MBA – Semester – IIMB0046 – Marketing Management

Q1: Explain the stages in the new product development process.

Answer: The stages for the new product development process are as follows:

1) Idea / Concept Generation: Ideas for new products can be obtained from customers (employing user innovation), the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation.

2) Idea Screening: The object is to eliminate unsound concepts prior to devoting resources to them. The screeners must ask at least three questions: Will the customer in the target market benefit from the product?, Is it technically feasible to manufacture the product?, Will the product be profitable when manufactured and delivered to the customer at the target price?

3) Product Formulation and Testing: Develop the marketing and engineering details and test the concept by asking a sample of prospective customers what they think of the idea. Business Analysis: Estimate likely selling price based upon competition and customer feedback, estimate sales volume based upon size of market and estimate profitability and breakeven point.

4) Testing the Product: Produce a physical prototype or mock-up. Test the product (and its packaging) in typical usage situations. Conduct focus group customer interviews or introduce at trade show. Make adjustments where necessary. Produce an initial run of the product and sell it in a test market area to determine customer acceptance. Involves managerial planning and focusing on feedback. Make necessary adjustments to ensure product is ready for launch.

5) Commercialization: Launch the product. Produce and place advertisements and other promotions. Fill the distribution pipeline with product. Critical path analysis is most useful at this stage.

Page 1

Q2: Explain the various types of retailers and wholesalers.

Answers 2: The various types of retailers and wholesalers are as follows:

A: Retailer Types:

Department Stores: A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. eg: Apparels, Electronics, Footwear’s etc.

Mom & Pop Stores OR Kirana Stores: Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. eg. Cereals, Pulses, Daily consumables etc.

Discount Stores: Discount stores also offer a huge range of products to the end-users but at a discounted rate. eg. Bigbazar comes under discount store.

Specialty Stores: Specialty store would specialize in a particular product and would not sell anything else apart from the specific range.. eg - Reebok Retail Outlet.

Supermarket: A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket.

B: Types of Wholesaler:

Merchant Wholesalers : Merchant wholesalers are firms engaged primarily in buying, taking title to, storing, and physically handling products in relatively large quantities and reselling the products in smaller quantities to retailers; industrial, commercial, or institutional concerns; and other wholesalers. These There are two basic kinds of merchant wholesalers: 1) Full-service wholesalers. 2) Limited Function or service wholesalers.

Agents, Brokers, And Commission Merchants : Agents, brokers, and commission merchants are also independent middlemen who do not (for the most part) take title to the goods in which they deal, but instead are actively involved in negotiating and other functions of buying and selling while acting on behalf of their clients (commission merchants typically are limited to agricultural goods). They are usually compensated in the form of commissions on sales or purchases.

Manufacturers' Sales Branches and Offices: Manufacturers' sales branches and offices are owned and operated by manufacturers but are physically separated from manufacturing plants. They are used primarily for the purpose of distributing the manufacturers' own products at the wholesale level. Some have warehousing facilities where inventories are maintained, while others are merely sales offices. Some of them also wholesale allied and supplementary products purchased from other manufacturers.

Page 2

Question 3: Describe the steps in business buying process with examples.

Answer 3: Steps in Business Buying Process

Stage 1: Problem recognition1. Problem can be identified from either internal stimuli or external stimuli. Company would like to launch new product hence it searches for the suppliers who can supply the material and equipments required for the new product. 2. External stimuli like trade show, conference also helps the company to identify the problem.

Stage 2: Need description: After finalizing the problem, companies will define need description. The need description includes

Stage 3: Product specification: Organizations develop detailed product specification with value analysis. In the value Analysis Company analyzes the components and their production process. Here emphasis is given to find the alternative methods of producing the components and finding the optimum method that suits the company.

Stage 4: Supplier search: The buyer now tries to identify the most appropriate suppliers. The buyer can examine trade directories, do a computer search, phone other companies for recommendations, watch trade advertisements, and attend trade shows. The supplier’s task is to get listed in major business directories, develop a strong advertising and promotion program, and build a good reputation in the marketplace.

Stage 5: Proposal Solicitation: The buyer will now invite qualified suppliers to submit proposals. Some suppliers will send only a catalog or a sales representative. Where the item is complex or expensive, the buyer requires a detailed written proposal from each qualified supplier. The buyer will invite qualified suppliers to make formal presentations.

Stage 6: Supplier selection: This stage is also known as vendor selection. During this stage companies will prepare the checklist. Weightages are assigned against each checklist point and evaluated. Some of the important attributes those commonly found in the vendor evaluations are Quality, Delivery, Service etc….

Stage 7: Order routine specifications: The buyer now negotiates the final order with the chosen supplier(s), listing the technical specifications; the quantity needed, the expected time of delivery, return policies, warranties and so on. In case of MRO items (Maintenance, Repair and Operating items), buyers are increasingly moving towards blanket contracts rather than periodic purchase orders.

Stage 8: Performance review: In this stage organization review the performance of the suppliers. This will help it to decide whether to continue with existing suppliers or should search for the new vendor. These eight stages are very much essential for new task but not necessary for straight re-buy or modified re-buy.

Page 3

Question 4: Explain the product mix pricing strategies with examples.Answer 4:

A) Product Mix is the array of products or services you sell, whether you offer different variations of the same item or service or completely different ones. Business owners use the concept of product mix for a variety of reasons, including expanding sales opportunities, targeting different customers and reducing their dependency on only one product or service.

B) Product Mix Pricing Strategies

Product Line pricing: Strategy of setting the price for entire product line. Marketer differentiates the price according to the range of products, i.e. suppose the company is having three products in low, middle and high end segment and prices the three products say at Rs 10 Rs 20 and Rs 30 respectively.The three levels of differentiation create three price points in the mind of consumer. The task of marketer is to establish the perceived quality among the three segments. If the customers do not find much difference between the three brands, he/she may opt for low end products.

Optional Product pricing: This strategy is used to set the price of optional or accessory products along with a main product.Organizations separate these products from main product so that customer should not perceive products are costly. Once the customer comes to the show room, organization explains the advantages of buying these accessory products.

Captive product pricing: Setting a price for a product that must be used along with a main product. For example, Gillette sells low priced razors but make money on the replacement cartridges.

By-product pricing: It is determining the price for by-products in order to make the main product’s price more attractive. For example, L.T. Overseas, manufacturers of Dawaat basmati rice, found that processing of rice results in two by-products i.e. rice husk and rice brain oil. If the company sells husk and brain oil to other consumers, then company is adopting by-product pricing.

Product bundle pricing: It is offering companies several products together as a bundle at the reduced price. This strategy helps companies to generate more volume, get rid of the unused products and attract the price conscious consumer. This also helps in locking the customer from purchasing the competitors’ products. For example, Anchor toothpaste and brush are offered together at lower prices.

Page 4

Question 5: Advertisement is a media which conveys message about the product. It is important to understand different types of advertisement to attract the attention of the people to a product and service. Find out the various forms of advertisement.

Explanation of advertisementTypes of advertisement

Answer 5: Advertisement is a paid form of communication in which the sponsor or the brand owner has made payments to the media to carry the message through their set of media vehicles.

Digital Media and Print Media: Advertisement through the T.V and Films are very popular way of advertisement. Advertisement is also given through the Daily Newspaper is also oldest way to reach the people.

PR (Press and Public Relations): The press release is under-rated form of advertising as it is free, and all above that press editorial is perceived by the audience to be true. Getting your editorial printed for free is easier than you may think, and guidelines for using PR follow in more detail below.

Seminars: Creating an informative seminar and inviting your target audience is an excellent way to educate the market and promote your company and proposition.

Telemarketing: Using telemarketing staff or a telemarketing agency is a proven method of marketing. If well-managed, telemarketing can be an extremely good and cost-effective method for generating sales enquiries, selling products and services, and making appointments for sales staff.

Direct Mail: Direct mail is the process of sending your material direct to the address of the potential customer by post.

Directories - Local Directories, Yellow Pages, Thomson:. A business telephone line generally gives free Yellow Pages and Thomson's entries under a single classification in your local books. They are published annually, at different dates throughout the country.

Brochures, Leaflets and Printed Material: Brochures and leaflets can be used for different purposes, and can be distributed in different ways. Coffee mugs, printed tea shirts, printed pens, broachers are some methods of advertisement.

Car Wrapping / Big Holdings at Roads: Advertisement through the sticker wrap on the taxi and Local transports. Big Banner Holdings on the roads by Municipal Corporation by charging fee is also one of the popular way of advertisement.

Open Days and Exhibitions: Exbhitions are organized by the different industries where the supplier and buyer can have transparent interaction and can promote their products.

Page 5

Question 6: Explain the forms of customer relationship and the reasons behind losing customer by organization.

A) Forms of Customer relationship B) Reasons behind losing customer.

Answer 6:

A) Continuity Marketing: An attempt is made to offer rewards to consumer by way of membership and loyalty cards with a variety of rewards which may include privileged services, discounts and cross purchased items.

B) Individual Marketing: An attempt is made to fulfill the unique needs of each as well as develop frequency marketing, interactive marketing and after sales programs.

C) Co marketing: Co marketing has been long used in individual marketing by way of key account management programs. It involves appointment of separate teams by marketers to decide on the use of company resources to be used to need individual customer need.

Today’s companies must pay closer attention to their defection rate and take steps to reduce it. The possible reasons for customer defection would include:

Price related reasons: A customer tries to match the price to pay for acquiring a brand and the value the brand could generate. If the customer perceives a mismatch between the price and the value, he would opt for a competitor’s brand. Also, if the price of brand for any reason goes beyond his reach, he would switch over to a low priced brand.

Product related reasons: In view of technological advancement, the new brand which makes market entry would be capable of offering better performance as compared to the already existing brand. This would induce the customers to make a brand switch over.

Services related reasons: The customer’s concentration is not only on the brand, but also on the accompanying services offered at three different stages--pre-sales, during sales and after sales. Any dissatisfaction as regards to services would cause the customer to move away from the brand. Benefit related reasons: The customers may be attracted by various augmented benefits offered by the competitors. Such benefits may be more appealing and induce customers towards brand changes.

Competitor related reasons: Technological advancement, attractive offers, value added services, etc. offered by competitors would also draw the attention and induce customers towards brand switching.

Personal reasons: On the personal front, a customer would become a brand defector due to the following reasons:Moved away from the market area where the brand is sold.Role changes in life cycle and consequently leading changes in brand preference.Anger, disgust, distress developed within the process of product delivery.

Page 6

5BC000DB-DE65-45E8-B22F-FAA4A4CC2A67

Page 7