Class 12-commerce NCERT Solutions Business Studies Chapter 3 - Marketing
Marketing Exercise 321
Solution VSA 1
Branding refers to deciding a suitable name for the product. The name can be either a generic name or brand name. The brand name acts as a basis of differentiation of the firm's product with that of its competitors. Advantages of branding for marketers:
- Branding enables a business organisation to differentiate its product from that of its competitors. In this way, it enables a certain degree of control over the market.
- It enables advertising of the product. Without branding, advertising cannot be done.
- Good branding enables a firm to follow differential pricing. That is, it allows the firm to charge a different price than that charged by its competitors.
- Good branding of an existing product forms the base for the introduction of new products by the firm. This is because a new product would get a boost and benefit from the reputation of the existing brand.
Solution VSA 2
Branding refers to the process of giving a unique name, sign, symbol or term for the identification of a product. The name can be either a generic name or brand name. The brand name acts as a basis of differentiation of the firm’s product with that of its competitors. Branding enables a firm to follow differential pricing. That is, it allows the firm to charge a different price than that charged by its competitors.
Solution VSA 3
According to the societal concept of marketing, organisations must work according to the needs and desires of the target market. The organisation must identify what is required by target customers and accordingly work towards delivering the results in the most effective and efficient manner. In addition, other aspects of consumer well-being (namely ecological, ethical and social) must be taken into consideration by the organisation.
Solution VSA 4
Packaging is the process of developing the container for a product.
Packaging has the following advantages:
- With the help of packaging, customers are able to identify the product.
- Packing can also be used for promoting the product. Packing can be used for attracting customers towards the purchase of the product.
- For certain products to be used, such as toothpaste, packaging is essential. In this way, it provides convenience in handling the product.
- Proper packaging helps in protecting the product from spoilage and breakage.
Solution VSA 5
List of some shopping products purchased:
- Air conditioner
Solution VSA 6
Marketing planning is an important activity or area of work of a marketer to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved. For example a marketer of colour TV, having 10 per cent of the current market share in the country, aims at enhancing his market share to 20 per cent, in the next three years. He will have to develop a complete marketing plan covering various important aspects including the plan for increasing the level of production, promotion of the products, etc., and specify the action programmes to achieve these objectives.
Solution SA 1
Marketing refers to the process of interaction between buyers and sellers with the objective of exchange of goods and services.
Earlier, marketing had two different approaches to its definition:
- Post-production process: As a post-production process, it was described as the process of purchasing the final product.
- Pre-production process: As a pre-production process, it was called designing the product.
However, marketing is a much wider concept which comprises various activities involved in the process of exchange of goods and services between buyers and sellers. The activities which are part of marketing are basically the various functions which are performed under marketing such as planning, designing the product, packaging and labelling of the product, standardising, branding, warehousing, transport, advertising, pricing and distribution. In addition, it includes after sales activities such as customer care and feedback.
Solution SA 2
Basis of Difference
It was based on the belief that products superior in quality are favoured by consumers. Accordingly, for profit maximisation, the primary focus of the business should be on improving the quality of the product.
It was based on the belief that those products are favoured by consumers which are readily and easily available and are affordable. Accordingly, for profit maximisation, the primary focus of the business should be on increasing the production volume.
Focus of the business
The primary focus is on improving the quality of the product and adding new features to the product.
The primary focus is on increasing the volume of production and curtailing the average cost of production.
Marketing Exercise 322
Solution SA 3
A consumer derives satisfaction from the consumption of a product. So, when a customer decides to purchase a product, his main focus is on the utility which he would receive on consuming it.
A customer derives various kinds of satisfaction/benefits from the consumption of a product:
- Functional benefits: It refers to the utility derived from the basic functions performed by the product. For instance, a cooking gas range provides functional utility as a medium of cooking.
- Psychological benefits: It refers to benefits in the form of pride and self-esteem derived from owning the product. For instance, a consumer can derive psychological benefit from owning a cooking gas range which he uses as a modern means of cooking.
- Social benefits: Consumption of a particular product may also provide social benefits in the form of acceptance among the peer group.
Thus, we can say that a product is a bundle of utilities.
Solution SA 4
Industrial products are products which are used as inputs in further production process. In other words, they are the raw materials used by the manufacturers in the production process. For example, machines and tools are industrial products.
As against this, consumer products are products which are used for final consumption purposes by the ultimate customers. For example, toothpaste, wheat flour and furniture.
Basis of Difference
Number of customers
They have a limited number of customers as they are used primarily by manufacturers.
The number of customers is comparatively higher.
Channel of distribution
They require shorter channels of distribution.
They require comparatively longer channels of distribution to reach the final consumers.
They are available in the area where the industries producing these goods are located.
They are readily and conveniently available at various locations.
Their demand is derived from the demand for consumer goods.
They have an independent demand. Their demand is the basis for the demand for industrial products.
Role of technical features in decision making
These products are complex, thereby technical features play an important role in their purchase.
Such products are simple and do not involve much technical complexities.
Solution SA 5
Basis of Difference
They have a frequent demand.
They have a relatively less frequent demand.
Nature of Products
They are generally essential goods.
They are durable.
Unit of Purchase and Price
These products are available in smaller units and command a low per unit price. Accordingly, they have a low profit margin.
These products are available in larger units and command higher per unit price. Accordingly, the profit margin is high.
Nature of Purchase
They are bought spontaneously by consumers without devoting much time and effort.
They are brought after considering factors such as price and quality of the product.
Newspapers, stationery items, vegetables
Jewellery, furniture, television
Solution SA 6
Labelling refers to providing information about the product in the form of a tag and graphic on the package of the product. The following functions are performed by labelling:
- Description of Use and Contents: A label describes the product and specifies its components or other useful information such as the caution to be taken while using it and the procedure of use. For example, soup ingredients along with the procedure of preparation are mentioned on a packet of soup.
- Identification and Differentiation: It helps consumers in identifying the product. For instance, a picture of the product is printed on the package which makes identification easy. Similarly, the label provides other useful information as well such as the name of the manufacturer, weight of the product and maximum retail price.
- Standardising and Grading: It enables grading of the product in various categories. For instance, different features of the product are specified on the label. For example, a brand of ice cream comes in different flavours.
- Promotion of the Product: A label helps in attracting customers, thereby enabling promotion of the product. Moreover, any information regarding the sales promotion schemes is provided by the label.
- Information Required according to Law: Information as required by the law is also provided by the label. For instance, it is mandatory for tobacco-producing companies to print a warning message on the packet of the product.
Solution SA 7
Intermediaries are the ones through which the goods are transferred from the place of production to actual consumers. The following functions are performed by intermediaries in case of non-durable products:
- Arrangement. An intermediary receives goods from numerous sources. He arranges them into various homogeneous groups based on their characteristics such as size and quality.
- Collection: An intermediary maintains ensures that there is enough stock available with him to ensure easy flow of supply.
- Allocation and Packing: The supply of goods received by him is in larger units. He breaks the stock into smaller units and packs them separately.
- Building Variety: As an intermediary receives supply of goods from numerous sources, he acquires a good variety of products. He can then sell them in different combinations.
- Promotion of Product: Intermediaries assist promotion activities of manufacturers. For instance, intermediaries can put banners and display products sold by them.
- Mediation: Intermediaries act as middle men who negotiate the deal between producers and consumers. They ensure efficient transfer of ownership such that the need of both parties is satisfied.
- Bearing Risk: Intermediaries maintain a large stock of goods as received from different sources. The goods remain with them till they are sold to final consumers. In the process, they have to bear various risks such as fluctuations in demand, price and spoilage.
Solution SA 8
Advertising is a technique of promotion of a product. It helps in attracting customers towards the product. Important features of advertising:
- Cost Involved: Advertising is a paid form of communication. It involves a cost which is to be borne by sponsors.
- Impersonal Mode: Advertising is impersonal in the sense that there is no direct interaction between the customer and the advertiser.
- Specific sponsors: There are certain few individual sponsors who undertake the advertising process.
Solution SA 9
Sales promotion refers to the various short-term incentives which are offered to customers so as to influence them to purchase the product. It includes activities such as offering discounts, product combinations and offering free samples. Such activities support other promotional activities used by the company. Various sales promotion activities help in attracting customers and induce them to purchase. They are particularly used by companies when they launch a new product. Sales promotion activities help boost the sales of the company.
Solution SA 10
Societal concerns which the marketing manager would face:
- It must be taken care that various business activities do not harm the environment in any manner (such as in the form of pollution).
- It must be ensured that business dealings are fair and just.
Steps which can be taken to address these concerns:
- One of the important steps which can be taken towards environment protection can be in the form of waste management. For example, it must be ensured that the waste is disposed of properly.
- To ensure fair dealings, there must be strict policies and the staff of the hotel must be made aware of it. For instance, the staff must be instructed to charge as per the maximum retail price of various products and no amount more than that.
Solution SA 11
Some information provided by a label:
- Name of the product
- Graphic or image which symbolises the product
- Contents of the product
- Directions for usage
- Caution (if any to be taken)
Label for juice package
Solution SA 12
Customer care services which can be offered for marketing of motorcycles:
- Easy monthly instalments
- Extended warranty periods
- First servicing of the motorcycle free of cost
- Easy finance schemes
Solution LA 1
According to the marketing concept of marketing management, the primary focus of business should be on customer satisfaction. It is based on the belief that customer satisfaction is the most important factor which determines the success of an organisation. A business must identify the target customer base and the market for which the efforts of the market should be made. It must keep in mind that it can survive in the long run only if it works effectively towards customer satisfaction. The following points explain in brief the marketing concept:
- The organisation must clearly identify the target customer base and the market. All its marketing efforts must be directed towards that particular market segment.
- It should work towards developing such products and services which are according to the needs of the customer and satisfies them.
- It must ensure that the product can satisfy the needs of customers better than that done by competitors.
- The basic objective of all the activities should be profit earning.
- According to the marketing concept, if organisations focus on customer satisfaction, then marketing would take place in an effective and smooth manner. If the products are according to the needs of customers, then selling would be easy.
Solution LA 2
Marketing mix means the set of various marketing tools used by an organisation to achieve the desired objectives of marketing.
In an organisation, various decisions with regard to marketing are affected by a large number of factors, some of which are controllable, while the others are non-controllable. Controllable factors can be decisions regarding price, branding and advertising. Non-controllable factors can be government policies and policies of commercial banks. To achieve the various objectives of marketing, a firm continuously alters the various controllable factors. These factors, also known as marketing tools, form the basic pillars of marketing. From the various available marketing tools, a firm chooses the most suitable and best combination. This combination of marketing tools used by the firm is called marketing mix. Elements of a marketing mix:
- Product: In terms of marketing, the product refers to the mix of various tangible and intangible attributes which have a value and can be exchanged. They are capable of satisfying the needs of consumers. Besides physical goods, a product includes services. In other words, in terms of marketing, a product is defined not only in terms of physical product (functional utility) but also in terms of satisfaction or the utility provided to the consumer. Moreover, after sales services such as customer care, addressing consumer complaints and taking feedback are part of product.
- Price: Price refers to the amount of money which is paid by a consumer to obtain a product. Price is the most important factor determining the demand of a product. Demand for a product shares a negative relation with its price. The marketers must suitably decide a price by properly analysing the various related factors such as the target customers, pricing range of the competitors and goals of the firm. The price which is set must be at par with the value offered by the product. In addition, the form must offer suitable discounts, offers or incentive schemes.
- Place: Another important decision to be taken by a firm relates to making the product available to target consumers. In this regard, the firm needs to decide the dealers or intermediaries which enable the distribution of the product. Similarly, decisions regarding inventory, warehousing, storage and transport of goods must also be taken.
- Promotion: Promotion refers to activities such as advertising and sales technique undertaken by the firm with the objective of communicating to potential consumers regarding the availability of a product, its features, special qualities and purpose. Promotion of the product is done with the objective of influencing potential customers to purchase the product. An organisation must decide which medium of promotion must be used and accordingly take the required actions.
Solution LA 3
Branding refers to deciding a suitable name for the product. The name can be either generic or a brand name. The brand name acts as a basis of differentiation of the firm's product with that of its competitors. If instead of a specific brand name, a firm decides to opt for a generic name, then it would not be able to distinguish its product from that of others. For example, all toothpastes are used for cleaning teeth; however, one toothpaste differs from the other on the basis of the brand name, certain special qualities are depicted, the image or symbols used by the different toothpaste manufacturing firms etc.
Branding also helps in marketing of goods and services. Benefits of branding for marketers:
- Helps in Advertisement: Branding enables the process of advertising. Without branding, advertising cannot be done. When advertising a branded product, the special qualities or features of a product are highlighted. In this, the advertisement of a brand helps in attracting consumers towards the product. Without branding, consumers cannot be attracted towards a particular product.
- Enables Differential Pricing: It enables the firm to follow differential pricing. That is, it allows the firm to charge a different price than that charged by competitors. Good branding helps in creating a loyalty of consumers towards the product. With this, consumers become ready to pay even a slightly higher price for the product.
- Facilitates Introduction of New Products: Good branding enables easy introduction of new products by the firm. This is because the new product would benefit (in terms of sales) from the established brand name. In this way, branding enables a firm to launch multiple products under a single brand name.
Solution LA 4
Price refers to the amount of money which is paid by a consumer to obtain a product. Price is the most important factor determining the demand of a product. Demand for a product shares a negative relation with its price. Price charged by a firm affects it revenue and profits. Moreover, pricing is used as a competitive tool by firms which produce substitutable products. The marketers must analyse properly the various factors which determine the price and decide a suitable price for the product. Thus, it is important for the firm to carefully decide the price of the product. Factors affecting the price of a product or service:
- Cost of Product: Cost of the product is the most important factor determining the price. The cost of product can be of the following three types:
- Fixed cost: These are costs which remain fixed irrespective of the level of output. For example, cost of machinery and land.
- Variable cost: These are costs which vary in direct proportion with the level of output. As the level of output increases, the variable costs also increases and vice versa. For example, cost of labour and raw material.
- Semi-variable cost: Similar to variable costs, these are costs which vary with the level of output but not in direct proportion. For example, commission paid to intermediaries.
- Generally, a firm decides such a price for its product so that it can cover the various costs and earn a profit over and above it.
- Demand for the Product: Another important factor determining the price of a product is the elasticity of demand for the product. Price elasticity of demand implies how responsive the demand is to the changes in price.
- Elastic demand: The demand is said to be price elastic if a given proportionate change in price leads to a more than proportionate change in demand. In such a case, charging a higher price by the firm would lead to a large fall in demand.
- Inelastic demand: The demand is said to be price inelastic if a given proportionate change in price does not bring about any significant change in demand. In such a case, it is possible for a firm to charge a higher price. This is because even at higher price, the demand will not fall much.
- So, goods generally having an elastic demand have a comparatively lower price than those which have an inelastic demand.
- Degree of Competition in the Market: In case there is high competition in the market, it is not possible for a firm to charge a higher price. This is because if the firm charges a higher price, consumers would shift the demand to its competitors.
- Government Regulations: At times, the government regulates the prices of certain commodities. For example, in the market for agricultural products such as wheat and rice, the government intervenes in price determination.
- Objectives of Pricing: There are various objectives which a firm considers while deciding the price of its product. The following are some important objectives of pricing:
- Profit Maximisation: Profit maximisation is one of the basic objectives of every firm. If the firm aims at profit maximisation only in the short run, then it may decide a higher price for the product. On the contrary, if the firm wishes to maximise profits in the long run, then it would charge a lower price at present so that it can acquire greater share of the market and build up consumer loyalty.
- Acquiring Market Share: If a firm aims at acquiring a greater market share, then it would charge a lower price so that it can attract a greater number of customers towards its product.
- Surviving Competition: If the firm has to survive in high competition, it must keep the price of the product lower, else it will lose customers to competitors.
- Focus on Quality: If the firm aims at improving the quality of the product, it may even charge a higher price so as to cover the additional costs.
- Method of Marketing: Another important factor determining the price of a product is the methods of marketing used by the firm. For example, if the firm decides to use intense advertising, then it may charge higher price so as to cover the costs.
Solution LA 5
After goods are produced, packaged, promoted, branded and priced, they must be made available to consumers. That is, they must be moved from the place where they are produced to the place where they would be consumed. This physical movement of products from the place of production to the place of consumption is known as physical distribution of products. It involves the following four major activities:
- Processing of Order: Processing of order implies the activities which take place between the placement of order and the final delivery to the consumer. It comprises steps such as placement of order, intimation of order to the manufacturer and delivery of goods. The system of distribution should be such that processing of order is speedy. A speedy processing with sufficient accuracy leads to greater customer satisfaction.
- Transportation of Products: Transportation of products implies physical transfer of goods from the place of manufacturing to the place of actual consumption. Consumers of a product are spread across different areas. So, the goods must be transported to different places for it to be available to consumers.
- Warehousing: Warehousing implies storing goods before they are finally sold to consumers. Warehousing is important because there is a time lag between production and sale or consumption. So, the goods must be properly stored till the time they are actually sold. Storing of goods at the warehouse enables ready availability of goods at different locations as and when required. However, warehousing involves costs as well. Thus, the benefits of warehousing must be weighed against the costs involved so as to maintain a balance according to the requirement.
- Maintenance of Inventory: Inventory refers to maintenance of stock of products. Maintaining inventories enables timely supply of products as and when required. Similar to warehousing, it holds a relation with consumer satisfaction. However, it also involves a cost for the firm. Various factors affect the maintenance of inventory by a firm such as the strength of the distribution system, cost involved and objectives of the firm.
Solution LA 6
There are different views with regard to expenditure on advertising. On one hand, it is considered a social waste as it adds to the cost of production, weakens social values and adds to consumer needs and desires. On the other hand, it is beneficial as it helps in enhancing the sales of the product of the firm.
The following points help in judging whether advertising is a waste or is beneficial to the firm:
- Higher Cost: Expenses on advertisement add to the cost of the product, the firm, and then in turn, is passed on as additional cost to consumers in the form of higher prices.
- However, advertising helps in attracting consumers to the product. Accordingly, the demand for the product increases. To cater to the increased demand, the production increases. An increase in the production, in turn, lowers the per unit cost of production.
- Weakens Social Values: One of the major arguments against advertising is that it weakens social values in the sense that it promotes materialism in society. Advertisement attracts customers and induces them to purchase the product. They are more aware with regard to the availability of different and new products in the market. In the process, they are often dissatisfied with their current possession of goods. Often on being increasingly attracted by the new product, they purchase even those products that they may not require. This increases materialism in society.
- On the other hand, it is said that advertisement is beneficial to consumers in the sense that it informs them about the various products which are available in the market. The final decision regarding the purchase of the product lies with the consumer himself.
- Creates Confusion: It is argued that with advertisements of a large number of similar products, the consumer often gets confused. On the contrary, those who support advertisements argue that they help in increasing the knowledge of the consumer with regard to the availability of different products in the market. In this way, it increases their choice and helps them in making an informed decision with regard to purchase of the product.
- Promotes Inferior Goods: Advertisement induces consumers to purchase the product. Even inferior goods can be advertised, and their demand be induced. However, it said that quality is only a relative product. Advertisements provide knowledge with regard to all kinds of products. Whether to purchase the product or not is up to consumers themselves.
- Objectionable Advertisements: Sometimes the advertisements can be objectionable in the sense that they undermine social values. For instance, in certain advertisements, women are shown in an objectionable manner. Sometimes, the language, images and content of the advertisement may not appeal to society at large.
Solution LA 7
Basis of Difference
Personal v/s impersonal
Advertising is impersonal; i.e. there is no direct communication with potential consumers.
Personal selling involves direct communication with potential consumers.
It has a wide reach.
It has a limited reach.
It is inflexible in the sense that the message which is transmitted is standard.
It is flexible in the sense that the message can be adjusted according to individual consumer.
It is more suitable when the target group is large.
It is more suitable when the target group is small.
Advertisement reaches a large number of people simultaneously, so, the per person cost is low.
The per person cost in case of personal selling is relatively high.
A large number of potential consumers can be reached simultaneously.
It involves huge time as only a few people can be reached at a time.
As advertising is impersonal, feedback and reactions of the consumer cannot be judged.
As personal selling is in a personal form, feedback and reactions of consumer can be judged.
The medium of communication can be in the form of television, newspapers, radio etc.
The communication can be only through sales persons.
Solution LA 8
Factors determining the choice of channels of distribution:
- Product Type: The choice of channel of distribution depends on the type of product, i.e. perishable or non-perishable, industrial or consumer product. For example, in case of perishable goods, short channels of distribution would be more suitable. Similarly, for consumer products, long channels are used, while for industrial products, short channels are used.
- Characteristics of the Company: There are two important characteristics of a company which determine the channel of distribution used by it, namely financial strength and the degree of control which the company wishes to command over intermediaries. Shorter channels of distribution require greater funds but also offer greater control over intermediaries. Accordingly, a financially strong company or a company which wishes to command greater control over intermediaries would opt for shorter channels of distribution.
- Competitive Factors: The channel of distribution opted by a company also depends on the channels opted by its competitors. For instance, a company may opt for a similar channel as used by its competitors.
- Business Environmental Factors: Business environmental factors such as economic factors and legal policies are also important factors in determining the choice of channel of distribution. For example, if there are complex legal formalities at various steps of distribution, then a company would prefer shorter channels of distribution.
- Market Factors: There are various market factors such as size of the market, geographical concentration of potential buyers and volume of demand which determine the choice of channels of distribution which the company opts. For instance, if potential buyers are concentrated in only a small geographical area, then the shorter channels of distribution would be more suitable.