It is a zero or direct channel of distribution in which goods are directly transferred from the producer to the consumer. There is no intermediaries involved in this channel there are three alternatives in direct sale to consumer.

Sale through advertising and direct methods, (mail/order selling)
Sale through travelling sales force (house to house selling).
Sale through retail shops of manufacturer, (manufacturers own large scale retail organization)

(b) Manufacturer retailer – consumer channel:
Between producer and consumer there is only one middleman called retailer. This is common channel for ready made garments shoes, textiles etc. departmental stores, chain stores, super market, co-operative stores are the examples for this type of channel of distribution under this method of distribution either the manufacturer or the retailer performs the function of wholesale.

(c) Manufacturer-Wholesaler-retailer-consumer:
Under pis channel of distribution manufacturer sells goods in large quantity of wholesale arid wholesaler sells it to retailer in small quantity and retailer sells goods to final consumer as and when demanded by the consumers. It is popular channel of distribution used for groceries, drugs etc.

(d) Manufacturer – agent – wholesaler – retailer – consumer:
In this channel of distribution producer uses the service of agent to distributor goods to wholesaler and than wholesaler to retailer and retailer to consumers. The channel of distribution is common for agricultural marketing.

(e) Manufacturer wholesaler-consumer:
In this channel of distribution wholesales acts, as a middleman between manufacturer and user of the product. This channel is mainly used for industrial goods. Example business buyers, government, consumer co-operative, hospitals educational institution etc. Buyers under this method of channel are not individual buyers they are institutional buyers. Therefore the scope of this channel is limited to the number of institutional buyers.

Question 11.
Explain the factors governing the choice of channels of distribution.
Answer:
Following are the factors influencing inflection of channel of distribution.
I. Product factors:
(a) Product nature:
Incase of industrial product buyers are limited in number therefore direct channel of distribution is preferable. But incase of consumer goods buyers or users are large in number and spread all over the world therefore indirect channel of distribution is suitable.

(b) Perishable nature:
Perishable goods like milk, bread, meat etc. have very short life therefore these goods requires direct channel to move them fast to the consumer.

(c) Cost of product:
High cost, and good quality product requires direct channel of distribution to customers. Because customers for these products are riot large in number but for how cost product general product indirect channel Of distribution is more suitable.

(d) Technical nature:
When a product is technically designed and more complex like computer, machineries etc., direct channel is relatively more useful. Because these type of goods requires skilled technicians help in its selling.

(e) Seasonal product:
Some products are demanded by the consumers during certain seasons only e.g. woolens are demanded during winter season. Therefore these goods are distributed to consumer through sales agents, retailers etc.

(f) Fashionable goods:
Businessman must distribute goods of new fashion to consumers quickly during the particular season only. Because there is a risk of style obsolescence in Case of fashion goods. Therefore wastage of time in distribution is a danger. Hence direct selling is best method of approaching customers.

(g) New product:
New product introduction requires aggressive selling system, therefore quick and fast movement of goods from seller to buyers is required exclusive franchise indirect channel is suitable for such products.

II. Market factors:
Channel of distribution selection depends on certain market factors also they are –
(a) Consumers:
Incase of large number of consumers to a product long channel of distribution is required. Because consumers are spread all over the world distributing the product through indirect channel of distribution is more suitable method. If consumers are concentrated in a small geographic location it is always advantageous to opt for a direct channel.

(b) Intermediaries:
Strength and weakness of intermediaries also influence in selection channel. If terms and condition of wholesaler or retailer are unfavorable a manufacturer would like to prefer direct channel by performing the work of wholesaler or retailer.

(c) Competitors:
The distribution channel used by the competitors influence in selection of channel. When the competitors are using a channel and have been successful in the distribution work, it is essential to adopt such type of channel to get success in the work.

III. Company factors:
(a) Financial ability of channel members:
Sometime manufacturers opt. for direct channel as they do not need the financial support and other facilities offered by the market intermediaries. On the other hand a financially weak company has to select an indirect channel out of financial compulsion.

(b) Experience:
Old and well established company wants to supply goods directly to consumers. But if the same company has good relationship with intermediaries than it opt for indirect channel of distribution.

(c) The extent of market control desired:
The channel selection is governed by the degree of market control desired by the company. That is the desire of the company to make Intermediaries behave and act in the manner desired by its management, the control may be in respect of retail price, product quotes etc.

(d) The company reputation:
Company reputation helps in appointment of intermediaries reputed company products are very easy to sell in the market. This is a plus point for the company to make channel as for as possible direct.

(e) The company marketing policies:
The company’s market policies influences greately on the selection of channel of distribution marketing policies includes policies on advertising delivery of goods, after sale services, and pricing all these influence the channel choice.

IV. Environmental factors:
(a) Economic factors:
During prospecting growth, and boom period intermediaries are willing to co-operate and ready to work because of assured and quick possible turn over and during the period of deflation intermediaries are not ready to participate because they find it very difficult to move the goods.

(b) Legal factors:
The legislative restrictions imposed by the government give final shape to the channel choice. The provisions of the MRTP Act 1969 prevents channel arrangements that tend to lesson competition create monopoly and those are objectionable to the very public interests.

(c) Fiscal structure:
In India sales tax rates vary from state to state. This sales fax paid by the company is a part of final price borne by final consumers and this plays an important role in designing channel arrangements.

Question 12.
What is channel management? Explain the steps involved in the management of channels intermediaries.
Answer:
Channel management refers to selecting and motivating middlemen arid evaluating their performance. More than selection of an appropriate channel and good intermediaries, it is essential that, for effective implementation of channel decisions and polices they are to be effectively managed.

The management of channel intermediaries involves the following step –

Selection of good intermediaries
Compensating intermediaries for their services.
Motivating intermediaries for better results
Co-ordinating the efforts of intermediaries
Control measures on intermediaries.

(i) Selection of good intermediaries:
Producers should distinguish the intermediaries on the basis of their experience, growth, profit record, co-operativeness, etc., while selecting an appropriate’ intermediary. For the purpose of identifying efficient intermediary, the producer may also take the help of the outsiders, if required.

(ii) Compensating intermediaries for their services:
Intermediaries perform various functions such as assembling, strong, transporting of goods, financing, risk bearing, grading etc., which helps the producers. Therefore, the producers should also see that the intermediaries are properly remunerated either monetarily or non-monetariiy.

(iii) Motivating intermediaries for better results:
If the producers want to perform better and better in the market than they should motivate the Intermediaries to work hard, honestly and efficiently. Producers can motivate the intermediaries by offering them higher margins, special deals, advertising allowances, sales can test etc.

(iv) Co-ordinating the efforts of intermediaries:
The producers must properly co – ordinate the activities of the intermediaries properly. When sales is high producer should supply sufficient quantity and when sales it tow producer should not pileup too much of stocks similarly the other activities should also be co-ordinated.

(iv) Control measures on intermediaries:
The producer must periodically evaluate the middlemen’s performance against standards which are pre-determined. Producers should not treat their dealers lightly and risk of losing their support such evaluation of intermediaries are essential for effective control on them.

Question 13.
Discuss the functions and services of a whole saler.
Answer:
Functions of wholesaler are as follows –
Wholesaler is one who sells to other middlemen institution, and individuals usually in fairly large granitites. Following are the function of wholesaler.

He collects goods available at different, location of manufactures and assembles them at a particular location.
He provides warehousing facility to the goods collected from different manufacturer.
He undertakes the risk of transporting goods from the warehouse of manufacturer to the warehouse of retailer.
He supplies goods on credit to retailer.
He bears the risk of loss due to change in price, damage during transportation, deterioration of quality theft etc.
He undertakes the risk of grading of goods purchased and packing and packaging them properly.
They provide market information both to the manufacturer and retailer.

Wholesalers render some value services both to the manufacturer and retailers.

Services to manufacturer:

Wholesaler purchase goods in large quantity from the manufacturer. As such the manufacturer enjoys the benefits of bulk selling.
Wholesaler relieves the manufacturers from the risk of distribution.
Wholesaler helps the manufacturer to keep the production cycle unaltered and regular.
Wholesaler purchases goods on cash basis as such there is no problem of lockup of capital.
Wholesale makes adjustment of demand and supply. As such them is stability’ in price.

Services to retailer :

Wholesaler relieves the retailer from holding large quantity of goods.
Retailer can save the time by making direct purchase from wholesaler.
Retailer gets the goods at his door as such economy in transport and packing can be enjoyed by him.
Retailer can make use of his capital effectively.
Retailer can get all information’s about the market through wholesaler.

Question 14.
Explain merits and demerits of advertising?
Answer:
Strength of advertising as a promotional tool.

It gives planned and controlled message to public.
It can contact and influence numerous people quickly.
It has the ability to deliver message to audience with particular demographic and socio economic features.
It can deliver the same message in a variety of context.
It can reach prospects that cannot be reached by salesmen.
It induces buyers to buy goods.
It offers a wide choice of channels for transmission of messages.
It is very useful to create maximum intrest and offer adequate knowledge of the hew product.
It increases and stabilizes sales turnover of seller.
It helps to maintain the existing market and explores the hew market.
It controls the product prices.
It reduces the burden of salesmen job.
It helps the consumer in taking buying decision.
It ensures better quality goods at reasonable creates.
It helps to uplift the standard of living of the people.
It helps to provide gainful employment opportunities to society people by increasing market for product.
It tries to increases the knowledge of customer towards the product.

Weakness of advertising (demerits of advertising):

It is less effective then personal selling and sates promotion in convincing and securing action.
It is less flexible than personal communication.
It cannot give answer for objections raised by public.
If is one-way means of communication.
Advertising media carry many messages competing to secure attention of audience simultaneously. Thus it cereates noise in communication.
Many adverting messages are unbelievable.
Rigidity in advertisement sometimes irritates the Customers.

Question 15.
Explain the types of advertising?
Answer:
Following are the various types of advertising –
(A) Based on the objectives:

informative advertising: This method of advertising is used by manufacturer when the product is newly introduced in the market. This kind of advertising gives information about product features.
Persuasive advertising: This method of advertising is used to boost the image, features and benefits in the use of product. Because it would create strong desires in the consumers, to buy the product and persuade him to act positive.
Reminder advertising: This advertising is used to remind the consumer during saturation or decline stage of product. This kind of advertising helps in repeat and countries sale of the product.

(B) Based on the geographical area covered:

National advertising: It is an advertisement of a product all through out nation. It is useful for the products which have national-level market.
Regional advertising: This advertising is ristricted to regional level because product is produced and sold at regional market only.
Local advertising: It is smallest advertising style in which locally produced goods information are communicated to local people.

Manufacturer advertising: When manufacturer takes the risk of advertising the product than it is called as manufacturer advertising.
Dealers advertising: Dealers are taking the responsibility of advertising the product.

(D) Product advertising:

Direct action advertising: This advertising directly induce the consumer to rush towards the shop to buy goods example Discount sale, extra offers etc.
Indirect action advertising: This brings gradual growth in sale by creating a positive image of the company and its products in the minds of the consumers.
Primary demand advertising: This is the method of advertising used for newly produced product. It is always informative in nature.
Comparative advertising: It is a strategy used in advertising by the advertises about the best quality of his product against competition substitute goods.

(E) Based on target consumers:

Consumer advertising: This is the advertisement method used to attract final users or consumers of the product.
Industrial advertising: It is the method of advertising used to give information about industrial product to industrial buyers.
Trade advertising: It is meant to target whole saler, retailers dealers and other middlemen.

(F) Based on others:

Institutional advertising: It is the advertisement method used to project the image of the company. E.g. Life insurance corporation, banks are doing institutional advertising.
Co-operative advertising: Manufactures and middlemen are jointly share the expenditure of advertising and combinely advertise the product.
Non commercial advertising: Non trading Oranizations are advertising their programme for seeing financial support from the public or the collection of donations.

Question 15.
Is advertising is waste do you agree? Give reasons.
Answer:
Before commencing the above subject, let us consider the arguments is favour and against the advertising.
Arguments in favour of advertisement:
(1) Advertising stimulates production, employment and income leading to rising purchasing power and better living standards.

(2) Commercialization of inventions, accelerated public acceptance of innovations, new products etc. can be realized only due to effective mass communication advertising.

(3) Informative advertising enables consumers to secure released and adequate information about all rival products and their relative merits. So the consumers can make the right choice.

(4) Advertising facilities mass production and mass distribution we have lesser unit cost of production as well, as lesser unit cost of distribution scientific marketing reduces cost of production. So customers are able to get the product at a competitive prices.

(5) Advertising builds up brand preference and brand loyalty. In the long run these are not possible under keep competition unless the brand quality is maintained and steadily improved by the manufacturer.

(6) Advertising has educative value also. It teaches us to adopt new ways of life and higher standard of living. It can educated the community to demand quality of life.

Arguments against advertising:

Expenditure on advertising becomes a part of the price of the product there by consumers have to pay high price than what the product is actually costs.
The money invested on advertising go waste if the advertisement is not noticed or ignored by the customers.
As advertising is quite expensive, now- a days it is used by big companies to monopolies the market.
The advertising can easily mislead the people by making unreliable claims.
It stimulate the people of purchase beyond their capacity and in turn discourage savings, affecting capital formation of the company.
Advertising is necessary only if there is product differentiation otherwise it is a waste.
With a view to make use of advertising, producers create trial differences in their products, valuable resources that can be used to create new industries are wasted in the production.

In Spite of various limitations, advertising is an essential marketing function in present day world -now- a – days advertising has become an integral part of not only our marketing process but also for our entire economic and social life. It is double edged instrument or tool in the marketing mix. If it is properly used it can be a boon or a blessing in distribution. But if it is misused, it can also act as a curse in distribution.

By itself it is no doubt a very fine device of demand creation and demand stimulation and can contribute a lot to investment, economic growth, rising income, rising standard of living and economic prosperity in any country. But some people are of the opinion that advertisement undermined social values, ultimately as stored earlier advertisement is not social justifiable because advertisement is a double edged tool, if it is used in a proper way, it has got off lot of advantages.

Question 16.
Explain the various media of advertising.
Answer:
An advertising medium is the means to deliver the advertising message. The advertiser will select the right message carrier by keeping in mind the cost, efficiency & specialties of the media.
(1) Newspapers: Of all the media, the newspaper is considered as the backbone of advertising programme, & it remains the most powerful message carrier even today.

(2) Magazines & Trade journals : The is one of the oldest media of advertising, Magzines can be special & general. If it is a special magazines, it will appeal to specific class of Consumers.

(3) Radio Advertisements: This media can even appeal to the illiterate people. The advertisement can be repeated in different programmes. Communicates with different types of people.

(4) Television Advertisement: In India., television was first commissioned in 1959, & Commercial telecasting started only in 1976, & Colour transmission in 1982. This is specialized Media, as is provides scientific synchronization of sound, light, Motion, Colour & immediately that no other medium does, except film.

(5) Film advertising: Business unit prepare short films or slides, which are shown before the start of the regular shows of during the intermission. Along with the film there will be running commentary on the features, uses & Superiority of the product.

(6) Outdoor or Mutual advertising: This is also known as position or Indirect advertising. This is the Media to reach the people when they are out of the doors, or traveling, than when they are in out doors, or traveling, than when they are in the home or offices. Her the advertising message is not deliver the audience.

Likinprint and broad cost media, but are plaid in strategic locations, where they are exposed to the audience who are on the move. This media catches attention of the people within a split of a second’s times. Its effectiveness can be seen from the fact that 97% of total adult population moved out of door every day.

(7) Transit advertising This is also known as traveling displays. It stands for all types of advertising signs or displays used in trains, buses, cars, autos, trucks and other such transportation vehicles & terminals or the stations from which they operate.

(8) Direct mail: This is the advertising media where in the advance sends messages directly to target customers by mail. The messages may be mailed in a variety of forms. Says letters, circulars, catalogues, folders, brochures etc., which may be informatics, persuasive & reminders.

Question 17.
What are the merits and demerits of personal selling?
Answer:
Advantages of personal selling:

It is useful method of promotional tool in launching the product.
It helps to adjust the products features according to customers needs and desires by colleting feedback from them.
It helps to increase in sales by persuading the customer to buy goods.
It helps to achieve target sales.
It is a two way communication process therefore it clarify the doubts of public.
It is useful for convincing new customers.
It tries to improves company image and goodwill.
There is less wastage of promotional expenditure under this process.
It is useful method for educating the buyer about product and service.
Salesman adjust the sales presentation on the spot to meet objections and reactions of the his buyers in order to gain action.

Disadvantages of personal selling:

The cost of developing and maintain efficient sales force is quite high.
Good and competent sales man are inscarce.
It is difficult to use this method for general and low quality goods.

Question 18.
What is pricing strategy? Explain the different polices and strategies followed by business firms.
Answer:
Pricing strategies are more specific than the objectives and deal with situations in the foreseable future that generally recur. It provides the framework and consistency needed by the firm to make reasonable, practicable and effective pricing decisions.

The different pricing strategies followed by the firm as follows :

Cost-oriented or cost-based pricing strategy.
Demand-oriented or Demand-based pricing strategy.
Cost-demand – oriented pricing strategy.
Competition-oriented or pricing strategy.

The advantage of this strategy is that it is a simple and socially fair system, recovery of cost is guaranteed and can be applied in changing situations. The disadvantage is that it ignores demand and future cost.

(b) Demand-oriented or Demand-based pricing strategy:
Under this method, demand of the product is considered while fixing the price i.e., price is fixed on the basis of demand for the product. The advantage of this method is that consumers preferences are considered and inefficiency of the manufacturer is penalized. The disadvantage is that it is socially unfair and doesnot ensure competitive harmony.

(d) Competition-oriented or pricing strategy:
This pricing strategy is based on the concept of break-even-point (i.e. where the sales revenue are equal to total cost). At break-even-point there will be neither profit nor loss. It helps in estimating the effects of different prices on profits.

Question 19.
Describe briefly the functions of retailer.
Answer:
The functions of retailer are as follows:
(i) Linking: A retailer links the wholesalers with the consumers. In other words, the goods purchased by’wholesaler are distributed to the consumers through the retailers.

(ii) Assembling: The retailer purchases goods from numerous wholesalers spread out in different places and assembles them at one place.

(iii) Storing: The retailer stores the goods purchased by him from the numerous wholesalers in his warehouse and dispatches them to the consumers on demand.

(iv) Grading: The retailer sorts out the goods in his warehouse into different grades on the basis of their quality, size, shape, etc.,

(v) Transporting: The retailer arranges for the transportation of goods from the wholesaler to the customer.

(vi) Risk bearing: By owning and holding goods under his custody, the retailer assumes the risks arising out of fall in price, change in demand, damage, theft etc.,

(viii) Financing: The retailer often, grants credit facilities to the regular customers.

(ix) Informing: The retailer collects information about the tastes and needs of the consumers and passes it on to the wholesaler. He also brings to the notice of the consumers about the new types of goods.